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The White House Employee Carousel Continues; The Senate takes on the Dodd-Frank Act

Come senators, congressmen Please heed the call Don't stand in the doorway Don't block up the hall For he that gets hurt Will be he who has stalled There's a battle outside And it is ragin'. It'll soon shake your windows And rattle your walls For the times they are a-changin'.

Bob Dylan wrote this song in 1963 and 55 years later it’s still kinda relevant. Now, I’m no theorist or academic scholar, but there must be a reason why this song still holds up after 5 decades have passed. The song, and most notably this verse, is a call for change and if there is one thing that’s definitely happening in the White House and on Capitol Hill is change… whether that change is good or bad is up for debate, but I think we all can agree that “times are a-changin’”.

As of Tuesday, March 6 a grand total of 19 White House officials have either resigned or been fired from their positions. Gary Cohn, the 11th Director of the National Economic Council and chief economic advisor to President Trump is the most recent White House official to leave his post. His departure comes days after President Trump announced his plan to impose tariffs on steel and aluminum imports. Initial reports say that the stock market is set to fall and as I write this… those reports hold true as the DOW fell about 200 points since the opening bell. If we mix in the instability created in world markets by President Trump’s unofficial/official “trade war” we should have an interesting day ahead of us. Silver lining though… when the stock market takes a bath… the bond market finds it’s groove and we might have a decent day or two of interest rates. I only say a day or two because the report mentioned above from the Wall Street Journal points back to stabilization once the dust has settled (if that ever happens).

Another big change that is happening is the one on Capitol Hill as The Senate has moved forward with reviewing a bill that would overhaul the Dodd-Frank Act. The bill would roll back and possibly eliminate certain policies the act enforces… most notably omitting the cash balances held at the Federal Reserve when calculating their leverage ratios. This means we could see a change in how much capital banks need to hold on their balance sheets. What immediate impact would this play? I don’t know, but it’ll be interesting to see if this bill trickles down into the larger banks (Wells, Citi, JP Morgan, BOA) and what holding onto less capital could mean for them… maybe securitizing mortgages again?

It’s clear that there is a battle outside… and it’s ragin’… but when will it shake your windows and rattles your walls is up for debate, but oh… for the times they are a-changin’.


The opinions expressed in this post are the sole view of the writer and do not reflect the opinion of Princeton Mortgage Corporation.

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