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Housing Stimulus No. 4,080: The Obama administration is cutting FHA mortgage insurance premiums on “streamlined” refinancings — those that replace FHA loans in good standing and thus don’t require appraisals, credit checks or income verification. The cuts could save borrowers $1,000 a year, not counting the savings from refinancing into a lower interest rate. “It’s like another tax cut that will put more money into people’s pockets,” the president said. The catch: The lower fees only apply to refis of FHA loans originated before June 2009. This excludes an estimated two-thirds of the FHA’s portfolio. But unlike the mass refi plan Obama announced in his State of the Union address, this comparatively modest one doesn’t require legislation. Wall Street Journal, New York Times, Washington Post

Wall Street Journal

The “Ahead of the Tape” column considers the regulatory risks to H&R Block’s financial services business. Although the tax preparer can no longer arrange refund anticipation loans, it continues to offer the prepaid Emerald card, which is loaded with the customer’s refund. But if the Treasury Department revives a bungled effort to steer refunds to low-cost debit cards, “that could undercut H&R Block’s own cards,” the column says. Also, the CFPB’s planned crackdown on payday lenders, some of which offer tax-filing services, “could spill over to services offered by the likes of H&R Block.”

Financial Times

The FT takes a closer look at the British Bankers Association’s rethinking of the way LIBOR is calculated. The article notes that in addition to the worldwide government investigations and private lawsuits over alleged manipulation of the rate index, LIBOR faces competition — the overnight indexed swap rate, or OIS, has become the benchmark of choice for certain derivatives, for example. One idea for improving the survey used to produce LIBOR rates is to “remove the stigma” for banks that report higher hypothetical borrowing costs than their peers, the FT says. “Rather than asking the bank what rate it could borrow at, [analysts] suggest, the banks should be asked what rate two banks would charge each other.” That would depend on which two banks we’re talking about, wouldn’t it? Another idea that’s been floated (so to speak) is setting tighter controls on which employee at a bank sets its estimate. Incidentally, after we said in yesterday’s Scan that the British Bankers Association “publishes” LIBOR, the trade group very politely pointed out to us that it farms out the work of calculating and releasing the figures to Thomson Reuters. (According to a video embedded in today’s FT story, that company performs the calculations “at an undisclosed location” in the U.K. Perhaps next to MI6 headquarters?) “We put in place the governance mechanism” for the daily survey, but the contracting arrangement “removes us from direct involvement,” a BBA spokesman tells us. Duly noted.


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