Nuclear renaissance: The Departments of Energy and Defense airlifted a small nuke reactor for the first time, which is expected to be operating by July 4.
IP rights: ByteDance will strengthen safeguards for its AI video generator after Disney (DIS) and Paramount Skydance (PSKY) reportedly threatened legal action.
DEI criteria: Goldman Sachs (GS) is planning to remove diversity requirements for its board following similar rollbacks by banking rivals.
Easing requirements Changes might be coming to the mortgage industry, as the outlook shifts on the risks origination and servicing pose to the banking system. Regulations in the post-2008 world prioritized safety over market participation, with increasing restrictions gradually pushing out traditional lenders from the mortgage market. It's a big topic that's taking place as the housing market continues to thaw, with the hope of increasing competition and potentially lowering costs for consumers.
Quote: "We have seen a significant migration of mortgage origination and servicing out of the banking sector," Fed Vice Chair for Supervision Michelle Bowman told an American Bankers Association event in Florida. "The data tells a clear story. In 2008, banks originated around 60% of mortgages and held the servicing rights on about 95% of mortgage balances. Since that time, the contraction has been extraordinary. As of 2023, banks originated only 35% of mortgages and serviced about 45% of mortgage balances."
The first proposal specified by Bowman would remove the requirement to deduct mortgage servicing assets from regulatory capital while maintaining the 250% risk weight assigned to those assets. Another area that could work within the Basel III framework would consider increasing the risk sensitivity of capital requirements for mortgage loans on bank books. This approach could use loan-to-value (LTV) ratios to determine the applicable risk weight for residential real estate exposures, rather than applying a uniform risk weight regardless of LTV.
On watch: The effects could be significant for non-bank lenders, who have seen their market share rise significantly in the aftermath of the 2008 financial crisis. Players like Rocket Mortgage (RKT), United Wholesale Mortgage (UWMC), PennyMac Financial (PFSI), and loanDepot (LDI) might be forced to defend their margins against newly incentivized bank competition. It would also encourage Wall Street institutions like Wells Fargo (WFC), Bank of America (BAC), and JPMorgan Chase (JPM) to claw back their share, and compete more aggressively for the mortgages typically sold to or guaranteed by government-sponsored agencies like Fannie Mae (FNMA) and Freddie Mac (FMCC). (1 comment)
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Today's Markets
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