Welcome to The Vault. Every week you'll find a sample of FedFin opinion and analysis on the most recent issues facing financial services firms. Check back frequently to see what's new. Click here to contact us.

The OCC yesterday expanded the ability of national banks and federal thrifts to make over-100% LTV loans as long as the loan is to purchase or rehab of an eligible loan in eligible distressed communities.  The OCC’s newly-granted permission is so grudging that we doubt large loan volumes will ensue, but new partnerships with banks for flippers, investors, and community groups are now possible.

The full report is available to subscription clients. To find out how you can sign up for the service, click here

Taking a look at the critical question of the extent to which interest-rate changes have their intended monetary-policy effect in the mortgage market, a new Federal Reserve paper reinforces the important adverse impact of high premiums – read also delivery fees – on housing equality.  Looking at the sudden cut in FHA premiums at the end of 2015 and isolating its impact for higher-risk, higher-LTV borrowers in FHA-likely neighborhoods, the paper finds that it was the premium cut – not lower rates – that spurred a demand spike without a corresponding price increase.

The full report is available to subscription clients. To find out how you can sign up for the service, click here

Earlier this week, the American Banker focused on a new FedFin paper looking at the impediments to new bank charters.  Based on hard experience working to charter a new bank, the brief reminds policy-makers warring over who gets to charter a bank that this issue isn’t all about them – if investors don’t see profit in a bank, they won’t try to open one.  However, there’s more than investor profits at stake – economic equality also has a stake in seeing new banks opened to serve local and under-served markets.

Read more: Karen Petrou on How New Bank Charters Affect Economic Equality

The FRB has proposed an overhaul to its supervisory ratings of large financial institutions – essentially a specialized CAMELS standard focused on the biggest BHCs and other companies under the FRB’s jurisdiction.  However, unlike CAMELS and the current BHC-rating system, a composite rating would not apply; instead, the FRB would judge covered companies’ capital planning and adequacy, liquidity-risk management and adequacy, and governance without combining these judgments into an overall safety-and-soundness conclusion.  The governance rating would be based on the supervisory guidance for large institutions proposed in tandem with these ratings, with the capital and liquidity components now judged to a considerable extent on the performance of a covered company and its U.S. operations under FRB stress-test standards.

The full report is available to retainer clients. To find out how you can sign up for the service, click here.