ST. LOUIS - (01/18/05) -- The Federal Reserve continued itssalvo against Fannie Mae and Freddie Mac last week with thepresident of the Federal Reserve Bank of St. Louis calling for theprivatization of the two government sponsored enterprises. Theremarks by William Poole cam the day after the Fed releasedseparate studies showing the government benefits provided thesecondary mortgage market giants mainly benefited shareholders andnot homeowners; and that market making activity by the two didlittle to calm the huge mortgage securities markets. "My preferredstrategy would be to transition these firms to fully privatestatus, and have them more in the situation of GE Capital, which isnot regulated by a federal agency," said the St. Louis FedPresident. Poole said he would raise the companies' capitalrequirements to the equivalent of banks' and then end thecompanies' ties to government. Markets would then be the arbitersof adequate capital for the companies. "I would like the market tomake that judgment, quite frankly," Poole said. The Fed's assaulton Fannie and Freddie comes as Congress is preparing to open debateon a new regulatory scheme for the secondary mortgage market,including another government sponsored housing enterprise, theFederal Home Loan Bank System.
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The Cleveland-based bank is projecting steady growth in net interest income even as credit losses remain manageable. But Chairman and CEO Chris Gorman also said that he thinks a recession is likely.
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The first-quarter increase involved commercial real estate loans, including some problematic multifamily loans and an office credit, but none of the criticized loans were to consumers, officials at the Dallas company say. Further CRE deterioration is anticipated.
April 18 -
The Detroit-based company is exploring ways to make more consumer auto loans without running afoul of stricter capital standards that are expected from the Federal Reserve. Possible approaches include more securitizations and the use of credit risk transfers.
April 18 -
The House Financial Services Committee also sent to the full House two bipartisan bills, including one that would prevent large banks from opting out of having to recognize Accumulated Other Comprehensive Income in regulatory capital.
April 18 -
Charge-offs and nonperforming loans rose at the Georgia bank in the first quarter. But it blamed the problem on one large client and said the matter has been resolved.
April 18 -
Amid healthy first-quarter loan growth and improving credit quality, Discover Financial Services slashed its profits by $800 million to offset remediation costs from a 16-year period when it overcharged certain merchants.
April 18