CREF Policy Update Nov. 9
Broeksmit Critical of FSOC’s Then-Proposal to Regulate Non-Bank Firms
In a new blog post published last week, MBA President and CEO Bob Broeksmit, CMB, took aim at what was then the Financial Stability Oversight Council’s (FSOC) proposal that would remove procedural requirements and allow it to fast-track the designation of non-bank financial companies as systemically important financial institutions (“SIFI”) subject to enhanced supervision by the Federal Reserve.
Friday afternoon, the Financial Stability Oversight Council FSOC voted unanimously to approve finalized Interpretive Guidance on the matter.
The guidance reinstates FSOC’s ability to directly pursue the designation of a market participant without first requiring the identification of a particular market activity, as adopted by the Trump Administration’s 2019 Interpretive Guidance.
FSOC also approved a finalized Analytic Framework detailing the factors FSOC considers when evaluating systemic threats to the global financial system. Nonbanks of concern to FSOC include hedge funds, money market funds, payments system providers, crypto assets and IMB servicers.
Why it matters: Broeksmit called the then-proposal an attempt to “impose a solution where no problem exists,” and also expressed concern about the lack of due process and analytical rigor in the proposal, which could compromise the integrity of the entire designation process if not remedied in the final version.
Go deeper: MBA does not believe IMBs – individually or as a sector – pose systemic risk to the entire U.S. financial system and highlighted the serious flaws in the FSOC guidance and analytical framework in a July 2023 comment letter.
What’s next: MBA will continue to engage with the White House, Treasury Department, and FSOC agencies and staff on this issue.
For more information, please contact Stephanie Milner at (202) 557-2747.
Federal Reserve Maintains Federal Funds Rate
The Federal Reserve, in its ongoing efforts to slow inflation, decided to hold the federal funds rate to a target range of 5.25-5.50% last Wednesday.
Why it matters: The FOMC emphasized that, “the Committee will continue to assess additional information and its implications for monetary policy,” and that it “will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans.”
Go deeper: During the Fed’s press conference, Chair Jerome Powell was asked about the banking industry’s strong pushback of several aspects of the Basel III endgame capital proposal.
• Chair Powell said that the Fed expects a lot of comments and will take them seriously. “I’ll say, what I do expect is that we will—we will come to a—we’re a consensus-driven organization. We’ll come to a package that has broad support on the Board.”
What they’re saying: MBA’s SVP and Chief Economist Mike Fratantoni noted, “Even though third-quarter economic growth came in quite strong, and several job market indicators continue to show strength, so long as inflation continues to come down, the Fed is likely to pause at this level for some time. We expect its next move will be a cut in next year’s second quarter.”
What’s next: MBA will submit comments on the banking agencies’ Basel III bank capital proposal, which will include recommendations on substantial changes to key mortgage-related provisions in the NPR. Comments are due by Jan. 16, 2024.
For more information, please contact Mike Fratantoni at (202) 557-2935, Stephanie Milner at (202) 557-2747 or Fran Mordi at (202) 557-2860.
Senate Votes on FY 2024 HUD Funding
Last Wednesday, the Senate voted 82-15 on an appropriations package that included funding Transportation, Housing and Urban Development, and Related Agencies (T-HUD) for Fiscal Year 2024 (FY24). The bipartisan Senate bill provides $70 billion in total funding for HUD, including $900 million in new commitment authority for Ginnie Mae and $54 million for Ginnie Mae salary and expenses. It also includes $100 million for the “Yes In My Back Yard” grant program to encourage zoning reforms.
• The House is considering all of its FY24 funding bills separately, including its version of a T-HUD measure next week.
Why it matters: Floor action in both chambers represents an initial step towards House and Senate negotiations on final FY24 HUD funding levels as part of a broad, potential omnibus spending package to fund all federal agencies – either later this calendar year or the next.
What’s next: With Congress unlikely to reach agreement on government funding before November 17, 2023, legislators will need to pass another “stop-gap” Continuing Resolution to keep the government operating.
For more information, please contact Ethan Saxon at (202) 557 2913 or Alden Knowlton at (202) 557-2741.
House Financial Services Subcommittee Holds Hearing on Insurance Costs, Availability
Last Thursday, the House Financial Services Subcommittee on Housing and Insurance held a hearing titled, “Factors Influencing the High Cost of Insurance for Consumers.” Hearing topics included the overall high cost of insurance, current challenges in individual state markets, and the impact of federal and international regulatory developments. A summary of the hearing can be found here.
Go deeper: Insurance premiums have risen for 20 straight quarters due to increased risk from natural disasters. Finding adequate insurance coverage is increasingly difficult and has affected homeowners, commercial owner/operators, and lenders.
Why it matters: MBA submitted a statement for the record ahead of the hearing on top industry priorities, including reauthorizing the National Flood Insurance Program (NFIP) – set to expire on November 17, 2023 – addressing the rising costs and declining availability of private property insurance coverage, and needed reforms to the Federal Housing Administration (FHA)-insured Multifamily Program.
What’s next: The Federal Housing Finance Agency (FHFA) will host a series of property insurance symposiums in the coming weeks on the availability and affordability of property insurance and how to address the insurance needs of the market.
• MBA will work with the Administration and members of Congress on both sides of the aisle to stress the importance of avoiding a lapse in the NFIP program while emphasizing the need for a long-term authorization to protect residential and commercial real estate markets and provide stability for the companies and agents that sell and administer the NFIP.
For more information, please contact Bill Killmer at (202) 557-2736, Alden Knowlton at (202) 557-2816, Ethan Saxon at (202) 557-2913 or George Rogers at (202) 557-2797.
House Financial Services Subcommittee Targets SEC Rulemakings
Yesterday, the House Financial Services Subcommittee on Capital Markets held a hearing titled, “Examining the SEC’s Agenda: Unintended Consequences for U.S. Capital Markets and Investors.” The hearing served as a follow-up to the subcommittee’s September hearing with SEC Chair Gary Gensler.
Go deeper: The hearing delved into the SEC’s approach to rulemaking, which has sparked bipartisan concerns, including the rapid push to propose and finalize numerous new rules, providing insufficient comment periods, and pushing the bounds of the SEC’s statutory authority. A summary of the hearing can be found here.
Why it matters: Ahead of the hearing, Reps. Wiley Nickel (D-NC) and Bryan Steil (R-WI) led a broad, bipartisan letter to Chair Gensler urging the SEC to narrow the scope of its proposed rule to Prohibit Conflicts of Interest in Certain Securitizations. The letter outlined industry concerns about the impact the rule could have on the functioning of securities markets and, by extension, the cost of credit for American consumers.
What’s next: MBA will continue its engagement with Congress and the SEC and monitor developments on relevant rulemakings. MBA may also connect with other trade groups to submit subsequent follow-up letters on industry concerns.
For more information, please contact Bill Killmer at (202) 557-2736, Alden Knowlton at (202) 557-2816, Ethan Saxon at (202) 557-2913 or George Rogers at (202) 557-2797.
Upcoming MBA Education Webinars on Critical Industry Issues
MBA Education continues to deliver timely single-family and commercial/multifamily programming that covers the spectrum of challenges, obstacles and solutions pertaining to our industry. Below, please see a list of upcoming and recent webinars – which are complimentary to MBA members:
• CREF Career Conversations – Nov. 9
• Avoiding TCPA Class Actions and Do Not Call Complaints – Nov. 9
• Adopting Best Practices for Prefunding QA and Post-Close QC – Nov. 14
• NMLS Mortgage Call Report (MCR) Version 6 – What You Need to Know – Nov. 21
• Originating and Succeeding with High-Net-Worth Borrowers – Nov. 29
MBA members can register for any of the above events and view recent webinar recordings by clicking here.
For any questions, please contact David Upbin at (202) 557-2931.
