Morning Report: Fed week

Vital Statistics:


Last Change
S&P futures 3208 24.1
Oil (WTI) 38.84 0.39
10 year government bond yield 0.91%
30 year fixed rate mortgage 3.32%


Stocks are higher this morning on no real news. Bonds and MBS are flat.


The FOMC will meet this week, although no changes in interest rates are expected. They may give some sort of update on the various sundry financial assets they will buy, but that is about it.


The unemployment rate was probably understated in Friday’s jobs report. Apparently there was a misclassification error for people who were employed but absent from work. They should have been classified as “unemployed” but were not, which means the unemployment rate was higher than advertised. Note this doesn’t affect the payroll number, which comes from the establishment survey.


The Fed is launching its Main Street lending program, but it looks like the high minimum amount of $500k is putting some borrowers off.  It has generated some political heat as a bailout for oil and gas industries. “It is far and away the biggest challenge of any of the 11 facilities that we’ve set up,” Fed chair Jerome Powell said last month during a Princeton University webcast in which he also said the central bank is open to adjusting the program.


The FHA gave some more guidance on forbearance. Loans in forbearance are generally ineligible for FHA insurance, but the government is permitting closed loans to be insured provided the lender agrees to indemnify FHA for 20% of the loan amount if the loan goes into foreclosure. “FHA has continually been at the forefront of providing assistance and assurance for borrowers, lenders, and the mortgage market since the coronavirus pandemic began,” said Department of Housing and Urban Development Secretary Ben Carson in a statement, adding the policy change “will give borrowers, lenders, and the market peace of mind as we continue our road to economic recovery in the United States.”

5 Responses

    • Admittedly, it is often difficult to tell what qualifies as an excessive delegation.

      It isn’t difficult if you understand that it is the non-delegation doctrine, not the non-execessive-delegation doctrine.


      • I understand non-delegation as it was explained in the early Supreme Court cases to incorporate common law principles. A short way to describe the formula is that the power to legislate cannot be delegated but legislation can and must delegate the power to enforce. The general examples being that Congress shall create a federal court system but courts themselves run according to common law principles, and Congress shall make general laws, say like establishing a budget for highway construction, but it is the executive is who applies them. Basic separation of powers doctrine.

        So when you understand non-delegation in this way, each delegation must be viewed in terms of whether Congress tried to share its authority to legislate in an area, or whether one of the other branches usurped the power and “legislated”. I think this comes up in tax cases all the time. IRS Regs are often challenged as contrary to or beyond the intent of Congress. But no one has ever argued that Congress itself must collect taxes and tariffs. It is the primary focus of attacks on administrative law generally. Is the Agency, which Congress created or which exists in the executive branch, enforcing legislation, or is it writing legislation?

        The problem is recurring and widespread and a legitimate area of case and controversy, always. In the eyes of libertarian leaning lawyers there is plenty of excessive delegation, in fact, I think most federal practitioners think there is too much delegation going on. All lawyers representing clients who have been bitten by an administrative ruling regard the non-delegation theory as the first line of attack. But first you have to show why the rule or regulation was “legislation” and thus was non-delegable. The easiest case for the citizen is where the rule is contradictory to the statute, and that actually happens more often than you might think.

        Just my take relating to line drawing, and why it can be difficult.

        BTW, my wife the tax specialist is always amazed when the IRS “non-acquiesces” to a federal court ruling. Just when you think you can advise a client based on a court ruling as to what the Internal Revenue Code means in a case the IRS comes along and announces that it non-acquiesces to the ruling and treats the next case as if the ruling never happened.


        • Mark:

          But first you have to show why the rule or regulation was “legislation” and thus was non-delegable.

          I think it ought to be the other way around, ie the agency should have to show that its rules and regulations are not non-delegable legislation. Because on the face of it any such rules and regulations will be. If, in the absence of the rule/regulation, the legislation has itself already restricted the action being regulated, there would be no need for the rule/regulation. The enforcers would simply point to the legislation and say “We are enforcing that.” Generally speaking they promulgate rules and regulations precisely because the legislation is general and non-specific, and they are filling in the details of….the legislation. And filling in the details of legislation is a legislative function.


  1. Even Jacobin hates de Blasio now:

    ““Let me explain to you how change really works,” Bill de Blasio said to us. “You put me into office, and now you have to let me do my job.” It’s been four years so I’m paraphrasing, but only by a word or two — the mayor’s obnoxiousness left quite an indelible impression.

    De Blasio went on to spend most of our time lecturing a group of deeply knowledgeable educators and parents — people from whom he could have learned a lot. The feeling I took away from his message was that we were naive activists, and that he was the one who understood how to win the education goals that he took as a given we all shared in common.”


Be kind, show respect, and all will be right with the world.

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