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: #45, January 2014

The Longbrake Letter
- Bill Longbrake
In this month's letter, Bill Longbrake expresses optimism about economic prospects in 2014, but pessimism about the longer term. While optimism about higher economic growth in 2014 appears warranted, it is a story about higher growth rates, it is not a story about the potential for a bigger economy or a better job mix in the future that boosts the standard of living. An outcome that achieves full employment at a much lower level of output and declining overall job quality is not an outcome to cheer about. In particular, Longbrake expresses concern that large numbers of people are leaving the labor force and may never return. If this is what is happening, then there will be significant consequences for growth (lower) inflation (higher) and interest rates (higher).

Has the Home Loan Bank Board Ghost Returned?
- Bob Barnett
The Dodd Frank Act imposed heavy regulations throughout industry and government. In doing so in the mortgage sector, it has stirred feelings last visited when the Federal Home Loan Bank Board was running the residential home mortgage lending industry through its regulations and supervisory policies. That approach only worked in good times as the S&L debacle of the 1980s demonstrated. The scope and depth of Dodd Frank, as seen in the example of the CFPB's reach in the QM regulations, seems to have many of the elements of the old Bank Board approach to regulation, notwithstanding the changes made in the authority of the regulators.

Housing Finance — 2013 Year in Review
-Katie Wechsler and Sanford Shatz
Originally prepared for the American Bar Association's Housing Finance Subcommittee, this article, written by Katie Wechsler and Sanford Shatz, reviews some of the major events in housing finance in 2013 including new rules, enforcement actions, and litigation.

The Mysterious Clause 5
- Ray Natter
The new QM rule leaves many questions unanswered, as can be shown by the a close look at just one of the QM requirements. Lenders risk being surprised when such ambiguities are left to the courts to decide. The CFPB should consider issuing an official "question and answer" document that addresses interpretive issues submitted by the public to provide needed certainty when providing mortgage finance.