Word: discounted
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Dates: during 1960-1969
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Tighter Cinch. Along with its discount-rate boost, the Federal Reserve lifted, from 51% to 61%, the maximum interest that commercial banks are permitted to pay on large time deposits-money left with a bank for a specified period. The new ceiling applies to "certificates of deposit" of $100,000 or more with maturities of six months or longer. By this action, the Fed hopes to prevent sharp deposit losses, which would further disrupt the already nervous financial markets...
Because FHA and VA loans carry a 6% interest ceiling (which the Johnson Administration has asked a reluctant Congress to repeal), almost all private lending institutions are willing to make them only at a big discount-that is to pay out about $9,200 for a mortgage with a face amount of $10,000. This has the effect of raising the return closer to 7%-a cost which homebuilders pass along to buyers disguised as a higher price for their homes. In a time of rising interest rates, when lending institutions demand increasing discounts, Fannie Mae faces a dilemma...
...reluctance to raise its own discounts and add more upward pressure to housing costs results in a rush to dump loans on Fannie Mae. The association's resources get swamped, and it is forced to curtail purchases just when they are needed most to sustain housebuilding. When Fannie Mae moves to charge an increased discount, private lenders demand still larger ones. In its effort to conserve dwindling funds during the 1966 credit squeeze, Fannie Mae refused to buy loans larger than $15,000-a decision which Lapin says led to "pernicious inequities and market distortions" because "high-cost areas...
Auction in Reverse. Now, Lapin expects to free Fannie Mae from such problems. Instead of buying (and selling) loans at a preset-and infrequently changed-discount, it will hold a weekly auction in reverse. Bidders will not be buying, but competing for the right to sell Fannie Mae loans at some future time. Thus the private market will set the price, or discount, while FNMA controls the volume of its business probably $40 to $50 million a week.' For loans on new or used houses, the association will accept bids to deliver mortgages within either three or six months...
...newsmen say no, yet their generally restrained coverage of the "disturbances" following the King assassination, compared with the full-blast coverage of last summer's riots, proves that television need not err on the side of sensationalism. Though the President's riot commission report tends to discount TV's role as an inciter it guardedly adds that "the question is far-reaching and a sure answer is beyond the range of presently available scientific techniques...