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: #30, October 2012

The Longbrake Letter
- Bill Longbrake
September's data reports, especially for employment, were cause for guarded optimism, but they were not sufficiently strong to be cause for celebration. All-in-all, economic activity in the U.S. is grinding higher but not at a rate sufficient to make much, if any, real progress in reducing the sizable output gap. Global risks and the impending fiscal cliff in the U.S. threaten to slow growth during the fourth quarter and early 2013. In this month's letter, Bill Longbrake reviews recent developments for U.S. and global GDP growth, discusses trends in U.S. personal income, consumption and employment, and provides updates on the U.S. presidential election, U.S. fiscal policy and developments in Europe and China.

The Conflict Between Public Policy and Basel III
- Raymond Natter
This article explores the conflicts between the Basel III proposal and important public policies espoused by the Administration and the Federal Reserve.

Brief Note on Comment Fatigue and the Massive Regulatory Calendar
- Bob Barnett
Comment fatigue has set in on many of the comments outstanding in the mortgage finance arena. Massive proposals piled on other massive proposals create an environment for errors. The regulators cannot change the statutes, but there are steps they can take to make the results better for all.

Building a New Private Sector Secondary Mortgage Market: An Analysis of the Proposal by the Housing Policy Council
- Jim Sivon
Last summer the Hamline University School of Law held a symposium on “Reforming the Secondary Mortgage Market”. Jim Sivon presented a paper at that symposium that explains a plan for replacing Fannie Mae and Freddie Mac with several privately-capitalized firms that was developed by the Housing Policy Council of the Financial Services Roundtable. These private firms would not be supported by the federal government, but the mortgage securities they issue would carry an explicit federal guarantee that would be triggered only upon the failure of a firm. The article explains the rationale for this proposal, the structure of the private firms, and a methodology for pricing the backstop federal guarantee in order to minimize any potential cost to taxpayers.