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Inside Washington (03/29/2011)
* WASHINGTON (3/30/11)--Efforts to reform government-sponsored enterprises could spell the end of the traditional 30-year mortgage (American Banker March 29). Observers are still in the process of evaluating the pros and cons of such a radical change to the mortgage market. The 30-year fixed mortgage has long-been the standard product, and the best option for most home buyers, in the housing market. But Bert Ely, an independent consultant based in Alexandria, Va., said the possible elimination of Freddie Mac and Fannie Mae are causing some in the industry to rethink the 30-year mortgage. Although the 30-year fixed-rate mortgage is the traditional home loan in the U.S., its long term requires that it be purchased by a securitization entity. A private buyer would not be guaranteed if Fannie Mae and Freddy Mac were eliminated and the government role in the housing market were reduced. Under the options proposed by the Treasury Department for reforming the housing sector, the government would provide less support, potentially making the cost of the 30-year mortgage more expensive. Under that scenario, adjustable rate mortgages could be more attractive to borrowers … * WASHINGTON (3/30/11)--When CNBC asked him about the proposed interchange rule, Rep. Barney Frank (D-Mass.) on Friday said he would urge bank customers to shop around and find community banks and credit unions that offer free services (Pennsylvania Credit Union Association’s Life is a Highway March 29). “America has one of the most competitive banking systems, if not the most competitive banking system, in the world,” said Frank, who is a ranking member of the House Financial Services Committee and a co-author of the Dodd-Frank Act. Big banks have lobbied against the proposed interchange rules, which they say would result in an estimated $12 billion in lost fees. As a result, bankers are looking to increase fees for their customers. The Credit Union National Association (CUNA) opposes the cap on interchange fees and has told federal lawmakers that such action would harm consumers by driving up costs of debit cards, limiting consumer options, competition and technological innovation. Interchange fees allow business costs, including the risk of consumer nonpayment, to be shared by the payments participants, CUNA says …


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