On March 28th, 2012, while testifying before a subcommittee of the Senate Appropriations Committee, U.S. Treasury Secretary Timothy Geithner said that he is encouraging Fannie Mae and Freddie Mac to reduce the principal on a borrower’s mortgage, under certain circumstances. Over the past two years, more than 12 percent of all mortgages in the United States have been labeled delinquent or have resulted in foreclosure.
Wall Street’s biggest headline yesterday was the release of notes from the latest Federal Open Market Committee’s (FOMC) meeting and the results of the Fed’s stress tests on America’s 19 largest banks. In the statement released by the FOMC, the Fed expects moderate economic growth over the coming quarters and expects unemployment to decline gradually but noted it is still elevated. The Fed also reiterated its federal funds target rate range of between 0 and 0.25% through late 2014. While the economic update was important, it was the results of the stress tests that generated the biggest buzz.