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: #26, June 2012

The Longbrake Letter
- Bill Longbrake
Recent economic news both in the U.S. and elsewhere has been decidedly
downbeat. What is particularly worrisome is that just about every
significant part of the global economy is losing forward momentum. In this
month's letter, Longbrake reviews recent developments in U.S. GDP growth,
personal income, consumption, and employment. He also explains Hyman
Minsky's "Instability Hypothesis" and its importance for understanding the
potential severe consequences of building global risks for real GDP growth.
The final section of this month's letter updates the deteriorating situation
in Europe with focus on developments in Spain and Greece.

Deep Gloom over Europe, Foreboding for United States
- Greg Wilson
Based on presentations and discussions on Europe at the IIF's recent spring meeting in Denmark, it is clear that a real financial and economic crisis unfortunately is brewing in Europe, with serious implications for the U.S. financial system and economy.

Caution: Mortgage Payments May Be Losing Their Priority
-Bob Barnett
Servicers are finding that many borrowers no longer place mortgage payments at the front of the payment queue each month. That coupled with the delay in foreclosures and litigation over issues that have been in the past, trusted practices, raises questions about pricing mortgages, differentiation between mortgages in various states depending upon enforcement of their laws, and other issues that a decade ago were never considered.

A Note on Breaking Up the Banks
- Jim Sivon
Jim Sivon notes that federal regulators already have ample statutory authority to break up banking institutions.

City Ordinances and Low-Income Lending Reports: Policy and Legal Concerns
- Ray Natter
Several cities have passed or are considering ordinances designed to require banks to make loans and investments in lower income communities as a condition for receiving municipal deposits. This article discusses some of the public policy and legal issues that are raised by these local laws.