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Daily Archives: February 11, 2013

Mortgage insurance: market structure, underwriting cycle and policy implications – Consultative paper

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Mortgage insurance: market structure, underwriting cycle and policy implications – Consultative paper released by the Joint Forum, February 2013

  • “This consultative report on Mortgage insurance: market structure, underwriting cycle and policy implications examines the interaction of mortgage insurers with mortgage originators and underwriters. The report sets out the following recommendations directed at policymakers and supervisors with the aim of reducing the likelihood of mortgage insurance stress and failure in such tail events.
    • Policymakers should consider requiring that mortgage originators and mortgage insurers align their interests;
    • Supervisors should ensure that mortgage insurers and mortgage originators maintain strong underwriting standards;
    • Supervisors should be alert to – and correct for – deterioration in underwriting standards stemming from behavioural incentives influencing mortgage originators and mortgage insurers;
    • Supervisors should require mortgage insurers to build long-term capital buffers and reserves during the valleys of the underwriting cycle to cover claims during its peaks;
    • Supervisors should be aware of and mitigate cross-sectoral arbitrage which could arise from differences in the accounting between insurers’ technical reserves and banks’ loan loss provisions, and from differences in the capital requirements for credit risk between banks and insurers; and
    • Supervisors should apply the FSB Principles for Sound Residential Mortgage Underwriting Practices (“FSB Principles”) to mortgage insurers noting that proper supervisory implementation necessitates both insurance and banking expertise.”
    • See related postings on financial system

    • POGO- SEC’s Revolving Door Blurs Line Between Regulator and Industry

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    “A Project On Government Oversight study of thousands of government records found that former staff of the Securities and Exchange Commission (SEC) routinely: Tried to help corporations influence agency rulemaking; Defended companies suspected of wrongdoing; Helped companies soften the blow of enforcement actions; Won exemptions from federal law for their clients; and Secured the agency’s… Continue Reading

    In FTC Study, Five Percent of Consumers Had Errors on Their Credit Reports That Could Result in Less Favorable Terms for Loans

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    News release: “A Federal Trade Commission study of the U.S. credit reporting industry found that five percent of consumers had errors on one of their three major credit reports that could lead to them paying more for products such as auto loans and insurance. Overall, the congressionally mandated study on credit report accuracy found that… Continue Reading

    A Painfully Slow Recovery for America's Workers: Causes, Implications, and the Federal Reserve's Response

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    Vice Chair Janet L. Yellen At the “A Trans-Atlantic Agenda for Shared Prosperity” conference sponsored by the AFL-CIO, Friedrich Ebert Stiftung, and the IMK Macroeconomic Policy Institute, Washington, D.C. February 11, 2013 “At the federal level, policymakers have reduced purchases of goods and services, allowed stimulus-related spending to decline, and have put in place further… Continue Reading

    UK – Investigation announced in connection with Autonomy Corporation plc

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    News release: “The Financial Reporting Council (FRC) has launched an investigation under the Accountancy Scheme into the published financial reporting of Autonomy for the period between 1 January 2009 and 30 June 2011. The FRC’s decision to initiate an investigation was taken following consultation with the ICAEW (Institute of Chartered Accountants in England and Wales).… Continue Reading

    EIA – Saudi Arabia Country Analysis Brief

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    Report: “Saudi Arabia was the world’s largest producer and exporter of total petroleum liquids in 2012, the world’s largest holder of crude oil reserves, and the world’s second largest crude oil producer behind Russia. Saudi Arabia’s economy remains heavily dependent on petroleum. Petroleum exports accounted for almost 90 percent of total Saudi export revenues in… Continue Reading

    CRS – Taxation of Unemployment Benefits

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    Taxation of Unemployment Benefits, Julie M. Whittaker, Specialist in Income Security, February 7, 2013 “Unemployment compensation (UC) benefits have been fully subject to the federal income tax since the passage of the Tax Reform Act of 1986 (P.L. 99-514). Under tax law, unemployment compensation is a broad category that includes regular state UC benefits, extended… Continue Reading