Do Financial Markets Need More Government Regulation?

[Retire Soon]

Federal Housing Finance Agency

New legislation passed by the House and expected to be approved by the Senate will establish the "Federal Housing Finance Agency," which will regulate Fannie Mae, Freddie Mac and the Federal Home Loan Bank Board. Some major regulatory changes will be: 1) The regulator will be able to raise capital requirements for Fannie & Freddie 2) Procedures for placing the companies in Receivership have been established 3) Executive pay may be restricted 4) A slice of company profits will be directed into a fund to enable low-income people to purchase homes 5) The maximum loan amount in a high cost area will be set at $625,500 on January 1, down from the temporary current maximum loan amount of $729,750. Needless to say, this is a major change in strategy from the Reagan years when the direction of the country was moving toward less regulation and smaller government.

 

[ziggy29]

5) The maximum loan amount in a high cost area will be set at $625,500 on January 1, down from the temporary current maximum loan amount of $729,750. Needless to say, this is a major change in strategy from the Reagan years when the direction of the country was moving toward less regulation and smaller government.

Wow. That could cause some serious weakness on housing in the $700-900K range as it could make it harder to get financing. Of course, many of those are already in high-priced areas where the bubble is rapidly deflating already.

 

[al_bundy]

New legislation passed by the House and expected to be approved by the Senate will establish the "Federal Housing Finance Agency," which will regulate Fannie Mae, Freddie Mac and the Federal Home Loan Bank Board. Some major regulatory changes will be: 1) The regulator will be able to raise capital requirements for Fannie & Freddie 2) Procedures for placing the companies in Receivership have been established 3) Executive pay may be restricted 4) A slice of company profits will be directed into a fund to enable low-income people to purchase homes 5) The maximum loan amount in a high cost area will be set at $625,500 on January 1, down from the temporary current maximum loan amount of $729,750. Needless to say, this is a major change in strategy from the Reagan years when the direction of the country was moving toward less regulation and smaller government.

if you don't want to be regulated, don't run to the government begging for a bailout. seems all bankers who stonewalled regulation a few years ago because the free market was supposed to make it work are now begging everyone from the fed to congress to bail them out from all the bad loans they made

this was the reason for the increased regulation from the 1930s to the 1970's. people took on too much risk and then it blew up and hurt a lot of people who lost their life savings in the bank runs of The Great Depression