I posted two videos recapping the Bernanke speech this morning in Jackson Hole, WY in interviews with John Makin of American Enterprise Institute and Ethan Harris of Lehman Brothers since no cameras were allowed.
Video Part 1 - Interview with John Makin of American Enterprise Institute
Video Part 2 - Reaction with Ethan Harris of Lehman Brothers
Bernanke’s new mortgage rules are devoid of any real protection from bad mortgage originators since they conveniently skipped regulating yield spread premiums. The new rules apply to all mortgage lenders and therein lies the rub. If the Fed wanted to reign in mortgage broker yield spread premiums they’d also have to address bank service release premiums.
Today Ben Bernanke, the Federal Reserve Chairman, spoke addressing many issues the foreclosure and mortgage crisis are causing. Mr. Bernanke seems worried, at least ostensibly, the current or a possible future crisis could cause entire “financial markets” to grind to a halt.
The housing crash currently in it’s infancy will soon grow up into an economy killing monster that the Federal Reserve has no weapon strong enough to defeat. A housing crash is unlike a stock market crash in that there is no easy way out.
Let’s take a walk back in time to the tech stock crash just 8 years ago and compare it to a housing crash.
The Fed rate cut this week came from and emergency meeting when the Dow futures were down almost 500 points. The rate cut came just in the nick of time stemming a stock market crash…or so we’re told.
Yes…at least that was how it was reported in the media… a crash as bad as Black Monday two decades ago…and we were 60 minutes away. Tick- Tock…
Yesterday Merrill Lynch announced it’s first quarterly loss in 6 years with the excuse their subprime mortgage exposure cost them $7.9 Billion, $3 Billion more than expected - marking Merrill’s gut-punch as the “Worst Hit” taken by a financial company from the subprime mortgage meltdown.
The FTC this week announced a “crack down” on mortgage advertisers who use deceptive language in there solicitations. This comes on the heels of a statement earlier in the summer by Federal Reserve Chairman, Ben Bernanke, that the Fed plans to make changes to federal rules on mortgage marketing by the end of the year. This action and announcement seems “consumer friendly” and all, but it really is just…too little, too late.
Remember this date: August 3rd, 2007. This is the day Jim Cramer melted down right along with the subprime home mortgage market and Bear Stearns. I wrote an article about a month ago on the Bear Stearns implosion due to subprime home mortgage exposure, forecasting their demise, and here it is.
On July 19th, Fed Chairman Bernanke testified before the Senate Banking, Housing and Urban Affairs chaired by Senator Dodd. In the Q and A portion of his testimony, Senator Carper asks Mr. Bernanke about the modernization of the FHA mortgage program. FHA mortgage programs have lost ground to more “adaptive” mortgage programs in the last few years. So much so, they have nearly fallen into obscurity. I wrote an article about a month ago if you’d like a refresher on the FHA home mortgage demise.
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