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The letter written by Rep. Maxine Waters, D-Calif., and Sen. Sherrod Brown, D-Ohio, was seen as a boost to Wall Street lobbying efforts seeking to quell the fallout of the coronavirus crisis on the mortgage market.
The Fed's actions are designed to ensure the flow of credit to midsize businesses and state and local governments hit hard by the economic impact of the coronavirus pandemic.
Tom Barrack, who a week ago warned that commercial real estate financing was on the brink of collapse because of the coronavirus pandemic, is now calling for a moratorium on margin calls and intervention by the Federal Reserve to keep values of mortgage debt from plummeting further.
While analysts agree banks are in better shape than in 2008, lawmakers are dusting off a crisis-era tool used by the Federal Deposit Insurance Corp. to soothe potential liquidity fears during the coronavirus pandemic.
The central bank's sweeping actions suggest a cash shortage gripping sectors directly hit by the pandemic. Banks were supposed to be protected by Dodd-Frank but are still vulnerable to a funding domino effect.
The Federal Reserve committed Monday to conducting more asset purchases of Treasury securities and mortgage-backed securities and announced $300 billion in new financing for credit facilities.
An effort by the Federal Housing Finance Agency to examine membership rules for the Federal Home Loan Bank System is reigniting an argument over whether to allow more nonbanks in or impose tougher barriers.
