March 29, 2019 | Issue 276
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SFIG President Michael Bright Testifies Before Senate Banking Committee
On Wednesday, March 27, SFIG President and CEO Michael Bright testified before the Senate Banking Committee regarding Chairman Crapo’s proposed outline for Housing Finance Reform. In his the testimony, Mr. Bright emphasized the need for more private capital in the system, support for affordable housing initiatives, and a smooth transition to a desired end state. If you are interested in participating in SFIG’s new Government RMBS Committee, please contact
Will Innes
.
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SFIG Sends LIBOR Tax Letter to Treasury
On Thursday, March 28, SFIG’s Tax Committee submitted a
letter
to the Treasury Department and Internal Revenue Service requesting guidance that would relieve issuers and holders of outstanding
debt instruments, especially structured debt instruments, from potentially severe tax consequences resulting from the anticipated replacement of LIBOR-based interest rates with interest rates based on alternative indices.
Please contact
Hunter Hamrick
if you would like to join SFIG’s LIBOR Task Force or Tax Committee.
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House Financial Services Committee:
- Tuesday, April 2, at 10:00 a.m. EST
- Full Committee: “The Fair Housing Act: Reviewing Efforts to Eliminate Discrimination and Promote Opportunity in Housing.”
- Tuesday, April 2, at 2:00 p.m. EST
- Subcommittee on Housing, Community Development and Insurance: “The Affordable Housing Crisis in Rural America: Assessing the Federal Response.”
- Wednesday, April 3, at 10:00 a.m. EST
- Full Committee: “Member Day Hearing: Committee on Financial Services.”
- Wednesday, April 3, at 2:00 p.m. EST
- Subcommittee on Investor Protection, Entrepreneurship and Capital Markets: “Putting Investors First: Reviewing Proposals to Hold Executives Accountable.”
Senate Banking Committee:
- Tuesday, April 2, at 10:00 a.m. EST
- Full Committee: "The Application of Environmental, Social, and Governance Principles in Investing and the Role of Asset Managers, Proxy Advisors, and Other Intermediaries"
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President Trump Signs Memo on Reforming Housing Finance System
On Wednesday, March 27, the White House released a memo, signed by President Trump, directing the Department of the Treasury to prepare a reform plan for Fannie Mae and Freddie Mac that will craft administrative and legislative options for housing finance reform. The memo also directs the Department of Housing and Urban Development (HUD) to prepare a reform plan for the housing finance agencies it oversees. The memo notes that the Administration wants to work with Congress to achieve comprehensive reform that improves the housing finance system, that both the Treasury and HUD plans should be submitted to the President as soon as practicable, and that any administrative reforms should include implementation timelines.
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Large SOFR Swap Suggests Uptick in Trader, Investor Interest
Last week, the U.S. secured overnight financing rate (SOFR) saw the execution of its
largest swap to date,
a $6 billion interest rate swap that was quickly followed by a $3 billion trade. Previously, the largest SOFR swap was valued at $1.63 billion in January 2019. While the two swaps had high notional values, asset managers noted that there was minimal associated risk. Industry experts noted that these new swaps suggest that more traders and investors are starting to explore opportunities created by the new benchmark.
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NABE predicts slower US economic growth
The National Association of Business Economists (NABE) released a statement indicating that it is
downgrading its outlook
for U.S. economic growth in 2019 and 2020. NABE predicts that the US economy will grow 2.4% this year (down from the previously forecasted 2.7%) and 2% next year. In its annual survey, respondents indicated that the primary reasons for this projected decline are trade policy and slower global growth. Despite the pessimistic outlook, the survey also indicates that economists believe the likelihood of a recession this year is low.
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FHA Re-Tightens Underwriting Standards
According to the
Wall Street Journal
, the FHA will tighten underwriting standards previously loosened in 2016, a decision that could affect 40,000 to 50,000 loans per year. Previously, manual underwriting was required for all loans with credit scores below 620 or DTI higher than 43%. Since that decision, the FHA’s average credit score dropped to 670, representing the lowest average in a decade, and almost 25% of their loans were made to borrowers with a DTI above 50%.
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SFIG Trustee Committee
Tuesday, April 2nd
11:00 a.m. EST
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SFIG LIBOR Task Force
Wednesday April 3rd
4:00 p.m. EST
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Join us at SFIG Canada 2019
SFIG Canada 2019
May 22-23, 2019
Fairmont Royal York
Ontario, Canada
Join stand-up comedian and entertainer
Derek Edwards
during our Industry Dinner at the conclusion of SFIG Canada 2019 Day One, Wednesday, May 22.
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