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Here’s How Regulators Are Inadvertently Laying The Groundwork For The Next Housing Crisis

Only a few weeks ago, we pointed out a remarkable development in the US mortgage market that has significant implications not only for mortgage borrowers, but perhaps the broader economy as a whole: Wells Fargo, formerly America’s foremost mortgage lender, had seen its share of the market eclipsed by Quicken Loans – the Detroit-based, nonbank lending behemoth that pioneered applying for mortgages on the Internet with its now-famous Rocket Mortgage (readers will remember RM’s celebrity-packed SuperBowl spot).

Many factors (aside from Wells’ own criminality, which recently drew a strong, but ultimately meaningless, rebuke from the Fed) have contributed to this shift, as Bloomberg points out.

But as it turns out, the rising dominance of nonbank lenders like Quicken could portend a massive, bad-debt fueled binge reminiscent of the circumstances that led up to the housing crisis. That is to say, a wave of bad debt could create a cascading wave of defaults with repercussions far beyond the housing market.

Considering all the restrictions that Dodd-Frank and other post-crisis regulations slapped on mortgage lenders, one might wonder how this might be possible.

Of course, as Bloomberg explains, instead of making the market safer, regulators are inadvertently enabling the rise of lenders like Quicken who aren’t bound by many of the rules that restrict banks’ mortgage-lending practices. As a result, Quicken Loans is effectively free from many of the regulations that have forced some of the biggest mortgage lenders into a period of retrenchment…

Make no mistake, regulators have done plenty to rein in the mortgage business since the 2000s. New rules require that lenders carefully assess borrowers’ ability to pay, and that mortgage servicers — which process payments and manage other relations with borrowers — give troubled customers plenty of opportunity to renegotiate their debts before resorting to foreclosure.

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The Case of Glyphosate: Product Promoters Masquerading as Regulators?

The Case of Glyphosate: Product Promoters Masquerading as Regulators?


On 20 March, the World Health Organisation International Agency for Research on Cancer (IARC) said that glyphosate was probably carcinogenic to humans. This is just one step below the risk designation of ‘known carcinogen’. The European Unioin is currently in the process of assessing the IARC’s research and will re-evaluate glyphosate.

Aaron Blair, a scientist emeritus at the National Cancer Institute who chaired the 17-member working group of the IARC that classified glyphosate as “probably” cancer-causing, says that the classification is appropriate based on current science. Blair also states that there have been hundreds of studies on glyphosate with concerns about the chemical growing over time and added that in its review the IARC group gave particular consideration to two major studies out of Sweden, one out of Canada and at least three in the US.

He stressed that the group did not classify glyphosate as definitely causing cancer:

“We looked at, ‘Is there evidence that glyphosate causes cancer?’ and the answer is ‘probably.’ That is different than yes… It is different than smoking and lung cancer. We don’t say smoking probably causes cancer. We say it does cause cancer. At one point we weren’t sure, but now we are.”

Glyphosate is the active ingredient in Monsanto’s Roundup herbicide, which was primarily responsible $5.1 billion of Monsanto’s revenues in 2014.  The herbicide is also used to support Monsanto’s Roundup Ready crops, which comprise the vast bulk of the balance of its revenue stream. Unsurprisingly, Monsanto has wasted no time in trying to rubbish the WHO findings. The work of cancer specialists from 11 countries was speedily dismissed by Monsanto. In a press release, the company argued the findings are based on ‘junk’ science and cherry picking and are agenda driven.


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Emails Reveal Coziness Between Koch Lobbyists and Regulators

Emails Reveal Coziness Between Koch Lobbyists and Regulators

The close ties between corporate interests and the regulators who are supposed to police them contributes, many argue, to fundamentally lax oversight.

Emails I recently obtained through a records request show how cozy a Koch Industries lobbyist is with officials at the Commodities Futures Trading Commission, the primary regulator for derivatives and commodity trading.

Though Koch Industries is better known for using its considerable political machine to promote fossil fuel industry priorities and tax cuts for the wealthy, the company also has a major stake in the financial markets via its business unit devoted to commodity speculation. Notably, the very first oil-indexed price swap was pioneered by a Koch trader in 1986, and the infamous “Enron Loophole” that deregulated the trading of credit default swaps was engineered by a lobbying team that included two Koch lobbyists.

The recent lobbying campaign around derivatives is already paying off. As Zach Carter of the Huffington Post reported, the House of Representatives on Tuesday passed a major regulatory roll-back supported by Wall Street banks and the Kochs. The legislation would affect the post-financial crisis reforms designed to rein in the global derivatives market.

Just as Citigroup lobbyists authored their own deregulation bills in Congress, the Koch emails reveal just how comfortable the regulators and the lobbyists who curry their favor feel with each other, even as the latter are besieging the former with information and pressure that benefits their very rich clients.

Gregory Zerzan, a former Treasury Department official during the George W. Bush administration, went on to work for the International Swaps and Derivatives Association before becoming a Koch lobbyist.


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