The Senate Finance Committee approved Timothy Giethner's nomination for Treasury secretary Thursday in a 18-5 vote, sending it to to the full Senate for final clearance — but not without pinging him on a number of hot-button issues, including the transparency of the Troubled Asset Relief Program, which Geithner fervently urged would be implemented under the Obama administration.

The Obama administration will require publicly traded banks receiving government aid to provide a full disclosure of lending patterns each quarter, as well as an explanation of "factors that influenced their decisions," Treasury Secretary-nominee Timothy Geithner said Thursday in a written response to senators' questions.

Geithner also said the Obama administration will require that dividend payments by firms granted “exceptional assistance” under the $700 billion rescue program be restricted to a penny until the government has been repaid.

Outgoing Treasury secretary Henry Paulson and his team have been under extreme fire from Congress, as well as the Government Accountability Office, to require banks account for their usage of government funds, in an effort to provide full disclosure to Congress and the public alike as to where and why funds are being spent.

It's a concern that has mounted in recent weeks after word that Bank of America Corp. (BAC: 7.29 -0.14%) and Citigroup Inc. (C: 30.87 +1.61%) were granted additional government aid — a move that leaves many wondering "where did all the money go?" Addressing that basic question, said TARP's Special Inspector General Neil Barofsky in a letter to Senator Charles Grassley, is critical to credible and effective oversight.

President Obama and many lawmakers are concerned banks aren't using bailout money to up the volume of loans available for businesses and consumers. Geithner said, however, the new administration's requirements look to address this issue.

According to Geithner, the administration will disclose the amount of money it's investing in each institution, the value of the investment, the schedule by which banks will make payments to the government, and the amount of warrants received, in addition to their strike prices.

In his letter to Grassley, Barofsky said he too plans to ask all financial institutions getting aid to account for the money and describe how they've complied with executive pay. As of now, he said the institutions' use of federal dollars "remains almost entirely opaque," because their contracts with the Treasury don't require them to track the money.

"We strongly believe that the transparency of this program must be improved," Geithner wrote.

Write to Kelly Curran at kelly.curran@housingwire.com.

Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.

The Federal Reserve purchased more than $19 billion in agency mortgage-backed securities from government-sponsored entities Freddie Mac (FRE: 0.00 N/A), Fannie Mae (FNM: 0.00 N/A) and Ginnie Mae in the week ending Jan. 21. The latest installment brings total agency MBS purchases to $52.6 billion, little more than a tenth of the Fed's $500 billion purchasing power under the program, which was announced Nov. 25, 2008.

"Spreads of rates on GSE debt and on GSE-guaranteed mortgages have widened appreciably of late," Fed officials said in a media statement first announcing the program. "This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally."

The Federal Reserve Bank of New York announced Thursday details of the purchases completed Jan. 15 through 21 — together totaling just under $19.01 billion — with Fannie enjoying nearly $11.71 in purchases, Freddie selling off $5.45 billion and Fannie seeing $1.85 billion in MBS leave its sheets. The Fed so far has purchased $4.25 billion in agency MBS from Ginnie, $20.2 billion from Fannie and $28.17 from Freddie.

If the Fed has directed its purchases based on the strength of GSE issuance, however, it's more than a little bit off. Issuance figures provided to HousingWire in December by eMBS Inc. showed that fixed issuance — which refers to MBS deals backed by fixed-rate mortgage products — in November at Ginnie Mae was $25.6 billion, surpassing both Freddie's $13.7 billion and Fannie's close second of $22.7 billion.

Despite the sizable investments in the GSEs and recent efforts to lower the federal funds rate effectively to zero percent, long-term mortgage interest rates have inched back up past the 5 percent mark for the week ending Jan. 22, according to Freddie's rate survey, and mortgage application volume has dived nearly 10 percent last week, according to the Mortgage Bankers Association. Refinance activity in particular appears to be edging away from recent highs, with refi applications accounting for 83.3 percent of raw mortgage activity — a decrease from the 85.3 percent reported the previous week, according to the MBA's weekly application survey — suggesting that the Fed may still have a long way to go to affect the cost and availability of credit to prospective home buyers and struggling borrowers looking to refinance..

Write to Diana Golobay at diana.golobay@housingwire.com.

Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.

Credit quality is clearly deteriorating at Sun Trust Banks, Inc. (STI: 20.61 +0.54%), which on Thursday reported Thursday a fourth-quarter loss of $379.2 million, or 1.08 per share, compared to a $3.3 million, or $0.01 per share loss in the fourth quarter of 2007.

Driving much of the loss was a provision for loan losses of $962.5 million and $145 million in additional write-downs to the bank's loan and securities portfolios. During the quarter, the bank issued $4.85 billion of preferred stock and warrants to the U.S. Treasury under the Capital Purchase Plan, it said, and issued another $3.0 billion of debt guaranteed by the FDIC under the Temporary Liquidity Guarantee Program.

"We are under no illusions as to the severity of this credit cycle," said James M. Wells III, SunTrust chairman and CEO, citing increased unemployment and the continued declines in home values, soaring delinquencies, and increasing credit losses. "Managing successfully through it remains our number one priority," he said.

No kidding. Wells announced that Sun Trust would slash its dividend to 10 cents per common share outstanding — that after a 30 percent cut in October that brought the dividend down to 54 cents. That an 80 percent cut to the bank's dividend within one quarter.

Sun Trust's mortgage business took a clear hit, as it has throughout much of the current crisis, posting a $285.6 million fourth-quarter loss compared to a $30.4 million loss in the same quarter last year. Year-end results showed a $561.8 million loss for all of 2008, compared to a $54 million loss in 2007.

Average home loans were down $0.8 billion, or 2.4 percent, while interest income was down 34.6 percent as the bank continued to shift its product mix in mortgages towards lower-yielding conventional products. Loan production of $7.2 billion was off more than 44 percent compared to the fourth quarter of 2007, Sun Trust reported, while mortgage servicing income was down $393.5 million, driven by $370.0 million of impairment of mortgage servicing rights.

In other words: making loans wasn't profitable, and neither was servicing them. That's a double whammy.

Nonetheless, the bank's total servicing portfolio continued to grow: total loans serviced at December 31, 2008 were $162.0 billion, an increase of $12.2 billion, or 8.1 percent, from year-ago totals.

– Paul Jackson contributed to this report.

Write to Kelly Curran at kelly.curran@housingwire.com

Disclosure: The authors held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.

Richard Parsons denied whispers last November that he might become chairman of Citigroup Inc. (C: 30.87 +1.61%). "I have every confidence that we have the right team on the field to pull this thing out," Parsons, then chairman of Time Warner and a Citi director, said in a CNBC interview.

Nonetheless, Wednesday afternoon, Citi announced that Richard D. Parsons, lead director and chair of the Board's Nomination and Governance Committee, was appointed to succeed Sir Win Bischoff as Chairman of the Board of Directors.

Parsons, 60, is best known for his positions as President, CEO and Chairman at Time Warner, where he led the company's turnaround after its merger with America Online in 2000. He's also served as chairman and CEO of Dime Bancorp, Inc. And he's no stranger to Washington, as he has held various positions in government, including senior White House aide under President Gerald Ford, and most recently as a member of Obama's transition economic advisory board.

Bischoff's exit and Parson's appointment is just one change in the all-around shakeup at Citi since the start of the year, during which time Citi announced it would spin-off its brokerage business, reorganize itself into two separate entities, forego executive bonuses, and say goodbye to Citi senior counselor Robert Rubi, after he voluntarily stepped down from his position. Not to mention, the company reported 8.29 billion in fourth-quarter losses.

Amid the changes, Parsons said one of his top priorities will be to "ensure the Board remains committed to strong, independent corporate governance – especially in today's challenging economic conditions."

Citi's CEO Vikram Pandit said Parson is an invaluable asset to Citi. "With his proven record of turning around Dime Bancorp and Time Warner, as well as his work with a wide range of government regulators, Dick is uniquely qualified to lead the Citi Board…  Dick will surely play an integral role in helping us place Citi back on the right track and returning the company to a position of sustainable financial success," Pandit said.

Outgoing chairman Sir Win, who has been with Citi since 2000, said he will retire from Citi later this year.

Write to Kelly Curran at kelly.curran@housingwire.com.

Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.

John Thain, the former Merrill Lynch & Co. CEO, has resigned from his position as president of global banking, securities and wealth management operations at Bank of America Corp. (BAC: 7.29 -0.14%) after a meeting with BofA CEO Ken Lewis, according to a breaking news bulletin Thursday by the Wall Street Journal. Spokespeople from Merrill Lynch and BofA would not return calls seeking comment before this story was published mid-Thursday. BofA stocks were down almost 14 percent and were trading at about $5.70 moments after the announcement began to cross major media outlets. The news comes as the bank grapples with steep losses incurred after the completion of BofA's merger with Merrill on Jan. 1.

The bank also purchased troubled mortgage lender Countrywide Financial Corp. in July 2008, making it the largest mortgage lender and servicer in the country. The addition of Merrill effectively made BofA the nation’s largest stock brokerage and a large investment bank to boot. But under the surface, BofA's balance sheets were hurting from the latest acquisition, and executives were reportedly in discussions with the Treasury Department as early as December regarding additional capital injections through the Troubled Asset Relief Program.

BofA on Oct. 28 had received $15 billion through the capital purchase vehicle of TARP; Merrill's $10 billion injection was slated at the time as deferred pending the merger. The $10 billion was later granted to BofA on behalf of the completed acquisition. The announcement Jan. 15 that the Treasury and Federal Deposit Insurance Corp. had agreed to assist the bank further meant BofA had an additional $20 billion through a new targeted investment vehicle of TARP and would enjoy a loss sharing program with the government to offset deep losses incurred through the Merrill acquisition. BofA now boasts one of the largest capital injections through TARP, totaling $45 billion — a figure matched only by the injections given to Citigroup Inc. (C: 30.87 +1.61%), whose $45 billion also consists of capital purchase program and targeted investment program contributions.

Friedman, Billings, Ramsey analyst Paul Miller made waves Tuesday by suggesting BofA needs more than $80 billion in new common equity capital, thanks to a ballooning balance sheet of assets tied to its acquisitions of Countrywide and Merrill. Miller suggested that BofA would also need to cut its dividend to preserve capital, and moved his target price to $5 per share. The forecast, coupled with a bleak outlook from BofA's Lewis going into 2009, begs the question whether the bank can withstand continued losses and capital pressure much longer, or whether it will require more federal aid going forward.

Write to Diana Golobay at diana.golobay@housingwire.com.

Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.