Daily Archives: December 27, 2014

Issuers of mortgage-backed securities have 1 year to comply with risk rule

WASHINGTON (MarketWatch)—Originators of residential mortgage-backed securities will have a year to comply with a risk-retention rule under the Dodd-Frank law.

In October, the Federal Reserve Board of governors, along with five federal agencies including the Securities and Exchange Commission, voted to approve a risk-retention rule that would require sponsors of asset-backed securities to retain at least 5% of the credit risk of the assets collateralizing the issuance.

On Wednesday, the agencies posted the rule to the Federal Register, making it effective one year from then, on Dec. 24, 2015, for residential mortgage-backed securities and two years from that day for all other securitization types.

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Dollar mortgage holders urge Russia to end ‘financial slavery’

Very interesting… Russia is dealing with their own financial and housing crisis…

Moscow (AFP) – When Olga Savelyeva took out a $226,000 mortgage to buy a small apartment on the outskirts of Moscow in 2008, she could never have imagined that the ruble would lose more than half its value in a few short years.

But Savelyeva’s $2,090 monthly instalments have skyrocketed in ruble terms due to the Russian currency’s dive against the dollar. The resulting jump in monthly payments from 49,000 to 115,000 rubles now devours most of her family’s income.

The 30-year-old mother of a young daughter and her husband have tried to honour their repayment commitments but despite their best efforts, December’s instalment was $400 short.

“We’re left with 3,000 rubles ($56) this month,” Savelyeva told AFP.

“We won’t be able to make the January payment in full… “We also have other obligations,” she added, referring to her retired mother and cancer-stricken father.

Savelyeva is one of tens of thousands of Russians who took on lower-interest foreign currency-denominated mortgages in the years before the financial crisis and now struggle with repayments as the ruble’s value shrinks.

Russia’s central bank says that as of November 1, foreign exchange mortgage debt totalled 120.5 billion rubles ($2.28 billion).

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Opinion: Break up Citigroup — now

WASHINGTON, D.C. — America’s presidential campaign is already well under way. The election is not until November 2016, and very few candidates have formally thrown their hats into the ring, but the competition to promote and develop ideas — both behind closed doors and publicly — is in full swing.

Earlier this month, Citigroup C, -0.20%  took advantage of this formative political moment by seizing an opportunity to score a tactical victory — but one that amounts to a strategic blunder. Using legislative language apparently drafted by Citigroup’s own lobbyists, the firm successfully pressed for the repeal of some of the 2010 Dodd-Frank financial reforms. The provision was then passed after it was attached to a last-minute spending bill, a tactic that ensured little debate in the House of Representatives and none at all in the Senate.

At a stroke, Citigroup executives demonstrated both their continued political clout in Washington and their continued desire to take on excessive amounts of financial risk (which is what this particular legal change permits). Lobbying to be allowed to load up on risk is exactly what Citigroup did during the 1990s and 2000s under presidents Bill Clinton and George W. Bush — with catastrophic consequences for the broader economy in 2007-09.

As a result, breaking up Citigroup is under serious consideration as a potential campaign theme. For example, in a powerful speech — watched online more than a half-million times — Massachusetts Sen. Elizabeth Warren responded uncompromisingly to the megabanks’ latest display of muscle: “Let’s pass something — anything — that would help break up these giant banks.”

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“Will We Never Learn?” – Meet Subprime Auto ‘Title Loans’: 2014’s Home ATM

The rusting 1994 Oldsmobile sitting in a driveway just outside St. Louis was an unlikely cash machine.

That was until the car’s owner, a 30-year-old hospital lab technician, saw a television commercial describing how to get cash from just such a car, in the form of a short-term loan.

The lab technician, Caroline O’Connor, who needed about $1,000 to cover her rent and electricity bills, believed she had found a financial lifeline.

“It was a relief,” she said. “I did not have to beg everyone for the money.”

Her loan carried an annual interest rate of 171 percent. More than two years and $992.78 in debt later, her car was repossessed.

“These companies put people in a hole that they can’t get out of,” Ms. O’Connor said.

The automobile is at the center of the biggest boom in subprime lending since the mortgage crisis. The market for loans to buy used cars is growing rapidly.

And similar to how a red-hot mortgage market once coaxed millions of borrowers into recklessly tapping the equity in their homes, the new boom is also leading people to take out risky lines of credit known as title loans.

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U.S. Chamber of Commerce Pushes Priorities in Congress

Congress roaches-2013

And this is not a surprised to me..Chamber of Commerce are in line with the banks, corporations, lobbyists, special interest groups, etc. to push their priorities in the next Congress.

WASHINGTON–The U.S. Chamber of Commerce flexed its muscle in the midterm election, winning 14 of 15 Republican primaries in which it was involved and helping the GOP recapture the Senate. Now it wants the Republican majority in Congress to get to work.

Chamber Chief Executive Tom Donohue said in an interview that the GOP has two years to enact “a vigorous program aimed at meeting the needs of the American people” or risk losing their majority. The Chamber wants Congress to act on business priorities such as an immigration overhaul, transportation funding, tax breaks and trade agreements.

Mr. Donohue warned lawmakers to move beyond intraparty skirmishes and partisan bickering that paralyzed the last Congress, hinting that his group might look to oust lawmakers who try to derail the legislative process.

The Chamber played a central role in the midterm campaigns, spending more than $70 million, according to an official. After backing a number of losing candidates in 2012, the goal for the group–and the Republican party–in 2014 was to nominate candidates with the best prospects of winning a general election, and an aptitude to govern once they arrived in Washington.

“We had candidates who were fundamentally more interested in turning over the apple cart than they were in governing,” Mr. Donohue said of the congressional elections in 2010 and 2012.

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