The huge success that GMAC-RFC has experienced in the subprime securitization market has not been lost on Wall Street. Two years ago Lehman Bros. backed a start-up conduit called Finance America, and now Merrill Lynch is expanding its efforts with a unit called "specialty underwriting and residential finance" or SURF. Merrill, not surprisingly, has tapped GMAC-RFC for talent, hiring away GMAC-RFC's Jamie Willeck and Ranae Lacey. When Donaldson Lufkin & Jenrette launched its subprime conduit in late 2000 it hired away RFC's managing director, Jeff Detweiler...
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Was FM Watch and its backers the big winners or losers in this past week's installment of "GSE Wars"? Yes, Fannie Mae and Freddie Mac agreed to a new era of financial "glasnost" by agreeing to reveal, on a regular basis, more information about insider stock sales and their derivative portfolios. But General Electric, a key backer of FM Watch, saw its stock price get smacked around after a well regarded bond fund manager, Bill Gross of Pacific Investment Management Co., criticized GE for its own less-than-full disclosure practices and its heavy debt burden. FM Watch, as you might recall, has levied similar criticisms on the GSEs...
Rep. Chris Shays, R., Conn., introduced legislation that would require the GSEs to register their securities with the Securities and Exchange Commission. (GE is based in Connecticut.) An industry source said GE lobbyist Kate Fulton has been active on Capital Hill, lobbying Shays to introduce the bill. However, chance of passage this year looks nil...
Meanwhile GE, for the first time ever, made public the annual earnings of its GE Mortgage Insurance unit ( Tom Mann of GEMI is a key FM Watch player). GE had solid earnings of $395 million last year, but its growth rate was 8%, the weakest among the top four MIs. GE, by the way, has been expanding its presence in the subprime market -- not in the U.S. but overseas where regulation is much friendlier to lenders...
Keep in mind that all this talk about the riskiness of derivatives has reflected poorly on J.P. Morgan Chase, which holds $23 trillion in derivative contracts compared to Fannie and Freddie's $1.4 trillion. Moral of this story? People who live in glass houses might want to be careful where they throw their stones...
The Office of Thrift Supervision has begun lopping off staff. It is anticipated that it may chop as much as 20% of its 1,167 employees...
The FDIC is in the process of "downsizing" as well...
Former FDIC chairman Donna Tanoue has been named vice chairman of financial services for Bank of Hawaii. Based in Honolulu, BoH is the nation's 69th largest residential lender...
And finally, it's not the Baseball Hall of Fame or the Rock 'n' Roll Hall of Fame, but HUD deputy secretary Alphonso Jackson has been inducted into the Texas chapter of the National Association of Housing and Redevelopment Officials (NAHRO) Hall of Fame...
