On September 26 I participated in a conference call hosted by the Washington D.C. investment firm Compass Point, on the topic of “Mortgage Finance Reform and Credit Risk Transfers.” Below is the text of my prepared remarks for that call.

The topic I’d like to address this morning is credit risk transfers, and the role they might play in a reformed mortgage finance system.

Today there are two competing approaches to resolving the conservatorships of Fannie and Freddie. The first is what Treasury and those I call the “Financial Establishment”—commercial and investment banks and their supporters—have sought from the day the conservatorships began: to wind Fannie and Freddie down, and have Congress replace them with some mechanism more to the liking of large primary market lenders. Over the past few years there have been a number of proposals for doing this: Corker-Warner, Johnson-Crapo, proposals from the Urban Institute and…

That’s billion with a B….

• Outsize punitive damages awards are often reduced by courts
• Bank found by jury to have mismanaged estate of Max Hopper

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Morgan Stanley plans to bring its mortgage origination business in-house, as the bank ramps up the business to create a bigger presence in the mortgage market.

According to the Reuters article by Olivia Oran, Morgan Stanley wants to bring the business in-house to improve customer service and generate more mortgages, citing two people familiar with the matter.

“Morgan Stanley executives hope that handling originations in-house will smooth out the process and give the bank a chance to market other products and services to wealthy clients,” the article stated.

Before bringing the business in-house, Morgan Stanley used PHH Corp. as a third-party provider for its originations.

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National Memo:

Chase CEO Jamie Dimon is increasingly vocal in public about his newfound ethical concerns. He made a very public statement distancing himself from President Trump over Trump’s failure to condemn white supremacy in Charlottesville, Virginia. He has also described himself as “pro-immigrant”: an opinion that is hard to square away against his roles as a financier, underwriter and bond-holder of private prison corporations like GEO Group and Core Civic (formerly Corrections Corporation of America). Both corporations oversee Immigrant Detention Centers throughout the U.S., many of which house undocumented migrants.

JPMorgan Chase’s investments in private prisons certainly make economic sense: the private prison industry is worth about $5 billion, and the election of Donald Trump has caused the profits of the sector to balloon further. Almost immediately after Trump’s inauguration, the Department of Justice rescinded the Obama administration’s order to phase out federal private prisons from the criminal justice…

In what can only be regarded as a shocking development, the United States is suing the former head of subprime mortgage trading at Deutsche Bank over “systematically and intentionally” lying about the quality of subprime mortgages that backed nearly $1.5 billion in mortgage-backed securities in the run-up to the crisis.

The lawsuit marks one of only a handful of times the government has gone after an individual for crisis-era mortgage fraud at the systemic level; an untold amount of MBS traders from this era still walk free.

Read on.