Thank Goodness The Fed Is Holding Fire!
July 8th, 2008 categories: Mortgages & Financing, The Market
Today’s Wall Street Journal reported that the Fed would not require Fannie Mae or Freddie Mac to increase their reserve deposits. Thank goodness. In my opinion, much of the last major financial meltdown that occurred during the Savings and Loan crisis of the 1980s was a result of regulators increasing the deposit requirements for those companies. If the Fed had required lenders to increase their on hand deposits, I believe you would have seen a significant number of lenders stop or greatly reduce the number of new loans they would make. In a market that is already experiencing tighter lending requirements, further tightening could lead to unnecessary damage.
“The top regulator for Fannie Mae and Freddie Mac said Tuesday that future accounting rules would likely not lead regulators to demand that the huge mortgage-finance giants hold more capital, addressing fears that punished the stock prices of both firms on Monday.”
Click here to read the Wall Street Journal article.
I am told that Bank of Hawaii and the First Hawaiian Bank did not significantly participate in sub-prime mortgage markets and, due to this, are in good positions to continue lending in Honolulu market. It is good to see that our local banks decisions to remain conservative have come back to serve all of us.
Today’s picture was taken at the beach side finish line of this past weekend’s cut into race.
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