Progress on Housing Finance Reform

House GOP outlines plans for mortgage finance

The Corker-Warner proposal requires investors to put at risk funds equal to 10 percent of the value of the mortgages included in mortgage-backed securities to be guaranteed by the government. The total losses of Fannie and Freddie during the crisis were equal to about 4 percent of the firms combined assets. The firms were shielded by homeowner down payments and by private mortgage insurance before they had to make good on their guaranteed securities, but the housing price collapse of more than 30 percent combined with concentrations of Fannie and Freddies risk in key bubble states such as Nevada combined to generate losses that wiped out the firms thin capital cushions of less than 1 percent of their assets. With a 10 percent capital requirement, the firms would easily have made it through the worst housing cycle in recent memory. To be sure, a 10 percent capital requirement is not the same as the 100 percent in a fully private system. But a fully private system is neither feasible nor stable. By the standards of the recent housing debacle, the Corker-Warner legislation provides considerable protection for taxpayers. Still, any government guarantee gives rise to moral hazard, since investors will naturally seek to obtain government backing on risky mortgages that provide a high private upside if the loan works out, and a loss for taxpayers if it does not.

Over the past five years, Fannie, Freddie and other government-backed agencies have made home loans widely available by insuring nearly 90 percent of new mortgages. But their actions have placed taxpayers at risk if homeowners default on their loans and have made the mortgage industry heavily reliant on the federal government. House Financial Services Committee Chairman Jeb Hensarling (R-Tex.) said the House bill aims to eliminate those risks. Our plan helps taxpayers and homeowners.

Finance ministry moots cap on gas prices

This design will now be replicated in all the underground sections in Phase III. LIC could shell out record Rs 90,000 cr benefits to policyholders this fiscal LIC’s dominance is clear a decade after private cos were allowed to set up cos, resulting in the entry of ICICI, Aviva and HDFC. LIC’s settlements will equal the total premium income of the entire private sector for the last fiscal. New found aggression: What Colgate is doing to push out P&G’s Oral B Across 4.5 mn retail outlets, Colgate is being a shameless bully, elbowing P&G out of any shelf space. It is throwing toothbrushes, pastes, and brand events with trade partners, and discounts, all to deny or delay giving P&G even a toehold.

Finance Latest News: Stocks Surge After Bernanke Allays Taper Fear

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