WILL PULLING OUT THE RUG HELP? UNCERTAINTY ABOUT FANNIE AND FREDDIE'S FEDERAL GUARANTEE AND THE COST OF THE SUBSIDY

2008 ◽  
Vol 04 (01) ◽  
pp. 0850002
Author(s):  
KARAN BHANOT ◽  
DONALD LIEN ◽  
MARGOT QUIJANO

Comments by the Federal Reserve Chairman often evoked concerns about whether the government would protect bondholders in the event of default by Fannie Mae and Freddie Mac (F&F). Using a model of capital structure, we analyze the impact of this uncertainty on the value of the implicit subsidy for F&F (and similar institutions). We show that, counter to intuition, an increase in the likelihood that the government will not subsidize these entities via a guarantee may increase the expected cost of the subsidy to the federal government. A cap on the value of the investment portfolio is a more effective mechanism to reduce the risk exposure of the federal government. We also assess the design and impact of proposed receivership rules and highlight the problems in regulating GSE portfolios. Even though F&F are now in conservatorship, the framework is applicable to other government sponsored entities where there is ambiguity about the extent of government backing.

Author(s):  
Shahabuddin Mohammed Ahmed Abdullah

The traffic accidents in the high ways and towns are still increasing, their effect on the community development clearly seen. The control of this problem is highly significant. The analysis of the data and the information about the traffic accidents, their direct, indirect, a variables and continues cost represented in curing the injured, paying the Diya, the cost of the medical operations on behalf of the government and the relatives of the injured dealt with through the accounting view. This paper aimed at measuring the effect of traffic accidents in terms of money, to be use for the development of Accer province – South of the kingdom of Saudi Arabia. The overall cost of the traffic accidents in 2013 is 23 pillions Riyal. The percentage of the injured is 30% per family. The cost account of traffic accidents in Accer province is 1. 6 pillions Riyal. These sums of money could have been use for the development of the province. The paper recommends The direct, indirect, a variables and continues costs of the traffic accidents should give a due consideration The traffic administration should give a due consideration as well, to be minimizing the number of the traffic accidents. There should be decisive practical measures to stop these accidents.


2019 ◽  
Author(s):  
Oceana ◽  
Devan Archibald ◽  
Robert Rangeley

Healthy fish populations are critical to healthy ecosystems: they feed communities, support economies and are essential to our survival. But our oceans are facing growing threats and greater uncertainty. Overfishing, climate change, habitat destruction and pollution are degrading the underwater world and putting the marine life we all depend upon at risk. Much is at stake, as the status quo is demonstrably not working. The number of stocks in the healthy zone has decreased since Oceana Canada released its 2018 Fishery Audit, and the number in the critical zone has increased — including crab and shrimp stocks. This isparticularly worrying if the depletion of crustaceans becomes a trend, as the value of Canada’s seafood industry depends heavily on them. Progress on implementing rebuilding plans remains slow and many critically depleted stocks, including northern cod, are still without a plan. As well, Fisheries and Oceans Canada (DFO) has not yet indicated how and by when it will collect adequate catch monitoring information, needed to measure and manage bycatch (the incidental catch of non-target fish) in all Canadian commercial fisheries. Meanwhile, only two of the 11 recommendations from the 2018 Fishery Audit have been implemented. DFO has made some progress since the last Fishery Audit was released. In 2019, DFO published more information to help assess fish stock health, and some elements of fishery monitoring became more transparent. DFO also implemented some of the recommendations from the 2016 Auditor General report on sustainable fisheries, including developing timelines and priorities for rebuilding plans for depleted fish populations. Most importantly, a modernized Fisheries Act became law in June 2019. For the first time in the Act’s history, rebuilding plans are now required for depleted fish populations. The government has committed more than $100 million over five years to assess and rebuild fish stocks. This brings Canada into the group of nations with modern fisheries laws and could signal a historic turning point in the health of Canadian fisheries. The impact of the new Act will depend on the strength and pace of regulations, currently under development. The regulations will outline what rebuilding plans must include, and Oceana Canada is advocating that, at a minimum, they should specify a timeline and target, aimed at rebuilding stocks to healthy levels. In the year ahead, the federal government must develop strong and effective regulations to support the rebuilding provisions in the Fisheries Act and accelerate the implementation and enforcement of existing policies. Fortunately, there is a strong base of support for new regulations to rebuild stocks, new funding commitments and much-needed increases in DFO’s science capacity to get the job done. We have the tools needed to modernize Canada’s approach to fisheries management and rebuild fish populations, and Canadians want to see this happen. In a recent Abacus Data market research survey, 98 per cent of Canadians said it was important that the federal government work to rebuild abundant fish populations. If the government fails to take these actions, we can expect the number of healthy stocks to continue to decline and depleted populations will fail to recover, impoverishing the oceans and the coastal communities who depend on them.


2015 ◽  
Vol 7 (4) ◽  
pp. 354-365
Author(s):  
Peggy Crawford ◽  
Joetta Forsyth

Purpose – The purpose of this paper is to examine whether the underserved area requirements for Fannie Mae and Freddie Mac (the government-sponsored enterprises [GSEs]) and the community needs requirements of the Community Reinvestment Act (CRA) contributed to the house price run-up in the USA. Design/methodology/approach – This paper predicts the incidence of “Rebounds”, which indicate that a mortgage had been previously denied, to provide evidence on whether certain regulations caused excessively risky mortgage originations. As a different lender rejected the loan given the interest rate that they were willing to charge and information on the borrower, a higher incidence of Rebounds provides evidence that lenders were more frequently disagreeing about loans. This can indicate differences in regulatory pressure or oversight across lenders. Findings – This paper provides evidence that the GSEs were purchasing fewer Rebounds directly from lenders. However, evidence suggests that indirectly, the securitization market served as a conduit for Rebounds to the GSEs that needed to satisfy regulatory underserved area requirements. The necessity of complying with the CRA was found to increase Rebounds. Among regulators, the Federal Reserve was found to have been particularly associated with Rebounds. Originality/value – The paper’s contribution comes from linking Rebounds to legislative and regulatory influences. This contributes to the literature on excess credit and fraud, as well as the effect of underserved area requirements and the CRA. Also, this paper adds a new dimension to the literature on securitization, by showing the influence of regulation on the securitization of risky mortgages.


Author(s):  
Apinran Martins ◽  
Ogiji Patrick ◽  
Laniyan Chioma ◽  
Usman Nuruddeen

This paper investigates the inflationary impact of the various financing options for the federal government budget deficit which has accumulated overtime. Using Auto Regressive Distributed Lag (ARDL) methodology and quarterly data over the period 2000Q1 to 2017Q2, the study found significant relationship between inflation and the current financing options of the Government. Overall, the result of our ARDL model affirm that the impact of fiscal spending in Nigeria on inflation is captured more in the short-run since none of the variables is significant in the long-run. In addition, the use of Banking System Financing to fund government deficits has better potentials as the optimal choice because its impact on inflation is insignificant. Federal Government Bonds as a tool for financing budget deficits is also considered an optimal choice because though it causes inflation to rise by the second quarter, but its impact on inflation is expected to fizzle out in the long-run. Ways and Means Advances on the other hand, was shown to have the highest inflationary impact and as such, its use as a tool for financing government deficit should be discouraged. We, therefore, recommend a couple of appropriate policy options for financing budget deficits in Nigeria namely monetary financing and the issuance of federal government bonds. On the policy side, more efficient public expenditure management. Capital market, co-financing arrangements with pension funds and issuance of project-tied bonds, would be beneficial.


2005 ◽  
Vol 29 (3) ◽  
pp. 270
Author(s):  
Pauline Stanton ◽  
Tim Bartram

WHILE MANY COMMENTATORS are describing the Federal Government?s industrial relations reform package as radical or even revolutionary there is very little in it that is a complete surprise. Further reduction in the power of the Australian Industrial Relations Commission (AIRC), greater simplification in the making of awards and agreements, an increase in anti-trade union legislation, and weakening of unfair dismissal provisions have been on the government?s wish list for some time. The move to a national industrial relations system has also been on the government?s agenda. The impact of these developments on the health industry is difficult to predict beyond saying that it appears to be a recipe for conflict and division. However, our main focus is not to discuss the detail and merits of the proposed changes but instead to ask whether these policies in any way address the major workforce issues facing the Australian health care sector in the twenty first century.


Budgeting is a fiscal policy used by the government to grow and develop the economy to ensure performance, stability and sustainability. Studies have shown that diversion of budgeted allocated funds, misappropriation of funds, fraud and uncompleted capital and developmental projects are major challenges facing budgetary system in Nigeria public sector. Studies further revealed that various strategies used to resolve the problem have not been successful. This study evaluated the impact of the applying forensic accounting techniques in curbing fraud in Nigeria budget implementation. The study employed survey cross-sectional research design. The population consisted of 195 staff of federal government establishments connected with budgetary system and fiscal policy. With the use of total enumeration, 195 copies of the questionnaire were administered with a retrieval rate of 150 copies (77%).The study adopted descriptive and inferential statistics to analyze the data. The findings showed that Investigative and Audit Support Service have strong impact on fraud and misappropriation of budgeted allocation funds β=0.342,F (1,149)=10.587,p-value=.002.The result also showed that Investigative and Audit Support Service has significant impact on uncompleted capital and developmental projects.β=0.745,F(1,149)=249.621,p-value=.003.The study concluded that the application of forensic accounting techniques have positive effect on curbing fraud in budget implementation. The study recommended that the federal government should make a policy to incorporate forensic accounting in Nigeria budgetary system


2015 ◽  
Vol 16 (1) ◽  
pp. 12
Author(s):  
Roseline O Osagie

The government policy directive to secondary schools has been to diversify their programs to include vocational and technical education in the 6-3-3-4 system in order to make provision for students with varying aptitudes. This article explores the impact of this policy by examining some factors affecting the implementation of the policy in private secondary schools in Edo state. Subjects for the study were fifty (50) students, fifty (50) teachers and five (5) principals randomly drawn from five(5) private secondary schools in Edo State. The study utilized interviews, observations and a questionnaire to assess the implementation of government policy onvocational and technical education in private secondary schools in Edo State. The findings showed that there was a dearth of qualified teachers for vocational and technical subjects, poor infrastructure, lack of equipment, instructional materials and books. The schools were not adequately financed. It was observed that the federal government did not make adequate preparations before it issued directives for the take off of the programs in the schools. Recommendations were made for the federal government to sensitize the public on the importance of vocational and technical education, as it plays a vital and indispensable role in the economic and technological development of the country.


2021 ◽  
Vol 18 (4) ◽  
pp. 177-189
Author(s):  
Tetiana Konieva

The cost of debt is a key element to define the amount of the regular interest payments of a company and its business value. It is used for indicators that warn of the economic crisis, which is relevant for the countries where most companies are financially dependent on liabilities. The formalized criteria for the types of financing policy, improved procedure for the cost of debt calculation make it possible to reveal policy with the capital structure that minimizes the cost of debt.The study is based on Ukrainian food processing companies for the period 2013–2020. The studied database was distributed by the types of financing policies: 22% of the cases have a conservative policy, 15% – moderate, 26% – aggressive, 37% – super-aggressive. The results show that the highest weighted cost of debt (24.1%) belongs to the conservative policy, which replaces negative equity by the expensive long-term debts, as well as super-aggressive policy (20.8%) with trade payable that is near half of the capital, and long days payable outstanding. A company can reduce the cost of debt relying on non-interest-bearing liabilities and trade payable if its days payable outstanding are kept at the industrial level or below. Moderate and conservative financing policies, which are based on equity and avoid debts, provide the lowest weighted cost of debt: 2.1% and 1.2%.Thus, choosing the desired type of financing policy for the company, it is possible to form a capital structure that will reduce the cost of debt.


2018 ◽  
Vol 7 (3.21) ◽  
pp. 200
Author(s):  
Ismiriai Nasip ◽  
Eka Sudarmaji

The IFRS-16 will shortly be implemented worldwide, where the operating lease is effectively removed, and all operational leases are qualified as debt. The operational lease is a major source and is important for off-balance sheet financing in Indonesia. Therefore, the implementation of IFRS-16 will probably hurt Indonesian business. The contract and/or service level agreements on the retrofits for the energy efficiency product can relieve the business owner from cash flow and new debts. This study established a framework for a critical comparative study; compare and assess the possibility of the retrofit financial practices under the current taxes regime, and the possibility upon IFRS-16 implementation to better understand the favorable measures for retrofit practitioners and future customers to handle the disputes. Triangulate the findings of comparative study and questionnaire survey to develop recommendation for the future researchers, practitioners and the government. The result indicates that the benefits of the retrofits financing implementation beat the cost and complexity posed by the enactment of new IFRS standards. Thus, the impact of the IFRS-16 and taxation are being considered as a part of business constraints that should be addressed together and able to manage the disputes over misperception on retrofits aspects with taxes officers.  


Risks ◽  
2019 ◽  
Vol 7 (2) ◽  
pp. 47 ◽  
Author(s):  
Delphine Boursicot ◽  
Geneviève Gauthier ◽  
Farhad Pourkalbassi

Contingent Convertible (CoCo) is a hybrid debt issued by banks with a specific feature forcing its conversion to equity in the event of the bank’s financial distress. CoCo carries two major risks: the risk of default, which threatens any type of debt instrument, plus the exclusive risk of mandatory conversion. In this paper, we propose a model to value CoCo debt instruments as a function of the debt ratio. Although the CoCo is a more expensive instrument than traditional debt, its presence in the capital structure lowers the cost of ordinary debt and reduces the total cost of debt. For preliminary equity holders, the presence of CoCo in the bank’s capital structure increases the shareholder’s aggregate value.


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