Protecting poor & minorities while gentrifying communities, the same time?

The Federal Reserve, in collaboration with the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC), is taking steps to address fair lending risks associated with digital marketing activities.

In a recent webinar on fair lending supervision, the Federal Reserve highlighted the potential for digital redlining, which involves using certain criteria to exclude minority communities or minority applicants from marketing efforts.

Technology is making it more expensive to get a house and appraisers are beating down prices if they don’t like the area and consider it negative.

1. Digital Redlining: The use of digital marketing activities to exclude majority minority communities or minority applications is a potential fair lending risk. This practice can result in limited access to financial services and opportunities for certain communities based on their race or ethnicity.

2. Reverse Redlining or Steering: New technologies can lead to reverse redlining or steering, where more expensive or inferior products are advertised to minority communities. This can result in these communities being targeted with less favorable financial products and services, potentially leading to financial disadvantages.

3. Changes in CRA Regulations: The proposed adaptation of Community Reinvestment Act (CRA) regulations to address changes in the banking sector, including internet and mobile banking, may impact consumers. Depending on the specific changes, it could affect the accessibility and availability of banking services for certain communities.

4. Deficient Home Appraisals: The risks associated with deficient home appraisals can negatively impact consumers. Inaccuracies in collateral valuations due to errors, omissions, or discrimination can affect borrowers' ability to access fair loans and obtain suitable housing options.

Stop! Are we kidding? It’s very real.

This practice can perpetuate discrimination and limit access to financial services for marginalized groups.New technologies also present the risk of reverse redlining or steering, whereby more expensive or inferior products are advertised to minority communities.

This can result in these communities being targeted with products that may not be in their best interest, exacerbating existing inequalities in the financial sector.

To address these concerns, the Federal Reserve, OCC, and FDIC are working together to release a final rule for the Community Reinvestment Act (CRA). The CRA aims to ensure that banks meet the credit needs of the communities in which they operate, particularly low- and moderate-income neighborhoods.

The proposed rule will adapt the regulations to account for changes in the banking sector, such as the rise of internet and mobile banking, and update the approach to assessment areas.In addition to the CRA rule, the agencies have invited public comment on guidance that would highlight risks associated with deficient home appraisals.

**As prices rise, even if people have bad credit or debts, they’ll be favored for help.

Make Poor Neighborhoods Rich They Say

Deficient collateral valuations can contain inaccuracies due to errors, omissions, or even discrimination. By addressing these risks, the agencies aim to promote fair lending practices and ensure that all individuals, regardless of their background, have equal access to financial services.

It is important to note that while the efforts to address fair lending risks are commendable, there are differing opinions on the effectiveness of the CRA and the proposed rule. Critics argue that the CRA has not been successful in achieving its intended goals and that it may burden banks with unnecessary compliance requirements.

They suggest that alternative approaches, such as market-based solutions, may be more effective in promoting fair lending.

On the other hand, proponents of the CRA argue that it has played a crucial role in expanding access to credit for underserved communities.

They believe that updating the regulations to account for digital banking and other changes in the industry is necessary to ensure the continued effectiveness of the CRA.

So the Federal Reserve, OCC, and FDIC are taking steps to address fair lending risks associated with digital marketing activities. The proposed changes to the CRA regulations and the guidance on deficient home appraisals aim to promote fair lending practices and equal access to financial services.

However, there are differing opinions on the effectiveness of these measures, with critics suggesting alternative approaches and proponents highlighting the importance of the CRA in expanding access to credit.

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Banks Health & Commercial Real Estate

The financial landscape surrounding commercial real estate (CRE) remains an area of concern for banks and financial institutions, despite recent regulatory efforts to stabilize the US financial system. Delving into the Federal Reserve's Financial Stability Report, we unveil a noteworthy passage shedding light on the potential impact of CRE on the sector.

CRE encompasses diverse properties such as office buildings, hotels, retail stores, and warehouses. However, shifting dynamics, notably the rising trend of remote work, present a formidable challenge. The reduced demand for office spaces precipitates a potential decline in the value of office buildings. Coupled with the increasing interest rates, securing new loans for CRE properties upon the expiration of current loans becomes an arduous task.

Should these property values experience a significant decline, banks and financial institutions that extended loans for these assets face the peril of financial losses. The report emphasizes that the exposure to these loans varies across different types of financial institutions, with banks and insurance companies specializing in particular loan types.

Within this context, loan-to-value ratios (LTVs) emerge as a crucial metric. LTVs measure the loan amount relative to the property value. A higher LTV implies a substantial loan share in relation to the property's value, potentially leading to borrower challenges in repayment. According to the report, LTVs for office and downtown retail properties currently average between 50 to 60 percent.

These potential risks and losses necessitate vigilant monitoring of loan exposure by financial institutions, urging them to proactively prepare for any market fluctuations.

Profitability and Community Transition

In light of these challenges, financial institutions may seek to offload the risks associated with CRE assets. However, this scenario opens doors for those with the requisite capital or innovative approaches to capitalize on the situation.

For those connected to substantial capital, three avenues emerge as potential profit generators during this critical juncture:

1. Alternative Financing Platform: Seize the opportunity by establishing an online platform or marketplace that connects commercial real estate borrowers with alternative lenders. Such lenders specialize in offering competitive loan rates and flexible terms. Examples include crowdfunding platforms, peer-to-peer lending networks, and private investors keen on financing commercial real estate projects.

2. Loan Workout and Restructuring Solutions: Establish a consultancy firm providing expertise in restructuring troubled commercial real estate loans. By assisting financial institutions in negotiating loan modifications, refinancing options, and workout plans, such firms can help mitigate potential losses.

3. Lease-to-Own Solutions: Launch a lease-to-own program tailored specifically for commercial real estate properties. This financing model allows aspiring property owners to lease a property initially with the option to purchase it in the future. This approach provides valuable time to secure favorable financing conditions amid higher interest rates.

Office buildings face the greatest risk, given their moderate leverage and dwindling demand. Repurposing these buildings, similar to their predecessors, will require thoughtful consideration. Conversion to condominiums, hotels, public housing, research and development centers, entertainment venues, and other emerging concepts will depend on the location and the reception of such ventures.

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The Motivation Behind These Endeavors

Prominent voices in the commercial real estate realm often advocate purchasing properties when interest rates are high and selling when rates are low. The opportunity lies in acquiring ownership of these properties while simultaneously assisting current landlords in maintaining their creditworthiness. Moreover, facilitating a smooth transition into conversions and other CRE uses is paramount.

By assuming the risks associated with conversion, entrepreneurs have the potential to rescue building owners from bankruptcy. Simultaneously, they can leverage the cash flow generated from new conversion projects as interest rates decline. Creative ideas, such as allowing owners to assume equity in the new venture, can act as a bridge across the barriers to market entry.

What Brokers Have to Say About Sellers

A handful of prominent Twitter accounts we follow that are involved in the commercial real estate space say sellers are unwilling to except the new cap rates and that they've lost a significant value on their properties.

Sellers who refused prices offered years ago or coming back around looking for buyers accepting old offers that are outdated. Because prices have fallen significantly.

If the building loses a tenant or the rents go down or interest rate shift the value of the building loses a substantial amount but the loan originated stays the same with the same terms and other agreed on. When these loans come due for adjustment and the values the buildings have gone down due to their vacancy, a lot of acceptance will begin taking place from the sellers of the current conditions.

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This is the time for harvesting what you’ve planted (our business ideas above).

Until reality sets in it could be a great time to get prepared and one of the businesses we've talked about above.

***Please note that I am a researcher and not directly involved in the commercial real estate industry. This is all opinion and not financial advice.

The full report can be found here https://www.federalreserve.gov/publications/files/financial-stability-report-20230508.pdf

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June 1, 2008 the United States Oil Fund was at $909.28 per share. On April 27, 2020 the United States Oil Fund was at its lowest ever price of $18.86. In todays case study we explore the Federal Reserve and price action from 2006 until March 2023, present.

When to Trade Oil Successfully, Three Patterns

• One pattern that is evident is that the price of WTI Crude oil & USO tends to be higher towards the end of the year and lower towards the beginning of the year.

  **The price of crude oil is consistently lower in January and February, and higher in October, November, and December.

• Another pattern is that the price of WTI Crude oil & USO tends to be more volatile during the first quarter of the year.

  **For example, NYSEArca: USO, the range between the high and low prices is much larger for the months of January, February, and March compared to the other months.

• Average percentage change is 5.34% to 5.91% between monthly time periods based on USO open and close data from 2020 to 2023

  **For example you know prices will swing month to month about these % changes.

The Current State of Crude Oil & It’s Effectors

• The state of the global economy can drive up or down demand for oil, as can geopolitical events such as conflicts in major oil-producing regions.

• Changes in technology and energy policy, such as the rise of renewable energy sources, can also affect demand for oil.

• The effects of US macro news on commodity prices, including oil, are stronger during periods of high market volatility, and the effects of monetary policy are more pronounced for energy commodities.

• The price of oil tends to be more volatile during the first quarter of the year, higher towards the end of the year, and is generally increasing over time, with some fluctuations.

More Patterns Based on USO Stock Price Data Since 2016

There has been a recent decline in energy prices, which is expected to continue throughout the year, potentially providing some relief for households.

1. The overall trend of the USO stock price seems to be increasing over time, with some fluctuations along the way. This suggests that the company has been performing well and growing in value I’d say and shows demand growing.

2. The trading volume tends to be higher in months where there is a significant change in the USO stock price. For example, the highest trading volume in the dataset occurred in March 2022 when the stock price had a large increase.

3. There are some months where the opening and closing prices are very similar, indicating that there wasn't much volatility during that period. For example, in January 2022, the opening and closing prices were within a few cents of each other.

4. There are also some months where the range between the high and low prices is quite large, indicating that there was significant volatility during that period. For example, in October 2022, the high price was almost $14 higher than the low price.

The Summarized Case for Global Growth, War, 10-Year & Historically Low Oil Prices

As of March 2, 2023, the current state of the global economy is having a significant impact on the relationship between oil and other economic indicators, particularly the 10-year period. Historically, in periods of economic growth, there is an increase in demand for oil and oil prices, while a downturn in the economy results in a decrease in both demand and prices. Presently, the 10-year period is at an all-time high, indicating a positive outlook for the global economy. This is attributed to the world's successful comeback from the COVID-19 pandemic that brought many economies to a standstill.

The price of WTI Crude oil and USO tends to be more volatile during the first quarter of the year, higher towards the end of the year, and is generally increasing over time, with some fluctuations. Recent data shows that there has been a decline in energy prices, which is expected to continue throughout the year, potentially providing some relief for households.

Macroeconomic news releases and monetary policies, particularly those from the United States, have a significant impact on commodity prices. Positive news typically results in an increase in prices, while negative news leads to a decrease. Currently, the news has been neutral, and no significant changes in commodity prices have been observed.

Geopolitical events such as conflicts in oil-producing regions can have a significant impact on oil supply and cause prices to spike. The ongoing conflict between Ukraine and Russia, coupled with a high demand for oil in China and India, has the potential to drive oil prices up. Therefore, it is essential to keep an eye on geopolitical events as they remain a key factor that could disrupt oil supply and drive prices up in the future.

Based on the patterns observed, the price of crude oil is consistently lower in January and February and higher in October, November, and December. In addition, the price tends to be more volatile during the first quarter of the year, with a higher trading volume in months where there is a significant change in the USO stock price.

Overall, while the global economy's positive outlook and neutral news have had a stabilizing effect on commodity prices, geopolitical events remain a key factor that could disrupt oil supply and drive prices up in the future. Therefore, it is crucial to weigh the potential risks and rewards before making any investment decisions in oil stocks.

A Trading Strategy Tweetsift Follows

We will focus on selling bi-weekly cash covered puts on USO for an extra $200 per week in income with $28,000 in our account. If assigned we will actively sell cash covered calls. According to the research starting in October we will see the price of oil go higher like it does every year. USO, 61.81 - 92.20 52-week range it’s at $68.30 today.

With the volatility of the beginning of the year is over with and the middle of the year here, demand coming back. job growth doing well, housing market still doing OK and a new global increase in manufacturing demand, we here at Tweetsift think this is a great time to enter into WTI Brent Crude futures and USO.

Learn by Joining Cody Sells Options Private Discord: https://discord.gg/E8u56HXa