Skip to comments.Banks firing at regs, See housing crimp
Posted on 05/22/2010 3:20:59 AM PDT by Scanian
A day after the Senate passed its version of a sweeping financial overhaul bill, the banking industry fired a warning shot at Washington -- and anyone looking to buy a house -- that rules restricting banks' use of derivatives may crimp an already vulnerable housing recovery.
Strongly hinting that average Joes could become collateral damage as a result of Congress' hard-line approach to regulating banks, Wall Street warned that the cost of home ownership could surge as a result of rules that prevent banks from using a form of derivatives called swaps, which help banks hedge against interest-rate risk and keep a lid on interest rates.
In the current form of the reform bill passed by a 59-39 Senate vote Thursday, banks would be precluded from using the complex derivatives contracts to protect themselves against volatility in their loan portfolios.
The result is that mortgage rates could surge as much as 3.5 percentage points from current rates, which, for a $200,000 mortgage, could result in another $10,000 getting tacked on to the cost of the loan, according to the Securities Industry Financial Markets Association, a bank lobbying group.
(Excerpt) Read more at nypost.com ...
Mortgage derivatives are an affront as is this legislation. Go after Fannie and Freddy and Fanny Franks.
In a normal world, yes. But their lawyers is:
David Gregory's wife, so don't go expecting MSM to discuss
ANYTHING but the weather.
and Chris Dodd & Barney Frank!
Another huge mess that will create all sorts of unintended consquences.
Oh but we’ll never have another recession again. Hahahaha Maybe we’ll just have one permanent recession - what else can be done to stretch out the misery? Oh yes, next lets drive up the cost of energy and force everyone into a union. Yeah, those are pretty good nails for the coffin. Happy days are here again!
Good. We have millions of empty houses already - let’s fill them first. We have MUCH MORE important uses for our capital than building more houses - such as building more power plants.
The idea that the only way to recover the economy is to repeat what got us into this mess is crazy - and if this bill stops that madness (even if that wasn’t the intent), then, maybe, we can seriously start a recovery.
“The result is that mortgage rates could surge as much as 3.5 percentage points from current rates, which, for a $200,000 mortgage, could result in another $10,000 getting tacked on to the cost of the loan,”
I don’t have a financial calculator handy but that ten thousand dollar figure is ridiculous, it would be closer to ten thousand a year than ten thousand total as it seems to say. Just another example of carelessness, you have to go over everything with a fine toothed comb to try to figure out what is really meant.
Our current crop of “journalists” couldn’t have gotten past a seventh grade English test back in the fifties.
|We have MUCH MORE important uses for our capital than building more houses - such as building more power plants.
Hi there. Adam Smith sent me to tell you that you should let the market figure out where the capital should go, instead of joining the liberals in pretending that you know best.
Cool post. The markets were determining the flow of capital - it was Fannie and Freddie, with the banks making it easier.
Ideally, we’d get rid of those clowns and we’d also try to deregulate banks and get rid of housing laws - and housing would find its place - WAYYY down in priority for capital.
But until then, ANYTHING that slows down housing can only HELP this country - even if not much.