Marketplace - Why would the Fed loosen mortgage regulations?

Episode Date: February 17, 2026

After the 2008 housing market crash, new rules required banks hold capital reserves proportional to the home loans they issued. In response, banks issued fewer mortgages and non-banks filled in the gap. Easing those rules — which the Fed is considering — could make it a bit easier for Americans to get a mortgage. Also in this episode: Vaccine research and development suffers under federal funding cuts, home builders give industry sentiment updates, and physical media sees a comeback.Every story has an economic angle. Want some in your inbox? Subscribe to our daily or weekly newsletter.Marketplace is more than a radio show. Check out our original reporting and financial literacy content at marketplace.org — and consider making an investment in our future.

When it comes to getting a mortgage, there are banks and non-banks that make loans. Does it matter? From American public media, this is Marketplace. In Denver, I'm Amy Scott in for Kai Rizzdahl. It's Tuesday, February 17th. Good to have you with us. We're going to start with a different kind of Fed story than usual. Typically, we talk about the central bank in terms of where interest rates might be headed.

But the Federal Reserve regulates banks, too. And in a speech yesterday, a top Fed official said the central bank is rethinking some regulations affecting mortgages. The changes would encourage banks to make more home loans. And as Marketplaces Sabri Beneshire reports, that could make it easier for the rest of us to get mortgages. After the 2008 crash, banks bolted out of the mortgage business. Before the Great Recession, about 70% of loans were originated by banks. Now it's only about 30%. Thomas Piskorsky is a professor of finance at Columbia Business School.

One reason was they got burned so bad by the home loans they made. Another reason, according to Piskorski's research, was regulation drove them out. It accounts for about 60% of that migration. Specifically, new rules said banks had to set aside a bunch of money in reserve as a kind of safety cushion should things go bad. A lot of banks felt it was too much money, so they just didn't want to deal with it. A lot of this activity have moved to the unregulated sector, to the non-banks. Non-banks like fintech companies. That's not necessarily a problem, he says, but it does mean banks aren't out there swimming in the sea of competition to give you a home loan.

And proposed Biden-era rules would have tightened those regulations even more. Yesterday, the Fed said, let's maybe not. So here's what they want to do. one, a reduction in the amount of capital that banks will have to hold against loans that they hold on their portfolio. Jim Parrott is a non-resident fellow at the Urban Institute and a former senior advisor in the Obama White House. Banks right now have to hold a certain-sized safety cushion of capital for all of their loans. Which is sort of a silly way to determine capital because it means you've got to hold the same amount of capital against a risky loan as you would against a not-very-risky loan. So some flexibility there might encourage banks to offer more mortgages.

The Fed may do a similar thing for mortgage servicing. That's like the day-to-day management of mortgages and payments. Sometimes banks will do that stuff on mortgages that were actually issued by someone else, but they still have to have a safety cushion for that, too. We are very optimistic. They are definitely moving in the right direction. Michael Fratton-Toney is chief economist at the Mortgage Bankers Association. You want both banks and non-banks to be active participants

in this market. He says the more entities offering mortgages, the better. In New York, I'm Sabri Beneshaw for Marketplace. On Wall Street, shaking off those AI jitters, we'll have the details when we do the numbers. Uncertainty is just a fact of life these days, right? And therefore, of the economy. It's affecting consumers, business owners, investors, and vaccine makers. They're investing less in research and development. because the rules have been changing under Health and Human Services Secretary Robert F. Kennedy Jr. The federal government has rescinded funding for vaccine research, changed recommendations for who should get vaccines and when. And just last week, the FDA refused to review Moderna's new mRNA flu vaccine. And Marketplace's Samantha Fields reports the consequences could be long-lasting.

Developing new vaccines is extremely expensive. and Amish Adalja at Johns Hopkins University says it takes years. This is sometimes a decades-long process or even longer, and there are many failures. Even once a company does have success, vaccines have never been a major moneymaker for pharmaceutical companies. That's why investment and support from the federal government is so critical for vaccine research and development. Many companies are dependent on that money, and they are also dependent upon the fact that they have access to a market in the United States. States. Now both are in question. And Michael Osterholm at the University of Minnesota says the regulatory

environment for vaccine approvals is shifting to. Vaccine companies need to have one set of rules to play by. If they're constantly changing, the companies will decide that doing business here just doesn't make financial sense. That is already happening. Moderna now says it's no longer planning to invest in new late stage vaccine trials. And Jason Schwartz at Yale is worried that other companies are also making early-stage decisions about whether to prioritize vaccine research at all. Earlier stage decisions may not make headlines, but they ultimately will set back vaccine R&D in ways that we'll continue to see for decades. At GeoVax, a small biotech company in Georgia, CEO David Dodd says they're not moving away

from vaccines, but... We may be setting priorities that are different than what we had in the past. That is for sure. Previously, the company had two priorities, a better COVID vaccine. for people who are immunocompromised and an M-Pox smallpox vaccine. Now, he says they've decided it's less risky to focus primarily on the M-Pox vaccine. Jason Schwartz at Yale is concerned about lots of companies shifting their priorities. We saw during the COVID pandemic just how transformative a vaccine can be,

and there was momentum there, both for influenza and other potential pandemic diseases. And he says that momentum has now been lost. I'm Samantha Fields for Marketplace. The tech sell-off we've seen in the stock market over the past couple weeks has been driven mostly by two letters, AI, over fears of how it will disrupt businesses like software and questions about when massive investments in AI infrastructure will pay off. As we've been reporting, big tech is spending hundreds of billions of dollars to build data centers for the AI boom. But some of those facilities, are sitting empty because there's not enough electricity to power them. This surge in demand

for energy is charging up the market for alternative and off-grid power sources. Marketplaces Megan McCarty Carino checked out one business that has benefited. A couple of weeks ago, I found myself at an R&D lab in the heart of San Francisco's design district, full of circuit boards, humming fridge-like devices. And I drove an even... for quite a long time. I don't think I ever pictured what the actual battery pack looked like inside my vehicle. Yeah, they're not that beautiful objects. They're just kind of a little black skateboard. It's not a high design object now. With a bunch of red and black wires coming out of it. But this is really the core of an electric vehicle. That's Colin Campbell, Chief Technology Officer at Redwood Materials,

an electric vehicle battery recycling startup that recently expanded into providing grid energy storage for data centers. It's part of the expansion of AI infrastructure we've been exploring this week. And as we've talked about, AI companies and their massive data centers are trying to tap as much power as possible while they face pushback from communities worried about downstream effects like higher electricity bills. The thing that really distinguishes the AI companies, that they really want to move fast and building battery storage coupled with renewing. is often much faster than interconnecting to the grid or building natural gas turbines. So we can be the first movers.

And last year, Redwood successfully activated a large-scale EV battery grid in Nevada, specifically to power a local data center. And so what that is is 60 megawatt hours and 12 megawatts of reused electric vehicle batteries powering a data center completely disconnected from the grid. only took us four months to build. Larger data centers need a lot more than just 12 megawatts. Redwood Materials just closed its latest funding round, adding $425 million to scale up production.

Google is an investor, so is Nvidia. So this is really just engineering production here, but it's the beginnings of what will eventually be a 10 gigawatt per year manufacturing line that we will most likely cite out at our facility in Nevada. to be able to mass produce this thing in a way that's industrially relevant for the world. So does this business model work without this surge of demand from AI data centers? Great question. It does work without the AI surge. The AI customers are really excited. They want power fast, and we are in a position to do that.

But we can absolutely sell into all of the things that grid scale energy storage is sold into today. and we do have those customers. They're just a little more measured, a little slower to get going. The AI boom is hitting the accelerator for their business. In San Francisco, I'm Megan McCarty Carrino for Marketplace. Sabree talked earlier about rules that could boost the housing market by encouraging banks to increase mortgage lending. Now a check on the companies that supply the homes,

a measure of industry confidence from the national. Association of Home Builders and Wells Fargo slipped by one point this month to 36 out of 100. The index hasn't been above 50, considered positive territory, since the spring of 2024. That's the national picture. But as we all know, real estate is all about location. So Marketplaces Elizabeth Troval has this regional view of the market for new homes. Even in a mediocre homebuilding environment with elevated interest, rates and building costs. Scott Norman with the Texas Association of Builders does not worry about the Lone Star State. Two things that drive housing starts historically are population growth and job growth.

And Texas continues to lead in both of those categories. He expects people to continue to move to Texas in droves. All those people have to sleep somewhere at night, we say, and so they need housing of some form. The Houston metro area specifically will continue to be a bright spot, says Chris Bolio with the Greater Houston Builders Association. There is a skeptical optimism. Skeptical, because even with strong demand, you can't escape headwinds. I think tariffs, I think immigration, I think the amount of governmental oversight costs associated with development and with construction. they are all big red flags. But their red flags, builders are getting used to.

And in Atlanta, another southern real estate market, Wayne Hyatt with the Greater Atlanta Home Builders Association, says companies there haven't been able to build as quickly as they'd like. Our biggest struggle is bringing a developed lot to the public and bringing a developed lot that is priced where the, you know, the, you know, the, you know, the consumer can afford it. He says new regulations like energy and building codes have made construction more costly without adding to home values.

Further north, Don Crandall with the Home Builders Association of Michigan says new single-family permits there are still lagging behind the level of new housing needed. In construction, time is money. So when you have those delays, it costs more. So it's looking at lot-size requirements. It's looking at streamlining the process. She's optimistic that a new bipartisan push in Michigan for zoning reform could boost home building in her state. I'm Elizabeth Troval for Marketplace.

Coming up. It's kind of like if you work with dogs or anything like that, you get to go out and get to see your dogs. Well, I get to go out and see my shrimp. Whatever makes you happy. But first, let's do the numbers. The Dow Jones Industrial Air. average inched up 32 points, one-tenth of a percent, a close up 49,000-533. The NASDAQ also rose 32 points, about one-tenth percent, a finish at 22,0578. And the S&P 500 added seven points,

one-tenth percent, and at 68-43. Banks started strong this first day of the week for the stock market, Citigroup, home of City Bank, notched up two and six-tenths percent. J.P. Morgan Chase and Company increased one and a half percent. Bank of America Corporation expanded 4 tenths percent. Sam Fields was just talking about the challenging climate for vaccine makers. Cambridge Mass-based Moderna Inc. improved 4%. Pfizer dropped three-quarters percent. Merck & Company picked up one tenths percent. You are listening to Marketplace. This is Marketplace. I'm Amy Scott. How do you typically watch movies these days? Streaming, I'm guessing, maybe an occasional night out at the cinema. At one of our editorial meetings

recently. Some, shall we say, younger members of the staff, mentioned renewed interest in physical media, DVDs, Blu-ray discs, even VHS tapes. Sure enough, a survey from consumer reports found that nearly half of us are watching DVDs and Blu-rays, 15% are still watching VHS tapes. Is video having its vinyl moment? Marketplace's Novasafo looked into it. If you're a videophile in the No, in Los Angeles, then you've probably visited Vidiots, a video rental store tucked inside a refurbished 100-year-old movie theater. We originally started in 1985. Robbie McCluskey is the video store's director, tracing its roots back to the same year the

first Blockbuster video opened. McCluskey joined Vidiot's decades after. It was already popular with Hollywood celebrities. My first day, I got a phone call from Christian Bale. He was doing research on playing Moses for. Ridley Scott, so he's like, give me everything that has Moses in it. And then later that day, Keanu Reeves was driving his motorcycle, stopped in to grab a couple of movies. So it was a really fun place to work. Was a fun place because that version of Vidyat's, a for-profit enterprise,

closed down in 2017, unable to beat back the streaming tide. In 2023, Vidyat's reopened as a nonprofit at a new cheaper location, the refurbished movie theater, which holds screenings that help subsidize the video rental shop. It's been two and a half years now. Every month, we have more rentals than the month before. The desire to rental, the desire for physical media, has really brought people back in a big way. McCluskey says they've gone from renting a few hundred videos a week to more than a thousand. And his customers aren't just a bunch of nostalgic middle-aged people.

They are also nostalgic 20-somethings, like the trio we encountered perusing the anime aisle. Fay Favre, Isabelle Torres, and Danielle Rathbun. What are you guys doing here? I mean, we grew up watching DVDs. I think guys are still definitely within our generation. I watched VHS. Collected all the Disney VHSs. That's a Hollywood video.

Yeah. I think it's refreshing just to, because everything's like a streaming service now. Yeah. It's like, and you have to like pay different subscriptions to just to see like different movies. Saving money on subscriptions is one reason video stores are getting more customers. And across town at for-profit video store Cinephile, strategically located right next to an independent movie theater, owner Sebastian Matthews says his business is picking up too. What we've seen is folks with a lot of fatigue with the streaming services,

either with price increases or things going in and out of rights so that they can't watch stuff that they expect to be there. Matthews says a growing number of collectors, are also purchasing physical media. For a long time, our rental business represented about 75% of the business, and 25% were people purchasing, and now that number is closer to 50-50. Customers are often snapping up rare or obscure titles, he says. Those titles are the bread and butter of lunchmeat VHS, a North Carolina-based retailer. Like this 1980s gem, Splatter University.

And splatter you, it's not whether you pass or fail, but whether you live or die. LunchMeet VHS is run by Josh Schaefer, who also publishes an occasional magazine of the same name about everything videotape. This is stuff that's not on disc officially anywhere. Stuff that was shot on videotape, beta, VHS, quarter inch. Schaefer buys the rights to videotape-only films, B-movie. mostly, and produces reprints. Nostalgia is a big motivating factor for his customer base. Once you get into VHS culture, a video store culture, you start to learn that this is us.

Like the movies we were making, the movies that we were watching, you know, going into the video store interacting with other humans, it was a huge part of our society. That desire to unplug and connect is a motivating factor for customers at Vidiots as well. Like 43-year-old Joel Cameron. He's renting a 1970 French film called The Nude Vampire, based on a staff recommendation. There's so much here. And there's multiple different sections, so you can go to something that inspires you or that you like and get turned on to something else rather than an algorithm doing it for you. It's a nice respite from the digital world, Cameron says.

And it keeps him coming back to the video store. I'm Novosafo for Marketplace. The United States is an import economy, meaning we buy more goods and services from other countries than we sell to them. The current trade deficit per the latest release from the Bureau of Economic Analysis out last month is nearly $57 billion. One example of that deficit is the seafood industry. According to the U.N., more than 85% of fish and other seafood consumed in the U.S. is imported. But not all of it, which brings us to this next instance. installment of our series, My Economy.

My name's Carlena Brown. I'm the co-owner of R&M Shrimp, or RDM Uncle Culture, and we are located in Fowler, Indiana. We raised saltwater shrimp indoors, inland. When we started, we were actually the third one in the entire U.S. Right now, the only ones that work the shrimp are myself and my son. It's kind of like if you work with dogs or anything like that, you get to go out and get to see your dogs.

Well, I get to go out and see my shrimp. So on a daily basis, I run nine different tests on my tanks. We sell shrimp out the front door. And as long as we balance and maintain the water, the shrimp do just fine. We averaged about 500 pounds of shrimp per month on the 20 count shrimp, and we sell it $22 a pound. We might run out for a week or two throughout the year. It could be either at Easter, it could be around Christmas time. But this year, we ran out four times.

Our average customer drives about two hours just to get two to four pounds of shrimp. But I do have one lady who drives from Columbus, Ohio, which is six hours one way to my facility. And I mean, I love my shrimp, but I don't even know if I would drive 12 hours to go get it. The shipping cost really is the hardest part of this whole business right now, because it has almost quadrupled within just the last couple of years. And what I'm talking about shipping, it's not me shipping, it's when we get our baby shrimp in, they either come from Florida or Texas. They come from hatcheries down there. And they ship them up here. I mean, I'm spending less than maybe $700 to get 60,000 shrimp, but it costs me $2,000 to get them shipped here.

As much as I would love to do my own hatchery, we've done the cost analysis. It's just not cost effective for us to do it. So we're at the mercy basically of the UPS and FedEx companies right now. We're fortunate that I think that we've been in it long enough, that we really do have a cush on our price. I don't need to raise the price of my shrimp in order to meet that market yet. But you've got to kind of start thinking about it if these prices keep going like they are. Even though I've been doing this for 16 years,

I always started, but I would have never, ever in a moment. million years ever thought this is what I would be doing with my life. And I mean, my closest thing to aquaculture I ever did, my son won two goldfish at the county fair and I kept him alive for two weeks. I always talk about you don't have to be a farmer. I have no farming inkling. I have known as but I love what I do. I love working with the water and I actually love working with the shrimp. Carlina Brown, co-owner of RDM aquaculture in Fowler, Indiana. As always, you can tell us what's happening in your economy at marketplace.org slash my economy.

This final note on the way out today, Beyer, the German conglomerate that makes Roundup, has agreed to pay more than $7 billion over 21 years to settle a class action lawsuit, alleging the widely used weed killer causes cancer. The settlement is pending court approval and comes on top of $10 billion the company is already paid to resolve other claims. Beyer has denied that Roundup causes cancer, citing the EPA's finding that the main ingredient, glyphosate, poses no risks to human health if used properly. Bayer acquired Roundup and its legal liabilities when the company bought Monsanto back in 2018 for $63 billion. dollars. Jordan Manjee's O'Neill Maharaj, Janet Wynn, Olga Oxman, and Virginia K. Smith are the digital team. I'm Amy Scott. Hope to see you back here tomorrow. This is APM.

Hey, everyone. I'm Rima Grace, and this week on This Is Uncomfortable, I'm joined by my fellow podcaster, Sam Sanders, for a special love advice episode. We tackle listener questions about money and relationships, everything from secret investment accounts to parents making receipts. financial choices. I have told people all the time, when you are experiencing an adult in your life who is acting like a child, that is the time at which you most need to be an adult. Listen to This Is Uncomfortable on your favorite podcast app.