FSOC

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.