Latest news with #Pulte
Miami Herald
17 hours ago
- Business
- Miami Herald
Housing market chief Pulte sends blunt message on Fed interest rate cuts
In the midst of one of the slowest spring real-estate markets in decades, the director of the Federal Housing Finance Agency strongly urged Federal Reserve Chair Jerome Powell to resume cutting the central bank's interest rates. Trump-appointee FHFA Director William J. Pulte made his blunt request on X just a few days before the minutes of the May Federal Open Meeting Committee, chaired by Powell, showed multiple reasons why the central bank chose not to reduce rates. Don't miss the move: Subscribe to TheStreet's free daily newsletter Pulte and other Trump administration officials have been demanding that the independent Federal Reserve Bank's leaders cut interest rates as early as its June or July meetings to allow, among other outcomes, mortgage rates to drop for was sworn in as the director of the U.S. Federal Housing Agency, FHFA, following his nomination by President Donald J. Trump and bipartisan confirmation by the U.S. Senate. In this role, Pulte oversees Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. Related: Fed official sends strong message about interest-rate cuts He knows a thing or two about the housing market. Pulte is the grandson of the founder of PulteGroup, one of the largest U.S. homebuilders. He has had a longstanding career in homebuilding, housing products, and community development, including sitting on PulteGroup's board from 2016 to 2020. In 2011, Pulte founded Pulte Capital Partners LLC, an investment firm that focuses on building and housing products. He's also widely followed on the social media site, "X", where he garnered over 3.2 million followers partly due to his focus on philanthropy. As inflation stays relatively steady and housing inventory dries up, Pulte turned to Elon Musk's social media platform X to plead for a long-awaited change in the federal funds interest rate. More Economic Analysis: Hedge-fund manager sees U.S. becoming GreeceA critical industry is slamming the economyReports may show whether the economy is toughing out the tariffs The Federal Reserve impacts consumer interest rates by influencing the federal funds rate, which in turn affects the money supply. When the federal funds rate is lowered, it can stimulate economic growth and lower interest rates for consumers. Mortgage rates are impacted by changes in the 10-year Treasury note, which is influenced by changes in the Fed Funds Rate. Most U.S. mortgages, particularly the 30-year fixed rate, are influenced more directly by the movement of the 10-year Treasury yield. The current Fed Funds Rate is between 4.25 and 4.50%. The average interest rate on a 30-year home mortgage is approximately 6.86%. The 10-year Treasury yield as of May 29 is 4.32%, an increase from early 2023. Some analysts believe the 10-year Treasury yield could reach 5.5% by the end of the year if inflationary pressures and global trade policies are not addressed. "Jay Powell needs to lower interest rates - enough is enough," he wrote. "President Trump has crushed Biden's inflation, and there is no reason not to lower rates. The housing market would be in much better shape if Chairman Powell does this," Pulte said in the X post on May 27. Pulte says the rate cut is overdue and prolongs the multiple economic damages the Biden administration left behind. Pulte did not mention Trump's seesawing tariffs. Redfin recently announced that there were 500,000 more buyers for homes in the United States than inventory of houses for sale. Related: Fed minutes send strong message on interest-rate cuts The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Yahoo
2 days ago
- Business
- Yahoo
Contributor: A Trump deregulator may set us up for a sequel to the 2008 crisis
The movie "The Big Short" — dramatizing the reckless behavior in the banking and mortgage industries that contributed to the 2008 financial crisis — captures much of Wall Street's misconduct but overlooks a central player in the collapse: the federal government, specifically through Fannie Mae and Freddie Mac. These two government-created and government-sponsored enterprises encouraged lenders to issue risky home loans by effectively making taxpayers co-sign the mortgages. This setup incentivized dangerous lending practices that inflated the housing bubble, eventually leading to catastrophic economic consequences. Another critical but overlooked factor in the collapse was the Community Reinvestment Act. This federal law was intended to combat discriminatory lending practices but instead created substantial market distortions by pressuring banks to extend loans to borrowers who might otherwise have been deemed too risky. Under threat of regulatory penalties, banks significantly loosened lending standards — again, inflating the housing bubble. After the bubble inevitably burst, Fannie and Freddie were placed under conservatorship by the Federal Housing Finance Agency. The conservatorship imposed rules aimed at preventing future taxpayer-funded bailouts and protecting the economy from government-fueled market distortions. Now, President Trump's appointee to lead that agency, Bill Pulte, is considering ending this conservatorship without addressing the core structural flaw that fueled the problem in the first place: implicit government guarantees backing all Fannie and Freddie mortgages. If Pulte proceeds without implementing real reform, taxpayers on Main Street are once again likely to be exposed to significant financial risks as they are conscripted into subsidizing lucrative deals for Wall Street. Without genuine reform, the incentives and practices that led to the crisis remain unchanged, setting the stage for a repeat disaster. Pulte's proposal isn't likely to unleash free-market policies. Instead, it could further rig the market in favor of hedge funds holding substantial stakes in Fannie and Freddie, allowing them to profit enormously from the potential upside, while leaving taxpayers to bear all the downside risks. A meaningful solution requires Fannie and Freddie to significantly strengthen their capital reserves. The two government-sponsored enterprises still remain dangerously undercapitalized. A report from JP Morgan Chase describes it this way: 'Despite steady growth in [their net worth], the GSEs remain well below the minimum regulatory capital framework requirements set by the Federal Housing Finance Agency in 2020.' Imposing robust capital requirements similar to those that govern private banks would oblige the two enterprises to internalize their risks, promoting genuine market discipline and accountability. Further reforms should address transparency and oversight. Enhanced disclosure standards would allow investors, regulators and the public to better assess risks. Additionally, limiting the types of mortgages these entities can guarantee could reduce exposure to the riskiest loans, further protecting taxpayers. Implementing clear rules that prevent Fannie and Freddie from venturing into speculative financial products would also mitigate potential market distortions. Critically, the federal government must clearly communicate that future bailouts are not an option. Explicitly removing government guarantees would compel Fannie and Freddie to operate responsibly, knowing that reckless behavior will lead to their insolvency, not to another taxpayer rescue. Clear legal separation from government backing is essential to prevent moral hazard. The combination of government guarantees, regulatory pressure from policies such as the Community Reinvestment Act and inadequate capital standards created the perfect storm for the 2008 financial crisis. Ignoring these lessons and repeating past mistakes would inevitably lead to a similar disaster. Proponents of prematurely releasing Fannie and Freddie argue that market conditions have changed and risk management has improved. Yet, history repeatedly demonstrates that without structural changes, financial entities — particularly those shielded by government guarantees — inevitably revert to risky behavior when market pressures and profit incentives align. Markets function best when participants bear the full consequences of their decisions, something impossible under the current structure of these government-sponsored enterprises. Ultimately, the only responsible approach is removing taxpayers from the equation entirely. Fannie Mae and Freddie Mac should participate in the mortgage market only as fully private entities, without any implicit government guarantees. The American public doesn't need a sequel to 'The Big Short.' The painful lessons of the 2008 crisis are too recent and too severe to be ignored or forgotten. Market discipline, fiscal responsibility and genuine reform — not government-backed risk-taking — must guide our approach going forward. We can only hope that the Trump administration chooses fiscal responsibility over risky experiments that history has already shown end in disaster. Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University. This article was produced in collaboration with Creators Syndicate. If it's in the news right now, the L.A. Times' Opinion section covers it. Sign up for our weekly opinion newsletter. This story originally appeared in Los Angeles Times.
Los Angeles Times
2 days ago
- Business
- Los Angeles Times
A Trump deregulator may set us up for a sequel to the 2008 crisis
The movie 'The Big Short' — dramatizing the reckless behavior in the banking and mortgage industries that contributed to the 2008 financial crisis — captures much of Wall Street's misconduct but overlooks a central player in the collapse: the federal government, specifically through Fannie Mae and Freddie Mac. These two government-created and government-sponsored enterprises encouraged lenders to issue risky home loans by effectively making taxpayers co-sign the mortgages. This setup incentivized dangerous lending practices that inflated the housing bubble, eventually leading to catastrophic economic consequences. Another critical but overlooked factor in the collapse was the Community Reinvestment Act. This federal law was intended to combat discriminatory lending practices but instead created substantial market distortions by pressuring banks to extend loans to borrowers who might otherwise have been deemed too risky. Under threat of regulatory penalties, banks significantly loosened lending standards — again, inflating the housing bubble. After the bubble inevitably burst, Fannie and Freddie were placed under conservatorship by the Federal Housing Finance Agency. The conservatorship imposed rules aimed at preventing future taxpayer-funded bailouts and protecting the economy from government-fueled market distortions. Now, President Trump's appointee to lead that agency, Bill Pulte, is considering ending this conservatorship without addressing the core structural flaw that fueled the problem in the first place: implicit government guarantees backing all Fannie and Freddie mortgages. If Pulte proceeds without implementing real reform, taxpayers on Main Street are once again likely to be exposed to significant financial risks as they are conscripted into subsidizing lucrative deals for Wall Street. Without genuine reform, the incentives and practices that led to the crisis remain unchanged, setting the stage for a repeat disaster. Pulte's proposal isn't likely to unleash free-market policies. Instead, it could further rig the market in favor of hedge funds holding substantial stakes in Fannie and Freddie, allowing them to profit enormously from the potential upside, while leaving taxpayers to bear all the downside risks. A meaningful solution requires Fannie and Freddie to significantly strengthen their capital reserves. The two government-sponsored enterprises still remain dangerously undercapitalized. A report from JP Morgan Chase describes it this way: 'Despite steady growth in [their net worth], the GSEs remain well below the minimum regulatory capital framework requirements set by the Federal Housing Finance Agency in 2020.' Imposing robust capital requirements similar to those that govern private banks would oblige the two enterprises to internalize their risks, promoting genuine market discipline and accountability. Further reforms should address transparency and oversight. Enhanced disclosure standards would allow investors, regulators and the public to better assess risks. Additionally, limiting the types of mortgages these entities can guarantee could reduce exposure to the riskiest loans, further protecting taxpayers. Implementing clear rules that prevent Fannie and Freddie from venturing into speculative financial products would also mitigate potential market distortions. Critically, the federal government must clearly communicate that future bailouts are not an option. Explicitly removing government guarantees would compel Fannie and Freddie to operate responsibly, knowing that reckless behavior will lead to their insolvency, not to another taxpayer rescue. Clear legal separation from government backing is essential to prevent moral hazard. The combination of government guarantees, regulatory pressure from policies such as the Community Reinvestment Act and inadequate capital standards created the perfect storm for the 2008 financial crisis. Ignoring these lessons and repeating past mistakes would inevitably lead to a similar disaster. Proponents of prematurely releasing Fannie and Freddie argue that market conditions have changed and risk management has improved. Yet, history repeatedly demonstrates that without structural changes, financial entities — particularly those shielded by government guarantees — inevitably revert to risky behavior when market pressures and profit incentives align. Markets function best when participants bear the full consequences of their decisions, something impossible under the current structure of these government-sponsored enterprises. Ultimately, the only responsible approach is removing taxpayers from the equation entirely. Fannie Mae and Freddie Mac should participate in the mortgage market only as fully private entities, without any implicit government guarantees. The American public doesn't need a sequel to 'The Big Short.' The painful lessons of the 2008 crisis are too recent and too severe to be ignored or forgotten. Market discipline, fiscal responsibility and genuine reform — not government-backed risk-taking — must guide our approach going forward. We can only hope that the Trump administration chooses fiscal responsibility over risky experiments that history has already shown end in disaster. Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University. This article was produced in collaboration with Creators Syndicate.
CNBC
3 days ago
- Business
- CNBC
Palantir teams up with Fannie Mae in AI push to sniff out mortgage fraud
Quasi-governmental financial firm Fannie Mae on Wednesday announced a partnership with defense tech player Palantir to detect mortgage fraud, deepening ties between the federal government and a company that has been a big winner in the second Trump administration. Priscilla Almodovar, Fannie Mae CEO, said Wednesday at a press event that the goal is for the firm to "identify fraud more proactively" with the help of Palantir, starting with its multi-family housing business. An early test showed that Palantir's technology, which includes elements of artificial intelligence, could identify fraud in seconds that took human investigators two months to find, she said. Shares of Palantir have jumped more than 140% since President Donald Trump's election win in November. The technology stock has roles in both modernizing the U.S. military and helping to cut costs in government, making it a seemingly strong fit for the administration's stated priorities. CEO Alex Karp said Wednesday that the mortgage fraud detection can be done in a way that "protects the underlying data and protects the privacy of the people submitting their forms." Fannie Mae and Freddie Mac are government-sponsored enterprises that have been under the conservatorship of the Federal Housing Financing Agency since 2008. The official names of the two enterprises are the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, respectively. FHFA director William Pulte said Wednesday the Palantir program could be expanded to Freddie Mac in the future and that the agency is also talking to Elon Musk's xAI firm about a potential partnership. "The sky's the limit. We're not just limited to fraud. If there are ways to pull cost out of the system, we want to do it," Pulte said. The press release did not include a dollar amount that Fannie Mae would pay to Palantir for this service. The announcement comes as there is a push to potentially bring Fannie and Freddie out of conservatorship and re-establish them as something closer to independent companies. "Our great Mortgage Agencies, Fannie Mae and Freddie Mac, provide a vital service to our Nation by helping hardworking Americans reach the American Dream — Home Ownership," Trump said in a Truth Social post on Tuesday. "I am working on TAKING THESE AMAZING COMPANIES PUBLIC, but I want to be clear, the U.S. Government will keep its implicit GUARANTEES, and I will stay strong in my position on overseeing them as President. These Agencies are now doing very well, and will help us to, MAKE AMERICA GREAT AGAIN!" The "implicit guarantee" mentioned by Trump refers to the idea among investors that the government won't let Fannie and Freddie default on their mortgage-backed securities. That concept is not legally binding but does help that massive market function and, in theory, lead to lower mortgage rates by reducing the perceived risk to investors in the housing market. Pulte, who is the grandson of the founder of homebuilding firm PulteGroup, said on CNBC's "Money Movers" that an exact plan for bringing Fannie and Freddie public is still undetermined and could even involve the companies remaining in conservatorship. "Whether the president decides to sell a small piece, or what have you, that's entirely up to the president," he said. There are equity shares of the two firms that trade over the counter, and those shareholders could conceivably see a large profit if Fannie and Freddie are taken public. One such shareholder is Bill Ackman's Pershing Square, and the hedge fund manager has publicly called for IPOs of the two firms.
Yahoo
3 days ago
- Business
- Yahoo
5 Companies That Consistently Buy Back Their Own Shares
May 26, 2024 -- (Maple Hill Syndicate) When a company buys back its own shares, shareholders often benefit. With fewer shares outstanding, each share is likely to be worth more. In the past 20 years, buybacks have become increasingly popular. Many companies prefer them to dividends because they have a softer tax impact. Dividends stick shareholders with taxes on their next tax return, while buybacks don't. Of course, companies can also do both dividends plus buybacks. Warning! GuruFocus has detected 6 Warning Signs with BOM:542905. Buybacks can be a sign that a company's board of directors considers the company's stock undervalued. To be sure, buybacks are a bad idea if a company takes on excessive debt to fund them, or if the buyback siphons off cash that would be better used to beef up the company's core business. On the whole, though, I view buybacks as a good sign. Standard & Poor's has a Buyback Index (basically the 100 stocks in the S&P 500 with the highest percentage of buybacks). In the past five years, it has beaten the S&P 500 Total Return Index by about seven percentage points cumulatively, returning 16.29% a year versus 15.61% for the S&P 500. Over the past 25 years, the Buyback Index has outperformed the benchmark S&P 500 18 times out of 25. Here are five companies that stand out for their consistent use of buybacks. Each has bought back more than 4% of its shares per year over the past one, three and five years. MetLife MetLife Inc. (NYSE:MET), based in New York City, is one of the largest insurance companies in the U.S. It specializes in group benefit packages. Last year it took in about $45 billion in premiums, and another $18 billion or so in investment income. It paid out roughly $43 billion in claims. In the past five years, MetLife has bought back, on average, 5.8% of its stock each year. During that time, the stock has risen about 114%. The stock seems reasonable priced to me, selling for less than 13 times earnings and about 0.75 times revenue per share. Pulte Nobody wants homebuilding stocks these days. Mortgage rates are unpleasantly high, and home prices are steep (a mixed blessing for homebuilders). New home sales this year have been weak, bordering on terrible. Several homebuilding companies have been buying back their own stock. One that I like is PulteGroup Inc. (NYSE:PHM), whose average home sells for about $570,000. That's a few notches higher than the U.S. average (about $504,000) and median price (about $438,000). Who knows when industry conditions will improve? It's not clear, but if you're a patient investor, you can take heart from the fact that homebuilders have enjoyed periodic booms in the past. Pulte stock, like that of other homebuilders, is cheap at present, selling for about seven times earnings. Pulte has bought back about 6% of its stock annually in the past five years. Academy Sports Also at seven times earnings is Academy Sports and Outdoors Inc. (NASDAQ:ASO), which has its headquarters in Katy, Texas. It has averaged a 4% buyback in the past five years, and picked up the pace to 8% last year. Wall Street analysts are split on Academy. Of 20 analysts who cover it, half rate it a buy or outperform and half don't. But the average one-year price target for all analysts is more than $55, well above the current market price of less than $41. Employers Holdings A nearly debt-free choice is Employers Holdings Inc. (NYSE:EIG), out of Reno, Nevada. It's a workers' compensation insurer, concentrating on small and mid-sized businesses engaged in low-to-medium hazard industries. Growth has been slow here, but profitability has been consistent: No losses in the past 23 years. The company has only a speck of debt, and more than $26 in cash for each dollar of debt. Williams-Sonoma Known for high-end cookware and home goods, Williams-Sonoma Inc. (NYSE:WSM) has seen its stock quadruple in the past decade. It has been astonishingly profitable, with a return on equity recently of 52%. Analysts obviously think the party's over: Our of 25 analysts who cover the stock, only five recommend it. The reason for analysts' gloom is obvious: The company imports about 23% of its merchandise from China, the target of the harshest tariffs proposed (though currently paused) by the Trump administration. The stock is down more than 15% year to date (through May 23). It sells for about 18 times earnings, which I think is not bad considering that Williams-Sonoma has grown earnings at better than a 22% annual clip for the past ten years. John Dorfman is chairman of Dorfman Value Investments LLC in Boston, and a syndicated columnist. His firm or clients may own or trade securities discussed in this column. He can be reached at jdorfman@ This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
