Treasuries Plunge, Led by 30-Year Bonds, as Debt Auctions Loom – Dakin Campbell – Treasuries fell, with 30-year bonds losing the most this week in 22 years, as the U.S. readied $78 billion in debt sales over the next five days to finance fiscal stimulus spending projected to swell the deficit to $1 trillion. – Bloomberg 

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FAIR VALUE SECTION:

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1.  Volcker Calls for New Look at Fair-Value Rules - David M. Katz – Will the former Fed Chairman tell Obama to ease up on mark-to-market standards for regulated banks? – CFO.com

2.  What’s More Important than Fair Value? Plenty - Marie Leone – Global financial experts are more keen on reining in securitization than stamping out fair value. – CFO.com 

3.  In this issue of The Institutional Risk Analyst, we ask whether the combination of fair value accounting and credit default swaps is not driving the global economy into a fire-sale liquidation.  Does FVA + CDS equal financial Armageddon?  And we republish a comment on FVA by our friend Alex Pollock at American Enterprise Institute. 

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MORE NEWS:

Small Banks Move Into Mortgage Market as JPMorgan Fears to Lend – Dan Levy and Ari Levy – … Small banks with little or no exposure to the toxic debt that crippled Wall Street have money to lend as U.S. homebuyers struggle to find credit.  … – Bloomberg 

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The Next Bank Bailout – Mary Kane – Federal Home Loan Banks Are Positioned to Need Taxpayer Help – Washington Independent  
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Alt-A Loans a Wild Card in 2009 US Mortgage Outlook – Not-quite-prime Alt-A loans will continue to perform poorly throughout 2009 as economy-wide payment shocks, such as job losses, and mortgage-specific shocks, such as amortisations, continue to stretch borrowers, according to CreditSights. – Research Recap

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1.  supporting MBS – Fed buys $19 billion in mortgage-backed assets – Ronald D. Orol – … The Federal Reserve Bank of New York bought $19 billion in mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae between Jan. 15 and Jan 21, bringing its total purchases up to $52.6 billion, according to a statement Thursday.  … – MarketWatch

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2.  not working? – Fed Losing Control of Mortgage Rates – Michael Steinberg – With much fanfare, the Federal Reserve started buying Fannie Mae (FNM), Freddie Mac (FRE) and FHLB debt and MBS. Conforming 30-year mortgages rates dropped to an average 4.96 according to Freddie’s last report. The Fed was hailed for its accomplishment, and predictions came from all corners that 4.5% or even 4% mortgages were not far off. … – Click Broker

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The Second Savings And Loan Scandal – Michael Hudson and Jim Overton – Where was regulatory supervision when we needed it?  … Among the worst blows in 2008 were the meltdowns of IndyMac Bank and Washington Mutual Savings Bank. WaMu’s fall was the largest bank failure in the nation’s history; IndyMac’s was the fourth largest ever.  There were common threads, though, in both calamities. … – Forbes Commentary

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The risk-reward of FHLBs–all out of whack – There’s something the matter with this picture: the Federal Home Loan Banks benefit a small handful of institutions, yet spread a lot of risk among many. Gary Townsend explains  at bankstocks.com
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Fannie Mae Laying Off Hundreds – Zachary A. Goldfarb – Fannie Mae, the District mortgage giant taken over by the federal government last year, is laying off several hundred employees locally as it reorients itself to focusing on preventing home foreclosures.  – Washington Post 

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Cram-Downs Will Drive MBS Downgrades, Analysts Say – By PAUL JACKSON – housingwire