Thrifts And Housing Finance

Author : U S Government Accountability Office (G
Publisher : BiblioGov
ISBN 13 : 9781289015619
Total Pages : 84 pages
Book Rating : 4.0/5 (156 download)

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Download or read book Thrifts and Housing Finance written by U S Government Accountability Office (G and published by BiblioGov. This book was released on 2013-06 with total page 84 pages. Available in PDF, EPUB and Kindle. Book excerpt: Pursuant to a legislative requirement, GAO evaluated the implications of a more stringent test for qualifying savings and loan associations to operate as insured thrifts, focusing on: (1) requirements changing the minimum thrift portfolio proportion of housing-related assets from 60 percent to 70 percent; and (2) better definition and restriction of acceptable thrift investments. GAO found that: (1) the supply of housing finance has become substantially less dependent upon thrifts' mortgage investments since the development and growth of mortgage-backed securities; (2) well-capitalized thrifts following nontraditional strategies performed comparably to well-capitalized thrifts following the traditional mortgage lending strategy; (3) if thrifts want to be profitable in the long term, they will have to broaden their activities or transform themselves into different sorts of financial institutions; (4) a more stringent qualified thrift lender test may not be necessary to ensure the availability of housing finance or to promote industry profitability and safety; (5) keeping the qualified thrift lender test at the current 60-percent level would help to ensure thrift industry safety and profitability and minimize the risks the industry presents to taxpayers; and (6) industry safety and soundness could be promoted by allowing safe and liquid assets, such as short-term U.S. Treasury securities, to be counted as qualified thrift investments.