Thursday morning, Barack Obama met with Jamie Dimon, Lloyd Blankfein, Brian Moynihan, and other members of the country's largest financial institutions. Let me pause for a minute to let you digest the sheer number of pinstripes and massive egos that strolled into the White House.
While the full details from the meeting between the President and financial leaders weren't released to the public, it is encouraging to see there is at least some communication present on Capitol Hill. According to the White House, the group discussed housing, education policy, and clean energy financing. Although not explicitly stated, the bankers probably shared their thoughts on the new regulation, such as the Volcker Rule. Of these topics, bank leaders were surely heavily interested in the housing sector.
After drastic deterioration in the housing sector pushed the country into a deep recession, banks and policymakers both received most of the blame. However, looking ahead, a productive relationship between the largest money centers and housing policy makers is absolutely vital to a continued housing and broader economic recovery. The discussion comes at an interesting time, as the nation's two largest mortgage lenders, Wells Fargo (NYSE:WFC) and JPMorgan Chase (NYSE:JPM) are set to release earnings on Friday morning.
The two banking behemoths controlled roughly 40% of the mortgage origination market in 2012, and both experienced huge year-over-year revenue increases, as customers' refinancing accounted for roughly three out of four mortgages. The high refinancing volume was predominantly driven by customers with equity in their homes who jumped at the chance to lock in record low interest rates.
However, the refinancing market is expected to slow, and volume is likely to decline. Enter a necessary productive housing policy. As the refinancing volume becomes a smaller piece of the pie, policymakers and lenders are going to need to be increasingly more in sync. While no one wants to a return to an era of shoddy lending, there is certainly a middle ground that allows banks to support the sector and housing policy while maintaining credit standards.
With the election out of the way, Obama and these leaders may actually be able to make some positive contributions.
David Hanson has no position in any stocks mentioned. The Motley Fool recommends Wells Fargo. The Motley Fool owns shares of JPMorgan Chase & Co. and Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.