Mortgage Banks Winners in the Bailout Sweepstakes
Prakash, Snigdha, American Banker
The home mortgage market isn't what it used to be.
Once ruled firmly by the nation's thrifts, the market was set on its ear by the Financial Institutions Reform Recovery and Enforcement Act of 1989.
Nowadays, thrifts account for just 22% of all new mortgages, down from 42% before the bailout law. The new leaders: mortgage banks and their government-sponsored partners -- Fannie Mac and Freddie Mac.
Mortgage banks like Countrywide Credit, previously known only to industry insiders, have become full-fledged financial celebrities. As a group, they now handle about half of all mortgage originations, up from about one-third in 1988.
"Mortgage banks are the real winners of FIRREA," says Gareth Plank, an analyst with Mabon Securities.
How did all this come about? For one thing, the bailout law thinned the ranks of the nation's thrifts by about one-third, to 2,100. And it restrained the surviving institutions with tough new …
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Publication information: Article title: Mortgage Banks Winners in the Bailout Sweepstakes. Contributors: Prakash, Snigdha - Author. Magazine title: American Banker. Volume: 159. Issue: 154 Publication date: August 11, 1994. Page number: 1+. © 2009 SourceMedia, Inc. COPYRIGHT 1994 Gale Group.
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