China Can Endure Growth Slowdown to 6.5%, Finance Chief Says

Samba-REDF deal to finance housing projects

Lous comments suggest China is prepared to allow a further slowdown from a rate thats already at risk of falling to a 23-year low this year as Premier Li Keqiang focuses on policy changes to create more sustainable expansion. Li said this week that the government should keep restructuring the economy as long as growth, employment and inflation stay within limits he didnt specify. We dont think 6.5 percent or 7 percent will be a big problem, Lou said at a press briefing in response to a question on whether theres a limit on slower growth that officials will tolerate. Its difficult to give you a limit. But from the data we have, we have the confidence. He said, please dont forget that our expected GDP growth rate this year is 7 percent. adding that there wont be much of a problem to meet our expectations this year. Growth Targets Lous remarks may add to confusion over the governments growth targets and tolerance levels.

Investors Should Reset Ambitions on China

I was among the many people providing technical advice to the group working on the Corker-Warner proposal and think there is much to like in it. The legislation includes the essential elements of housing finance reform: a dominant role for private capital; considerable protection for taxpayers against future bailouts; a secondary government backstop to ensure stability; competition and entry by new firms into housing finance so that no future entity is too big to fail; a clear delineation of the roles of private firms and the government; an empowered regulator to ensure that loan quality remains high for guaranteed mortgages; and support for activities related to affordable housing. A paper I wrote with Ellen Seidman , Sarah Rosen Wartell , and Mark Zandi has a proposal similar in many respects to the Corker-Warner bill. Clicking through to the biographies of my co-authors quickly reveals that the four of us come at this issue from quite different political perspectives. The common ground we reached in a sense mirrors that of the bipartisan group of senators in looking to move forward with reform rather than allowing Fannie and Freddie to remain effectively part of the government, which is the outcome that will obtain if no action is taken. A key feature of the Corker-Warner proposal is the requirement that private investors must put up capital equal to 10 percent of the loans that will be guaranteed by a new government agency set up along the lines of the Federal Deposit Insurance Corporation. This provision alone goes a long way toward restoring the dominant role of private incentives and protecting taxpayers against the possibility of another costly housing bailout.

Malaysia’s Islamic finance sector overhaul a boost for depositors

It was questioned in the Parliament exchange. More Housing Minister Shuwaish Al-Dhuwaihi and Samba Chairman Eissa Al-Eissa have jointly launched a housing loan program introduced by the bank in association with the Saudi Real Estate Development Fund. The program will enable Samba customers who have applied for REDF loans to own a suitable house on the basis of a financing scheme that follows Shariah principles, said an official statement after the signing ceremony. Speaking to reporters, Al-Eissa said the program goes in line with the governments initiatives to solve the countrys housing problem and enable Saudis to have their own homes. This will also strengthen partnership between public and private sectors, he said.

Progress on Housing Finance Reform

One of the most important changes is to make Shariah advisers legally liable for the financial products they approve, analysts and industry experts said. The Islamic scholars are hired by banks to assure that financial products abide by Shariah standards. The rule-change would encourage advisers to conduct a closer inspection of the financial products they approve, holding them more accountable, said Mohamad Akram Laldin, executive director of the Malaysia-based International Shariah Research Academy for Islamic Finance. This is a step forward, everyone who is involved will know their duties and what is expected of them, he said. Previous rules governing Shariah compliance were just guidelines. The IFSA elevates them to statutory duties, a breach of which could expose licensed financial entities to punishment. Penalties will be more severe, a Malaysia-based lawyer told Reuters, with many offences carrying a possibility of up to eight years imprisonment and 25m ringgit ($7.86m) in fines.

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