Obama Administration

S&P Downgrade of U.S. Credit Rating

On August 5, S&P downgraded the sovereign credit rating of the United States to ‘AA+‘ from ‘AAA’, and stated that the outlook on the long-term rating is negative. S&P cited the prolonged controversy between Congress and the Obama Administration over raising the statutory debt limit, and the rising public debt burden as reasons for the downgrade. S&P also published a list of ratings actions on Organizations, Issues (including U.S. Public Finance), Insured Bonds, and Funds that were affected by the rating downgrade. S&P Release on Downgrade. S&P Rating Action Related Information.

On August 5, the Fed, FDIC, NCUA, and OCC announced that, for risk-based capital purposes, the risk weights for Treasury securities and other securities issued or guaranteed by the U.S. government, government agencies and government-sponsored entities will not change as a result of the downgrade by S&P. Agencies’ Joint Release.

On August 2, Moody’s confirmed the ‘Aaa‘ government bond rating of the United States following the raising of the statutory debt limit while assigning the rating a negative outlook. Also on August 2, Fitch confirmed its ‘AAA‘ United States sovereign rating but noted that it projects that the United States government debt will continue to rise over the medium term in a manner inconsistent with maintaining a ‘AAA’ rating. Moody’s Release. Fitch Release.

Note: Free registration is required for Fitch, Moody’s and S&P releases.

Housing Finance Reform: House Hearing and Administration Proposal

On February 9, the House Financial Services Committee held a hearing on GSE reform with a focus on immediate steps to protect taxpayers and end the bailout. On February 11, the Obama administration released a white paper on housing finance reform, outlining its plan to: (i) reduce government support for housing finance and wind down Fannie Mae and Freddie Mac on a responsible timeline; (ii) address fundamental flaws in the mortgage market to protect borrowers, ensure transparency, and increase the role of private capital; and (iii) target the government’s support for affordable housing in a more effective and transparent manner. The proposal also sets forth longer-term reform choices for structuring the government’s future role in the housing market. Congressional Hearing Link. Treasury Release. White Paper.  HFS Testimony and Archived Webcast.

Obama Administration Announces Panelists for Housing Conference

On August 12, the Obama administration announced a list of panelists and conference agenda for the August 17 “Conference on the Future of Housing Finance“. The goal of the conference is to provide a forum for input to the administration as it develops a comprehensive housing finance reform proposal anticipated to be delivered to Congress by January 2011.

Please see the following links to indexed compilations of the comment letters provided to HUD and Treasury in response to the Obama administration’s request for public input on reform of the housing finance system. HUD Responses. Treasury Responses.  Treasury Release.

Foreclosure Prevention Assistance

On August 4, the Obama Administration approved plans submitted by state housing finance agencies in North Carolina, Ohio, Oregon, Rhode Island, and South Carolina to access $600 million in foreclosure prevention assistance from the “Hardest Hit Fund“, which was established in February to provide aid in states most affected by the downturn of the housing market. Treasury Release.

Obama Administration Announces Conference on Housing Reform

On July 27, the Obama Administration announced it will host a “Conference on the Future of Housing Finance” on August 17 at the Treasury Department. The conference will assemble academic experts, consumer and community organizations, industry groups, market participants, and other stakeholders for an open discussion about housing finance reform. The Administration seeks to provide Congress with a comprehensive housing finance reform proposal by January 2011, and will use over 300 comment letters received in response to Treasury and HUD’s solicitation of public comment on the future of the housing finance system to help develop its proposal.  Treasury Release. 

Note: To search for the Comment Letters on the website provided in the Treasury Release, please select “Public Submissions” under the Document Type drop-down menu, and search for keywords “housing finance”.

Obama Administration Approves State Plans for Use of Foreclosure Prevention Funding

On June 23, the Obama Administration approved the plans of the State Housing Finance Agencies in Arizona, California, Florida, Michigan, and Nevada to use $1.5 billion in “Hardest Hit Fund” foreclosure-prevention funding. This first round of funding will support local initiatives to assist struggling homeowners in those states.  Treasury Release.

Obama Administration Seeks Public Input on Reform of the Housing Finance System

As HUD Secretary Donovan mentioned in his testimony before the House Financial Services Committee (see above), the Obama Administration, on April 14, released questions for public comment to solicit input from market participants, industry groups, academic experts and consumer and community organizations on the future of the housing finance system in the U.S., including Fannie Mae and Freddie Mac, and the overall role of the federal government in housing policy. Information regarding the process for submitting comments will be included in a notice to be published in the Federal Register. The Administration will also hold public hearings to get additional feedback.  Administration Release.

Second Round of Assistance for Hardest Hit Housing Markets

On March 29, the Obama Administration announced an expansion of the Housing Finance Agency (HFA) Innovation Fund for the Hardest Hit Housing Markets (the HFA Hardest Hit Fund).  This second HFA Hardest Hit Fund will provide up to $600 million in funding for initiatives to help families stay in their homes in five states (North Carolina, Ohio, Oregon, Rhode Island, and South Carolina) which have large concentrations of people living in “economically distressed areas”.  The HFAs in states qualifying for this assistance will be required to submit plans for review by Treasury to become eligible for funding up to a predetermined allocation cap.  Treasury Release.