Keeping your credit debt finance problems into perspective...Greenspans remarks on the mortgage industry.
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Hello,
I always find it interesting to see what the Feds are up to especially when it involves the economy. This latest report views that a limit on the big players in the mortgage industry needs to be looked at regarding the their holdings and basically not get caught with their pants down in the distant future regarding loans they buy.....check it out.
Thu Feb 17, 4:59 PM ET Business - AP
Fed Suggests Limits on Mortgage Portfolios
By JEANNINE AVERSA, AP Economics Writer
WASHINGTON - Federal Reserve (news - web sites) Chairman Alan Greenspan (news - web sites) suggested Thursday that Congress consider placing limits on the massive portfolios held by the mortgage companies Fannie Mae and Freddie Mac.
Greenspan told the House Financial Services Committee that he did not see an immediate risk to the U.S. financial system from the companies' multibillion portfolio holdings.
But that could change, he said.
"If they continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate-risk aversion, they potentially create ever growing potential systemic risks down the road," Greenspan said.
Fannie Mae and Freddie Mac pump money into the home mortgage market by buying and guaranteeing repayment of billions of dollars of home loans each year from banks and other lenders. The companies then bundle the loans into securities that are resold to investors. The companies' stock and debt are held by investors around the world.
The portfolios contain mortgages and other investments.
Because there is no risk at the moment, Greenspan said, "It's the time, therefore, to act, to do something to fend off problems, which in my judgment, seem almost inevitable as we look forward into the remainder of this decade." He suggested the possibility of gradually limiting the companies' portfolio holdings.
Greenspan's comments came in response to questions raised by lawmakers, including Rep. Richard Baker (news, bio, voting record), R-La., who would like to see the two companies reined in.
The Prospects of legislation giving the government a tighter hand over Fannie Mae and Freddie Mac appear strong this year. Such legislation has gained momentum in the wake of an accounting crisis at Fannie Mae, which is facing a $9 billion restatement of earnings.
Separately, Greenspan said that while housing prices continue to rise sharply in some markets, he did not foresee a nationwide danger.
"I think we're running into certain problems in certain localized areas. We do have characteristics of bubbles in certain areas but not, as best I can judge, nationwide," he said. "I don't expect that we will run into anything resembling a collapsing bubble."
Thanks for viewing.
http://www.101-credit-debt-finance.com
Hello,
I always find it interesting to see what the Feds are up to especially when it involves the economy. This latest report views that a limit on the big players in the mortgage industry needs to be looked at regarding the their holdings and basically not get caught with their pants down in the distant future regarding loans they buy.....check it out.
Thu Feb 17, 4:59 PM ET Business - AP
Fed Suggests Limits on Mortgage Portfolios
By JEANNINE AVERSA, AP Economics Writer
WASHINGTON - Federal Reserve (news - web sites) Chairman Alan Greenspan (news - web sites) suggested Thursday that Congress consider placing limits on the massive portfolios held by the mortgage companies Fannie Mae and Freddie Mac.
Greenspan told the House Financial Services Committee that he did not see an immediate risk to the U.S. financial system from the companies' multibillion portfolio holdings.
But that could change, he said.
"If they continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate-risk aversion, they potentially create ever growing potential systemic risks down the road," Greenspan said.
Fannie Mae and Freddie Mac pump money into the home mortgage market by buying and guaranteeing repayment of billions of dollars of home loans each year from banks and other lenders. The companies then bundle the loans into securities that are resold to investors. The companies' stock and debt are held by investors around the world.
The portfolios contain mortgages and other investments.
Because there is no risk at the moment, Greenspan said, "It's the time, therefore, to act, to do something to fend off problems, which in my judgment, seem almost inevitable as we look forward into the remainder of this decade." He suggested the possibility of gradually limiting the companies' portfolio holdings.
Greenspan's comments came in response to questions raised by lawmakers, including Rep. Richard Baker (news, bio, voting record), R-La., who would like to see the two companies reined in.
The Prospects of legislation giving the government a tighter hand over Fannie Mae and Freddie Mac appear strong this year. Such legislation has gained momentum in the wake of an accounting crisis at Fannie Mae, which is facing a $9 billion restatement of earnings.
Separately, Greenspan said that while housing prices continue to rise sharply in some markets, he did not foresee a nationwide danger.
"I think we're running into certain problems in certain localized areas. We do have characteristics of bubbles in certain areas but not, as best I can judge, nationwide," he said. "I don't expect that we will run into anything resembling a collapsing bubble."
Thanks for viewing.
posted by gotoguy | 9:09 PM
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