Ellen Seidman: All Publications, Events and Press

Financial System Regulation

Asset Building — Wed, 14 May 2008 08:16:00 -0400

Financial Literacy: Need, Strategies, Opportunity

Asset Building — Thu, 17 Apr 2008 08:37:00 -0400

CA Event: Financial Literacy - Need, Strategy, Opportunity

Communications — Thu, 17 Apr 2008 08:00:00 -0400

A New America Event
04/17/2008 - 12:00pm

Families across America face a growing array of financial decisions in an increasingly complex financial environment. Consumers are expected to navigate an increasinly complex financial services market in order to save for retirement, higher education and homeownership. Those with low-incomes -- who disproportionately lack both financial know-how and relationships with financial institutions -- are especially vulnerable to being shut out of the financial marketplace.

On Thursday, April 17th, Ellen Seidman, Director of New America's Financial Services and Education Project, presented on the importance of financial literacy for both individual households and the broader macroeconomy and discussed:

Expanding access to wealth-building financial services especially for low- and moderate-income families,
Effective strategies to improve financial education such as the California's Statewide Financial Literacy Initiative
Forging a new responsibility framework for consumer financial services in the 21st century and,
Helping Americans to better manage their debt and make wise financial decisions.

Can Online Investing End Poverty?

Communications — Tue, 18 Mar 2008 08:00:00 -0400

A New America Event
03/19/2008 - 4:00pm

"Invest Wisely. End Poverty." This is the goal of eBay's new online microfinance investment marketplace, MicroPlace. While online microlending has been growing more popular with peer-to-peer offerings such as the non-profit Kiva.org, MicroPlace is charting a whole new course in the microfinance industry, offering socially-minded Americans a new way to offer microloans to entrepreneurs in the developing world. As the only broker-dealer in the microfinance arena, MicroPlace is the first and only online service offering a way for investors to invest in the working poor, and earn both a social and financial return on the investment.

On March 19th, a panel of experts on social development and microfinance discussed MicroPlace's potential to reach everyday investors in the United States, as well as the opportunity to help people in developing countries. The event also touched on the larger themes of microfinance policy and fighting poverty, including how loans provided by microfinance institutions can help the working poor come out of poverty and begin to realize the possibilities of longer-term assets such as a thriving business, home, and nest-egg for retirement, as well as the systemic and institutional challenges the microfinance industry faces in reaching the world's poor.

Tracy Turner, founder and General Manager of MicroPlace, began the discussion by stressing the need for the microfinance industry to be profitable in order for it to be sustainable. One way to help achieve profitability is for individuals to think of securities based on the performance of microfinance institutions (MFIs) as a new “asset class” -- along with stocks, bonds, property, and other types of assets.

After Turner introduced MicroPlace, Shari Berenbach, Executive Director of Calvert Foundation explained the nature of her organization’s cooperation with the website. Calvert Foundation is an issuer of a number of the securities offered on MicroPlace, essentially acting as an intermediary between the microfinance institutions seeking loans and the investors in the United States and elsewhere seeking investments. Calvert Foundation is also responsible for ensuring due-diligence is done on the MFIs that it lends the proceeds from the purchase of the securities to. Next, Robert Mosbacher, Jr. President and CEO of the Overseas Private Investment Corporation (OPIC), explained how OPIC, a government agency, guarantees the securities that Calvert Foundation sells to investors through MicroPlace.

Kate McKee, a senior advisor to CGAP, a consortium of microfinance funders, subsequently offered MicroPlace a few kudos and a few quibbles. The kudos included: working hard to get the regulatory compliance “right,” and educating potential investors about difference in poverty from country to country. At the same time, McKee said she had a few concerns, including about the potential of MFIs listed on MicroPlace to be harmed by financial crises, natural disasters, political instability, and mismanagement of funds.

Looking ahead, MicroPlace’s Turner said that after spending the past year building the regulatory infrastructure and “back-office” capacity of the website, the company is turning its attention to improving its user interface. Changes will include providing investors with more search criteria by which they can choose their investment, such as which institutions offer the highest rate of return and which offers loans primarily to women and/or the “poorest-of-the-poor.”

The Global Assets Project of the New America Foundation, along with Calvert Foundation and the Overseas Private Investment Corporation (OPIC), with the support of the International Gateway at the Ronald Reagan Building and International Trade Center, cordially invite you and your colleagues for a special event discussing one of the newest innovations in asset building and poverty reduction.

Ellen Seidman in U.S. Banker | Is the OTS Obsolete?

Communications — Sat, 01 Mar 2008 14:55:00 -0500

New America in the News:

Is the OTS Obsolete? (U.S. Banker, subscription only)

. . . "The system has worked well enough," says Ellen Seidman, who ran the Office of Thrift Supervision under President Clinton and now directs the New America Foundation's Financial Services and Education Project in Washington, D.C. "It's a case of 'If it isn't broke, don't fix it.' Though it's entirely reasonable that people are raising these questions now, it's not great for morale."

Abolishing the OTS would only raise a number of other problems, including whether the two main regulatory duties--overseeing thrifts and overseeing holding-banking companies--would be given, respectively, to the Office of the Comptroller of the Currency and the Federal Reserve, says Seidman. The OTS's input has been particularly necessary in ongoing discussions about interest-rate risk in 15- and 30-year mortgages, she says. . .

Ellen Seidman in New York Times | 'A Moral Hazard for a Housing Bailout'

Communications — Sat, 23 Feb 2008 10:14:00 -0500

New America in the News:

A ‘Moral Hazard’ for a Housing Bailout: Sorting the Victims From Those Who Volunteered (New York Times)

Ellen Seidman, a former director of the Office of Thrift Supervision and now a senior fellow at the New America Foundation, said the government’s first challenge is to buy mortgages at their true current value. If the government overpaid or became caught by an even further decline in the market value of its mortgages, taxpayers would indeed be bailing out both the industry and imprudent home buyers.

“It’s not easy, but it’s not impossible,” Ms. Seidman said. “There are various auction mechanisms, both inside and outside government.” ...

Optimal Capital Structure: The Role of Savings in MFIs

Asset Building — Thu, 21 Feb 2008 12:56:00 -0500

The Community Reinvestment Act

Asset Building — Wed, 13 Feb 2008 09:54:00 -0500

New America Foundation Commends Governor Arnold Schwarzenegger’s Bank on California Initiative

Communications — Thu, 24 Jan 2008 13:21:00 -0500

Today, California Governor Arnold Schwarzenegger announced he would launch a Bank on California initiative to connect lower income un-banked Californians with the financial products and services they need to begin climbing up economic ladder. The program builds on Bank on San Francisco, a citywide effort to bring 10,000 of the city’s estimated 50,000 un-banked residents into the financial mainstream through participating banks’ offerings and marketing of reasonably-priced products and services.

“We applaud Governor Schwarzenegger for recognizing that un-banked Californians are financially vulnerable and should be encouraged to become part of the financial mainstream,” said Olivia Calderon, California Legislative Director of… more

Ellen Seidman in American Banker | Obama's Bank-Issue 'Blank Slate'

Communications — Wed, 09 Jan 2008 17:20:00 -0500

New America in the News:

Assessing Obama's Bank-Issue 'Blank Slate' (American Banker)
"When you start campaigning in places like Florida and California, where these issues are front and center, you will hear more about it," said Ellen Seidman, who ran the Office of Thrift Supervision under President Clinton and now directs the New America Foundation's Financial Services and Education Project. ...

Ellen Seidman in Chicago Sun-Times | 'Home Prices and The Fed'

Communications — Sun, 30 Dec 2007 07:40:00 -0500

New America in the News:

What a year! But Chicago rolls with the punches. (Chicago Sun-Times)
"If you go back a year ago and look at the stories, and look at what the lending community was doing, [the problems do] tend to unfold more slowly in places like Chicago that are more stable," said Ellen Seidman, executive vice president at ShoreBank Corp. and the director of the Financial Services and Education Project at the New America Foundation. ...

Viewpoint: Fed's Mortgage Move is a Good Start

Ron Tang — Fri, 21 Dec 2007 00:00:00 -0500

With foreclosures reaching record levels and predictions for further trouble ahead, the Federal Reserve Board on Tuesday unanimously approved potentially sweeping changes to how mortgages are marketed, made, and serviced, especially in the nonprime market. Will the Fed be able to meet its goal of a "comprehensive set of protections to consumers" when the comments come flying?

The proposed revisions to regulations under the Truth in Lending Act are designed to realign relationships in the mortgage business, so borrower and lender are once again interested in the same result: a good mortgage.

The rules, unlike guidelines bank regulators issued over the last… more

Ellen Seidman in Wall Street Journal on Helping Troubled Homeowners

Communications — Sat, 15 Dec 2007 09:43:00 -0500

New America in the News:

Washington's leaders have been pushing many policy buttons to stem the worsening housing and credit crisis. They've yet to find the off button, however, and that's prompting a search for more-aggressive solutions.

This week's decision by Citigroup Inc. to bail out seven investment entities and bring $49 billion in assets onto its balance sheet effectively killed one of the centerpieces of the Bush administration's approach. Treasury Secretary Henry Paulson has pushed a giant rescue plan for off-the-books funds saddled with mortgage-backed debt, but banks have mostly done the painful work themselves.

Some other policy moves are getting under way, including a plan to freeze interest rates for some subprime mortgage borrowers and the Federal Reserve's move to offer banks special funding at lower-than-usual rates so they can lend more. The Fed has cut its key short-term rate by a full percentage point since August, and markets expect it to continue.

Still, if those steps fail to calm homeowners and markets, as some investors expect, debate is likely to grow about what levers remain. Some with an interventionist bent are raising proposals amounting to federal bailouts for homeowners facing foreclosure and the revival of New Deal-era programs. Earlier this month, the Mortgage Bankers Association said home foreclosures in the third quarter hit their highest rate since at least 1972. ...

This past week, the Center for American Progress, a liberal think tank, proposed that the government buy some mortgage-backed securities and create a new agency, the Family Foreclosure Rescue Corp. It would issue new, more affordable fixed-rate mortgages for those facing foreclosure whose homes are worth less than what they owe.

"There will be a louder discussion about do variations on this theme make sense, and could you pull it off?" says Ellen Seidman, a former economic adviser in the Clinton administration now at the New America Foundation. ...

For the complete article, please click here.

Ellen Seidman in U.S. News & World on Bush's Mortgage Plan

Communications — Fri, 07 Dec 2007 13:26:00 -0500

New America in the News:

The devil is in the details of President Bush's plan to curb the nation's escalating home foreclosures by freezing for five years the introductory "teaser" interest rates on many subprime loans. Borrowers who qualify—Bush estimates that up to 1.2 million might be eligible—will also have the option of refinancing into a new mortgage or switching to a loan insured by the Federal Housing Administration.

Lenders had already been working out deals with strapped subprime borrowers, but only a small number of homeowners have been able to renegotiate their loans. Bush's plan aims to speed up these deals by laying out criteria to help lenders determine who is eligible for help. "We hope that these guidelines will be adopted as reasonable and customary standard practice across the entire servicing industry," said Treasury Secretary Henry Paulson, who helped broker the deal with other regulators and mortgage lenders. Here are six things you should know about the plan:

It will benefit only a small group of subprime borrowers. ...

Borrowers must ask for help. ...

The plan is not a "silver bullet." ...

Questions remain about how it will work. ...

This is an industry-led deal, not a government bailout. ...

The plan will become a hot political issue. This is a bold step for an administration that has, until recently, insisted that the task of refinancing mortgage loans should be handled on a case-by-case basis. "There are obviously significant limitations on what they're willing to do, but I don't think we would have gotten this plan out of the administration that came into office in 2001," says Ellen Seidman, former director of both the Office of Thrift Supervision and the Federal Deposit Insurance Corp., who now heads a project at the New America Foundation. As the presidential election nears, the health of the economy—and how candidates will deal with the mortgage crisis—is gaining political importance. Some Democratic candidates argued that the plan doesn't go far enough and proposed their own plans. Hillary Clinton, for example, proposed an across-the-board rate freeze and a moratorium on foreclosures. John Edwards said he would freeze interest rates for seven years. ...

For the complete article, please follow this link.

Ellen Seidman Discusses Relief for Subprime Homeowners on KPCC

Communications — Wed, 05 Dec 2007 17:29:00 -0500

New America in the News:

Mortgage Expert Ellen Seidman interviewed with KPCC radio, please listen to the interview here.

"In an agreement that is set to be publicly announced by the Bush Administration on Thursday, December 6, a five-year freeze will be put on interest rates for certain subprime mortgages. The plan hopes to alleviate the growing number of foreclosures in the U.S., and the housing slump which is already aggravated financial markets." ... Please visit the KPCC website.

Ellen Seidman in Los Angeles Times on the Mortgage Crisis

Communications — Wed, 05 Dec 2007 15:21:00 -0500

New America in the News:

Amid escalating loan defaults and foreclosures, the Bush administration had until recently said lenders and borrowers should work out new loan terms on their own and not expect the government to step in.

But that changed abruptly last week as Treasury Secretary Henry Paulson convened lenders, investors and others to discuss freezing interest rates for some borrowers in hopes of staving off foreclosures. Details of the plan are expected to be announced this week.

As recently as Oct. 10, Paulson told reporters that he opposed the idea of modifying loans by broad category. The administration had held steadfast to this view, despite complaints by consumer activists that many borrowers had signed for loans that were doomed to fail when they reset at higher rates in the future.

The previous posture was consistent with the administration's strong free-market views and general wariness toward government intervention in the private economy.

But recent developments transformed the picture, observers said, suggesting that fallout from the mortgage markets was spreading. Lenders are making fewer loans, further cooling the housing market. That in turn is weakening consumer spending and is expected to cut into job growth.

The mounting damage helped spur a sharp Nov. 26 sell-off on Wall Street, moving the major stock market indexes into "correction" territory before beginning a rebound the next day.

"I think the capital-markets issue hit them in a way that the problems of individual homeowners and community devastation did not," said Ellen Seidman, former director of both the Office of Thrift Supervision and the Federal Deposit Insurance Corp., who now heads a New America Foundation financial education project. ...

For the complete story, please follow this link.

New America Foundation Praises Governor Arnold Schwarzenegger’s Leadership in Responding to Sub-prime Mortgage Loan Crisis

Communications — Tue, 20 Nov 2007 18:02:00 -0500

Today, California Governor Arnold Schwarzenegger announced an agreement with four large servicers of sub-prime mortgage loans to “fast-track” modifications to those loans so that homeowners who have been current, but are facing unaffordable loan payment resets, will be able to stay in their homes over the long term. The program builds on a proposal by FDIC Chair Sheila Bair that servicers freeze interest rates at current rates for homeowners who have been making timely payments on sub-prime loans with interest rates scheduled to reset.

California is the nation’s single largest state in terms of mortgages outstanding, and in September, had the… more

Public Policy Ideas to Improve Financial Education and Help Consumers Make Wise Financial Decisions

Asset Building — Wed, 17 Oct 2007 11:51:00 -0400

Although the number of financial education programs has grown over the last decade, few policies have been enacted to evaluate, support and expand effective financial education and increase financial capability. Although the government is not the only entity that can help improve financial education, there is an important role for the government sector to play that complements the efforts of the private sector, the nonprofit sector, and the efforts of individuals to take personal responsibility to access financial education. All levels of government can develop policies that help prepare youth and adults to make wise financial decisions. … more

Next Generation CRA: A 21st Century Responsibility and Accountability Agenda for Consumer Financial Services

Asset Building — Sun, 14 Oct 2007 12:49:00 -0400

Ellen Seidman in American Banker on Helping Homeowners

Communications — Thu, 11 Oct 2007 04:23:00 -0400

New America in the News:

Amid widespread complaints that mortgage loan modification is not moving fast enough, Treasury Secretary Henry Paulson on Wednesday opposed pressure for across-the-board modifications, said bankruptcy reform could prove counterproductive, and painted a relatively upbeat picture of the ability of struggling homeowners to handle interest rate resets.

At a press conference announcing a group of lenders, servicers, and others who have agreed to step up counseling efforts, Mr. Paulson said the group would not consider categorical modifications, signaling that they should be handled on a loan-by-loan basis. ...

Ellen Seidman, director of the Financial Services and Education Project at the New America Foundation and a former director of the Office of Thrift Supervision, said Treasury's announcement fails to make an impact. Doing modifications "on a loan-by-loan basis is not going to work fast enough," she said. "We've got to do something other than - as someone put it - social work."

For more on this story, please visit American Banker online.