Department of Housing and Urban Development Secretary Shaun Donovan said the Obama administration doesn’t plan to introduce Fannie Mae or Freddie Mac reform “any time soon.”
In coverage by HousingWire Thursday, reporter Jon Prior states that the news, which comes as no surprise, shows that meaningful financial reform will not come before the elections.
While one could argue the political angle further, the writing on the wall from the Obama administration is clear: Sort out the banks before the mortgage industry.
This morning Donna Borak reports in the American Banker, “Sens. Jeff Merkley and Carl Levin on Thursday urged regulators not to delay writing a strong rule that would ban banks from proprietary trading.” This is in regards to the comparatively, and politically, popular Volcker Rule.
Proprietary trading played a strong role in the runup to the recession, but should it take priority over housing finance?
Apparently, I’ve underestimated the impact the inner workings of banks have on the economy at large. After all, how big is the mortgage market in comparison to proprietary trading today? In the post-Dodd-Frank world, I believed that mortgage finance reform should take precedent.
Washington clearly does not agree.
The outcome of Friday’s GDP report shows “the wave of foreclosures should be past its peak a year from now,” said Scott Hoyt, senior director of consumer economics, Moody’s Analytics.
I’m going to take all this in a positive way. Apparently, leaving mortgage finance to its own devices is favorable to trying to foster the development of a private mortgage market.
