Editor's Note: This is a monthly publication on economic trends and financial policy issues. In this publication you can read "The Longbrake Letter", an analysis of economic trends and conditions written by Bill Longbrake, as well as commentary on financial regulation and policy written by members of the law firm Barnett, Sivon & Natter, P.C., a Washington, DC based law firm that specializes in financial services law.

ISSUE: #10, February 2011

The Longbrake Letter
- Bill Longbrake
The U.S. economy is gradually picking up forward momentum; risks are diminishing; but formidable headwinds – housing, state and local finances, and high unemployment – will slow the rate of acceleration. As optimism builds, policymakers appear increasingly reluctant to take on significant and growing economic and financial imbalances, such as rapidly growing public debt and an expanding trade deficit. Deferring making tough decisions likely means that a new crisis will occur, but that could take several years to develop.

Beware the QM!
- Ray Natter
Although much attention is focused on the upcoming action to define the QRM, the authority of the Consumer Bureau to define a Qualified Mortgage may have far more reaching consequences for the mortgage finance industry. Its important to bear in mind that the QM, not the QRM, may be the more significant definition.

Economic Impact of a Privatized System of Housing Finance
- Jim Sivon
Some key findings in a recent paper by Mark Zandi on the future of the
housing finance system.

You Can't Repeal the Laws of Physics
- Ray Natter
Recent legislation and executive pronouncements have mandated
conflicting financial and economic goals for our financial system, for
example mandating both higher capital and liquidity requirements and
increased lending to small businesses. However, the Governmental
attempts to change the basic laws of economics will ultimately prove to
be no more successful that legislation seeking to overturn the basic
laws of physics.