Week InReview
Friday | Sep 17, 2021
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Illustration: Daria Kirpach/WAPO |
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THERE IS A SAYING in the Balkans that loosely translates to: “There is nothing worse than finally seeing the light, only to be plunged again into darkness.” Extraordinary levels of stress and anxiety started to ease, only to be replaced by anger, disappointment and despair as coronavirus cases resurged and the promise of the pandemic’s end became more elusive.
The widespread return to in-person school and the uneven return to offices this fall are further contributing to the sense of being pushed to the limit. Although tried-and-true self-help strategies, such as exercise, good sleep, socializing, mindfulness, positive reframing, and self-compassion are still the best prescription for lowering stress overall, sometimes a practical solution that can provide immediate relief is what’s needed.
— The Washington Post
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The National Security Council finds a report about International Monetary Fund Managing Director Kristalina Georgieva to be serious and troubling, according to a spokesperson. NSC spokesperson says they are are committed to upholding the integrity of international financial institutions. Georgieva was called out Thursday by the World Bank, her previous employer, for applying pressure to boost China’s position in a ranking of economies. (Bloomberg Economics | Sep 16)
The Fed may delay rolling back pandemic support for the U.S. economy as Congress descends into a traditional debt ceiling standoff. The Fed decision could be delayed to December as the “upcoming drama” over the debt limit could lead to market turmoil, according to a note from the office of Guggenheim’s Scott Minerd. (Bloomberg Economics | Sep 16)
Fannie Mae and Freddie Mac's regulator is planning a revamp of tough rules approved at the end of the previous administration. In a Wednesday statement, the Federal Housing Finance Agency said it’s proposing amendments to the November rules that would specifically target so-called credit risk transfer securities — assets that transfer the risk of mortgages defaulting to private investors. Under the overhaul, Fannie and Freddie would get more capital relief when issuing such securities. (Bloomberg Markets | Sep 15)
Securities and Exchange Commission Chair Gary Gensler in a hearing Tuesday said he was taking a hard look at cryptocurrency-trading platforms. He also reiterated his openness to potentially banning payment for order flow, a practice in which stockbrokers sell customers’ trades to high-speed trading platforms. He emphasized the SEC’s mission of protecting investors while pointing to challenges stemming from emergent technologies like cryptocurrency and sophisticated data analytics used by financial firms. (The Wall Street Journal | Sep 14)
It’s a truism in markets that when things get bad enough, investors will reach for the safety of U.S. government debt — even when the proximate cause of the market’s concern is the U.S. government itself. That’s a point worth remembering as America hurtles towards another debt ceiling deadline showdown, with Treasury Secretary Janet Yellen warning last week that her department will probably reach the federal borrowing limit sometime in October. (Bloomberg Odd Lots | Sep 13)
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Fannie-Freddie regulator examines capital rule |
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Fannie Mae Federal National Mortgage Association building in Washington DC |
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(Sep 14) — Fannie Mae and Freddie Mac’s regulator said it’s reviewing a rule approved at the end of the previous administration that required the mortgage giants to hold hundreds of billions of dollars in capital to protect against losses.
In a statement Tuesday, the Federal Housing Finance Agency said it’s examining “the Enterprise Regulatory Capital Framework and expects to announce further action in the new future.”
The regulation – a priority for former FHFA Director Mark Calabria – drew intense criticism from the housing industry, which argued it was excessive and would lead to higher mortgage costs. Finalized in November, it envisioned Fannie and Freddie building up combined capital buffers that could exceed $280 billion, a total that would hinge on huge share sales and the companies retaining earnings for years.
President Joe Biden fired Calabria in June, replacing him on an acting basis with Sandra Thompson, who had been deputy director of the FHFA’s division of housing mission and goals.
Fannie and Freddie don’t make mortgages. They buy them from lenders, wrap them into securities and guarantee repayment of principal and interest to investors. The federal government took control of the companies during the 2008 financial crisis and bailed them out with around $187.5 billion as mortgage defaults mounted.
Calabria argued that dramatically ratcheting capital requirements would ensure Fannie and Freddie could survive a future economic calamity without needing another taxpayer rescue. He wanted to release the companies from their government conservatorships and believed the huge capital cushions were a necessary first step.
In the Tuesday statement, the FHFA also said it and the Treasury Department were suspending certain revisions to Fannie and Freddie’s bailout agreements that former Treasury Secretary Steve Mnuchin and Calabria had instituted in January.
Source: Bloomberg Government
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Recognizing that we have cognitive biases that make us vulnerable is the first step to overcoming them. But it isn't easy.
Illustration: Matt Chase/WSJ
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How hackers use our brains against us
Criminals lure smart people into their traps by taking advantage of the unconscious, automatic processes that act as shortcuts to make our decision-making more efficient. These cognitive biases – arising from what’s often referred to as our “lizard brains” – can cause us to misinterpret information and make snap judgments that may be irrational or inaccurate. The big biases hackers leverage include loss aversion, authority bias, urgency bias, halo effect, and the illusion of invulnerability.
It’s a good day to update all your devices. Trust us.
Another day, another nag from your iPhone and Mac that an update is ready. And from Chrome. And for Microsoft, it’s patch Tuesday, so that’s another round of installs on your plate. As tempting as it may be to kick these down the road, you’ll want to go ahead and get these done. iOS, Windows, and Chrome all have zero-day vulnerabilities that hackers are going after. Now that the fixes are here, you need to install them ASAP.
SEC actions up the ante for cybersecurity disclosures
Companies continue trying to address evolving cybersecurity threats, but recent settlements like that between the Securities and Exchange Commission and investment advisory firms make clear that these efforts will be closely scrutinized and errors aggressively penalized.
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Illustration: George Wylesol/FT |
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Inside the cult of crypto
“Crypto is essentially an economic cult that taps into very base human instincts of fear, greed and tribalism, combined with economic illiteracy as a means to recruit more greater fools to pile money into what looks like a weird, novel digital variant of a pyramid scheme,” argues Stephen Diehl, a crypto-sceptic software engineer. “Although, it’s all very strange because it’s truly difficult to see where the self-aware scams, true believers and performance art begin and end. Crypto is a bizarre synthesis of all three.”
Parents are at breaking point over childcare woes
More than 18 months into the pandemic, U.S. working parents are more worried than ever about securing child care and the impact that inevitable school disruptions will have on their jobs, a survey shows. About three quarters of respondents think their children’s school will temporarily shut down or shift back to remote learning at some point this year.
Climate impact 'worse than we thought,' UN's Guterres
The United Nations said out loud Thursday what people all over the world have to come realize amid months of fires, floods and supercharged hurricanes: Climate change is hitting faster and harder than expected.
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