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: #14, June 2011

The Longbrake Letter
- Bill Longbrake
While economic recovery remains intact, growth has slowed and is close to stall speed.  In this month's letter Bill Longbrake discusses the dismal state of the labor market and examines possible reasons why aggressive use of traditional monetary and fiscal policy tools has been and is likely to continue to be relatively ineffective in restoring full employment.  Where are the jobs?  Bill concludes that a different mix of policy tools, which shifts the focus from consumption-based to investment-based economic growth, will be required.

The Abuse of ‘Abusive'?
- Paul Smith
Paul Smith summarizes a recent study that questions the effectiveness of disclosures for consumers as they age, and discusses the implications of the study on the regulation of financial products and services offered to older Americans.

Risk Retention Rule – Premium Capture, Commingling, and Servicing
- Robert Barnett
Rushing to complete the Dodd Frank Act, Congress adopted provisions in that law that have created problems for rule writers. Three such problems have surfaced in the risk retention proposed regulation. Fortunately, there are solutions to those problems that the agencies can adopt as they finalize this proposal.

Is the Pendulum Swinging on the Dodd-Frank Act?
- Jim Sivon
The slow down in the implementation of the Dodd-Frank Act should not be misinterpreted as a fundamental reconsideration of the Act's purposes or goals.

What was the legislative intent behind the QRM?
- Ray Natter
Under the Dodd Frank Act, securitizers are generally required to hold 5 percent of the credit risk of loans sold into a securitization. However, the Act provides an exemption for "Qualified Residential Mortgages" ("QRM"). There has been much public debate about the Congressional intent behind this exemption. This article reviews the relevant legislative history and finds that Congress clearly wanted the QRM to include all mortgages underwritten to pre-bubble standards, and in particular did not want to disadvantage creditworthy first-time home buyers and and otherwise qualified low- and moderate-income consumers who cannot meet high down payment requirements.