President Obama "unveiled" his regulatory reform plan today. Most of the details of the plan had already been revealed earlier and the "near-final" draft was released by the Administration last evening.

The administration has focused on five key areas for reform, which we have highlighted below along with the important actions proposed in those areas:

1) Promoting Robust Supervision and Regulation

Raising capital and liquidity requirements Supervision by the Fed for all "too big to fail" firms Establishing a council of regulators for better coordination New National Supervisor to supervise all federally chartered banks Registration of hedge funds with the SEC Enhanced oversight of insurers2) Establish Comprehensive Regulation and Supervision of Financial Markets Enhanced regulation of securitization markets Stronger regulation of credit-rating agencies ...

President Obama "unveiled" his regulatory reform plan today. Most of the details of the plan had already been revealed earlier and the "near-final" draft was released by the Administration last evening.

The administration has focused on five key areas for reform, which we have highlighted below along with the important actions proposed in those areas:

1) Promoting Robust Supervision and Regulation

Raising capital and liquidity requirements Supervision by the Fed for all "too big to fail" firms Establishing a council of regulators for better coordination New National Supervisor to supervise all federally chartered banks Registration of hedge funds with the SEC Enhanced oversight of insurers2) Establish Comprehensive Regulation and Supervision of Financial Markets Enhanced regulation of securitization markets Stronger regulation of credit-rating agencies ...

I've mentioned recently (including in this Money and Markets piece) that the fallout from Fannie Mae and Freddie Mac is spreading far and wide.  For instance, many banks and financial instiutions hold preferred shares issued by the two Government Sponsored Enterprises. There are a lot of questions about how those preferreds would be treated in any bailout. But what is not in question is that the value of the GSEs' preferred shares has fallen sharply. Today, another institution quantified the impact that's having. From JPMorgan's 8-K filing:"JPMorgan Chase & Co. disclosed today that it held approximately $1.2 billion par value of Fannie Mae and Freddie Mac perpetual preferred stock. Such securities are held in the Firm's investment portfolio and are marked to market through the Firm's earnings. The Firm estimates that such preferred stocks have declined in value by approximately an aggregate $600 million in the third quarter to date,

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WASHINGTON (AP) -- Federal Reserve Chairman Ben Bernanke told Congress Wednesday that troubled mortgage giants Fannie Mae and Freddie Mac are in "no danger of failing." The Fed chief made his remarks to the House Financial Services Committee, his second day on Capitol Hill where he briefed lawmakers on the problems plaguing the economy. Bernanke appeared amid a backdrop of fading confidence in the U.S. financial system and in the national economy. The Fed and the Treasury Department on Sunday came to the rescue of mortgage giants Fannie Mae and Freddie Mac, offering to throw them a financial lifeline. The two companies hold or guarantee more than $5 trillion in mortgages - almost half of the nation's total- and are major sources of financing for the mortgage market. The Bush administration is asking Congress to temporarily increase lines of credit to Fannie and Freddie and ...

Article Source Some thoughts about the role played by the GSEs in the run-up in mortgage debt and house prices. Paul Krugman ably lays out the case for why it's conceivable that Fannie and Freddie could have made a contribution: Here's the background: Fannie Mae-- the Federal National Mortgage Association-- was created in the 1930s to facilitate homeownership by buying mortgages from banks, freeing up cash that could be used to make new loans. Fannie and Freddie Mac, which does pretty much the same thing, now finance most of the home loans being made in America. The case against Fannie and Freddie begins with their peculiar status: although they're private companies with stockholders and profits, they're "government-sponsored enterprises" established by federal law, which means that they receive special privileges. The most important of these privileges is implicit: it's the belief of investors that if Fannie and Freddie are threatened with failure, ...

Article Source I see much to like about this. From the New York Times: the Bush administration will ask Congress to approve a rescue package that would give the government the authority to buy billions of dollars in stock in Fannie Mae and Freddie Mac and also lend to the companies to meet their short-term funding needs.... Separately, the Federal Reserve voted on Sunday to also open a lending facility for Fannie Mae and Freddie Mac, if they need emergency capital. The two companies would be able to post their own securities as collateral. The plan calls on Congress to give the government the authority over the next two years to buy an unspecified amount of stock in the two companies. Over the same period of time, it would permit the companies to have greater access to the Treasury, by expanding the credit line that each company has from the Treasury. Each ...

Article Source How did we get into this mess, and how do we get out of it? First, a little background: Both Freddie and Fannie were initially created by the U.S. Congress with the goal of expanding the residential mortgage market. They are for this reason referred to as "government-sponsored enterprises", or GSEs, even though both eventually were converted into private companies for which there is today no explicit government guarantee of their debt.... After a homeowner has borrowed money to buy a home, the original lender likely resold that loan to Fannie or Freddie. The GSE in turn collected some of those mortgages in a pool which was sold in the form of mortgage-backed securities (MBS) to private investors, for which the GSEs collect a fee in exchange for guaranteeing payment on the MBS. Other mortgages purchased by the GSE are held directly by the GSE for its own investment ...