Verbal Suasion
According to Tony Crescenzi, the Fed is trying to use verbal suasion to take some air out of the housing bubble.
Snip...
"The talk is that the Federal Reserve is now reviewing lending standards at top mortgage lenders, which will be used as a model for issuing regulatory guidance to other banks around the end of this year. In such cases, the Fed can pressure banks to adhere to its guidelines via verbal suasion, and by its power to issue supervisory letters and or perhaps by being more scrutinizing toward banks that do not follow the guidelines. The Fed can also issue less favorable reviews of institutions seen as engaging in imprudent lending practices."
Full Article
Snip...
"The talk is that the Federal Reserve is now reviewing lending standards at top mortgage lenders, which will be used as a model for issuing regulatory guidance to other banks around the end of this year. In such cases, the Fed can pressure banks to adhere to its guidelines via verbal suasion, and by its power to issue supervisory letters and or perhaps by being more scrutinizing toward banks that do not follow the guidelines. The Fed can also issue less favorable reviews of institutions seen as engaging in imprudent lending practices."
Full Article
posted by Little_Silvered at 6:31 PM
1 Comments:
This is probably one of the most important events happening to finally pop this bubble.
Today people (ie morons are buying selling flipping houses with nothing down or use of risky scheming loans). Tightening up lending standards will put the kabosh on this.
Higher rates + tighter lending standards = Popping real esatte bubble.
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