Fannie Mae and Freddie Mac may force lenders including Bank of America (NYSE:BAC), JPMorgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC) and Citigroup (NYSE:C) to buy back $21 billion of home loans this year as part of a crackdown on faulty mortgages. U.S. banks could suffer losses of $7 billion this year when those loans are returned and get marked down to their true value, according to estimates by Oppenheimer & Co. analyst Chris Kotowski. Fannie Mae and Freddie Mac, both controlled by the U.S. government, stuck the four biggest U.S. banks with losses of about $5 billion on buybacks in 2009, according to company filings made in the past two weeks. -Bloomberg
November fed-funds futures see an 86% chance for the Federal Open Market Committee to boost the federal funds target rate to 0.5% at Nov. 2-3 meeting, having priced in as much as 90% chance after better-than-expected jobs report. Thursday the same contract priced in 70% odds for November tightening. Shorter-dated, in October, there’s a 44% chance for 0.5% rate after the Sept. 21 FOMC meeting, from 50% odds immediately after data came in, and 32% chance Thursday. –The Wall Street Journal
Premier Wen Jiabao pledged further measures to curb speculation in China’s housing market Friday, signaling that lending to the sector would be tightened as well as the imposition of targeted taxes and stricter enforcement of real estate laws. The government would, among other things, work to improve management of land to prevent "prices from rising too fast" along with making "greater efforts" to tackle illegal land hoarding and property-price manipulation, he said. Wen’s address also set out economic targets for the year, including pegging the rate of growth in China’s gross domestic product at "about 8%." –MarketWatch
Lawmakers’ efforts to spur job creation were delayed once again Thursday after the House amended a $15 billion Senate bill before passing it. The bill would exempt employers from Social Security payroll taxes on new hires who were unemployed; fund highway and transit programs through 2010; extend a tax break for business that spend money on capital investments, such as equipment purchases; and expand the use of the Build America Bonds program, which helps states and municipalities fund capital construction projects. However, the House added two provisions to pay for the infrastructure spending and corporate tax breaks. Its amendments require foreign financial institutions to give the Internal Revenue Service more information to help it catch tax cheats, and delays a tax break for foreign interest payments. The measure passed by a 217-201 vote. –CNN Money
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