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Mortgage Reits Roundtable Meeting

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Mortgage Reits Roundtable Meeting Mortgage REITs Roundtable Meeting Wednesday, April 1st 9:45am – 11am JW Marriot Desert Ridge Resort & Spa Phoenix, AZ Discussion Leads: Jack DeCicco, CFO, Annaly Commercial Real Estate Group, Inc. Phillip Reinsch, EVP & CFO, Capstead Mortgage Corporation Copyright 2015 National Association of Real Estate Investment Trusts Bloomberg the Company & Products 1 Bloomberg Anywhere Login T LIVE 1 s Search BREAKING NEWS Procter & MenuGamble to Explore Sale or IPO of Beauty Brands c 10:40 AM Mortgage REITs Joining FHLBs Again Even as Regulator Weighs Ban open in browser PRO version Are you a developer? Try out the HTML to PDF API pdfcrowd.com Don't Miss Out — Follow us on: f Facebook t Twitter i Instagram y Youtube by Jody Shenn, and Heather Perlberg, 11:59 AM EDT March 13, 2015 t f h (Bloomberg) -- The Federal Home Loan Recommended Bank of Indianapolis is again admitting mortgage-investment firms as members, Germans Tired of even as the overseer of the government- Greek Demands chartered system of 12 regional lenders Want Country to Exit considers barring such companies. Euro Krugman Is Told to The FHLB in Indiana recently accepted Read More, Write another insurer owned by a real-estate Less, by Swedish investment trust, spokeswoman Carrie Riksbanker O’Connor said, after holding off on such approvals while its regulator, the Federal Why Bankers Are Housing Finance Agency, gathered Leaving Finance for No-Salary Tech comments through January on its Jobs open in browser PRO version Are you a developer? Try out the HTML to PDF API pdfcrowd.com proposed ban. She wouldn’t name the REIT that joined Ladder Capital Corp. and a The Interest Rate Invesco Mortgage Capital Inc., which have Puzzle Making Fools units as members of the cooperative. of Wall Street “We felt we had an obligation to address good-faith applications,” O’Connor wrote in an e-mail. The move may mark the return of a trend that began in 2012 when investment firms that buy mortgage debt started joining the system to tap cheap and dependable financing. That halted last year as the FHFA proposed banning captive insurers -- which mainly offer coverage to their owners or customers of those parent companies -- after a growing number of REITs used the type of guarantors to gain memberships. The regulator said REITs could add risks to the system, which encompasses $830 billion of outstanding debt, and might not be permitted as members under the law that says FHLBs can admit banks and insurers. To lend to those owners, the FHLBs jointly raise money with sales of bonds perceived by investors and credit graders as government-backed. open in browser PRO version Are you a developer? Try out the HTML to PDF API pdfcrowd.com Peter Garuccio, an FHFA spokesman, declined to comment on the Indianapolis FHLB’s move and the timeline for the regulator’s decision on its September proposal. The FHLBs had voluntarily paused admissions of captive insurers in June. ‘Getting Tired’ “Maybe this is somebody’s way of saying, ’I’m getting tired of waiting, maybe I can force a decision,’” Michael Widner, an analyst who covers mortgage REITs at Keefe, Bruyette & Woods, said in a telephone interview. Mortgage REITs responded to the proposal by saying their businesses match the FHLBs’ mission of supporting real estate and that they don’t present unusual risks, partly because their borrowing is backed by collateral. “They’re looking at this and saying this rule doesn’t make a lot of sense,” Scott D. Geromette, a partner at Honigman Miller Schwartz and Cohn LLP, who represents some REIT-owned insurers that are FHLB members and some that want to be, said in a telephone interview. open in browser PRO version Are you a developer? Try out the HTML to PDF API pdfcrowd.com Current REIT members, which also include Annaly Capital Management Inc., Two Harbors Investment Corp. and Redwood Trust Inc., have been boosting their use of the system. Five of their units that joined the Indianapolis, Des Moines or Chicago FHLBs since 2012 were borrowing about $6 billion on Dec. 31, up from $3 billion on June 30, according to data compiled by Bloomberg from their disclosures. Kicked Out The Des Moines FHLB in Iowa hasn’t admitted any new members of this type in the past year, spokeswoman Angie Richard said in an e-mail. Melissa Warden, a spokeswoman for the Chicago FHLB, declined to comment. While captive insurers could retain membership for five years if the FHFA’s proposal is enacted, those admitted since it was released would be kicked out immediately if the rule is “adopted as proposed,” according to the FHFA’s plan. “Any new member is fully aware of the potential impact” of the rule, said O’Connor of the Indianapolis FHLB. open in browser PRO version Are you a developer? Try out the HTML to PDF API pdfcrowd.com Most of the more than 1,300 comments the FHFA’s proposal drew addressed issues unrelated to the captive insurer ban. FHFA Director Melvin L. Watt said this month at the Goldman Sachs Housing Finance Conference that while his agency had no “bias against REITs,” there are questions about whether they should be allowed to be members under the law. “We get called on quite often to do things that we simply don’t have the power to do that ought to be done in the legislative branch,” he said. To contact the reporters on this story: Jody Shenn in New York at [email protected]; Heather Perlberg in Washington at [email protected] To contact the editors responsible for this story: Shannon D. Harrington at [email protected] Michael Aneiro, Faris Khan open in browser PRO version Are you a developer? Try out the HTML to PDF API pdfcrowd.com Read More Debt, Indiana, Real Estate, Law, Des Moines, Chicago, Money, Bonds, Iowa, From The Web Sponsored Links by Taboola ‘Warren Buffett Indicator’ Here's why transferring your Ex-Microsoft exec is Signals Collapse in Stock… credit card balance every 1… disrupting the traditional… Newsmax Business Insider for NextAdvisor Motif Investing 19 Common Habits That Will 8 Signs You May Have Afib How this Razor is Changing Destroy Teeth WebMD the Shaving Industry open in browser PRO version Are you a developer? Try out the HTML to PDF API pdfcrowd.com Destroy Teeth the Shaving Industry WedMD Harry's Terms of Service Trademarks Privacy Policy Careers Made in NYC Advertise Ad Choices ©2015 Bloomberg L.P. All Rights Reserved Website Feedback Help Sitemap open in browser PRO version Are you a developer? Try out the HTML to PDF API pdfcrowd.com Federal Reserve Bank of New York Staff Reports Financial Stability Policies for Shadow Banking Tobias Adrian Staff Report No. 664 February 2014 This paper presents preliminary findings and is being distributed to economists and other interested readers solely to stimulate discussion and elicit comments. The views expressed in this paper are those of the author and are not necessarily reflective of views at the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the author. Financial Stability Policies for Shadow Banking Tobias Adrian Federal Reserve Bank of New York Staff Reports, no. 664 February 2014 JEL classification: E44, G00, G01, G28 Abstract This paper explores financial stability policies for the shadow banking system. I tie policy options to economic mechanisms for shadow banking that have been documented in the literature. I then illustrate the role of shadow bank policies using three examples: agency mortgage real estate investment trusts, leveraged lending, and captive reinsurance affiliates. For each example, the economic mechanisms are explained, the potential risks emanating from the activities are described, and policy options to mitigate such risks are listed. The overarching theme of the analysis is that any policy prescription for the shadow banking system is highly specific to the particular activity. Key words: shadow bank policies, systemic risk, financial intermediation _________________ Adrian: Federal Reserve Bank of New York (e-mail: [email protected]). This paper was prepared for the Federal Reserve Bank of Chicago’s Sixteenth Annual International Banking Conference Shadow Banking within and across National Borders. The author thanks Adam Ashcraft, Nicola Cetorelli, Michael Holscher, Morgan Lewis, Antoine Martin, and Robert Patallano for feedback. The views expressed in this paper are those of the author and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. 1. Introduction .......................................................................................................................................................... 1 2. The Economics Shadow Banking ........................................................................................................................... 2 i) Specialization .................................................................................................................................................... 2 ii) Mispriced Guarantees from Government Backstops ....................................................................................... 3 iii) Regulatory Arbitrage ........................................................................................................................................ 3 iv) Neglected Risk .................................................................................................................................................. 4 v) Agency Problems .............................................................................................................................................
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