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: #13, May 2011

The Longbrake Letter
- Bill Longbrake
In this month's letter Bill Longbrake includes a short update on each of the major risks he examined in last month's letter and also discusses U.S. GDP growth and employment trends.  In the last section Bill turns to a discussion of the principal policy issue – increasing the U.S. debt ceiling – which is percolating and will most likely dominate U.S. politics until a resolution is forged in a brinksmanship-like finale in mid to late summer.  History and the nature of the current political debate suggest that we should expect symbolic spending cuts and delay on entitlement reform, which is not an optimal outcome for the U.S. economy in the long run but is politically expedient in the short run.

Covered Bonds
- Ray Natter
Both the Administration and Congress are looking for ways to stimulate private sector investments for mortgage finance.  One concept that is advancing in Congress is to establish a legislative framework that would permit U.S. banking institutions to issue covered bonds.  This article will explain how covered bonds function, why they play such an important role in housing finance in Europe, and the current status of efforts to start a covered bond program for U.S. institutions.

The Dangers of the Current Regulatory Mass
- Robert Barnett
In the midst of the massive cluster of regulations that are being considered currently, it remains important to see that this is so and to encourage the regulators to work to produce conditions that will generate thoughtful and unhurried responses. Absent that, unfortunate results will inevitably follow.