Brazil
raises rate for fifth time in a row - (www.ft.com) Brazil’s central bank raised its benchmark
interest rate for the fifth time in a row on Wednesday night, bringing it close
to double digits and raising questions about how much longer the tightening
cycle has left to run. The bank increased the Selic rate by 50 basis points to
9.5 per cent amid debate about whether it plans to continue the cycle at the
next meeting in six weeks’ time, which would bring the rates to the politically
sensitive 10 per cent level. The monetary policy committee “evaluates that this
decision will contribute to set inflation into decline and ensure that this
trend persists in the upcoming year”, it said, repeating the brief statement
issued at its last meeting in August. The bank has been keen to underline the
credibility of its inflation-targeting regime after perceptions of political
interference earlier in the year.
IMF
Sees Business-Loan Losses of EU250 Billion in EU Banks - (www.bloomberg.com) Banks in Spain, Italy and Portugal face
about 250 billion euros ($338 billion) in potential losses on their business
loans over the next two years, the International Monetary Fund said. About
one-fifth of combined corporate loans is at risk of default in the three
economies, which are forecast to contract this year, according to the fund’s
Global Financial Stability Report released today. The Spanish banking system is
the only one with enough reserves to cover the losses, it said. The study is
“an illustration of the potential magnitude of corporate risks for banking
systems,” the fund said in the report. “Some banks in the stressed economies
might need to further increase provisioning to address the potential
deterioration of asset quality on their corporate loan books, which could
absorb a large portion of future bank profits.”
Icelanders
Run Out of Cash to Repay Foreign Debts: Nordic Credit - (www.bloomberg.com) The nation faces a “repayment risk of foreign
debt by private entities in the economy, who don’t have access to foreign
financial markets,” Sigridur Benediktsdottir, head of financial stability at
the Reykjavik-based central bank, said yesterday in an interview. “We view this
as being exacerbated or made worse by the fact that our current account is
actually declining.” Prime Minister Sigmundur David Gunnlaugsson has said
Iceland’s foreign exchange shortfall is “a matter of huge concern” as he tries
to scale back currency controls in place since 2008. The government’s biggest
challenge is to allow capital to flow freely without triggering a krona
sell-off that would cause Iceland’s foreign debt to spike and undermine the
nation’s economic recovery.
So
This is A Recovery: Housing Welfare Queens Oppose Rollback of Crisis Loan
Limits - (www.mortgagenewsdaily.com) Pressure appears to be building on the
Federal Housing Finance Agency's (FHFA) acting director to back down or at
least delay an intended reduction in conforming loan limits for Fannie Mae and
Freddie Mac (the GSEs). In August Edward J. DeMarco announced plans to scale
back existing limits on the size of conventional loans that can be purchased by
the GSEs. The current limit is $417,000 with exceptions for counties
deemed to have high cost housing where the limit is as high as $625,000.
DeMarco proposed a gradual reduction as one mechanism to
encourage the return of private money to the mortgage market and to reduce the
government's housing finance footprint. Industry groups began almost
immediately to question both the wisdom of a reduction and the authority of
DeMarco to take the action without congressional authority. It now
appears they have unified to press their demands and have picked up some
congressional support. On Tuesday, 15 industry groups including the National
Associations of Home Builders (NAHB), Realtors (NAR),Credit Union Associations,
and the Land Title Association, Credit Union National Association, and the Mortgage
Bankers Association sent a letter to DeMarco stating that "a
reduction of the conventional conforming loan limit to $400,000 would have
impacted nearly 154,000 borrowers in 2012, many of whom were in markets still
in recovery." The group said that many of these borrowers could not
have qualified for loans under the tighter private market standards.
"These conditions leave the American dream out of reach for many families.
Lowering the loan limits further restricts liquidity and makes mortgages more
expensive for households nationwide."
The Guarantee That Banks May Fear to Invoke - (www.nytimes.com) The mortgage
orgy that banks entered into before the financial crisis has caused them — and
their borrowers — immense pain since then. I have lost track of all the
settlements and payments. Now The American Banker newspaper is reporting that
banks may be hiding losses from their shareholders: The nation’s four
largest banks are holding $57 billion of seriously delinquent loans that
they’ve been slow to move into foreclosure over concerns that the Federal
Housing Administration, the government mortgage insurer, will refuse to cover
the losses and hit them with damages, according to industry sources. The banks
— Bank of America (BAC), Citigroup (NYSE: C), JPMorgan Chase (JPM), and Wells
Fargo (WFC) — have assured investors in the footnotes of quarterly filings that
the loans are government-insured and therefore pose no threat to their bottom
lines, even if they end up in foreclosure. What’s more, the banks have used
these supposedly ironclad government guarantees as a pretext for continuing to
classify the loans as performing and for holding no reserves against them.
Most
Fed Officials Saw QE Tapering This Year, Minutes Show - (www.bloomberg.com)
U.S. mortgage applications edge up on more refinancing: MBA - (www.reuters.com)
U.S. mortgage applications edge up on more refinancing: MBA - (www.reuters.com)
Everything
you need to know about Janet Yellen, your new Fed chair nominee - (www.washingtonpost.com)
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