CORDRAY'S FUTURE
Consumer Financial Protection Bureau Director Richard Cordray is caught in the crosshairs of one of the biggest battles in Congress, as Democrats run to his aid and Republicans tear him and his agency apart. But despite this rapidly growing controversy, Cordray appears to be conducting business as usual. Meanwhile, President Donald Trump may have a very simple route to fire him: he can order Cordray to drop the appeals case. If he refuses, he can be fired for disobeying a direct order. Otherwise, he can still be fired at-will by the president.
THE ECONOMY
It’s been almost eight years since the last recession ended in June 2009. With economists predicting that the economy could grow during the next two years, that could put the country on track for its longest period without a recession in modern history. Right now the economy is currently enjoying its third longest period without a recession, according to the National Bureau of Economic Research. The longest period was 10 years in the 1990s and the second was just under nine years in the 1960s. But do consumers share this sunny view of the economy?
GUTTING DODD-FRANK
President Donald Trump issued an executive order to roll back the Dodd-Frank Wall Street Reform Act, but it doesn’t do much by itself. The core principles in the executive order should simply be viewed as a policy placeholder for the re-thinking of Dodd-Frank, in terms of both potential legislative and regulatory changes. Rep. Jeb Hensarling, R-Texas, put out a statement about Trump’s action, saying that much of the order “mirrors” the Financial CHOICE Act, the Republican-led effort to repeal and replace Dodd-Frank.
FICO MONOPOLY
Three senators are reigniting the fight to allow Fannie Mae and Freddie Mac to consider alternative credit-scoring models beyond the FICO credit score the GSEs currently use. As it stands, Fannie Mae and Freddie Mac exclusively rely on a single credit scoring model to make mortgage purchasing decisions, and combined with the GSEs’ dominance of the secondary mortgage market, the result is a government-backed monopoly in credit scoring. If passed, the new law would open the door for other credit score companies, like VantageScore Solutions.
GSE CONSERVATORSHIP
According to a new report from Fitch Ratings, those waiting for comprehensive GSE reform may have to wait a little longer. Treasury Secretary nominee Steven Mnuchin’s statements saying that “getting Fannie and Freddie out of government ownership” is one of the Trump administration’s top 10 priorities showed that there might actually be a light at the end of the conservatorship tunnel. However, Fitch analysts suggest that the mechanics of actually reforming the GSEs make that light at the end of the tunnel a little further away than one might think.
STUDENT DEBT
Back in July, the National Association of Realtors explained that Millennials with student debt are not interested in buying homes. Another survey from NAR shows that Millennials with student debt struggle to save up for a down payment. Now, City College in San Francisco will be tuition free for the city’s residents, paid for by a transfer tax on properties selling for at least $5 million. But, is this the first step in the right direction for encouraging Millennial homeownership, or will the increased transfer tax only further decrease affordability?
