FSOC

The Financial Stability Oversight Council's annual report underscores mounting challenges in commercial real estate, escalating cyber threats, and regulatory gaps in third-party services and stablecoins, urging stronger oversight and legislative action.

The incoming Trump administration is expected to prioritize an activities-based oversight approach to nonbank entities, just as the Biden administration has. It may also leave its designation power intact, but unused.

Some of the points in last week's Financial Stability Oversight Council report on mortgage servicing overstate potential risk posed by IMBs, writes the Executive Director of the Community Home Lenders of America.

Sen. Jack Reed, D-R.I., also brought up concerns with synthetic risk transfers and so-called shadow banks, which he said are shifting risk from outside the banking system into private credit markets.

Housing finance organizations argue that these companies are relatively small, and allowing other agencies to be the first line of defense has worked.

The banking industry and consumer advocates praised the Financial Stability Oversight Council's move to reinvigorate its authority to regulate nonbanks. But that effort is going to take time and is guaranteed to face political headwinds.

The Financial Stability Oversight Council issued a pair of proposals that would enhance transparency into how the council designated nonbank firms and activities as systemically risky and simplify its process for designations.

The Financial Stability Oversight Council has struggled to find its footing since its creation in Dodd-Frank. The Treasury secretary has signaled a more aggressive role for the panel, including reviving its authority to target nonbank behemoths.

Federal Reserve officials left their benchmark interest rate unchanged near zero as they flagged a moderating U.S. recovery and reiterated a pledge to use all available tools to support the economy during the coronavirus pandemic.

The Financial Stability Oversight Council could determine that a broad range of mortgage companies should be subject to “heightened prudential standards,” said Andrew Olmem, a partner at Mayer Brown and a former senior economic adviser to the White House.

The economic fallout from COVID-19 has highlighted systemic concerns about commercial real estate exposure, business debt and short-term wholesale funding, the Financial Stability Oversight Council said in an annual report.

FSOC’s statement on the FHFA’s proposed capital rule raises questions for market participants trying to anticipate a post-conservatorship secondary mortgage market, should the incoming administration go through with the GSEs’ exit from governmental control.

The Financial Stability Oversight Council said the mortgage giants may need a bigger capital cushion than their regulator has proposed, but stopped short of designating them as “systemically important financial institutions.”

The council created by the Dodd-Frank Act to identify systemic risks launched a review of the market as part of an activities-based approach that shifts focus away from targeting individual firms.

Years after criticizing the Dodd-Frank Act, the Democratic presidential candidate and former New York City Mayor Michael Bloomberg is now taking a page from the Elizabeth Warren playbook.

The administration proposed to end the housing trust funds now financed by Fannie Mae and Freddie Mac, and to subject numerous agencies to the congressional appropriations process, among other things.

The fact that the more operationally skilled nonbanks have come to specialize in government mortgages is hardly surprising if you assess the cost to originate and service these loans.

A report from the Financial Stability Oversight Council cited a bigger share of originations and servicing by nonbanks as a potential vulnerability in the financial system.

A report from the Financial Stability Oversight Council cited a bigger share of originations and servicing by nonbanks as a potential vulnerability in the financial system.

Financial regulators have been put on notice about the risk of an economically damaging cash crunch in the home mortgage market. Behind the concern: the rapid growth of shadow banks in the origination and servicing of home loans.