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Paulson Urges Stronger Mortgage Oversight
by
findingDulcinea Staff
U.S. Treasury Secretary Henry Paulson urges stronger oversight of the mortgage industry in order to avoid future situations like the current mortgage crisis.
30-Second Summary
Yesterday, Paulson outlined a number of rules and regulations developed by the president’s Working Group on Financial Markets aimed at preventing future mortgage crises like the one currently affecting the nation.
Paulson said that the group has been reviewing policy issues “to help reduce the likelihood that mistakes of the past are repeated,” Forbes reports.
“Regulation needs to catch up with innovation and help restore investor confidence but not go so far as to create new problems, make our markets less efficient or cut off credit to those who need it," Paulson said.
Paulson’s announcement comes as the U.S. dollar reaches new lows, falling below 100 yen for the first time since 1995 yesterday, and just after a Carlyle Group fund defaulted on about $16.6 billion of debt, causing “turmoil in financial markets,” reports Bloomberg.
Paulson said that the group has been reviewing policy issues “to help reduce the likelihood that mistakes of the past are repeated,” Forbes reports.
“Regulation needs to catch up with innovation and help restore investor confidence but not go so far as to create new problems, make our markets less efficient or cut off credit to those who need it," Paulson said.
Paulson’s announcement comes as the U.S. dollar reaches new lows, falling below 100 yen for the first time since 1995 yesterday, and just after a Carlyle Group fund defaulted on about $16.6 billion of debt, causing “turmoil in financial markets,” reports Bloomberg.
Headline Links: Paulson urges stronger mortgage oversight as the dollar weakens
Paulson outlined a number of rules and regulations developed by the president’s working group that will hopefully serve to prevent future mortgage crises. His speech included recommendations for credit rating agencies, lenders and banks: “We are encouraging financial institutions to continue to strengthen balance sheets by raising capital and revisiting dividend policies; we need those institutions to continue to lend and facilitate economic growth," he said.
Source: Forbes
Some of Paulson’s speech is available from the Associated Press’s channel on YouTube.
Source: YouTube
Paulson’s message came after the dollar fell to below 100 yen for the first time in 12 years. Yesterday, the dollar also reached a record low against the euro, following news that a Carlyle Group fund had defaulted on about $16 billion of debt. President Bush said on March 12 that the dollar’s drop was not “good tidings.” The dollar’s tumble also “drove gold to a record above $1,000 an ounce as investors sought shelter in the metal,” Bloomberg reports.
Source: Bloomberg
Opinion & Analysis: Do foreclosures have a positive side?
Perhaps the mortgage crisis provides its own solution, writes Robert J. Samuelson in The Atlanta Journal-Constitution. The onslaught of “somber reports” is “actually good news, because lower home prices are the only real solution to the housing collapse. The sooner the prices fall, the better.” Samuelson suggests that although they are difficult for affected families, foreclosures and falling home prices may bring prices back to a level where “housing can escape its present stagnation.”
Source: The Atlanta Journal Constitution
Slate Magazine’s Steven E. Landsburg points out that a foreclosure is unhappy for one family, but good news for another: “None of these foreclosed houses is going to disappear. After a foreclosure, one family moves out, and another moves in. We see the sad faces of the people moving out, but we don't as often see the happy faces of the new homeowners moving in. Nevertheless, those happy faces are out there, and we should not discount them.”
Source: Slate Magazine
Related Topic: Countrywide mortgage applications fall sharply
Countrywide Financial Corp., the nation’s biggest mortgage lender, said Thursday that their mortgage applications had fallen sharply to $1.9 billion in February, down from $2.6 billion in January. The lending group recently agreed to be acquired by Bank of America after losing $704 million in 2007.
Source: Reuters
Background: The mortgage crisis
The sub-prime crisis has put 8.8 million homeowners in over their head. Americans haven’t been in this kind of debt since the Depression. With so many homeowners in trouble, the Bush administration and Congress are considering government-funded emergency measures, such as a federal mortgage guarantee for troubled borrowers.
Source: findingDulcinea
FindingDulcinea also provides a Web guide to home buying, including advice on mortgages and links to reliable lenders.
Source: findingDulcinea
Federal Reserve Chair Alan Greenspan explained what he believes to be the roots of the mortgage crisis in a December 2007 Wall Street Journal op-ed. The crisis, he writes, was inevitable. “If it had not been triggered by the mispricing of securitized subprime mortgages, it would have been produced by eruptions in some other market. As I have noted elsewhere, history has not dealt kindly with protracted periods of low risk premiums,” Greenspan says.
Source: Wall Street Journal
Reference: The Working Group on Financial Markets
President Reagan established the Working Group on Financial Markets on March 18, 1988, in response to the financial events of Oct. 19, 1987, or “Black Monday.” According to Reagan’s executive order, which is available through the National Archives Web site, “The Working Group shall consult, as appropriate, with representatives of the various exchanges, clearinghouses, self-regulatory bodies, and with major market participants to determine private sector solutions wherever possible.”
Source: The National Archives
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