Stimulus.org - Regulatory Change

Prudent Commercial Real Estate Loan Workouts

Jason Peuquet — Wed, 25 Nov 2009 18:53:26 +0000

Date:

October 30, 2009

Who:

Fed

Policy Area:

Financial Sector Policy

Economic Target:

Financial Institutions

Action Type:

Regulatory Change

Maximum Amount Special Symbol:

Amount Spent Special Symbol:

Deficit Impact Special Symbol:

This policy statement, adopted by each of the financial regulators, provides guidance for examiners and financial institutions that are working with commercial real estate (CRE) borrowers who are experiencing diminished operating cash flows, depreciated collateral values, or prolonged delays in selling or renting commercial properties.

This policy statement details risk-management practices for loan workouts that support prudent and pragmatic credit and business decisionmaking.

Financial institutions that implement loan workouts for CRE as inidicated in this policy statement will not be subject to criticism for engaging in CRE loans, even if restructured loans have weaknesses and poor ratings. In addition, the credit rating for reviewed loans will not be lowered if solely the value of the collateral declines.

Source:

Federal Reserve Release 10/30/2009

Policy Statement for CRE Loans Workouts

Notes:

Associated costs, if any, are unknown.

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Fed Payment of Interest on Bank Reserves

Maya MacGuineas — Mon, 17 Aug 2009 14:12:07 +0000

Date:

October 6, 2008

Who:

Fed

Policy Area:

Financial Sector Policy

Economic Target:

Depository Institutions

Action Type:

Regulatory Change

Maximum Amount Special Symbol:

Amount Spent Special Symbol:

Federal Reserve will pay interest on depository institutions' required and excess cash reserves. Program originally slated to begin in October of 2011 was moved up to October 2008 because of the financial crisis. Objective is to compensate depository institutions for lost income they could derive by investing reserve funds elsewhere.

Source:

Federal Reserve Oct. 6 Release

Notes:

Cost of paying interest is unknown. Activities of the Federal Reserve are not directly recorded in the federal budget. However, each year the Federal Reserve remits a portion of its earnings to the general treasury. This remittance is generally in the range of $20-$30 billion per year, but the CBO estimates that the Fed's earnings will be lower by approximately $90 billion over the next ten years.

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Raise Limit on Insured Deposits: $100K to $250K

Maya MacGuineas — Mon, 17 Aug 2009 14:09:49 +0000

Date:

October 3, 2008

Who:

FDIC

Policy Area:

Financial Sector Policy

Economic Target:

Consumers

Economic Target:

Depository Institutions

Action Type:

Regulatory Change

Maximum Amount:

700000000000

Amount Spent Special Symbol:

Deficit Impact Special Symbol:

The Emergency Economic Stabilization Act of 2008 temporarily raised from $100,000 to $250,000 the amount of deposit and share insurance in FDIC and Federal Credit Union member organizations. Initially, this law stated that the increased limit on insured deposits would last until 12/31/2009. However, On 5/20/2009 President Obama signed the Helping Families Save Their Homes Act, extending the temporary deposit insurance limit of $250,000 untill 12/31/2013. After that date, the FDIC deposit insurance limit will return to $100,000 except for IRAs and other retirement accounts.

Source:

Emergency Economic Stabilization Act of 2008

FDIC Release 5/22/2009

Notes:

Limit will return to $100,000 after Dec. 31, 2013. Maximum amount indicates total value of new insured deposits.

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Streamlined Modification Program

Maya MacGuineas — Mon, 17 Aug 2009 14:06:50 +0000

Date:

November 11, 2008

Who:

FHFA

Policy Area:

Sector Policy (Non-Financial)

Economic Target:

Housing

Action Type:

Regulatory Change

Maximum Amount Special Symbol:

Amount Spent Special Symbol:

Deficit Impact Special Symbol:

Creation of fast-track method for reducing monthly payments on mortgages held by Fannie Mae or Freddie Mac, restricting payments to 38 percent of income, reducing the interest rate, extending loan periods, and, deferring principal.

Source:

FHFA Nov. 11 Statement

Notes:

CBO's estimate from "Budget and Economic Outlook: Fiscal years 2009 to 2019" (http://www.cbo.gov/doc.cfm?index=9957) is listed as "unknown." FHFA is the Federal Housing Finance Agency.

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Enhanced Consumer Protection for Credit Cards

Maya MacGuineas — Mon, 17 Aug 2009 14:04:40 +0000

Date:

December 18, 2008

Who:

Fed

Who:

NCUA

Who:

Treasury

Policy Area:

Financial Sector Policy

Economic Target:

Consumers

Economic Target:

Financial Institutions

Action Type:

Regulatory Change

Maximum Amount Special Symbol:

Amount Spent Special Symbol:

Deficit Impact Special Symbol:

New credit card regulations adopted under the Federal Trade Commission Act, in coordination with similar sets of new rules adopted by the Office of Thrift Supervision and the National Credit Union Administration.

The new regulations, as described on the Federal Reserve's website:

"Protect consumers from unexpected interest charges, including increases in the rate during the first year after account opening and increases in the rate charged on pre-existing credit card balances.
Forbid banks from imposing interest charges using the "two-cycle" billing method.
Require that consumers receive a reasonable amount of time to make their credit card payments.
Prohibit the use of payment allocation methods that unfairly maximize interest charges.
Address subprime credit cards by limiting the fees that reduce the amount of available credit."

Source:

Federal Reserve Announcement 12/18/2008

Details of New Rules

Notes:

Associated costs, if any, are unknown.

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Home Affordable Refinance Program

Maya MacGuineas — Mon, 17 Aug 2009 14:01:37 +0000

Date:

February 18, 2009

Who:

Treasury

Policy Area:

Sector Policy (Non-Financial)

Economic Target:

Consumers

Economic Target:

Housing

Action Type:

Regulatory Change

Maximum Amount Special Symbol:

Amount Spent Special Symbol:

Deficit Impact Special Symbol:

Mortgage owners will be allowed to refinance with less home equity than what was permitted by previous regulations. Program applies to loans owned or guaranteed by Fannie Mae and Freddie Mac and is one of two principle programs under the Treasury's Making Home Affordable program.

Source:

Treasury March 4 Term Sheet

Notes:

Budgetary impact of program is not known. Maximum and current costs also unknown.

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Change of "Market-to-Market" Financial Accounting Rules

Maya MacGuineas — Mon, 17 Aug 2009 13:58:39 +0000

Date:

April 2, 2009

Who:

Other

Policy Area:

Financial Sector Policy

Economic Target:

Financial Institutions

Action Type:

Regulatory Change

Maximum Amount Special Symbol:

Amount Spent Special Symbol:

Deficit Impact Special Symbol:

On April 2, 2009, the Financial Accounting Standards Board announced that it would relax fair-value (i.e., "market-to-market") accounting rules that obligated banks to value all assets at the current market price. New guidelines would give banks greater flexibility in how they value "distressed" assets.

Source:

FASB Meeting Report 4/2/2009

Notes:

Fiscal and budgetary impacts unknown.

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Pension Relief

suggp — Fri, 10 Jul 2009 20:01:28 +0000

Date:

December 23, 2008

Who:

IRS

Policy Area:

Financial Sector Policy

Economic Target:

Consumers

Action Type:

Regulatory Change

Maximum Amount:

2509000000

Amount Spent:

Deficit Impact:

2509000000

The Worker, Retiree, and Employer Recovery Act waives rules requiring individuals to make an annual withdrawal from their retirement accounts for one year, and reduces funding requirements for certain defined pension benefits.

Source:

Worker, Retiree, and Employer Recovery Act of 2008

Notes:

Max Amount and Deficit Impact represent ten year numbers. Program makes money is year one due to timing shift.

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SBA Actions Promoting Small Business Lending

suggp — Fri, 10 Jul 2009 18:47:09 +0000

Date:

March 16, 2009

Who:

SBA

Policy Area:

Sector Policy (Non-Financial)

Economic Target:

Other Business

Action Type:

Regulatory Change

Maximum Amount Special Symbol:

Amount Spent Special Symbol:

Deficit Impact Special Symbol:

Programs are part of a package of government actions by the Treasury Department and Small Business Administration (SBA) on March 16, 2009 to promote small business lending.

These measures include:

• Eliminating borrower and lender fees for SBA-backed 504 loans, which combines government-backed loans with private mortgage loans to support community development.

• Eliminating up-front fees for SBA 7(a) loans.

• Providing rebates for loan fees paid since February 17th.

• Expediting future SBA loan processing.

• Requiring the 21 biggest banks receiving federal money must compile monthly reports on their levels of small business lending. The Treasury department also calls on all banks to report on their small business lending quarterly, rather than annually.

Source:

Treasury Announcement 3/16/2009

Program Q & A

Notes:

Costs of provisions are unknown.

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Home Affordable Modification Program

Maya MacGuineas — Fri, 10 Jul 2009 17:12:50 +0000

Home Affordable Modification Program

Date:

February 18, 2009

Policy Area:

Sector Policy (Non-Financial)

Economic Target:

Consumers

Economic Target:

Housing

Action Type:

Regulatory Change

Maximum Amount:

29877000000

Amount Spent:

3585600000

Deficit Impact:

3585600000

To stabilize the housing market, the Treasury announced on February 18 the Home Affordable Modification Program, part of the Making Home Affordable Program (MHA), to offer assistance to millions of homeowners by reducing mortgage payments. The program gives homeowners the opportunity to modify their mortgages as well as an opportunity to refinance GSE loans, which can lower monthly payments.

The program is designed to provide assistance to up to 3-4 million eligible homeowners before the end of 2012. Between loans covered from over 50 servicers and loans owned or guaranteed by the GSEs, more than 85 percent of all mortgage loans in the country are now covered by the program.

On Sept. 24, 2009 a Treasury release reported that, as of September 9, more than 360,000 trial modifications were underway and 570,000 trial modifications had been offered under the program.

Source:

Housing Program "Fact Sheet"

Treasury Release 9/24/2009

Notes:

Maximum amount represents the total amount allocated to all mortgage servicers as of 8/22/2012, as reported on the Treasury's transaction reports. Amount spent is total spent on HAMP as of 8/22/2012.

Deficit impact is the same as amount spent.

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