NYT finds that big banks are not rushing to make mortgage loans
Clue.
In a Business Section editorial masquerading on the first page as a news article, the Times points out that banks are not making large amounts of first mortgage loans to consumers. "The big banks are strong enough to provide credit to borrowers" opines the Times. This from the newspaper with the cozy relationship with neat Preet Bharara at Justice who always manages to do a media front run on the latest lawsuits and essentially government blackmail of big banks and their mortgage operations that is ongoing.
The Times points out that banks now provide new mortgage loans only to those with "pristine credit". That generally means at least a 15% down payment, often 20% or even more, and a credit score over the 700 area (sub-prime is below 620 and banks for good reason don't want to be too close to that). Nit-picks like having a job and verified salary stats and asset values are also in vogue now. Who can quibble with these requirements after the 2008-2009 mortgage disaster. Who can question big banks who were begged by the government to take over banks in trouble and are now being sued by neat Preet for mortgage banking actions of those acquired going back to as early as 2000, long before the acquirers had any control whatsoever. Please note the Times supports Preet in everything that he throws at the banks, as does Obama.
Here are two other factors to consider. There are considerable efforts underway, led in no small part by Senators Elizabeth Warren and Carl Levin, to significantly raise required capital levels for the big banks. At the same time the belabored securitization markets are just beginning to breathe slightly with these higher quality mortgage loans being originated and due to back to basics structures. Banks do not want to build their balance sheets with mortgage loans. They need a diversified loan book and not one that grows due to mortgage loan growth. Ask WAMU about that if you want.
Mel Watt, the new head of the Federal Housing Agency that supposedly manages Fannie Mae and Freddie Mac, is now said to be looking at ways for these agencies to "guarantee a wider swath of mortgages". That should be little consolation to the banks who have been sued by those government agencies controlled by Congress, these supposed mortgage experts filing their suits four years after the crisis claiming they were duped by the banks. Clinton's White House and HUD as run by Andrew Cuomo, and a Congress influenced by the inimitable Barney Frank, helped bake the cake that led that ultimately led to the disaster with the required weakening of credit standards at the agencies to benefit low income buyers. Of course Wall Street put the icing on the cake, lots of it, with its complex securities and what was in some firms widespread deception. Main Street participated too, as corrupt brokers fed crappy loans to overly eager banks.
Why would big banks fall for Watt's proposed trick again? To reward Obama, for what one might ask? One could suggest that banks will cooperate with constructive ideas for expansion if they are targeted, limited, and sound. It would be a mistake to fully trust the government on anything again. The banks will just try to lay low, run good businesses, and make sound loans.
Sounds good here.
In a Business Section editorial masquerading on the first page as a news article, the Times points out that banks are not making large amounts of first mortgage loans to consumers. "The big banks are strong enough to provide credit to borrowers" opines the Times. This from the newspaper with the cozy relationship with neat Preet Bharara at Justice who always manages to do a media front run on the latest lawsuits and essentially government blackmail of big banks and their mortgage operations that is ongoing.
The Times points out that banks now provide new mortgage loans only to those with "pristine credit". That generally means at least a 15% down payment, often 20% or even more, and a credit score over the 700 area (sub-prime is below 620 and banks for good reason don't want to be too close to that). Nit-picks like having a job and verified salary stats and asset values are also in vogue now. Who can quibble with these requirements after the 2008-2009 mortgage disaster. Who can question big banks who were begged by the government to take over banks in trouble and are now being sued by neat Preet for mortgage banking actions of those acquired going back to as early as 2000, long before the acquirers had any control whatsoever. Please note the Times supports Preet in everything that he throws at the banks, as does Obama.
Here are two other factors to consider. There are considerable efforts underway, led in no small part by Senators Elizabeth Warren and Carl Levin, to significantly raise required capital levels for the big banks. At the same time the belabored securitization markets are just beginning to breathe slightly with these higher quality mortgage loans being originated and due to back to basics structures. Banks do not want to build their balance sheets with mortgage loans. They need a diversified loan book and not one that grows due to mortgage loan growth. Ask WAMU about that if you want.
Mel Watt, the new head of the Federal Housing Agency that supposedly manages Fannie Mae and Freddie Mac, is now said to be looking at ways for these agencies to "guarantee a wider swath of mortgages". That should be little consolation to the banks who have been sued by those government agencies controlled by Congress, these supposed mortgage experts filing their suits four years after the crisis claiming they were duped by the banks. Clinton's White House and HUD as run by Andrew Cuomo, and a Congress influenced by the inimitable Barney Frank, helped bake the cake that led that ultimately led to the disaster with the required weakening of credit standards at the agencies to benefit low income buyers. Of course Wall Street put the icing on the cake, lots of it, with its complex securities and what was in some firms widespread deception. Main Street participated too, as corrupt brokers fed crappy loans to overly eager banks.
Why would big banks fall for Watt's proposed trick again? To reward Obama, for what one might ask? One could suggest that banks will cooperate with constructive ideas for expansion if they are targeted, limited, and sound. It would be a mistake to fully trust the government on anything again. The banks will just try to lay low, run good businesses, and make sound loans.
Sounds good here.
posted by John Borden at 4:32 PM
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