2012 April FIRE Policy News

The April issue of FIRE Policy News reports on federal charges filed in late January against a “criminal club” of investors who made money trading on insider information. The charges have raised the issue of what, exactly, is insider trading and whether it should be a crime.

Also in this issue:

• The deal to force the nation’s largest mortgage lenders to write down some home loans and refinance mortgages for “underwater” borrowers is drawing fire from various quarters.

• Reporters’ questions about government-sponsored mortgage behemoth Freddie Mac’s investment practices have led to Freddie’s pledge to get out of investments that turn profits when Americans stay in mortgages with high interest rates.

• Just 10 months after the Raleigh Michigan Studios opened in Pontiac, Michigan, the movie studio missed a $630,000 bond payment. But the bondholders received their money courtesy of the Michigan Employees’ Retirement System. Former governor Jennifer Granholm and lawmakers forced the employee pension system to back an $18 million loan for the studio.

• Another major dispute over interchange fees could take place soon, this one centering on the swipe fee retailers pay on credit card transactions. An antitrust suit is pending between five million retailers and Visa, MasterCard, and 13 large banks, including Citi, Bank of America, Chase, Capital One, U.S. Bancorp, and Wells Fargo. The retailers claim banks and the payment systems have colluded unfairly to increase the interchange fee retailers pay on credit card transactions.

• Politicians and the nation’s federal financial regulators claim they saved the American economy, but in truth they have done everything within their power to expand their own influence. Instead of openly explaining their actions, the bailout agencies have attempted to prevent the public from reviewing their decision-making, often at tremendous cost to taxpayers.

• New projections from the nonpartisan Congressional Budget Office state the Troubled Asset Relief Program will cost federal taxpayers $23 billion in 2012--$20 billion more than originally anticipated. The cause of TARP’s deteriorating condition, nearly four years after it was put into place, is the declines in share prices at General Motors and insurer American International Group.