A group of Republican lawmakers wrote to the heads of the Department of Justice, Federal Reserve and OCC asking them to clarify their position on the DOJ's Operation Choke Point, an Obama-era policy that seeks to curtail disfavored businesses by working through regulators to pressure banks to end customer relationships.

While the FDIC has encouraged banks to evaluate business relationships on an individual basis rather than simply severing ties with all businesses in industries deemed to be high-risk, there has still been a lack of action among the agencies to formally rescind existing Choke Point guidance, the lawmakers noted. They added that despite these steps by the FDIC, many banks are still reluctant to begin serving industries previously targeted by Operation Choke Point.

The lawmakers called on DOJ and the agencies to give banks explicit assurance that they are free to serve the industries in question and restore longstanding relationships with customers that were curtailed as a result of the policy. "As highly regulated and risk-averse entities, banks may be hesitant to resume providing services to legitimate businesses unfairly targeted by Operation Choke Point absent explicit directives countermanding the Obama Administration's previous guidance," they wrote.

Read the DOJ letter.... 

That's about 20% less than last year's stress tests revealed

Fannie Mae and Freddie Mac could need a taxpayer bailout of as much as $99.6 billion if a severe economic downturn gripped the U.S., their regulator says.

The Federal Housing Finance Agency released the results of a stress test that examined how the mortgage finance companies would perform in what's called a "severely adverse scenario." The stress test was mandated by the post-financial-crisis Dodd-Frank Act and the specifics of the scenario were devised by the Federal Reserve.

The test found that Fannie FNMA and Freddie FMCC together would require between $34.8 and $99.6 billion, FHFA said. That's an improvement from last year, when FHFA said the enterprises would need $125.8 billion.

Also read:

Congress wouldn't do it, so Fannie and Freddie reformed themselves  

The two government-sponsored enterprises have operated under federal conservatorship since the 2008 crisis. In 2010, the Obama administration amended that 2008 agreement to require that Fannie and Freddie send all their profits to the Treasury and draw down remaining capital buffers until they reach zero in 2018.

Depending on the accounting treatment of certain deferred tax assets both companies hold, they would be able to tap between $158.4 and $223.2 billion in the "severely adverse scenario" imagined.

Under the hypothetical scenario, a severe global recession with "elevated stress" in corporate financial and commercial real estate markets plays out over nine quarters from 2017 to early 2019. GDP would decline as much as 6.50%, unemployment would peak at 10%, and consumer price inflation would decline to about 1.25%.

Additionally, equity prices would decline about 50% even as volatility picks up. Home prices would fall by 25%, and commercial real estate prices by 35%.

"The global market shock also includes a counterparty default component that assumes the failure of each Enterprise's largest counterparty," FHFA noted in the report.

In a letter to the National Association of Realtors, FHFA Director Mel Watt signaled that the agency would not move to establish a short-term capital buffer for Fannie Mae and Freddie Mac when the current capital buffer put in place under the terms of the Senior Preferred Stock Purchase Agreements with the Treasury Department expires on Jan. 1, 2018.

Watt's letter came in response to calls from NAR to establish a short-term "mortgage market liquidity fund," where the GSEs could deposit a portion of their profits to cover future losses and reduce risk to taxpayers. Watt responded that while FHFA remains concerned about the expiration of the capital buffer, any changes to housing reform should come through Congress.

See the letter....  

If you're not marketing to millennials, you should be. As of last year, Millennials surpassed Baby Boomers as the largest living generation in the United States. While there are many arguments as to the exact definition of the millennial age range, the majority of demographers start the generation in the early 1980's and end it in the mid 1990's. As this generation begins to take over the American workforce, here are a few things you should advise your millennial customers against, to protect their finances and keep their money in your bank.

Spending from their 401(k): While buying a house can be a great investment for a young professional, their down payment shouldn't come from their retirement savings. Make sure your millennials know the penalties and taxes that can result from pulling money out of their 401(k) before they've reached retirement age. Have them open up a separate savings account and they'll be able to save for that down payment in no time.

Being too conservative with their money: Being conservative with money is a great rule, but there are times when that rule is made to be broken. Sure, a credit card that's abused could make a 24-year-old spiral into debt, but when used responsibly, it's a great way to build credit. And while some millennials may not feel ready to start investing, they'd be crazy to not start taking advantage of compounding interest.

  There's more....