| News on the capital markets, securities and financial industry |  |
- Bush's mortgage plan expected to reduce foreclosures
At the White House yesterday, the Bush administration unveiled its plan to address the subprime-mortgage crisis. Marc Lackritz, president and CEO of SIFMA, commended "the use of all options available to borrowers, including refinancing, loan modification, borrower counseling and loss mitigation strategies." Tom Deutsch, deputy director of the American Securitization Forum, an affiliate of SIFMA, said: "This
is not a government bailout program. This is an industry-led framework for providing the best market standards and practices." The Wall Street Journal (tiered subscription model)
(12/7), InvestmentNews (free registration)
(12/6), Financial Times (free content)
(12/7), NYTimes.com
(12/7), The Washington Post
(12/7)       
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Weighing the effect of the freeze on the bond market: The Bush administration's plan to hold interest rates of some subprime mortgages steady has caused some to speculate on the effect it will have on the bond market. SIFMA's affiliate, the American Securitization
Forum, which helped federal regulators pen the deal, said it believed that servicers would continue to act in the best interest of bond investors because foreclosures would cause greater overall losses. Bloomberg
(12/7)
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Commentary: Mortgage plan not perfect, but necessary: In this Wall Street Journal commentary, Treasury Secretary Henry Paulson discusses the events that led to the meltdown in the subprime-mortgage market and the subsequent plan to stem the tide of foreclosures.
Paulson says that it isn't a perfect fix to the complex issues facing the housing market, but that it will be closely monitored and issues dealt with as they arise. The Wall Street Journal (tiered subscription model)
(12/7)
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- Fed governor expects mortgage-delinquency rates to climb
Testifying before a House Financial Services Committee hearing, Federal Reserve Governor Randall Kroszner said the Fed was anticipating a higher rate of delinquency on subprime mortgages as many borrowers will face a reset to their interest rate next year. "We expect the substantial payment increases often experienced at the first interest-rate reset to result in higher delinquencies," Kroszner said.  Bloomberg1/ClipSyndicate
(12/6), Bloomberg
(12/6)
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| Industry News | | |
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- OECD predicts global economy will slow in 2008
Growth in the world's economy will slow to its lowest rate in five years, according to the Organization for Economic Cooperation and Development. The think tank cited turmoil in the financial markets, an increase in commodity prices and the cooling housing markets in making the forecast. The OECD, in its twice-yearly report, warned that China's economy may be overheating. It also recommended that the Federal Reserve, the European Central Bank and the Bank of Japan leave interest rates unchanged. Financial Times (free content)
(12/6), The Wall Street Journal (tiered subscription model)
(12/7)
- Cuomo takes a cue from Spitzer and tackles Wall Street
New York Attorney General Andrew M. Cuomo, in a move reminiscent of his predecessor, Eliot Spitzer, is taking on Wall Street to get to the bottom of the subprime-mortgage meltdown. While the two crusades have much in common, there is one critical difference, and that has to do with available information and transparency. NYTimes.com
(12/7)
- Foreign small-cap funds sidestep subprime turmoil
While small-cap value managers in the U.S. are suffering from exposure to struggling financial stocks, foreign managers are benefiting from fewer ties to the subprime mess. "In the U.S., financials are really dragging down small-cap funds," said Eric Bjorgen of Leuthold Core Investment Fund. "But we're not seeing that kind of a performance lag in foreign funds holding a lot of financial-services providers. There's a huge difference right now between financial sectors in the U.S. and overseas." MarketWatch
(12/6)
- JPMorgan CEO says turmoil will result in bank mergers
Jamie Dimon, chairman and chief executive officer of JPMorgan Chase, told a German newspaper that he is anticipating a series of bank mergers in the U.S. and Germany. "Companies recognize after such a collapse that they need more weight, more capital and access to good, long-term financing and the people there say to themselves: 'Now it is time to do something,'" Dimon said. Reuters
(12/7)
| Regulatory Roundup | | |
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- SEC charges former broker with selling client information
The SEC has charged a former stock broker with illegally selling the names and other confidential personal information of more than 500 of his customers to insurance agencies. Sidney Mondschein has been ordered to pay civil penalties and turn over all illegally gained profit. InvestmentNews (free registration)
(12/6)
| Legislative Update | | |
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- Legislative solution to subprime mess finds many critics
While the battle over the plan to freeze interest rates for some subprime-mortgage borrowers heats up, another proposal, which would allow judges to alter the terms of a mortgage in a bankruptcy proceeding without input from the lender, is under fire. "If a mortgage loan can be modified during bankruptcy, it will be far more difficult to originate or sell mortgages in the secondary market," says a letter from SIFMA to the Senate's Judiciary Committee. "These proposals would reduce liquidity and make it harder for Americans to obtain a new mortgage or refinance their existing mortgage, the exact opposite of what the mortgage market needs now." Forbes
(12/6)
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