Treasury Secretary Janet Yellen has designated non-bank mortgage servicers as systemically important, indicating they are too big to fail. The Financial Stability Oversight Council (FSOC) has proposed a fund that mortgage companies could access for liquidity, which may lead to taxpayers bearing the risks. Critics argue that the FSOC report on non-bank mortgage firms overlooks key issues, such as the potential failure of GNMA issuers. Additionally, there are concerns about Freddie Mac buying second liens that cannot be sold at a profit. Sandra @FHFA remains silent on this issue.
From @WSJopinion: The Financial Stability Oversight Council wants to establish a fund that mortgage companies could tap for liquidity, ultimately making taxpayers cover the risks government created https://t.co/cKTu5l5b8v https://t.co/cKTu5l5b8v
From @WSJopinion: To prevent bailouts, the Fed could simply stop blocking run-proof banks from emerging. But that would take political will, write @JohnHCochrane and Amit Seru. https://t.co/OLfMMWRAst https://t.co/OLfMMWRAst
The second great bailout. Paper and WSJ oped https://t.co/sWGvsWxfDm
Can a simple regulatory fix decrease risk in the bank sector? Profs Seru and Cochrane of Stanford/Hoover argue financing banks with debt & equity (and not deposits) - and allowing them to fail - would end bailouts. #esg https://t.co/RmgjPScP9V
"Preventing Bailouts Is Simple, but It Isn’t Easy" by @JohnHCochrane and Amit Seru via @WSJ https://t.co/ojIlopDiv0
"Preventing Bailouts Is Simple, but It Isn’t Easy" via @WSJ https://t.co/ojIlopDiv0
RcWhalen commented on WSJ: "The #FSOC report on nonbank mortgage firms misses the point. If a GNMA issuer fails and the business is underwater..." https://t.co/nRi6kMF45l
SO when media interview Meredith Whitney about @FreddieMac buying second liens, ask her who's gonna buy these sub notes. @JoeBiden WH wants to stick them into the GSE since they cannot be sold at a profit. Silence from Sandra @FHFA
Yellen #FSOC Punts on Mortgage Servicers; WGA Bottom 25 Banks | https://t.co/mVPlXpsaZD | One more time with feeling.... @SecYellen #MeredithWhitney
"Treasury says non-bank mortgage servicers are systemically important." Janet Yellen's New Too-Big-To-Fail Firms https://t.co/WFmhNuW4qL