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: #27, July 2012

The Longbrake Letter
- Bill Longbrake
Repeated doses of policy stimulus have been unable to ignite sustainable growth and bring unemployment down in the U.S. When policy intervention has little apparent lasting positive effect and when the balance of risks is weighted to the down side, it is hard to be optimistic and easy to worry that Nouriel Roubini's forecast of the “Perfect Storm”, which he expects will inundate the global economy in 2013, will prove prophetic. In this month's letter, Bill Longbrake explains why policy initiatives have had and are likely to continue to have limited effectiveness in the U.S. and in Europe, including why the recent European Union summit decisions will do little to resolve Europe's financial and economic crisis.

Mortgage Finance Under Basel III
- Ray Natter
The Basel III capital accord sets significantly higher capital requirements for mortgage loans. In light of all of the tougher underwriting standards in place for mortgages and the additional prudential regulations expected in the near future, the need for these new capital requirements on mortgages questionable and could impede the housing recovery.

The San Bernardino Eminent Domain Solution
-Bob Barnett
The county of San Bernadino and two cities have jointly agreed to use eminent domain to capture performing loans, reduce the principal owed and sell the loans to investors. The results for those municipalities could be destructive as investors discount the value of debt of those entities in the future because of the new eminent domain risk.