2013 October FIRE Policy News

Issue Date: 
October, 2013
Newspaper PDF: 

The October issue of FIRE (Finance, Insurance, and Real Estate) Policy News reports the inspector general for the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, finds they have been avoiding billions of dollars of potential long-term losses by neglecting to write off appropriate amounts of delinquent mortgages they own or backstop.

Also in this issue:

  • A federal judge has dismissed a lawsuit that challenged the Dodd-Frank financial reform law Congress enacted after the credit crisis of 2008. And in a separate ruling, a different federal judge ordered the Federal Reserve to set sharply lower limits on debit card transaction fees that card issuers may charge retailers.
  • In what may be one of the most important rulings of the recently completed session of the U.S. Supreme Court, the justices in Koontz v. St. Johns River Water Management District declared governments’ demands for money, land, or other concessions may be subject to heightened judicial review.
  • One of the great financial innovations of the 1990s was the now-ubiquitous debit card. But its salad days may well be coming to an end because of two events. First, the Federal Reserve in 2011 set much lower rates for debit card transactions, at $0.21 per transaction. Second, Judge Richard Leon of the Southern District of New York set recently aside two of the Fed’s regulations and imposed even-more-drastic rate cuts.
  • Only 40 percent of individuals with direct federal student loans are currently repaying their debt. Many of the rest are taking advantage of a grace period before repayment, but 14 percent are in forbearance (delayed default), and 8 percent are in default.
  • When firms compete for government subsidies and regulatory advantages, economists call it “rent seeking.” As Washington considers how to replace Freddie Mac and Fannie Mae in the mortgage market, we can expect the policy process to be dominated by rent-seekers.
  • Under the guise of catching tax evaders--a dubious claim given the law lacks any targeting of people or places prone to evasion--the federal law known as FATCA treats anyone who invests overseas as a criminal. Without need for a warrant, the U.S. government demands foreign institutions spy on their U.S. clients, while expecting individuals to report their entire holdings to the government.

Newspaper Articles in this Issue