Market commentary

U.S. Senate, House and White House conferees reached agreement on final amendments to what is called the “Wall Street” reform bill. Unfortunately this bill does little to reform Wall Street, but it will put a further tightening on credit availability while imposing fees to pay for the additional government agencies it establishes. The imposition of fees and taxes on banks to pay for the new bureaucrats, as we all know, will be paid by the consumer in the end. At a time when the economy can least afford it credit will become harder to obtain.

If there is good news to be derived from this, it is the market “vote”. And the vote today is a decline in stocks and an improvement in bond prices. Investors feel this legislation will place a further drag on the U.S. economy and therefore reduce corporate profit growth---meaning lower stock valuations. For those of us in mortgage land, the good news is interest rates will remain at low levels as long as investors feel economic growth will be hindered.