April 22 is coming up. So what, you ask? April 22 is the 43^rd Earth Day, which is probably observed in some countries but ignored in all the countries that should observe it. The day was created from reaction to a massive oil spill in waters near Santa Barbara, Calif., in 1969. Leading up to Earth Day is "Earth Week, which we're in the middle of...who knew? The Census Bureau is on top of it, with stats that you can use at Happy Hour today. For example, 2.3 million occupied housing units (a shade over 2%) are heated by wood in the U.S. versus about 40,000 heated by solar energy. And 57 million are heated by utility gas - about half of all housing units. (I like the generic term "housing unit" - I understand why Census uses it, but saying to your spouse, "I think we should buy a housing unit" doesn't have the same ring to it.)

The Census Bureau tells us that 88% of newly built single-family homes across the country with air-conditioning in 2011. In 1974, it was 48 percent. And those A/C units need power: there are roughly 49k of us employed in nuclear electric power generation across the U.S. in 2010, up from 42k in 2009. They had an average salary of $109,021, down from $110,355 in 2009. We can see how this "stacks up" (get it?) versus the 53k employed in forestry and logging across the U.S. in 2010 - they had an average salary of $37,215, up from $35,128 in 2009. And wrapping up, the average size of a single family house built in 2011 had 2,480 square feet with an average price of $267,900.

Like it or not, a lot of those people buying homes use a government-related housing program. FHA & VA lenders know that biz is good. Ginnie Mae has announced that it guaranteed more than $36.44 billion in mortgage-backed securities (MBS) in March 2013. Issuance for the Ginnie Mae Home Equity Conversion Mortgage-Backed Security (HMBS), included in Ginnie Mae II single-family pools, was $889 million. Total single-family issuance for March was $34 billion. In addition, Ginnie Mae's multifamily MBS issuance reached $2.3 billion for the month. Ginnie Mae II single-family pools led the way with more than $29 billion, while Ginnie Mae I single-family pools totaled roughly $5 billion. Ginnie securitizes other types of loans besides just FHA & VA - it also finances housing mortgage insurance programs run the Office of Public and Indian Housing (PIH), and the Department of Agriculture's Rural Development Housing and Community Facilities Program (RD). Here is the complete monthly issuance report.

And a lot of those folks will obtain their home loan through a local bank. I am currently attending a MBA/STRATMOR bank peer group meeting in Denver, and according to the Independent Community Bankers of America, there are almost 7,000 community banks, including commercial banks, thrifts, stock and mutual savings institutions, with more than 50,000 locations throughout the United States. Assets may range from less than $10 million to $10 billion or more. Community banks constitute 96.6 percent of all banks in this country, and provide varying services to their customers (who are primarily small-business and agricultural). Here is the breakdown by region: North Central 24.6%, Southeast 19.9%, Midwest 19.7%, Southwest 16.1%, Northeast 10.6%, and West 9.0%.

It may be hard to quantify the impact community banks will have on lending in the coming years, but one thing is almost for certain, any controls put in place by the CFPB may have little direct impact to community banks as a whole who normally have a narrower lending scope than traditional banks, are usually very well capitalized, and traditionally don't know any other loan type but the "makes sense" loan. The CFPB is focused on banks with assets above $10 billion, but I don't believe that to be carved in stone and the cost of making a mistake is so great that smaller institutions are carefully watching the result of exams on both the big banks and of independent mortgage bankers. The Dallas Fed in their 2012 annual report (www.dallasfed.org/fed/annual/) argues in favor of a smaller-is-better, more controllable banking system for the future, what they call "too small to save". Ironically, a recent Rasmussen Report indicates that 50% of adults support breaking up of the nation's largest banks. The future may come with a revival in "community lending", or possibly, a structure which looks similar.

What about credit unions? There are certainly some large ones out there, and this segment of the financial services industry saw record home loans originated in 2012. (Somewhat recent news saw the NCUA allowing Landmark Credit Union - $2.1B, WI - to buy Hartford Savings Bank - $187mm, WI - for an undisclosed sum and approval goes to the FDIC. But there are plenty of credit unions with assets above $1 billion.) There have been just as many credit union failures so far this year as bank failures -- though the credit unions tend to be much smaller than the banks. Credit union losses, however, are being tempered by recoveries from bad mortgage securities.

Some bankers just grunt when you bring up the subject of credit unions. First of all, credit unions don't pay taxes - does that still made sense when the government is hurting for

Revenue? Second, it seems that most have moved away from tight-knit membership - you don't have to live in a state, or work for a particular group anymore to join for many credit unions. Third, many have farmed residential lending out to banks that have forged a counter-party relationship with the credit union. Some lending relationships might be invisible to the consumer, whereas others are co-branded.

The age old discussion between banks and credit unions (CUs) around taxes wages on and one has to admit that CUs have done a marvelous job of positioning themselves as community-minded providers of service. Community banks have been left behind in this propaganda battle in many cases. Now CUs are lobbying to increase the cap limit on commercial lending from 12.25% to 27.50% of assets for well capitalized institutions - and so the tax difference (banks have to pay them, CUs don't) discussion is once again an issue per the Pacific Coast Banker Bank.

Historically, there were basically two kinds of institutions created to serve the needs of lower and middle class consumers. At the time mutual savings banks came about (the mid-1880s in the US), traditional banks had little interest in serving the needs of working class individuals and were mostly focused on corporations. Mutual savings banks were primarily in the business of caring for depositors and with their pooled savings, making home mortgage loans to their small group of members. Credit unions were originally designed to provide credit to underserved individuals and especially to provide short term personal loans - often used by labor union members during periods of unemployment. State chartered credit unions were first to be exempted from taxation in 1917. Federally chartered credit unions, through legislation of Congress in 1937, received the same status on the grounds that they resembled cooperative organizations such as mutual savings banks, mutual insurance companies and mutual savings and loans. The congressional action simply made the tax treatment consistent among similar institutions.

Mutual savings banks, mutual insurance companies, and mutual S&Ls, however, lost their tax exemptions when they reached a point of "active competition" with taxable institutions. By the 1970s, mutual savings banks were mostly indistinguishable from other banks, offering checking accounts and similar product lines. Most mutual savings banks have since converted into stockholder owned institutions and other than a handful of mutual savings banks in the northeast, they are fairly rare.

CUs too, have evolved into full-service depository institutions over the past 30 years, with product lines indistinguishable from banks. They also were allowed to broaden their customer bases first in 1982 and the common bond requirement pretty much disappeared with a 1998 law. Until recently, consumer lending was always the primary specialty for most CUs, but now they are active in the commercial lending arena. It seems unlikely that the tax exempt status of CUs will change anytime soon, but perhaps the more banks and CUs look alike the less likely it will remain. And given the movement toward equalization, transparency, and fairness in today's government, many suggest that banks and credit unions be on the same taxable footing.

Rate-wise, there just isn't a whole lot for me to drone on about. Besides, rates are expected to pretty much stay range-bound for quite some time, but what will increase is the cost of originating a loan. Along those lines, Adam Quinones with Thomson Reuters has chosen to remind everyone of impending agency gfee increases. Per Mr. Quinones, "Fannie has been contacting lenders privately to break the news. Credit guarantee costs are on the rise.  Some desks were alerted in January. Most hedgers heard in February. Others in March.  Effective dates also vary by seller. Increased fees are already in place at a many shops. May 1 is a common delivery deadline as well but June 1 was reported too. In terms of size the G-Fee hike ranges from 1 to 5bps with multiples between 6-8x. We expected the GSEs to level the G-Fee playing field. Less disparity = More competition.  Unfortunately this doesn't count as an official G-Fee hike.  We're still due an FHFA announcement. And if 70 basis points is really the year-end target it should say something soon." And he asks, "Anyone hearing chatter about a 'Reservation G-Fee'? It sounds like Fannie is considering the idea of letting lenders lock-in their credit guarantee costs for a defined period. If it's true Fannie will need a swap mechanism to hedge those locks." Thank you Adam.

Rate-wise, yesterday we learned that unemployment benefit numbers were little changed from the prior week, and about as expected. Leading Economic Indicators fell slightly, and the Philly Fed number also dropped. (After three consecutive gains, the U.S. LEI dipped slightly in March, with equally balanced strengths and weaknesses among its components. The leading indicator still points to a continuing but slow growth environment.) Prices for agency MBS prices improved a shade and the 10-yr improved about .125 and closed at a yield of 1.69%.

There isn't much to report out of Asia or Europe, and the media is more interested in recent developments in the Boston Marathon bombing case. (The 10-yr stands at 1.70% and MBS prices are unchanged - there is no scheduled economic news.) Besides, our thoughts go out to the victims and family members of the explosion in West, Texas, and the fact that this is the anniversary of the Oklahoma City bombing which killed 168 people.