Lownds CFPB 3 of 3

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Deutsch, Rebecca (CFPB)

</o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=deutschr>
Lownds, Kevin (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=lowndsk>
RE: 1063(i) Questions

Mon May 02 2011 17:27:08 EDT
Thanks Kevin. This is very helpful. Much appreciated!
Rebecca Deutsch
Attorney-Advisor
Office of General Counsel
Consumer Financial Protection Bureau
[email protected]
Office: (202) 435-7091
From: Lownds, Kevin (CFPB)

Sent: Monday, May 02, 2011 4:54 PM
To: Deutsch, Rebecca (CFPB)
Cc: Glaser, Elizabeth (CFPB); Kitt, Brett (CFPB); Osborn, Meredith (CFPB); Scanlon, Thomas
Subject: 1063(i) Questions
Hi Rebecca,
At Fridays meeting on the 1063(i) project, you asked that I check into several provisions for inclusion in
the list or further analysis. Elizabeth and I have examined these provisions today and have drafted
responses to your questions in the attached document. Please let us know if you have any questions or
would like to discuss any of our answers further.
Thanks,
Kevin
Page 4 of 3826
Kevin K. Lownds
Review Analyst
(202) 435-7399
Page 5 of 3826
From:
Slagter, Dennis (CFPB)

(fydibohf23spdlt)/cn=recipients/cn=slagterd>
_DL_CFPB_AllHands
</o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands>
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Welcome our New Hires!

Mon May 02 2011 17:08:25 EDT
image001.jpg
Colleagues,
Please join us in welcoming the following new team members to our family at CFPB! If you have not
already met our newest additions, please stop by and introduce yourself.
On April 25, we welcomed:
2011 PP09 Cohort 042511
Left to Right after Wally:

Allison Brown, Attorney-Advisor, Non-Bank Supervision, 520
Katie Worthman, Attorney-Advisor, Fair Lending, 7704
Kristen Donoghue, Attorney-Advisor, Enforcement, 547
Kristina Betts, Attorney-Advisor, Enforcement, 547
John Starr, Physical Security Specialist, Operations & Facilities, 7513
Not Pictured:
Jesse Leary, Economist, Research, 504
On May 2nd, we also welcomed (not pictured):

Ethan Levisohn, Attorney-Advisor, Enforcement, 547
Alicia McDonald, Attorney-Advisor, General Counsel, 508
Page 6 of 3826
Hi Dennis,
Below is our welcome email for this pay periods new hires! Please let me know if you need any other
information or support in sending this out to all-hands.
Thanks so much,
Emily
--Emily Herchen
Human Capital Team
(p) 202-435-7519
(b) (6)
(f) 202-435-7329
Page 7 of 3826
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Deutsch, Rebecca (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=deutschr>
Glaser, Elizabeth (CFPB)
</o=ustreasury/ou=do/cn=do resources/cn=user
accounts/cn=standard users/cn=glasere>; Kitt, Brett (CFPB)
</o=ustreasury/ou=do/cn=recipients/cn=kittb>; Osborn, Meredith
(CFPB) </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=osbornm>; Scanlon, Thomas
</o=ustreasury/ou=do/cn=recipients/cn=scanlont>
1063(i) Questions
Mon May 02 2011 16:54:23 EDT
Outstanding Rules List Questions 5-2-11.docx
Hi Rebecca,
At Fridays meeting on the 1063(i) project, you asked that I check into several provisions for inclusion in
the list or further analysis. Elizabeth and I have examined these provisions today and have drafted
responses to your questions in the attached document. Please let us know if you have any questions or
would like to discuss any of our answers further.
Thanks,
Kevin
Kevin K. Lownds
Review Analyst
(202) 435-7399
Page 10 of 3826
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_DL_CFPB_AllHands
New Jobs for Posting on CFPB Web Site & Distribution

Mon May 02 2011 15:19:16 EDT
Colleagues,
The CFPB Human Capital Team has posted the following new vacancy announcements on the
USAJOBS website. At the end of this message you will find the job title, grade level, and link for each
announcement. If you know great candidates who might be interested in joining our team, please share
this information with them!
Information Technology Specialist (INFOSEC), Cyber Threat Security Analyst,

CN-2210-5C
Office: Chief Information Officer
Vacancy Announcement #: 11-CFPB-177DH
Announcement Closes: May 4, 2011
Who May Apply: All U.S. Citizens
Link: 11-CFPB-177DH
Information Technology Specialist (INFOSEC), Information Systems Security Manager,

CN-2210-5C
Office: Chief Information Officer
Vacancy Announcement #: 11-CFPB-165DH
Who May Apply: All U.S. Citizens
Link: 11-CFPB-165DH
Paralegal Specialist CN-0950-4B/5B
Page 13 of 3826
Office: General Counsel or Supervision & Enforcement

Vacancy Announcement #: 11-CFPB-175P
Who May Apply: Applications will be accepted from U.S. citizens.
Link: 11-CFPB-175P
Paralegal Specialist CN-0950-4B/5B

Vacancy Announcement #: 11-CFPB-174
Who May Apply: Candidates with permanent competitive service status, non-competitive eligibles, and
special appointment eligibles.
Link: 11-CFPB-174
Human Capital Support Assistant CN-303-3C

Office: Chief Human Capital Office
Vacancy Announcement #:11-CFPB-194
Who May Apply: Candidates with permanent competitive service status, non-competitive
eligibles, and special appointment eligibles
Link:11-CFPB-194
Human Capital Support Assistant CN-303-3C

Office: Chief Human Capital Office
Vacancy Announcement #:11-CFPB-195P
Who May Apply: Applications will be accepted from U.S. citizens
Link: 11-CFPB-195P
Page 14 of 3826
Consumer Response Specialist CN-0301-5B/5C

Office: Consumer Response Center
Who May Apply: Candidates with permanent competitive service status, non-competitive
eligibles, and special appointment eligibles
Link: 11-CFPB-182
Consumer Response Specialist CN-0301-5B/5C

Office: Consumer Response Center
Link: 11-CFPB-183P
Dennis Slagter
Chief Human Capital Officer
202-435-7143 (1801 L St)
(b) (6)
This e-mail may contain Privacy Act/Sensitive Data, which is intended only for the individual to which it
is addressed. It may contain information that is privileged, confidential, or otherwise protected from
disclosure under applicable laws. Do not disclose sensitive data to others within or outside of CFPB
unless they have a legitimate need for the information based on their official duties. If you are unsure of
the appropriateness of information disclosure, please contact the General Counsel or the Privacy Team
for guidance.
Page 15 of 3826
From:
To:
Adeyemo, Adewale (Wally) (CFPB)

accounts/cn=standard users/cn=adeyemoa>
Abney, Wilson (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=abneyw>; Adeyemo, Adewale
(Wally) (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user
accounts/cn=standard users/cn=adeyemoa>; Alag, Sartaj
(fydibohf23spdlt)/cn=recipients/cn=alags>; Antonakes, Steve
(fydibohf23spdlt)/cn=recipients/cn=antonakess>; Antonellis,
Sherry (CFPB) </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=antonelliss>; Assebab,
Catherine (CFPB) </o=ustreasury/ou=exchange administrative
group (fydibohf23spdlt)/cn=recipients/cn=assebabc>; Bach, Mary
(Stacey)(CFPB) </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=bachs>; Basham, Stephanie
(fydibohf23spdlt)/cn=recipients/cn=bashams>; Bateman, Jon
(fydibohf23spdlt)/cn=recipients/cn=batemanj>; Bernstein, Ethan
(fydibohf23spdlt)/cn=recipients/cn=bernsteine>; Betts, Kristina
(fydibohf23spdlt)/cn=recipients/cn=bettsk>; Black, Brad
</o=ustreasury/ou=do/cn=recipients/cn=blackb>; Blanton, Mary
(fydibohf23spdlt)/cn=recipients/cn=blantonm>; Blenkinsopp,
Alexander (CFPB) </o=ustreasury/ou=exchange administrative
group (fydibohf23spdlt)/cn=recipients/cn=blenkinsoppa>; Blow,
Marla (CFPB) </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=blowm>; Blumenthal, Pamela
(fydibohf23spdlt)/cn=recipients/cn=blumenthalp>; Boateng, W.
(Kwadwo)(CFPB) </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=boatengk>; Boenau, Susan
(fydibohf23spdlt)/cn=recipients/cn=boenaus>; Botelho, Michael
(fydibohf23spdlt)/cn=recipients/cn=botelhom>; Breslaw, April
(fydibohf23spdlt)/cn=recipients/cn=breslawa>; Brolin, John
(fydibohf23spdlt)/cn=recipients/cn=brolinj>; Brown, Allison
(fydibohf23spdlt)/cn=recipients/cn=brownall>; Brown, Amy (CFPB)
accounts/cn=standard users/cn=brownam>; Brown, Charles (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=brownchar>; Brown, Robert
(CFPB) </o=ustreasury/ou=do/cn=recipients/cn=brownr>; Brown,
Trina (CFPB) </o=ustreasury/ou=exchange administrative group
Page 17 of 3826
(fydibohf23spdlt)/cn=recipients/cn=browntri>; Burniston, Tim

(fydibohf23spdlt)/cn=recipients/cn=burnistont>; Burton, Matthew
(fydibohf23spdlt)/cn=recipients/cn=burtonm>; Callan, Nicole
(fydibohf23spdlt)/cn=recipients/cn=callann>; Campbell, Michael
(fydibohf23spdlt)/cn=recipients/cn=campbellmic>; Canfield, Anna
(fydibohf23spdlt)/cn=recipients/cn=canfielda>; Cantrell, Diane
(fydibohf23spdlt)/cn=recipients/cn=cantrelld>; Chandler, Deidra
(fydibohf23spdlt)/cn=recipients/cn=chandlerde>; Chanin, Leonard
(fydibohf23spdlt)/cn=recipients/cn=chaninl>; Chopra, Rohit
(fydibohf23spdlt)/cn=recipients/cn=choprar>; Chow, Edwin (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=chowe>; Chuhaj, Yuri J
</o=ustreasury/ou=do/cn=recipients/cn=ots/cn=ch4970>; Cochran,
Kelly (CFPB) </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=cochrank>; Coleman, John
(fydibohf23spdlt)/cn=recipients/cn=colemanjo>; Coney, Steven
(fydibohf23spdlt)/cn=recipients/cn=coneys>; Cordray, Richard
(fydibohf23spdlt)/cn=recipients/cn=cordrayr>; Coyle, Raymond
(CFPB) </o=ustreasury/ou=do/cn=recipients/cn=coyler>; Craft,
Nadine (CFPB) </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=craftn>; Cronan, Russell
(fydibohf23spdlt)/cn=recipients/cn=cronanr>; Cronin, Katherine
(fydibohf23spdlt)/cn=recipients/cn=cronink>; Cumpiano, Flavio
(fydibohf23spdlt)/cn=recipients/cn=cumpianof>; D'Amico,
Christina </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=damicoc>; Darling, Eben
(fydibohf23spdlt)/cn=recipients/cn=darlinge>; Date, Rajeev
(fydibohf23spdlt)/cn=recipients/cn=dater>; Davidson, Terri L
</o=ustreasury/ou=do/cn=recipients/cn=ots/cn=da0037>; Decker,
Sharon (CFPB) </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=deckers>; Deutsch, Rebecca
(fydibohf23spdlt)/cn=recipients/cn=deutschr>; Dickman, Marilyn
(fydibohf23spdlt)/cn=recipients/cn=dickmanm>; DiPalma, Nikki
(fydibohf23spdlt)/cn=recipients/cn=dipalman>; Dokko, Jane
(fydibohf23spdlt)/cn=recipients/cn=dokkoj>; Donoghue, Kristen
Page 18 of 3826

(fydibohf23spdlt)/cn=recipients/cn=donoghuek>; Dorsey, Darian
(fydibohf23spdlt)/cn=recipients/cn=dorseyd>; Duncan, Timothy
(fydibohf23spdlt)/cn=recipients/cn=duncant>; Egerman, Mark
(fydibohf23spdlt)/cn=recipients/cn=egermanm>; Elliott, Brandace
(fydibohf23spdlt)/cn=recipients/cn=elliottbr>; English, Jared
(fydibohf23spdlt)/cn=recipients/cn=englishjar>; English,
Leandra (CFPB) </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=englistl>; Fay, Andrew
(fydibohf23spdlt)/cn=recipients/cn=faya>; Forrest, David (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=forrestda>; Fravel, Wesley
(fydibohf23spdlt)/cn=recipients/cn=fravelw>; Frotman, Seth
(fydibohf23spdlt)/cn=recipients/cn=frotmans>; Fuchs, Meredith
(fydibohf23spdlt)/cn=recipients/cn=fuchsm>; Galicki, Joshua
(CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user
accounts/cn=standard users/cn=galickij>; Gao, Jane (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=gaoj>; Geary, John (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=gearyj>; Geldon, Daniel
(fydibohf23spdlt)/cn=recipients/cn=geldond>; Gelfond, Rebecca
(fydibohf23spdlt)/cn=recipients/cn=gelfondr>; Glaser, Elizabeth
accounts/cn=standard users/cn=glasere>; Goldfarb, Rachael
(fydibohf23spdlt)/cn=recipients/cn=goldfarbr>; Gonzalez,
Roberto (CFPB) </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=gonzalezr>; Gordon, Michael
(fydibohf23spdlt)/cn=recipients/cn=gordonm>; Gorski, Stephanie
accounts/cn=standard users/cn=gorskis>; Gragan, David (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=gragand>; Granat, Rochelle
</o=ustreasury/ou=do/cn=recipients/cn=granatr>; Gregorio,
Laurie (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=gregol>;
Grover, Eric (CFPB) </o=ustreasury/ou=exchange administrative
group (fydibohf23spdlt)/cn=recipients/cn=grovere>; Gupta,
Neeraj (CFPB) </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=guptan>; Hammonds, Jamice
(fydibohf23spdlt)/cn=recipients/cn=hammondsj>; Hancock, Gary
(fydibohf23spdlt)/cn=recipients/cn=hancockg>; Hannah, Stephen
Page 19 of 3826
(Rick)((CFPB) </o=ustreasury/ou=exchange administrative group

(fydibohf23spdlt)/cn=recipients/cn=hannahs>; Harpe, Pam (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=harpep>; Hart, Maria (CFPB)
</o=ustreasury/ou=do/cn=recipients/cn=hartm>; Harvey, Imani
(fydibohf23spdlt)/cn=recipients/cn=harveyi>; Haynes-Gholar,
Tywana (CFPB) </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=haynes-gholat>; Healey, Jean
(fydibohf23spdlt)/cn=recipients/cn=healeyj>; Herchen, Emily
(fydibohf23spdlt)/cn=recipients/cn=herchene>; Herring, Maia
(fydibohf23spdlt)/cn=recipients/cn=herringm>; Hillebrand, Gail
(fydibohf23spdlt)/cn=recipients/cn=hillebrandg>; Holmes,
Cordelia (CFPB) </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=holmesc>; Horan, Kathleen
(CFPB) </o=ustreasury/ou=do/cn=recipients/cn=horank>; Horn,
Richard (CFPB) </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=hornr>; Howard, Jennifer
(fydibohf23spdlt)/cn=recipients/cn=howardje>; Hrdy, Alice
(fydibohf23spdlt)/cn=recipients/cn=hrdya>; Hupp, James (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=huppj>; Jackson, Monica
(fydibohf23spdlt)/cn=recipients/cn=jacksonmo>; Jackson, Peter
(fydibohf23spdlt)/cn=recipients/cn=jacksonpe>; Johnson,
Christopher </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=johnsonch>; Keane, Micheal
(fydibohf23spdlt)/cn=recipients/cn=keanem>; Kearney, Thomas
(fydibohf23spdlt)/cn=recipients/cn=kearneyt>; Kennedy, Leonard
(fydibohf23spdlt)/cn=recipients/cn=kennedyle>; Kern, Shaun
(fydibohf23spdlt)/cn=recipients/cn=kerns>; Kim, Lynn
accounts/cn=standard users/cn=kiml>; Klein, Heather (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=kleinh>; Krafft, Nicholas
(fydibohf23spdlt)/cn=recipients/cn=krafftn>; Kunin, Noah (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=kuninn>; Ladd, Christine
(fydibohf23spdlt)/cn=recipients/cn=laddc>; Lauderdale, Steve
(fydibohf23spdlt)/cn=recipients/cn=lauderdales>; Leary, Jesse
(fydibohf23spdlt)/cn=recipients/cn=learyje>; Leiss, Wayne
Page 20 of 3826

(fydibohf23spdlt)/cn=recipients/cn=leissw>; Lepley, Richard
accounts/cn=standard users/cn=lepleyr>; Lev, Ori (CFPB)
</o=ustreasury/ou=do/cn=do resources/cn=ofac/cn=ofac
users/cn=levo>; Lilly, Antona
</o=ustreasury/ou=do/cn=recipients/cn=lillya>; Logan, Amanda
(fydibohf23spdlt)/cn=recipients/cn=loganam>; Lombardo,
(fydibohf23spdlt)/cn=recipients/cn=lombardoc>;
Lopez-Fernandini, Alejandra (CFPB) </o=ustreasury/ou=exchange
administrative group
(fydibohf23spdlt)/cn=recipients/cn=lopez-fernadinia>; Lownds,
Kevin (CFPB) </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=lowndsk>; Mann, Benjamin
</o=ustreasury/ou=do/cn=recipients/cn=mannb>; Mann, Seth (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=manns>; Markus, Kent
(fydibohf23spdlt)/cn=recipients/cn=marcusk>; Marshall, Mira
(fydibohf23spdlt)/cn=recipients/cn=marshallm>; Martin, Alyssa
(fydibohf23spdlt)/cn=recipients/cn=martinal>; Martinez, Adam
(fydibohf23spdlt)/cn=recipients/cn=martinezaz>; Martinez, Zixta
(fydibohf23spdlt)/cn=recipients/cn=martinezz>; McCoy, Patricia
(fydibohf23spdlt)/cn=recipients/cn=mccoyp>; McQueen, Suzanne
(CFPB) </o=ustreasury/ou=do/cn=recipients/cn=mcqueens>; Megee,
Christine (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user
accounts/cn=standard users/cn=megeec>; Mestre, Juan (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=mestrej>; Meyer, Erie (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=meyerer>; Michalosky, Martin
(fydibohf23spdlt)/cn=recipients/cn=michaloskym>; Middlebrook,
Jack (CFPB) </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=middlebrookj>; Miller,
Kimberly (CFPB) </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=millerki>; Morris, Lucy
(fydibohf23spdlt)/cn=recipients/cn=morrislu>; Mosena, Lea
(fydibohf23spdlt)/cn=recipients/cn=mosenal>; Munz, Daniel
(fydibohf23spdlt)/cn=recipients/cn=munzd>; Nelson, Sheila
</o=ustreasury/ou=do/cn=recipients/cn=nelsons>; Osborn,
Meredith (CFPB) </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=osbornm>; Patross, Whitney
(fydibohf23spdlt)/cn=recipients/cn=patrossw>; Pearl, Joanna
Page 21 of 3826
(fydibohf23spdlt)/cn=recipients/cn=libermanj>; Perry, Vanessa

(fydibohf23spdlt)/cn=recipients/cn=perryv1>; Petersen, Cara
(fydibohf23spdlt)/cn=recipients/cn=petersenc>; Petraeus, Holly
(fydibohf23spdlt)/cn=recipients/cn=petraeush>; Plunkett,
group (fydibohf23spdlt)/cn=recipients/cn=alexanderp>; Pluta,
Scott (CFPB) </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=plutas>; Prince, Victor
(fydibohf23spdlt)/cn=recipients/cn=princev>; Proctor, Althea
</o=ustreasury/ou=do/cn=recipients/cn=proctora>; Puri, Angela
accounts/cn=standard users/cn=puria>; Reeder, Garry (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=reederg>; Reese, Angelique
(fydibohf23spdlt)/cn=recipients/cn=reesea>; Reilly, Deb (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=reillyd>; Reilly, Elizabeth
(fydibohf23spdlt)/cn=recipients/cn=ericksone>; Rexroth, Mariana
(fydibohf23spdlt)/cn=recipients/cn=rexrothm>; Riley, Jeffrey
(fydibohf23spdlt)/cn=recipients/cn=rileyje>; Royster, Felicia
accounts/cn=standard users/cn=roysterf>; Ruihley, Joshua (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=ruihleyj>; Sanford, Paul
(fydibohf23spdlt)/cn=recipients/cn=sanfordpa>; Scala, Courtney
(fydibohf23spdlt)/cn=recipients/cn=scalac>; Scanlon, Thomas
</o=ustreasury/ou=do/cn=recipients/cn=scanlont>; Sealy, William
(fydibohf23spdlt)/cn=recipients/cn=sealeyw>; Selden, R. Colgate
(fydibohf23spdlt)/cn=recipients/cn=seldenr>; Sena, Theresa
(fydibohf23spdlt)/cn=recipients/cn=senat>; Sensiba, Vicki
(fydibohf23spdlt)/cn=recipients/cn=sensibav>; Shue, Jeffrey
(fydibohf23spdlt)/cn=recipients/cn=shuej>; Silberman, David
(fydibohf23spdlt)/cn=recipients/cn=silbermand>; Skinner,
Cathaleen (CFPB) </o=ustreasury/ou=exchange administrative
group (fydibohf23spdlt)/cn=recipients/cn=skinnerc>; Slagter,
Dennis (CFPB) </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=slagterd>; Smith, Rorey
(fydibohf23spdlt)/cn=recipients/cn=smithror>; Smullin, Rebecca
Page 22 of 3826
(fydibohf23spdlt)/cn=recipients/cn=smullinr>; Smyth, Nick

(fydibohf23spdlt)/cn=recipients/cn=smythn>; Sobczak, Greg
(fydibohf23spdlt)/cn=recipients/cn=sobczakg>; Sokolov, Dan
</o=ustreasury/ou=do/cn=recipients/cn=sokolovd>; Stapleton,
Claire (CFPB) </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=stapletonc>; Stark,
Paula-Rose (CFPB) </o=ustreasury/ou=exchange administrative
group (fydibohf23spdlt)/cn=recipients/cn=starkp>; Starr, John
(fydibohf23spdlt)/cn=recipients/cn=starrj>; Sterken, Nathan
(fydibohf23spdlt)/cn=recipients/cn=sterkenn>; Stone, Bayard
(Corey) (CFPB) </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=stonec>; Suess, Robert
(fydibohf23spdlt)/cn=recipients/cn=seussr>; Taiwo, Ebunoluwa
(fydibohf23spdlt)/cn=recipients/cn=taiwoe>; Tamberrino, Mary
(fydibohf23spdlt)/cn=recipients/cn=tamberrinom>; Taylor, Doug
(fydibohf23spdlt)/cn=recipients/cn=taylord>; Tierney, Patrick
(fydibohf23spdlt)/cn=recipients/cn=tierneyp>; Tingwald, James
(fydibohf23spdlt)/cn=recipients/cn=tingwaldj>; Trueblood,
Andrew (CFPB) </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=trueblooda>; Tucker, Kevin
(fydibohf23spdlt)/cn=recipients/cn=tuckerke>; Turenne, Jeannine
(fydibohf23spdlt)/cn=recipients/cn=turennej>; Twohig, Peggy
(CFPB) </o=ustreasury/ou=do/cn=recipients/cn=twohigp>; Vail,
Amber (CFPB) </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=vaila>; Vale, Elizabeth
(fydibohf23spdlt)/cn=recipients/cn=valee>; Van Loo, Rory (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=vanloor>; Vanderslice, Julie
(fydibohf23spdlt)/cn=recipients/cn=vanderslicej>; VanMeter,
Stephen (CFPB) </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=vanmeters>; Vinton, Merici
(fydibohf23spdlt)/cn=recipients/cn=vintonm>; Wanderer, Agnes
(fydibohf23spdlt)/cn=recipients/cn=wanderera>; Wang, Shou
(fydibohf23spdlt)/cn=recipients/cn=wange>; West, Catherine
(fydibohf23spdlt)/cn=recipients/cn=westca>; Williams, Anya
(fydibohf23spdlt)/cn=recipients/cn=williamsany>; Williams,
Page 23 of 3826
(fydibohf23spdlt)/cn=recipients/cn=williamsk>; Witt, Michael

(fydibohf23spdlt)/cn=recipients/cn=wittm>; Worthman, Katherine
(fydibohf23spdlt)/cn=recipients/cn=worthmank>; Young,
(fydibohf23spdlt)/cn=recipients/cn=youngc>; Yuda, John (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=yudaj>; Zapanta, Victor
(fydibohf23spdlt)/cn=recipients/cn=zapantav>
Cc:
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CFPB Weekly Report 5/2

Mon May 02 2011 14:33:41 EDT
CFPB Weekly Report

5/2/2011
Overview
Elizabeth Warren will travel to Arkansas on Thursday for a meeting with local consumer advocates and
community bankers. She will also deliver a lecture on the middle class and the CFPB at the William J.
Clinton Presidential Center. The lecture is open to the public.
The CFPB will launch its mortgage disclosure project Know Before You Owe online at
ConsumerFinance.gov. The CFPB will also release its second quarterly spending report online.
Professor Warren will visit with members of Congress on Tuesday afternoon and Wednesday morning.
On Wednesday, Holly Petraeus will meet with Senator Lindsey Graham (R-SC) on Capitol Hill.
Petraeus will travel to North Carolina on Friday to visit Fort Bragg with Senator Kay Hagan (D-NC).
They will hold an availability with local media to discuss the CFPBs Office of Servicemember Affairs.
Petraeus will lead three separate events: a roundtable will military service providers, a town hall with
junior enlisted servicemembers and their spouses, and a separate town hall with senior enlisted
servicemembers and officers.
On Saturday, Petraeus will deliver the commencement address at Methodist University in Fayetteville,
NC.
Page 24 of 3826
Policy
Cards
Last week, we held quarterly update meetings with two of the top credit card issuers. We will conclude
these meetings this week and put together a quarterly industry update. We will also begin
conversations this week with several issuers around steps to simplify credit card agreements.
We met with the Center for Financial Services Innovation and will be meeting next week with Green Dot
to obtain additional information on prepaid card usage patterns. We will also meet with Ace Cash
Express, one of the largest distributors of prepaid cards. We have completed a round of mystery
shopping and are working on an options memo.
Mortgages
The TILA/RESPA team is launching the outreach campaign and completing the design and content for
the first prototype consolidated disclosure forms to go into testing. The Mortgage Markets team began
planning a research event on access to credit, researched data needs, and began designing a
response capability for distressed mortgage borrowers who contact consumer response. Additionally,
Mortgage Markets staff met with representatives from the HAMP program, Consumer Bankers of
America, and the American Enterprise Institute.
Other Policy Developments

In the field of deposits, we met with the two largest depository institutions and are meeting this week
with one of the large regional banks as we continue to research this market.
The CFPB signed an information-sharing MOU with the Federal Financial Institutions Examination
Council (FFIEC) on April 22.
This week, we will complete a primer on the remittances market in conjunction with a visit by Western
Unions CEO.
We will be visited this week by Equifaxs senior vice president of government relations.
This week, Vantage Score will present results of its recent study on credit card line reductions that took
place during 2009 and their impact on consumers credit scores and defaults.
Page 25 of 3826
This week, we have calls scheduled with regulators in two states West Virginia and Texas that have
implemented FX disclosure requirements for international remittances, to learn about the costs and
benefits of these disclosures and how they are enforced.
This week, we will make our first official requests to state regulators for information about their
supervision of certain non-depository institutions.
Corey Stone and Rohit Chopra will meet with Deputy Assistant Secretary of Education Michael
Bergeron and staff at the Office of Postsecondary Policy to discuss the student loan marketplace. We
will also meet with staff overseeing the National Student Loan Data System, the central database of the
Federal student loan program.
The Enforcement team continues to plan for e-discovery and other systems that will support its work.
Last week, the team received demonstrations on several case management systems.
Outreach
This week, Elizabeth Warren and Elizabeth Vale are meeting with community bankers from Arkansas,
Illinois, Connecticut, Georgia, Oklahoma, Tennessee, Texas, Minnesota, New York, and the
Independent Community Bankers Association. Warren will speak with the Credit Union National
Association.
On Tuesday, Professor Warren will sit for an interview with Ylan Mui of the Washington Post. She will
also meet with Congressman Waxman and Quigley.
On Thursday, CFPB staff will hold a meeting with the Consumer Federation of American on payday
lending and prepaid cards. Also on Thursday, Rich Cordray will participate in a Chamber of Commerce
Roundtable with FTC Bureau Director David Vladeck to discuss enforcement coordination between the
two agencies. These meetings are closed to the press.
Jean Ann Fox from the Consumer Federation of America will brief CFPB personnel on internet payday
lending.
Management
Page 26 of 3826
The CFPB received a FOIA request regarding information related to Ron Howards video promotion.
The contract for our consumer response bridge solution has been awarded to Buan Consulting.
Procurement will issue a solicitation for regional office space.
We hope to transmit a fourth transfer request to the Fed for funding through September 30, 2011.
We also aim to launch an internal staff directory soon.
Professor Warren Week Ahead

Monday, May 2, 2011
EW Meeting w Arkansas Bankers
EW Meeting w Independent Community Bankers Asso (ICBA)
EW Meeting w Illinois Bankers
DSilberman Meeting w PNC
DSilberman Call w Green Dot
Tuesday, May 3, 2011

EW Call w CUNA & NAFCU
EW Meeting w Georgia Bankers
ICBA Reception
Wednesday, May 4, 2011

EW in Little Rock, Arkansas
EW Meeting w Consumer/Civil Rights groups in Little Rock, AR
RDate Remarks Morgan Stanley Services Conference
Page 27 of 3826
HPetraeus Meeting w CUNA

EVale Meeting w TN Bankers Asso
Thursday, May 5, 2011

EW in Little Rock, AR
EW Meeting w AR Community Bankers
EW Remarks at William J. Clinton School at the University of Arkansas. Open Press.
EV Meeting w Independent Bankers Asso of Texas (IBAT)
RCordray Meeting w US Chamber of Commerce
CStone & GHillebrand attending Consumer Data Industry Asso Briefing on
Credit Reporting Accuracy
PTwohig Meeting w Consumer Federation of America (CFA)
DSilberman Meeting w CFA
CStone Meeting w Equifax
EV Meeting w MN Community Bankers
Friday, May 6, 2011

EW Calls w Community Bankers
LAST WEEK:
Events & Meetings w External Groups Apr 25-29, 2011
Monday, April 25, 2011

EW & DSilberman Meeting w NetSpend
Tuesday, April 26, 2001

DSilberman Quarterly Update w Chase
CWest Meeting w Bank CEOs
Page 28 of 3826
EVale Meeting w 100 community bankers & Connecticut Banking Commissioner in Hartford, CT
Wednesday, April 27, 2011

MBlow Meeting w Center for Financial Services Innovation
GHillebrand Meeting w AARP
ZQM Quarterly Meeting w Interagency Community Affairs
PTwohig Meeting w Consumer Financial Services Association
PMcCoy Meeting w Consumer Bankers Asso
PMcCoy Meeting w American Enterprise Institute
EVale & RChopra Meeting w Credit Union Student Choice
EVale Meeting w former ABA President Ed Yingling
Thursday, April 28, 2011

EW keynote to AFL-CIO Lawyers Conference
EW Meeting w Community Bankers
DSilberman Meeting w Wells Fargo
DSilberman & EVale Meeting w Citibank
Friday, April 29, 2011

EW Meeting w Americans for Financial Reform
DSilberman Quarterly Meeting w Bank of America in North Carolina
HPetraeus Meeting w Military Advocacy groups
GHillebrand Meeting w The San Francisco Foundation
Page 29 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

accounts/cn=standard users/cn=glasere>
FW: Draft Rules

Mon May 02 2011 13:53:22 EDT
Draft Rules.doc
From: Deutsch, Rebecca (CFPB)

Sent: Monday, May 02, 2011 10:00 AM
To: Scanlon, Thomas; Glaser, Elizabeth (CFPB); Mosena, Lea (CFPB); Kitt, Brett (CFPB)
Cc: Osborn, Meredith (CFPB)
Subject: Draft Rules
Attached is a revised draft of the list of rules that I circulated on Friday in connection with the section
1063(i) project.
Rebecca
Page 30 of 3826
From:
Blenkinsopp, Alexander (CFPB)

(fydibohf23spdlt)/cn=recipients/cn=blenkinsoppa>
_DL_CFPB_AllHands
Adamske, Steven
(fydibohf23spdlt)/cn=recipients/cn=adamskes>; Moore, Megan
</o=ustreasury/ou=do/cn=recipients/cn=mooreme>; Hunt, Anita
Maria </o=ustreasury/ou=do/cn=recipients/cn=hunta>; Wallace,
Kim </o=ustreasury/ou=do/cn=do resources/cn=user
accounts/cn=standard users/cn=wallacek>; Wolin, Neal
accounts/cn=standard users/cn=wolinn>; Warren, Elizabeth (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=warrene>; Fitzpayne,
Alastair </o=ustreasury/ou=do/cn=do resources/cn=user
accounts/cn=standard users/cn=fitzpaynea>; LeCompte, Jenni
accounts/cn=standard users/cn=engebretsenj>; Murray, Colleen
(fydibohf23spdlt)/cn=recipients/cn=murrayco>; Coloretti, Nani
(fydibohf23spdlt)/cn=recipients/cn=colorettin>
To:
Cc:
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Subject:
Date:
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CFPB Press Clips 5/2

Mon May 02 2011 10:47:05 EDT
Press Clips 5/2/2011
Index
Click publication title to find its location in this e-mail.

Click article title to go to its source website.
USA Today Our view: Dont defang new consumer protection bureau
USA Today Opposing view: Stop excessive regulation
Dow Jones Newswires Spending At Consumer Watchdog Agency Is On The Rise
Page 37 of 3826
Politico Morning Money First Look: Bachus on CFPB
Wall Street Journal (blog) Will Federal Consumer Bureau Ride to the Rescue of Class Actions?
Fayeteville Observer (North Carolina) The Other Petraeus
Reuters Breakingviews Crippled class suits may put new watchdog to test
Housing Wire Three months away from opening, CFPB releases expenditures
American Banker Washington People: Baring Her Fangs
Washington Observer-Reporter (Pennsylvania) Lobbyists vs. consumers
Louisville Courier-Journal (blog) FDIC publishes charges against Republic Bank
Arkansas Times (blog) Elizabeth Warren
Wall Street Journal (blog) Live Blog: The Berkshire Hathaway Annual Meeting
Consumer Credit
The Morning Call (Allentown, Pennsylvania) Is credit card debt protection worth it?
Housing
Washington Post Mortgage clearinghouse taps new chief executive
Los Angeles Times Elder homeowners might want to consider reverse mortgage alternatives
Reuters Post-crash, mortgages scarce for minorities: study
Birmingham News (Alabama) Alabama Attorney General Luther Strange opposes proposed
national settlement with mortgage servicers
USA Today
Dont defang new consumer protection bureau
May 1, 2011
Editorial
Page 38 of 3826
In Washington, when you can't kill an idea you hate, you can always go back and maim it.
That's what's happening this week in Congress, as House Republicans move to defang, declaw and deenergize a new agency created last year over their unanimous opposition to protect consumers.
For decades before the creation of the Consumer Financial Protection Bureau, consumers were the
orphans in a federal regime set up to regulate financial institutions. Anyone with a credit card might
remember the consequences.
Banks were allowed to raise credit card interest rates on existing balances at any time for any reason.
Regulators did nothing to stop it until 2008. Charging sky-high fees when a consumer missed a
payment deadline even by a few minutes? Also fine with regulators. Explaining the rules in language so
incomprehensible that a financial wizard would be hard-pressed to figure them out? Ditto.
The full list is much longer, including a major contribution to the ruinous financial crisis of 2008, which
was triggered by outrageous mortgage lending practices that never should have been permitted. You
might remember the lenders' TV commercials: No income? No assets? No problem.
A splintered collection of regulators just stood by and watched.
The Office of the Comptroller of the Currency, charged with regulating commercial banks, was more a
cheerleader than a regulator, impeding state efforts to crack down on predatory lending. The Federal
Reserve, with some power over mortgage lending, didn't move against abusive practices until 2007, far
too late. Others were just as blind.
Finally last year, amidst the resulting carnage, Congress created the consumer bureau. To understand
what a feat that was, consider the campaign contributions that commercial banks lavished on members
of the House Financial Services Committee, the gatekeeper for banking laws. Committee members
Republicans and Democrats received $2.5 million from banks in the last election cycle. Among the
top 10 recipients were then-chairman Barney Frank, D-Mass., who championed the new bureau, and
the current chairman, Spencer Bachus, R-Ala., who is pushing a measure to weaken it by trading its
director for a five-member commission.
The bureau was the brainchild of Harvard law professor Elizabeth Warren, who wrote in 2007 that
consumers got better federal protection when they bought a toaster than when they took out a
mortgage. Now, as an adviser to the Treasury secretary, she is setting up the bureau for its July 21
opening. Republicans who gained control of the House this year are pushing changes to rein in what
they claim are unprecedented powers. But that's just spin.
Page 39 of 3826
The 2010 law already places an unprecedented check on the bureau. A 10-member council of financial
regulators can veto many bureau actions by a two-thirds vote a power not granted over any other
financial regulator. Republicans, who will vote in committee on the changes Wednesday, want to
strengthen that veto power so much that a single council member could delay and threaten just about
any bureau action turning the bureau into an expensive, ineffective pawn of the lenders it would
oversee.
On The Daily Show with Jon Stewart last week, Warren likened the proposed changes to "a knife in the
ribs."
It's an apt description, one Republicans should think about before weakening the first real financial
watchdog consumers have ever had.
Back to Top
USA Today
Opposing view: Stop excessive regulation
May 1, 2011
By Shelley Moore Capito
In the aftermath of every crisis there are lessons to be learned. The recent financial collapse is no
exception. In hindsight, there were glaring regulatory gaps in many areas of finance, including
consumer protection. We can all agree that regulators, financial institutions and consumers should work
together toward the shared goal of better transparency and ease of understanding for financial products
such as mortgages and credit cards.
Simply creating another expensive federal bureaucracy will not in itself protect consumers. As the
Consumer Financial Protection Bureau (CFPB) takes shape, strong oversight is essential to ensure that
the rules are effective and efficient so that consumers are never again left out to dry. As members of
Congress, we have a duty to put a regulatory structure in place that protects our constituents from
unscrupulous actors; however, we also have a duty to protect them from unchecked, unelected
Page 40 of 3826
bureaucrats.
This week, the House Subcommittee on Financial Institutions and Consumer Credit, which I chair, will
examine common-sense bills that seek to promote effective and efficient transparency in the CFPB.
The first bill would replace the director of the bureau with a five-person commission. We think this is a
more balanced approach and follows the standard structure for other product regulators, such as the
Consumer Product Safety Commission. The second bill would strengthen the review authority of the
Financial Stability Oversight Council to make it possible to overturn a bad rule; currently the Dodd-Frank
Act, which created the new bureau, makes this process virtually impossible. We'll also take a look at my
suggestion to make sure the CFPB has a director in place confirmed by the Senate before it's
officially set up in July.
Some may say these improvements are making the CFPB weak and ineffective.
The truth is that yes, many members of Congress and many Americans cringe at the idea of
unelected bureaucrats in Washington overseeing personal financial decisions. Frankly, they're tired of
Washington creating another agency instead of holding existing ones accountable. But if the CFPB is
here to stay, it's my job as chairman to make sure the bureau is accountable to the American people.
Shelley Moore Capito, R-W.Va., chairs the House Subcommittee on Financial Institutions and
Consumer Credit.
Back to Top
Dow Jones Newswires

Spending At Consumer Watchdog Agency Is On The Rise
April 29, 2011
By Maya Jackson Randall
As the new U.S. consumer watchdog agency ramps up, so does its spending. During the first three
months of this year, the Consumer Financial Protection Bureau spent $36 million, twice as much as in
Page 41 of 3826
the previous quarter.
According to the bureau's updates, the consumer agency has spent $54 million in the current 2011
fiscal year, which started in October 2010. That's less than half of the $143 million the fledgling agency
estimates it will need in this fiscal year.
Still, the bureau's spending is set to grow. The agency has not yet officially opened its doors as a
powerful new financial markets cop with authority over giant banks and thousands of other firms. The
bureau, a central plank of the Dodd-Frank financial overhaul Congress passed last summer, won't
officially gain authority to help root out abusive financial products until July 21.
"It is anticipated that CFPB spending will increase in future quarters as the agency grows," says the
agency's latest spending notice, which was posted on the bureau website Friday afternoon. The budget
plan President Barack Obama unveiled in February estimates the Consumer Financial Protection
Bureau will need $329 million in fiscal year 2012 as the bureau writes and enforces consumer
protection rules and addresses consumer complaints.
Meanwhile, the bureau has faced a difficult start in Washington, with the agency's finances under
intense scrutiny. U.S. House Republicans, who argue that the bureau will have too much power over
financial products, have already taken aim at the bureau's start-up funding levels. Earlier this year,
Republican critics proposed to slash the bureau's fiscal year 2011 funding by 40%, to no more than $80
million.
However, the bureau's funding levels emerged unscathed in the last-minute spending agreement
congressional lawmakers struck in April to avert a shutdown of the federal government.
The bureau's spending update reveals how much the bureau has spent and how much the bureau has
requested from the Federal Reserve.
According to the notice, the consumer agency last month requested its largest allotment from the Fed:
$27.93 million. The bureau is an independent agency but it receives its funding from the Fed's excess
earnings instead of through the often-contentious congressional appropriations process.
The bureau says the funds are going toward staffing, information technology and other services needed
to get the bureau going. The largest expenditures this year "were for staff detailed from and
administrative services provided by other federal agencies, including the Department of the Treasury,"
the agency said in the notice. And the largest obligation "was a contract award for human resources
support," it added.
Page 42 of 3826
Specifically, the bureau spent $36 million between Jan. 1 and March 31, which is double the $18 million
it spent during last year's October-to-December quarter.
Overall, the bureau has requested three funding transfers from the Federal Reserve, totaling $60.7
million. It requested $18.4 million in August; $14.37 million in December; and $27.93 million in March.
Back to Top
Politico Morning Money

First Look: Bachus on CFPB
May 2, 2011
By Ben White
From remarks scheduled to be delivered this morning by House Financial Services Committee
Chairman Spencer Bachus before the Independent Community Bankers of America. Bachus has
introduced a bill to change the CFPB leadership structure so it is governed by a bipartisan commission
rather than a single director: [S]ome in Washington have reacted to this idea as though Im attacking
motherhood and apple pie. You would think the idea of having a bipartisan commission govern an
independent agency was simply unheard of. ... Actually, what is virtually unheard of is to have an
independent agency governed by one single director. ...
Almost all independent agencies -- including those responsible for consumer protection -- are governed
by a commission rather than a single person. ... So its hardly a radical concept to propose having a
commission run the CFPB. In fact, its something that Democrats and Republicans in the House voted
for last year when regulatory reform was being debated. It was later dropped in conference, but until
then this idea had strong, bipartisan support. A commission rather than a single director would also
minimize the risk of having a captive regulator. It is much easier for a special interest group to capture
one person than five.
Page 43 of 3826
Back to Top
Wall Street Journal (Law Blog)

Will Federal Consumer Bureau Ride to the Rescue of Class Actions?
April 29, 2011
By Nathan Koppel
After the Supreme Court Wednesday dealt a body blow to consumer class actions, all eyes have turned
to former Harvard Law professor Elizabeth Warren.
To recap, the Supreme Court in AT&T v. Concepcion ruled that federal law trumps state law in allowing
companies to use arbitration clauses that prohibit customers from joining class actions against the
companies.
Class-action bans are already pretty common in certain industries, such as consumer credit and cell
phones, and they are about to become much more common, lawyers say.
But Warren, the head of the new Bureau of Consumer Financial Protection, has the power to potentially
limit the scope of the Supreme Courts AT&T ruling, Reuters reports.
The Dodd-Frank law gives Warrens consumer agency the power to regulate arbitration in consumer
financial-services contracts, including agreements governing credit cards and bank accounts, and the
agency could conclude that class-action bans are harmful to consumers, according to Reuters.
Alan Kaplinsky, a partner at Ballard Spahr, told the Law Blog that he is advising clients to start crafting
class-action waivers now and to not to wait around to see whether Warrens group restricts the use of
Page 44 of 3826
arbitration clauses. It will take several years before the new bureau gets around to the issue, he said.
They have so much else on their plate.
San Francisco consumer rights lawyer Cliff Palefsky agrees that any remedy from Warrens group is
way down the line, he told the Law Blog.
The only near-term remedy for consumers, he says, is legislation restricting unfair arbitration clauses.
Congress, for example, he says, has already prohibited mandatory arbitration of Sarbanes Oxley
claims.
Back to Top
Fayeteville Observer (North Carolina)

The Other Petraeus
May 1, 2011
WASHINGTON
A letter from Holly Petraeus put America's biggest banks on notice.
JPMorgan Chase had just refunded $2.4 million to military families along with an apology for
overcharging thousands of them for home mortgages and even foreclosing on 14. Other banks should
make sure their employees understand military legal protections, Petraeus wrote, just a month on the
job leading the Office of Servicemember Affairs in the Department of the Treasury.
And suddenly, the Army wife and mother discovered that her husband wasn't the only Petraeus in the
national spotlight. As Gen. David Petraeus faces a dangerous spring in Afghanistan, Mrs. Petraeus
wages a battle back home. She has worked quietly for years protecting military families from financial
scams, but a recession, banking crisis and housing meltdown put finance on the front page and her in a
new federal watchdog agency.
Page 45 of 3826
This month, Petraeus will hold a roundtable talk with Fort Bragg families, a day before she gives the
commencement address to spring graduates at Methodist University. It will be a homecoming of sorts,
one she never imagined.
The instantly recognizable double A's of the 82nd Airborne Division have a prominent place on the
corner of Holly Petraeus' desk. Military coins (a fraction of her husband's collection, she says) are
neatly lined up in front of family photos that just happen to include two U.S. presidents. The coins and
an engraved nameplate with her full name, Hollister Petraeus, are among the office's few personal
touches.
She is waging the war to protect military families from financial fraud in temporary digs. The Consumer
Financial Protection Bureau won't become an official federal agency until July so, for now, the Office of
Servicemember Affairs is a generic space a couple of blocks from its mother office within the
Department of Treasury, but far removed from the political firestorm that surrounds its very existence.
President Obama tapped professor Elizabeth Warren to lead the bureau last fall, sidestepping Senate
confirmation and setting off complaints that it would stymie business.
Warren then turned to other leaders, including Holly Petraeus, who at the time was running Military
Line, an educational program at the Council of Better Business Bureaus that helps military personnel
with sensible financial management and warns them about scams.
Petraeus jokes that she landed both jobs without even realizing she was being interviewed. For years,
she watched out for the financial well-being of servicemembers without fanfare or pay. It was something
of a surprise, then, when she found herself as a working mother and wife balancing a job with the worry
of a husband - and later, a son - deployed overseas.
When Holly Petraeus says her husband has been deployed "forever," it's not much of an exaggeration roughly six out of the past 10 years. She has known no other life than military life. Married to a general,
she also grew up the only daughter of a general.
"Being a military family member equals being a resilient person," she says. Petraeus says a career
makes it easier to handle the constant deployments as her husband juggled duties first in Iraq and now
Afghanistan.
She finds herself tracing familiar steps, visiting military installations around the country, about one per
month. When she tells military families that she understands their problems, she speaks from personal
experience.
Page 46 of 3826
It's the same message she will relay at Fort Bragg, a place that she remembers with fondness.
"One memory is going to a parade on the parade field, seeing a pack of kids playing in the distance and
realizing one of them is mine," she said and laughed. "And I'm sending silent messages, 'Stay away. Do
not come any closer.'
"Growing up in the Army, it's kind of an unbroken chain. It was great that my children got to experience
life in the Army."
The family was stationed at Fort Bragg on Sept. 11, 2001. Gen. Petraeus, a former chief of staff of Fort
Bragg and the 18th Airborne Corps, was in Bosnia at the time. Their son was a freshman at Terry
Sanford High School.
"It was a significant time to be there and to see our country change," she said. "Certainly I don't think
anyone could have written the script for what happened in the almost 10 years since then. We knew it
was a very significant event for our country and, for the military, the consequences were going to follow,
and they did."
Her husband, of course, would go on to become a household name as the general largely credited for
turning around the Iraq war and more recently taking charge of the campaign in Afghanistan.
The couple met at the U.S. Military Academy at West Point, where David Petraeus was a cadet and a
young Holly Knowlton was the daughter of Gen. William A. Knowlton, a World War II and Vietnam
veteran who served as West Point superintendent. They now have two grown children, Stephen, a
second lieutenant with the 173rd Airborne Brigade Combat Team, and a daughter, Anne. In their 36
years of married life, the Petraeuses have moved 23 times. Add in the years spent growing up in the
Army, and Holly Petraeus estimates that she has moved at least 30 different times.
If you think that being married to arguably the most famous general in America right now means she
doesn't have to make a long-distance move on her own, think again. She moved herself from Florida to
Virginia when her husband deployed to Afghanistan. And when her son served there too last year, she
received news of his unit through a "virtual" Family Readiness Group just like thousands of other
military moms.
Financial stresses
Like many young military couples, the Petraeuses made some questionable financial choices of their
own in the early days. They splurged on a fancy but temperamental sports car and plunked down
deposit money on a Georgia apartment sight unseen.
Page 47 of 3826
But that's nothing compared to the horror stories Holly Petraeus has heard while on the job. Thanks to
government checks that arrive like clockwork, she says, servicemembers have become easy marks for
unscrupulous lenders. The issue has become of top importance to the Pentagon. With two ongoing
wars, the military can little afford to have troops anxious about the financial well-being of family
members back home.
In fact, hundreds of servicemembers have their essential security clearances revoked each year due to
financial problems. A Department of Defense survey found that servicemembers consider their finances
to be the second largest source of stress in their lives, behind career concerns but ahead of
deployments, health, family and war. A survey found that nearly one-third of military families had at
least $10,000 in credit card debt compared to 16 percent for the civilian population. And nearly threefourths of financial counselors and attorneys said they have sometime in the last six months counseled
members of the armed forces who had fallen victim to abusive or discriminatory auto lending.
But it was the housing meltdown that finally brought things to a head. Last summer, Congress passed
the Dodd-Frank Wall Street Reform and Consumer Protection Act, which established the Consumer
Financial Protection Bureau, including the Office of Servicemembers Affairs. The Dodd-Frank Act
authorizes the OSA to work with the Pentagon to see that military personnel and their families receive
strong financial education, to monitor their complaints about consumer financial products and services and responses to those complaints - and to coordinate efforts by federal and state agencies to improve
consumer financial protection measures for military families.
Part of that is enforcing a law that has been on the books well before the housing meltdown. Congress
passed the Servicemembers Civil Relief Act in 2003, protecting military personnel from foreclosure and
capping credit card interest rates for active-duty servicemembers. Yet at least 18 servicemembers have
recently lost their homes to foreclosure.
Petraeus has received plenty of backup from the Pentagon. "The Department of Defense fully believes
that personal financial readiness of our troops and families equates to mission readiness," wrote Clifford
Stanley, undersecretary of Defense for Personnel and Readiness, in support of the fledgling bureau.
But some members of Congress say the bureau will curb innovation and kill jobs. They have proposed
to repeal the entire financial bill, cut the bureau's budget or curb its power in other ways.
But it hasn't held back Holly Petraeus. "What's that old phrase, how do you eat an elephant, one bite at
a time? I think everybody's kind of operating under that."
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Reuters Breakingviews
Crippled class suits may put new watchdog to test
April 29, 2011
By Reynolds Holding
It's a joyful spring in corporate America thanks to the U.S. Supreme Court. It has ruled that companies
can stop customers or employees from banding together to sue. But as directors celebrate, consumer
advocates and trial lawyers are mobilizing to overturn the decision. One of their best hopes of an ally
may be Elizabeth Warren's new Bureau of Consumer Financial Protection.
The decision came in a challenge to AT&T's requirement that cellphone customers resolve claims oneby-one in private arbitration. Lower courts struck down the class-action ban, but the high court reversed,
saying federal law favors arbitrations over litigation and class actions make them too costly and slow.
The upshot is that companies can not only prevent beefs against them from going to court, they can
also keep plaintiffs from uniting in large groups. The decision is a blow to consumers and employees -and might one day affect shareholders. Owners of publicly traded companies don't enter into contracts
with them, so there's no obvious way to bind the investors to an arbitration clause, much less stop their
pervasive class-action suits.
Some companies have tried, by putting such clauses in their bylaws or articles of incorporation,
contending those documents govern the relationship with shareholders. The approach might have
worked had the U.S. Securities and Exchange Commission not vetoed it in 1990 as against public
policy. New commissioners might one day conclude differently.
The ruling should nevertheless save businesses from defending lawsuits with hundreds of plaintiffs
seeking millions of dollars. But efforts are already under way to find a way to reverse the Supremes. A
Congress with a Republican-dominated House is unlikely to back those efforts. But Warren's new
agency might help.
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Dodd-Frank gives the watchdog power to regulate arbitration in consumer financial-services contracts.
It only oversees credit cards, bank accounts and the like, but if the bureau banned anti-class-action
clauses as harmful to, say, bank customers, it might strengthen the case against such clauses in other
areas.
Of course, Warren already has a full plate. But she has been a bulldog at challenging corporate power.
So it seems inevitable that lobbyists will soon test the former Harvard law professor's consumer bona
fides -- and the powers of her fledgling bureau.
CONTEXT NEWS
-- The Supreme Court ruled on April 27 that companies can prohibit customers from pursuing class
actions in private arbitrations over claims of consumer fraud.
-- The 5-4 decision means that businesses can, in effect, avoid class-action lawsuits by requiring
employees, customers or other businesses to resolve their disputes in arbitration rather than court, and
to bring their claims individually.
-- The ruling continues a long line of decisions by the court favoring private arbitration as a faster, more
efficient and less costly process than lawsuits.
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Housing Wire
Three months away from opening, CFPB releases expenditures
April 29, 2011
By Jon Prior
The still forming Consumer Financial Protection Bureau listed $36 million in expenditures as of March
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31, the agency said Friday.
The Dodd-Frank Act stipulates the CFPB to be built and ready by July 21. The agency will become the
de facto federal regulator for the entire mortgage market, from origination through servicing. While the
agency continues to add to its staff, there is still no director or nomination for one from the White House.
In the meantime, Elizabeth Warren is serving as the special adviser to the Treasury, and is in charge of
organizing the agency. The CFPB has spent two quarters in development.
According to the agency, the spending so far consists of $13 million in outlays and $23 million in gross
obligations.
Most of the spending was for building staff and administrative services provided by other federal
agencies, including the Treasury. The largest expenditure during its second quarter of development was
a $3 million contract for human resources support.
According to Dodd-Frank, the Fed will supply 10% of its expenses to the formation of the CFPB through
the first year. That goes up to 11% in the second year and 12% every year after, up to roughly $500
million. If that's not enough, the Fed can go to Congress for an additional $200 million.
The CFPB received three funding transfers totaling $60.7 million from the Fed so far. They stem from
an initial request for $18 million in August 2010 and another $14.3 million in December. The agency
requested another $27.9 million in March 2010.
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American Banker
Washington People: Baring Her Fangs
May 2, 2011
Page 51 of 3826
By Kate Davidson and Cheyenne Hopkins
Elizabeth Warren is ready to rumble.
Appearing on "The Daily Show" last week, the de facto head of the Consumer Financial Protection
Bureau railed against legislation to delay, defund or "defang" the new agency.
The show's host, Jon Stewart called it "Round Two," but Warren's description evoked a brawl straight
out of "West Side Story."
"The fight isn't over," Warren said. "The fight moved from Main Street to the dark alleys. Now the game
is, let's just see if we can stick a knife in the ribs of this consumer agency."
Republicans have introduced four bills that would, among other things, replace the CFPB director with a
five-member board, give other regulators more power to overrule the consumer bureau and delay
implementation of its powers until a Senate-confirmed leader is in place.
Republicans have also said that the bureau should have to go through the appropriations process. But
even banks have an easier time getting their hands on government money, Stewart joked.
At the top of the show, he lampooned a measure that would require World Trade Center survivors to
prove they're not on the terrorist watch list before receiving federal health benefits under the 9/11 First
Responders law.
"You want billions in bank bailout money? You get that without having to be cross-checked against the
terrorist watch list," he said. "The only thing they want to know in that case is did you start the financial
meltdown in the first place, because if you did, here's your [expletive] money."
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Washington Observer-Reporter (Pennsylvania)

Lobbyists vs. consumers
May 1, 2011
Editorial
When Congress gets back into session this month, it will be taking up legislation to "improve" the new
Consumer Financial Protection Bureau. The bureau's purpose is to protect consumers from being
cheated by credit-card companies, banks and other lenders.
Elizabeth Warren, the economist whom President Obama chose to put the bureau together, wants
mortgages and loan and credit-card agreements to be simple documents in plain English that can be
easily understood, so that consumers know the terms and how much their payments will be. You may
recall that the economic bomb crater we've been attempting to climb out of was caused by deceptive
lending practices.
A handful of bills have been introduced to strip the bureau of its power and funding. HR 1121 is
intended to prevent Warren from becoming director of the bureau by replacing the director's position
with a five-member commission. HR 1315 - the Duffy Bill - would diminish the bureau's authority to
make rules and regulations on the lending industry.
Among the lobbyists pushing this legislation is the U.S. Chamber of Commerce. Apparently, the
chamber favors the right of lenders to confuse and deceive consumers, or at least not to have to deal
with pesky regulations.
Odd, that the chamber would defend businesses by attacking their customers.
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Louisville Courier-Journal (Derby City Cents blog)

FDIC publishes charges against Republic Bank
April 29, 2011
By Chris Otts
The Federal Deposit Insurance Corp. has published its Feb. 9 notice laying out the case against loans
made by Louisville-based Republic Bank to consumers based on their anticipated tax refunds.
Though the FDIC is just posting the charges on its website today, they have been the subject of a
federal lawsuit filed by Republic on Feb. 28: Republic lawsuit vs FDIC
The FDIC alleges Republics "refund anticipation loans" 836,835 loans for a total of more than $3
billion during the 2010 tax season are too risky now that the Internal Revenue Service no longer
allows third parties like Republic to check a taxpayers record to be sure he or she doesnt owe taxes
"a vital underwriting tool."
Republic disagrees and says the FDIC doesnt have the authority to push it out of the business.
It was against this backdrop that Republic CEO Steve Trager challenged Harvard professor Elizabeth
Warren, architect of the new U.S. Consumer Financial Protection Bureau, at a Louisville event last
month about whether banks will have an "objective" forum in which to challenge rules made by the new
consumer agency.
Ultimately, Warren conceded that they would not, though she said rules made by the new agency could
be over-ruled by a consensus of other regulators like FDIC.
Heres a link to my full story about that.
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Arkansas Times (Arkansas Blog)

Elizabeth Warren
April 29, 2011
By Max Brantley
My favorite member of the Obama administration is coming to town May 5 to speak at the Clinton
School. She deserves a bigger room and I hope response merits it. The consumer financial protection
chief is smart, righteous and tough. Reserve your seats by emailing publicprograms@clintonschool.
uasys.edu, or calling 501-683-5239.
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Wall Street Journal (Deal Journal blog)

Live Blog: The Berkshire Hathaway Annual Meeting
April 30, 2011
The Berkshire Hathaway annual meeting, known as the Woodstock for capitalists, convenes today just
one month after the surprise resignation of David Sokol, one of Warren Buffetts top lieutenants.
Nearly 40,000 people are expected to pack into the Omaha, Neb., Qwest Center to hear Buffett and
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investing partner Charlie Munger talk about Sokol, the economy, the health of Berkshire Hathaway and
everything else under the sun. People have flown in from as far away as Australia to take in the words
of the Oracle of Omaha.
"In God We Trust" is false advertising:
Question about why Buffett doesnt own more gold or other commodities that have soared in value
recently. He says he wants to own assets that are valued based on what it can produce, not on assets
where rising prices create their own excitement.Over time, that has not been the way to get rich.
To explain, Buffett actually breaks out his wallet -- youre watching a historic event, Buffett quips I
might point out that this is a one dollar bill.
Buffett point out the bill says, In God We Trust on the back but thats really false advertising. If
Elizabeth Warren, the head of the federal consumer protection bureau, were here, Buffett said, Shed
say, in government we trust. God isnt going to do anything about that dollar bill if the government does
the wrong thing.
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Washington Post
Mortgage clearinghouse taps new chief executive
April 29, 2011
By Dina ElBoghdady
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A former Citigroup executive has been tapped to head Reston-based Merscorp, the parent company of
the firm that maintains an electronic mortgage clearinghouse embroiled in a series of lawsuits involving
the documentation of foreclosures.
Bill Beckmann joins as president and chief executive of the company and its subsidiary Mortgage
Electronic Registrations Systems Inc. effective immediately, a company spokeswoman said.
Beckmann replaces R.K. Arnold, the longtime MERS official who retired in January. Paul Bognanno, the
companys interim chief, organized the search that ultimately led to Beckmanns hiring and will play a
consulting role during the transition.
In a statement released Friday, Merscorp touted Beckmanns mortgage industry expertise. Beckmann
spent more than two decades at Citigroup and served as chairman and chief executive of CitiMortgage
before leaving the company in 2008. More recently, he ran his own consulting firm.
Beckmann joins an operation thats become integral to the mortgage industrys operations but a
lightning rod for critics, who say that gaps and errors in its private electronic database have spurred the
nations mortgage mess.
That database, created in the mid-1990s, is a registry of 68 million mortgages or 60 percent of the
nations residential loans. It enables brokers to bundle mortgages to sell to investors without having to
deal with the slow process of moving documents through county courthouses.
In addition to tracking the transfer of mortgages, MERS also serves as a proxy for mortgage owners in
the foreclosure process.
In its statement, the company made no mention of its legal headaches. But Merscorp chairman Kurt
Pfotenhauer said Beckmanns knowledge and experience will be instrumental as we continue to
implement initiatives to strengthen and improve the MERS brand.
Beckmann said hes excited to be part of a firm that provides a unique and vital service to the nations
housing finance system.
During his time at CitiMortgage, Beckmann oversaw strategy, sales, operations, capital markets and
regulatory issues. At the time, the company had 4 million residential mortgage customers.
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Beckmann holds an M.S. in management from the Stanford Sloan Program and a bachelors in
mathematical economics from Brown University.
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Los Angeles Times

Elder homeowners might want to consider reverse mortgage alternatives
May 1, 2011
By Lew Sichelman
Reverse mortgages may very well be a good choice for some seniors who need to tap into equity they
have in their homes. But there are other options elder owners might also want to consider.
For example, some state and local governments offer a less costly version of a reverse mortgage called
a deferred payment loan (DPL). Generally, there are no origination fees and insurance premiums, and
closing costs, if any, are very low.
The interest rate on DPLs is low as well, if interest is charged at all. When it is, it's often on a fixed
basis, meaning that the rate never changes. Better yet, many programs charge simple rather than
compound interest, so interest isn't charged on interest. Some even forgive part or the entire loan if the
owner remains in the house for a specified period of time.
King County, Wash., offers loans of up to $25,000 at zero interest. No payments are required, and the
loan needn't be paid back until the house is sold, transferred to a new owner or is no longer your
primary residence. Bloomington, Minn., offers loans of up to $35,000 at 5% a year, but with no
payments until the place is sold, refinanced or conveyed to someone else.
Typically, seniors can use deferred payment loans only to make specific types of repairs or home
improvements such as roofing and heating. But many will cover accessibility modifications such as
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ramps, rails and grab bars, and energy-efficiency improvements such as storm windows, insulation and
weatherstripping.
DPLs aren't available everywhere, and eligibility rules vary. Most are limited to homeowners with low or
moderate incomes. And many place a limit on the home's value and are confined to certain areas.
Some have a minimum-age or disability requirement.
Deferred payment loans go by many different names, so they may be difficult to find. Contact your city
or county housing department, area agency or county office on aging, or the nearest community action
or community development agency. Also try your state housing finance agency.
Another public sector version of the reverse mortgage is known as a property tax deferral (PTD) loan.
Generally, it provides annual advances that can be used only to pay your property taxes or a portion
thereof. But no repayment is required for as long as you live in the house.
In some places, property tax deferral loans are offered on a uniform, statewide basis. But in many
others, they are available only in some areas, and they vary from area to area. Eligibility rules also
sometimes differ from place to place, but most programs have a minimum-age requirement of 65 and
are limited to owners with low or moderate incomes.
In Cook County, Ill., the income limit is $50,000, and you must have lived in the house for at least three
years. In Wisconsin, the income limit is $20,000, but the residency requirement is just six months.
To find out if your state offers PTDs, contact the agency to which you pay taxes.
Seniors also may be eligible for monthly Supplemental Security Income (SSI) benefits if their liquid
resources (cash and savings) are less than $3,000 for a couple or $2,000 for an individual.
Your home and car do not count as resources under SSI, but your monthly unearned income cannot
exceed $924 for a couple or $623 for an individual. Income limits are higher if you earn income from a
job or live in a state that supplements SSI.
If you qualify for Supplemental Security Income, you might automatically qualify for other public benefits
that may allow you to postpone the need for a reverse mortgage. That way, if you do take out a reverse
loan later, you may be able to receive larger advances because you will be older and the value of your
house may have increased.
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Also, by waiting, interest charges will eat less of your home's equity. At the same time, though, you
could jeopardize your public benefits by getting more cash than you need from a reverse mortgage
because money in a checking or savings account at the end of a month is counted as an asset.
The National Council on Aging sponsors a website at http://www.benefitscheckup.org that will locate
public benefits programs that may pay for some of your prescription drugs, healthcare, utilities and
other essentials. The one-stop site also explains how to apply for the more than 1,150 programs
available in all 50 states and the District of Columbia.
If you don't qualify for a reverse mortgage, or the proceeds aren't enough for you to live on, here are
some other housing options you might want to consider:
Accessory apartments. Many elderly owners bought homes years ago when they needed space to
raise young families. Now, even though their houses are too big and too costly, they don't want to
move. But by turning a section or a floor into an apartment, they can bring in extra money, gain
companionship or get help with household chores.
Sometimes known as "in-law suites," accessory apartments are separate, private living quarters
contained within a larger home. They contain at least a mini-kitchen and a bathroom, and sometimes
have their own private entry.
The feasibility of such an arrangement often depends on the cost of modifying your house.
ECHO cottages. An arm's-length version of accessory apartments, elder cottage housing opportunities
are small, separate units added in the side or backyard of a single-family house owned by your adult
child or perhaps another loved one. That way, you can live near someone but not "with" them.
Unfortunately, many zoning ordinances do not allow elder cottages or allow for a variance only for
occupants age 55 or over. Contact your local zoning office to find out if they are permitted. If not, try
applying for a special-use permit, and solicit the aid of your local agencies on aging, senior centers or
other groups with an interest in older persons.
Sharing. You don't need to be just starting out to benefit from having a roommate. Sharing a dwelling
is for seniors too.
These kind of arrangements never change. Occupants have their own private, personal spaces such
asa bathroom and bedroom but share common areas such as the kitchen, living room, dining area and
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so on. Still, having a roommate isn't for everyone, especially elderly people who can be set in their
ways. So you should weigh the pros and cons carefully, the National Shared Housing Resource Center
warns.
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Reuters
Post-crash, mortgages scarce for minorities: study
April 28, 2011
By Joshua Lott
Funds for refinancing home mortgages were much more available in predominantly white sections of
major U.S. cities than in minority areas after the recent housing crash, a study showed on Thursday.
The study's authors called for more investment by lenders in poor communities and for improved
disclosure requirements for mortgage lenders to protect unwary borrowers.
"Paying More for the American Dream V," found that in the seven metropolitan areas included in the
study -- Boston, Charlotte, Chicago, Cleveland, Los Angeles, New York City and Rochester, New York
-- conventional mortgage refinancing in minority communities decreased by an average of 17 percent in
2009 compared with the previous year.
But in predominantly white neighborhoods, mortgage refinancing loans jumped by an average of 129
percent.
This is the fifth in a series of reports that began in 2007, compiled by a coalition of nonprofit groups
across the country, including the California Reinvestment, the Woodstock Institute in Chicago and the
Ohio Fair Lending Coalition.
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The study also found lenders "were more than twice as likely" to deny refinancing applications by
borrowers in minority communities than in majority white neighborhoods.
Previous reports by the coalition showed that during the recent property boom minority borrowers were
more likely to obtain high-risk subprime loans than white Americans, even if their credit was good.
"These findings build on our past reports, which have documented ongoing racial disparities in
mortgage lending," Adam Rust, Director of Research at the Community Reinvestment Association of
North Carolina, said in a statement. "Lenders are loosening up credit in predominantly white
neighborhoods, while continuing to deprive communities of color of vital refinancing needed to aid in
their economic recovery."
Subprime loans -- offered to borrowers with poor credit -- and risky products like "stated income," or "liar
loans" where banks did not check borrower's income, exploded during the housing boom. Irresponsible
lending contributed to a housing market crash in 2007 that triggered America's worst downturn since the
Great Depression.
The crash also resulted in an unpopular bailout program for the U.S. banking sector that continues to
have political repercussions.
A separate study published in the American Sociological Review in October found that predatory
lending aimed at predominantly minority neighborhoods led to mass foreclosures and directly
contributed to the crash.
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Birmingham News (Alabama)

Alabama Attorney General Luther Strange opposes proposed national settlement with mortgage
servicers
May 1, 2011
By Martin Swant
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Alabama Attorney General Luther Strange is among a small group of state attorneys general voicing
opposition to a proposed nationwide settlement with the nation's largest mortgage servicers related to
foreclosure abuses.
The settlement, being crafted by a coalition of attorneys general and other officials, would impose new
regulations and fines against the servicers. Although an official settlement amount has never been
announced, media reports have said mortgage servicers could be forced to pay at least $20 billion to U.
S. homeowners who incurred losses from mishandled foreclosures or loans during the housing
collapse.
Strange, along with the attorneys general of Oklahoma and Nebraska, wrote a letter in March raising
concerns over the term sheet submitted to the largest U.S. mortgage servicers.
"What started out as an effort to correct specific practices harmful to consumers has morphed into an
attempt to establish an overarching regulatory scheme that fundamentally restructures the mortgage
loan industry in the United States," the attorneys general wrote in the letter addressed to Iowa Attorney
General Tom Miller, who is leading negotiations for the states.
Strange declined to comment further on his letter.
In a separate letter to Miller, attorneys general for Virginia, Texas, Florida and South Carolina
expressed similar concerns about the settlement, citing how the settlement would conflict with state
laws and go "beyond enforcement and into regulation." Georgia's attorney general also has voiced
disagreement.
While the states have broken ranks in recent weeks, back in October all 50 states attorneys general
united to inquire whether mortgage servicers improperly handled foreclosure documents.
The letter from Strange and the two other attorneys general acknowledges that any mortgage servicer
engaged in illegal or deceptive practices should be held accountable, but warns that the proposed
settlement could hurt community banks by increasing their "regulatory burden."
Richard Allan Rice, a partner at Birmingham's Vulcan Legal Group specializing in foreclosure defense,
said he disagrees with Strange's concerns because current Alabama law doesn't provide adequate
protection to consumers fighting wrongful foreclosure. While the dissenting attorneys general argue the
settlement would interfere with a free market, Rice said he thinks the market already isn't fair.
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"The bargaining power is so far tilted to mortgage servicers that we don't have a true market," he said.
Encourage defaults?
In the letters, the attorneys general say principal reductions could encourage some homeowners to
default on their loans even if they are financially able to continue making payments. Some of the
attorneys general said principal writedowns represent a 'moral hazard."
This week, Bloomberg News reported Miller's office had accused Bank of America Corp. of engaging in
a strategy to divide the 50 states in their support for the settlement. The bank has declined to comment
on the allegations, according to Bloomberg.
In an action separate from the attorneys general settlement, several federal banking regulators
announced last month formal enforcement actions against eight national mortgage servicers and two
third-party servicer providers for "unsafe and unsound" practices.
Those actions will require the mortgage servicers to improve residential mortgage loan servicing and
foreclosure processing along with independent inquiries into previous foreclosure processing, according
to a statement by the Office of the Comptroller of the Currency, one of the regulators involved.
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The Morning Call (Allentown, Pennsylvania)

Is credit card debt protection worth it?
April 30, 2011
By Paul Muschick
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If you have a credit card, you've certainly heard the sales pitch for debt protection.
Pay a small fee and if you run into a crisis and can't pay your bill, your debt protection coverage will
make your payments for you, or even suspend them.
Ever wondered whether that was a good deal? Federal authorities wonder, too. It's something the new
Consumer Financial Protection Bureau says it intends to look at to help people make wise decisions as
they consider purchasing coverage.
The review was recommended by the U.S. Government Accountability Office, a research arm of
Congress. In a March report, it said while debt protection coverage and credit insurance can offer
advantages, the cost can be substantial.
It found that in 2009, the nine largest credit card issuers collected $2.4 billion in fees for debt protection
coverage, and paid out $518 million in benefits to their customers. That's a payout ratio of 21 percent.
The GAO said it did not find evidence of "predatory practices," and said there have been few complaints
and few citations issued to banks. But it said the plans need more attention.
"The increased popularity of debt protection products raises the importance of effective regulatory
oversight of these products," the GAO said in its report, which you can find on my blog at http://blogs.
mcall.com/watchdog/.
The possibility of increased oversight apparently is a sore spot for banks.
I contacted several of the largest ones, including Chase, Wells Fargo, Citigroup and Discover. They all
declined to comment and said the American Bankers Association was responding to the report on
behalf of the industry. Looks like banks want to make sure they don't send mixed messages with the
possibility of federal review lurking.
"With over 70 percent of benefits requests for these products approved, and with unemployment being
one of the most common payout reasons, consumers are getting helpful assistance during difficult times
in their lives," the association said in a joint statement with the American Bankers Insurance
Association.
Kevin McKechnie, executive director of the ABIA, told me debt protection coverage has value that goes
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beyond what can be measured in dollars and cents, such as the ability for cardholders to purchase it
and drop it as their needs change, with no long-term commitment required.
"These products fulfill a very specialized role," he said.
The key to getting the most from the coverage, he said, is to know when you need it (when you could
be facing uncertain times), when you don't (such as when your credit card balances are low), and to
understand the terms.
"Know what you're buying and why you're buying it," McKechnie told me.
Just how much would you be paying? The GAO report says the primary debt protection product offered
by the nine largest credit card issuers ranged from 85 cents to $1.35 per month for every $100 in
outstanding balance. In 2009, that translated to an average monthly cost of $16.49 for cardholders
carrying a balance.
There are differences between credit insurance, which is sold by an insurance company to a credit card
issuer, which then offers it to its customers, and other debt protection coverage, which is an agreement
between the card issuer and customer and doesn't involve an insurer.
Both types of coverage generally work the same, though, kicking in to pay, suspend or cancel your bill if
a qualifying event such as unemployment, death or disability occurs.
Credit insurance premiums are reviewed by state insurance departments, but debt protection coverage
that is not insurance gets much less scrutiny and needs more attention, the GAO said.
Oversight of those plans falls to federal banking regulators such as the Office of the Comptroller of the
Currency, the Office of Thrift Supervision, the Federal Deposit Insurance Corp., the Federal Reserve
and the National Credit Union Administration. While they will investigate complaints, their primary focus
is to ensure that banks adequately disclose the terms to their customers.
The GAO said those regulators "have generally not addressed the reasonableness of the pricing of debt
protection products."
It said that in one case, a regulator noted fees "appeared high and recommended that the bank
continue reviewing the appropriateness of the fees it charged." In another case, a regulator noted the
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"debt protection products' payout rate to consumers was low compared with the fees collected."
The GAO report doesn't identify those banks, neither of which was cited for wrongdoing. Citations are
rare, the GAO said. It found three formal violations out of 24 federal bank examinations between 2006
and 2010.
Two were for inadequate disclosures. The other involved an allegation of unfair or deceptive practices,
when a bank required customers to request a refund if they canceled within the trial period, instead of
automatically refunding the money.
If your bank offers you debt protection, either through insurance or other coverage, think seriously about
whether you need it. Weigh the cost against the potential benefit, including your chances of ever
needing to claim that benefit.
If you lose your job, or a death in the family reduces your income, could you still make your minimum
monthly payment? Do you have other insurance that would provide the money you'd need?
As always, read the terms carefully so you understand what you're signing up for.
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Page 67 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

RE: Nitty Gritty Discussion re: transfer of Restatement Project

Mon May 02 2011 10:24:33 EDT
:-)
-----Original Appointment----From: Lownds, Kevin (CFPB)
Sent: Monday, May 02, 2011 10:23 AM
To: Glaser, Elizabeth (CFPB)
Subject: Accepted: Nitty Gritty Discussion re: transfer of Restatement Project
When: Monday, May 09, 2011 3:45 PM-4:30 PM (UTC-05:00) Eastern Time (US & Canada).
Where: Boomer
Thanks!
Page 68 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Accepted: Nitty Gritty Discussion re: transfer of Restatement Project

Mon May 02 2011 10:23:21 EDT
Thanks!
Page 69 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

accounts/cn=standard users/cn=glasere>; Lownds, Kevin (CFPB)
Darling, Eben (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=darlinge>; Harvey, Imani
(fydibohf23spdlt)/cn=recipients/cn=harveyi>
M Barr letter pls
Mon May 02 2011 09:29:14 EDT
Pls scan and send to me - need to forward to sr leaders. Thx D

CFPB Human Capital
202-286-0378
Page 73 of 3826
From:
To:
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Date:
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_DL_CFPB_AllHands
WebTA - new time and attendance process

Mon May 02 2011 07:58:32 EDT
Colleagues
As you know, all Federal employees are required to track their time and attendance. Until now, CFPB
employees have been tracking time manually through the use of spreadsheets. However, we will begin
to use webTA, a Kronos time and attendance tracking system, to capture employee time and leave.
This product will also provide managers the ability to approve leave and overtime in advance and to
certify their employees timesheets.
Beginning with pay period 10 May 8th thru May 21st, employees will begin entering their time and
attendance information in webTA, and managers will start certifying employee time at the end of each
pay period. Training has been designed to be just in time so that its fresh in everyones mind.
On May 10th and 11th, members of the Bureau of Public Debt Administrative Resource Center will be
on-site at 1801 to provide employee and manager training. They will be hosting 2 manager and 3
employee training sessions over the course of the 2 days. These sessions will last 1 - 1 hours.
Everyone is strongly encouraged to participate in this training in order to ensure that proper timekeeping
procedures are followed and to prevent payroll related issues from occurring. Please plan to attend one
of the following sessions:
Last Name Beginning with A through J, Room 7003

May 10:
8:30 - 10:00 - supervisor session
1:00 - 2:00 - employee session
Last Name Beginning with K through Z, Room 8003
May 11:
1:00 - 2:30 - supervisor session
If you are unable to attend the session assigned to you, please advise Maria Hart as soon as
Page 74 of 3826
practicable at [email protected]
Supervisors need only attend the supervisor session as it will cover both the employee and supervisor
roles. If you have any questions, please contact Imani Harvey on 435-7513 or at Imani.
[email protected].
Dennis Slagter
202-435-7143 (1801 L St)
(b) (6)
for guidance.
Page 75 of 3826
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Microsoft At Home <microsoft at home>
MMO games: A players guide to online virtual worlds

Mon May 02 2011 00:00:00 EDT
Free and paid massively multiplayer online (MMO) role-playing games and virtual worlds are hugely
popular. Heres how to enjoy fantasy, sci-fi, and kids MMOs with the Windows operating system.
View article...
Page 76 of 3826
From:
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Date:
Attachments:
Martinez, Zixta (CFPB)

(fydibohf23spdlt)/cn=recipients/cn=martinezz>
_DL_CFPB_AllHands
English, Leandra (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=englistl>
Weekly Outreach Calendar May 2-6, 2011
Sun May 01 2011 18:32:12 EDT
Events & Meetings w External Groups May 2-6, 2011
Monday, May 2, 2011

EW Meeting w Arkansas Bankers
EW Meeting w Independent Community Bankers Asso (ICBA)
EW Meeting w Illinois Bankers
DSilberman Meeting w PNC
DSilberman Call w Green Dot
Tuesday, May 3, 2011

EW Call w CUNA & NAFCU
EW Meeting w Georgia Bankers
ICBA Reception
Wednesday, May 4, 2011

EW in Little Rock, Arkansas
EW Meeting w Consumer/Civil Rights groups in Little Rock, AR
RDate Remarks Morgan Stanley Services Conference
HPetraeus Meeting w CUNA
EVale Meeting w TN Bankers Asso
Page 77 of 3826
Thursday, May 5, 2011

EW in Little Rock, AR
EW Meeting w AR Community Bankers
EW Remarks at William J. Clinton School at the University of Arkansas. Open Press.
EV Meeting w Independent Bankers Asso of Texas (IBAT)
RCordray Meeting w US Chamber of Commerce
CStone & GHillebrand attending Consumer Data Industry Asso Briefing on
Credit Reporting Accuracy
PTwohig Meeting w Consumer Federation of America (CFA)
DSilberman Meeting w CFA
CStone Meeting w Equifax
EV Meeting w MN Community Bankers
Friday, May 6, 2011

EW Calls w Community Bankers
LAST WEEK:

EW & DSilberman Meeting w NetSpend

DSilberman Quarterly Update w Chase
CWest Meeting w Bank CEOs
EVale Meeting w 100 community bankers & Connecticut Banking Commissioner in Hartford, CT
Page 78 of 3826

MBlow Meeting w Center for Financial Services Innovation
GHillebrand Meeting w AARP
ZQM Quarterly Meeting w Interagency Community Affairs
PTwohig Meeting w Consumer Financial Services Association
PMcCoy Meeting w Consumer Bankers Asso
PMcCoy Meeting w American Enterprise Institute
EVale & RChopra Meeting w Credit Union Student Choice
EVale Meeting w former ABA President Ed Yingling

EW keynote to AFL-CIO Lawyers Conference
EW Meeting w Community Bankers
DSilberman Meeting w Wells Fargo
DSilberman & EVale Meeting w Citibank

EW Meeting w Americans for Financial Reform
DSilberman Quarterly Meeting w Bank of America in North Carolina
HPetraeus Meeting w Military Advocacy groups
GHillebrand Meeting w The San Francisco Foundation
Zixta Q. Martinez
Assistant Director for Community Affairs
202.435.7204
www.consumerfinance.gov
Page 79 of 3826
From:
Reilly, Elizabeth (CFPB)

(fydibohf23spdlt)/cn=recipients/cn=ericksone>
_DL_CFPB_AllHands
To:
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Welcome
Date:
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RE: CFPB Travel Training - Friday, April 29th @ 3:00 pm -- Room 503 - All are
Fri Apr 29 2011 11:39:55 EDT
Reminder: travel training is available TODAY at 3:00 in room 503.
From: Hart, Maria (CFPB)

Sent: Wednesday, April 20, 2011 3:23 PM
To: _DL_CFPB_AllHands
Subject: CFPB Travel Training - Friday, April 29th @ 3:00 pm -- Room 503 - All are Welcome
If you are new to CFPB, or if you have been here a while and still dont quite have the hang of our
GovTrip travel system, please attend a travel training next Friday, April 29th, at 3:00 in room 503. Here
are the topics that will be covered:
Preparing a Travel Authorization
Preparing a Voucher from the Authorization
Preparing a Local Voucher
Adjustments and Amendments to an Authorization
Questions and Answers
Thanks,
Catherine West
Chief Operating Officer
Page 81 of 3826
From:

_DL_CFPB_AllHands
Adamske, Steven
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Fri Apr 29 2011 11:34:01 EDT
Index

Mad Money With Jim Cramer Cramer: Banks Just Need to Accept Lower Profitability
Seeking Alpha Cramers Mad Money A Kinder, Gentler Pipeline Play
Daily Kos Reuters: Warren associates considered for consumer agency job
Page 83 of 3826
Consumer Credit
American Banker Will Durbin Rule Make Data Less Secure?
The Hill (blog) Durbin, bankers battle over interchange fees
Bank Technology News Gaming Overdraft
Associated Press Getting married? Remember, two FICO scores arent always better than one
Housing
Wall Street Journal Banks Rush to Improve Foreclosure Practices
Wall Street Journal Judges See Little Improvement in Foreclosure Procedures
Dow Jones Newswires Fannie, Freddie To Set New Mortgage Servicing Standards
American Banker Mortgage Reg Problems, Tech Solutions
New York Times The Mortgage Was Like a Shell Game; So Is Responsibility in 3 Deaths
Dodd-Frank Implementation
Huffington Post Dodd-Frank Deadlines Slip, But Barney Frank Isnt Worried
Mad Money With Jim Cramer

Cramer: Banks Just Need to Accept Lower Profitability
April 28, 2011
By Michelle Fox
Bank of Americas decision to start charging higher interest rates on credit cards for customers who
miss payments is not the right move for the financial institution, Cramer said Thursday.
While the Card Act of 2009 allows for such increases after proper notice, the "Mad Money" host thinks
Page 84 of 3826
Bank of America [BAC 12.42

] needs to stay off "Washingtons radar screen." The Obama
administration deems interest rate hikes as an attack on the consumer, Cramer said. So he would steer
clear of any action that would appear to test the new law, especially since the Consumer Financial
Protection Bureau is set to open June 21. Elizabeth Warren, a Harvard professor and banking advisor
to Obama, is said to be under consideration for heading the bureau. Warren has publicly denounced
those who seek to "water down" FinReg, as it relates to consumer protection.
If the bank stocks are ever going to go up, move in our lifetime, they have to wait a decent interval
before they start raising rates and showing strong profits. Cramer said, adding that banks should
simply accept a lower level of profitability for the time being. Otherwise your underperformance could
last for a generation rather than just 2011."
Back to Top
Seeking Alpha
A Kinder, Gentler Pipeline Play
April 29, 2011
Lie Low for Heaven's Sake: Bank of America (BAC)
Bank of America chose a fine time to announce it would start charging higher interest rates for
customers who miss their payments. Elizabeth Warren, who is expected to head the Financial
Consumer Protection Agency has declared war on banks who profit at the customers' expense. Cramer
urged banks to avoid following Bank of America's example. "Accept a lower level or profitability. Lie low,
for Heaven's sake!"
Page 85 of 3826
Back to Top
Daily Kos
Reuters: Warren associates considered for consumer agency job
April 28, 2011
By Joan McCarter
Elizabeth Warren "wants to give middle-class families a chance to survive economically with the
Consumer Financial Protection Bureau." So of course she's the most controversial woman in
government. Can't have the middle class survive now, can we?
Because powers that be in Congress really want to see the financial sector continue to have the power
to rip you off with impunity, the very existence of this agency is being threatened, much less the
eventually agency head.
(Reuters) - The White House is zeroing in on close associates of law professor Elizabeth Warren, an
outspoken critic of Wall Street, to head the new U.S. consumer financial agency, a source with
knowledge of the discussions told Reuters....
Warren, who championed the consumer agency, has run into strong opposition from Republicans who
say she would be too confrontational toward the financial industry.
But picking anyone other than Warren could be problematic for Obama because it would risk
disappointing Democratic activists whose enthusiasm the president is counting on to help fuel his reelection bid in 2012.
Choosing someone with a close relationship with Warren might be one way to solve the problem for the
White House.
The source, who spoke on condition of anonymity, said such a choice would be a clear signal that she
would continue to help shape the consumer agency.
Page 86 of 3826
Reportedly, Warren is still in strong consideration for the job. Other reports have said that other
candidates, including former Michigan Governor Jennifer Granholm and former Ohio Governor Ted
Strickland, have taken themselves out of the running for the job because they think it should belong to
Warren.
The fight over this agency isn't going to go away if the administration lands on another candidate. As
Warren said on Tuesday's "Daily Show," the "fight isn't over. The fight moved from Main Street to the
dark alley. And so now the game is let's just see if we can stick a knife in the ribs of this consumer
agency." Warren may as well be the nominee, because she has proven remarkably effective thus far in
its creation and ramp-up.
But if the White House, or Warren, decide otherwise, she certainly has other options open. Like, say,
the U.S. Senate.
Back to Top
Wall Street Journal

Banks Rush to Improve Foreclosure Practices
April 29, 2011
By Ruth Simon
The clock is ticking for the biggest U.S. banks to revamp their foreclosure practices.
Under orders from U.S. regulators, 14 financial institutions have until mid-June to lay out plans to clean
up their mortgage-servicing operationsand another 60 days to make the changes.
It will be a daunting, expensive chore despite the work done since the foreclosure mess erupted last
fall. J.P. Morgan Chase & Co. said it would take a $1.1 billion charge related to the consent order and
Page 87 of 3826
other servicing-cost increases. Citigroup Inc., which services $602 billion of mortgage loans, predicted
the changes will boost expenses by as much as $35 million a year.
"It does raise the bar," said Frederick Cannon, director of research at Keefe, Bruyette & Woods Inc. The
overhaul either goes "beyond what was considered best practices for the industry, or [banks] weren't
really complying with best practices."
On Thursday, Fannie Mae, Freddie Mac and their federal regulator rolled out new guidelines designed
to encourage more successful modifications while preventing foreclosures from dragging on. The rules
will require servicers to approach borrowers earlier and more frequently after a first missed payment in
order to have a better chance at modifying loans. The mortgage titans also will pay more to servicers
that meet certain benchmarks and establish timelines for banks to modify loans or process foreclosures.
Here is a status report on how close some of the largest mortgage servicers are to meeting three
important requirements in the regulatory order:
Single point of contact. Borrowers who have been bounced from one bank employee to another must
get a "single point of contact" to steer them through loan modification and the foreclosure process.
In June, Wells Fargo & Co. began assigning an employee and backup employee to each borrower
seeking a loan modification. The program "significantly improved customer communication and the
modification process," said Wells Fargo spokeswoman. It plans to expand the effort to foreclosures and
short sales, or sales for less than what is owed on the property.
Some borrowers still aren't satisfied. "They kept assigning me a person, but I never got to speak to that
person," said Rachel Goler, a bus driver who lives in Monroeville, Pa.
Wells Fargo's spokeswoman said the employee assigned to Ms. Goler "was falling down on his job."
The borrower's phone calls also weren't transferred to the right department, the San Francisco bank
said.
Ally Financial Inc. assigns borrowers who have had trouble submitting a completed financial package a
team of employees to help them gather documents, execute a final loan modification or weigh other
foreclosure alternatives. Ally is looking for ways to better identify borrowers who need extra help, a
spokeswoman for the Detroit lender said.
J.P. Morgan is working on a software program to make it easier for employees and borrowers to track
loan-modification requests. Last year, it started providing some borrowers with a "relationship manager"
to advise on the process.
Page 88 of 3826
Citigroup now provides borrowers with a single point of contact for gathering documents and handling
short sales. In the next months, it will roll out a "concierge" system that will assign a small team of
employees to help delinquent borrowers and homeowners at risk of default navigate the system.
Bank of America Corp. has begun its version of a single point of contact but declined to provide details.
Deadlines. Banks are required to set "appropriate deadlines" for deciding whether borrowers can get a
loan workout.
Frustrating waits are common, and borrowers often are asked for fresh financial information because
their documents sit around at the bank for too long. Los Angeles Neighborhood Housing Services says
it takes an average of 141 days for borrowers it works with to get an answer after completing an initial
loan-modification request. The nonprofit group, which works with borrowers at risk of foreclosure, said
Wells Fargo has the fastest turnaround, with initial reviews averaging 79 days. A Wells Fargo
spokeswoman said 60% of borrowers receive a decision five days after the company receives a
complete package, up from 45% a year ago.
"We're not happy" with the time it takes to give borrowers an answer, said Christine Larsen, head of
operations for retail financial services at J.P. Morgan, who is responsible for implementing the consent
orders. The bank is trying to speed response times by setting new customer-communication deadlines.
Ally Financial said it responds to the average borrower within seven to 10 days of receiving a complete
financial package.
At Citigroup, the goal is to give borrowers a final answer about a permanent modification within 22 days
of their final trial payment. "On average, we do that," said Sanjiv Das, chief executive of the
CitiMortgage unit.
Staffing levels. Banks must make sure they have enough employees to deal with the tidal wave of
troubled loans. For some lenders, that means hiring more workers.
J.P. Morgan said it will add as many as 3,000 new home-lending jobs, mostly drawing the workers from
elsewhere in the company. BofA said it hired roughly 3,000 people in the first quarter to work on
troubled mortgages. Citigroup said it will expand its loan-modification unit by 500 employees.
Page 89 of 3826
Wells Fargo doesn't expect to increase staffing because the number of borrowers behind on loan
payments is declining. It might transfer employees from other parts of the company with excess
capacity.
Back to Top
Wall Street Journal

Judges See Little Improvement in Foreclosure Procedures
April 29, 2011
By Ruth Simon
Some judges are skeptical of claims by lenders that they have substantially improved their foreclosure
procedures since controversy over the practices exploded last fall.
F. Dana Winslow, a N.Y. State Supreme Court Justice in Long Island's Nassau County, said there has
been only "a marginal improvement in what is being submitted to the court."
For example, financial institutions are "showing a better chain of title" about who owns the debt, he said.
"But I'm not seeing any additional clarity on who has control over the actual mortgage note signed by
the borrower and lender and where the note is."
Since the mess erupted, court officials and judges across the U.S. have toughened scrutiny of lenders
trying to seize homes from borrowers.
In March, Mercer County, New Jersey General Equity Judge Mary C. Jacobson appointed a special
master to make sure that foreclosure proceedings initiated by six large mortgage servicers comply with
state law. Another New Jersey state judge is reviewing filings by two dozen smaller companies.
In New York, foreclosure filings have declined sharply since New York State Chief Judge Jonathan
Page 90 of 3826
Lippman issued an order in October requiring lawyers to sign an affidavit affirming that foreclosure
paperwork was properly reviewed and to their knowledge is accurate.
"There's almost a presumption that there may be something wrong with the documentation," said O.
Max Gardner III, a lawyer in Shelby, N.C., who represents borrowers in bankruptcy cases.
U.S. regulators have ordered banks to take steps to "ensure the accuracy of all documents" used in the
foreclosure process.
At J.P. Morgan Chase & Co., many legal documents are now prepared twice by different employees
and then compared to spot any differences.
Wells Fargo & Co. and Bank of America Corp. have created standardized foreclosure affidavit forms
that also consider local requirements. Wells Fargo now uses a uniform checklist for affidavit signers and
specific affidavit procedures that must be followed in every state.
Back to Top
Dow Jones Newswires

Fannie, Freddie To Set New Mortgage Servicing Standards
April 28, 2011
By Alan Zibel and Nick Timiraos
Mortgage giants Fannie Mae (FNMA) and Freddie Mac (FMCC) will establish a uniform set of standards
for the troubled mortgage-servicing process -- and impose fines on companies that violate those
standards, a federal regulator said Thursday.
The effort is designed to help fix problems in U.S. mortgage servicing companies' handling of delinquent
loans. Numerous mortgage companies are under state and federal investigation due to
Page 91 of 3826
widespread problems in their treatment of borrowers on the verge of foreclosure.
The policies "should give homeowners a greater understanding of the process and faster resolution by
requiring earlier contact, more frequent communication, and prompt decisions," said Edward DeMarco,
acting director of the Federal Housing Finance Agency, which regulates Fannie and Freddie.
The guidelines, effective later this year, will require servicers to approach borrowers much earlier and
more frequently after they first miss payments in order to have a better chance at modifying loans.
Fannie and Freddie, which currently have separate paperwork for troubled homeowners, will use the
same set of forms.
The mortgage titans will also pay more to servicers that meet certain benchmarks and establish
timelines for banks to move loans through the modification or foreclosure process. The goal is to
encourage more successful modifications while preventing foreclosures from dragging on.
Under the new standards, banks will be required to conduct a formal review of every borrower to make
sure they are considered for loan assistance. Foreclosures may not start if borrowers and lenders "are
engaged in a good-faith effort to resolve the delinquency."
Back to Top
American Banker
Will Durbin Rule Make Data Less Secure?
April 29, 2011
By Cheyenne Hopkins
WASHINGTON Sony Corp.'s disclosure that a massive data breach may have let thieves steal the
personal information of more than 77 million PlayStation users is playing into the hands of banks
attempting to change a Federal Reserve Board proposal to limit debit interchange fees.
Page 92 of 3826
While the two issues do not at first appear related, banks have said that once it goes into effect on July
21, the Durbin amendment could weaken data security standards.
Banks and several large technology companies, including Apple Inc. and Microsoft Corp., argue that
because the Fed's proposed 12-cent interchange fee cap does not properly take into account the costs
of fraud and fraud prevention, banks will inevitably have less money to protect data security, making the
entire system less safe.
The PlayStation incident reminds policymakers and the public about the continued dangers of a breach,
and reinforces a bank complaint that it is mostly retailers not the banks themselves that endanger
consumers' private data.
"The latest, and maybe the largest security breach ever, may have put the personal data of 77 million
American consumers, including mine, at risk," said Pace Bradshaw, vice president of congressional
affairs for the Consumer Bankers Association. "While the details of that specific case continue to
unravel, this is a very clear and timely reminder that security measures are not static and should
constantly be evaluated and enhanced."
Bradshaw said that "when you look at data security breaches, you don't see many on the bank side."
The PlayStation breach comes at a critical time in the debate, as bankers continue to push to revamp
the proposal to account for fraud losses.
Under the Dodd-Frank law, the Fed must ensure debit interchange fees are "reasonable and
proportional."
In its Dec. 16 proposal, the central bank proposed a 12-cent cap, but left the door open to an
adjustment for fraud prevention, while saying nothing about bearing the costs of fraud losses.
The Fed suggested two separate ways to win a potential fraud prevention adjustment if banks take
certain steps.
Under one approach, banks would have to deploy specific forms of security technology, while under the
other, banks would have to take "reasonably necessary" steps to prevent fraud, but not have to use
specific technologies. It is unclear how much benefit banks will see from the adjustment, as the Fed left
it open-ended on what the size would be.
Page 93 of 3826
Bankers argue that the adjustment could potentially let the Fed determine appropriate security
standards and may not properly account for the costs of fraud prevention. They also note that the
central bank does not address the costs of fraud already incurred by a data breach and other criminal
activity.
"You're really not doing us any favors if you only look at fraud prevention," said Jason Kratovil, vice
president of congressional relations for the Independent Community Bankers of America. "If you are not
looking at the full picture including mitigating fraud that occurred as a result of a merchant data
breach you are not providing small issuers any comfort or relief at all."
Dan Berger, senior vice president of government affairs for the National Association of Federal Credit
Unions, agreed.
"NAFCU is concerned that the real costs of developing, maintaining, innovating and protecting the debit
system has not been fully recognized by the price-cap amendment or proposed rule," he said.
It's an issue that also worries members of Congress.
"Everyone is hurt when there's a data security breach," Rep. Shelley Moore Capito, R-W.Va., said in an
email to American Banker. "As chairman of the subcommittee on Financial Services and Consumer
Credit, I certainly think it's important to make sure consumer and merchant information and data is
protected as Dodd-Frank is implemented."
Capito has introduced a bill that would delay the Durbin amendment by a year and give other regulators
the power to influence the plan if they determine it doesn't properly take various costs into account,
including fraud and fraud prevention.
Some regulators have already weighed in on the issue. In a March letter to the Fed, Acting Comptroller
of the Currency John Walsh raised concerns with the central bank's potential fraud prevention
adjustment. The agency said that under one possible approach, issuers would only receive the credit
for major technological innovations.
"We are concerned that adopting the second alternative would make the board the gatekeeper for
determining which innovations are significant enough to be eligible for the adjustment," Walsh wrote.
"The OCC encourages national banks to develop technologies to prevent fraud across all product lines
and to implement improvements whenever feasible, whether they be product-specific or cut across
multiple product lines. This is simply sound banking practice. Allowing cost recovery for only certain
technologies, and only when applicable in merchant debit card transactions, runs counter to that
Page 94 of 3826
fundamental goal."
The issue was highlighted at a Visa Inc. conference on Wednesday. Nessa Feddis, vice president and
senior counsel at the American Bankers Association, dismissed the Fed's suggestion of dictating data
technology to win a higher interchange fee.
"The Fed dictating technology is an academic exercise rather than a real exercise," she said.
Industry representatives, meanwhile, have said the exclusion of fraud costs is a reason to delay the
Durbin amendment.
"There are a number of items that go into the cost of processing a debit transaction and the Durbin
amendment didn't consider many of these, including fraud loss," Bradshaw said. "This is also a reason
we need to delay this."
But the merchants and Sen. Dick Durbin, the author of the interchange measure, claim that banks push
consumers toward riskier products, including signature debit cards rather than PIN-based transactions,
and should bear more of the fraud costs.
"The Durbin amendment will improve data security and the card issuers ought to be honest about that,"
said Doug Kantor, counsel for the Merchants Payments Coalition.
"Right now they get paid to push products and to push people toward products that create more fraud
and have worse data security. That is a profound problem. They get higher profit on signature debit
transactions than PIN transactions. The banks push their customers to act that way because they
make more money, and then they push the product on merchants."
Durbin echoed that point in an April 12 open letter to JPMorgan Chase & Co.'s chief executive and
president, Jamie Dimon.
"Chase's practice of steering American cardholders toward fraud-prone signature debit stands in stark
contrast to Chase's practices in Canada," Durbin wrote.
"The Chase Canada website indicates that 'chip and PIN technology will become available for all Chase
Canada MasterCard and Visa cards in 2011.' It is frankly inexcusable that your bank would urge your
American customers to 'always select' a fraud-prone technology while you provide your Canadian
Page 95 of 3826
customers with technology that enhances security and reduces fraud.
"In contrast to the current U.S. interchange system which rewards banks for promoting fraud-prone
signature debit, my amendment will allow interchange fee increases only to those banks that
successfully prevent fraud. The Federal Reserve can implement this in its final rulemaking by setting
target fraud prevention metrics and allowing increased interchange for banks that meet those targets."
Oliver Ireland, a partner at Morrison & Foerster LLP, dismissed those arguments.
"The vast majority of the merchants can't take PIN, so you are hearing from a minority that can take
PIN," Ireland said.
"Secondly, if you talk to the banks that issue cards, what you find is PIN transaction fraud doesn't show
up at merchants, because anybody that has managed to get the card number and PIN number uses it
at an ATM, so the merchants don't see it. The banks see it."
To be sure, the industry said it would continue to try and protect customers' data, but the revenue to do
so would need to be found somewhere.
"When you take some of the resources to prevent fraud, you run the risk to the system because the
system won't be as strong as it otherwise could be," said Ken Clayton, senior vice president and chief
counsel for the ABA. "We are going to continue to make sure the system is safe and secure. We don't
want people to walk away thinking that the system isn't safe and secure, but it's wrong for the
merchants to not bear some of the cost of that."
The industry argues that unless the final rule specifically accounts for fraud losses, the customer will
end up paying more.
"Right now interchange revenue will in part fund all of the investment and infrastructure to support the
network and things like fraud and when there is a data breach that's how the credit unions and banks
get reimbursed from a breach," said Trish Wexler, a spokeswoman for the Electronic Payments
Coalition.
"The problem with the Fed rule is the way it is written right now is it only allows for in that 7 to 12 cents
for the clearing of the transaction and fraud cost is not considered now. At what point if a bank is not
compensated for that coverage does the bank start to suffer or that cost gets shifted to the customer?"
Page 96 of 3826
Cliff Rossi, a professor at the University of Maryland, agreed data security will suffer.
"If debit interchange fees are significantly lowered, there will be greater sensitivity to low-cost provider
networks over best-in-class data security technology," he said. "My expectation is that investment in
payment system security technology will moderate somewhat in response to lower interchange fees.
"We've gotten a glimpse of what some firms are likely to do in terms of reduced service, redirection of
customers to other payment alternatives such as credit cards and the like."
Kratovil said the community banks won't be able to keep up with the data security concerns under the
Durbin amendment.
"It creates both an immediate problem" and a longer-term problem, he said. "Since fraud liability rests
largely on issuers, what are individual banks going to do to respond internally?" he said. "And looking to
the future, the criminals are getting more sophisticated, and if the money for investments and upgrades
is not in the system to respond, how do you keep the technologies on par or ahead of the criminals?
You can't completely ignore it. If you are a community banker, your first priority is protecting your
customers. You're not going to stop doing that. But if you have ancillary programs like frau
Back to Top
The Hill (On The Money blog)

Durbin, bankers battle over interchange fees
April 28, 2011
By Vicki Needham
The battle between the banking industry and Sen. Dick Durbin (D-Ill.) continued on Thursday as the
Senate leader defended his proposal to lower swipe fees charged by banks.
Page 97 of 3826
Durbin responded on Thursday to a letter from the American Bankers Association (ABA) reiterating their
opposition to any to changes to the interchange system, saying that lower fees will reduce retailer and
customer costs.
The Federal Reserve has proposed capping the fees at 12 cents a transaction, replacing a formula that
averages 1.14 percent of the purchase price, or about 44 cents, that accounts for $16.2 billion in
revenue.
The law has pitted retailers against the banking industry.
Durbin argued that while the ABA is asking Congress to require a study of the issue, it's clear the group
doesn't want any changes to the fee system.
"Given that your association has unambiguously stated its opposition to any government regulation, it is
difficult for me to believe that your efforts to have Congress stop and study this rule are anything other
than an effort to prevent regulation from ever occurring, he said.
While I do not expect your association to ever change its position of outright opposition to interchange
reform, I will conclude by sharing with you the same words that I recently wrote to the CEO of one of
your largest member institutions: interchange reform is necessary and it is long overdue," he said.
Durbin pointed out a position statement on the ABA's website that makes clear "that your association
opposes any effort by state or federal governments to regulate interchange rates" and that Congress
should stop and study the Feds proposed rule before the rule goes forward.
In an April 21 letter to Durbin, Frank Keating, president and chief executive of the group, wrote that
"confusion about this issue remains, and I feel compelled to reach out to you once more, on behalf of all
our members, to again express our concerns and add some clarification."
The ABA argues that the cap on the fees would cause "harm to consumers, banks and the communities
they serve."
"This is evidenced by the fact that roughly 86 percent of the comment letters received by the Federal
Reserve express opposition to the proposal," Keating wrote. "Congress has the power to step in and
stop and study this rule before it goes forward."
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Durbin, on the other hand, said "reasonable regulation of the interchange fee system is supported by a
broad and diverse array of consumer, business, university, labor and community groups."
"These voices should not be drowned out by the lobbying might of the financial industry.
Keating noted in his letter that while Home Depot's chief financial officer said the company will save $35
million a year, "she said nothing about passing that benefit on to customers."
Led by Sen. Jon Tester (D-Mont.), the lawmakers are pushing a bill that would delay the provision
included in the Dodd-Frank financial reform law that would drastically limit the amount banks can
charge retailers for swiping debit cards.
The bill would require the Fed to stop writing rules implementing the measure, and call for a two-year
study examining the impact of the provision on consumers, businesses and banks.
Back to Top
Bank Technology News

Gaming Overdraft
May 2011
By Shane Kite
Vendors and banks are trying toturn compliance with recently revised FDIC guidance on customer
overdraft notifications into new revenue opportunities for banks. Overdraft software vendors are aiming
their analytics capabilities at detecting excessive users of automated overdraft programs, so banks can
both better manage these customers for risks and more easily sell them other fee-based services, as
well as comply with the basic tenets of the FDIC rules.
Page 99 of 3826
"The changes on the surface to meet the regulatory requirements aren't that significant," says Robert
Hunt, senior research director for retail banking at TowerGroup. "But the changes on the backend to try
to restructure pricing and minimize lost fees are very significant. It's interesting how the compliance side
is driving a whole new set of product pricing changes."
While FDIC's guidance does not apply to the larger, federally chartered banks, many are instituting the
suggestions as best practices anyway, says Hank Israel, a partner at New York-based Novantas, which
advises the top 50 banks on product pricing and business strategies. That's because the big banks are
betting that the Consumer Financial Protection Bureau, after it launches July 21, will take up FDIC's
overdraft mantle to cover the rest of the industry. FDIC-regulated banks must have their overdraft
policies in place by July 1.
Finding, Alerting Excessive Overdraft Users
A list of frequently asked questions FDIC released last month to supplement final overdraft guidance
the regulator issued in November say community or state-chartered banks should notify any customer
who has incurred more than six overdraft fees in a 12-month period - an amount the regulator deems
"excessive" - of what "may be lower-cost or more appropriate alternatives." The total fee counts should
include daily fees for outstanding overdraft status, as well as per-transaction overdraft fees, so systems
will have to be coded thusly. It had been unclear prior whether daily outstanding overdraft fees should
factor into the total count, says Mark Groves, director of consulting analytics at Austin, Texas-based
Sheshunoff Consulting + Solutions.
Analytics pinpoint banks' big overdraft users. Then the systems can be configured to automatically alert
these users to fee-based alternatives to overdraft coverage, such as mobile funds transfers or direct
deposit advances - exactly like FDIC says the banks it oversees should. Alerts can be sent as emails,
texts, periodic statements, online messages, letters or phone calls, depending on the system chosen.
Sheshunoff's automated Deposit Score overdraft program, for instance, now automatically generates
letters and "to-call" lists triggered by a customer's seventh overdraft fee. The product, which focuses on
overdraft tracking, will also record whether or not customers want to stay in an overdraft program, and
manages preferred mode of contact. "If the client says 'please quit calling me,' we can capture that,"
Groves says. While Deposit Score lacks automated customer contacts - emails or calls to customers
require a manual, follow-on step - "generating an email would be potentially possible based on the letter
generation process. Our system doesn't do that because it is designed to alert the bank, not the
customer, to the situation," Groves says.
Other automated overdraft programs, including that of Pinnacle Financial Strategies, do not provide call
list and letter generation, because some core providers "such as Jack Henry and Fiserv, may also offer
the ability to automate the generation of customer letters through the core platform," says Kelly
Anderson, Pinnacle's director of marketing.
Page 100 of 3826
Analytics = New Products, New Pricing
A silver lining in the new overdraft rules is that they leave room for banks to personalize overdraft
program pricing according to customer type. "I don't know how much you can change customer
patterns," Hunt says, "but with analytics you can price according to them." And customers that keep
large, continuous balances can be rewarded with free protection on the rare occasions they overdraw
their accounts, Hunt adds.
Tools like Minneapolis-based FICO's Predictive Analytics, Revenue Management, and Decision
Optimization and Strategy Design are getting noticed amid the overdrafts hubbub because they're
aimed at better segmenting customers by tracking their behavior and transaction patterns, so banks can
better price and sell them overdraft and other services.
The Bank of Stockton in Stockton, Calif. ($1.9 billion in assets), is using ClairMail's mobile messaging to
notify bank customers of low balances and overdrafts, so they can choose to transfer money from
savings accounts to cover any shortfalls. And ASP availability for Brookfield, Wis.-based Fiserv's
deposit lending product, Relationship Advance, which covers overdrafts by debiting money from a
customer's next electronic deposit, was announced in October.
"The smaller community banks are definitely going to be looking more for the software-as-a-servicetype solutions for overdraft," said Nancy Atkinson, senior analyst at Aite Group. And solutions that apply
a compliance layer, Hunt says, but can also drive or recoup fee revenues, are most in demand.
Novantas has worked with "a number of clients in building logic to automatically shut down overdraft
protection to any customer getting ready to charge off," Israel says. Such "automatic shutdowns will
come over time to the smaller banks," he adds. FDIC guidance suggests monitoring overdraft
programs, which carry certain charge-off risks, so they neither harm consumers nor threaten the
financial safety and soundness of banks.
Disclosing Overdraft Limits
While overdraft limits can remain undisclosed, some firms have moved toward a more disclosed model,
interpreting language in FDIC guidance as emphasizing such transparency. Sheshunoff is currently
working on a hybrid version of Deposit Score that would make changes to customers' overdraft limits
less frequently than daily. So banks, if they choose, can report limits to customers less expensively
more easily by doing it periodically. Deposit Score uses algorithms to set and change max overdraft
limits for each customer based on deposit and transaction histories from prior days.
Fluctuating overdraft limit programs "have hid behind a data processing algorithm to generate fee
income for the bank," contends Mike Sobba, Strunk & Associates' president and CEO. Sheshunoff's
Page 101 of 3826
Grove counters that prior overdraft regulation resulted from inappropriate marketing of disclosed and
fixed overdraft limits. "We think periodic limit change notification is more flexible than just having a plan
of $500 out there," he says.
Back to Top
American Banker
Mortgage Reg Problems, Tech Solutions
April 29, 2011
By Ravi Varma and John Socknat
Unprecedented regulatory change is driving a full transformation of the mortgage finance business
model, and regulatory compliance issues affect all lenders, whether they are depository institutions or
independent mortgage companies. Executives face myriad challenges at a time when their compliance
resources are stretched thin and their IT teams struggle to integrate compliance into existing systems.
Over the last 18 months the mortgage industry has had to grapple with a raft of new federal and state
laws, and will continue to do so over the course of the next year and a half. In addition to significant
changes to the Truth in Lending Act and the Real Estate Settlement and Procedures Act, the industry
will continue to navigate its way through changes to the Home Mortgage Disclosure Act, the Fair Credit
Reporting Act, the SAFE Act, appraisal independence rules (the Home Value Code of Conduct, and its
replacement), plus a host of state laws.
These changes are in effect or have rapidly approaching effective dates, even as the industry awaits
further clarification and final rules for many provisions of the Dodd-Frank Act.
Lenders cannot rely on manpower alone to meet compliance requirements. It is too costly in time and
money. Lenders must leverage technology, integrating compliance issues into systems such that
compliance is a natural part of the workflow from initial loan origination lead management up to and
including secondary marketing. And not just any technology will do. The most desirable, effective
technology solutions are those that have been designed by compliance experts working closely with IT
teams to build superior rules engines and automated decisioning protocols that accurately, costeffectively and seamlessly ensure compliance.
Page 102 of 3826
The concept of compliance and workflow integration facilitated by technology is gaining the attention of
mortgage industry executives eager to bring regulatory compliance costs under control. In January of
this year, the MORTECH 2010 study estimated that mortgage lenders expect to increase technology
spending by 15%, which would be a $4.11 billion cumulative spend. Asked for their top reasons for IT
investment, survey respondents indicated that they planned to invest in "making operations more
flexible and responsive, reducing cost of operations, and integrating workflow across the enterprise."
The study concluded that these investment plans are directly linked to the rising costs of regulatory
compliance and the desire to improve operations.
While figures are not yet compiled for the time and money spent as an industry, thus far, to implement
new regulations, it is safe to assume that number is already well into the hundreds of millions.
Anecdotal evidence suggests that, over the last 18 months' deluge of changes, the vast majority of
lenders "patched" existing technology or purchased compliance modules that plugged into existing
systems. While these adaptations may have made perfect sense as short-term solutions, it is clear that
end-to-end, enterprise technology designed in partnership with compliance experts is a much wiser,
cost-effective and cost-efficient solution.
We can turn to loan officer licensing, a compliance matter initially addressed in the SAFE Act, to
illustrate this assertion. Today, technology available in the marketplace can assign a sales lead to a
mortgage loan officer, based on automated confirmation that the loan officer is licensed or registered
and has a unique identifier provided by the Nationwide Mortgage Licensing System Registry. But
technology that delivers one-time ID confirmation is not sufficient; it solutions should also be able to
routinely exchange information with the registry.
A superior, end-to-end solution goes even further, with automated licensing confirmation following the
transaction at the loan level from application through funding.
For example, if a loan officer's license expires during loan application, an end-to-end solution would
receive this information from the registry and note that there is a compliance problem, so that
appropriate action can be taken, including reassignment of the loan file to a loan officer who is properly
licensed/registered. Other features should include the ability to supply proof of licensing both in real
time and as historical data when and where required, and in a manner or format requested by any
number of federal and state entities.
Technology solutions designed in partnership with compliance experts are much more likely to be
comprehensive: built with special knowledge of the array of regulations, the multiple regulatory bodies
involved and an in-depth understanding of the need to access to loan-level data not only in real time,
but also historically. Such enterprise solutions accurately store data so you can show how compliance
was addressed in the past, giving your company the ability to show regulators a snapshot of what
happened on a particular loan, on a particular day. In practice, regulators also may ask to see an image
Page 103 of 3826
of virtually every document, correspondence and other communication, as well as pertinent information
about the loan officer and others involved in each loan file.
With a patchwork of technology solutions, lenders may not be able to conduct such forensic analysis.
Even cobbled-together systems that do produce full forensic data are likely to require far more manhours to compile, report and present than an enterprise system. In short, demonstrating that your
lending operation is compliant is made much easier and more thorough with an enterprise solution.
Historically, loan origination systems have been built in such a way that they are disjointed from
compliance issues; rarely have they been designed with compliance experts as members of the overall
design team. Even today's robust rules engines and automated decisioning capabilities often do not
address compliance points at the loan level.
Now that virtually every element in a mortgage business's operations can be automated and recorded,
the right enterprise technology can be a superior enabler, helping lenders guard against being out of
compliance now and in the future.
Regulatory reform and compliance are transforming the mortgage finance business model. Without the
right technology technology designed in partnership with compliance experts you could end up
paying a bigger price: enforcement actions and/or litigation, either of which could ultimately spell the
end for your company.
Ravi Varma is the chief executive of LendingSpace, a provider of mortgage technology solutions. John
Socknat is a partner in the mortgage banking group at Patton Boggs LLP in Washington.
Back to Top
Huffington Post
Dodd-Frank Deadlines Slip, But Barney Frank Isnt Worried
April 28, 2011
By Dan Froomkin
Page 104 of 3826
Deadlines for many of the rulemakings mandated by last summers financial reform legislation have
slipped, leaving the implementation dates for some key measures up in the air.
The Dodd-Frank Act mandated that dozens of rulemakings be completed within either nine months or a
year of the bills enactment. Nine months have now passed. The one-year mark is fast approaching.
Much remains undone.
But Rep. Barney Frank (D-Mass.), who championed the bill in the House last year, isnt concerned
about the delays. There are a lot of complicated rules there, he said. I believe all the agencies are
working hard to try to complete them.
The regulatory agencies will get the rules finished as soon as it can be rationally done, Frank told
HuffPost. What difference does it make if its a month later or six weeks later?
Until definitions and regulations are finalized, there will be no new regime for derivatives, the complex
investments that played a key role in amplifying the financial crisis. Also at issue are regulations
regarding such things as oversight of credit-rating agencies; a new program for whistleblowers; and the
implementation of the Volcker rule, which would limit a bank's ability to make risky speculative bets and
its financial involvement with hedge funds and other high-octane trading firms.
The Huffington Post reported two weeks ago that the Securities and Exchange Commission had
delayed its final rulemaking on three measures that were due on April 15. One of those is an anticorruption measure that calls for publicly traded companies to disclose how much they pay foreign
governments to acquire drilling and mining rights in their countries.
The measure has been fiercely opposed by oil and mining interest, and the bipartisan duo of senators
who sponsored it expressed concern about the delay and requested an explanation from the SEC.
But Frank said that delays do not in any way indicate that rules are being watered down. We have
regulators in every case who are sympathetic to what we are trying to do, he said.
The Dodd-Frank law created an enormous workload for the already strapped staffs of regulatory
agencies, calling for at least 240 rulemakings. And the delays have hardly been a secret;
commissioners have been warning about them for months, and have adjusted their public calendars
accordingly.
Page 105 of 3826
The SEC, for instance, posts a list of Dodd-Frank tasks that have been accomplished to date and a
schedule going forward, showing some rulemakings being issued as late as the end of the year.
At the Commodity Futures Trading Commission, Chairman Gary Gensler last month proposed a
staggered implementation of Dodd-Frank provisions.
And the staffs of the SEC and CFTC are jointly holding a two-day public roundtable next week to
discuss the schedule for implementing final rules for swaps, and are specifically requesting public
comment on how they should be phased in.
Howard Kramer, who practices securities law for the Schiff Hardin law firm, said he is concerned about
the possibility of much longer delays. Theres no actual impact from missing the deadlines. They can
still go beyond those dates and enact the rules that theyre intended to enact, he said. The agencies I
think in good faith are trying to get as many of the rules done as possible -- but theres just too much.
"Its worth time to get the rules right," Kramer said, but the longer the rules are absent, the harder it is
for people to make plans -- and the more vulnerable the system remains to the problem that led to the
last crisis.
Kramer told The Huffington Post he thinks that getting everything done by next July is essential. If they
wait much beyond that, then they run the risk of getting into the next round of elections. And of course
everything can change, the next round of elections.
For that reason among others, House Republicans have proposed legislation that would push back the
implementation of the Dodd-Frank derivatives rules by 18 months -- something Democrats and
reformers are fiercely opposed to.
Frank said that when the bill was being written, its authors didnt intend the due dates to be set in stone.
The deadlines are really targets, Frank said. With complicated rules, you cannot estimate a year in
advance with precision how long each of them are going to take, he said.
They are all going to be done in a timely fashion, he said. I would guess in a few more months. There
is no undue delay.
Back to Top
Page 106 of 3826
Associated Press
Getting married? Remember, two FICO scores arent always better than one
April 29, 2011
By Candice Choi
One perk of marrying into royalty: Kate Middleton isnt up at night worrying about Prince Williams credit
score.
For everyone else, a spouses financial record can be a concern. Marriage doesnt automatically trigger
new scores, but the history each spouse brings into the union can affect shared and individual fortunes.
The FICO score is still the most widely used; it ranges from 300 to 850. Heres how credit scores factor
into married life:
Mortgages
Buying a home is perhaps when a spouses credit score is most critical.
If the mortgage is under both names, the bank will check each spouses credit score. But how the
scores and other financial information are weighed will vary, depending on the lender.
The lender may take an average of the two scores, or simply use the lower score to err on the side of
being conservative.
So even if your score is an impressive 780, the bank may base the loans interest rate on your spouses
score of 620.
On a $200,000 mortgage, the monthly payment would be about $1,000 for the stronger score, versus
$1,200 for the lower score, according to FICO. Thats for a 30-year, fixed-rate mortgage, assuming 4.44
percent and 6.03 percent interest rates for the respective scores.
Page 107 of 3826
There are a ways to deal with a bad score. The ideal way is to take some time to rehabilitate the credit
score before applying for a mortgage. Or the spouse with the stronger score can take out the mortgage.
This may significantly reduce the amount the couple can borrow because only one persons income will
be considered for the loan. Only that spouse would be liable for the debt.
Assets such as savings and investment accounts can help offset the impact of bad scores.
Merging money
Marriage doesnt influence your credit score. Its the mingling of finances that leaves scores vulnerable.
With joint credit card accounts, for example, the account is factored into each spouses credit score, as
if it were an individual account. So if one spouse has very limited credit, this could be a way to help lift
his or her score. Thats because scores improve when borrowers have a higher ratio of available credit
to outstanding debt.
But if your spouse racks up charges you cant cover, both scores could take hits. Banks may also
require credit checks before a spouse can be added as a joint owner of an account.
If you simply add your spouse as an authorized user on a credit card, however, the impact may not be
as significant. Authorized users arent liable for the debt.
Its good to understand your spouses credit standing. It could change how you proceed financially as a
couple.
Back to Top
New York Times

The Mortgage Was Like a Shell Game; So Is Responsibility in 3 Deaths
April 28, 2011
Page 108 of 3826
By Jim Dwyer
The promise made by a mortgage company in San Diego could not have been more blunt. Accredited
Home Lenders offers an unusually broad line of subprime mortgage products for wholesale mortgage
brokers, the companys Web site boasted in its heyday.
Send us your toughest loans, and let us earn your business.
Those were the days: from 2005 to 2007, Accredited made $29 billion in subprime loans.
Among them was a balloon mortgage for $384,000 in November 2005 to one Domingo Cedano, who
used the money to buy a three-family building at 2321 Prospect Avenue in the Bronx. The mortgage
carried an interest rate of 7 3/8 and monthly payments of $2,491. Mr. Cedano put none of his own
money into the purchase.
By this week, Mr. Cedano had long since stopped making payments. The property was in foreclosure.
Accredited Home Lenders itself had gone bankrupt.
On Monday morning, when a fire in the building killed three people who lived on the top floor, it was a
warren of rooms nested inside rooms. As the stairway roared with flames, illegally built walls blocked
access to the fire escape for Manuel Lopez and Christina Garcia and their 12-year-old son, Christian
Garcia. How did the building get this way, and who was responsible?
Here was one of the most confounding legacies of the subprime era: the nearly cosmic invisibility of
who owns what. Loans were made, then bundled and sold in securitizations to investors, and these
were traded again. The connection between lender and borrower vanished. Sometimes the bundles of
loans were sold through public filings, but often they were not. The Prospect Avenue loan began with a
company in San Diego, then moved to another one in Flint, Mich., and was taken over by a company in
Oklahoma City.
As of one year ago this month, a state law makes it clear that the lenders are responsible for a property
once it has gone into the foreclosure process.
The legislation required that once a foreclosure takes place, its up to the bank or whoever foreclosed
on the property to take care of it, maintain it, make sure its safe, said State Senator Jeffrey D. Klein, a
Bronx Democrat who sponsored the bill. If not, the local building department can go in and make the
proper repairs.
Page 109 of 3826
Thats not what happened at 2321 Prospect.
In response to complaints about illegal subdivisions and other problems at the building, city inspectors
went to the building 10 times, but they were never able to get in and they left notices outside. The city
also mailed notices to Mr. Cedano, who was listed as the owner of the property, said Tony Sclafani, a
spokesman for the citys Buildings Department.
Mr. Klein said building departments in other parts of the state had used the law to force lenders to take
care of properties in foreclosure. In my own district, in the northeast Bronx and southern Westchester,
weve been able to use it to push the lenders into dealing with their responsibilities, he said. These
foreclosures can cause community eyesores.
The loan made by Accredited six years ago is now the property of a trust for unidentified investors, and
the Bank of New York Mellon serves as their trustee. The bank has engaged Vericrest Financial, a
company in Dallas, to handle the loans in that trust, including the foreclosure proceedings.
Did Vericrest take care of the building while it was in foreclosure, or even know that it was supposed to?
Vericrest is not going to comment, a spokesman said.
The state law was a start, said Harold Shultz, who worked with the citys Department of Housing
Preservation and Development for 30 years and is now a senior fellow with the Citizens Housing and
Planning Council of New York.
We have a big mess to unwind, and foreclosure is going to be a big part of it, he said. We have to
make sure that our foreclosure procedures can deal with our actual problems. Despite the attempts of
the New York State Legislature, we need to do more.
Among his suggestions: Make sure that competent receivers are appointed to run troubled properties,
and set up a system in which government authorities are alerted when a building is in the limbo of a
lengthy foreclosure proceeding.
We need to make sure, in general, that foreclosure is a process in which properties are watched over
and dont get lost in the shuffle, Mr. Shultz said.
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Page 110 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Detail Request 4-29-11

Fri Apr 29 2011 11:24:26 EDT
Detail Request 4-29-11.docx
Page 112 of 3826
Detail Request 4-29-11.docx (Attachment 1 of 1)
HUD Detail Request

Email TP and LC
Division
Names
Needs the Detail will

Address
Date
OGC
Claire Harrigan
Legal Work
ASAP
CR
Theresa Payne
Mortgages
ASAP
RESPA/TILA
Enforcement
Kirsten Ivey-Colson
Enforcement Matters
ASAP
Planning SAFE Act

Compliance functions
and Non-Bank
Supervision policies
and procedures
ASAP
Credit Union
Outreach and
Planning
ASAP
Educational Content
ASAP
Eleonora Cornejo
Chandana Kolavala
Non-Bank Supervision
Laura Gipe
Ann Shearer
Small Bank Outreach
Bart Shapiro
Consumer Education & Deborah Denton

Engagement
Geri Hansen
Mary Jo Sullivan
Page 113 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Detail Request
Fri Apr 29 2011 11:09:18 EDT
Detail Request.docx
Page 114 of 3826
Detail Request.docx (Attachment 1 of 1)
HUD Detail Request

Email TP and LC
Division
Names
Needs the Detail will

Address
Date
OGC
Claire Harrigan
Legal Work
ASAP
CR
Theresa Payne
Mortgages
ASAP
RESPA/TILA
Enforcement
Kirsten Ivey-Colson
Enforcement Matters
ASAP
Planning SAFE Act

Compliance functions
and Non-Bank
Supervision policies
and procedures
ASAP
Credit Union
Outreach and
Planning
ASAP
Eleonora Cornejo
Chandana Kolavala
Non-Bank Supervision
Laura Gipe
Ann Shearer
Small Bank Outreach
Bart Shapiro
Page 115 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

FW: Registration background reading

Fri Apr 29 2011 09:13:08 EDT
From: Trueblood, Andrew (CFPB)

Subject: Registration background reading
Liz,
Given that youre going to be helping out on the registration rule (yeah!), I thought that the documents in
this folder might help provide some background as to our current thinking:
\\do.treas.gov\dfsres\Department\ud\_RRI\Policy planning documents\Nondepository
Supervision\Planning\Registration
In addition, I am hopefully going to begin outlining the rules requirements in the next few days.
Look forward to having you on the team,

Andrew
Andrew Trueblood
202.435.7134 | office
(b) (6)
Page 116 of 3826
[email protected]
www.consumerfinance.gov
Page 117 of 3826
From:

_DL_CFPB_AllHands
To:
Cc:
Bcc:
Subject:
Date:
Attachments:
RE: CFPB Survey

Thu Apr 28 2011 19:40:35 EDT
_MG_8905-2.jpg
Hello Team,
Thank you all for participating in the first inaugural Consumer Financial Protection Bureau Employee
Survey. The CFPB organizational culture team and members of the CFPB leadership have spent time
reviewing all the anonymous responses. We have appreciated your thoughtful comments. We have
learned a lot about what matters to CFPB employees through this survey. We wanted to share a quick
summary of the survey results.
Background:
99 participants provided feedback and the survey was sent to 157 individuals. Response rate of
63%.
Our goal was to hear from you on how develop CFPB into an environment where everyone was
thrilled to come to work each day. We know we are a growing agency and the demographic charts
would not have as much impact as your specific comments.
What Did We Hear From You?
The CFPB team is enthusiastic and connected to the bureaus mission
o 73 out of the 99 submission said the CFPB mission excited them most about their work
The submitters used many different words to describe CFPB (overwhelmingly positive)
o Innovative: 18 times
o Exciting: 13 times
o New: 8 times
o Committed, Growing: 4 times
o Focused, Dynamic, Fast-paced, Dedicated, Mission-driven, Smart, Enthusiastic, Fun, Idealistic,
Progressive, Eager & Start-Up: 3 times
Page 118 of 3826

Team work and collaboration are valued. CFPB staff want to participate in both small and large
ways to improve this across the agency as it continues to grow.
Fairness and equal access to opportunities is a desire among staff to support a meritocracy.
The CFPB community seeks greater openness from leadership on a range of issues; principally,
agency policies, organizational structure and office planning.
We are making plans to incorporate your feedback. The culture team and CFPB leadership is currently
developing an action plan that will help us implement some of the changes that you suggested. Over
the last week, we have developed some ideas for action items moving forward. Here are a few of the
first action items we will work on:
Ideas for Action Items:
Hold regular town halls with Professor Warren with a small number of staff members (different
team members in each meeting)
Share survey results with Executive Leadership and discuss ideas to implement in each of their
offices
Continue with Lunch & Learns, however, make them more interactive
More organized coffee breaks and happy hours
Cross-functional activities
We will continue to look for ways to improve this agency. If you have ideas to contribute to our culture
working group please send an email to [email protected]. I want to express thanks to
Stephanie Gorski, Alice Hrdy, and the culture club for taking the time to review the survey results and
for helping to come up with an action plan for implementing the feedback we received.
Finally, I have attached a few pictures from take your son and daughter to work day. I hope you enjoy
the pictures almost as much as the kids enjoyed the chocolate credit cards that David Silberman gave
them this morning.
Take Care,
Wally
Page 119 of 3826
From: Adeyemo, Adewale (Wally) (CFPB)

Sent: Tuesday, March 08, 2011 6:50 PM
Subject: CFPB Survey
As a follow up to Professor Warrens email, I wanted to extend my thanks for all the hard work you are
doing. We have a great deal of work to do between now and the transfer date, but I am confident that
we are building a team that is capable of meeting our goals. As our agency matures, it is important that
we think deliberately about organizational culture. I would like to ask for your help with this process.
Below you will find a link to survey about culture at CFPB.
The survey should take no more than 10 minutes and responses will be aggregated to maintain their
anonymity. Please complete the survey by Monday, March 28, 2011. Doing so will help us continue to
move forward our culture building efforts.
Thanks,
Wally
Link to CFPB Culture Survey:

http://www.surveymonkey.com/s/CFPBculturesurvey
From: Warren, Elizabeth (CFPB)

Sent: Tuesday, March 08, 2011 3:54 PM
Subject: Vision and Mission
Dear Team,
It is an exciting milestone when we can talk as a team about our Vision and Mission.
I am looking forward to using statements of our vision, our mission, and our values (which will follow in
the next couple of months) to help us remain focused every day on what we are trying to accomplish. I
was glad to share the attached statements with you, and I was happy to conclude on the importance of
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great people and great teamwork.
ew
Page 121 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:
Dickman, Marilyn (CFPB)

(fydibohf23spdlt)/cn=recipients/cn=dickmanm>
Black, Brad
</o=ustreasury/ou=do/cn=recipients/cn=blackb>; Burden, Gail
accounts/cn=standard users/cn=burtong>; Coyle, Raymond (CFPB)
</o=ustreasury/ou=do/cn=recipients/cn=coyler>; Cronin,
Katherine (CFPB) </o=ustreasury/ou=exchange administrative
group (fydibohf23spdlt)/cn=recipients/cn=cronink>; Darling,
Eben (CFPB) </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=darlinge>; Dickman, Marilyn
(fydibohf23spdlt)/cn=recipients/cn=dipalman>; Glaser, Elizabeth
accounts/cn=standard users/cn=glasere>; Gorski, Stephanie
accounts/cn=standard users/cn=gorskis>; Harpe, Pam (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=harpep>; Harvey, Imani
(fydibohf23spdlt)/cn=recipients/cn=harveyi>; Herchen, Emily
(fydibohf23spdlt)/cn=recipients/cn=herchene>; Lownds, Kevin
(fydibohf23spdlt)/cn=recipients/cn=lowndsk>; Mann, Seth (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=manns>; Megee, Christine
accounts/cn=standard users/cn=megeec>; Plunkett, Alexander
(fydibohf23spdlt)/cn=recipients/cn=alexanderp>; Royster,
Felicia (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user
accounts/cn=standard users/cn=roysterf>; Sensiba, Vicki (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=sensibav>; Slagter, Dennis
(fydibohf23spdlt)/cn=recipients/cn=slagterd>; Tamberrino, Mary
(fydibohf23spdlt)/cn=recipients/cn=tamberrinom>; Tingwald,
James (CFPB) </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=tingwaldj>; Wanderer, Agnes
(fydibohf23spdlt)/cn=recipients/cn=wanderera>
New Distro Lists

Thu Apr 28 2011 15:38:55 EDT
CFPB HC Employees (1).msg <extracted>
CFPB HC CCs (2).msg <extracted>
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I made a couple of quick adjustments to two contact lists that you can pull over into your contacts.
Marilyn
Marilyn A. Dickman
Deputy Chief Human Capital Officer
202-435-7157 (W)
for guidance.
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From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:
Kevin Lownds <(b) (6)

HPA
Thu Apr 28 2011 14:22:53 EDT
THE HOMEOWNERS PROTECTION ACT OF 1998.docx
-Kevin Lownds
(b) (6)
Georgetown University Law Center

(b) (6)
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THE HOMEOWNERS PROTECTION ACT OF 1998.docx (Attachment 1 of 1)
THE HOMEOWNERS PROTECTION ACT OF 1998

DRAFT
4901. Definitions
In this chapter, the following definitions shall apply:
(1) Adjustable rate mortgage
The term adjustable rate mortgagemeans a residential mortgage that has an interest rate that is
subject to change. A residential mortgage that: (A) does not fully amortize over the term of the
obligation; and (B) contains a conditional right to refinance or modify the unamortized principal
at the maturity date of the term, shall be considered to be an adjustable rate mortgage for
purposes of this chapter.
(2) Cancellation date
The term cancellation datemeans-(A) with respect to a fixed rate mortgage, at the option of the mortgagor, the date on which the
principal balance of the mortgage-(i) based solely on the initial amortization schedule for that mortgage, and irrespective of the
outstanding balance for that mortgage on that date, is first scheduled to reach 80 percent of the
original value of the property securing the loan; or
(ii) based solely on actual payments, reaches 80 percent of the original value of the property
securing the loan; and
(B) with respect to an adjustable rate mortgage, at the option of the mortgagor, the date on which
the principal balance of the mortgage-(i) based solely on the amortization schedule then in effect for that mortgage, and irrespective of
the outstanding balance for that mortgage on that date, is first scheduled to reach 80 percent of
the original value of the property securing the loan; or
(ii) based solely on actual payments, first reaches 80 percent of the original value of the property
securing the loan.
(3) Fixed rate mortgage
The term fixed rate mortgagemeans a residential mortgage that has an interest rate that is not
subject to change.
(4) Good payment history
The term good payment historymeans, with respect to a mortgagor, that the mortgagor has not-(A) made a mortgage payment that was 60 days or longer past due during the 12-month period
beginning 24 months before the later of (i) the date on which the mortgage reaches the
cancellation date, or (ii) the date that the mortgagor submits a request for cancellation under
section 4902(a)(1) of this title; or
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(B) made a mortgage payment that was 30 days or longer past due during the 12-month period
preceding the later of (i) the date on which the mortgage reaches the cancellation date, or (ii) the
date that the mortgagor submits a request for cancellation under section 4902(a)(1) of this title.
(5) Initial amortization schedule
The term initial amortization schedulemeans a schedule established at the time at which a
residential mortgage transaction is consummated with respect to a fixed rate mortgage, showing-(A) the amount of principal and interest that is due at regular intervals to retire the principal
balance and accrued interest over the amortization period of the loan; and
(B) the unpaid principal balance of the loan after each scheduled payment is made.
(6) Amortization schedule then in effect
The term amortization schedule then in effectmeans, with respect to an adjustable rate
mortgage, a schedule established at the time at which the residential mortgage transaction is
consummated or, if such schedule has been changed or recalculated, is the most recent schedule
under the terms of the note or mortgage, which shows-(A) the amount of principal and interest that is due at regular intervals to retire the principal
balance and accrued interest over the remaining amortization period of the loan; and
(B) the unpaid balance of the loan after each such scheduled payment is made.
(7) Midpoint of the amortization period
The term midpoint of the amortization periodmeans, with respect to a residential mortgage
transaction, the point in time that is halfway through the period that begins upon the first day of
the amortization period established at the time a residential mortgage transaction is
consummated and ends upon the completion of the entire period over which the mortgage is
scheduled to be amortized.
(8) Mortgage insurance
The term mortgage insurancemeans insurance, including any mortgage guaranty insurance,
against the nonpayment of, or default on, an individual mortgage or loan involved in a residential
mortgage transaction.
(9) Mortgage insurer
The term mortgage insurermeans a provider of private mortgage insurance, as described in
this chapter, that is authorized to transact such business in the State in which the provider is
transacting such business.
(10) Mortgagee
The term mortgageemeans the holder of a residential mortgage at the time at which that
mortgage transaction is consummated.
(11) Mortgagor
The term mortgagormeans the original borrower under a residential mortgage or his or her
successors or assignees.
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(12) Original value

The term original value, with respect to a residential mortgage transaction, means the lesser of
the sales price of the property securing the mortgage, as reflected in the contract, or the appraised
value at the time at which the subject residential mortgage transaction was consummated. In the
case of a residential mortgage transaction for refinancing the principal residence of the
mortgagor, such term means only the appraised value relied upon by the mortgagee to approve
the refinance transaction.
(13) Private mortgage insurance
The term private mortgage insurancemeans mortgage insurance other than mortgage
insurance made available under the National Housing Act [12 U.S.C.A. 1701 et seq.], Title 38,
or title V of the Housing Act of 1949 [42 U.S.C.A. 1471 et seq.].
(14) Residential mortgage
The term residential mortgagemeans a mortgage, loan, or other evidence of a security interest
created with respect to a single-family dwelling that is the principal residence of the mortgagor.
(15) Residential mortgage transaction
The term residential mortgage transactionmeans a transaction consummated on or after the
date that is 1 year after July 29, 1998, in which a mortgage, deed of trust, purchase money
security interest arising under an installment sales contract, or equivalent consensual security
interest is created or retained against a single-family dwelling that is the principal residence of
the mortgagor to finance the acquisition, initial construction, or refinancing of that dwelling.
(16) Servicer
The term servicerhas the same meaning as in section 2605(i)(2) of this title, with respect to a
residential mortgage.
(17) Single-family dwelling
The term single-family dwellingmeans a residence consisting of 1 family dwelling unit.
(18) Termination date
The term termination datemeans-(A) with respect to a fixed rate mortgage, the date on which the principal balance of the
mortgage, based solely on the initial amortization schedule for that mortgage, and irrespective of
the original value of the property securing the loan; and
(B) with respect to an adjustable rate mortgage, the date on which the principal balance of the
mortgage, based solely on the amortization schedule then in effect for that mortgage, and
irrespective of the outstanding balance for that mortgage on that date, is first scheduled to reach
78 percent of the original value of the property securing the loan.
4902. Termination of private mortgage insurance
(a) Borrower cancellation
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A requirement for private mortgage insurance in connection with a residential mortgage

transaction shall be canceled on the cancellation date or any later date that the mortgagor fulfills
all of the requirements under paragraphs (1) through (4), if the mortgagor-(1) submits a request in writing to the servicer that cancellation be initiated;
(2) has a good payment history with respect to the residential mortgage;
(3) is current on the payments required by the terms of the residential mortgage transaction; and
(4) has satisfied any requirement of the holder of the mortgage (as of the date of a request under
paragraph (1)) for-(A) evidence (of a type established in advance and made known to the mortgagor by the servicer
promptly upon receipt of a request under paragraph (1)) that the value of the property securing
the mortgage has not declined below the original value of the property; and
(B) certification that the equity of the mortgagor in the residence securing the mortgage is
unencumbered by a subordinate lien.
(b) Automatic termination
A requirement for private mortgage insurance in connection with a residential mortgage
transaction shall terminate with respect to payments for that mortgage insurance made by the
mortgagor-(1) on the termination date if, on that date, the mortgagor is current on the payments required by
the terms of the residential mortgage transaction; or
(2) if the mortgagor is not current on the termination date, on the first day of the first month
beginning after the date that the mortgagor becomes current on the payments required by the
terms of the residential mortgage transaction.
(c) Final termination
If a requirement for private mortgage insurance is not otherwise canceled or terminated in
accordance with subsection (a) or (b) of this section, in no case may such a requirement be
imposed on residential mortgage transactions beyond the first day of the month immediately
following the date that is the midpoint of the amortization period of the loan if the mortgagor is
current on the payments required by the terms of the mortgage.
(d) Treatment of loan modifications
If a mortgagor and mortgagee (or holder of the mortgage) agree to a modification of the terms or
conditions of a loan pursuant to a residential mortgage transaction, the cancellation date,
termination date, or final termination shall be recalculated to reflect the modified terms and
conditions of such loan.
(e) No further payments
No payments or premiums may be required from the mortgagor in connection with a private
mortgage insurance requirement terminated or canceled under this section-4
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(1) in the case of cancellation under subsection (a) of this section, more than 30 days after the
later of-(A) the date on which a request under subsection (a)(1) of this section is received; or
(B) the date on which the mortgagor satisfies any evidence and certification requirements under
subsection (a)(4) of this section;
(2) in the case of termination under subsection (b) of this section, more than 30 days after the
termination date or the date referred to in subsection (b)(2) of this section, as applicable; and
(3) in the case of termination under subsection (c) of this section, more than 30 days after the
final termination date established under that subsection.
(f) Return of unearned premiums
(1) In general
Not later than 45 days after the termination or cancellation of a private mortgage insurance
requirement under this section, all unearned premiums for private mortgage insurance shall be
returned to the mortgagor by the servicer.
(2) Transfer of funds to servicer
Not later than 30 days after notification by the servicer of termination or cancellation of private
mortgage insurance under this chapter with respect to a mortgagor, a mortgage insurer that is in
possession of any unearned premiums of that mortgagor shall transfer to the servicer of the
subject mortgage an amount equal to the amount of the unearned premiums for repayment in
accordance with paragraph (1).
(g) Exceptions for high risk loans
(1) In general
The termination and cancellation provisions in subsections (a) and (b) of this section do not
apply to any residential mortgage transaction that, at the time at which the residential mortgage
transaction is consummated, has high risks associated with the extension of the loan-(A) as determined in accordance with guidelines published by the Federal National Mortgage
Association and the Federal Home Loan Mortgage Corporation, in the case of a mortgage loan
with an original principal balance that does not exceed the applicable annual conforming loan
limit for the secondary market established pursuant to section 1454(a)(2) of this title, so as to
require the imposition or continuation of a private mortgage insurance requirement beyond the
terms specified in subsection (a) or (b) of this section; or
(B) as determined by the mortgagee in the case of any other mortgage, except that termination
shall occur-(i) with respect to a fixed rate mortgage, on the date on which the principal balance of the
mortgage, based solely on the initial amortization schedule for that mortgage, and irrespective of
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the original value of the property securing the loan; and

(ii) with respect to an adjustable rate mortgage, on the date on which the principal balance of the
mortgage, based solely on the amortization schedule then in effect for that mortgage, and
irrespective of the outstanding balance for that mortgage on that date, is first scheduled to reach
77 percent of the original value of the property securing the loan.
(2) Termination at midpoint
A private mortgage insurance requirement in connection with a residential mortgage transaction
described in paragraph (1) shall terminate in accordance with subsection (c) of this section.
(3) Rule of construction
Nothing in this subsection may be construed to require a residential mortgage or residential
mortgage transaction described in paragraph (1)(A) to be purchased by the Federal National
Mortgage Association or the Federal Home Loan Mortgage Corporation.
(4) GAO report
Not later than 2 years after July 29, 1998, the Comptroller General of the United States shall
submit to the Congress a report describing the volume and characteristics of residential
mortgages and residential mortgage transactions that, pursuant to paragraph (1) of this
subsection, are exempt from the application of subsections (a) and (b) of this section. The report
shall-(A) determine the number or volume of such mortgages and transactions compared to residential
mortgages and residential mortgage transactions that are not classified as high-risk for purposes
of paragraph (1); and
(B) identify the characteristics of such mortgages and transactions that result in their
classification (for purposes of paragraph (1)) as having high risks associated with the extension
of the loan and describe such characteristics, including-(i) the income levels and races of the mortgagors involved;
(ii) the amount of the downpayments involved and the downpayments expressed as percentages
of the acquisition costs of the properties involved;
(iii) the types and locations of the properties involved;
(iv) the mortgage principal amounts; and
(v) any other characteristics of such mortgages and transactions that may contribute to their
classification as high risk for purposes of paragraph (1), including whether such mortgages are
purchase-money mortgages or refinancings and whether and to what extent such loans are lowdocumentation loans.
(h) Accrued obligation for premium payments
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The cancellation or termination under this section of the private mortgage insurance of a
mortgagor shall not affect the rights of any mortgagee, servicer, or mortgage insurer to enforce
any obligation of such mortgagor for premium payments accrued prior to the date on which such
cancellation or termination occurred.
4903. Disclosure requirements
(a) Disclosures for new mortgages at time of transaction
(1) Disclosures for non-exempted transactions
In any case in which private mortgage insurance is required in connection with a residential
mortgage transaction (other than a residential mortgage transaction described in section
4902(g)(1) of this title), at the time at which the transaction is consummated, the mortgagee shall
provide to the mortgagor-(A) if the transaction relates to a fixed rate mortgage-(i) a written initial amortization schedule; and
(ii) written notice-(I) that the mortgagor may cancel the requirement in accordance with section 4902(a) of this title
indicating the date on which the mortgagor may request cancellation, based solely on the initial
amortization schedule;
(II) that the mortgagor may request cancellation in accordance with section 4902(a) of this title
earlier than provided for in the initial amortization schedule, based on actual payments;
(III) that the requirement for private mortgage insurance will automatically terminate on the
termination date in accordance with section 4902(b) of this title, and what that termination date
is with respect to that mortgage; and
(IV) that there are exemptions to the right to cancellation and automatic termination of a
requirement for private mortgage insurance in accordance with section 4902(g) of this title, and
whether such an exemption applies at that time to that transaction; and
(B) if the transaction relates to an adjustable rate mortgage, a written notice that-(i) the mortgagor may cancel the requirement in accordance with section 4902(a) of this title on
the cancellation date, and that the servicer will notify the mortgagor when the cancellation date
is reached;
(ii) the requirement for private mortgage insurance will automatically terminate on the
termination date, and that on the termination date, the mortgagor will be notified of the
termination or that the requirement will be terminated as soon as the mortgagor is current on loan
payments; and
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(iii) there are exemptions to the right of cancellation and automatic termination of a requirement
for private mortgage insurance in accordance with section 4902(g) of this title, and whether such
an exemption applies at that time to that transaction.
(2) Disclosures for excepted transactions
In the case of a residential mortgage transaction described in section 4902(g)(1) of this title, at
the time at which the transaction is consummated, the mortgagee shall provide written notice to
the mortgagor that in no case may private mortgage insurance be required beyond the date that is
the midpoint of the amortization period of the loan, if the mortgagor is current on payments
required by the terms of the residential mortgage.
(3) Annual disclosures
If private mortgage insurance is required in connection with a residential mortgage transaction,
the servicer shall disclose to the mortgagor in each such transaction in an annual written
statement-(A) the rights of the mortgagor under this chapter to cancellation or termination of the private
mortgage insurance requirement; and
(B) an address and telephone number that the mortgagor may use to contact the servicer to
determine whether the mortgagor may cancel the private mortgage insurance.
(4) Applicability
Paragraphs (1) through (3) shall apply with respect to each residential mortgage transaction
consummated on or after the date that is 1 year after July 29, 1998.
(b) Disclosures for existing mortgages
If private mortgage insurance was required in connection with a residential mortgage entered
into at any time before the effective date of this chapter, [FN1] the servicer shall disclose to the
mortgagor in each such transaction in an annual written statement-(1) that the private mortgage insurance may, under certain circumstances, be canceled by the
mortgagor (with the consent of the mortgagee or in accordance with applicable State law); and
(2) an address and telephone number that the mortgagor may use to contact the servicer to
determine whether the mortgagor may cancel the private mortgage insurance.
(c) Inclusion in other annual notices
The information and disclosures required under subsection (b) of this section and subsection
(a)(3) of this section may be provided on the annual disclosure relating to the escrow account
made as required under the Real Estate Settlement Procedures Act of 1974 [12 U.S.C.A. 2601
et seq.], or as part of the annual disclosure of interest payments made pursuant to Internal
Revenue Service regulations, and on a form promulgated by the Internal Revenue Service for
that purpose.
(d) Standardized forms
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The mortgagee or servicer may use standardized forms for the provision of disclosures required
under this section, which disclosures shall relate to the mortgagor's rights under this chapter.
4904. Notification upon cancellation or termination
(a) In general
Not later than 30 days after the date of cancellation or termination of a private mortgage
insurance requirement in accordance with this chapter, the servicer shall notify the mortgagor in
writing-(1) that the private mortgage insurance has terminated and that the mortgagor no longer has
private mortgage insurance; and
(2) that no further premiums, payments, or other fees shall be due or payable by the mortgagor in
connection with the private mortgage insurance.
(b) Notice of grounds
(1) In general
If a servicer determines that a mortgage did not meet the requirements for termination or
cancellation of private mortgage insurance under subsection (a) or (b) of section 4902 of this
title, the servicer shall provide written notice to the mortgagor of the grounds relied on to make
the determination (including the results of any appraisal used to make the determination).
(2) Timing
Notice required by paragraph (1) shall be provided-(A) with respect to cancellation of private mortgage insurance under section 4902(a) of this title,
not later than 30 days after the later of-(i) the date on which a request is received under section 4902(a)(1) of this title; or
(ii) the date on which the mortgagor satisfies any evidence and certification requirements under
section 4902(a)(3) of this title; and
(B) with respect to termination of private mortgage insurance under section 4902(b) of this title,
not later than 30 days after the scheduled termination date.
4905. Disclosure requirements for lender paid mortgage insurance
(a) Definitions
For purposes of this section-(1) the term borrower paid mortgage insurancemeans private mortgage insurance that is
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required in connection with a residential mortgage transaction, payments for which are made by
the borrower;
(2) the term lender paid mortgage insurancemeans private mortgage insurance that is required
in connection with a residential mortgage transaction, payments for which are made by a person
other than the borrower; and
(3) the term loan commitmentmeans a prospective mortgagee's written confirmation of its
approval, including any applicable closing conditions, of the application of a prospective
mortgagor for a residential mortgage loan.
(b) Exclusion
Sections 4902 through 4904 of this title do not apply in the case of lender paid mortgage
insurance.
(c) Notices to mortgagor
In the case of lender paid mortgage insurance that is required in connection with a residential
mortgage transaction-(1) not later than the date on which a loan commitment is made for the residential mortgage
transaction, the prospective mortgagee shall provide to the prospective mortgagor a written
notice-(A) that lender paid mortgage insurance differs from borrower paid mortgage insurance, in that
lender paid mortgage insurance may not be canceled by the mortgagor, while borrower paid
mortgage insurance could be cancelable by the mortgagor in accordance with section 4902(a) of
this title, and could automatically terminate on the termination date in accordance with section
4902(b) of this title;
(B) that lender paid mortgage insurance-(i) usually results in a residential mortgage having a higher interest rate than it would in the case
of borrower paid mortgage insurance; and
(ii) terminates only when the residential mortgage is refinanced (under the meaning given such
term in the regulations issued by the Board of Governors of the Federal Reserve System to carry
out the Truth in Lending Act (15 U.S.C. 1601 et seq.)), paid off, or otherwise terminated; and
(C) that lender paid mortgage insurance and borrower paid mortgage insurance both have
benefits and disadvantages, including a generic analysis of the differing costs and benefits of a
residential mortgage in the case lender paid mortgage insurance versus borrower paid mortgage
insurance over a 10-year period, assuming prevailing interest and property appreciation rates;
(D) that lender paid mortgage insurance may be tax-deductible for purposes of Federal income
taxes, if the mortgagor itemizes expenses for that purpose; and
(2) not later than 30 days after the termination date that would apply in the case of borrower paid
mortgage insurance, the servicer shall provide to the mortgagor a written notice indicating that
the mortgagor may wish to review financing options that could eliminate the requirement for
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private mortgage insurance in connection with the residential mortgage transaction.

(d) Standard forms
The servicer of a residential mortgage transaction may develop and use a standardized form or
forms for the provision of notices to the mortgagor, as required under subsection (c) of this
section.
4906. Fees for disclosures
No fee or other cost may be imposed on any mortgagor with respect to the provision of any
notice or information to the mortgagor pursuant to this chapter.
4907. Civil liability
(a) In general
Any servicer, mortgagee, or mortgage insurer that violates a provision of this chapter shall be
liable to each mortgagor to whom the violation relates for-(1) in the case of an action by an individual, or a class action in which the liable party is not
subject to section 4909 of this title, any actual damages sustained by the mortgagor as a result of
the violation, including interest (at a rate determined by the court) on the amount of actual
damages, accruing from the date on which the violation commences;
(2) in the case of-(A) an action by an individual, such statutory damages as the court may allow, not to exceed
$2,000; and
(B) in the case of a class action-(i) in which the liable party is subject to section 4909 of this title, such amount as the court may
allow, except that the total recovery under this subparagraph in any class action or series of class
actions arising out of the same violation by the same liable party shall not exceed the lesser of
$500,000 or 1 percent of the net worth of the liable party, as determined by the court; and
(ii) in which the liable party is not subject to section 4909 of this title, such amount as the court
may allow, not to exceed $1,000 as to each member of the class, except that the total recovery
under this subparagraph in any class action or series of class actions arising out of the same
violation by the same liable party shall not exceed the lesser of $500,000 or 1 percent of the
gross revenues of the liable party, as determined by the court;
(3) costs of the action; and
(4) reasonable attorney fees, as determined by the court.
(b) Timing of actions
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No action may be brought by a mortgagor under subsection (a) of this section later than 2 years
after the date of the discovery of the violation that is the subject of the action.
(c) Limitations on liability
(1) In general
With respect to a residential mortgage transaction, the failure of a servicer to comply with the
requirements of this chapter due to the failure of a mortgage insurer or a mortgagee to comply
with the requirements of this chapter, shall not be construed to be a violation of this chapter by
the servicer.
(2) Rule of construction
Nothing in paragraph (1) shall be construed to impose any additional requirement or liability on
a mortgage insurer, a mortgagee, or a holder of a residential mortgage.
4908. Effect on other laws and agreements
(a) Effect on State law
(1) In general
With respect to any residential mortgage or residential mortgage transaction consummated after
the effective date of this chapter, [FN1] and except as provided in paragraph (2), the provisions
of this chapter shall supersede any provisions of the law of any State relating to requirements for
obtaining or maintaining private mortgage insurance in connection with residential mortgage
transactions, cancellation or automatic termination of such private mortgage insurance, any
disclosure of information addressed by this chapter, and any other matter specifically addressed
by this chapter.
(2) Protection of existing State laws
(A) In general
The provisions of this chapter do not supersede protected State laws, except to the extent that the
protected State laws are inconsistent with any provision of this chapter, and then only to the
extent of the inconsistency.
(B) Inconsistencies
A protected State law shall not be considered to be inconsistent with a provision of this chapter if
the protected State law-(i) requires termination of private mortgage insurance or other mortgage guaranty insurance-(I) at a date earlier than as provided in this chapter; or
(II) when a mortgage principal balance is achieved that is higher than as provided in this chapter;
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or
(ii) requires disclosure of information-(I) that provides more information than the information required by this chapter; or
(II) more often or at a date earlier than is required by this chapter.
(C) Protected State laws
For purposes of this paragraph, the term protected State lawmeans a State law-(i) regarding any requirements relating to private mortgage insurance in connection with
residential mortgage transactions;
(ii) that was enacted not later than 2 years after July 29, 1998; and
(iii) that is the law of a State that had in effect, on or before January 2, 1998, any State law
described in clause (i).
(b) Effect on other agreements
The provisions of this chapter shall supersede any conflicting provision contained in any
agreement relating to the servicing of a residential mortgage loan entered into by the Federal
National Mortgage Association, the Federal Home Loan Mortgage Corporation, or any private
investor or note holder (or any successors thereto).
4909. Enforcement
(a) In general
Subject to subtitle B of the Consumer Financial Protection Act of 2010, compliance with the
requirements imposed under this chapter shall be enforced under
(1) Section 1818 of this title, by the appropriate Federal banking agency (as defined in section
1813(q) of this title), with respect to-->
(A) insured depository institutions (as defined in section 1813(c)(2) of this title);
(B) depository institutions described in clause (i), (ii), or (iii) of section 461(b)(1)(A) of this title
which are not insured depository institutions (as defined in section 1813(c)(2) of this title); and
(C) depository institutions described in clause (v) or (vi) of section 461(b)(1)(A) of this title
which are not insured depository institutions (as defined in section 1813(c)(2) of this title);
(2) the Federal Credit Union Act [12 U.S.C.A. 1751 et seq.], by the National Credit Union
Administration Board in the case of depository institutions described in clause (iv) of section
19(b)(1)(A) of the Federal Reserve Act [12 U.S.C.A. 461(b)(1)(A)];
13
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(3) part C of title V of the Farm Credit Act of 1971 (12 U.S.C. 2261 et seq.), by the Farm Credit
Administration in the case of an institution that is a member of the Farm Credit System; and
(4) subtitle E of the Consumer Financial Protection Act of 2010, by the Bureau of Consumer
Financial Protection, with respect to any person subject to this chapter.
(b) Additional enforcement powers
(1) Violation of this chapter treated as violation of other Acts
For purposes of the exercise by any agency referred to in subsection (a) of this section of such
agency's powers under any Act referred to in such subsection, a violation of a requirement
imposed under this chapter shall be deemed to be a violation of a requirement imposed under
that Act, subject to subtitle B of the Consumer Financial Protection Act of 2010.
(2) Enforcement authority under other Acts
In addition to the powers of any agency referred to in subsection (a) of this section under any
provision of law specifically referred to in such subsection, each such agency may exercise, for
purposes of enforcing compliance with any requirement imposed under this chapter, any other
authority conferred on such agency by law.
(c) Enforcement and reimbursement
In carrying out its enforcement activities under this section, each agency referred to in subsection
(a) of this section shall-(1) notify the mortgagee or servicer of any failure of the mortgagee or servicer to comply with 1
or more provisions of this chapter;
(2) with respect to each such failure to comply, require the mortgagee or servicer, as applicable,
to correct the account of the mortgagor to reflect the date on which the mortgage insurance
should have been canceled or terminated under this chapter; and
(3) require the mortgagee or servicer, as applicable, to reimburse the mortgagor in an amount
equal to the total unearned premiums paid by the mortgagor after the date on which the
obligation to pay those premiums ceased under this chapter.
4910. Construction
(a) PMI not required
Nothing in this chapter shall be construed to impose any requirement for private mortgage
insurance in connection with a residential mortgage transaction.
(b) No preclusion of cancellation or termination agreements
Nothing in this chapter shall be construed to preclude cancellation or termination, by agreement
between a mortgagor and the holder of the mortgage, of a requirement for private mortgage
insurance in connection with a residential mortgage transaction before the cancellation or
termination date established by this chapter for the mortgage.
14
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From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:
Kevin Lownds <(b) (6)

FDCPA
Thu Apr 28 2011 14:05:47 EDT
FAIR DEBT COLLECTION PRACTICES ACT.docx
-Kevin Lownds
(b) (6)
Georgetown University Law Center

(b) (6)
Page 143 of 3826
From:

_DL_CFPB_AllHands
Adamske, Steven
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Thu Apr 28 2011 10:55:05 EDT
Index

New York Post Unfriendly fire
American Banker Supreme Court Gives Banks a Win on Arbitration, But Will CFPB Trump It?
Forbes (blog) After Arbitration Ruling, Watch Warrens Consumer Bureau
Page 159 of 3826
Reverse Mortgage Daily Elizabeth Warren Tells Daily Show: The Fight Isnt Over
New York Times Director Petraeus to Face Different Culture at C.I.A.
Consumer Credit
American Banker Underbanked and Under Banks Radar
Housing
Bloomberg Bank of America Said to Target Individual States to Block Foreclosure Deal
Credit Slips For the Servicers: Is It Better to Rob Peter or Paul?
American Banker Servicing Wrongs Could Force banks to Take Big Losses on FHA Loans
Palm Beach Post Bondi too easy on lenders
Los Angeles Times Foreclosure prevention legislation fails in Sacramento
American Banker Michigan Appeals Court Rules Against MERS
New York Post

Unfriendly fire
Warren: Enemies out to defang agency
April 28, 2011
By Mark DeCambre
Elizabeth Warren's consumer watchdog agency may get defanged before it has a chance to bite.
Warren said two bills floating in House subcommittees -- which are scheduled to be put to a vote on
May 4 -- will weaken the Consumer Financial Protection Bureau and make it harder for the agency to
protect ordinary people.
"They have introduced bills to delay, defund and defang this agency before it has a chance to help one
consumer," Warren told The Post in an interview.
Page 160 of 3826
One bill proposed by Rep. Spencer Bachus (D-Ala.), chairman of the Financial Services Committee,
would change the bureau's leadership from one director to a five-member board.
Some Washington insiders said the bill, known as HR 1121, is a move to undermine Warren's powers
should she be officially tapped to lead the consumer organization. President Obama has tasked Warren
with putting together the new bureau but hasn't named her its first director.
"Mr. Bachus has expressed the notion that this bill is not just about thwarting one person," said a
representative for Bachus. "But never [in the history of regulation] has one agency left so much power in
one person's hands."
The other proposal, known as HR 1315, led by Rep. Sean Duffy (R-Wis.) would make it easier for a
new oversight committee -- the Financial Stability Oversight Council, which was established by
sweeping Wall Street reform legislation -- to overturn rules put in place by the new consumer bureau.
Over the past several days, Warren has been pounding the pavement, appearing on Jon Stewart's "The
Daily Show" and at various media outlets in New York.
"Nobody takes the consumer agency away from families without a fight -- not on my watch," Warren told
the Post.
The first federal consumer agency doesn't officially open its doors until July 21.
Although a director for the agency has yet to be named, Warren has spent the past eight months trying
to build inroads and could get tapped to run it.
Warren was shot down for the position last year after a lawmaker called her "unconfirmable." She
needs a 60-vote majority in order for her nomination to pass the Senate or a special appointment by the
president.
Nonetheless, she has re-emerged as the leading candidate after a number of people turned down the
job.
Page 161 of 3826
Back to Top
American Banker
Supreme Court Gives Banks a Win on Arbitration, But Will CFPB Trump It?
April 28, 2011
By Kate Davidson
WASHINGTON A Supreme Court decision limiting class-action lawsuits was a win for banks and
other corporations on Wednesday, but the victory may prove to be short-lived.
In a 5-to-4 decision, the high court ruled that businesses may require customers to sign binding
arbitration agreements that prohibit them from joining class-actions.
While the decision was a relief to the banking industry, along with the rest of the business world, a
provision in the Dodd-Frank Act allows the Consumer Financial Protection Bureau to revisit the issue,
and potentially decide to limit arbitration agreements in the future.
"I think consumer advocates will certainly turn to the CFPB in the wake of the ruling," said Jo Ann
Barefoot, a co-chair with Treliant Risk Advisers and a former deputy comptroller at the Office of the
Comptroller of the Currency, who said the CFPB has substantial leeway under the regulatory reform
law. "Mandatory arbitration has been a top complaint of consumer groups for years and they clearly
hope the bureau will curtail or regulate the practice."
At issue are mandatory arbitration agreements, which are often used for credit cards, auto financing,
installment loans and even checking and deposit accounts.
In the case of AT&T Mobility v. Concepcion, a California couple complained about being charged $30 in
taxes for what they thought was free cellphone service. California courts found that they were entitled to
join in a class-action claim, despite a binding arbitration agreement in their contract.
Page 162 of 3826
But the Supreme Court overturned that decision and found that federal arbitration law preempts state
laws prohibiting class-action waivers in consumer arbitration agreements.
While such a decision might normally put the issue to rest, the Dodd-Frank Act requires the CFPB to
study and provide a report to Congress concerning the use of mandatory arbitration agreements in
connection with consumer financial products. It also allows the agency to issue rules that may "prohibit
or impose conditions" on the use of arbitration agreements if the study finds that it would be in the
public interest and would protect consumers.
The distinction is critical, because while the Supreme Court case said arbitration clauses are binding
once they are part of a contract, the CFPB may still be able to prohibit their inclusion in a contract to
begin with.
"What it begs is the question of whether a regulator can prohibit the use of a mandatory arbitration
clause," said Andrew Sandler, a partner in BuckleySandler LLP. "What this says is when [the clause] is
in the contract, it's effective and you can't have class action. Now the question is can a regulator
mandate that you're not allowed to put these clauses in a contract. So that's the next issue probably."
The provision would not allow CFPB to prohibit or restrict a consumer from entering into a voluntary
arbitration agreement with a business after a dispute has arisen.
A CFPB spokesperson declined to comment on the decision.
Some banking lawyers said they do not think the CFPB has much room to change the law.
Alan Kaplinsky, a partner at Ballard Spahr who filed an amicus curiae brief in the Concepcion case on
behalf of several banking industry groups, said any decision to limit or prohibit arbitration agreements
would have to be based on the study, not on anecdotal evidence.
"The problem for them, assuming that philosophically they'd like to get rid of arbitration, is that the
empirical data is already out there on the fairness of arbitration," Kaplinsky said.
Those studies, he said, show that arbitration costs less, takes less time and provides greater rewards
for consumers than a class action.
Page 163 of 3826
"I am optimistic that if they conduct a fair study and that's going to depend a lot on who the director is
if they do a fair study they're not going to be able to prohibit or restrict in any material way the use of
arbitration, because arbitration has helped consumers, it hasn't hurt them," Kaplinsky said.
But Deepak Gupta, a Public Citizen lawyer who argued the case for the plaintiffs, said the CFPB has
the power to trump the Supreme Court decision.
"Congress always has the authority to overturn a decision, but Congress has delegated the authority to
ban arbitration in certain contracts in this instance," Gupta said. "So there is nothing unusual about an
administrative agency exercising authority delegated to it by Congress."
Gupta also rejected the notion that arbitration is better for consumers.
"All of the consumer advocates, all of the civil rights advocates, argue that mandatory binding arbitration
is being used as a get-out-of-jail-free card," he said. "The only people arguing the opposite are the
Chamber of Commerce and the banks. I think that shows you that you have to almost think the
consumer advocates and civil rights activists are just crazy, or are just completely wrong on the
evidence."
Whether arbitration agreements hurt consumers remains a hot-button topic. The Supreme Court
acknowledged that at least in the case of the Concepcion, an arbitration decision was preferable to a
class-action settlement.
Kaplinsky and Sandler said the decision is a vindication for banks that use arbitration in a fair way.
Over the past decade, many banks have shied away from the use of arbitration agreements as the
issue was fought out in the courts, Kaplinsky said. Class actions exert enormous pressure on banks to
settle because of the risk of litigating the case, he said.
"I've received calls already from I would say a dozen of my clients who were standing on the sidelines
and not using it, they're now interested in potentially looking at the issue again, because the Supreme
Court has really breathed new life into this issue," Kaplinsky said.
He was careful to say the decision would not permit unfair arbitration agreements that would, for
example, saddle the consumer with exorbitant fees or limit their ability to initiate arbitration.
Page 164 of 3826
Sandler said he wouldn't view the case as a victory for banks over consumers, but rather a reaffirmation
that arbitration is the preferred method for resolving disputes under our legal system.
"The Supreme Court has spoken as to what the law of the land is," Sandler said. "What we should
expect from the bureau is a focus on making sure that contract arbitration requirements establish an
arbitration process that is fair for the consumer as well as the company."
Industry groups praised the high court's decision.
"It's a great way for individuals to resolve disputes in an informal and speedy manner," said Gregory
Taylor, a vice president and senior counsel at the American Bankers Association. "I think the court got it
exactly right."
Richard Hunt, the president of the Consumer Bankers Association, said in a press release that the
decision was "a win for both American consumers and companies."
Back to Top
Forbes (Full Disclosure blog)

After Arbitration Ruling, Watch Warrens Consumer Bureau
April 27, 2011
By Daniel Fisher
Corporate attorneys best not gloat too much over the Supreme Courts decision in AT&T vs.
Concepcion today. The decision reaffirms the power of the Federal Arbitration Act to squelch consumer
class actions. But a lawyer whos crafted many of the arbitration contracts at the core of the case says
consumer advocates will have another chance to overrule the court before the Obama administrations
new Consumer Finance Protection Bureau.
Page 165 of 3826
In the Concepcion case, the court reversed a California decision that struck down clauses in consumer
contracts requiring arbitration of disputes and banning them from participating in class actions. The
decision has far-reaching implications in consumer, employment and even business law, said Alan
Kaplinsky of Ballard Spahr in Philadelphia, who represents financial firms and claims to have written
some of the first class-action waivers.
This decision affects any arbitration, whether its consumer, employment or even business-to-business
arbitration, Kaplinski said. Franchise and other business contracts, he said, frequently contain classaction waivers.
But what Congress giveth with the Federal Arbitration Act, he added, it may have taketh away with the
Dodd-Frank act. Contained within the sprawling law regulating the financial industry is Section 1028
ordering the new Consumer Financial Protection Bureau to study such arbitration agreements with an
eye toward banning provisions it deems anti-consumer. Given acting CFPB Chair Elizabeth Warrens
views on the ability of consumers to understand complex financial agreements, its a safe bet the new
agency wont think highly of class-action waivers or binding arbitration agreements at all.
As the impact of Concepcion sinks in, Kaplinsky said, I am sure there will be an effort to lobby
congress and the new bureau to do something.
That might be too bad because statistics from the not entirely impartial Arbitration Association of
America suggest consumers do better with arbitration, certainly better than with class actions that all too
often reward the lawyers with cash fees and consumers with worthless coupons.
An understanding of how the law in this area actually works is necessary. To avoid being declared
unconscionable and void under the laws of many states, Kaplinsky explained, these agreements must
be considered fair on two levels. If the consumer enters into the agreement simply by purchasing
something, then the company must make other provisions. In the AT&T case, it provided a minimum of
$7,500 plus double legal fees to anybody who won an award in arbitration higher than the companys
last offer. Another way around unconscionability is a clause Kaplinski writes into many contracts giving
consumers the right to opt out of arbitration within 45 days with no penalty.
Not many consumers do.
Most consumers are concerned about the real important things like the interest rate and fees, he said.
Theyre not thinking `Gee, what if I get in a dispute, I want to be part of a class action.
Back to Top
Page 166 of 3826
Bloomberg
Bank of America Said to Target Individual States to Block Foreclosure Deal
April 28, 2011
By David McLaughlin
Bank of America Corp. (BAC) was accused by a top official at the Iowa attorney generals office of
engaging in a divide-and-conquer strategy by undermining support for the settlement of a nationwide
probe into foreclosure practices, a person familiar with the matter said.
The bank tried to get attorneys general to break away from those supporting the proposed accord, Iowa
Assistant Attorney General Patrick Madigan said during a recent conference call, according to the
person. A second person familiar with the settlement talks said the bank sought to sow dissent among
the states, eight of which have publicly criticized the proposals terms. Both people asked not to be
identified because the talks are private. Madigan declined to comment.
We have held face to face negotiating sessions and our negotiations continue, Iowa Attorney General
Tom Miller, a Democrat who leads the 50-state effort, said in a statement. We believe all the banks are
negotiating in good faith.
Madigan, who was giving an update to state officials, said the largest U.S. lender by assets was taking
a divide-andconquer approach in a bid to disrupt negotiations, according to the person on the call.
Jumana Bauwens, a spokeswoman for the Charlotte, North Carolina-based bank, declined to comment.
State and federal agencies including the Justice Department last month submitted a 27-page settlement
proposal, or term- sheet, to five mortgage servicers, including Bank of America. The document was
offered to start negotiations with banks as part of the 50-state investigation.
Six-Month Probe
The six-month probe was triggered by claims of faulty foreclosure practices following the housing
Page 167 of 3826
collapse, which state officials said may violate their laws. The people said Madigans comments were
made on a call that took place within the past two months, after the term sheet was made public.
Since the settlement proposal was circulated in early March, at least eight Republican attorneys general
have assailed its terms as overreaching. They specifically oppose a proposal that would require the
servicers to pay for reducing mortgage balances owed by borrowers.
In addition to Bank of America, the other banks negotiating with state and federal officials are JPMorgan
Chase & Co. (JPM), Wells Fargo & Co. (WFC), Citigroup Inc. (C) and Ally Financial Inc. They control
more than half of the mortgage servicing market, Miller has said.
Geoff Greenwood, Millers spokesman, said state attorneys general would begin talks with other
mortgage servicing companies after reaching a final agreement with the five banks.
We will start looking at servicers beyond the largest five after we finish this phase of our effort, he
said.
Principal Reductions
As of last week, the states had yet to approach banks with a proposed dollar amount that would fund
principal reductions for borrowers, Greenwood said at the time.
Oklahoma Attorney General Scott Pruitt, a Republican, said last week he may negotiate an alternative
accord with the banks if the national settlement turns out to be inconsistent with our conviction.
Pruitt said in a letter to Miller last month that forcing lenders to reduce mortgage balances would take
away incentives for banks to loan money and destroy an already devastated housing market.
Besides Oklahoma, state attorneys general who have criticized the proposal to reduce principal
balances are Florida, Texas, South Carolina, Virginia, Alabama, Nebraska and Georgia.
Four of them said in a letter to Miller that principal reduction constitutes a moral hazard.
No Overt Requests
Page 168 of 3826
Lauren Kane, a spokeswoman for Georgia Attorney General Sam Olens, said in an e-mailed statement
that no one has asked Olens to oppose the settlement proposal. One bank, which Kane declined to
identify, discussed with her office a recent settlement with federal regulators over foreclosure practices,
she said.
We have been in contact with numerous industry representatives on the local and national level, who
have voiced their concerns throughout the process, said Diane Clay, a spokeswoman for Pruitt, in an e
-mailed statement.
Adam Piper, a spokesman for South Carolina Attorney General Alan Wilson, said two banking
representatives shared research with his office and pointed out some concerns with certain
provisions. While not identifying the banks, he added that they didnt ask Wilson to oppose a potential
accord.
In their talks so far, the states agreed on some terms while failing to reach an accord on monetary
payments by lenders, a person familiar with the talks said this month.
Mortgage Servicers
In March, mortgage servicers agreed with U.S. banking regulators to a series of reforms, including
conducting a review of loans that went into foreclosure in 2009 and 2010 and improving procedures for
modifying loans and seizing homes.
The 50 states and the Justice Department seek to set requirements for how banks service loans and
conduct home foreclosures.
Any state agreement with banks on principal reductions will depend on the size of the writedowns, the
incentives for the servicers built into the settlement and other details which continue to be sorted out,
said the person, who declined to be identified because the talks are confidential.
Another person familiar with the talks said last week that a final agreement could take as long as four
months to reach.
Pruitt said his plan could be a model for other states.
Page 169 of 3826
On April 26, Jennifer Meale, a spokeswoman for Florida Attorney General Pam Bondi, said Bondi looks
forward to reviewing Oklahomas plan. Yesterday, Meale said Bondi hasnt been urged by the banks to
oppose the term sheet.
We have had general discussions with banks about how the matter might be resolved, Meale said in
an e-mailed statement.
Back to Top
Credit Slips
For the Servicers: Is It Better to Rob Peter or Paul?
April 27, 2011
By Bob Lawless
The U.S. mortgage servicing industry is in deep doo-doo. To foreclose on a mortgage, you must own
the note and the mortgage. That's a lot of paperwork to keep track of, especially when you're trying to
package as many mortgage loans into as many securitizations as you can before the market dries up. If
we have learned nothing else in the past four years, it is a lot to ask Wall Street to make sure they get
things right when there is money to be made. Because of lost, sloppy, and perhaps nonexistent
paperwork, banks who purport to have the right to foreclose often cannot prove they own the note and
mortgage.
Things are starting to hit the fan -- we can't say exactly what is hitting the fan because this is a family
blog (except for here, here, and especially here). In defending itself, the mortgage industry is taking yet
another reflexive, knee-jerk position that seems to me to be against their long-term interest.
A typical fact pattern might play out like this. Bank forecloses on Peter. At the foreclosure sale, Paul
buys the property. Bank cannot prove it owned the mortgage and note at the time of the foreclosure
sale, meaning it had as much right to foreclose as any other stranger to the property. That is to say, it
had no right to foreclose.
Page 170 of 3826
At this point, Bank either owes Peter or Paul. It owes Peter for fraudulently obtaining a judgment of
foreclosure against him and dispossessing him of his home. Or, if we overturn the foreclosure sale, it
owes Paul for conveying an invalid title (more accurately, it would owe the sheriff who should have to
return Paul's money). If I had to choose between owing a homeowner for dispossessing the person of
her home or owing a disappointed investor for conveying an invalid title at a foreclosure sale, I would
rather owe the disappointed investor. It is going to be cheaper.
The issues I have outlined are in play in a Massachusetts case called Bevilacqua v. Rodriguez,
currently pending before that state's highest court. Previously, in a case called Ibanez, the court
rejected claims that Wall Street's nontransfer of mortgages and notes through the securitization process
was sufficient to establish standing to conduct a foreclosure sale. Bevilacqua deals with the fallout from
Ibanez as the purchaser at a foreclosure sale tries to bring a "try title" action to establish his prior claim
to the property despite the fact that the foreclosure sale appears to be invalid under the reasoning of
Ibanez. Credit Slips blogger Adam Levitin led an effort by other Credit Slips bloggers (Katie Porter,
Chris Peterson, and John Pottow) to file an extraordinarily well-written amicus brief supporting the
homeowner's position. The Mortgage Bankers Association (MBA) has filed an amicus brief supporting
the purchaser at the foreclosure sale.
The MBA brief cites the usual reasons for supporting the purchaser at the foreclosure sale, namely that
the system works best in the long run if the purchaser can be confident the sale will not be undone.
That position is not clearly wrong. Many states have very strong protections for foreclosure sales for
exactly this reason, as I have previously discussed. In the current context of widespread problems with
the validity of foreclosure sales, are strong protections really the rule that the banking industry wants?
As I write above, protecting the purchaser at the foreclosure sale would seem only to increase the
bank's liability exposure.
Perhaps the industry is counting on the fact that dispossessed homeowners will not be as aware of their
rights than jilted foreclosure sale purchasers? Perhaps the industry is counting on hiding behind finality
rules or other ancient doctrines to prevent any recovery for wrongfully dispossessed homeowners? In
these cases, the industry's current legal position would be rational, but let us hope that the exit plan for
the mortgage servicing mess is not to leave wrongfully dispossessed homeowners without any
compensation.
Back to Top
Reverse Mortgage Daily
Page 171 of 3826
Elizabeth Warren Tells Daily Show: The Fight Isnt Over

April 27, 2011
By Elizabeth Ecker
White House Special Advisor Elizabeth Warren, who is currently tasked with setting up the Consumer
Financial Protection Bureau scheduled to launch on July 21, appeared on The Daily Show on Tuesday,
saying the fight isnt over.
Weve got a broken financial services market, Warren told Daily Show host Jon Stewart. No one can
tell the price of a credit card, people got tangled up in mortgages, part of what brought us to our knees
two and a half years ago.
Warren said the agency is aimed at making a financial market work for families, some of whom are on
the brink of financial collapse.
In terms of the status of the CFPB formation, Warren said that the fight against the bureau is still going
on. The fight isnt over. The fight moved from main street to the dark alleys, she said. Right now there
are bills pending in Congress to delay, defund, and defang [the CFPB] and bills in both the House and
Senate to kill the agency before it is able to take one step on behalf of middle class families.
Back to Top
American Banker
Servicing Wrongs Could Force Banks to Take Big Losses on FHA Loans
April 28, 2011
By Kate Berry
Billions of dollars of delinquent Federal Housing Administration-insured loans held on bank balance
Page 172 of 3826
sheets are looking more and more like shadow nonperformers, and mortgage experts warn that banks
are unlikely to be fully reimbursed for losses.
Though the largest banks said in their first-quarter results that they will eventually be reimbursed for all
losses on FHA-insured loans, they will have to eat some of those losses if they violate servicing
standards, the experts said.
Some lenders acknowledge privately they "think the line is blurred and they will be held accountable for
any mistakes on FHA loans," said Brian Chappelle, a partner at Potomac Partners, a consulting firm in
Washington, and a former HUD official. "Lenders are really at a loss as to when the insurance stops
and their responsibility starts."
In the past two years, as delinquencies on FHA and Veterans Administration-insured loans have risen,
banks have been aggressive in buying delinquent loans from the Government National Mortgage
Association, or Ginnie Mae. Funding delinquent loans on their balance sheets is cheaper than making
regular principal and interest payments to bond investors.
Most banks classify delinquent FHA loans as 90 days past due and still accruing interest, which some
experts say is distorting bank earnings and overstating their profitability.
Rebel Cole, a finance and real estate professor at DePaul University in Chicago and a former Federal
Reserve Board economist, said the majority of the loans should be listed as nonperforming because
reimbursement by FHA is not a sure thing. He said banks should not be accruing interest on the loans
and should charge them off after 180 days.
"There is no certainty of reimbursement on these loans, but it's showing up as paper profits," Cole said.
"FHA isn't recognizing the losses, and the banks aren't recognizing the losses, and they're all
complaining about the deadbeat borrowers that they are not kicking out of their houses."
Servicers can be penalized up to three times the amount of any FHA insurance claim if they have not
offered loss-mitigation options to defaulted FHA borrowers. The average claim submitted to the
Department of Housing and Urban Development last year was $167,782, so banks could potentially
face up to $500,000 of penalties for each claim that would potentially be rejected for failing to provide
loss mitigation.
"Lenders are reluctant to submit claims because they are worried that FHA will penalize them,"
Chappelle said.
Page 173 of 3826
Many servicers have delayed submitting claims to the FHA until they comply with consent orders issued
earlier this month by the Office of the Comptroller of the Currency. The orders require an overhaul of
servicing operations and a third-party review of the past two years of foreclosures.
Some industry experts say that when federal regulators assess penalties against the largest bankservicers for failures identified in the consent orders, a significant portion of the damages will be paid to
HUD for failures to perform appropriate loss mitigation on delinquent FHA-insured loans.
Some servicers are in negotiations with the FHA to ensure "they are not subject to some big liability
issue," said a person familiar with the administration's thinking.
At yearend, Bank of America Corp. held $16.8 billion of loans insured by the FHA and the VA that were
90 days or more past due. Wells Fargo & Co. had $14.7 billion, Citigroup Inc. had $9.3 billion and
JPMorgan Chase & Co. held $8.7 billion.
The vast majority of these delinquent loans either are still being worked out or are stuck somewhere in
the foreclosure process. The FHA pays claims only when a loan has gone into foreclosure and the
property has been conveyed back to it.
There is a potential benefit to the delays by lenders. The slower claims process may buy the FHA time
to improve its financial condition and have more money to reimburse banks.
Qumber Hassan, a mortgage strategist at Credit Suisse, said the vast majority of delinquent FHA loans
held on bank balance sheets will eventually default. The FHA has capital reserves of $33.3 billion to
cover potential losses, and by raising premiums this year it is bolstering its reserves as well.
"They might be able to put some of these losses back to the banks," Hassan said. "So it looks like [the
FHA] will steer through the crisis without needing more help from the government. [The FHA] may be
able to get out of this mess without requiring a bailout."
Back to Top
Page 174 of 3826
Palm Beach Post

Bondi too easy on lenders
April 27, 2011
By Rhonda Swan, for the Editorial Board
News that Washington Mutual executives pushed toxic mortgages should prompt federal regulators and
Florida Attorney General Pam Bondi to seek penalties against banks that defrauded homeowners out of
their properties.
Washington Mutual collapsed in 2008 - the largest bank failure in U.S. history - and was bought by J.P.
Morgan Chase. WaMu was among the largest issuers of subprime mortgages. A large concentration
were in Florida, which suffered above-average home depreciation, according to a report by the U.S.
Senate's Permanent Subcommittee on Investigations. "WaMu launched its high-risk lending strategy
primarily because higher-risk loans and mortgage-backed securities could be sold for higher prices on
Wall Street," said the 639-page report. These "unacceptable lending and securitization practices" by
Washington Mutual and other banks "were the fuel that ignited the financial crisis."
Yet the Federal Reserve, Office of the Comptroller of the Currency and FDIC have entered into a
consent decree with the 14 largest mortgage lenders that illegally foreclosed on thousands of
homeowners. The deal includes no fines or criminal penalties. Banks must hire outside consultants to
review all foreclosures from 2009 and 2010 and identify those who lost homes or were denied loan
modifications due to fraud by the banks or firms they hired to assist with the foreclosure process and
repay them. Does the government seriously believe that consultants who rely on the banks for their
paychecks will find any homeowners who were victims?
The agreement undermines an investigation into foreclosure fraud by the 50 state attorneys general,
who have been negotiating a settlement that would call for financial penalties. Banks would have to do
many more loan modifications and spend $20 billion to $25 billion on principal reductions. Experts say
that approach is essential to real estate recovery in states such as Florida, but Ms. Bondi opposes the
measure, fearing that people would choose not to pay their mortgage just to get the principal reduction.
Studies show that the opposite is true.
The consent decree likely would result in banks walking away from negotiations with the attorneys
general, who had been working with federal regulators. Why wouldn't they? The decree lets the banks
claim that they already have been punished for breaking the law.
The agreement at least allows states to seek fines, penalties or other changes to the foreclosure
process. That's where Ms. Bondi comes in. The real "moral hazard" is failing to go after banks like
Washington Mutual that duped homeowners into loans they couldn't afford. If the feds won't go after the
Page 175 of 3826
banks for the havoc they wreaked upon Florida, the state's attorney general should.
Back to Top
Los Angeles Times

Foreclosure prevention legislation fails in Sacramento
April 27, 2011
By Alejandro Lazo
A proposed law that would have ended "dual track" foreclosures in California failed to win a key vote in
Sacramento on Wednesday.
The California bill, SB 729, would have required a lender to fully evaluate a borrower for a loan
modification before filing a notice of default, the first stage in the formal repossession process.
Sen. Alex Padilla (D-Pacoima) abstained from voting following a hearing in the state Senate's Banking
and Financial Institutions Committee and the bill failed 3-3.
The California Homeowner Protection Act, authored by state Senate President Pro Tem Darrell
Steinberg (D-Sacramento) and Sen. Mark Leno (D-San Francisco), was one of the furthest-reaching
attempts to limit dual tracking, a common practice among financial institutions in which they pursue
foreclosure even if a borrower has requested a loan modification.
The two-track process is one the lending industry has argued is necessary to protect its investments.
But the practice is under fire from regulators and lawmakers in the wake of last year's "robo-signing"
scandal, which revealed widespread foreclosure errors.
Back to Top
Page 176 of 3826
American Banker
Michigan Appeals Court Rules Against MERS
April 28, 2011
By Austin Kilgore
The Michigan Court of Appeals ruled that Mortgage Electronic Registration Systems Inc. is ineligible to
use the state's non-judicial foreclosure process, vacating the 2009 foreclosures of two borrowers.
Foreclosures in Michigan typically follow a non-judicial process, meaning attorneys for the owner of a
defaulted promissory note can initiate a foreclosure of the mortgage simply by advertising it. But
Michigan law specifies that in order to use this expedited process, the foreclosing entity must be "either
the owner of the indebtedness or of an interest in the indebtedness secured by the mortgage or the
servicing agent of the mortgage."
In the two 2009 cases, MERS was the mortgagee in county property records and was the named entity
initiating the foreclosure. In a 2-1 split decision, the court ruled that MERS does not meet the
requirements to foreclose by advertisement and should have filed the foreclosures through the state's
judicial process.
"[I]t was the plaintiff lenders that lent defendants money pursuant to the terms of the notes. MERS, as
mortgagee, only held an interest in the property as security for the note, not an interest in the note
itself," the court wrote in its April 21 opinion. "MERS could not attempt to enforce the notes nor could it
obtain any payment on the loans on its own behalf or on behalf of the lender."
The lender's equitable interest in the mortgage does not translate into an equitable interest for MERS in
the loan, the court decision added. "Applying these considerations to the present case, it becomes
obvious that MERS did not have the authority to foreclose by advertisement on defendants' properties."
The decision overturned lower court rulings that judged the foreclosure actions legal.
Page 177 of 3826
"We are reviewing the decision and evaluating our options," said Janis Smith, MERS vice president of
corporate communications, in an e-mailed statement.
MERS Inc. is the mortgagee of record on public property records, an entity within parent company
MERSCorp. Inc. Another component of the corporation is the MERS System, an electronic platform that
tracks changes in promissory note ownership, allowing mortgage investors to bypass the county-level
land recordation process. While possession of the note may changes hands, MERS remains the listed
owner of the mortgage document that serves as proof in the public record of the borrower's home as
collateral for the notein the name Mortgage Electronic Registration Systems Inc.
"The separation of the note from the mortgage in order to speed the sale of mortgage debt without
having to deal with all the 'paper work' of mortgage transfers appears to be the sole reason for MERS'
existence. The flip side of separating the note from the mortgage is that it can slow the mechanism of
foreclosure by requiring judicial action rather than allowing foreclosure by advertisement," the court's
opinion said. "To the degree there were expediencies and potential economic benefits in separating the
mortgagee from the noteholder so as to speed the sale of mortgage-based debt, those lenders that
participated were entitled to reap those benefits."
"However, it is no less true that, to the degree that this separation created risks and potential costs,
those same lenders must be responsible for absorbing the costs," the ruling added.
Back to Top
American Banker
Underbanked and Under Banks Radar
April 28, 2011
By Jennifer Tescher
Banks are working hard to cut costs and at the same time deliver more value for their now-pricier
checking accounts. They are creating pricing structures that encourage customers to switch to
electronic statements.
Page 178 of 3826
Banks are so busy tweaking checking account features, rewards and prices to shore up revenues that
they are missing the most obvious new revenue source expanding their offerings to the 43 million
underbanked consumers they already serve by providing the kinds of transactional products and
services they buy elsewhere.
Instead of seizing the opportunity, some banks are predicting the demise of underserved consumers.
JPMorgan Chase CEO Jamie Dimon pronounced recently that the Durbin amendment to cap
interchange fees would push an additional 5% of American families out of the banking system.
Consumer groups likewise worry that, as the economics of banking shift under the weight of new
regulations, their clients will be priced out of the market.
It is a mistake to assume that underserved consumers will simply close their accounts as prices rise.
The data suggests that price is not the issue. The problem is value.
According to the FDIC's 2009 survey of un- and underbanked consumers, only 12% of the unbanked
who previously had an account closed it because the fees were too high. About a third said they didn't
have enough money to make an account worthwhile. Another 25% said they didn't see the value in
having one.
Free checking accounts may have helped reduce the number of unbanked consumers over the last
decade, but many of them still were left with unmet financial needs.
By definition, the underbanked aren't able to meet all of their financial needs through the bank. The
underbanked make up 18% of the U.S. population, and the FDIC study showed that the nonbank
products and services used most frequently by underbanked households are money orders (81%) and
check cashing (30%).
Core Innovation Capital estimates that the financially underserved spend at least $29 billion a year on
nonbank and subprime financial services. If banks are to succeed in claiming that revenue, they need to
reacquaint themselves with the core needs of their existing underserved customers.
Liquidity: Consumers living paycheck to paycheck need immediate access to their funds. Most banks,
however, won't cash consumers' checks if they are drawn on another depository. Customers are
typically given the first $100 while they wait a day or more for the check to clear. Many consumers
simply walk down the street to a grocery store or a retailer and pay a fee to cash their check.
We live in a real-time economy. Banks have more than enough technological horsepower and data on
consumer behavior patterns to cash paychecks with little to no risk.
Page 179 of 3826
Just-in-time payments: Without a financial cushion, underbanked consumers often need to pay their
bills the day they are due. They can't afford to schedule an online payment and have the funds pulled
from their account several days beforehand.
Rent payments present a particular challenge. In a 2003 survey of low- and moderate-income
households in Chicago, Los Angeles and Washington, 39% of those with a bank account paid their rent
with cash or a money order, often because their landlords would not accept checks. A growing number
of nonbank companies are offering expedited bill-payment services. Banks should integrate these
offerings into checking accounts.
Small-dollar credit: When the car gets a flat tire or the roof has a leak, cash-strapped consumers need a
way to bridge the gap. They need access to small amounts of credit with enough breathing room to
repay without getting caught in a cycle of debt.
Most banks scrapped small-dollar consumer lending years ago. Given the current regulatory climate,
the large banks are ironically in the best position to build scalable products.
Small-scale savings: For the underserved, savings may feel like a luxury rather than a necessity.
Accumulating even a couple hundred dollars can help smooth cash flow and provide a cushion. A
combination of electronic cookie jar, social media support and rewards is what's needed.
At least so far, consumers aren't being driven out of banks by increased fees. They are opting out
because they don't derive enough value from checking accounts to make the monthly fee worthwhile.
And waiting in the wings are an increasing array of innovative alternative products and providers. The
question is this: Do banks want the business of underserved consumers enough to fight for it?
Jennifer Tescher is the president and chief executive of the Center for Financial Services Innovation.
Back to Top
Page 180 of 3826
New York Times

Director Petraeus to Face Different Culture at C.I.A.
April 27, 2011
By Scott Shane
WASHINGTON Gen. David H. Petraeus will be taking on familiar challenges when he arrives at the
Central Intelligence Agency this summer: the terrorist threat from Yemen and Pakistan; the Taliban
insurgency in Afghanistan; the Arab uprisings and their uncertain outcomes.
Those are among the C.I.A.s major preoccupations, and they are what General Petraeus has lived and
breathed in his last three jobs, first as commander in Iraq, then overseeing all of the Middle East and
South Asia as head of Central Command, and finally as commander in Afghanistan. He knows military,
intelligence and political leaders across the swath of the world that most worries the Obama
administration. He has long been a voracious consumer of C.I.A. intelligence.
But in the four decades since he entered West Point, General Petraeus, 58, has thrived in the singular
world of the American military. At the civilian intelligence agency, the four-star general will find a far less
deferential culture, a traditional resentment of the Pentagon and a history of making trouble for directors
who do not pay sufficient respect to local folkways.
But General Petraeus, who holds a Ph.D. in international relations from Princeton, has a reputation for
negotiating Washingtons political currents with skill, courting Congress and the news media, and
thriving under two very different presidents. His wife, Holly, recently began work at the new Consumer
Financial Protection Bureau, overseeing efforts to prevent exploitation of military service members and
their families.
Back to Top
Page 181 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Cronin, Katherine (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=cronink>; Di Palma, Nikki L
</o=ustreasury/ou=do/cn=recipients/cn=ots/cn=di0378>; Herchen,
Emily (CFPB) </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=herchene>; Mann, Seth (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=sensibav>; Tamberrino, Mary
(fydibohf23spdlt)/cn=recipients/cn=slagterd>; Glaser, Elizabeth
HUD Offers
Thu Apr 28 2011 09:26:42 EDT
Hi Team,
Just a quick update. We are almost done (with 1-2 exceptions) with being able to finalize the HUD
offers. I am hoping to have the complete spreadsheet to everyone today. I verified that Wally that he is
fine to release the offers whenever we are ready.
Once I send you the spreadsheet, each CC who will having HUD transferees coming to their customer
organization should verify one final time that all information (position offered including correct title,
location, Pay Band, promotion potential, salary, etc.) is completely accurate. If it is not, please update
immediately and return corrected information to me.
Page 182 of 3826
Vicki and Mary, please let me know who will prepare the HUD offers using the agreed template. Please
also let Dennis and I know before we actually hit the Send button.
Let me know if you need any other information.
Thanks
Marilyn
Marilyn A. Dickman
202-435-7157 (W)
for guidance.
Page 183 of 3826
From:
To:

accounts/cn=standard users/cn=adeyemoa>; Abney, Wilson (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=abneyw>; Alag, Sartaj
(fydibohf23spdlt)/cn=recipients/cn=bernsteine>; Betts, Kristina
(fydibohf23spdlt)/cn=recipients/cn=bettsk>; Black, Brad
(fydibohf23spdlt)/cn=recipients/cn=brolinj>; Brown, Allison
(fydibohf23spdlt)/cn=recipients/cn=brownall>; Brown, Amy (CFPB)
Page 184 of 3826
(fydibohf23spdlt)/cn=recipients/cn=browntri>; Burleson, James

Jr (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=burlesonj>;
Burniston, Tim (CFPB) </o=ustreasury/ou=exchange administrative
group (fydibohf23spdlt)/cn=recipients/cn=burnistont>; Burton,
Matthew (CFPB) </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=chandlerde>; Chanin, Leonard
(fydibohf23spdlt)/cn=recipients/cn=chaninl>; Chopra, Rohit
Page 185 of 3826
(fydibohf23spdlt)/cn=recipients/cn=dokkoj>; Donoghue, Kristen

(fydibohf23spdlt)/cn=recipients/cn=donoghuek>; Dorsey, Darian
(fydibohf23spdlt)/cn=recipients/cn=forrestda>; Fravel, Wesley
(fydibohf23spdlt)/cn=recipients/cn=fravelw>; Frotman, Seth
Page 186 of 3826

(fydibohf23spdlt)/cn=recipients/cn=lauderdales>; Leary, Jesse
Page 187 of 3826
(fydibohf23spdlt)/cn=recipients/cn=learyje>; Leiss, Wayne

Page 188 of 3826

Page 189 of 3826

group (fydibohf23spdlt)/cn=recipients/cn=starkp>; Starr, John
(fydibohf23spdlt)/cn=recipients/cn=starrj>; Sterken, Nathan
Page 190 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Young, Christopher
(fydibohf23spdlt)/cn=recipients/cn=youngc>
Re: New Request

Thu Apr 28 2011 08:53:04 EDT
Sounds good, Chris, will do. Thanks.

-K
_____
From: Young, Christopher
To: Lownds, Kevin (CFPB)
Sent: Thu Apr 28 08:28:03 2011
Subject: RE: New Request
Kevin:
That sounds great. Ill be looking for your delivery tomorrow. Im in room 573 at desk c by the window
on the right as you come in. Just leave on my desk if Im not in.
Many thanks.
--Chris
Christopher J. Young
Attorney-Advisor
U.S. Treasury Department (CFPB)
Office: (202) 435-7408
Email: [email protected]
Page 192 of 3826

Sent: Thursday, April 28, 2011 8:25 AM
To: Young, Christopher
Subject: Re: New Request
Hi Chris,
I'm out of the office today but will forward these along first thing tomorrow.
-Kevin
_____
Sent: Thu Apr 28 07:52:21 2011
Kevin:
Any chance you could get me another full set of the Federal consumer financial laws with the
amendment from Dodd-Frank interlineated as a redline. Peggy Twohig saw mine and asked how she
can get one. They are very useful.
Thanks.
Chris
Attorney-Advisor
Office: (202) 435-7408
Page 193 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:
Williams, Anya (CFPB)

(fydibohf23spdlt)/cn=recipients/cn=williamsany>
_DL_CFPB_AllHands
RE: Take Our Daughters and Sons to Work Day Program (REMINDER)
Thu Apr 28 2011 08:45:33 EDT
If you would like to meet the youngest members of our CFPB team please stop by conference room
503.
Thank You
From: Williams, Anya (CFPB)

Sent: Monday, April 25, 2011 5:08 PM
Subject: RE: Take Our Daughters and Sons to Work Day Program (REMINDER)
In connection with Treasurys celebration of Take Our Daughters and Sons to Work Day, the CFPB will
host a continental breakfast in 503 for daughters and sons of CFPB staff from 8:00 a.m. until 9:30 a.m.
on April 28th prior to the start of events at the Treasury Building.
Please RSVP to Anya Williams to let us know how many daughters and sons to expect.
Thank You,
Anya
202.435.7276
From: GLOBAL
Page 194 of 3826
To: Global_All
Subject: Take Our Daughters and Sons to Work Day Program
Treasurys Departmental Offices will celebrate Take Our Daughters and Sons to Work Day on April 28,
2011 at 10 a.m. This day and the events help connect what children learn at school with the working
world. This national program helps children discover the power and possibilities associated with a
balanced work and family life, and encourages children to dream and think imaginatively about their
family, work and community lives. We are set up to accommodate 25 children for several planned
events. If you would like your child to participate in the events that day at the Treasury Building, please
complete the attached registration form by Friday, April 22, 2011 and return it to griselda.
[email protected]. We have also attached a prepared letter which may be given to
teachers/principals requesting an excused absence.
This event is sponsored by the Office Deputy Assistant Secretary for Human Resources and Chief
Human Capital Officer.
Page 195 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:
Young, Christopher
(fydibohf23spdlt)/cn=recipients/cn=youngc>
RE: New Request

Thu Apr 28 2011 08:28:03 EDT
Kevin:
That sounds great. Ill be looking for your delivery tomorrow. Im in room 573 at desk c by the window
on the right as you come in. Just leave on my desk if Im not in.
Many thanks.
--Chris
Attorney-Advisor
Office: (202) 435-7408

To: Young, Christopher
Subject: Re: New Request
Hi Chris,
I'm out of the office today but will forward these along first thing tomorrow.
-Kevin
Page 196 of 3826
_____
Sent: Thu Apr 28 07:52:21 2011
Kevin:
Any chance you could get me another full set of the Federal consumer financial laws with the
amendment from Dodd-Frank interlineated as a redline. Peggy Twohig saw mine and asked how she
can get one. They are very useful.
Thanks.
Chris
Attorney-Advisor
Office: (202) 435-7408
Page 197 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

HUD Documents
Wed Apr 27 2011 18:24:45 EDT
HUD Transfer Data 4-27-11.xlsx
HUD Employee Placement Summary 4-27-11.docx
Kevin K. Lownds
Review Analyst
(202) 435-7399
Page 203 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Accepted: Nitty Gritty Discussion re: transfer of Restatement Project

Wed Apr 27 2011 16:47:19 EDT
Page 221 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

accounts/cn=standard users/cn=glasere>; Deutsch, Rebecca (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=deutschr>; Lownds, Kevin
(fydibohf23spdlt)/cn=recipients/cn=lowndsk>; Mosena, Lea (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=mosenal>; Osborn, Meredith
(fydibohf23spdlt)/cn=recipients/cn=osbornm>; Scanlon, Thomas
</o=ustreasury/ou=do/cn=recipients/cn=scanlont>; Smyth, Nick
(fydibohf23spdlt)/cn=recipients/cn=smythn>; Boomer Sooner
Conference Room 501 </o=ustreasury/ou=exchange administrative
group (fydibohf23spdlt)/cn=recipients/cn=1801conferenceroom501>
Nitty Gritty Discussion re: transfer of Restatement Project

Wed Apr 27 2011 16:46:30 EDT
StartTime: Mon May 09 15:45:00 Eastern Daylight Time 2011

EndTime: Mon May 09 16:30:00 Eastern Daylight Time 2011
Location:
Invitees:
Recurring: No
ShowReminder: No
Accepted: Yes
AcceptedTime: Mon May 02 10:23:21 Eastern Daylight Time 2011
When: Monday, May 09, 2011 3:45 PM-4:30 PM (UTC-05:00) Eastern Time (US & Canada).
Where: Boomer
Note: The GMT offset above does not reflect daylight saving time adjustments.
*~*~*~*~*~*~*~*~*~*
Adjusting the time.
Page 222 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

FW: HUD Response to CFPB Request For Assistance on List of Rules and Orders
Wed Apr 27 2011 16:34:01 EDT
List of HUD Rules and Other Issuances 4-21-11.docx
-----Original Message----From: Scanlon, Thomas

Subject: FW: HUD Response to CFPB Request For Assistance on List of Rules and Orders
-----Original Message----From: Mosena, Lea (CFPB)

Sent: Thursday, April 21, 2011 5:32 PM
To: Scanlon, Thomas; Kennedy, Leonard (CFPB); Fuchs, Meredith (CFPB); Deutsch, Rebecca (CFPB);
Cc: Osborn, Meredith (CFPB); Smyth, Nick (CFPB)
Subject: FW: HUD Response to CFPB Request For Assistance on List of Rules and Orders
FYI
-----Original Message----From: Ceja, Paul S [mailto:[email protected]]
To: Mosena, Lea (CFPB)
Cc: Kanovsky, Helen R; Smith, Damon Y
Subject: HUD Response to CFPB Request For Assistance on List of Rules and Orders
Pursuant to your April 14, 2011 e-mail forwarding CFPB General Counsel Leonard Kennedy's letter
request to HUD General Counsel Helen Kanovsky, please find the attached list of HUD issuances
under the Real Estate Settlement Procedures Act of 1974 (RESPA), the Secure and Fair Enforcement
for Mortgage Licensing Act of 2008 (SAFE), and the Interstate Land Sales Full Disclosure Act (ILS).
This document incorporates input received from relevant Office of Housing and Office of General
Counsel staff with responsibilities for RESPA, SAFE and ILS here at HUD.
As you will see, there are items included that are likely to be beyond the scope of only enforceable
rules or orders, but that may be useful to the CFPB in assessing the full range of HUD guidance on the
respective statutes being transferred. If you require any additional assistance identifying and publishing
a list of relevant rules and orders that will be enforced by the Bureau, please let us know.
Paul S. Ceja
Assistant General Counsel for RESPA/SAFE Office of General Counsel U.S. Department of Housing
Page 223 of 3826
and Urban Development

(202)402-5085
[email protected]
Page 224 of 3826
List of HUD Rules and Other Issuances 4-21-11.docx (Attachment 1 of 1)
April 21, 2011
List of HUD's RESPA, Interstate Land Sales Full Disclosure Act, and
SAFE Act Rules and Other Issuances
I.
Real Estate Settlement Procedures Act of 1974 (RESPA) Program
Codified Regulations Applicable to RESPA:1

24 CFR Part 3500: Include all sections and appendices as listed in the "Working Draft of List of
Rules to be Enforced by the Bureau Pursuant to 1063(i)," dated April 8,
2011 (as emailed to HUD staff).
24 CFR Part 3800, Investigations in Consumer Regulatory Programs [including RESPA and
Interstate Land Sales Full Disclosure Act (ILS) programs):2
3800.10
3800.20
3800.30
3800.40
3800.50
3800.60
Scope of rules.
Subpoenas in investigations.
Subpoena enforcement in district court.
Investigational proceedings.
Rights of witnesses in investigational proceedings.
Settlements.
24 CFR Part 26, Hearing Procedures:3

Subpart B Hearings Pursuant to the Administrative Procedure Act:
26.28
26.29
26.30
26.32
26.33
26.34
26.35
1
References to sections of title 24 of the Code of Federal Regulations (CFR) are to those sections collected in the
published volumes of title 24 revised as of April 1, 2010, and to any subsequent revisions of those sections before
the transfer date of the function to the CFPB.
2
Part 3800 applies to investigations and investigational proceedings under RESPA, the Interstate Land Sales Full
Disclosure Act (ILS), and the National Manufactured Housing Construction and Safety Standards Act of 1974
(Manufactured Housing). RESPA and ILS are consumer protection statutes that are transferring to the CFPB
(Manufactured Housing will continue to be administered by HUD).
3
The civil money penalties provision in 3500.17(n)(4)(iii) of the RESPA regulations, which is applicable to
violations of the escrow account statements requirements, requires the use of the relevant procedures in 24 CFR
part 30 when an Administrative Law Judge decides to hold an oral hearing on an appeal of a penalty determination
by the agency. The only relevant section of part 30 is 30.95, which incorporates the procedures at 24 CFR part 26,
subpart B.
Page 225 of 3826
26.36
26.37
26.38
26.39
26.40
26.41
26.42
26.43
26.44
26.45
26.46
26.47
26.48
26.49
26.50
26.51
26.52
26.53
26.54
26.55
26.56
24 CFR Part 30, Civil Money Penalties: Certain Prohibited Conduct:
30.95
Hearings.
Note: Civil Money Penalties Inflation Adjustments. The civil money penalties provided
for the RESPA, ILS, and SAFE Act programs are required by separate statute to be
adjusted every 4 years.4 The current penalty amounts applicable to RESPA5 were
established in 2007 and is included in the RESPA regulations in 24 CFR 3500.17(m).
The amount applicable to ILS, also established in 2007, is included in HUD's civil money
penalty regulations, at 24 CFR 30.55. The amount for the SAFE Act program is
expected to be established in a final rule that HUD hopes to issue before the transfer date.
Federal Civil Penalties Inflation Adjustment Act of 1990, as amended (28 U.S.C. 2461 note).
These amounts were established in 72 FR 5586 (Feb. 6, 2007).
Page 226 of 3826
Statements of Policy (SOPs) Applicable to RESPA:

SOP 1996-1, Computer Loan Origination Systems: 61 FR 29255 (June 7, 1996).
[Note: Section 4 ("Payment of Commissions or Bonuses to Employees") of SOP
1996-1 is no longer valid because the regulatory provisions discussed in this
section were later withdrawn.]
SOP 1996-2, Sham Controlled [Affiliated] Business Arrangements: 61 FR 29258
(June 7, 1996).
SOP 1996-3, Rental of Office Space, Lock-outs and Retaliation: 61 FR 29264 (June 7,
1996).
SOP 1996-4, Title Insurance Practices in Florida: 61 FR 49398 (September 19, 1996).
SOP 1999-1, Regarding Lender Payments to Mortgage Brokers: 64 FR 10080
(March 1, 1999).
SOP 2001-1, Clarification of SOP 1999-1, Regarding Lender Payments to Mortgage
Brokers: 66 FR 53052 (October 18, 2001).
Interpretive Rule:
Interpretive Rule: Home Warranty CompaniesPayments to Real Estate Brokers and
Agents: 75 FR 36271 (June 25, 2010). (See also, "Response to Public Comments on
Home Warranty Interpretive Rule," listed under "Other Informal Guidance" as providing
additional related guidance.)
RESPA Exemptions:
Exemption from Coverage Under Sections 4 and 5 of RESPA for Certain Subordinate
Loans Provided by Assistance Programs for Low- and Moderate-Income People
(October 6, 2010).
<http://portal.hud.gov/hudportal/documents/huddoc?id=DOC_14574.pdf>6
Exemptions for subordinate loans, open-end lines of credit, certain Federal agencies from
section 6 (mortgage servicing)-related requirements: 59 FR 65442 (December 19, 1994)
(various places).
Exemption from sections 4 and 5 of RESPA for Small Business Administration first-lien
disaster home loans (April 23, 1986).
Unless otherwise stated, all links provided in this document were last accessed on April 21, 2011.
Page 227 of 3826
"Unofficial Interpretations" Under RESPA, Generally:

HUD's RESPA regulations expressly limit reliance on various RESPA-related issuances,
publications, and communications, as explained below.
Section 19(a) of RESPA authorizes the Secretary of HUD to issue such rules and regulations, to
make such interpretations, and to grant such reasonable exemptions for classes of transactions, as
may be necessary to achieve the purposes of the Act. Section 19(b) provides that RESPA or
state law liability shall not apply to any act done or omitted in good faith in conformity with
any rule, regulation, or interpretation by the Secretary or the Attorney General. HUDs
regulations implementing RESPA, at 24 CFR 3500.4(a)(1), provide that for purposes of sections
19(a) and (b) of RESPA only the following constitute a rule, regulation or interpretation of the
Secretary(in addition to the regulations in 24 CFR part 3500): Any other document that is
published in the Federal Register by the Secretary and states that it is an 'interpretation,'
'interpretive rule,' 'commentary,' or a 'statement of policy' for purposes of section 19(a) of
RESPA."
24 CFR 3500.4(a)(2) provides that a 'rule, regulation, or interpretation' for purposes of
section 19(b) of RESPA shall not include: the special information booklet prescribed by the
Secretary or any other statement or issuance, whether oral or written, by an officer or
representative of the Department of Housing and Urban Development (HUD), letter or
memorandum by the Secretary, General Counsel, any Assistant Secretary or other officer or
employee of HUD, preamble to a regulation or other issuance of HUD, Public Guidance
Document, report to Congress, pleading, affidavit or other document in litigation, pamphlet,
handbook, guide, telegraphic communication, explanation, instructions to forms, speech or other
material of any nature which is not specifically included in paragraph (a)(1) of this section."
24 CFR 3500.4(b) allows for the issuance of unofficial staff interpretations at the discretion of
HUD staff or counselin response to requests for interpretation of matters not adequately
coveredby HUDs RESPA regulations or an official interpretationprovided under 24 CFR
3500.4(a)(1). Section 3500.4(b) provides further that such unofficial staff interpretations
provide no protection under section 19(b) of RESPA.
24 CFR 3500.4(c) withdraws all informal counsels opinions and staff interpretations issued
before November 2, 1992,but permits courts and administrative agencies to use these previous
opinions to determine the validity of conduct under the [RESPA regulations in effect before
November 2, 1992].
Therefore, in accordance with 24 CFR 3500.4 none of the remaining HUD issuances listed under
the RESPA section of this document is a rule, regulation or interpretation of the Secretaryof
HUD for purposes of sections 19(a) and (b) of RESPA.
Informal Opinion Letters issued after November 2, 1992:
Over the years many letters have been issued some signed by staff, some by an
Assistant Secretary or a General Counsel in response to inquiries about RESPA and
HUD's regulations. Pursuant to 24 CFR 3500.4, HUD has treated these letters as
informal guidance or interpretations that do not have the status of a rule. As discussed
4
Page 228 of 3826
above, letters issued before November 2, 1992, were formally withdrawn (in
3500.4(c)).
Other Informal Guidance and Webcasts:
Shopping for Your Home Loan: HUDs Settlement Costs Booklet (Notice of
Availability, 75 FR 423 (January 5, 2010); updated online 8/17/2010).
<http://portal.hud.gov/hudportal/HUD?src=/program offices/housing/rmra/res/settlementcost-booklet03252010>
Response to Public Comments on Home Warranty Interpretive Rule: 75 FR 74620
(December 1, 2010).
FAQs about RESPA for Industry.
<http://portal.hud.gov/hudportal/documents/huddoc?id=faqsjuly16.pdf > (accessed on
April 19, 2011).
FAQs about escrow accounts for consumers.
<http://portal.hud.gov/hudportal/HUD?src=/program offices/housing/rmra/res/respafaq>
(accessed on April 19, 2011).
New RESPA rule FAQs, dated April 2, 2010.
<http://portal.hud.gov/hudportal/documents/huddoc?id=resparulefaqs422010.pdf>
HUD Responses to RESPA questions: Real Estate Agent and Other Settlement Services.
<http://portal.hud.gov/hudportal/documents/huddoc?id=DOC_19685.pdf>
Sample Written Complaint to Lender [Sample Qualified Written Request].
<http://portal.hud.gov/hudportal/HUD?src=/program offices/housing/rmra/res/reslettr>
Fillable Good Faith Estimate.
< http://portal.hud.gov/hudportal/documents/huddoc?id=gfeform.pdf>
Fillable HUD-1 [Settlement Statement].
< http://portal.hud.gov/hudportal/documents/huddoc?id=1.pdf>
RESPA Roundup: Guidance for RESPA in relation to FRB Compensation Rule (March
2011).
<http://www.hud.gov/offices/hsg/rmra/res/mlocomplrodup31811v3.pdf>
RESPA Roundup (December 2010).
Page 229 of 3826
RESPA Roundup (September 2010)

< http://portal.hud.gov/hudportal/documents/huddoc?id=DOC_19682.pdf>
RESPA Roundup (July 2010)
Webcast: Clarifying New RESPA rule (March 18, 2010).
<http://link.onlinevideoservice.com/hud/2010/0318/Respa20100318-1.wmv>
March 18, 2010 RESPA Webcast Material.
<http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/rmra/res/respa_hm
RESPA [New Rule] Implementation Briefing.
<http://link.onlinevideoservice.com/hud/2010/0127/RESPA20100122.wmv>
PowerPoint: RESPA in Plain English.
<http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/rmra/res/respa_hm
HUD YouTube: Shopping for Your Home.
< http://www.youtube.com/HUDchannel#p/u/22/kTn6hSrEGZg>
HUD YouTube: Shopping for Your Loan.
< http://www.youtube.com/HUDchannel#p/u/23/RdwxqiVwsOA >
HUD YouTube: Closing the Deal.
< http://www.youtube.com/HUDchannel#p/a/u/2/8IQ7Bl0VGTs>
Previously Codified Guidance:7
Appendix G-1: Initial Escrow Account Disclosure Statement Format. 60 FR 24734
(May 9, 1995).
Appendix G-2: Initial Escrow Account Disclosure Statement Example. 60 FR 24735
(May 9, 1995).
Appendix H-1: Biweekly Payments Example. 60 FR 8820 (February 15, 1995).
Appendix H-2: Biweekly Payments Example. 60 FR 8821 (February 15, 1995).
Appendix I-1: Annual Escrow Account Disclosure Statement Format. 60 FR 24737
7
Except for Appendix 2A, these guidance documents were previously codified in 24 CFR part 3500 as appendices.
They were removed from codification and preserved as public guidance documents as part of an initiative to
streamline the CFR (see 61 FR 13232 (March 26, 1996)). Appendix 2A was provided as an uncodified appendix in
a final rule on escrow accounting procedures (63 FR 3214, January 21, 1998). The appendices are also available on
the RESPA website at:
http://portal.hud.gov/hudportal/HUD?src=/program offices/housing/rmra/res/respagui. .
Page 230 of 3826
(May 9, 1995).
(May 9, 1995).
Appendix I-3: Annual Escrow Account Disclosure Statement Example. 60 FR 8824
(February 15, 1995).
(May 9, 1995).
(May 9, 1995).
Appendix I-7: Annual Escrow Account Disclosure Example. 60 FR 8828 (February 15,
1995).
Appendix J-1: Annual Escrow Account Disclosure Statement Example. 60 FR 8830
Appendix J-2: Annual Escrow Account Disclosure Statement Example. 60 FR 8831
Appendix K-1: Short Year Statements Example. 60 FR 8832 (February 15, 1995).
Appendix L: Side-by-Side Presentation of Old Projection and History. 60 FR 8836
Appendix M: Illustration of Option of Identifying Simultaneous Deficiency and
Shortage. 60 FR 8837 (February 15, 1995).
Appendix N: HUD-1 Aggregate Accounting Adjustment Example. 60 FR 8838
Appendix 2A: Consumer Disclosure for Voluntary Escrow Account Payments. 63 FR
3214 (January 21, 1998).
Page 231 of 3826
Settlements between HUD and parties listed below (2006 to present):

[For more complete listing of settlement agreements, see:
http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/rmra/res/resetagr]
State of Alaska Division of Insurance and Alyeska Title Guaranty Agency, dated 1/11/10.
Union National Mortgage Company, a corporation located at 8241 Dow Circle,
Strongsville, Ohio 44136, dated 08/06/09.
Grand Texas Homes, Inc. and its owners and officers, and Grand title Company, LLC,
dated 11/21/08.
First American Title Insurance Company, located at 1 First American Way, Santa Ana,
CA, dated 7/21/08.
Realogy Corporation which accepted assets and liabilities of Cendant Real Estate
Services Group, LLC, effective August 1, 2006, Cendant Corporation now known as
Avis Budget Group, Inc., and Coldwell Banker Residential Brokerage Corporation and
its parent NRT, LLC, along with their subsidiaries, shareholders, owners, directors,
officers and employees, by and through their respective counsel, in the case captioned
Preston v. Property I.D., et al., No. 07-3372, Central District of California, 08/08/08.
Property I.D. Corporation (including its shareholders, owners, directors, officers and
employees), Property I.D. Associates, LLC, Property I.D. Golden State, LLS, and
Property I.D. of East Bay, LLC, by and through their respective counsel, in the case
captioned Preston v. Property I.D., et al., No.07-3372, Central District of California,
08/05/08.
Mavnaa, Inc., a Maryland corporation, t/a ReMax One, located in Bowie, Maryland,
dated 6/10/08.
American Land Title, LLC, with its principal place of business at 1224 Walkers Creek
Valley Road, Pearisburg, VA 24134, Big Spring Farm, Inc. with its principal place of
business at 1224 Walkers Creek Valley Road, Pearisburg, VA 24134, and Mark D. Gunn
who resides at 1224 Walkers Creek Valley Road, Pearisburg, VA 24134, dated 4/30/08.
Florida Department of Financial Services, Florida Office of Insurance Regulation, and
The First American Title Insurance Company, dated 11/15/07.
Beazer Homes USA, Inc., 1000 Abernathy Road, Suite 1200, Atlanta, GA 30328 and
Security Title Insurance Company, 199 Main Street, P.O. Box 190, Burlington, VT
05402-0190, dated 10/23/07.
KB Home and KB Home Mortgage Company, both located at 10990 Wilshire Blvd., Los
Angeles, CA 90024, and Westview Company, located at 199 Main Street, P.O. Box 190,
Burlington, VT 05402-0190, dated 10/23/07.
Meritage Homes Corporation, Meritage Homes of California, Inc., formerly known as
Meritage Homes of Northern California, Inc., and Meritage Homes of Nevada, Inc.,
8
Page 232 of 3826
formerly known as MTH-Homes of Nevada, Inc., and Meritage Homes of Arizona, Inc.,
formerly known as Hancock-MTH Communities, Inc., and including Monterey Homes
Arizona, Inc., which merged with and into Meritage Homes of Arizona, Inc., and
Meritage Paseo Crossing, LLC, all located at 17851 North 85th Street, Suite 300,
Scottsdale, AZ 85255, dated 10/23/07.
Pulte Homes, Inc., located at 100 Bloomfield Hills Parkway, Suite 300, Bloomfield Hills,
MI 48304-2950 and Marquette Title Insurance Company, located at 199 Main Street,
P.O. Box 190, Burlington, VT 05402-0190, dated 10/23/07.
The Ryland Group, Inc., parent of Ryland Homes, and Ryland Mortgage Company,
located at 24025 Park Sorrento, Suite 400, Calabasas, CA 91302, and Cornerstone Title
Insurance Company, located at 199 Main Street, P.O. Box 190, Burlington, VT 054020190, dated 10/3/07.
Technical Olympic USA, Inc., formerly known as Eagle Homes, Inc. and Universal Land
Title, Inc., located at 4000 Hollywood Boulevard, Suite 500N, Hollywood, FL 33021 and
Universal Land Title Investment #3, LLC, located at 199 Main Street, P.O. Box 190,
Fidelity National Title Insurance Company, located at 601 Riverside Avenue,
Jacksonville, Florida 32204, dated 2/5/07.
Longford Homes of New Mexico, Inc., dated 2/5/07.
Fulton Homes Corporation, Fulton Homes Sales Corporation, both located at 9140 S.
Kyrene, Suite 202, Tempe, Arizona 85284, and its captive title reinsurance entity, Fulton
Homes Sales Corporation, Cell #6, located at 100 Bank Street, Suite 610, Burlington, VT
05401.
William Lyon Homes, located at 4490 Von Karman Avenue, Newport Beach, CA 92660,
and Duxford Title Reinsurance, Inc., located at 199 Main Street, P.O. Box 190,
Shea Homes Limited Partnership and its general partners, Shea Homes, Inc., Shea
Financial Services, Inc., and Shea Mortgage, Inc., all located at 655 Brea Canyon Road,
Walnut, California 91789, dated 9/15/06.
Grasso Appraisal Services, Inc., located at 121 Middlesex Turnpike, Burlington, MA,
dated 6/13/06.
R. Norman Peters and his law firm of Peters & Sowydra, located at 255 Park Avenue,
Suite 1100, Worcester, MA 01609, dated 6/13/06.
AHT Reinsurance, Inc., located at 199 Main Street, Burlington, VT 05402, and M.D.C.
Holdings, Inc., located at 4350 South Monaco Street, Suite 500, Denver, CO 80237,
including its Richmond American Homes homebuilding subsidiaries, operating in
jurisdictions where properties for which title was reinsured were located, dated 4/26/06.
9
Page 233 of 3826
Chesapeake Title Reinsurance Company, Inc., located at 7090 Samuel Morse Drive,
Columbia, MD 21046 and CitiMortgage, Inc., located at 1000 technology Drive,
OFallon, MO 63368, dated 7/14/06.
WL Homes LLC, which does business as John Laing Homes, located ar 895 Dove Street,
#200, Newport Beach, CA 92660, dated 7/14/06.
United States of America v. Fairbanks Capital Corp., a Utah corporation, Fairbanks
Capital Holding Corp., a Delaware corporation, and Thomas D. Basmajian, United States
District Court for the District of Massachusetts (Nov. 2003).
United States of America and State of Illinois, ex rel. Attorney General James E. Ryan v.
Mercantile Mortgage Company, Inc., an Illinois corporation, Bran Silveous, and Ronald
Noble, individually and as officers of the corporation, United States District Court for the
Northern District of Illinois (July 18, 2002).
ARVIDA/JMB Partners, dated 9/27/01.
10
Page 234 of 3826
II. Interstate Land Sales Full Disclosure Act (ILS) Program

Codified Regulations Applicable to ILS:8
24 CFR Parts 1710, 1715, and 1720: Include all sections and appendices as listed in the
"Working Draft of List of Rules to be Enforced by the Bureau Pursuant to
1063(i)," dated April 8, 2011 (as emailed to HUD staff).
24 CFR Part 3800, Investigations in Consumer Regulatory Programs [including ILS and
RESPA programs]:9
3800.10
3800.20
3800.30
3800.40
3800.50
3800.60
Scope of rules.
Subpoenas in investigations.
Subpoena enforcement in district court.
Investigational proceedings.
Rights of witnesses in investigational proceedings.
Settlements.
24 CFR Part 26, Hearing Procedures:

26.28
26.29
26.30
26.32
26.33
26.34
26.35
26.36
26.37
26.38
26.39
26.40
26.41
26.42
26.43
8
References to sections of title 24 of the Code of Federal Regulations (CFR) are to those sections collected in the
published volumes of title 24 revised as of April 1, 2010, and to any subsequent revisions of those sections before
the transfer date of the function to the CFPB.
9
Part 3800 applies to investigations and investigational proceedings under the Interstate Land Sales Full Disclosure
Act (ILS), RESPA, and the National Manufactured Housing Construction and Safety Standards Act of 1974
(Manufactured Housing). ILS and RESPA are consumer protection statutes that are transferring to the CFPB
(Manufactured Housing will continue to be administered by HUD).
11
Page 235 of 3826
26.44
26.45
26.46
26.47
26.48
26.49
26.50
26.51
26.52
26.53
26.54
26.55
26.56
[from] Subpart A - General
30.5
Effective dates.
30.10
Definitions.
30.15
Application of other remedies.
[from] Subpart B - Violations
30.55
Interstate Land Sales violations.
Subpart C - Procedures
30.70
Prepenalty notice.
30.75
Response to prepenalty notice.
30.80
Factors in determining amount of civil money penalty.
30.85
Complaint.
30.90
Response to the complaint.
30.95
Hearings.
30.100 Settlement of a civil money penalty action.
Note: Civil Money Penalties Inflation Adjustments. The civil money penalties provided
for the ILS (see 24 CFR 30.55), RESPA, and SAFE Act programs are required by
separate statute to be adjusted every 4 years. For additional discussion, see the "Note"
for 24 CFR part 30 under the heading for RESPA, above.
12
Page 236 of 3826
Federal Register Publication:

Guidelines for Exemptions to the Interstate Land Sales Full Disclosure Act: (see 48 FR 44,412,
at 44,417 (September 28, 1983)).10 The guidelines are currently published on HUDs website at:
(http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/rmra/ils/ilsexemp).11
Other ILS Guidance:
HUD/ILS web page, Full Disclosure Act Questions and Answers.
http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/rmra/ils/ilsdevqa.
Settlements:
Edgewater; Craft Development, LLC, dated 8/4/08 (modified December 2010).
CBD Development, Inc., CBD Development Group, Inc., CBD Development Group
Investment Partnership III, LLC, CBD Development Group Investment Partnership IV, LLC,
and USALANDSALES.com, dated 7/21/08.
Waters Edge One, LLC, with its principal place of business in Tampa, Florida, dated
6/10/08.
Fairfield Resorts, Inc., dated 6/6/07.
United States of America, acting through the United States Department of Justice, on behalf
of the Department of Housing and Urban Development and its Secretary, Alfonso Jackson,
and Jarrell Brock, Janice Brock, and Valley View Village South Development, LLC, dated
4/27/06.
Cat Creek Properties, LLC, dated 11/14/05.
of the Department of Housing and Urban Development, Mr. Thomas Brewer and Mrs. Betty
Brewer, dated 3/23/04.
10
These guidelines were written in 1983. Accordingly, they fail to consider 28 years of developing case law. Most
importantly, recent Circuit Court opinions, most notably Bodansky v. Fifth on the Park Condo, LLC, 635 F.3d 75
(2d Cir. March 15, 2011), have specifically overruled HUDs guideline for calculating 100-unit exemption. This
guideline (known as the stackingguideline) is found at 49 FR 31,375, at 31,379-80 (1984), republished 61 FR
13596 (1996). A similar holding that relies on the reasoning of the Bodansky decision is found in Nickell v. Beau
View of Biloxi, _ F.3d _, 2011 WL 1120792 (5th Cir. March 28, 2011).
11
These guidelines were previously codified in 24 CFR part 1710 as an appendix. They were removed from
codification and preserved as a public guidance document as part of an initiative to streamline the CFR (see 61 FR
13596, 13598 (March 27, 1996)).
13
Page 237 of 3826
of the Department of Housing and Urban Development, and Mrs. Susan Gard, dated 3/23/04.
of the Department of Housing and Urban Development, and Mr. Lannie Campbell, dated
3/23/04.
of the Department of Housing and Urban Development, and Mrs. Sue Smothers, and Mr.
Henry Montgomery, dated 6/09/04.
of the Department of Housing and Urban Development, and Mr. Frederick Blake, dated
6/09/04.
of the Department of Housing and Urban Development, and Mr. Jim Wilson, dated 7/2/04.
of the Department of Housing and Urban Development, and Ms. Dara Lanier, dated 7/3/04.
of the Department of Housing and Urban Development, and Mr. Bill Elko, dated 8/5/04.
of the Department of Housing and Urban Development, and Litchfield Financial
Corporation, its subsidiary Land Finance Company and its immediate parent Textron
Financial Corporation, dated 11/17/03.
of the Department of Housing and Urban Development, and Developer Finance Corporation,
dated 9/11/03.
Registrations under ILS:
The Interstate Land Sales Act requires land developers to register subdivisions of 100 or more
nonexempt lots and to provide each purchaser, before signing a contract, with a Property Report
that contains information about the subdivision. There are roughly 30,000 developers who have
registered with the Secretary of HUD. They are listed on the HUD website at:
http://hhhqunp003.hud.gov/HSNG/ILS/ILSSubdivisions.nsf/DevAll?OpenView&RestricttoCategory=A&Start=1&Count=20
Many of these registrants have not kept their registration current. Provision should be made to
accept or acknowledge current registrations, receive new registrations, and remove registrants
who do not continue to meet statutory requirements.
III. Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act)
Program
14
Page 238 of 3826
Codified Regulations Applicable to SAFE Act:

Note: HUD's final rule implementing the State-licensing requirements of the SAFE Act is
under review by OMB and may be published before the transfer date. HUD's proposed rule
was published at 74 FR 66548 (December 15, 2009).
24 CFR Part 26, Hearing Procedures:12
26.28
26.29
26.30
26.32
26.33
26.34
26.35
26.36
26.37
26.38
26.39
26.40
26.41
26.42
26.43
26.44
26.45
26.46
26.47
26.48
26.49
26.50
26.51
26.52
26.53
26.54
26.55
26.56
[from] Subpart A-General
30.5
30.10
30.15
Effective dates.
Definitions.
Application of other remedies.
12
If HUD's final SAFE Act rule is published before the transfer date, the sections as listed in 24 CFR parts 26 and
30 would likely apply to civil money penalties imposed under the SAFE Act.
15
Page 239 of 3826
[from] Subpart C-Procedures

30.70
30.75
30.80
30.85
30.90
30.95
30.100
Prepenalty notice.
Response to prepenalty notice.
Factors in determining amount of civil money penalty.
Complaint.
Response to the complaint.
Hearings.
Settlement of a civil money penalty action.
Other SAFE Act Issuances:

Notification of Availability of Model Legislation (74 FR 312, January 5, 2009).
Commentary on Model State Law, available at
http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/rmra/safe/cmsl (Last
visited April 19, 2011).
Frequently Asked Questions-Preliminary Guidance on Minimum Standards(posted
June 22, 2009), available at
http://portal.hud.gov/hudportal/documents/huddoc?id=DOC_19675.pdf (Last visited
April 19, 2011).
Frequently Asked Questions-Regarding Implementation Delays(posted July 13, 2010),
available at http://portal.hud.gov/hudportal/documents/huddoc?id=DOC 19676.pdf (Last
visited April 19, 2011).
Letter providing Good Faith Extension to Puerto Rico (June 6, 2010, signed by Assistant
Secretary Housing-FHA Commissioner David Stevens).
Letter providing Good Faith Extension to Commonwealth of the Northern Mariana Islands
(July 30, 2010, signed by Assistant Secretary Housing-FHA Commissioner David Stevens).
Letter providing Good Faith Extension to American Samoa (July 30, 2010, signed by
Assistant Secretary Housing-FHA Commissioner David Stevens).
Letter to Texas on seller financing (June 2, 2010, signed by Associate Deputy Assistant
Secretary, Office of Regulatory Affairs and Manufactured Housing, Teresa Payne).
Letter to Tennessee on de minimisstandard for loan refinancing (July 3, 2010, signed by
Associate Deputy Assistant Secretary, Office of Regulatory Affairs and Manufactured
Housing, Teresa Payne).
Letter to Hawaii on Implementation Schedule (November 30, 2010, signed by Assistant
Secretary Housing-FHA Commissioner David Stevens).
Letter to South Carolina on Implementation Schedule (December 23, 2010, signed by
16
Page 240 of 3826

Letter to Texas on establishment of de minimisstandard (February 15, 2011, signed by
Letter to Louisiana on establishment of de minimisstandard (February 15, 2011, signed
by Associate Deputy Assistant Secretary, Office of Regulatory Affairs and Manufactured
17
Page 241 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

FW: request from CFPB

Wed Apr 27 2011 16:32:25 EDT
rules orders for cfpb publication 1063 4-22.wpd
List of Rules Working Draft 04-08-11.docx
-----Original Message----From: Dawson, Rachel Miller [mailto:[email protected]]

Sent: Friday, April 22, 2011 2:44 PM
To: Scanlon, Thomas; Glaser, Elizabeth (CFPB)
Cc: Harrison, Lisa M.
Subject: FW: request from CFPB
Tom and Elizabeth - here are our informal staff comments. i've included the list of rules you sent us so
you can reference what we were looking at, but we did not edit your list. please feel free to give me a
call at 202-326-2463 to discuss as you like.
________________________________
From: Harrison, Lisa M.
To: Tom, Willard K.; White, Christian S.; Dawson, Rachel Miller; Mithal, Maneesha; Winston, Joel
Subject: request from CFPB
FYI.
________________________________
From: [email protected] [mailto:[email protected]]
To: Harrison, Lisa M.
Cc: [email protected]
Subject: Working Draft of the List of Rules Under Section 1063(i)
Lisa,
Attached please find a working draft of the list of rules called for by section 1063(i) of the Consumer
Financial Protection Act, which requires the Bureau to identify "rules and orders that will be enforced by
the Bureau." 12 U.S.C. 5583(i). Next week, Len Kennedy, the Bureau's General Counsel will send a
formal request for assistance to Willard K. Tom, General Counsel, the FTC's General Counsel, but we
wanted to provide this draft early to you and your staff.
We would appreciate your help reviewing and commenting on this working draft so that we can
complete the list to be published by the Bureau. This draft contains the provisions of each regulation to
allow you and your colleagues to specifically reference the provisions that should (or should not) be
included in the list. For the convenience of reviewing staff, we included comments on certain provisions
Page 242 of 3826
and also struck through certain provisions that we tentatively believe should not be included. Although
we welcome your suggestions on the entire list, your comment on the FTC's rules is essential.
We also ask for your assistance with two other issues:
(b) (5)
Of course, we would be happy to discuss further these and other issues relating to the Bureau's list at
your earliest convenience. My colleague, Elizabeth Glaser, and I are looking forward to working with
you on this project and greatly appreciate your assistance.
Thanks,
Tom
Thomas E. Scanlon
tel. (202) 622-8170
Page 243 of 3826
From:

To:
Cc:
Bcc:
Subject:
Date:
Attachments:
FW: Working Draft of the List of Rules Under Section 1063(i)

Wed Apr 27 2011 16:31:20 EDT
List of Rules Working Draft 04-08-11.docx
-----Original Message----From: [email protected] [mailto:[email protected]]

Cc: Scanlon, Thomas
Subject: Fw: Working Draft of the List of Rules Under Section 1063(i)
Can you give me a call about this when you have a chance?
Thanks.
James A. Michaels
Assistant Director
Division of Consumer and Community Affairs Federal Reserve Board Washington, D.C. 20551
Telephone (202) 452-3667 Fax (202) 452-3849
----- Forwarded by Jim Michaels/BOARD/FRS on 04/15/2011 04:24 PM -----
..
----- Forwarded by Leonard Chanin/BOARD/FRS on 04/11/2011 08:22 AM ----From:
<[email protected]>
To:
<[email protected]>
Cc:
<[email protected]>
Date:
04/08/2011 05:54 PM
Page 275 of 3826
Subject:
Working Draft of the List of Rules Under Section 1063(i)
Leonard,
Attached please find a working draft of the list of rules called for by section 1063(i) of the Consumer
Financial Protection Act, which requires the Bureau to identify rules and orders that will be enforced by
the
Bureau. 12 U.S.C. 5583(i). Next week, Len Kennedy, the Bureaus
General Counsel will send a formal request for assistance to Scott, but we wanted to provide this draft
early to you and your staff.
We would appreciate your help reviewing and commenting on this working draft so that we can
complete the list to be published by the Bureau. This draft contains the provisions of each regulation to
allow you and your colleagues to specifically reference the provisions that should (or should
not) be included in the list. For the convenience of reviewing staff, we included comments on certain
provisions and also struck through certain
provisions that we tentatively believe should not be included. Although
we welcome your suggestions on the entire list, your comment on the Boards rules is essential.
We also ask for your assistance with two other issues:
(b) (5)
Of course, we would be happy to discuss further these and other issues

relating to the Bureaus list at your earliest convenience. My colleague,
Elizabeth Glaser, and I are looking forward to working with you on this project and greatly appreciate
your assistance.
Thanks.
Tom
Thomas E. Scanlon
tel. (202) 622-8170
Page 276 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

FW: Letter from CFPB General Counsel

Wed Apr 27 2011 16:23:03 EDT
Letter to Kennedy.pdf
-----Original Message----From: Mosena, Lea (CFPB)

Sent: Monday, April 25, 2011 8:53 AM
To: Scanlon, Thomas; Glaser, Elizabeth (CFPB); Fuchs, Meredith (CFPB)
Subject: FW: Letter from CFPB General Counsel
In case you haven't received this yet...
-----Original Message----From: Krimminger, Michael H. [mailto:[email protected]]
To: Kennedy, Leonard (CFPB)
Cc: Deutsch, Rebecca (CFPB); Mosena, Lea (CFPB); Amberg, Ruth; McInerney, Roberta K.
Subject: RE: Letter from CFPB General Counsel
Len,
Attached please find my letter in response to yours of April 14. Our staff has reviewed the attachment to
your letter and has a few suggested changes. We look forward to consulting with you and your staff as
we move forward on this important effort.
Best regards,
Mike
________________________________
To: Krimminger, Michael H.
Cc: [email protected]; [email protected]
Subject: Letter from CFPB General Counsel
Dear Mr. Krimminger,
Page 306 of 3826
Attached please find a letter from Len Kennedy relating to Section

1063(i) of the Consumer Financial Protection Act of 2010. We greatly appreciate FDIC's assistance
with this project.
Please let us know if you have any questions.
Best regards,
Lea Mosena
Lea Mosena
Attorney-Advisor
[email protected]
Office: (202) 435-7152
------------------------------------------------------------------------This message was secured by ZixCorp(R).
Page 307 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

FW: Letter from CFPB General Counsel

Wed Apr 27 2011 16:19:10 EDT
OTS Response 4-21-11.pdf
-----Original Message----From: Bennett, Richard S

To: Kennedy, Leonard (CFPB)
Cc: Mosena, Lea (CFPB); Deutsch, Rebecca (CFPB); Scanlon, Thomas; Glaser, Elizabeth (CFPB);
Dakin, Deborah
Subject: RE: Letter from CFPB General Counsel
Dear Mr. Kennedy,
Attached please find Deborah Dakin's response to your April 14th letter. We are mailing the original.
Please let us know if we can be of further assistance to you and the CFPB.
Sincerely,
Richard Bennett
Richard Bennett
Senior Compliance Counsel
Office of Thrift Supervision
202-906-7409
[email protected]<mailto:[email protected]>

To: Dakin, Deborah
Cc: [email protected]; [email protected]
Subject: Letter from CFPB General Counsel
Dear Ms. Dakin,
Attached please find a letter from Len Kennedy relating to Section 1063(i) of the Consumer Financial
Protection Act of 2010. We greatly appreciate OTS's assistance with this project.
Best regards,
Page 312 of 3826
Lea Mosena
Lea Mosena
Attorney-Advisor
[email protected]
Office: (202) 435-7152
------------------------------------------------------------------------This message was secured by ZixCorp(R).
Page 313 of 3826
From:
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Date:
Attachments:

FW: HUD List

Wed Apr 27 2011 14:37:51 EDT
From: Glaser, Elizabeth (CFPB)

To: Vanderslice, Julie (CFPB)
Cc: Chow, Edwin (CFPB)
Subject: HUD List
Hi Julie,
Sorry for the delay --- here is a full list of HUD employees. Let me know if you need additional
information.
Thanks so much,
Liz
1.
Brolin, J.
2.
Ceja, P.
3.
Devlin, J.
4.
Kayagil, J.
5.
Matchneer, W.
(b) (6), (b) (2), (b) (5)
7.
Cornejo, E.
Page 321 of 3826
8.
Friend, D.
9.
Ivey-Colson, K.
10. Kolavala, C.
(b) (6), (b) (2), (b) (5)
(b) (6), (b) (2), (b) (5)
(b) (6), (b) (2), (b) (5)
14. Romano, A.
15. Harrigan, C.
(b) (6), (b) (2), (b) (5)
17. Fay, A.
(b) (6), (b) (2), (b) (5)
(b) (6), (b) (2), (b) (5)
20. Kremer, S.
21. Marcum, D.
(b) (6), (b) (2), (b) (5)
(b) (6), (b) (2), (b) (5)
(b) (6), (b) (2), (b) (5)
25. Wilkerson, T.
26. Denton, D.
(b) (6), (b) (2), (b) (5)
(b) (6), (b) (2), (b) (5)
29. Koerner, I.
30. Kritikos, E.
31. Weipert, D.
32. Gipe, L.
33. Johanek, C.
34. Shearer, A.
35. Shapiro, B.
Page 322 of 3826
36. Craig Erdmann

37. Monica Jordan,
(b) (6), (b) (2), (b) (5)
(b) (6), (b) (2), (b) (5)
(b) (6), (b) (2), (b) (5)
(b) (6), (b) (2), (b) (5)
Page 323 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Emailing: rf278financialguide_08
Wed Apr 27 2011 14:22:43 EDT
rf278financialguide_08.pdf
Page 324 of 3826
rf278financialguide_08.pdf (Attachment 1 of 1)
Public Financial Disclosure

A Guide to Reporting Selected Financial Instruments
Page 325 of 3826
TABLE OF CONTENTS
AMERICAN DEPOSITARY RECEIPT 1
CASH BALANCE PENSION PLAN 2
COMMON TRUST FUND OF A BANK 4
EMPLOYEE STOCK PURCHASE PLAN 6
EQUITY INDEX-LINKED NOTE 9
EXCHANGE-TRADED FUND 10
INCENTIVE STOCK OPTION 12
MANAGED ACCOUNT 15
MARGIN ACCOUNT
17
MEZZANINE DEBT SECURITY 19

MONEY PURCHASE PENSION PLAN 21
PHANTOM STOCK
23
PUT AND CALL OPTIONS 25

QUALIFIED TUITION PROGRAM (529 PLAN) 30
SHORT SALE
32
SPLIT-DOLLAR LIFE INSURANCE POLICY 35

STABLE VALUE FUND 37
STOCK APPRECIATION RIGHT 39
TAX-SHELTERED ANNUITY (403(b) RETIREMENT PLAN) 42
TIAA-CREF
44
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AMERICAN DEPOSITARY RECEIPT

Definition
An American depositary receipt is a certificate representing shares of foreign securities.
It is a form of indirect ownership of the foreign securities that are not traded directly on a
national exchange in the United States. Financial institutions purchase the underlying securities
on foreign exchanges through their foreign branches, and these foreign branches remain the
custodians of the securities. Through these foreign branches, the financial institutions hold legal
title to the underlying stock.
Investors who purchase American depositary receipts are able to avoid certain costs that
normally would be associated with an international transaction if they purchased the foreign
stock directly. Many American depositary receipts are registered with the Securities and
Exchange Commission (SEC) and traded on national exchanges, such as the New York Stock
Exchange or the American Stock Exchange. However, some American depositary receipts are
not registered and traded on national exchanges. Investors have to purchase these non-registered
American depositary receipts directly from their issuers or through other private trades (i.e.,
over the counter).
A related term is American depositary share, which corresponds to a single share of the
underlying security. An American depositary receipt may confer ownership rights to a specified
number of American depositary shares, representing the investors indirect interest in the
underlying foreign security that the issuing institution holds in its foreign branch.
Financial Disclosure Requirements
A filer who holds an American depositary receipt valued at over $1,000 or with income
greater than $200 should report the following information on Schedule A:
the name of the American depositary receipt;

the category of value; and
the type and category of amount of income.
Conflicts Analysis
A filer holding an American depositary receipt has a financial interest in the issuer of the
underlying foreign security. Therefore, the conflicts analysis for an American depositary receipt
is similar to the conflicts analysis for stock interests. The exemption for financial interests in
publicly traded securities at 5 C.F.R. 2640.202 is available if the American depositary receipt
is registered with the SEC and traded on a national exchange. However, the exemption will be
unavailable if the receipt is not registered with the SEC and traded on a national exchange.
1
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CASH BALANCE PENSION PLAN

Definition
A cash balance pension plan is a type of defined benefit pension plan in which the
employer makes contributions to the employees account and guarantees a specific rate of return,
regardless of the profitability of the plans investments. The employer generally makes
investment decisions concerning the holdings of the plan and bears the risks of investment.
Each year, the employee receives a pay credit that is equal to a percentage of the
employees salary and an income credit that is a fixed rate of return. The employer defines this
retirement benefit as an account balance, and a cash balance pension plan will often allow an
employee to choose between an annuity and a lump sum payment. In some cases, an employee
can elect to receive a lump sum payment when terminating the employment relationship, even
before reaching retirement age.
A filer who has a cash balance pension plan should report the plan in a manner similar to
a traditional defined benefit pension plan. A filer does not need to report the underlying assets of
the employers investments when the employer makes the investment decisions and bears the
risks of investment. Instead, the filer should report the following information on Schedule A:
the names of the employer and the plan;

the category of asset value; and
the actual amount of any pension benefits received, reported in the Other Income
column of Schedule A, Block C. (If the filer is not currently receiving benefits, the
filer should indicate that the amount of income is None.)
When reporting the category of asset value, the filer should report the current account
balance after any employer contributions in the form of pay credits and income credits. If
the filer is unable to ascertain the account balance, the filer may report the amount of pension
benefits to be received and the age at which the employee will be eligible in the Other Income
column.
If a filer has a reportable interest in a cash balance pension plan, the filer should also
report the following information on Schedule C, Part II:
the name of the employer;

the type of plan, which is a cash balance pension plan;
the date on which the filer began participating in the plan; and
an indication as to whether the employer is continuing to make contributions.
If a filers spouse holds an interest in a cash balance pension plan, the filer should
disclose the plan on Schedule A. However, the filer should not provide any information about a
spouses cash balance pension plan on Schedule C, Part II.
2
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Conflicts Analysis
The conflicts analysis for a cash balance pension plan is the same as for a traditional
defined benefit plan. Because the employer makes the investment decisions and bears the risks
of investment, the filer does not have a financial interest in the underlying assets with which the
employer has funded the plan. If the employer is no longer making contributions to the cash
balance pension plan, the filer also does not have a financial interest in the employer merely as a
result of holding an interest in the cash balance pension plan. Instead, the filer has a financial
interest in the employers ability or willingness to pay benefits under the plan.
3
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COMMON TRUST FUND OF A BANK

Definition
A common trust fund of a bank is a trust that a bank manages on behalf of a group of
participating customers, in order to invest and reinvest their contributions to the trust
collectively. A bank customer purchases units of the common trust fund. This arrangement
allows the trustee to manage the customers contributions in a pool of contributions from a
number of customers. These customers are the beneficiaries of the common trust fund.
Acting as a fiduciary, the bank commingles the contributions of participating customers
in the common trust fund and invests in a variety of underlying holdings. Typically, a preprinted
trust agreement will name the trustee, specify the investments and establish other terms of
participation in the common trust fund.
A filer who is a beneficiary of a common trust fund of a bank should report the following
information on Schedule A:
the names of the bank and the common trust fund;

the category of asset value;
either the type of income or an indication that the common trust fund is an excepted
investment fund;
the category of amount of income; and
if the fund is not an excepted investment fund, each individual asset that meets the
reporting threshold, reported as a separate line item.
A filer may not need to report the trusts underlying assets separately. Common trust
funds of banks typically are independently managed, widely held, and publicly available.
Therefore, a common trust fund of a bank will likely qualify as an excepted investment fund.
For any transactions over $1,000 that are related to the common trust fund of a bank, the
filer should report the following information on Schedule B, Part I:
a description of any such transaction;

the transaction type;
the date of the transaction; and
the category of value of the transaction.
Conflicts Analysis
A filer has a financial interest in the value of the filers units in a common trust fund of a
bank. The filer will not be able to rely on the regulatory exemptions for mutual funds and unit
investment trusts because common trusts funds of banks do not satisfy the regulatory definitions
of mutual funds and unit investment trusts at 5 C.F.R. 2640.102(k), (u).
4
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A filer also has a financial interest in the value of each underlying security of the
common trust fund. In contrast to the filers interest in the common trust fund as a whole, the
filer may be able to rely on the regulatory exemptions for de minimis interests in publicly traded
securities with regard to any qualifying security that is held in the common trust fund.
For these reasons, a filer may be able to participate in a particular matter that has a direct
and predictable effect on the financial interests of the issuer of certain individual securities that
are held in the common trust fund, if the securities qualify for the exemption. However, the filer
will not be able to participate in a particular matter that has a direct and predictable effect on the
financial interests of the common trust fund as a distinct legal entity.
5
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EMPLOYEE STOCK PURCHASE PLAN

Definition
An employee stock purchase plan is an employer-sponsored incentive plan that allows
employees to purchase company stock. Under such a plan, the employer offers its employees the
option to purchase company stock at the end of an offering period, which typically ranges
between 3 months and 27 months.
When an employee exercises such an option, the employer withholds the cost of
purchasing the stock from the employees pay in installments during the offering period. The
employer holds this money in an account for the employee during the offering period. At the end
of the offering period, the employee uses the money withheld to purchase company stock at the
specified purchase price. Most employers offer the stock at discounts below fair market value.
Note that employee stock purchase plans should not be confused with employee stock
ownership plans. An employee stock ownership plan is a type of defined contribution plan
where the employer contributes shares of company stock to the plan.
A filer who holds an option through an employee stock purchase plan with a value over
$1,000 or with income over $200 should report the following information on Schedule A:
the name of the underlying stock and an indication that the asset is an option;
a category of asset value; and
the category of amount of income, which will usually be None.
For stock acquired through an employee stock purchase plan with a value over $1,000 or
with income over $200, a filer should report the following information on Schedule A:
the name of the issuer;

the type and the category of amount of income.
If the filer has not yet purchased the stock but has established an account for
withholdings toward the purchase, the filer should report the account if it meets the reporting
threshold.
For transactions over $1,000, filers should report the following information on
Schedule B, Part I:
the name of the stock;

the type of transaction;
the category of amount of the transaction.
6
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If a filer has a reportable interest in an employee stock purchase plan, the filer should also
report that plan on Schedule C, Part II, including the following information:

a statement that the plan is an employee stock purchase plan;
the terms of the plan (including an indication as to when the filers participation in the
plan will terminate, which usually coincides with the termination of the filers
employment); and
the date on which the filer entered the plan.
The filer should not report a spouses continued participation in an employee stock purchase plan
on Schedule C, Part II.
Conflicts Analysis
The conflicts analysis for stock acquired or offered through an employee stock purchase
plan is the same as it is for any stock interest. However, the conflict arises when the filer first
has the option to purchase the stock, even if the filer has not yet exercised that option. A filer
holding either stock or an option to purchase stock through an employee stock purchase plan
may not participate personally and substantially in a particular matter that will have a direct and
predictable effect on the financial interests of the issuer of that stock, unless the filer first obtains
a waiver or qualifies for a regulatory exemption.
If the stock is publicly traded, a filer may qualify for a de minimis exemption under
5 C.F.R. 2640.202 after the filer has purchased the stock. However, the filer may not rely on a
de minimis exemption if the filer has an option to purchase stock that the filer has not yet actually
purchased. The exemptions at 5 C.F.R. part 2640 do not cover a financial interest in a stock
option.
Special Consideration for Certificates of Divestiture
Some reviewers may be aware of an issue involving requests for Certificates of
Divestiture for stock acquired under an employee stock purchase plan. The issue arose because
Certificates of Divestiture are intended for sales of property that produce capital gains, rather
than those that produce only ordinary income. However, taxpayers sometimes needed to hold
stock acquired under employee stock purchase plans for a period of time before the Internal
Revenue Service (IRS) would tax the proceeds of a sale of that stock as capital gains, rather than
solely as ordinary income.
This holding period raised a question about the availability of a Certificate of Divestiture
whenever an employee needed to divest stock acquired under an employee stock purchase plan
before expiration of the holding period. As a result, Congress amended the tax code to accelerate
the holding period when stock is sold pursuant to a Certificate of Divestiture. However,
provisions of the tax code affect the extent to which an individual may rely upon a Certificate of
Divestiture depending on the factual circumstances of a sale, including whether the employee
7
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purchased the stock at a discount. Filers should consult their own tax advisors or the IRS to
resolve questions about the applicability of the exception and to determine whether a sale would
produce capital gains or only ordinary income.
8
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EQUITY INDEX-LINKED NOTE

Definition
An equity index-linked note is a debt instrument that affords the owner interest payments
based on the performance of an equity index and, sometimes, a guaranteed return. The terms of
such notes vary, but interest payments are typically based on any increase in the value of a
specified equity index (e.g., Standard & Poors 500 Index). A note may also guarantee the return
of the investors principal, insulating the investor against decreases in the value of the equity
index to which the note is linked. In exchange for such protection against risk, a note usually
will offer an investor a return that is less than 100% of the value of any increase in the equity
index to which it is linked, or a note may establish a maximum return.
A filer should report the following information about any equity index-linked note with a
market value over $1,000 or income over $200 on Schedule A:
the names of the note and its issuer;

the index to which the note is linked;
On Schedule B, Part I, the filer should report the following information for any
transaction with a value over $1,000:
a description of any transactions involving the note;

Conflicts Analysis
A filer who holds an equity index-linked note has a financial interest in the ability or
willingness of the issuer to honor any guarantee under the notes contractual terms. Therefore,
the filer may not participate in any particular matter that has a direct and predictable effect on the
ability or willingness of the issuer to honor its contractual obligation, unless the filer first obtains
a waiver or qualifies for a regulatory exemption. As a practical matter, most filers official
duties will not involve particular matters affecting the issuers of equity index-linked notes.
9
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EXCHANGE-TRADED FUND
Definition
An exchange-traded fund is a fund that pools investors money in a variety of
investments with the goal of replicating the rate of return of a specified index (e.g., the Standard
& Poors 500 Index). As such, some of these funds are diversified, while others are focused on
specific sectors. Like traditional mutual funds, exchange-traded funds are publicly traded on
national exchanges. Unlike traditional mutual funds, which are priced only at the end of a
trading day, investors can purchase and sell exchange-traded funds like ordinary stock because
they are priced continuously throughout the trading day.
A filer who holds an exchange-traded fund valued over $1,000 or with income greater
than $200 should report the following information on Schedule A:
the specific name of the exchange-traded fund;

the category of value;
an indication that the fund is an excepted investment fund; and
the category of amount of income.
Because an exchange-traded fund is an excepted investment fund, a filer does not need to report
the underlying assets of the exchange-traded fund.
For any transactions over $1,000, the filer should report the following information on
Schedule B, Part I:
the specific name of the exchange-traded fund;

Conflicts Analysis
Most exchange-traded funds are organized either as open-end investment management
companies or as unit investment trusts. They are usually registered with the Securities and
Exchange Commission (SEC) under the same statutory authorities as traditional mutual funds
that are organized as open-end investment management companies and unit investment trusts.
However, exchange-traded funds are not necessarily subject to all requirements of those statutory
authorities. For this reason, the SEC does not allow exchange-traded funds to market themselves
to consumers as mutual funds. Nevertheless, most exchange-traded funds qualify for the
exemptions in 5 C.F.R. Part 2640 for mutual funds and unit investment trusts. An exchangetraded fund that is organized as an open-end investment management company satisfies OGEs
definition of a mutual fund at 5 C.F.R. 2640.102(k), and an exchange-traded fund that is
10
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organized as a unit investment trust satisfies OGEs definition of a unit investment trust at
5 C.F.R. 2640.102(u).
If a filer holds an interest in an exchange-traded fund, the reviewer must determine
whether the exchange-traded fund is diversified or sector focused. Depending on whether
the exchange-traded fund is a diversified fund or a sector fund, the filer may qualify for the
exemptions at either 5 C.F.R. 2640.201(a) or 5 C.F.R. 2640.201(b). These exemptions are
applicable without regard to whether the exchange-traded fund is an open-end investment
management company or a unit investment trust because OGE has interpreted the sector fund
exemption at 5 C.F.R. 2640.201(b) as being applicable to unit investment trusts even though
that regulatory provision does not explicitly mention unit investment trusts.
In most cases, an exchange-traded fund also qualifies for the regulatory exemption for
matters affecting mutual funds and unit investment trusts at 5 C.F.R. 2640.201(d). This
exemption addresses particular matters of general applicability affecting a fund as a separate
legal entity, rather than the underlying assets of the fund.
11
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INCENTIVE STOCK OPTION

Definition
An incentive stock option is a contract between an employer and an employee that
provides the employee with an option to purchase a specified number of shares of the employers
stock at a specified price (the strike price). An incentive stock option is a type of call option
because it provides the right to purchase stock. Unlike some other types of call options,
however, an incentive stock option is not traded on the open market. Instead, it is part of an
employees compensation.
Incentive stock options can be an attractive form of compensation. Depending on
whether an incentive stock option plan satisfies certain requirements of the tax code, the options
may qualify for preferential tax treatment. Qualifying incentive stock option plans allow
employees to defer taxation until they have exercised the options and subsequently sold the
resulting stock. Incentive stock options can also serve the employers purpose of retaining
employees because they often have vesting requirements, and employees typically forfeit such
options if they terminate their employment before the options vest.
A filer who has an incentive stock option should report the following information about
an incentive stock option that has a value over $1,000 on Schedule A:
the category of amount of income, which is None in most cases.
The option normally will not produce income. Any income is normally associated with the sale
of the underlying stock, not with the option.
The value of an option may not be readily ascertainable if the strike price exceeds the
market value of the stock. In this situation, where the filer would lose money by exercising the
option, the option is said to be underwater. When an option is underwater, the filer may write
value not readily ascertainable across the columns in Block B of Schedule A. Instead of
reporting a category of asset value in Block B, the filer should report the following in Block A of
Schedule A:
the number of shares that the filer has an option to purchase;
the strike price;
the expiration date;
an indication as to whether the option is vested; and,
for an unvested option, the date on which the unvested option will vest.
12
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If a filer has exercised an option and received stock through an incentive stock option
plan, the filer should also report the stock on Schedule A, as a separate line item. Specifically,
the filer should report on Schedule A the following information about any stock that has a value
over $1,000 or that produced income over $200 during the reporting period:

For transactions over $1,000 that involve stock acquired through an incentive stock
option plan, a filer should report the following information on Schedule B, Part I:

The filer should report both the purchase of stock and any subsequent sale of the stock as
separate line items. However, the filer should not report the grant of an incentive stock option on
Schedule B, Part I, because the grant of an option is not a reportable transaction for purposes
of Schedule B, Part I.
If the filer is continuing to participate in an incentive stock option plan or if the filer has
retained an incentive stock option that the filer has not yet exercised, the filer should report the
following information on Schedule C, Part II:

an indication that the plan is an incentive stock option plan;
the terms of the plan, including an indication as to whether the filer will forfeit any
unvested options and an indication as to whether the filer will receive any additional
grant of options in the future; and
the date on which the filer entered the plan.
The filer should similarly report a spouses incentive stock options on Schedule A and
any transactions involving the underlying stock on Schedule B, Part I. However, the filer
should not report a spouses continued participation in an incentive stock option plan on
Schedule C, Part II.
Conflicts Analysis
The conflicts analysis for an incentive stock option is the same as the conflicts analysis
for the underlying stock. While the filer holds either an option or the underlying stock, the filer
predictable effect on the financial interests of the issuer of the underlying stock. The conflict
arises when the filer is awarded the stock option, even if the stock option has not vested.
13
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If the stock is publicly traded, the filer may qualify for a de minimis exemption under
de minimis exemption if the filer continues to have any option to purchase stock that the filer has
not yet purchased. The exemptions at 5 C.F.R. part 2640 do not cover a financial interest in a
stock option.
In some cases, filers who are new entrants or Presidential nominees may have negotiated
with their former employer regarding the disposition of unvested incentive stock options. If the
employer has agreed to accelerate the vesting schedule in order to enable the employee to
exercise the option before entering Government service, it is likely that any acceleration will
constitute an extraordinary payment under 5 C.F.R. 2635.503 if the value of either the stock
or the option is greater than $10,000. If an accelerated vesting occurs after the filer enters
Government service, the reviewer will need to consider the applicability of 18 U.S.C. 209.
Some reviewers may be aware of an issue involving requests for Certificates of
Divestiture for stock acquired under an incentive stock option plan. The issue arose because
Certificates of Divestiture are intended for sales of property that produce capital gains, rather
than those that produce only ordinary income. However, taxpayers sometimes needed to hold
stock acquired under incentive stock option plans for a period of time before the Internal
Revenue Service (IRS) would tax the proceeds of a sale of that stock as capital gains, rather than
solely as ordinary income.
This holding period raised a question about the availability of a Certificate of Divestiture
whenever an employee needed to divest stock acquired under an incentive stock option plan
before expiration of the holding period. As a result, Congress amended the tax code to accelerate
the holding period when stock is sold pursuant to a Certificate of Divestiture. However,
provisions of the tax code affect the extent to which an individual may rely upon a Certificate of
Divestiture depending on the factual circumstances of a sale. Filers should consult their own tax
advisors or the IRS to resolve questions about the applicability of the exception and to determine
whether a sale would produce capital gains or only ordinary income.
14
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MANAGED ACCOUNT
Definition
In its simplest form, a managed account (sometimes called a controlled account or a
separately managed account) is an investment account that is owned by an individual investor
but managed for a fee by a fiduciary. The investor establishes the account in order to give the
fiduciary discretion to buy, sell and trade investments on behalf of the investor. The investor
owns the investments directly but benefits from professional management of the account. The
degree of customization varies from one account to another, ranging from fully personalized
accounts to more standardized accounts that charge lower fees.
Brokers can manage accounts on an individual basis for investors, but a variety of
managed accounts are commercially available from financial institutions. At the consumer level,
a commercially available product from a financial institution may bear some resemblance to a
pooled investment, such as a mutual fund, in that it can have a particular investment strategy or
sector focus. These products often allow investors to choose among predetermined portfolios,
which the financial institutions package with such labels as: high yield, balanced, large
cap, mid cap, global small cap, international ADR, intermediate fixed income,
strategic fixed income, municipal bonds, energy, and others. Unlike pooled investments,
however, the investor owns the underlying securities of the managed account directly.
Although some filers have mistakenly characterized their managed accounts as mutual
funds, managed accounts are not mutual funds. Like a brokerage account, a managed account is
simply an account, not a pooled investment vehicle. As a result, the investor holds legal title to
each underlying security. Unlike a mutual fund, which issues shares of an investment company
that is the legal owner of the underlying securities, the fiduciary of a managed account purchases
each underlying security separately for an investor upon receipt of the investors money. Also
unlike a mutual fund, an investor can usually customize even the most standardized
commercially available managed account. The financial institutions that offer commercially
available managed accounts are often willing to honor a certain number of customized
instructions from an investor. For example, an investor may instruct the financial institution to
refrain from purchasing stocks in alcohol and tobacco companies. Financial institutions may
limit the number of instructions they will honor.
A filer who has invested in a managed account should report the following information
for each individual asset of the account valued over $1,000 or with income over $200 on
Schedule A:
a description of the asset,

the type of income (or, if the asset is an investment fund, either the type of income or
an indication that the asset is an excepted investment fund); and
the category of amount of income.
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Whether or not the filer identifies the managed account, however, the filer must report
each individual asset of the managed account that meets the reporting threshold. The filer must
disclose these individual assets because a managed account does not qualify as an excepted
investment fund.
On Schedule B, Part I, the filer should also report the following information about any
transaction over $1,000 involving an asset of the managed account:
the name of the asset;

the date of the transaction (or various to indicate that transactions involving the asset
occurred on various dates during the reporting period); and
Conflicts Analysis
The conflicts analysis for a managed account focuses on the assets in the managed
account. A managed account does not qualify for the regulatory exemptions for mutual funds
and unit investment trusts. The filer may not participate personally and substantially in a
particular matter that will have a direct and predictable effect on the financial interests of any
asset in the managed account, unless the filer first obtains a waiver or qualifies for a regulatory
exemption with regard to that asset.
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MARGIN ACCOUNT
Definition
A margin account is an account with a broker that allows an investor to borrow money to
cover part of the cost of purchasing securities. The securities serve as collateral for the loan.
Until the loan is repaid, the investor pays the broker interest on the money borrowed.
Margin Account Liabilities
A filer who has a margin account should report margin account liabilities on Schedule C,
Part I if the aggregate amount owed to any single broker exceeded $10,000 at any time during
the reporting period. The filer should aggregate the amount of all liabilities owed to the same
broker, even if the liabilities were attributable to several purchases of a variety of separate
securities.
If the filers aggregate liabilities meet this reporting threshold, the filer should report the
following information on Schedule C, Part I:
the name of the lender;

the type of liability, which is a margin account;
the date incurred;
the interest rate identified in the margin agreement;
the term, which normally is on demand; and
the category of the highest aggregate value of the liabilities during the reporting period.
Related Securities
A filer should also report the securities that the filer purchased, in the same manner as
any other securities that the filer owns. Specifically, a filer should report any security with a
market value over $1,000 or income over $200, as well as any completed transactions over
$1,000. Filers should report the following information about the securities on Schedule A:
the specific name of the security;

With regard to an underlying security, the filer should also report the following
information about any transactions with a value over $1,000 on Schedule B, Part I:
the name of the security;

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the date of the transaction (or various to indicate that transactions involving the
security occurred on various dates during the reporting period); and
Conflicts Analysis
As with other types of commercial loans, a loan through a margin account on terms
generally available to the public normally does not give rise to significant financial conflict of
interest concerns. Often, the reviewer can confirm that the broker made the loan through the
margin account on terms generally available to the public. In cases where the filer has obtained
the loan on special terms that are not generally available to the public, reviewers should carefully
examine the potential for conflicts of interests, including an analysis of 18 U.S.C. 209 if the
filer was a Federal employee at the time of the loan.
With regard to the securities a filer has purchased with the loan, the conflicts analysis is
no different from the conflicts analysis for any other securities that the filer owns. Under
18 U.S.C. 208, the filer may not participate personally and substantially in a particular matter
that will have a direct and predictable effect on the financial interests of the issuers of the
securities, unless the filer first obtains a waiver or qualifies for a regulatory exemption.
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MEZZANINE DEBT SECURITY

Definition
A mezzanine debt security is a note establishing debt that is secured only by an entitys
future earnings. The investor who holds a note involving this type of debt has assumed the risk
that the entity will continue to generate income. Because this form of debt is a negotiated
instrument, there is no market for trading mezzanine debt securities.
Agreements establishing mezzanine debt vary, and every note is subject to its own
negotiated terms. The terms can include provisions for the borrowing entity to delay repayment
of the debt, and they usually provide options for the investor to obtain equity interests, including
warrants. (A warrant is a certificate entitling a holder to purchase a specified amount of
securities at a specified price. The specified price is usually higher than the current market value
of the security, but the holder will benefit if the market value increases above the specified price
before the warrant expires.)
The term mezzanine debt refers to the priority of this debt obligation for an entity,
which lies below senior debt and higher than common stock. The priority of a debt can become
relevant when a business entity fails and enters liquidation or in other circumstances.
A filer who holds a mezzanine debt security valued over $1,000 or with income over
$200 should report the following information on Schedule A:
the name of the issuer and an indication that the asset is a mezzanine debt security;
the category of amount of income (i.e., any payments of interest); and
any related security that meets the reporting threshold, such as a warrant or other equity
interest, reported as a separate line item.
A filer should report the following information about any transactions over $1,000
involving a mezzanine debt security on Schedule B, Part I:
a description of the transaction;

the value of the transaction.
Conflicts Analysis
The conflicts analysis for a mezzanine debt security is more like the conflicts analysis for
stock than the conflicts analysis for other types of debt instruments. A filer may not participate
personally and substantially in any particular matter that has a direct and predictable effect on the
financial interests of the borrower (i.e., the issuer of the mezzanine debt security). The filer may
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not rely on the de minimis exemptions for publicly traded securities because mezzanine debt
security does not satisfy the definition of a publicly traded security.
A reviewer should be sure to inquire about related equity interests in the borrowing entity
that the filer may hold. A variety of equity interests can be associated with mezzanine debt, and
they may require the filers recusal even after the borrowing entity has repaid its debt.
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MONEY PURCHASE PENSION PLAN

Definition
A money purchase pension plan is a type of defined contribution plan. It is an
arrangement in which an employer makes fixed contributions to a tax-deferred retirement
account. Unlike profit-sharing plans in which employer contributions are discretionary,
employer contributions to a money purchase pension plan are fixed in advance. Each year, the
employer must make fixed contributions based on an employees annual compensation. Like
other defined contribution plans, money purchase pension plans contain underlying assets in
which a filer has invested. These assets often include annuities, diversified mutual funds, bond
funds and stable value funds.
A filer who has an interest in a money purchase pension plan valued over $1,000 or with
income greater than $200 should report the following information on Schedule A:
the name of each asset of the plan that meets the reporting threshold, reported as a
separate line item;
the category of asset value for each asset listed;
either the type of income for each asset listed or an indication that the asset is an excepted
investment fund; and
the category of amount of income for each asset listed.
If an asset in a money purchase pension plan is a fund that does not qualify as an
excepted investment fund, the filer must report all of the underlying assets of that asset.
However, many assets in money purchase pension plans qualify as excepted investment funds.
For transactions over $1,000 involving any asset of the money purchase pension plan, the
filer should report the following information on Schedule B, Part I:
a description of any transactions associated with an asset of the plan;

the actual value of the transaction.
If a filer has a reportable interest in a money purchase pension plan, the filer should also
report the following information on Schedule C, Part II:

the type of retirement plan, which is a money purchase pension plan;
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If a filers spouse holds an interest in a money purchase pension plan, the filer should
disclose the assets of that plan on Schedule A and any transactions related to the plan on
Schedule B, Part I, to the extent that such assets and transactions meet the reporting thresholds.
However, the filer should not provide any information about a spouses money purchase pension
plan on Schedule C, Part II.
Conflicts Analysis
As with other types of defined contribution plans, a money purchase pension plan is an
arrangement for holding other investments on a tax-deferred basis. The filer has a financial
interest in these underlying investments, but the filer may qualify for a regulatory exemption
with regard to some or all of them. If a former employer is no longer making contributions to an
independently managed money purchase pension plan, the filer does not also have a financial
interest in the employer merely as a result of holding an interest in the money purchase pension
plan. However, if the money purchase pension plan includes stock in the former employer the
filer may not participate personally and substantially in any particular matter that has a direct and
predictable effect on the financial interests of the employer, unless the filer qualifies for a
regulatory exemption.
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PHANTOM STOCK
Definition
Phantom stock is a contract between an employer and an employee that grants the
employee the right to receive a payment based on the value of the employers stock. When
granting phantom stock, the employer does not grant the employee any shares of the employers
stock. Instead, the employer grants the employee a right that tracks the value of a specified
number of shares of the stock.
The employee will have a right to receive a payout equivalent to the value of these
tracked shares. Depending on the terms of the employers phantom stock plan regarding the
vesting of phantom stock, the payout may occur on a specified date or upon the occurrence of a
certain event, such as retirement, disability or death. If the employees employment is
terminated before the phantom stock vests, the employee normally forfeits the phantom stock.
The plan may provide for a single payment, or it may provide for installment payments
over a period of time after the phantom stock vests. In some cases, the employer may let the
employee elect to receive the payout in the form of an equivalent amount of stock. In addition to
the final payout, under some phantom stock plans, the employee may receive payments
equivalent to any dividends that the employer pays to stockholders.
A reviewer should understand some of the key similarities and differences between
phantom stock and other types of financial interests in an employer. Phantom stock differs from
an employers stock in that phantom stock does not give the employee an ownership interest in
the employer. Unlike stock, phantom stock also may not convey a right to payments based on
dividends. Phantom stock differs from a stock appreciation right in that its payout is based on
the full value of the stock, while the payout of a stock appreciation right is based only on any
increase in the value of the stock over a specified period of time. Phantom stock differs from a
stock option because the employee does not need to purchase anything.
A filer should report the following information about phantom stock valued over $1,000
or with income over $200 on Schedule A:
the name of the employer and the type of asset (i.e., phantom stock);
the category of asset value, which usually is based on current market value of the
employers stock; and,
if the filer has received a cash payout, the exact amount of income received in the Other
Income column.
The filer should report the exact amount of any cash payout because the payout is treated
as part of the filers compensation from employment. If the filer has not yet received the payout,
the filer should either check the box in the None column for income or write $0 in the
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Other Income column. Alternatively, if the filer has received the payout solely in the form of
stock, the filer should report the stock, rather than the phantom stock, as an asset on Schedule A.
If the filer continues to hold phantom stock, the filer should report the following
information on Schedule C, Part II:

an indication that the arrangement involves phantom stock;
the date on which the filer began participating in the plan under which the employee
received the phantom stock;
the relevant terms of the phantom stock (including the date of any expected payout or
installment payment); and,
if the employer will make additional grants of phantom stock in the future, an indication
that the employer will continue making such grants.
If a filers spouse holds phantom stock, the filer should disclose the spouses phantom
stock on Schedule A. However, the filer should not provide any information about a spouses
phantom stock on Schedule C, Part II.
Conflicts Analysis
The conflicts analysis for phantom stock is the same as it would be for a direct stock
interest. The conflict arises when the filer first receives a grant of phantom stock, even if the
filer has not yet received a payment based on that phantom stock. Absent a waiver, the filer may
not participate personally and substantially in any particular matter that will have a direct and
predictable effect on the financial interests of the employer that issued the phantom stock. The
phantom stock will not qualify for a de minimis exemption under 5 C.F.R. 2640.202.
with their former employer regarding the disposition of unvested phantom stock. If the employer
has agreed to accelerate the vesting schedule in order to enable the employee to receive a
payment before entering Government service, it is likely that any such payment greater than
$10,000 will constitute an extraordinary payment under 5 C.F.R. 2635.503. If the payment
occurs after the filer enters Government service, the reviewer will need to consider the
applicability of 18 U.S.C. 209.
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PUT AND CALL OPTIONS

Definition
A put option is a contract that provides an investor the option to sell a security.
Conversely, a call option is a contract that provides an investor the option to purchase a security.
With regard to each of these types of contracts, the investor has the right, but not the obligation,
to exercise the option at a specified price (the strike price) until the contracts expiration date.
One way in which put and call options differ from certain other types of options, such as
employee incentive stock options, is that investors can purchase put and call options on the open
market. As an alternative to exercising put and call options, investors can also resell them on the
open market before their expiration.
This discussion focuses on the filer who is a typical investor who has purchased a
contract for a put or call option from another party. It is possible, however, that a reviewer may
encounter a filer who is the other party to the contract; in other words, the filer may be the party
who initially granted the option to an investor. This situation is relatively uncommon for filers
of financial disclosure reports, and it is not addressed here. However, reviewers may consult
OGE for assistance if this situation arises.
The manner in which a filer should report a put or call option depends on whether the
filer currently holds the option, has exercised the option or has resold the option.
The Filer Who Currently Holds a Put or Call Option
A filer holding a put or call option that has a fair market value over $1,000 or that
produced income over $200 during the reporting period should report the following information
on Schedule A:
the name of the option;

a category of asset value of the option; and
The option normally will not produce income. Unless the filer resells the option, income is
associated with the underlying security, not with the option.
A filer who holds a put option may or may not also hold the underlying security that the
filer has the right to sell at the specified option price. If the filer holds the underlying security in
addition to the option, the filer should separately report the underlying security if it has a fair
market value over $1,000 or if it produced income over $200 during the reporting period. The
filer should report, as a separate line item, the following information on Schedule A:
the name of the underlying security;
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However, a filer who holds a put option may not currently hold the underlying security. While a
put option is the option to sell the underlying security, the filer may still have to acquire the
underlying security before the filer can exercise the right to sell it at a specified price. In that
event, the filer would not have an underlying security to report.
Sometimes the value of an option will not be readily ascertainable. The value of a put
option will not be readily ascertainable if the strike price is less than the market value of the
security. The value of a call option will not be readily ascertainable if the strike price exceeds
the market value of the security. In either of these situations, where the filer would actually lose
money by exercising the option, the option is said to be underwater. When an option is
underwater, the filer may write value not readily ascertainable across the columns in Block B
of Schedule A. Instead of reporting a category of asset value in Block B, the filer should report
the following in Block A of Schedule A: (1) the type of option; (2) the strike price; (3) the
expiration date; and (4) the name and number of units of the security for which the option exists.
The filer should report the purchase or sale of an option on Schedule B, Part I. The filer
should also report all transactions related to the exercise of an option on Schedule B, Part I. If a
filer never exercises an option before its expiration, the option will cease to have any value.
However, a filer should not report the expiration of an option on Schedule B, Part I, because the
expiration of the option is not a transaction.
The Filer Who Has Exercised a Put Option
If a filer has fully exercised a put option, neither the option nor the underlying security
will have any reportable value. In that case, a filer should report only income over $200. In
some cases, the filer may have received income in the form of dividends or interest over $200
before selling the underlying security. More often, the filer will have capital gains over $200 to
report as a result of selling the underlying security. A filer with reportable income associated
with a fully exercised put option or its underlying security should report the following
the name of the underlying security that the filer sold;

the current category of asset value, which will be None if the filer has completely sold
off the underlying security; and
the type and the category of amount of income from the underlying security.
If a filer has only partially exercised a put option, the option may still have a reportable
value. In that case, the filer should report the option as a separate line item, provided the option
meets the reporting threshold.
Finally, a filer who sold an underlying security over $1,000 related to a put option should
report the following information on Schedule B, Part I:
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the name of the underlying security sold;

an indication that the transaction was a sale;
The filer should provide similar information for a prior purchase of the underlying security, if the
filer purchased the underlying security during the reporting period prior to exercising the put
option.
The Filer Who Has Exercised a Call Option
If a filer has fully exercised a call option, the option will no longer have a value of its
own, but the underlying security that the filer purchased may have reportable value. Normally,
the filer should report only the underlying security and not the fully exercised call option on the
financial disclosure report. In the typical case, the filer who has fully exercised a call option will
report the following information on Schedule A for any underlying security that has a fair
market value over $1,000:

the current category of asset value;
The filer will not have capital gains to report solely as a result of exercising a call option,
even if the filer purchased the underlying security at a price below the current market value. It
may seem strange that the filer will have no reportable capital gains if the current value of the
underlying security exceeds the cost the filer paid for it, but the tax code does not recognize
capital gains until a filer sells a security. (In legal terms, this means that the price difference is
included in the securitys cost basis for tax purposes.)
Although the exercise of the call option will not result in reportable capital gains, a filer
may have received reportable income at some point after exercising the call option. After
exercising the call option and purchasing the underlying security, the filer may have sold the
underlying security for a profit. In that event, the filer will report any capital gains over $200
associated with this subsequent sale of the underlying security on Schedule A. Alternatively, a
filer may receive income in the form of dividends or interest from the underlying security after
exercising the call option. The filer will report any such dividend or interest income over $200
on Schedule A.
If a filer has only partially exercised a call option, the option may still have a reportable
value. In that case, the filer should report the option as a separate line item, provided the option
meets the reporting threshold.
Finally, a filer who purchased an underlying security over $1,000 related to a call option
should also report the following information on Schedule B, Part I:
the name of the underlying security purchased;

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an indication that the transaction was a purchase;

The filer should provide similar information for a subsequent sale, if the filer sold the underlying
security after purchasing it.
The Filer Who Resells a Put or Call Option
Instead of exercising a put or call option, an investor can resell it. If a filer has capital
gains over $200 from selling a put or call option during the reporting period, the filer should
report the following information on Schedule A:
the name of the option;

a notation in Block A that the option was sold;
the category of value, which should be None; and
the category of amount of income that the sale generated; and
the type of income, which will be Capital Gains.
A filer who holds a put option may or may not also hold the underlying security that the
filer has the right to sell at the specified option price. If the filer holds the underlying security in
addition to the option, the filer should separately report the underlying security if it has a fair
market value over $1,000 or if it produced income over $200 during the reporting period. The
filer should report, as a separate line item, the following information on Schedule A:

the category of asset value of the underlying security; and
the type and the category of amount of income from the underlying security.
Note again that a filer who holds a put option may not actually have acquired the underlying
security yet. In that event, the filer would not have an underlying asset to report.
A filer who sells a put or call option over $1,000 during the reporting period should also
report the following information on Schedule B, Part I:
the name of the option sold;

an indication that the transaction was a sale;
Conflicts Analysis
For both a put option and a call option, the conflicts analysis focuses primarily on the
underlying security. While the filer holds either an option or the underlying security, the filer
predictable effect on the financial interests of the issuer of the underlying security.
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If the stock is publicly traded, a filer may qualify for a de minimis exemption under
de minimis exemption if the filer continues to have any option to purchase stock that the filer has
not yet purchased. The de minimis exemptions for publicly traded securities do not apply to
options to purchase or sell publicly traded securities.
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QUALIFIED TUITION PROGRAM (529 PLAN)

Definition
A qualified tuition program is a program that offers investors tax-advantaged accounts for
the purpose of saving money to cover educational expenses. Qualified tuition programs are often
called 529 plans because they are recognized in the tax code at 26 U.S.C. 529. There are two
types of qualified tuition programs: (1) college savings plans and (2) prepaid tuition plans.
A college savings plan is an investment account in which an individual chooses among
various investment options, often consisting of mutual funds. The amount available for future
tuition depends solely on the amount that the individual contributes and the performance of the
investments.
A prepaid tuition plan is a contract between an individual and the plans sponsor that
allows the individual to prepay future tuition expenses at current tuition rates. Later, the
individual receives a credit for future tuition from the sponsor. The sponsor can either be a state
or the Tuition Plan Consortium, LLC, for private institutions (also known as Independent 529
Plan).
A filer holding an interest in a college savings plan with a value over $1,000 or with
income greater than $200 should report the following information on Schedule A:
a description of each asset in the plan that meets the reporting threshold, reported as a
separate line item;
the category of asset value for each asset;
either the type of income received from each asset or an indication that the asset is an
excepted investment fund; and
the category of amount of income from each asset.
As a form of simplified reporting, a filer may in some cases identify the portfolio option
that the filer has selected within the college savings plan rather than identifying the underlying
assets of the portfolio. This simplified reporting is permissible whenever the underlying assets
of the portfolio within the college savings plan are readily available to the public on the internet.
A filer holding an interest in a prepaid tuition plan with a value over $1,000 or with
income greater than $200 should report the following on Schedule A:
the names of the plan and its sponsor;

the category of asset value, which is the cost the filer paid for the contract;
the type of income; and
the category of amount of income, if any. (A filer usually has no income to report from a
prepaid tuition plan.)
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A filer should not report the purchase of a prepaid tuition plan on Schedule B, Part I.
Because the filers investment in the plan is a contract and not a security, the investment in the
plan is not a reportable transaction. In contrast, a filer who has invested in a college savings
plan should report the following information for any transaction over $1,000 that involves an
asset of the plan on Schedule B, Part I:
the name of the asset;

Conflicts Analysis
College Savings Plan
A college savings plan is a vehicle for investing in various assets, and the plans sponsor
does not guarantee these assets. Therefore, the filer has a financial interest in the plans assets.
Accordingly, the reviewer should analyze these assets for potential conflicts. A filer may qualify
for a regulatory exemption under 5 C.F.R. 2640.201 because the assets of college savings plans
are often mutual funds.
Prepaid Tuition Plan
A prepaid tuition plan is a contractual arrangement with the sponsor of the plan, and the
filer has a financial interest in the sponsors ability or willingness to carry out the terms of the
contract. Whether the sponsor of a plan is a state government or the Tuition Plan Consortium,
LLC, the plan normally will not give rise to significant financial conflict of interest concerns for
most Government employees.
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SHORT SALE
Definition
A short sale is the sale of securities that an investor has borrowed from a broker. The
investor, who does not actually own the securities, must eventually purchase an equal number of
the same securities and return them to the broker. The investors goal is to purchase replacement
securities at a price lower than the price at which the investor initially sold them. The investor
will realize a profit as a result of this price discrepancy if the value of the securities decreases.
However, the investor will lose money if the value of the securities increases before the investor
purchases them. In either case, the investor must also pay interest on the loan.
When the investor acquires the initial borrowed securities from the broker, but has not yet
purchased the replacement securities, the investor is in an open position. Later, when the
investor purchases the replacement securities and returns them to the broker, the investor is said
to be in a closed position.
Reporting requirements for short sales vary depending on whether a filer is in an open
position or a closed position. A filer in a closed position with realized gains over $200
should report the following information on Schedule A:
the name of the security;

an asset value of None (because the filer does not own the security); and
the category of amount and the type of income earned from the transaction.
A filer in an open position should not report the short sale on Schedule A. When the filer is in
an open position, the value of the securities is not reportable on Schedule A because the
securities do not belong to the filer and they have not yet generated any income for the filer.
A filer should report a short sale on Schedule B, Part I, only if the filer is in a closed
position. Even then, the filer should not report initial sales of borrowed securities in a short sale
because those securities belonged to the broker, not to the filer. Instead, a filer in a closed
position should report the following information related to the filers purchase of replacement
securities for more than $1,000:
the name of the replacement securities and a notation that they were purchased in
connection with a short sale;
an indication that the transaction was a purchase;
the date of the purchase; and
When reporting the Amount of Transaction on Schedule B, Part I, the filer should use the cost
of repurchasing the replacement securities, rather than the cost of the securities that the filer
originally borrowed from the broker.
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The filer should report any liability over $10,000 owed to a broker during the reporting
period on Schedule C, Part I. If a short sale that meets this reporting threshold is in an open
position, the filer should report the following information on Schedule C, Part I:
the name of the broker (in the Creditors column);

the name of the securities (in the Type of Liability column);
a notation that the nature of the liability is a short sale and that the position is open (in the
Type of Liability column);
the date when the filer incurred the liability, which is the date on which the filer initially
borrowed the securities (in the Date Incurred column);
the interest rate (in the Interest Rate column);
a notation that the term is on demand (in the Term column); and
the category of amount.
When valuing an open position on Schedule C, Part I, the filer may use the cost of
repurchasing the replacement securities. Alternatively, the filer may use the cost of the securities
that the filer originally borrowed from the broker.
If a short sale that meets the reporting threshold is in a closed position, the filer should
report the following information on Schedule C, Part I:
the name of the broker (in the Creditors column);

the name of the securities (in the Type of Liability column);
a notation that the nature of the liability was a short sale and that the position has been
closed (in the Type of Liability column);
the date when the filer incurred the liability, which is the date on which the filer initially
borrowed the securities (in the Date Incurred column);
the interest rate (in the Interest Rate column);
a notation that the term is on demand (in the Term column); and
the category of amount.
When valuing a closed position on Schedule C, Part I, the filer should use the cost of
repurchasing the replacement securities, rather than the cost of the securities that the filer
originally borrowed from the broker.
Conflicts Analysis
A closed position does not pose an ongoing conflict of interest because a filer no longer
has a financial interest in a short sale after the position has closed. However, conflicts can arise
when a short sale is in an open position.
With regard to an open position, the conflicts analysis for a short sale focuses primarily
on the securities the filer has borrowed for the short sale. For purposes of the conflicts analysis,
the filers financial interest in these borrowed securities is the same as if the filer actually owned
them. Therefore, the filer may not participate personally and substantially in a particular matter
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that will have a direct and predictable effect on the financial interests of the issuer of the
securities. 18 U.S.C. 208. The exemptions at 5 C.F.R. part 2640 do not cover a financial
interest in a short sale that is in an open position.
Because the term of the loan from the broker is on demand, a conflict could also
potentially arise in connection with particular matters affecting the decision of the broker to
demand repayment of an open position. As with other routine commercial transactions,
however, loans from brokers on terms generally available to the public normally do not give rise
to significant financial conflict of interest concerns.
Requests for Certificates of Divestiture
If an agency requires a filer to close out a short sale in order to avoid a potential conflict
of interest, the filer will not be able to obtain a Certificate of Divestiture. A Certificate of
Divestiture is unavailable in such circumstances because the filer will not be selling the
securities, and the applicable statute allows OGE to issue Certificates of Divestitures in
connection with sales. Instead, the filer will need to purchase replacement securities, which the
filer will return to the broker, in order to close out the short sale.
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SPLIT-DOLLAR LIFE INSURANCE POLICY

Definition
A split-dollar life insurance policy is a specific type of life insurance policy that has a
cash value. The term split-dollar describes the method of paying for life insurance by splitting
the premiums and proceeds between an employer and an employee.
There are two main types of split-dollar life insurance policies. In one type of policy, the
employer pays the premiums and owns the contract. The employer receives reimbursement of
the premiums upon the employees death, and the employees beneficiary then receives the
balance of the insurance proceeds. In the other type of policy, the employer pays the premiums
as loans to the employee, but the employee owns the contract. The loans are then repaid to the
employer out of the insurance proceeds. The primary differences between these two types of
policies are differing tax consequences based on the ownership of the contract.
A filer who holds a split-dollar life insurance policy should report the following
the names of the insurance company and the employer;

the type of insurance policy;
In addition, the filer should report the following information about any continuing ties to
a former employer through a split-dollar life insurance policy on Schedule C, Part II:

the type of insurance policy, which is a split-dollar life insurance policy;
an indication as to whether the employer is continuing to make contributions; and
the date on which the filer began participating in the policy.
If a filers spouse holds an interest in a split-dollar life insurance policy, the filer should
disclose the policy on Schedule A. However, the filer should not provide any information about
a spouses split-dollar life insurance policy on Schedule C, Part II.
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Conflicts Analysis
With respect to a split-dollar life insurance policy, the filer has a financial interest in the
former employers ability or willingness to continue paying the premiums. The filer also has a
financial interest in the insurers ability or willingness to pay the policy benefits. Therefore, the
filer may not participate personally and substantially in any particular matter that would have a
direct and predictable effect on the ability or willingness of either the former employer or the
insurer to honor these commitments.
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STABLE VALUE FUND

Definition
A stable value fund is an investment vehicle that is generally offered as an investment
option in an employee benefit or retirement plan. Stable value funds typically seek to provide
greater returns than money market funds but greater security than other types of investment
funds. They typically invest in bonds and interest-bearing contracts. The issuers of the contracts
are usually insurance companies that guarantee the value of the assets and a specified minimum
rate of return. Some stable value funds are mutual funds that have registered with the Securities
and Exchange Commission (SEC), but not all stable value funds are registered mutual funds.
A filer holding a stable value fund with a value over $1,000 or with income greater than
$200 should report the following information on Schedule A:
the name of the fund, including either the name of the employer or the name of the entity
that manages the fund;
either an indication that the asset is an excepted investment fund or the type of income;
the category of income; and,
if the fund is not an excepted investment fund, each asset of the fund that meets the
reporting threshold, reported as a separate line item that identifies:
- the name of the asset;
- the category of asset value; and
- the type and the category of income.
Stable value funds often meet the definition of an excepted investment fund at 5 C.F.R.
2634.310(c). They tend to satisfy the requirements of being widely held and out of the filers
control because filers usually invest in them through employee benefit or retirement plans. They
also often satisfy the requirement of being publicly available, even when they are not available to
individual investors, if they are commercially available to institutional investors, such as
employers.
On Schedule B, Part I, filers should report transactions involving the assets of an
employee benefit or retirement plan to the same extent that they would report such transactions if
they held these assets directly. For this reason, a filer should report a transaction involving a
stable value fund, even if the filer holds an interest in the stable value fund through an employee
benefit or retirement plan.
When a filer holds an interest in a stable value fund through an employee benefit or
retirement plan, the filer should report the employee benefit or retirement plan on Schedule C,
Part II, including the following information:
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the type of retirement plan (e.g., defined contribution plan, defined benefit plan, etc.); and
the date on which the filer began participating in the plan.
If a filers spouse holds a stable value fund through an employee benefit or retirement
plan, the filer should disclose the asset on Schedule A and any transaction related to the asset on
Schedule B, Part I. However, the filer should not provide any information about a spouses
asset on Schedule C, Part II.
Conflicts Analysis
As with other pooled investment vehicles, the filer has a financial interest in the assets of
the stable value fund. A filer may not be able to participate personally and substantially in any
particular matter that has a direct and predictable effect on the financial interests of the issuers of
any securities held in the stable value fund. To the extent that the fund holds bonds and interestbearing contracts, the filer may not be able to participate personally and substantially in any
particular matter that has a direct and predictable effect on either (a) the value of the bonds or (b)
the ability or willingness of the issuers of the bonds or contracts to make payments to the filer.
However, the stable value fund may qualify for one of the exemptions for sector mutual funds at
5 C.F.R. 2640.201, if the stable value fund is a mutual fund that has registered with the SEC.
If a former employer is no longer making contributions to an independently managed
employee benefit or retirement plan that contains the stable value fund, the filer does not have a
financial interest in the employer solely as a result of holding an interest in a stable value fund
that does not contain employer stock.
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STOCK APPRECIATION RIGHT

Definition
A stock appreciation right is a contract between an employer and an employee that grants
the employee the right to receive a payment tied to any increase in the value of employers stock.
When granting a stock appreciation right, the employer does not grant the employee any shares
of the employers stock. Instead, the employer grants the employee a right that tracks the value
of a specified number of shares over a specified period of time. The employer designates a
grant price, and the employee will have a right in the future to receive a payout equivalent to
the difference between the market price of the stock and the grant price.
If the value of the shares increases, the employee can exercise the stock appreciation right
by requesting a payment equivalent to the increase in value of the shares. For example, if the
employee has a stock appreciation right tied to 100 shares and the value of the shares increases
by 50 cents per share, the employee may request a payment of $50. In some cases, the employer
may let the employee elect to receive the payment in the form of $50 worth of employer stock at
current market value.
Like stock options, a stock appreciation right typically has a vesting requirement and an
expiration date. The employee may not exercise the stock appreciation right before it vests or
after it expires. If the employees employment is terminated before the stock appreciation right
vests, the employee normally forfeits the right.
A filer should report the following information about any stock appreciation right with a
value over $1,000 or with income over $200 on Schedule A:
the name of the employer and the type of asset (i.e., stock appreciation right);
the category of asset value; and,
if the filer has exercised the stock appreciation right and received a cash payout, the exact
amount of income received in the Other Income column.
The filer should report the exact amount of any cash payout because the payout is treated
as part of the filers compensation. If the filer has not exercised the stock appreciation right, the
filer should either check the box in the None column for income or write $0 in the Other
Income column. If the filer has fully exercised the stock appreciation right and has received the
payout solely in the form of stock, the filer should report the stock, rather than the stock
appreciation right, as an asset on Schedule A.
For purposes of financial disclosure, a filer may value a stock appreciation right based on
the difference between the current market value and the grant price. The filer should subtract the
grant price from the current market value of the employers stock. Then, the filer should
39
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multiply this difference by the number of shares that the stock appreciation right is tracking, as
follows:
(current market value grant price) x number of shares = value
($1.50 - $1.00) x 100 shares
= $50
The stock appreciation right is said to be underwater if the value is zero or a negative
number. This situation occurs when the current market value of a share is less that the grant
price. In other words, the stock decreased in value after the employer granted the stock
appreciation right, and the employee would not benefit from exercising the right. When a stock
appreciation right is underwater, the filer may write value unascertainable across the columns
in Block B of Schedule A. In that event, the filer should report the following information in
Block A of Schedule A:
the name of the employer and the type of asset (i.e., stock appreciation right);
the number of shares;
the grant price;
the expiration date;
an indication as to whether the stock appreciation right is vested; and
for an unvested stock appreciation right, the date on which the unvested right will vest.
If the filer continues to hold a stock appreciation right, the filer should report the

an indication that the arrangement involves a stock appreciation right;
the date on which the filer began participating in the plan under which the employee
received the stock appreciation right;
an explanation regarding the disposition of the stock appreciation right (including an
indication as to whether the filer will retain the stock appreciation right, exercise any
vested right, forfeit any unvested right, or receive an accelerated payout of any unvested
right); and,
if the employer will make additional grants of stock appreciation rights in the future, an
indication that the employer will continue making such grants.
If a filers spouse holds a stock appreciation right, the filer should disclose the spouses
stock appreciation right on Schedule A. However, the filer should not provide any information
about a spouses stock appreciation right on Schedule C, Part II.
Conflicts Analysis
The conflicts analysis for a stock appreciation right is the same as it would be for a direct
stock interest. The conflict arises when the filer first receives the stock appreciation right, even
if the filer has not yet exercised that right. Absent a waiver, the filer may not participate
personally and substantially in any particular matter that will have a direct and predictable effect
40
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on the financial interests of the employer that issued the stock appreciation right. The stock
appreciation right will not qualify for a de minimis exemption under 5 C.F.R. 2640.202.
with their former employer regarding the disposition of unvested stock appreciation rights. If the
employer has agreed to accelerate the vesting schedule in order to enable the employee to receive
a payment before entering Government service, it is likely that any such payment greater than
$10,000 will constitute an extraordinary payment under 5 C.F.R. 2635.503. If the payment
occurs after the filer enters Government service, the reviewer will need to consider the
applicability of 18 U.S.C. 209.
A filer may not receive a Certificate of Divestiture for the exercise of a stock appreciation
right. A Certificate of Divestiture is unavailable because the payout that the employee receives
upon exercising the right constitutes ordinary income, rather than capital gains. However, if an
employee receives the payout in the form of stock, the employee may be able to receive a
Certificate of Divestiture for a subsequent sale of the stock.
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TAX-SHELTERED ANNUITY (403(b) RETIREMENT PLAN)

Definition
A tax-sheltered annuity (or 403(b) retirement plan) is a defined contribution retirement
plan available primarily to employees of public educational systems and employees of certain
non-profit organizations. Certain other individuals are eligible under the tax code to participate
in tax-sheltered annuities, as well.
For the purposes of financial disclosure, tax-sheltered annuities are similar to 401(k)
retirement plans. The tax-sheltered annuity is an arrangement in which an employees pre-tax
earnings and sometimes employer matching contributions are contributed to a tax-deferred
retirement account. Like 401(k) retirement plans, tax-sheltered annuities contain underlying
assets in which a filer has invested. These assets often include annuities, diversified mutual
funds, bond funds and stable value funds.
A filer who has an interest in a tax-sheltered annuity valued over $1,000 or with income
greater than $200 should report the following information on Schedule A:
the name of each individual asset of the tax-sheltered annuity that meets the reporting
threshold, reported as a separate line item (including, in the case of an asset that is
actually an annuity, the name of the annuity provider);
the category of asset value for each asset listed;
either the type of income for each asset listed or an indication that the asset is an excepted
investment fund; and
the category of amount of income for each asset listed.
If an asset in a tax-sheltered annuity is a fund that does not qualify as an excepted

investment fund, the filer must report all of the underlying assets of that asset. However, many
of the assets in tax-sheltered annuities qualify as excepted investment funds.
For transactions over $1,000 involving any asset of the tax-sheltered annuity, the filer
should report the following information on Schedule B, Part I:
a description of any transactions associated with an asset of the tax-sheltered annuity;

the date of the transaction (or various to indicate that transactions involving a particular
asset occurred on various dates during the reporting period); and
the actual value of the transaction.
If a filer has a reportable interest in a tax-sheltered annuity, the filer should also report the

42
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the type of retirement plan, which is a tax-sheltered annuity (or 403(b) plan);
If a filers spouse holds an interest in a tax-sheltered annuity, the filer should disclose the
assets of that annuity on Schedule A and any transactions related to the tax-sheltered annuity on
Schedule B, Part I. However, the filer should not provide any information about a spouses taxsheltered annuity on Schedule C, Part II.
Conflicts Analysis
As with other types of defined contribution plans, a tax-sheltered annuity is an
arrangement for holding other investments on a tax-deferred basis. The filer has a financial
interest in these underlying investments, but the filer may qualify for a regulatory exemption
with regard to some or all of them. If a former employer is no longer making contributions to an
independently managed tax-sheltered annuity, the filer does not have a financial interest in the
employer merely as a result of holding an interest in the tax-sheltered annuity.
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TIAA-CREF
Definition
TIAA-CREF (Teachers Insurance and Annuity Association of America College
Retirement Equities Fund) is a non-profit entity that provides a variety of financial services,
including retirement plans. TIAA-CREF is one of the largest financial services providers in the
United States, and its retirement products typically appear on financial disclosure reports of filers
who have worked as professors or teachers. TIAA-CREF offers a variety of plans, including
403(b) retirement plans, simplified employee pension individual retirement accounts (SEP IRA),
Keogh plans and college savings plans. TIAA-CREF also offers a variety of specific financial
instruments, including annuities, various forms of insurance, cash accounts; and mutual funds.
A filer who holds a TIAA-CREF product valued at over $1,000 or with income greater
than $200 should report the asset on Schedule A in a manner consistent with the requirements
for that type of asset. The filer should identify each asset as a separate line item, rather than
identifying only TIAA-CREF in Block A (e.g., TIAA-CREF: TIAA Traditional Annuity;
TIAA-CREF: TIAA Growth & Income; TIAA-CREF: TIAA Inflation-Linked Bond). For
TIAA-CREF defined contribution plans, the filer should report each underlying asset of the
defined contribution plan as a separate line item on Schedule A.
On Schedule B, Part I, the filer should report any transactions over $1,000 involving a
TIAA-CREF product. The filer should be sure to report transactions involving the individual
underlying assets of a TIAA-CREF defined contribution to the extent that any such transactions
exceed $1,000.
Filers often have acquired their interests in TIAA-CREF retirement products through their
former employers retirement plans. A filer should disclose continued participation in such a
retirement plan on Schedule C, Part II, including the following information:

the type of retirement plan (e.g., defined contribution plan, fixed annuity, etc.); and
the date on which the filer began participating in the plan.
If a filers spouse holds a TIAA-CREF product, the filer should disclose all related assets
on Schedule A and all related transactions on Schedule B, Part I. However, the filer should not
provide any information about a spouses holdings on Schedule C, Part II.
Conflicts Analysis
The conflicts analysis for an asset that is a TIAA-CREF product is the same as for any
other asset that a filer holds. For example, if the filer has invested in a TIAA-CREF defined
contribution plan, the conflicts analysis should take into consideration all of the underlying assets
of the plan in which the filer has invested.
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From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

HELPDESK (DO)
</o=ustreasury/ou=do/cn=recipients/cn=helpdesk>
phone not working
Wed Apr 27 2011 14:07:44 EDT
Hello,
My desk phone is not functioning properly. When people try to call me, the phone rings once, then goes
directly to voicemail, so I dont have time to pick up the calls. In addition, individuals who have tried to
call me from an outside line report that the phone directs them straight to voicemail without ringing. Can
a technician come to fix my phone? I am located at 1801 L St, Room 546-J.
Thank you,
Elizabeth Glaser
Page 371 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

FW: SF-50s
Wed Apr 27 2011 13:58:16 EDT
step to 13-2trsf50rp_3549591.pdf
William Thomas SF-50.

-----Original Message----From: Glaser, Elizabeth (CFPB)
To: Tingwald, James (CFPB)
Subject: FW: SF-50s
Importance: High
1st one!
-----Original Message----From: Thomas, William [mailto:[email protected]]
Cc: Weipert, Dennis J
Subject: FW: SF-50s
Importance: High
Ms Glaser:
As requested, please find my form.
Best regards,
William J. Thomas
William J. Thomas, M.B.A., Certified Paralegal FAI Certified COTR Consumer Protection Compliance
Specialist (ILS) Office of RESPA/Interstate Land Sales Department of Housing and Urban Development
Room 9154
451 7th Street SW
Washington DC 20410
Direct Phone: 202-402-3006
General Phone: 202-708-0502
Fax: 202-708-4559
e-mail: [email protected]
ILS Examiner for the following jurisdictions: AK, AL, AR, CO, DE, DC, IL, IN, IA, KS, KY, ME, MD, MI,
MS, MT, NE, NH, NJ, NY, ND, OH, OK, SD, RI, TX, UT, VT, VA, WA, WI, WV, & WY
Please be advised that sometime in 2011, this office and staff will be transferred to a newly created
Page 373 of 3826
agency identified as the Bureau of Consumer Financial Protection (CFPB). The transfer date has been
set as of July 21, 2011. See Notice which was published in the Federal Register, 75 FR 57252,
September 20, 2010. However, there is a possibility that staff could be transferred earlier or the transfer
date could be re-set to a later date.
WARNING: Any reply e-mail to this message will be sent through a United States Government e-mail
system. No expectation of privacy should be expected of information transmitted through this system.
This message is intended for designated recipients only. If you have received this message in error,
please delete the original and all copies and notify the sender immediately as to any errors in delivery.
Federal law prohibits the disclosure or other use of this information. Please note that any information
contained herein is to be considered as advice of a general nature as to the preparation of a filing
and/or as a response to an informal inquiry or request for information or as a response to informal
discussions or as an unofficial staff interpretation by the Office of RESPA/Interstate Land Sales staff
pursuant to 24 CFR 1720.35 and is not deemed to be a formal advisory opinion as described under 24
CFR 1710.17 and does not provide any additional protection as that which may be afforded if an
official advisory opinion was obtained.
From: Shapiro, Barton
To: Collier, Angela B; Czauski, Henry S; Denton, Deborah J; Dunne, Richard E; Fay, Andrew B; Friend,
David L; Gipe, Laura T; Grimes, Carolyn; Hansen, Geri; Jackson, Ivy M; Johanek, Charles A; Johnson
III, Daniel; Kremer, Shiloh; Marcum, Deborah G; Matthews, Tawanna D; McClary, Kevin; Norfleet, Eddy
F; Payne, Teresa L; Perrett, Cheryl J; Romano, Anthony P; Shearer, Ann B; Stevens, Kevin L; Stewart,
Lejorian J; Sullivan, Mary Jo; Thomas, William; Weipert, Dennis J; Wilkerson, Tracey A
Cc: Ryan, Robert C; Kanovsky, Helen R; Payne, Teresa L; '[email protected]'
Subject: SF-50s
Importance: High
Please submit your most recent SF-50 Personnel Action form (in pdf format) directly to Elizabeth.
[email protected]<mailto:[email protected]>, by c.o.b. Monday, April 18, 2011.
These forms are essential for the CFPB to complete position and series development.
Thank you all for your very prompt attention to this task.
Bart
Barton Shapiro, Director

Office of RESPA and Interstate Land Sales Department of Housing and Urban Development
202.708.0502 (phone)
202.708.4559 (fax)
www.hud.gov/respa<http://www.hud.gov/respa>
please delete the original and all copies and notify the sender immediately. Federal law prohibits the
disclosure or other use of this information.
Page 374 of 3826
From:

_DL_CFPB_AllHands
Adamske, Steven
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Wed Apr 27 2011 11:35:55 EDT
Index

The Daily Show With Jon Stewart Interview With Elizabeth Warren (with videos)
Reuters White House eyes Warren associates for consumer job
CNNMoney Warren defends consumer bureau on Daily Show
Page 376 of 3826

Bank Systems & Technology Elizabeth Warren Visits The Daily Show, Defends Consumer
Agency
New York Times (blog) Journalists and Lawmakers Dominate Warrens Schedule
Housing Wire Mortgage industry readies for pit bull CFPB
The Nation Will Better Consumer Protection Lead to a Credit Crunch for Women?
Politico Morning Money Daily Show Green Room Report
New York Times Lobbyist Fires Warning Shot Over Donation Disclosure Plan
Consumer Credit
Charlotte Observer Bank of America introducing penalty rates for late payments
Reuters (blog) What you dont know about your checking account can hurt you
American Banker The Community Bank Is No Spotted Owl
New York Times (blog) Big Changes to American Expresss Blue Cash Card
Housing
American Banker New Tool Checks Military Status Before Foreclosure
American Banker Study: Homebuyer Education, Counseling Have Questionable Impact
Los Angeles Times California bill ending dual track foreclosures faces key vote
Huffington Post Why We Regulateand Why John Walsh Needs to Resign
The Daily Show With Jon Stewart

Interview With Elizabeth Warren
April 26, 2011
Stewart: Welcome back. My guest tonight, she's an Assistant to President Obama as well as Special
Advisor to the Secretary to the Treasury on the Consumer Financial Protection Bureau. Please
welcome back to the program, Elizabeth Warren. (cheers and applause) Hello! Great to see you. Thank
Page 377 of 3826
you for being here again.
Warren: Thank you!
Stewart: You first came to our program about 30 years ago with an idea... (laughter). ... that we were
going to create an agency that would protect consumers with simple common sense solutions.
Warren: Right.
Stewart: Since then, you have been turned into... I don't know if you'd say Che Guevara is the right...
(laughter). But you have somehow morphed into a controversial figure. What has changed? Have you
changed? Are you now... or is it that simple solutions are now considered controversial?
Warren: Well, so what we're looking for is pretty straightforward stuff. We've got a broken financial
services market. nobody can tell the price of a credit card. people got tangled up on mortgages. Part of
what brought us to your knees two and a half years ago. What this agency really wants to do is it wants
to make prices clear, it wants to make risks clear, it wants to get rid of the fine print, the word barf in the
middle of these contracts. (laughter) So that you can actually make direct comparisons. in other words,
to try to make a financial market work for families. that's what this agency is all about.
Stewart: Well, then I think I speak for most of America and many congressional individuals and say
"Who do you think you are?" (laughter) So what is... you know, the complaints originally were we don't
need to regulate this.
Warren: Right.
Stewart: And then they said, okay, we do. (laughter) But not this. This is too much.
Warren: So, you know, this is really about your vision. I mean, we really do, we have this crisis in 2008,
it was the worst since the great depression and coming out of it we could go one way or another and
the one was we should say, you know, that's what we built with deregulation, it's a boom-and- bust
world and so a few million people lose their homes from time to time, a few million people lose their
jobs, people get their retirements wiped out, their savings gone, but a few people did really well in that
world.
Stewart: It's the free-market system. You've articulated it beautifully. Why do you want toes me with
Page 378 of 3826
that?
Warren: The alternative to say is actually, we can do better than that. The first one is not a free-market
system, it's a rigged game. We think we can actually do better than that. what we can really do is we
can build a system in which there is not only some basic security for the economy but it's really about
mid--class families. Millions of Americans today live one bad diagnosis, one pink slip, one interest rate
reset away from complete financial collapse. This consumer agency is really a very tangible, very
concrete down payment on the notion that together we can build something that's fairer and we can
actually give middle-class families a chance to survive economically, maybe even to prosper. That's
really what this is about, your vision of what we should be doing.
Stewart: I... I... I... (cheers and applause) ... applaud this vision, but the complaint is that your vision is
actually what you will be doing is meddling in a system that is actually quite perfect on its own and that
this... you would say collapse rail damage of capitalism is actually the design of capitalism and if you
were to mess with that, if you were to tinker with that, the very fabric of our society could be torn
asunder and these middle-class families, as you call them, will suffer the consequences because you
will be a draconian emperor of finance. (laughter) for instance, in this agency could you say to Goldman
Sachs, You are no longer in the financial business, you know make hats"? (laughter).
Warren: No, I'm afraid all we can do as a consumer agency is really be pretty straightforward. This is
about families being able to tell costs and risks. But, you know, here's...
Stewart: Why do companies not want you to do that? What is it they think you're messing with that they
don't want? What secret recipe are you messing with?
Warren: Okay, so look, we had this fight out in the open a year ago over the whole question of what
we're going to do on financial reform. The fight was there. It was high noon, we had it out in the middle
of Main Street. A lot of middle-class families, a lot of folks like me who got out there and said, look, the
game is rigged against us, right now what we've got is we've got a financial services market in which
families are handed paperwork, you don't figure out what the real price is until the back end.
Stewart: You can't make informed decisions.
Warren: You cannot make informed decisions. We want a consumer agency that just says level playing
field. We all got out there and we can tell what's going on. The other side said we will kill this agency, it
will never be born. So we had that fight. Lots of people got into it. It was big, visible, we said give us a
vote, we got a vote and you know what happened?
Stewart: You won?
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Warren: The middle-class won. We got a consumer agency that's strong, that has the right tools that
could actually get that job done.
Stewart: And this is my favorite part of the fight. Tell us about round two. (laughter).
Warren: So I thought the next part would be all about getting the pieces of the agency put together.
And it is in part and I'm having great fun doing that. But the fight isn't over. The fight moves from Main
Street to the dark alleys.
Stewart: Right.
Warren: And so now the game is let's just see if we can stick a knife in the ribs of this consumer
agency. so right now there are bills pending in congress to delay the agency, to defund the agency, to
defang the agency, make it toothless so it won't get anything done and bills in both the house and the
senate to kill the agency outright before it is ever able to take one step on behalf of middle-class
families.
Stewart: It's an incredible process. My only thing to add to that as we go to commercial-- and if you
could stay to that we'll throw it up on the web-- I would also like to see this agency put through the
terrorist watch list (laughter). (applause) We'll be right back with Elizabeth Warren.
Stewart: That's our show, join us tomorrow night at 11:00. Here is your Moment of Zen.
Back to Top
Reuters
White House eyes Warren associates for consumer job
April 27, 2011
Page 380 of 3826
By Caren Bohan
The White House is zeroing in on close associates of law professor Elizabeth Warren, an outspoken
critic of Wall Street, to head the new U.S. consumer financial agency, a source with knowledge of the
discussions told Reuters.
Warren has long been considered a front-runner to lead the Consumer Financial Protection Bureau,
which will be charged with reining in abuses on issues such as credit card fees and mortgage-lending
practices.
But among President Barack Obama's aides, there is disagreement over whether it would be wise for
him to take on a highly visible fight to secure confirmation for Warren in the U.S. Senate.
Warren, who championed the consumer agency, has run into strong opposition from Republicans who
say she would be too confrontational toward the financial industry.
But picking anyone other than Warren could be problematic for Obama because it would risk
disappointing Democratic activists whose enthusiasm the president is counting on to help fuel his reelection bid in 2012.
Choosing someone with a close relationship with Warren might be one way to solve the problem for the
White House.
The source, who spoke on condition of anonymity, said such a choice would be a clear signal that she
would continue to help shape the consumer agency.
Presumably, an alternative candidate might not face the same kind of confirmation battle that Warren
would.
Sources close to the discussions have said Warren is still under consideration. She has also been
asked for her input about other candidates the White House might consider and has had a number of
consultations with officials on the subject of the consumer agency job.
Publicly released records of Warren's schedule show conversations in recent weeks with White House
counselor Pete Rouse, senior White House aide Valerie Jarrett, White House economic adviser Gene
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Sperling and senior White House economist Austan Goolsbee, among other officials.
MENDING FENCES
The White House dilemma over Warren was underscored after two high-profile candidates for the
consumer job, former Michigan Governor Jennifer Granholm and former Ohio Governor Ted Strickland,
publicly took themselves out of the running, saying they felt the job should go to Warren.
Another name in the mix is Federal Reserve Governor Sarah Raskin.
The White House considered the creation of the consumer bureau one of the most important parts of
the financial regulatory overhaul Obama signed into law last summer.
Newly empowered Republican lawmakers who won a majority in the House of Representatives and
added seats in the Senate in November elections have made slowing down or preventing the reforms a
legislative priority.
Warren, who has been serving as an adviser to Obama and the U.S. Treasury, has been helping to set
up the consumer agency for its formal launch. She has made efforts to mend fences with the financial
industry.
But in an appearance on the "Daily Show with Jon Stewart" on Tuesday night, Warren described the
consumer agency as a "very concrete down payment" on the effort to help struggling middle class
families.
She criticized efforts in Congress to weaken the consumer agency by removing its funding and taking
away its powers.
"The fight isn't over," she said. "The fight moved from Main Street to the dark alley. And so now the
game is let's just see if we can stick a knife in the ribs of this consumer agency."
Warren's advisory position in the Obama administration, which is temporary, did not require Senate
confirmation.
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That role would end once a director of the agency is in place.
Warren, a Harvard professor who headed a panel that investigated government bank bailouts during
the financial crisis, has been mentioned as a possible candidate to challenge Massachusetts
Republican Senator Scott Brown, who must seek re-election in 2012.
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CNNMoney
Warren defends consumer bureau on Daily Show
April 27, 2011
By Jennifer Liberto
Using a familiar, friendly forum, White House adviser Elizabeth Warren went on "The Daily Show with
Jon Stewart" to criticize a congressional effort to delay and weaken the consumer bureau created by
Wall Street reform.
"Now the game is, let's just see if we can stick a knife in the ribs of this consumer agency," she told host
Jon Stewart in one of her strongest defenses of the bureau.
Warren, a consumer advocate and Harvard University professor working with both the White House and
the Treasury Department, explained in the broadcast that aired Tuesday that she is helping put the new
bureau together. She said she's also playing a lot of defense to keep the bureau strong and alive.
The consumer bureau is a new federal agency that has its own funding and will regulate financial
products such as mortgages and credit cards starting July 21.
The House Financial Services Committee is considering bills to prevent the bureau from flexing new
powers until it has a Senate-confirmed director and to make it easier to overturn and veto new
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consumer bureau rules. Republicans say the bureau puts too much power in one individual and
complain the bureau lacks enough oversight.
In defending the agency on the show, Warren harkened back to the plain-spoken, heartfelt attacks that
won her such broad public support as a consumer advocate.
"Right now there are bills pending in Congress to delay the agency, to defund the agency, to defang the
agency, make it toothless, so it won't get anything done," she told Stewart. "And bills to kill the agency
outright before it is ever able to take one step on behalf of middle class families."
Since Warren went to work for the federal government last year, her public appearances have been
more carefully choreographed and less frank.
But her appearance on the "Daily Show" showcased the Elizabeth Warren that consumers love,
especially with her comparisons of attacks on the bureau to dark alley knife fights.
In her talk with Stewart -- who abandons his often critical view of public figures when she appears on
the show -- Warren talked about the bureau's purpose, usually in an earnest way. But she got a few
laughs.
"It wants to make risks clear, it wants to get rid of the fine print -- the 'word barf' in the middle of these
financial contracts -- so you can actually make direct comparisons," Warren said.
Stewart asked her a lot of questions about why the financial industry and those in Congress are fighting
to weaken the consumer agency.
"Could you say to Goldman Sachs (GS, Fortune 500), you are no longer in the financial business, you
now make hats?" Stewart asked her.
"No, I'm afraid all we can do with this consumer agency is really be pretty straight forward. This is about
families being able to tell costs and risks," Warren answered.
An extended version of the interview appears on the "Daily Show" website.
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Bank Systems & Technology

Elizabeth Warren Visits The Daily Show, Defends Consumer Agency
April 27, 2011
By Matt Gunn
Is Elizabeth Warren the Che Guevara of consumer protection?
Jon Stewart demands answers.
Warren, who serves as assistant to the President and special advisor to the Secretary of the Treasury
on the Consumer Financial Protection Bureau, appeared on The Daily Show Tuesday night in an
extended interview with Stewart. Her message was simple: The consumer bureau is here to protect
from the dangers of a boom-bust cycle, it is for the American people, it brings basic and sensible values
to financial services.
"What we can really do is we can build a system in which there is not only some basic security for the
economy, but it's really about middle class families," Warren said. "Millions of Americans today live one
bad diagnosis, one pink slip one interest rate reset away from complete financial collapse. This
consumer agency is really a very tangible, very concrete down payment on the notion that together we
can build something that's fairer and we can actually give middle class families a better chance to
survive, economically, maybe even to prosper. That's really what this is about."
But the agency is not without threats to its very existence. Various lobbies and bills in the house and
senate represent what Warren considers a "knife in the ribs" to the agency, an all-out, behind-thescenes attack at the very things that could make the CFPB effective.
But those attacks are missing the point, Warren suggests. The CFPB seeks to make financial services
less confusing, to eliminate the fine print and help consumers understand exactly what it is they're being
sold. And perhaps, with the help of more transparency, that could help avoid another crisis the likes of
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which the industry has been fighting to overcome for the past several years.
"We believe that together we can do better than the mess that was created," Warren said.
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New York Times (DealBook blog)

Journalists and Lawmakers Dominate Warrens Schedule
April 26, 2011
By Ben Protess
As Elizabeth Warren starts the nations first federal consumer finance agency, bankers and lawmakers
have been lining up to snag even a few minutes of her time.
It turns out, journalists have, too.
Ms. Warren, the Harvard law school professor turned Obama administration official, held nearly two
dozen meetings with journalists and bloggers in March, according to her recently released public
calendars. That comes after having 14 such meetings in February.
Big media names like The New York Times columnist Paul Krugman and Arianna Huffington, the editor
in chief of the Huffington Post Media Group, headline the March list. Ms. Huffington, a vocal supporter
of Ms. Warren, scored two meetings, including a one-hour, in-person gathering on March 1. The blitz
continues on Tuesday, when Ms. Warren will travel to New York to appear on The Daily Show With
Jon Stewart.
In March, she met with financial reporters from The New York Times, The Wall Street Journal and
Bloomberg News.
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She even made time for this DealBook writer, who appears on Ms. Warrens calendar for a 20-minute
meeting on March 10. That same day, she attended the Treasury Departments blogger summit and
held separate interviews with The Los Angeles Times and Robert Kuttner, co-founder and editor of the
American Prospect magazine.
Ms. Warren, a Washington outsider and noted consumer advocate, has been a source of media
fascination since 2008, when she took control of the Congressional Oversight Panel. But reporters have
sharpened their focus on Ms. Warren in recent months as her chances of becoming the official director
of the Consumer Financial Protection Bureau have grown. When President Obama tapped Ms. Warren
to set up the bureau in September, he stopped short of nominating her to be its first director.
The time Ms. Warren spent chatting with journalists hardly compares to her efforts to connect with
lawmakers. She spoke with about 15 senators in March alone, including top Democrats Harry Reid of
Nevada and Richard J. Durbin of Illinois.
Ms. Warrens relationships on Capitol Hill could prove essential in the coming months. If President
Obama nominates her to lead the bureau, she will face Senate confirmation not a sure bet for Ms.
Warren, a frequent target of Republican scrutiny.
When not meeting with lawmakers, journalists and bankers, Ms. Warren squeezed in time with fellow
regulators and consumer advocates. Ms. Warrens eclectic schedule also featured meetings with Ralph
Nader and Preet Bharara, the United States attorney in Manhattan.
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Housing Wire
Mortgage industry readies for pit bull CFPB
April 26, 2011
By Jacob Gaffney
Page 387 of 3826
An article in Tuesday's American Banker reminds us that the top spot at the Consumer Financial
Protection Bureau remains up for grabs. Furthermore, two options are mentioned for the presidentappointed position: a "safe" candidate or an appointment made during the current congressional recess.
If the latter, we will have our CFPB head within days.
The current head, Elizabeth Warren, may be considered in the case of the former.
Warren, for her part, has hinted publicly that it is a job she is willing to take. Warren is a brilliant
speaker, and after her Q&A session at a recent Society of American Business Editors and Writers
conference, one Bloomberg staffer said she reminded him of his sweet aunt.
The comparison is perfect. I instantly reminisced about the BBC back in Britain. The broadcast
behemoth there is often referred to as Auntie Beeb. The name comes with an undertone of hurt,
however, every time one comes to pay the $60 quarterly television tax.
Warren is on the record saying that as long as mortgage firms operate within the law, there will be no
problems.
The mortgage industry is not expecting this sugar-and-spice stance to last.
"Our inclination is that come July 21, when the CFPB opens, they will look to quickly take down one
large lender, and many smaller firms," a mortgage industry source who consults with the CFPB tells me.
The source talked about how the CFPB isn't hiring staff from prior regulators, like the Office of Thrift
Supervision and the Office of the Comptroller of the Currency.
"They don't want anyone who worked with those regulators who are today seen as not being forceful
enough in the lead-up to the recession," he said.
One extrapolation is that the CFPB is looking for younger, more consumer-minded staffers who support
the political shift against the housing industry status quo.
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But it may just be good old-fashioned paranoia to envision a regulatory entity more concerned with
taking down an industry than helping to rebuild it. And it is certainly not a position endorsed by the
CFPB.
However, the head of the CFPB is a compelling issue as it exemplifies the hand wringing of a mortgage
finance industry anxiously waiting to finally see who its boss will be.
Many are predicting a Sheila Bair-esque appointment. Or at least someone with a long association with
the "going out of business" moniker.
But even if Warren is appointed, make no mistake; Auntie CFPB will own a pit bull.
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The Nation
Will Better Consumer Protection Lead to a Credit Crunch for Women?
April 26, 2011
By Bryce Covert
Considering women themselves were once property, weve come a long way: most women can now
walk into a bank and open an account, sign up for a credit card, or take out a loan. As recently as the
1970s, credit cards were issued only with a husbands signature; it took the Equal Credit Opportunity
Act of 1974 to force companies to make cards available to women. Women quickly embraced credit,
and less than thirty years later they carry roughly the same amount of consumer debt as men and even
have more cards in their wallets than men doby a 5-to-4 margin.
But as the market opened up to female borrowers, lenders began lobbying to relax usury laws and
developing predatory practices. Women who obtained credit found themselves bearing a
disproportionate share of lender abuses. As a group, women are financially less stable than men are;
that made them a prime target for companies looking to profit from late fees and interest on unpaid
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balances.
Of course, female borrowers arent the only ones feeling credit card company abuses; interest rates
have soared, fees have stacked up and terms and conditions have become obscured at the back of
lengthy contracts across the board. The industry is in desperate need of reform and regulation, and the
Obama administration has already begun to rein in lenders. But some critics of increased regulation
contend that deregulation allowed companies to lend to borrowers who would have faced discrimination
early in the industrys life, including women, low-income people and people of color. As those
regulations are put in place, will women see some of their financial power eroded?
The most recent push toward industry regulation is the Credit Card Accountability, Responsibility and
Disclosure Act (CARD Act), which Obama signed into law in May 2009. The bill includes protections
against interest rate increases without reason or notification and bans hikes in the first year of an
account, gives consumers more time to pay their bills, forces companies to apply excess payments to
the highest interest balance first and puts statements into understandable language, among other
things. And more restrictions are on the way. The Dodd-Frank financial reform bill of 2010 created the
Consumer Financial Protection Bureau, whose mission is to restrict predatory practices and make
products safer and more transparent. While it wont be fully functional until it has a permanent chief,
once its up and running it will start issuing new rules and ramping up enforcement of existing ones.
These regulations are in response to bank practices that have left Americans trapped in products they
don't understand and cant pay their way out of. As usury laws were relaxed in court decision after court
decision during the late 1970s and early 1980s, the credit card industry figured out how to keep
consumers indebted. They hid terms and fees at the back of agreements, which have bloated up to
thirty pages from a page and a half in the early 1980s. They offered low teaser interest rates that
ballooned to double or triple later on. As Elizabeth Warren puts it, The financial industry has perfected
the art of offering mortgages, credit cards, and check-overdrafts laden with hidden terms that obscure
price and risk.
Before the 1970s, credit was only given to those who the white men in charge wanted to do business
with, excluding women, minorities and low-income families. Womens exclusion from loans and credit
products was mostly based on pervasive social bias, such as the idea that women were likely to stop
working to become pregnant if they were under 28, making their salaries undependable. Divorced
women were believed to be bad with money because they couldnt keep a marriage under control. As
Gail Collins remembers in her book When Everything Changed, Men, in their capacity as
breadwinners, were presumed to be the money managers on the home front as well as in business, and
women were cut out of almost everything having to do with finances. The Equal Credit Opportunity Act
made it unlawful for issuers to discriminate on the basis of sex, marital status, race, religion or other
factors; one result was that women could rely on the income of their spouses to take out cards in their
own names. The ECOA is largely responsible for beginning the move toward democratization of credit
that brought these products to formerly underserved groups.
The industry, however, was soon pushing for deregulation, mostly to evade state usury laws that
prevented companies from charging interest rates and fees over a set limit. Along with promising
greater competition and lower prices, lenders told lawmakers that deregulation would allow them to
further open up the market to women, minorities and low-income individuals. To a certain extent, this
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was true: now almost any woman can open an account, including women who may not have stable
income or even income of their own. Lower-income families, all but shut out of these markets before,
have better access: In 2004, 35 percent of households with income below $10,000 had credit cards.
But as the market expanded, so did credit card companies predatory practices. And that burden didnt
fall equally on men and women; women are bearing the brunt of it. The majority of industry profits come
from fees and interest rates garnished from those who carry a balance but cant afford to pay it off.
Single women are more likely to find themselves in this situation. They are often stuck with sky-high
interest rates: 11 percent of single women with credit card balances pay rates higher than 20 percent,
compared to only 6 percent of single men. Another source of profit is late payments determined by
arbitrary rules and paired with outsized fees. An issuer can decide a payment is late if received after 1
pm; they issue an average $28 fee for payments just one day late. Late payments often also trigger
interest rate hikes, sometimes applied retroactively. Twenty-one percent of single women reported
missing a payment in 2009, likely triggering these penalties and falling deeper into debt. Other
predators, such as subprime lenders, have also targeted women. While they have the same credit
scores, women were 32 percent more likely to receive high-cost subprime mortgages than men across
all income and ethnic groups.
Women are targeted for these higher-cost products along with minorities and low-income individuals
because they tend to be less financially secure, making them likely targets for higher interest rates.
Companies claim that this is merely due to risk-based pricing that means lower-income people receive
higher interest cards, but these customers are where the real profits come from. Those who revolve
balances without paying them off or miss payments generate the bulk of industry profits while bearing
most of the cost. And while the market for new cardholders is competitive, leading to extremely low
introductory offers and other goodies, issuer policies for those who revolve balances have few
differences. While wealthier customers are given cards with 0 percent APRs and reward programs,
those offers are financed with the profits made off the rest.
The good news is that the CARD Act did away with many of the practices that were targeting women,
including retroactive rate hikes and arbitrary late payment rules, and will help expose traps by requiring
more transparent agreements. But it also may have an unintended consequence. The act mandated
that the Federal Reserve issue rules limiting to whom companies can lend, excluding those who cant
afford loans. One of those rules is that an applicants income must be taken into account. It sounds like
a no-brainer. But now banks can only consider an individuals income and not a households. Will
women be sent back to the 1960s, once again having to rely on a husbands income for credit?
Stay-at-home mothers (and, for that matter, stay-at-home fathers) will see their access compromised. A
woman at a department store counter without her own income will likely be turned down, and a bank will
ask her to involve her husband so the lender can work around the rule. However, if the card she carries
is not in her name, she will not be building her own credit history. Divorced or widowed women will
therefore find it harder to borrow just when they most need to.
And this could be even worse for women in abusive relationships. With less of a chance to build an
independent credit history, and with landlords and some employers running credit checks, abused
women may have few escape routes. Says Gail Cunningham, spokesperson for the National
Foundation for Credit Counseling, Treated responsibly, credit can become a safety net for all women
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whether they are single, divorced, widowed or put into other situations where they have to depend upon
their existing lines of credit that are in place.
Unfortunately, this rule is unlikely to change. The Fed issued it in its attempt to interpret Congresss
intention in the CARD Act, and changing it would require action from Congress. The best that can be
hoped for is that the ramifications end up being small. If not, it may have to be revisited.
Women have much to gain from regulating the lending industry and are likely already feeling some relief
from the CARD Acts implementation. As Elizabeth Warren and her team at the CFPB start policing the
industry, we should all feel it in our wallets. But regulators must take into account the history of
excluding women from credit to make sure past discrimination doesn't come back to life.
Back to Top
Charlotte Observer
Bank of America introducing penalty rates for late payments
April 27, 2011
By Rick Rothacker
Bank of America Corp. has started telling customers that it may increase the interest rate on their credit
cards if they're late on payments.
Notifications sent with bills this month say the Charlotte bank can apply a "penalty rate" of nearly 30
percent to future balances.
A bank spokeswoman said a late payment won't automatically trigger a penalty rate. The bank will
review the account to determine if the new rate is required, taking into account other risk factors.
If the new rate is applied, customers will be notified 45 days in advance. The bank noted it has e-alerts
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to remind customers when payments are due.
The bank said it hasn't raised interest rates on existing credit card balances since credit card reform
legislation went into effect last year, even if the customer is 60 days late, and it doesn't have plans to do
so. The bank didn't previously have a penalty rate, unlike some other issuers.
Back to Top
Reuters (Prism Money blog)

What you dont know about your checking account can hurt you
April 27, 2011
By Mitch Lipka
Consumer relationships with big banks may be worse than they seemed just a couple of weeks ago.
Pew Health Groups Safe Checking in the Electronic Age Project just completed a study that details
how consumers have little chance to understand the terms of their relationships with their banks when it
comes to checking accounts and those terms can be pretty heavily tilted in the favor of the banks.
The group studied checking account terms at the nations 10 largest banks and found their checking
account disclosures had a median length of 111 pages and a lot of consumer-unfriendly conditions.
Failure to provide clear and comprehensive disclosure can expose account holders to hidden and
potentially dangerous risks, the group said.
Pew said more than 250 types of checking accounts offered online by the 10 largest banks in the United
States were examined.
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Among the findings of Pews study:
Consumers are not given full disclosure about how much overdrafts will cost or what options
there and banks are not required to tell them.
Banks are allowed to change the order in which transactions are processed to give them the most
overdraft revenue.
Eight in 10 checking accounts lock consumers into binding mandatory arbitration that actually
require their customer to absorb the banks costs regardless of who wins the dispute.
Pew also reviewed how banks have stepped up their push for profits through overdraft fees, increasing
the charges to $38.5 billion in 2011. Thats up $18.6 billion since 2000. And, said Pew, the overdrafts
are not proportional to the amount of the overdraft.
The median penalty for an overdraft is $35, Pew said, up from $27 in 2007.
Pew said that if an overdraft was regarded as a short-term loan payable in seven days, the annual
percentage rate would be more than 5,000 percent an interest charge that would make a loan shark
s terms seem fair.
Compounding what U.S. PIRG found in a study released a couple of weeks ago that showed banks
werent complying with laws that require consumers be given ready access to fees and other account
terms, Pew said what information is given out isnt easy to understand.
It is exceedingly difficult for the average consumer to find the basic information needed to either select
a checking account or to responsibly manage the one they currently have, Shelley A. Hearne,
managing director of the Pew Health Group, said in a statement. We are calling on policy makers to
ensure that overdraft fees are reasonable and proportional. They must also address both the length and
clarity of checking account disclosures
Pew said the study shows that consumers need the kind of protections that were afforded to credit card
holders by Congress.
Congress acted nearly two years ago and passed the Credit CARD Act of 2009, which protected credit
card holders from practices deemed unfair or deceptive, Eleni Constantine, director of the Financial
Security Portfolio at the Pew Health Group, said. Now is the time for policy makers to further protect
American families by ensuring that our checking accounts are safer, easier to use and more
transparent.
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Among the changes the organization would like to see:
Banks should be required to give customers simple and understandable checking account terms.
Banks should be made to provide a list of charges for various overdraft options.
Charges for overdrafts should be relative to the banks costs and risks.
Withdrawals and deposits should be done objectively.
An examination of binding arbitration clauses to see if they are inhibiting consumers from getting
what theyre due when theres a dispute.
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American Banker
The Community Bank Is No Spotted Owl
April 27, 2011
By Andrew Kahr
This may have gotten by you, but April was Community Banking Month. Kicking off their month with
April Fools' Day pointed in the right general direction.
It's a good time to remember that for many decades, some states had nothing but community banks
because branching and acquisitions were subject to onerous, anticompetitive state restrictions. In
certain states the unit bank, even the one-office bank, was the only permitted model.
This was thanks to the political influence of these banks. They persuaded legislators that if unrestricted
branching and bank acquisitions were permitted, then community banks would be wiped out and we'd
soon have a banking system like that of the U.K. or France: just a few large banks would control most
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of everything.
When the restrictions were removed, this didn't happen. We still have 7,000 community banks. Although
most of the banks that failed in the recent crisis were small banks, according to the Independent
Community Bankers of America community banks still constitute 97% of all banks. Why?
It can't be merely because the community banker is prepared to preside over the Rotary Club and
provide uniforms for the softball team. The big banks provide a "CEO" for cities, and they vary their
pricing and products by ZIP code. They're more than capable of making the necessary local charitable
contributions.
The main thing the big banks have not been able to do is to lower their costs and increase their
efficiency. Their total compensation expense continues to increase much faster than wage inflation.
Hence, many community banks have lower personnel costs than the biggies, plus access to highly
flexible and economical outsourcing of IT and other functions. They are obviously able to compete
effectively.
Compare a large bank with Walmart to check where we're headed. Walmart has driven a lot of momand-pop stores out of business. Yet if you walk down the street anywhere, you still see lots of mom-and
-pop stores. Mom and Pop will work for very low and uncertain income, while bank employees are not
willing to do so. Walmart employees, unlike bank employees, must tolerate unfavorable working
conditions. So, if Walmart and the supermarkets, with their low labor and product costs, have not
substantially eliminated the small local stores then it's implausible that the big banks can ever wipe
out or marginalize the community banks.
True, the community banks, unlike mom-and-pop stores, are subject to rather intensive regulation. If,
per dollar of deposits or revenue, banking regulation imposed a much higher burden on community
banks than on big banks, this in theory could make the position of the community banks more difficult.
It's very clear, however, that this isn't happening. The recent legislative and regulatory offensive "too
big to fail," the new FDIC premium structure, derivatives, mortgage servicing will constrain and
penalize the big banks while having little or no impact on most of the small ones.
What is unique about all banks is federal deposit insurance, which is effectively mandatory. As a result
of this, it requires millions of dollars in capital and it can take years to start a community bank unlike
a mom-and-pop store. The barrier to entry is high, and even in a fat year the number of new charters is
in the range of 100. With inevitable attrition, primarily by merger and acquisition, we'd have to make it
easier to start a community bank if, for some reason which has never been articulated, we didn't
think that 7,000 of them was enough, or more than enough.
But, where does the shoe pinch? Where is the threat to the survival of independent community banks
other than the increased opportunity to sell out at higher prices, which will continue to make many
disappear? Or, are they crying wolf again?
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What remedies do they seek, and why? How can they argue that measures such as the Durbin
amendment that are disagreeable to all banks will be particularly harmful to small ones? It was big
banks, not small ones, that started providing big incentives for checking accounts and debit cards.
The ICBA overtly lobbies for an unequal playing field tilted in favor of community banks. They find it
"harmful," for instance, that community banks, like all other banks, are subject to the new insider
transaction rules and that "shareholders of publicly traded community banks must be given a
nonbinding vote on executive compensation." Harmful to whom? The local plutocrat, whom we are
asked to salute as a model of benevolence in contrast to nasty "Wall Street"?
One big thing we can say for Vikram Pandit is that he is not the son or grandson of a CEO of Citigroup.
Many community banks can't say as much. High as my hopes are for Prince William, history tells us that
heredity does not breed efficiency. Family businesses are bested by investor-owned businesses.
Why should legislators and regulators favor community banks or treat them as an endangered species?
Andrew Kahr is a principal in Credit Builders LLC, a financial product testing and development
company. He was the founding chief executive of Providian Corp. and can be reached at
[email protected].
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New York Times (Bucks blog)

Big Changes to American Expresss Blue Cash Card
April 27, 2011
By Ron Lieber
American Express is altering the rewards formula on its popular Blue Cash card, but current users will
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be grandfathered in under the old program for now.
Starting today, there are two cards, the Everyday card, which will have no annual fee, and the Preferred
card, which will cost $75 a year. The old card had no annual fee.
Holders of the Everyday card will earn 3 percent cash back at grocery stores, 2 percent back at gas
stations and department stores and 1 percent back on all other purchases. The old card gave back 5
percent on all gas, grocery and drug stores once you passed $6,500 in total annual spending, which
made the card popular among big spenders.
The Preferred card adds that $75 annual fee and will give away an industry-leading 6 percent on
groceries though just 3 percent on gas and department stores. And the all-other-spending category
yields 1 percent from the first dollar you spend, not the 1.25 percent that existing customers earn when
they spend beyond $6,500.
So whats going on here and why?
Well, few companies make a move in the card industry these days without a spreadsheet-wielding army
behind them with models showing that the card issuer will come out ahead when all is said and done. E
-Bai Koo, an American Express vice president, wouldnt comment on its model.
That said, the company deserves some credit for not forcing the new scheme on current customers.
Giving 5 percent back on fuel purchases left the company vulnerable to volatile gas prices. Plus, it
exposed the company to people trying to game the system by using the card as a business card to pay
for fuel for a fleet of vehicles.
Grocery spending is a little less subject to those sorts of shenanigans, since there is only so much one
can eat or stockpile. And Mr. Koo noted that government data shows that people traditionally spend
more on groceries than gas.
When I heard that changes were afoot, I worried that American Express was moving to the same
noxious system as the ones that Discover, Chase and Bank of America use on some cards, where
theres a different cash-back bonus every few months. Once you figure out what it is, there are
sometimes caps on how much you can get back and you may have to register to earn the rebate.
Page 398 of 3826
Mr. Koo said the company learned in its research that people arent big fans of that approach, so the
company decided to avoid it. And there are no limits on how much cash you can earn each year
through the Blue cards. You get the cash back by requesting a credit on your statement; you can do this
as long as there is at least $25 available. Merchandise and gift cards are an option, too, in lieu of the
rebate.
Personally, I find this one tempting. The majority of my households groceries come from Fresh Direct,
an online grocery service. Our $5,000 or so annual bill would yield $225 each year after the annual fee,
which is still more than a 4 percent rebate.
Anyone else tempted?
Back to Top
American Banker
New Tool Checks Military Status Before Foreclosure
April 27, 2011
By Austin Kilgore
A new tool checks Department of Defense records to verify whether defaulted mortgage borrowers are
actively serving in the military, providing a regulatory compliance check for servicers while staying
within the confines of department policies.
The mortgage default management software developer Quandis Inc. said its Military Status Service
Search came out of a need for servicers to maintain compliance with the Servicemembers Civil Relief
Act, which offers a number of protections for active-duty members of the military, including lower
interest rates during their time serving and a ban on foreclosures while the borrower is serving and up
to nine months after returning from duty.
Servicers can use a Defense Department website to do an active-duty search of delinquent borrowers
before foreclosure review meetings, where cases are monitored to ensure all documentation is correct,
Page 399 of 3826
every loss-mitigation option has been exhausted and the case is ready to move forward.
In addition, servicers and their foreclosure attorneys do another check immediately before a foreclosure
sale, said Scott Stoddard, the chief executive of Quandis, of Foothill Ranch, Calif.
But servicers still run afoul of the legislation. On April 21, JPMorgan Chase & Co. agreed to a $27
million out-of-court settlement for a class action filed by a group of service member mortgage borrowers
who claimed the bank's mortgage unit violated provisions of the law.
In addition, JPMorgan Chase implemented new policies to prevent foreclosures prohibited by the
SCRA, including rescinding the foreclosure sale and forgiving the mortgage debt of SCRA-protected
borrowers who were previously foreclosed on. In future cases of improper foreclosures that should have
been prohibited by the law, JPMorgan Chase will forgive the remaining mortgage debt for those
borrowers as well.
Other banks have settled similar claims, including Wells Fargo & Co., which in March agreed to pay $10
million to settle SCRA-related claims.
"My best friend is an ex-Marine and his son is a Marine, so it's an issue that's pretty close to me to
make sure people who are fighting for our country, that we're watching their back at home," Stoddard
said. "There's just no reason with today's technology that anybody who's fighting for our country should
be missed because of an error in the system."
Servicers have typically used automated technology to run checks on the DOD website. But the huge
demand for the site was causing it to crash. The department implemented a number of new policies for
the site, including the addition of a phrase to the online duty-check tool, requiring a human to type the
distorted words appearing in a box on each check. Another rule limits the number of checks that an
entity can do on the site to 1,000 per hour.
The Quandis tool is an automated search that complies with the DOD regulations, Stoddard said.
Servicers upload a batch of borrower information to a secure server and the technology runs the
checks.
"The Department of Defense is very protective of their information. They're making it available, but
they're putting some rules around it and we're just making sure that we're following the rules," Stoddard
said. "That's all they're asking for and on our end, we just want to make sure people are doing their due
diligence and not foreclosing on our military personnel."
Page 400 of 3826
Quandis delivers the results of the check to the servicer, along with a digital document that provides the
detailed information for each case that servicers can include in their loan files to prove they did the
search. In addition, when the borrower's status has changed on a file that has been previously checked,
the Quandis report specifically notifies the servicer.
The DOD website is free. Quandis charges servicers on a per-transaction basis. Stoddard said the
service is a less expensive alternative to other methods servicers are using.
"I've heard of some big companies that will go hire 250 people at $8 an hour to sit there and type in the
DOD website all day," Stoddard said. "That's an option to do it, but it's just inefficient and you add a fat
finger error of 2% and all of a sudden, you run a pretty decent risk of missing somebody."
Stoddard said Quandis has discussed the online searches with the Defense Department and would like
to see more access to the records to make it easier for servicers to perform the checks. Stoddard
proposes creating a Web-based interface between default management platforms and the DOD
database so servicers can conduct batch checks without using the submission form.
"Our preference is to set up a Web interface into them because at the end of the day, we're trying to
keep service members who are fighting for our country from getting foreclosed on while they're away,"
he said.
Back to Top
American Banker
Study: Homebuyer Education, Counseling Have Questionable Impact
April 27, 2011
By Amilda Dymi
A study sponsored by the Mortgage Bankers Association shows that despite evidence that some home
pre-purchase education and foreclosure prevention programs are effective, inconsistent proof of the
effect of counseling indicates the industry remains clueless about what works and what does not work.
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In summary, one of the authors of the study wrote, the short answer to whether we do we know what
works, is "no."
The "Homeownership Education and Counseling: Do We Know What Works?" study conducted by J.
Michael Collins and Collin O'Rourke of the PolicyLab Consulting Group for MBA's Research Institute for
Housing America, confirms that in practice, the results from education and counseling programs "vary
significantly."
Results were based on reviews of 18 separate sample evaluation studies most of which are plagued by
biases, the authors wrote. There are however a few encouraging findings.
For example, while many studies found no positive effects from pre-purchase programs, some of these
programs helped reduce "the incidence of any form of mortgage default" by 34%. And at least one
study suggests programs may result in accelerated pre-payment of mortgages.
Over 2.1 million clients received varied types of one-on-one housing counseling from HUD-approved
agencies in FY2010, the method that is widely recognized as the most effective approach to loss
mitigation.
About 245,000 received pre-purchase education, of which about 17% were reported as purchasing a
home and another 26% as anticipating to buy within three months.
Up to 1.4 million received foreclosure prevention counseling. According to the study those who
participate in default counseling are more likely to have their loans modified. HUD data suggest
"counseling agencies were involved" in more than 301,000 loan modifications in FY2010.
HUD reports also show that 205,000 received help with home repair or a reverse mortgage, 278,000
received help related to rental housing, 37,000 received counseling on homelessness.
Over the past decade, long before the current housing downturn, concerns about whether "Americans
are sufficiently financially literate to make the complex decisions required in the ever-changing financial
marketplace," helped proliferate pre-purchase homeownership education and counseling programs,
researchers wrote. Going forward, the drive to expand homeownership education or counseling
nonetheless should continue to support a more stable homeownership and prevent the negative
impacts of market factors such as drops in property values.
Page 402 of 3826
MBA executives recognize that beyond the unavoidable differences between the outcome in theory and
practice, reasons to expect that education and counseling "could and should be effective," include the
evidence showing the effectiveness of these programs is not there primarily because of problems with
the design of existing studies.
Back to Top

Daily Show Green Room Report
April 27, 2011
By Ben White
CFPB Czar Elizabeth Warren was on the Daily Show with John Stewart last night. We hear the green
room featured a box of board games, including Cranium. No word on whether Warren tested her wits.
http://bit.ly/g3mn0o
WORD BARF - Warren to Stewart on eliminating the word barf in consumer financial product
documents. Video: http://bit.ly/h7U90f
Back to Top
Page 403 of 3826
Los Angeles Times

California bill ending dual track foreclosures faces key vote
April 27, 2011
By Alejandro Lazo
A proposed law facing a key vote in Sacramento on Wednesday would require lenders in California to
make a decision on mortgage modifications for delinquent homeowners before beginning the
repossession process, in effect ending "dual track" foreclosures in the state.
Financial institutions commonly pursue foreclosure even if a borrower has requested a loan
modification, a two-track process the lending industry has argued is necessary to protect its
investments. But dual tracking is under fire from regulators and lawmakers in the wake of last year's
"robo-signing" scandal, which revealed widespread foreclosure errors.
The California Homeowner Protection Act, authored by state Senate President Pro Tem Darrell
Steinberg (D-Sacramento) and Sen. Mark Leno (D-San Francisco), is one of the furthest-reaching
efforts to limit the practice. Several other states have passed requirements for third-party groups to
oversee mediations between mortgage servicers and homeowners.
The California bill, SB 729, would require a lender to fully evaluate a borrower for a loan modification
before filing a notice of default, the first stage in the formal repossession process, and a significant
change in the way foreclosures are conducted in the Golden State.
The law would give delinquent homeowners the right to sue their lenders to stop foreclosures if they
believe the requirement to properly evaluate their loan modification requests had not been followed. If
the sale occurs without the proper evaluation, homeowners would also be given the right to sue for
damages or to void a foreclosure sale for up to a year after the sale.
Such a change is necessary in the state because the two-track process often leads to unintended
foreclosures by mortgage servicers that "don't know what they are doing" and often bungle the loan
modification process, Leno said in an interview.
"We know of folks not only entering the loan modification process, but folks who have already been
accepted, and are making timely loan modification payments, and then getting a knock on their door
Page 404 of 3826
and being told 'your home will be sold,'" Leno said. "The stories are many and horrifying."
Groups representing lenders said the legislation overreaches and would only inhibit the state housing
market's recovery by slowing down an already drawn out foreclosure timeline. California's
comparatively streamlined foreclosure system, which allows for a home to be taken back without a court
order, has helped the state work through a foreclosure glut relatively quickly and recover faster than
other hard-hit states.
"It is just not good for the housing market, which is not good for the state economy, especially when we
are at 12% unemployment," said Dustin Hobbs, a spokesman for the California Mortgage Bankers
Assn. "It is a reaction, an overreaction, to procedural mistakes," he continued, "and this doesn't really
get at solving any of those problems."
The bill also would make it more difficult for investors to purchase, renovate and resell bank-owned
properties to first-time buyers because it gives foreclosed-on homeowners a year to sue after a
foreclosure sale, critics said. Home buying by investors has been a significant driver of California home
sales since the housing market hit bottom two years ago.
"It's unlikely that any prospective home buyer would want to buy these properties with that lingering
uncertainty hanging over their heads," said Beth Mills, a spokeswoman for the California Bankers Assn.
The bill also would require mortgage servicers to:
Prove they have a right to foreclose;
Adhere to new timelines when evaluating borrowers for possible loan modifications;
Provide an explanation letter detailing why a mortgage modification was not granted if a borrower is
denied;
Make a declaration of compliance with the law each time a notice of default is filed.
The bill also would allow a state banking regulator or the state attorney general to take action against
lenders if the law isn't followed.
Major mortgage servicers are under increased scrutiny since it was revealed last year that they
employed so-called robo-signers. These bank employees signed off on legal documents needed in
Page 405 of 3826
foreclosure cases without reading them or, in several cases, understanding what they were signing.
There were widespread complaints of botched loan modifications that left delinquent borrowers worse
off, and foreclosures made without documentation of who owned loans that had been sold and resold in
the secondary market where mortgage securities are created and traded. Mortgage servicing
operations were shown to be understaffed and employees were poorly trained.
In response, federal regulators this month ordered the nation's biggest banks to overhaul their
procedures and compensate borrowers hurt financially by wrongdoing or negligence. The agreement
between the regulators and banks requires mortgage servicers to stop foreclosure once a homeowner
is approved for a temporary mortgage modification.
But consumer advocates criticized those orders as watered down and not going far enough. A widerranging investigation conducted by a coalition of state attorneys general and other federal agencies is
continuing.
Consumer advocates and lawmakers are hoping that the California bill will have momentum following
revelations of the foreclosure paperwork debacle. The proposed law is similar to a bill that passed the
state Senate last year but was defeated in the Assembly.
The bill faces a hearing and vote in the state Senate's Banking and Financial Institutions Committee on
Wednesday. The committee is headed by Sen. Juan Vargas (D-San Diego), who isn't completely sold
on the legislation, said his chief of staff, Jim Anderson.
"My understanding is that Sen. Vargas has some concerns with the bill, but prefers to ask questions of
the author and discuss the bill in the public hearing tomorrow before making his final decision,"
Anderson said. Vargas wasn't available for comment Tuesday.
The bill has been endorsed by a slew of consumer advocacy groups including the Center for
Responsible Lending. Many of these groups have slammed federal banking regulators, saying they
failed to stop unsafe lending during the housing boom and preempted state attempts to rein in predatory
lending.
Back to Top
Page 406 of 3826
New York Times

Lobbyist Fires Warning Shot Over Donation Disclosure Plan
April 26, 2011
By Eric Lichtblau
WASHINGTON So much for dtente.
After a brief truce of sorts between the White House and business leaders, the top lobbyist at the U.S.
Chamber of Commerce took aim at President Obama on Tuesday over an as-yet unannounced plan to
force government contractors to disclose their political giving.
The lobbyist, R. Bruce Josten, said in an interview that the powerful business bloc is not going to
tolerate what it saw as a backdoor attempt by the White House to silence private-sector opponents by
disclosing their political spending.
We will fight it through all available means, Mr. Josten said. In a reference to the White Houses battle
to depose Libyas leader, Col. Muammar el-Qaddafi, he said, To quote what they say every day on
Libya, all options are on the table.
While no final decision has been announced, the White House has acknowledged that Mr. Obama is
considering issuing an executive order requiring all would-be federal contractors to disclose direct and
indirect political spending of more than $5,000.
The order could, for instance, force a military contractor or an energy company seeking federal work to
report money it gave to the Chamber of Commerce or another advocacy group to help finance political
ads and expenditures.
After tens of millions of dollars in anonymous political spending flooded the 2010 elections following a
landmark Supreme Court decision in the Citizens United case, Democrats tried to pass a bill known as
the Disclose Act to require greater reporting of political spending, only to see it blocked by Senate
Republicans. Democrats are now turning to other means, including the possible White House order and
a lawsuit filed last week against the Federal Election Commission, to achieve similar ends.
Page 407 of 3826
When asked about the possible order this week, the White House spokesman, Jay Carney, said, What
the president is committed to is transparency, and he certainly thinks that the American taxpayer should
know where his or her money is going.
The sparring over the issue disrupts several months of relative calm between the White House and
business leaders.
The two sides clashed last year over Congressional action on health care and business regulations,
with the chamber spending $42 million on the 2010 midterm elections to push its opposition to
administration policies.
But in February, Mr. Obama crossed Lafayette Park for a speech at the chamber at which he promised
to be more neighborly with business leaders. Elizabeth Warren, the administration official in charge of
setting up a consumer protection bureau, delivered a similar message of partnership in another speech
before the group last month, and chamber executives also pledged to work cooperatively with the White
House.
Mr. Josten, in an interview at his spacious office in view of the White House, said the chamber was
concerned about a variety of Obama administration policies that it considered potentially damaging to
businesses in a time of economic uncertainty.
Those concerns include the efforts to carry out last years health care plan, a vast expansion of
business regulations under the Dodd-Frank measure passed by Congress and the slow pace of new
trade agreements with foreign nations.
American businesses are losing market share globally to countries like Canada that have enacted new
trade pacts, Mr. Josten said. The rest of the world while were sitting around doing nothing is
racing ahead.
But much of the renewed tension can be traced to the prospect of the White House order on political
disclosures first disclosed last week in a blog posting by Hans von Spakovsky, a conservative lawyer
who worked on election law in President George W. Bushs administration.
The Business Roundtable, another powerful business association made up of leading chief executives,
also urged the White House on Tuesday not to move ahead with the draft order. It called the proposal
yet another example of regulatory over-reach and said it would increase paperwork and drive up costs
for businesses.
Page 408 of 3826
On Tuesday, 27 Republican senators also sent Mr. Obama a letter accusing him of playing politics
through the proposal.
Mr. Josten said that the order as now drafted would also stifle free speech rights for businesses that
worked with the government by subjecting them to harassment and protests if their political spending
were disclosed.
As one example, he pointed to the Target Corporation, which was the object of boycotts and protests at
its stores last year after reports said that the company gave $150,000 to a Minnesota business group
that supported a Republican candidate opposed to gay marriage. This is meant to have a chilling
effect, he said of the disclosure plan.
Back to Top
Huffington Post
Why We Regulateand Why John Walsh Needs to Resign
April 27, 2011
By Richard (RJ) Eskow
Regulatory agencies exist to protect the public, not the corporations they regulate. The head of the
Office of Comptroller of the Currency doesn't seem to understand that. But that's not why John Walsh
needs to resign.
The OCC was created to stabilize the economy, make it easier to conduct trade, and protect people's
savings. It didn't do that. In fact, it ignored the warnings raised by others. But that's not why John Walsh
needs to resign.
His agency failed to anticipate the foreclosure crisis, and it overlooked bank criminality. Later John
Walsh misled a Senate panel -- and the general public -- about the size of the problem. And even after
being forced to clarify those misleading statements, Mr. Walsh keeps on repeating them. Whether by
Page 409 of 3826
intent or ineptitude, he continues to misinform the public.
And that's why John Walsh needs to resign.
The Interview
John Walsh keeps using deceptive language in order to minimize bank fraud. This week he told the
Financial Times that there were "a small number of cases where we felt there should have been a stop"
to foreclosures. A "small number" -- that's the same phrase he used in testifying before a Senate panel.
Under pressure, he eventually conceded that there were probably "tens of thousands" of them, even by
his own limited definition. But he didn't explain that to the readers of the Financial Times when he used
the same misleading phrase again.
Walsh also says that the problem of bank foreclosure fraud "came to light at the end of September...
through some court proceedings." That's completely false. Court filings on the topic have been public
since 2009. (See US Bank vs. Ibanez, etc.) What's more, eagle-eyed observers had been finding
evidence of fraudulent foreclosure activity as far back as 2003 (we'll make some more information
available on that score shortly).
Walsh's video interview is a slow-motion train wreck. He compares bank criminality to speeding -- "as
with speeding, if there's a violation of law there will be penalties." He announces unspecified penalties,
but promises they'll be less severe "if we find that not a lot of homeowners were injured" -- which is
exactly the "finding" he's been jury-rigging the numbers in order to achieve. ( He also says that
"subprime underwriting that was done within the national banks was done properly." Interesting.)
Walsh makes it clear that he's more interested in closing this case than he is in justice, or in preventing
future crimes. We need to "complete the process," he says, to "draw a line and get the industry to move
on."
People talk of "regulatory capture," that process where an agency becomes a servant of the industry it
regulates. John Walsh is the Patty Hearst, the "Tania," of regulatory capture. Yves Smith has more
information on the OCC and Walsh, and asks: "What do we call the OCC? The Office of Capital
Corruption? The Office of Criminal Capitulation?" Before we change its name, though, let's change its
leader.
How did it come to this?
Wildcat Banks and Dollars in Every Color
Page 410 of 3826
Regulators exist to protect the public, and John Walsh's agency, the Office of the Comptroller of the
Currency, exists to ensure that we have an honest and reliable currency and banking system. Back in
the nineteenth century, "wildcat banks" were springing up everywhere, issuing unreliable dollars that
other banks often didn't recognize at full value. Some estimates say that by 1860 there may have been
as many as 10,000 different bank notes in circulation.
The federal government needed to stabilize the nation's finances and establish a reliable national
currency. (It needed to borrow money for the Civil War, too.) So it issued green dollars ("greenbacks"),
and gave them its full guarantee. The OCC was formed to make sure that banks were reliable and were
handling the new currency properly. A dollar needed to be worth a dollar everywhere. (Some
Libertarians want to go back to multiple currencies, but that's a topic for another day.)
In a way, the OCC made the Sears catalog possible -- and it helped make a national economy possible,
too. It wasn't formed "of the banks, by the banks, and for the banks." The OCC was created to protect
people's savings, and to encourage commerce.
Enter John Walsh
John Walsh became the OCC's chief of staff in 2005, the same year that the OCC issued a regulation
prohibiting states from regulating national banks. That regulation was finally overthrown by the Supreme
Court in 2009, but the OCC tied the states' hands as the system collapsed. Mr. Walsh joined the OCC
when John Dugan, a former bank lobbyist and political apparatchik, was in charge. (Dugan consistently
made statements that served his industry's interests rather than the public's and displayed an appalling
ignorance of his business -- or hoped for it from his listeners). Walsh became acting head when
Dugan's term ended in 2010, and he's been there ever since.
Walsh's OCC recently took control of the Office of Thrift Supervision, too, and the OTC's recent history
of disgrace and failure was thoroughly documented in the Levin/Coburn Report on the financial crisis.
There were two important priorities for the head of the OCC when Mr. Walsh took the job: restore the
public trust and confidence shattered by his predecessor, and ensure that similar regulatory
breakdowns could never happen again. Walsh has failed at both assignments.
America's Least Wanted: Covering Up
Of course, he's not that John Walsh, the America's Most Wanted guy. Unlike his namesake, this John
Walsh doesn't seem to want to catch wrongdoers. Instead of pursuing criminals and exposing them to
Page 411 of 3826
public scrutiny, this John Walsh exposed his agency to public embarrassment by attempting to do the
opposite.
Mr. Walsh told a Senate panel that "our work identified a small number of foreclosure sales that should
not have proceeded [emphasis mine]." But his "small number" comment was only put in context
afterwards, through an OCC spokesman who explained when pressed that the agency had only
examined 2,800 foreclosures. That's less than three-tenth of one percent of the foreclosures underway
at the time. So how could it have found a large number?
Walsh later conceded that the actual number of wrongful foreclosures might be "in the tens of
thousands." And even that number's artificially small, since Walsh insists on a narrow and unreasonable
definition of wrongful bank behavior. As Reuters thoroughly documented, both Walsh's methods and his
statements were suspect. Since his testimony was widely reported, but the clarifications were not,
Walsh managed to leave a permanently misleading impression with the American public.
The Sales Pitch
Said Walsh: "If there is any reassurance here, and there is sadly very little, it is that borrowers subject to
foreclosure in our sample were indeed seriously delinquent." But why were they delinquent? In many
cases people fell behind on their loans because predatory banks and loan servicers hit them with unfair,
undeserved fines and additional fees. Sometimes lenders forced a loan into delinquency with fraudulent
fees, then justified a foreclosure because the borrower was behind on payments. Walsh has made this
cynical industry argument his own.
Walsh comes across like a smooth salesman for the banks and mortgage companies he's supposed to
regulate. As his video interview with the Financial Times demonstrates, Walsh even uses the industry's
slick phraseology ("improper" instead of "illegal," for example) to describe massive, systematic, serial
fraud by banks and loan servicers. Even Financial Times reporter Tom Braithwaite succumbs,
describing thousands of fraudulent documents with the industry-honed phrase "shoddy paperwork."
Walsh has also suggested that $20 billion would be an unfairly high amount to levy on the banks, given
the scale of their wrongdoing. Actually, it's extraordinarily low. We've laid out our argument in more
detail elsewhere, but the U.S. housing market has lost ten trillion dollars in value -- and homeowners
have been left holding the bag. Homeowners didn't choose the appraisers, write the loan contracts, or
hire PR firms to convince the public that homes were a fail-safe investment. Yet homeowners, not
banks, are paying the price.
Time to resign
John Walsh doesn't seem to understand his agency's mission. His organization missed the warning
Page 412 of 3826
signs for the last crisis, and now he's papering over a pattern of criminality by the institutions he
supervises. He's "back-dating" foreclosure fraud, claiming it only surfaced last September. That's either
because he intended to mislead his audience, or because he lacks a fundamental understanding of the
most urgent matter before his agency.
He used slippery language to persuade some senators that only a "small number" of foreclosures were
improper, was forced to concede it was a misleading statement, and then used the same language
again. He either did that despite the fact that it misled people once before, or because it misled people
once before.
Whatever his reasons, it's time for John Walsh to resign.
Back to Top
Page 413 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:
Hart, Maria (CFPB)

</o=ustreasury/ou=do/cn=recipients/cn=hartm>
_DL_CFPB_AllHands
Final Documents
Wed Apr 27 2011 10:31:57 EDT
For reference purposes, most final versions of many CFPB documents are stored on the RRI drive
under the Exec Sec folder. The documents include Congressional correspondence and testimony,
speeches, fact sheets, talking points, and other documents. If you have any questions, please contact
Jeff Riley.
Thank you.
Page 414 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:
Hart, Maria (CFPB)

_DL_CFPB_AllHands
Take Your Daughters and Sons to Work Day

Wed Apr 27 2011 10:28:16 EDT
Between 8:30 a.m. and 10:00 a.m. tomorrow morning (Thursday, April 28) there will be children in our
offices for Take Your Daughters and Sons to Work Day. During this time children may tour the offices,
all floors, so your work space may be viewed.
Also, its not too late to participate. Please RSVP to Anya Williams if you would like to bring kids to the
event.
Thank you.
Page 415 of 3826
From:
To:
Cc:

Harvey, Imani (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=harveyi>; Dickman, Marilyn
(fydibohf23spdlt)/cn=recipients/cn=dickmanm>; Black, Brad
</o=ustreasury/ou=do/cn=recipients/cn=hartm>; Herchen, Emily
Sensiba, Vicki (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=sensibav>; Darling, Eben
Page 416 of 3826
(fydibohf23spdlt)/cn=recipients/cn=darlinge>; Tamberrino, Mary

(fydibohf23spdlt)/cn=recipients/cn=tamberrinom>
Bcc:
Subject:
Date:
Attachments:
Introduction - Imani Harvey

Tue Apr 26 2011 16:04:59 EDT
Team CHCO please meet Imani Harvey joining our team recently. Welcome Imani!
Things wed like you to know:

1.
Imani will help us start up our CHCO Ops Team (now consisting of Imani and Eben). Maria Hart
is now working directly for the COO upstairs.
2.
CHCO Ops will become a small support team of: budget, COTR, Admin Support, Policy
Coordination, Web TA management, etc
3.
Heres the initial role and set of responsibilities weve asked Imani to take on:
a.
Job CHCO Admin
b.
Scope Provide support for CHCOs sub-groups:

i.
ii.
Workforce Planning & Systems Integration -
iv.
CHCO Operations
ii.
communications, meetings, coordination
iii.
Develop role(s) of CHCO Admin Officer

Establish and manage internal processes for
Integrate, collaborate, communicate, synchronize
Projects/Tasks
i.
1.
CHCO/Dep CHCO
Roles
i.
d.
Employee Engagement - TBD
iii.
v.
c.
Talent Acquisition - Vicki
Develop CHCO-internal Standard Operating Procedures
Time & Attendance
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2.
Notice of absences, family member news, birthdays, etc
3.
Info / Decision Memos
4.
Etc
ii.
Direct support to CHCO & Deputy (in absence of Admin
Asst)
iii.
Monitor/overwatch agency Admins
iv.
Shared Drive Management and Maintenance
v.
Benefits Admin Support to Mary T (and Nikki/Programs,
Eben/COTR)
vi.
Support COTR (Eben) as requested
1.
WEB TA Manager -- Develop SOP and communications for implementation in support of Brad
(system implementer)
4.
And heres some info from Imani welcome Imani!
I am a native New Yorker that came to the DC Metro area to start my career with the American Bankers
Association. My interest in relocating stemmed from a 5 year stint in the Albany NY Police Department
as a Information Clerk which helped me realize that one person has the power to effect positive change
in the lives of others. At ABA I worked on a variety of items including web administration, resolution of
administrative issues, event planning and final copy editing for various areas within the organization.
After leaving ABA I worked at the Federal Reserve Board as Sandy Braunsteins assistant. I was team
lead for administrative/resource issues and protocol development. Most recently I served as former
Assistant Secretary Herb Allisons assistant at Main Treasury. My role was to do everything under the
sun because there were only three of us in the beginning! I managed the front office, Herbs schedule
and created administrative policies. I was also Herbs advisor on administrative and technical issues. I
am very happy to be a part of history in the making here and look forward to working together to support
our agencys mission.
Dennis Slagter
202-435-7143 (1801 L St)
(b) (6)
Page 418 of 3826
for guidance.
Page 419 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:
Cantrell, Diane (CFPB)

(fydibohf23spdlt)/cn=recipients/cn=cantrelld>
_DL_CFPB_AllHands
Available Monthly Parking Spaces

Tue Apr 26 2011 14:38:23 EDT
Good afternoon!
If you are interested in a monthly parking pass, there are still several parking spaces available in the
commercial parking garage on 18th Street, next to Jacks Fresh. The cost is $120.00 per month.
Please contact Stephanie Basham (x57089) if you are interested or need any additional information.
Thanks!
Page 423 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:
Hart, Maria (CFPB)

_DL_CFPB_AllHands
CFPB Toll Free Vanity Phone & Fax Number Contest

Tue Apr 26 2011 13:57:28 EDT
CFPB Team:
It is time to get your creative juices flowing. The CFPB's Consumer Response Team is in the process of
selecting the Consumer Response Center's telephone and fax number, and we are looking for you all to
give us great suggestions (limit 2 per person per category)! We are looking for clever 1-800 number(s)
that promotes CFPB's mission and brand. Please send an e-mail with your telephone/fax number
suggestion(s) to [email protected]. Submissions are needed by Monday, May 2, 2011
at 6:00 PM.
Once all submissions have been received:
The CFPB Senior Leadership will choose the top telephone number submissions
The top telephone number submissions will be sent to Verizon Business for an "availability check"
*
If multiple telephone numbers are available, the CFPB Senior Leadership will make the final
decision
A winner will be announced during the week of Monday, May 16, 2011. We look forward to your
suggestions! Also there will be a special prize for the individual whose number is selected.
Have fun submitting,
Christopher Johnson
Page 424 of 3826
Consumer Response
Page 425 of 3826
From:

_DL_CFPB_AllHands
Adamske, Steven
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Tue Apr 26 2011 10:57:49 EDT
Index

American Banker Time Rapidly Running Out for CFPB Chief Nomination
Politico Morning Money Must See TV
Firedoglake Warren Shoots to Top of Short List for CFPB Job
Page 426 of 3826
Foreclosure Settlement
Financial Times Caution urged on US bank foreclosure fines
Naked Capitalism OCC Makes Patently False Claim That Slap-on-the-Wrist Servicing Penalties
Could Hurt Banks
Consumer Credit
American Banker A Better Gauge of Default Behavior
Atlanta Journal-Constitution Consumers repaying record amount of credit-card debt
Housing
Housing Wire FTC mails $1.5 million in mortgage refund checks to Hispanics
Housing Wire NAMB to decide on continuing LO comp rule lawsuit this week
Wall Street Journal (blog) To Deter Foreclosures, California Weighs New Fee
MarketWatch The foreclosure prevention program that works
American Banker
Time Rapidly Running Out for CFPB Chief Nomination
April 26, 2011
By Kate Davidson
WASHINGTON The biggest obstacle to confirming a director of the Consumer Financial Protection
Bureau may not be Republicans or banking industry opposition but rather a ticking clock.
Even if President Obama were to nominate a director Tuesday, it would leave only 10 legislative weeks
for the Senate to confirm the selection before the bureau officially assumes its rulemaking and
enforcement authorities.
Page 427 of 3826
Such a tight window leaves the president with two options: Nominate a candidate who sparks little
debate, a tough achievement given the anxiety surrounding the CFPB's powers and mandate, or make
a controversial recess appointment, a move that will further infuriate GOP opponents.
If President Obama does not act by the July 21 deadline, the CFPB will begin its existence under a
cloud, operating under ambiguous legal authority that may limit the scope of its actions.
"I think whether they have enough time will depend partly on how much of a lightning rod the nominee
is," said Jo Ann Barefoot, co-chair of Treliant Risk Advisors and a former deputy comptroller at the
Office of the Comptroller of the Currency. "If they choose someone who will trigger a strong negative
reaction, it could get fought out and they could miss the deadline."
Even under normal circumstances, the confirmation process takes time. After the president sends his
nomination to the Senate, the Banking Committee would need a few weeks to research the candidate in
preparation for confirmation hearings, which could last a week.
The committee may take another week or two to vote on the nomination, after which the Senate must
find time for floor debate. If Republicans seek to block or filibuster the nomination Sen. Richard
Shelby, the ranking member on the Banking Committee, is one of the chamber's most notorious
nomination blockers they could hold up the final vote for another week.
And that's an optimistic time line. A chamber not known for its expediency, the Senate often delays or
pushes back its schedule. Although the calendar shows 12 weeks until the bureau's July 21 start date,
the Senate is in recess for two of them to celebrate Memorial Day and Independence Day.
"Even having 60 votes isn't enough if you don't have time to debate a nomination," said Wayne
Abernathy, an executive director at the American Bankers Association, and a former Treasury
Department assistant secretary during the Bush administration. "If the Senate gets all involved in the
budget, which it looks like they're going to it may be tough to go to [Senate Majority Leader] Harry
Reid and say, 'We'd like to have a week to debate the nomination.' "
That may force the president to pick someone more palatable to both sides, observers said.
L. Richard Fischer, a partner with the law firm Morrison & Foerster, said one such name has already
been floated: Sarah Bloom Raskin. As a new governor of the Federal Reserve Board, Raskin has
already navigated the nomination process, and the Senate has reviewed her credentials.
Page 428 of 3826
"She's a known quantity, she's got real banking experience as the superintendent of banks of Maryland,
at the Federal Reserve Board," Fischer said. "She's articulate, she's intelligent and I think that could be
done relatively quickly."
Such a candidate would have another distinct advantage: She is not Elizabeth Warren.
"That alone could speed the process," Fischer said.
But recent reports have indicated that Warren, the architect of the new bureau and its de facto head for
the past seven months, is still a top contender for the post.
No one is ruling out a recess appointment, but it seems only one person Warren is worth the
political capital that such a move would cost the president.
"I understand he's been told by many that it would be a very bad idea to do that, if that individual is
Elizabeth Warren," Fischer said. "And I can't imagine he'd do a recess appointment for anyone else, so
is it possible? Anything is possible, but I would put that as unlikely."
Republicans were already angry last year when Obama appointed Warren as an assistant to the
president and special adviser to Treasury Secretary Tim Geithner in charge of setting up the CFPB.
They saw the move as an end run around the Senate nomination process and emphasized that the
CFPB had only limited powers until an official director is in place.
Appointing Warren during a recess would further inflame Republican opposition, Barefoot said. "I know
there are members of the Senate who are supportive of the president and of Elizabeth Warren as well,
but who didn't like the bypassing of the statutory mandate and Senate prerogative regarding the advice
and consent law," Barefoot said. "So if it was bypassed again I think there would be some people who
would be concerned about it on a process basis, but I certainly wouldn't rule it out."
Some Republicans are already questioning whether a recess appointment would pass muster if the
position is with a brand new agency.
Rep. Randy Neugebauer, R-Texas, pointed out that the wording of the law suggests that recess
appointments are intended to fill vacancies that occur when Congress is in recess. "So does the recess
appointment actually apply to a situation where an initial office has never been filled?" he asked. "I
think that's an interesting question, and I'm not sure."
Page 429 of 3826
Several industry observers did not think that was much of a problem, however. Robert Dove, a former
Senate parliamentarian and public policy specialist at Patton Boggs LLP in Washington, said case
precedence has determined the president may appoint a candidate during a recess whether or not the
vacancy occurred during the recess. He said there are no special rules related to new agencies.
"I don't think there's any constitutional impediment to Elizabeth Warren being given a recess
appointment," Dove said.
Most industry observers are flabbergasted at the way the Obama administration has handled the CFPB
nomination. If Obama wanted to nominate Warren, the time to do so was last year, shortly after the
Dodd-Frank Act creating the agency was passed, they said. Some wondered if the administration
appointed her as de facto head of the CFPB in an effort to ease concerns over her nomination.
But if so, that appears to have backfired, Abernathy said.
"My assumption, if he was going to nominate Warren, he would have done so already," Abernathy said.
Fischer speculated that Obama may have wanted to nominate Warren all along, but his advisers have
struggled to convince him that it would be a bad move.
"It's still hard for me to believe that he's just going to let it kind of dangle out there," Fischer said. "If his
advisers coalesce around a candidate and that candidate appears to be someone who can be
confirmed, I think you'll see it happen very quickly."
The issue is critical as policymakers continue to debate how much authority would be conveyed to the
new agency without a director in place.
The most optimistic take is that the staff could enforce any existing statutes that are transferred from the
other bank regulators, but would be barred from enforcing any new provisions relating to nonbanks.
But operations would not grind to a halt, industry observers said.
In response to a request from House Financial Services Committee Chairman Spencer Bachus, the
inspectors general of the Treasury Department and Federal Reserve said in a report issued in January
Page 430 of 3826
that the Treasury's interim authority to perform the functions of the bureau would continue until a
permanent director is in place.
Under that authority, the Treasury could exercise the bureau's authority to "prescribe rules, issue orders
and produce guidance" related to federal consumer financial laws that have been transferred from other
regulators, and it would have authority to begin examining large banks. It could also enforce any orders
or agreements that have been made before the transfer date, and could replace any of the other
regulators in a lawsuit or proceeding that began before July 21.
But not everyone is satisfied with that report.
Abernathy said the authority is "unclear and at best fuzzy," and predicted that some institutions will file
lawsuits challenging the bureau's powers without a director.
"Our own view is that very little can be done," Abernathy said. "The only authority the Treasury really
has, it seems to us when you read the statute is to set up the organization, not to make any policy
decisions. The fact that the authority transfers over doesn't mean that there's anyone there to create
authority over it."
Moreover, if the agency cannot regulate nonbank institutions, it would "have one arm tied behind its
back," said Richard Hunt, the president of the Consumer Bankers Association.
Enforcing only part of its authority would create an unlevel playing field for banks, he said.
"If you don't have an executive director nominated by the president, confirmed by the Senate, you do
not have the core mission of the CFPB," he said. "There would not be full consumer protection. If you
cannot regulate the nonbanking entities you might as well not have one at all."
The absence of a director also creates uncertainty for the institutions that are subject to its authority,
said Cam Fine, the president of the Independent Community Bankers of America.
"I think the longer the president waits, the more uncertainty is created, and that's never good in any
sector, let alone the banking sector," Fine said. "I'm hopeful that the president will name a nominee for
the consumer bureau as soon as possible."
Lots of agencies run with acting heads, said Lynne Barr, a partner at Goodwin Procter, but the CFPB is
Page 431 of 3826
different.
"It's much more critical because you have this brand new agency about which people have a huge
amount of anxiety, and which also has this enormous mandate to help protect consumers and their
financial dealings," Barr said. "Without a clear vision of what the agency is going to do as expressed by
a permanent director, I think it will be rudderless for a while."
It is also unclear how much damage the process will ultimately do to the fledgling CFPB.
"It's going to be resolved at some point, whether it's this month, next month, October, it's going to get
resolved," Abernathy said. "The problem is that it has really started the agency off on a very sloppy
footing at best, and they're squandering a lot of time that I think everyone had hoped could have been
used to get the agency started in a very clear way, so that things are done with due process, so that
you have a lot more transparency with how the entity operates."
Back to Top
Financial Times
Caution urged on US bank foreclosure fines
April 25, 2011
By Tom Braithwaite
Banks will be fined for failures that led to the foreclosure debacle but regulators should avoid
dangerously large penalties, according to one of the top officials participating in fractious settlement
talks.
John Walsh, acting comptroller of the currency, told the Financial Times that he supported financial
penalties for mortgage servicers, led by Bank of America and Wells Fargo, whose shoddy paperwork
and improperly signed affidavits caused the repossession of delinquent borrowers homes to come to a
grinding halt.
Page 432 of 3826
But the Office of the Comptroller of the Currency has differed with some state attorneys-general, the
Federal Deposit Insurance Corporation and the new Consumer Financial Protection Bureau, which all
want a more far-reaching settlement, with $20bn in fines and at least some of the money used to
reduce the debt owed by struggling homeowners.
Mr Walsh said the controversial idea of a mortgage principal writedown was still on the table but the
OCCs role would be to decide whether the scheme threatened the safety or soundness of the US
banks.
If it were something that we felt was potentially harmful to the system, I mean some very large scheme
that we thought could be dangerously large, we would have a view on that, he said. But to the extent
that theres a settlement that involves other programmatic uses of that kind, we would have no objection
in principle.
Asked whether other agencies had proposed dangerously large penalties, Mr Walsh said only: Who
knows where this will come out? Others involved in the talks say that the Federal Reserve and the
Treasury are closer to the OCC in the debate, while the attorneys-general now differ among themselves
on the scope of a settlement.
The OCC is criticised by Democrats in Congress and consumer groups who believe that it is
overprotective of the banks it regulates particularly in its use of pre-emption authority to overrule
states that attempted to introduce tougher rules on lending in the run-up to the crisis.
The Financial Crisis Inquiry Commission found that the OCC had pointed to its use of pre-emption to try
to persuade banks to be regulated by and pay fees to the agency, offering pre-emption as an
inducement to use a national bank charter.
The general notion that the states had taken action and we had thwarted them on the subprime front is
an argument that we simply dont accept, said Mr Walsh.
He said regulators should be wary that the combination of new rules for the financial sector should not
be too burdensome.
We simply need to be conscious of the fact that there are multiple rule writings under way, each
sensible in their own regard, but we need to consider how they work additively and that will be a
challenge, he said.
Page 433 of 3826
He supported some add-on requirements for large globally active banks on top of the 7 per cent
capital ratio agreed at the Basel committee but said having reached an agreement on, in a sense the
right number for the internationally active banks, the idea that we would then say that wasnt actually
the right number, it should have been twice that or whatever else, doesnt seem entirely sensible to
me.
Back to Top

Must See TV
April 26, 2011
By Ben White
CFPB Czar Elizabeth Warren is also in the Big Apple today to appear on The Daily Show with Jon
Stewart. Because after all, whats funnier than the small print on your credit card statement? Seriously
though, M.M. is sure Warren will crush it, as always.
Back to Top
Page 434 of 3826
Firedoglake
Warren Shoots to Top of Short List for CFPB Job
April 26, 2011
By David Dayen
Weve seen enough trial balloons out of this Administration to cause a run on helium (Big Helium
Bailout!), but this latest one courtesy of Bloomberg News is actually a two-fer. First, theres the
speculation that Elizabeth Warren tops the list for Director of the Consumer Financial Protection
Bureau, which she devised, fought to get enacted into law, and took the lead in setting up:
President Barack Obama has narrowed the list of candidates to lead the Consumer Financial Protection
Bureau to a group of people with financial services experience, including Elizabeth Warren, an
administration official said.
Warren, the Obama administration adviser setting up the agency, and the other candidates have all
worked in financial services, though not necessarily in private industry, said the official who requested
anonymity because the process isnt public. The administration hopes to make a decision in the next
few weeks, the official said.
Ill note at this point that nobody else is mentioned in this piece other than Warren. The characterization
of candidates who have worked in financial services, though not necessarily in private industry leaves
in someone like Sarah Bloom Raskin, the former Maryland consumer protection official now on the Fed
Board of Governors, who has been touted (although she just got to the Fed, which already has several
vacancies of its own). Theres also been a little buzz for Sheila Bair, who only has a few months left on
her term as the head of the FDIC. But neither of those candidates get into this piece.
But the more important trial balloon here is that there will almost certainly be a recess appointment for
the position.
Obama met recently with advisers to discuss the nomination, according to a person briefed on the talks.
He may announce a nominee with the expectation that he will make a recess appointment if it becomes
clear the Senate wont confirm a director in time for the bureaus scheduled July 21 start date,
according to a person with knowledge of the bureaus efforts [...]
Warren has had meetings in recent weeks with Senate Democrats on the Banking Committee, including
Chairman Tim Johnson of South Dakota, Mark Warner of Virginia, Herb Kohl of Wisconsin and Kay
Page 435 of 3826
Hagan of North Carolina, according to two people briefed on the discussions.
The meetings have the dual effect of updating senators on Warrens progress in setting up the agency
created by the Dodd-Frank Act and tamping down opposition to a recess appointment, said the person
with knowledge of the bureaus efforts.
So Warren was the emissary sent to Senate Democrats offices to warn them about an imminent recess
appointment. Which could be herself. And the language here is crucial: a director nominated in May,
given the pace of the Senate, cannot possibly get confirmed within a couple months. So were headed
toward a recess appointment.
The main hurdle, at least publicly, for a Warren nomination was the difficulty or near-impossibility,
depending on who you talk to, of getting her confirmed. A recess appointment renders that argument
moot. She would be able to lead the agency right from the start, as she has already been doing, and
mold it in her image with the full set of powers and authorities.
The more private hurdle was the opposition of those inside the Administration to Warren in a strong
consumer protection role. But while Im sure that still exists, perhaps as high as the Treasury Secretary,
the fact that candidates like Ted Kaufman and Jennifer Granholm not only turned the job down, but
urged the White House to pick Warren, makes it extremely difficult for the Warren detractors to hold out.
The independent power base for Warren, separate and apart from the White House, has worked every
angle. And it may just succeed.
The timetable here was weeks, so well have an answer come May.
Back to Top
Naked Capitalism
OCC Makes Patently False Claim That Slap-on-the-Wrist Servicing Penalties Could Hurt Banks
April 26, 2011
By Yves Smith
Page 436 of 3826
Its time we come up with a new handle for the Office of the Controller of the Currency. It is difficult to
convey how shameless this regulatory-agency-turned-slut for the banking industry has become. Its the
Stage 4 disease version of where our government is heading at a rapid clip: officials masquerading as
serving the public interest when they are uber lobbyists for the pet whims of their supposed charges.
So what do we call the OCC? The Office of Capital Corruption? The Office of Criminal Capitulation? I
have no doubt readers will have even better ideas (and dont be constrained by the acronym).
As weve written in some of our posts on the foreclosuregate settlement negotiations, the OCC has
engaged in what even those of us at a remove can tell is bureaucratic warfare against the FDIC and the
yet to be operational Consumer Financial Protection Bureau. For the OCC to undermine the CFPB is a
twofer. First, it helps to beat back meaningful mortgage reform. Second, the CFPB has the potential to
hamper the OCCs real mission, which is to make sure that the banks come first and everyone else
pounds sand. It recognizes the need to make the occasional concession to keep the pitchfork crowd at
bay, but otherwise it really has no interest in making the banks toe the line. Note that the Treasury and
the Fed have pretty much the same worldview, but the OCC is more shameless and bloodyminded
about pursuing it.
For instance, it is pretty clear that someone in the officialdom, probably the OCC, painted a target on
Elizabeth Warrens back. As much as wee been critical of what appear to be some of the steps she has
taken, the flip side is that she does not buy the Team Obama modus operandi of coddling the banks
and persuading the chump public to go along via a heavy dose of propaganda and Potemkin reforms.
The CFPB and Warren in particular, have been depicted as behind-the-scenes drivers of the 50 state
attorney general settlement talks. Given that the yet-to-be-formed agency wasnt even in the room
during the first round of negotiations, that seems like quite a stretch. It appears that what happened is
that Tom Miller, in the two nanoseconds when he was talking tough about mortgage abuses, asked the
CFPB for some analytical input as to how to think about what level of fines might be appropriate. Its not
clear whether Miller gave the CFPB some grounds for action (as in if they didnt settle, we could sue
them for X, Y, and Z which would then give more concrete parameters for thinking of fines, since the
banks would never agree to pay more than what they might lose if the cases went to trial) or gave them
free rein to formulate the analysis.
So the goal of that exercise was Whats the most we could possibly argue for as damages? or
alternatively directly, Whats a reasonable economic argument for a settlement? The fact that this
analysis came up with bigger numbers than the banksters expected has led the industry defenders to
try to turn this finding on its head by depicting these pretty petty fines as monstrously big and therefore
proof that Warren is a modern day Savonarola. Ironically, weve argued the suggested fines of $20 to
$30 billion are way too low if you are coming at this from the perspective of harm done.
So look at how Chief Banking Shill, otherwise know as acting comptroller of the currency John Walsh,
Page 437 of 3826
insists that the banks cant be asked to pay for anything remotely resembling the damage theyve done.
This by the way, winds up being the reverse of what any respectable economist wold recommend. For
markets to function properly, businesses that do damage are not only supposed to pay for any harm
they do to their customers, but also to third parties. Thats why polluters are either regulated, or else
subject to extra charges so that the cost of their goods reflects the true social cost. Even conservative
economists like Harvards Greg Mankiw firmly support this notion.
By contrast, what Walsh is effectively recommending in this Financial Times interview is not only letting
polluters get away with doing harm, but also effectively subsidizing them. Of course, his responses are
carefully coded, so you need to be alert and read between the lines (view the clip here):
You can see the signs of Walshs misdirection and/or complicitness:
The claim that robosigning came to light in September of last year. False, it had been coming up
repeatedly in court filings for at least two years before that; the bank regulators chose to ignore it until it
erupted into a national scandal.
Characterizing forged documents and false affidavits as mishandling. The spin on this gets more and
more disconnected from reality. These were systematized, industry-wide practices, not occasional
innocent screw ups per the persistent bank Big Lie.
Staunchly supporting the fiction that all foreclosures are warranted, and worse, positive. This is a
misrepresentation on two levels. Walsh effectively admits what weve long been pretty certain was true:
that the touted Foreclosure Task Force review of servicer practices last fall was garbage in, garbage
out exercise. How did they determine whether the foreclosures were warranted? By looking at ONLY
the banks records. These same records have produced obvious screw ups like people being foreclosed
upon who had no mortgage, plus the more pernicious and from what we can tell, not at all uncommon
practice of impermissible application of fees, using suspense accounts to increase fees, holding
payments to make them late, using force placed insurance, padding or double dipping (charing the
same fee to both investors and the borrower), and applying fees so as to produce fee pyramiding.
There are numerous cases where these fees have led to charges that have been larger than the
mortgage past due amounts. They can easily escalate to thousands of dollars of unwarranted and
illegal charges in a six to eight month time frame.
The second canard here is that borrowers that are behind on their mortgage should lose their house. In
every other type of creditor relationship, when the borrower gets in trouble, the first question the lender
asks is whether they are worth more to him dead than alive. This isnt charity, its a cold blooded
financial assessment. A lender will always restructure a loan if he thinks the borrower can realistically
stay current on the new, lower payment amount and it looks more profitable than liquidating the loan.
The reason, as weve stressed again and again that banks arent modifying mortgages (and remember,
the servicers only do the work of restructuring, they dont eat the cost of the writedown) is the they have
Page 438 of 3826
terrible incentives. They make money foreclosing and theyve automated it so its profitable to them;
they need the proceeds from foreclosures to reimburse themselves for money theyve advanced to
investors; they arent set up to do mods, and have no interest in setting up new infrastructure; and if
they did enough mods, theyd have to write down second mortgages they own, which they have no
intention of doing. So despite the OCCs claims to the contrary, the parties that have skin in the game,
the homeowners and the investors, would benefit from well screened mods, as would the broader
housing market. But Walsh is operating from a bogus Mellonite liquidate the borrowers logic. The first
three years of the Depression tell you how well that idea worked.
There were also several references to bogus notions like being overly intrusive into their businesses,
overregulation, and the OCC being concerned that regulations or fines might damage bank safety and
soundness.
As we have argued, and analyses by the Bank of England director of financial stability Andrew Haldane
support, bank crises destroy so much value that you could appropriate all the big banks and it wouldnt
even begin to pay for the damage done. That alone is a justification for extremely intrusive regulation to
make them less destructive. Another way to arrive at the same conclusion is to look at the massive level
of subsidies the TBTF banks got before, during, and after the crisis. They are not private sector entities,
given the massive, one-sided heads I get huge bonuses, tails I put a drip feed into your national
Treasury arrangement , yet we allow them to launder that into egregious top executive and producer
pay packages. Walshs presentation is completely backwards, and he has to know better.
And as to the idea that the a $20 to $30 billion penalty might hurt the banks, although I questioned the
logic of that fine, this document sets out clearly why this no big deal to the banks in question:
But there was a final troubling theme in the Walsh presentation. It sounds as if the CFPB has already
capitulated. Notice how Walsh says the agency is assuring people that its going to stay in its cage and
worry about documentation. Thats better than nothing, but far less than American citizens deserve.
Back to Top
American Banker
A Better Gauge of Default Behavior
April 26, 2011
Page 439 of 3826
By Craig Crabtree
According to figures released the Bureau of Labor Statistics released on March 4, the unemployment
rate dropped slightly in February, but is still at a record-high 8.9%. In addition, a recent report indicates
strategic defaults are on the rise as they become more widely accepted.
These two economic factors are causing mortgage investors to be more focused on achieving greater
transparency into the collateral health of nonagency mortgage-backed securities. While investors now
have access to more detailed research related to payment and default hierarchy, a new approach to
analyzing borrower behavior may provide even greater clarity.
Default distance (the number of months between the default of a revolving debt and the first occurrence
of foreclosure) is a metric that provides more strategic insight into default timing.
In an evaluation of default distance, a positive number indicates that a borrower defaulted on a

revolving debt first while a negative number shows that the borrower defaulted on his mortgage loan
first.
Analysis by Equifax Capital Markets has found that revolving account defaults tend to occur before first
mortgage loan defaults, with the time span between the two decreasing over time.
The most significant decrease in default distance was on high-loan-to-value-ratio mortgages, like option
adjustable-rate mortgages, most likely driven by a rise in strategic defaults.
To analyze the significance of default distance and payment hierarchy, Equifax examined anonymous
borrower credit information (linking it to CoreLogic loan-level, mortgage-backed securities data) to
measure default distance at every point in the life of all nonagency securitized loans. The study
analyzed Federal Housing Finance Agency home price data on mortgages for borrowers with only one
mortgage outstanding and revolving debt such as credit card and home equity line of credit loans.
An in-depth look at this analysis by geography, market segment and credit score shows that geography
plays a significant role in default distance. According to the analysis, default distance has shrunk in
most states, especially states like Florida, California and Michigan that have been hard hit by poor
economic conditions. All three states had an average default distances in January 2010 of less than five
months. Texas and South Dakota had the longest default distances during the same period an
average distance of more than 15 months.
Page 440 of 3826
With default distance increasing over time for prime loans, this segment has started to stabilize,
however slightly. On the other hand, default distance for subprime loans has plateaued at 10 months. In
addition, option ARM loans have leveled off at five months.
Analysis shows that high credit scores do not necessarily result in long default distances. According to
Equifax' study, in late 2008 and early 2009, borrowers with a high VantageScore had the lowest
average distance between revolving and mortgage defaults. In fact, the default distance for those in the
800-900 score band was approximately five months.
Why? Because although borrowers in the highest score bands typically pay their credit obligation on
time, when they do default, it's on multiple accounts. As a result, the default distance is shorter.
Payment hierarchy has changed since the credit crisis, but mortgage loan defaults still follow a pattern
of occurrence after revolving debt defaults. However, since 2005 the default distance between revolving
debt and foreclosed mortgages has decreased. The most substantial decrease in default distance can
be seen among loans with high current combined loan-to-value ratios.
Craig Crabtree is senior vice president and general manager for Equifax.
Back to Top
Housing Wire
FTC mails $1.5 million in mortgage refund checks to Hispanics
April 25, 2011
By Jon Prior
The Federal Trade Commission mailed $1.5 million in refund checks to Hispanic borrowers who were
allegedly charged more on their mortgage than whites.
Page 441 of 3826
The refund stems from a lawsuit the FTC filed against California-based Golden Empire Mortgage and
its CEO Howard Kootstra. The suit alleged the company charged Hispanic consumers higher prices for
mortgages. The pricing disparity could not be explained in the borrowers' credit or underwriting risk.
In September, a settlement was struck. A $5.5 million judgment was suspended when the defendants
paid the $1.5 million for the refunds. The settlement bars the defendants from discriminating on the
basis of national origin in future loans and requires Golden Empire to establish a policy restricting the
discretion of a loan originator's pricing.
Golden Empire is also required to establish a fair-lending monitoring program, another program to
ensure the accuracy and completeness of its data and training programs for employees.
The FTC sent more than 3,100 checks, urging borrowers who receive the checks to cash them before
June 21.
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Housing Wire
NAMB to decide on continuing LO comp rule lawsuit this week
April 25, 2011
By Jon Prior
The National Association of Mortgage Brokers will decide this week on whether to continue its lawsuit
seeking to block the Federal Reserve rule governing how mortgage brokers are paid.
The Fed rule, required under the Dodd-Frank Act, went into effect April 6 after a brief stay for the U.S.
Court of Appeals for the District of Columbia to hear lawsuits brought by National Association of
Independent Housing Professionals and NAMB to end the rule. The original lawsuits were filed in the U.
S. District Court for the District of Columbia.
Page 442 of 3826
The rule ends higher compensation for originators when a borrower accepts a higher interest rate
mortgage, known as the yield spread premium. The rule was written to prevent borrowers from being
steered into higher-cost mortgage products than the lender requires.
The rule also ends of the practice of mortgage originators receiving payments directly from the borrower
and the lender simultaneously.
The NAIHP dropped its lawsuit to pursue other strategies last week, but Mike Anderson, the director of
government affairs at NAMB, said they are discussing strategy and cost with attorneys this week.
"We have not dropped the lawsuit," Anderson told HousingWire Monday. "We'll have our final decision
this Thursday."
Back to Top
Wall Street Journal (Developments blog)

To Deter Foreclosures, California Weighs New Fee
April 26, 2011
By Robbie Whelan
Some California lawmakers, supported by unions and left-leaning activist groups, have an idea to help
stem the flow of foreclosures: Charge banks $20,000 every time they want to foreclose on a home.
The proposed new fee, which has been dubbed a Foreclosure Mitigation Fee, would offset the roughly
$19,229 in costs for property maintenance, inspections, increased police and other public safety
presence and lost property tax revenues from each blighted foreclosure. (That estimate comes from a
2005 case study of the municipal cost of foreclosures in Chicago, prepared for the Homeownership
Preservation Foundation.) Under the proposal, which was debated Monday in the California Assemblys
Committee of Banking and Finance, mortgage servicers, which are usually owned by large Wall Street
banks, would pay the fees to local government agencies for damage done by foreclosures.
Page 443 of 3826
At the end of the day, we have a tremendous cost, collateral damage from foreclosures, and the banks
are not paying it. Were paying it. Neighbors are paying it, the school districts are paying it, small
businesses are paying it, says Bob Blumenfield, the San Fernando Valley, Calif. assemblyman who
authored the bill. Its not like the banks are innocent in this.
Critics say the proposal seems to be largely punitive in nature: By charging banks to foreclose, state
and local governments would essentially be penalizing banks for exercising their main legal remedy for
the problem of borrowers who stop paying their bills.
Penalizing loan holders simply for enforcing their rights under their loan documents is tantamount to
saying that secured lending is illegal, said Laurence Platt, a Washington-based securities lawyer who
often defends banks. If you believe that lending on the security of a home is illegal or immoral, youll
love this idea. If you believe in the sanctity of secured lending, you will see this as an unconstitutional
taking.
But making the foreclosure process more expensive for the banks by fiat could backfire. Instead of
deterring the banks from taking back houses from borrowers who have missed payments, as advocates
hope would happen, the banks could foreclose and pass the $20,000 cost along to consumers (by
raising the prices of houses when they re-sell them) or to the investors who own the mortgages, which
include the taxpayer-supported mortgage giants Fannie Mae and Freddie Mac. Furthermore, the
California housing market has begun to show signs of life, in large part because the foreclosure process
there is more expeditious and not as expensive as in places like Florida, where foreclosures can
sometimes last nearly two years and require thousands in legal fees and processing.
But Mr. Blumenfield, the California lawmaker, says that any talk about passing the fees on to
consumers amounts to scare tactics. A much more logical way for banks to pay for the fees would be
out of their enormous bonuses they give their executives while accepting government money, he says.
Some supporters of the bill admit that theres no way to make the proposed fees stick to the mortgage
servicers, but say the alternative is continuing to force consumers to pay for the foreclosure crisis
through property tax hikes and service cuts.
If we dont do it, we have to ask, why are we being punitive on the consumers and taxpayers, through
increased taxes and increased costs at the local police force? said economist Mike Konczal, a
research fellow with the Roosevelt Institute, a liberal-leaning think-tank. The question is, do we put it on
the consumers or do we put it onto the banks, who are the most proximate people to this situation?
Back to Top
Page 444 of 3826
MarketWatch
The foreclosure prevention program that works
A Pennsylvania borrower program may be better than HAMP
April 25, 2011
By Ronald D. Orol
As Republicans try to kill an Obama administration foreclosure prevention program that even
Democrats agree hasnt lived up to expectations, a program in Pennsylvania is being lauded for being
simpler, cheaper and more effective.
Its called the Pennsylvania Homeowners Emergency Mortgage Assistance Program and was
established in 1984, long before the recent mortgage crisis. The program gives bridge loans to people
who have recently lost their jobs. Loans do not accrue interest until the participants income is restored.
And a recent study from the New York Fed says the Pennsylvania law works far better than the $30
billion national program set up in 2009 called the Home Affordable Modification Program, which so far
has led to 630,000 loan modifications, against a target of 3 to 4 million.
Last year, Pennsylvania had the 26th-highest unemployment rate, of 8.7%, but the 37th-highest
foreclosure rate, of 0.93%, according to Labor Department and RealtyTrac data.
The New York Fed study says the HEMAP program can be cheaper for taxpayers and help a large
number of troubled homeowners. It compares the two approaches by evaluating costs on assistance for
two hypothetical mortgages valued at $210,000 at the time of unemployment. The HAMP modification
program, the report argues, costs the federal government $13,600 while the HEMAP program cost
Pennsylvania $1,620.
The report said the HEMAP program can be cheaper, in part, because when the homeowner finds a job
again, the loan ends and he or she begins to repay it.
Page 445 of 3826
Alternatively, the HAMP program provides taxpayer funded assistance to bank servicers, who, in turn,
modify the borrowers current mortgage payments, and those adjustments stay in effect for five years
regardless of whether the borrower returns to employment. Read the report
(HAMP makes initial taxpayer-funded payouts to the servicers of $1,000 for each permanent
modification, followed by an additional $1,000 a year for three years as long as the borrower remains
current in paying their mortgages).
Besides being cheaper at the outset, the New York Fed report says that roughly 80% of HEMAP loan
recipients have retained ownership of their homes, and that the program has largely become selffunded because most borrowers find jobs and have paid back their loans.
Loan repayments are an important source of the programs continued funding, and the high loan
repayment rate attests to the program administrators ability to screen applicants on their reemployment
prospects, the report said.
Backers, including banks, also say that it is much simpler to operate than HAMP because it does not
require the participation of bank loan servicers, which are often understaffed and have been, in many
cases, unable to handle the volume of modification requests.
Michael McKeever, an attorney who represents lenders and servicers in Pennsylvania, said that banks
prefer the HEMAP program because it imposes fewer delays on the foreclosure process than HAMP
does.
Banks support it because they recognize they can bring that account current, and there are minimal
delays on the foreclosure process if the borrower is denied, said McKeever. The HAMP program and
all the borrower applications is overwhelming mortgage servicers.
With HEMAP, borrowers can receive a maximum of 120 days to apply for assistance, after which, if
they arent approved for a loan, the foreclosure process can resume or begin.
The HEMAP loans can also go to help unemployed homeowners catch up on missed mortgage
payments.
Marcia Wells, a housing counselor at the Carroll Park Community Council Inc., said HEMAP helped
Frances Brinson keep her home in Philadelphia after she lost her job due to a broken hip. Wells said
Page 446 of 3826
Brinson was approved for a HEMAP loan on April 4 because her son moved back home, increasing the
household income to a level sufficient for approval.
The loan covers $10,000 in missed mortgage payments, late fees and due back-taxes.
Starting in September, Brinson and her son will pay the regular mortgage payments plus $100 a month
to cover the HEMAP loan.
We would have lost the house and gone into foreclosure without the loan, said Brinsons daughter
Marlo.
The program has been such a success that some believe the Obama administration may have been
better advised to allocate greater funds for it than HAMP, which so far has spent only $1 billion of the
$30 billion allocated for it with expectations that it will only use $4 billion of the funds.
Since we had so many resources for HAMP, it would have made more sense to put a lot of those funds
for the HEMAP program, said Philadelphia Unemployment Project Director John Dodds.
Henry Sommer, director at the National Association of Consumer Bankruptcy Attorneys, agrees that
more money for HEMAP would have been a good remedy for the large number of people who cant pay
because they are unemployed.
The point hasnt gone unrecognized. Four states Connecticut, Delaware, Idaho and Maryland are
operating programs similar to HEMAP.
Roughly $7.5 billion from the Troubled Asset Relief Program has been allocated to 18 of the hardest-hit
states (not Pennsylvania), to create programs for housing rehabilitation and help for unemployed
homeowners.
The Dodd-Frank Act, approved last year, put another $1 billion in taxpayer funds to a program known
as the Emergency Homeowner Loan Program, which is seeking to provide funds to the other 32 states
to set up HEMAP-type programs. However, the Department of Housing and Urban Development, which
is administering the program, hasnt yet provided funds to 28 states that dont have existing HEMAP-like
programs.
HUD doesnt have long to act if the funds arent allocated to specific homeowners in those states by
Page 447 of 3826
Sept. 30, it is required by law to be returned to the Treasury.
Lew Finfer, an organizer at the Massachusetts Communities Action Network, said HUD first promised to
provide the funds to the states, including Massachusetts, by January, then March, then mid-May and
now late July. Massachusetts is scheduled to receive $61 million from the program. Finfer said he and
other advocates are setting up a meeting with HUD officials to discuss the delays.
There are people right now who need it and because HUD hasnt put the money out they are losing
their homes, said Finfer.
HUD spokeswoman Tiffany Smith said the EHLP program is a very big undertaking, and officials are
making sure that the states have systems in place to handle the capital before funds are allocated.
HUD is working with state groups to make sure that homeowners can access the funds by the Sept. 30
deadline, said Smith. We are trying to roll this out as quickly as possible. Its a unique program and it
has been an implementation challenge.
HEMAP, for all its success, has its own limitations.
About 183,000 borrowers have applied for a loan and only 43,000, or about 23%, have been approved.
A program that approves a larger percentage of applicants, such as the three to four million borrowers
the Obama administration is seeking to help avoid foreclosure, is also one that would likely result in
lower repayment rates and require more taxpayer expenditures, McKeever said.
Back to Top
Atlanta Journal-Constitution
Consumers repaying record amount of credit-card debt
April 25, 2011
Page 448 of 3826
By Henry Unger
Consumers are repaying a record amount of credit card debt another sign that more are trying to get
their financial house in order, according to a new report.
Last year, consumers repaid more than $122 million to their creditors through a national, nonprofit credit
counseling group called CredAbility, which is based in Atlanta. Its a 3 percent increase from 2009 and a
record for the 47-year-old organization, which was formerly known as the Consumer Credit Counseling
Service of Greater Atlanta.
Already this year, the numbers continue to rise. In the first quarter, repayments are up 9.5 percent from
a year ago, CredAbility said.
While the Great Recession caused personal bankruptcy filings to soar, other consumers are choosing
different paths. Some are beefing up their savings, some are reducing debt and some are doing both.
Many consumers are deciding to take control of their financial lives by working with their creditors to
pay down their debt, even if it takes 36 months or longer, Vicki Williams, vice president of Debt
Management Plan Services for CredAbility, said in a statement.
A debt management plan helps consumers struggling with credit card debt to take advantage of
reduced payments with creditors, CredAbility said. Many creditors offer favorable repayment terms to
consumers who enroll in a debt plan, including significantly lower interest rates. The creditors may also
eliminate late fees and penalties once a consumer enrolls.
In 2010, the average income of a person enrolled in a CredAbility debt management plan was $53,880
a 4 percent increase over 2009, CredAbility said. Each person had an average of $24,266 in credit
card debt in 2010 a 4.5 percent increase from the year before. The average age was 48 up from
45 in 2009.
On Tuesday, you can meet a Gwinnett couple behind the numbers. My column will discuss how they
got into an $83,000 financial mess and how they paid it off over five years.
Back to Top
Page 449 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

RE: HUD Proposed Placement Spreadsheet.xlsx

Tue Apr 26 2011 09:15:48 EDT
Thank you!

Sent: Tuesday, April 26, 2011 8:52 AM
Subject: FW: HUD Proposed Placement Spreadsheet.xlsx

To: Dickman, Marilyn (CFPB)
Subject: HUD Proposed Placement Spreadsheet.xlsx
Hi Marilyn,
Attached is this back with our placement recommendations for the six outstanding HUD employees. I
also added the columns in the chart that Dennis requested. Let me know if you have any
questionsthanks!
-K
Page 451 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

FW: HUD Proposed Placement Spreadsheet.xlsx

Tue Apr 26 2011 08:51:30 EDT
HUD Proposed Placement Spreadsheet.xlsx

Subject: HUD Proposed Placement Spreadsheet.xlsx
Hi Marilyn,
questionsthanks!
-K
Page 452 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:


Tue Apr 26 2011 08:51:05 EDT
Hi Marilyn,
questionsthanks!
-K
Page 455 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

HUD Spreadsheet
Tue Apr 26 2011 08:35:43 EDT
HUD Proposed Placement Spreadsheet.xls
Marilyn A. Dickman
202-435-7157 (W)
for guidance.
Page 458 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:
Canfield, Anna (CFPB)

(fydibohf23spdlt)/cn=recipients/cn=canfielda>
(fydibohf23spdlt)/cn=recipients/cn=canfielda>;
_DL_CFPB_AllHands
</o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands>; Ladd,
Christine </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=laddc>; Lilly, Antona
</o=ustreasury/ou=do/cn=recipients/cn=lillya>
Grover, Eric (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=grovere>
All Hands Meeting
Mon Apr 25 2011 18:01:41 EDT
All Hands Meeting (1).msg <extracted>
Canceled: All Hands Meeting (2).msg <extracted>
StartTime: Tue Oct 26 09:30:00 Eastern Daylight Time 2010

EndTime: Tue Oct 26 10:00:00 Eastern Daylight Time 2010
Location:
Invitees:
Recurring: No
ShowReminder: Yes
ReminderMinutes: 15
ReminderTime: Tue May 24 09:15:00 Eastern Daylight Time 2011
Accepted: No
Page 469 of 3826
All Hands Meeting (1).msg <extracted> (Attachment 1 of 2)
To:
_DL_CFPB_AllHands[[email protected]]; Ladd,
Christine[[email protected]]; Lilly, Antona[[email protected]]; Betts, Kristina
(CFPB)[[email protected]]; Worthman, Katherine (CFPB)[[email protected]];
Leary, Jesse (CFPB)[[email protected]]; Donoghue, Kristen
(CFPB)[[email protected]]; Starr, John (CFPB)[[email protected]]; Chanin,
Leonard (CFPB)[[email protected]]
Cc:
Grover, Eric (CFPB)[[email protected]]; Keane, Micheal
(CFPB)[[email protected]]; Hillebrand, Gail (CFPB)[[email protected]]; Gupta,
Neeraj (CFPB)[[email protected]]; Deutsch, Rebecca
(CFPB)[[email protected]]; Healey, Jean (CFPB)[[email protected]]; Brolin, John
(CFPB)[[email protected]]; Wanderer, Agnes (CFPB)[[email protected]]; Selden,
R. Colgate (CFPB)[[email protected]]; Young,
Christopher[[email protected]]; Petraeus, Holly (CFPB)[[email protected]];
Blow, Marla (CFPB)[[email protected]]; Plunkett, Alexander
(CFPB)[[email protected]]; Coleman, John (CFPB)[[email protected]]; Scala,
Courtney (CFPB)[[email protected]]; Gragan, David (CFPB)[[email protected]];
Tingwald, James (CFPB)[[email protected]]; Shue, Jeffrey
(CFPB)[[email protected]]; Bach, Mary (Stacey)(CFPB)[[email protected]]; Turenne,
Jeannine (CFPB)[[email protected]]; Riley, Jeffrey (CFPB)[[email protected]];
D'Amico, Christina[Christina.D'[email protected]]; Reeder, Garry
(CFPB)[[email protected]]; Petersen, Cara (CFPB)[[email protected]]; West,
Catherine (CFPB)[[email protected]]; Sena, Theresa (CFPB)[[email protected]];
Mosena, Lea (CFPB)[[email protected]]; Gao, Jane (CFPB)[[email protected]]; Geldon,
Daniel (CFPB)[[email protected]]; Pearl, Joanna (CFPB)[[email protected]];
Boenau, Susan (CFPB)[[email protected]]; Dickman, Marilyn
(CFPB)[[email protected]]; Mann, Seth (CFPB)[[email protected]]; Morris, Lucy
(CFPB)[[email protected]]; Herchen, Emily (CFPB)[[email protected]]; Silberman,
David (CFPB)[[email protected]]; DiPalma, Nikki (CFPB)[[email protected]];
McQueen, Suzanne (CFPB)[[email protected]]; Sanford, Paul
(CFPB)[[email protected]]; Jackson, Peter (CFPB)[[email protected]]; Hrdy, Alice
(CFPB)[[email protected]]; Date, Rajeev (CFPB)[[email protected]]; Michalosky, Martin
(CFPB)[[email protected]]; Cordray, Richard (CFPB)[[email protected]];
Cumpiano, Flavio (CFPB)[[email protected]]; Cochran, Kelly
(CFPB)[[email protected]]; Stark, Paula-Rose (CFPB)[[email protected]];
English, Jared (CFPB)[[email protected]]; Twohig, Peggy
(CFPB)[[email protected]]; Gordon, Michael (CFPB)[[email protected]]; Lev, Ori
(CFPB)[[email protected]]; Chow, Edwin (CFPB)[[email protected]]; Vanderslice, Julie
(CFPB)[[email protected]]; Smullin, Rebecca (CFPB)[[email protected]];
McCoy, Patricia (CFPB)[[email protected]]; Lopez-Fernandini, Alejandra
(CFPB)[[email protected]]; Williams, Anya
(CFPB)[[email protected]]; Gorski, Stephanie (CFPB)[[email protected]];
Fuchs, Meredith (CFPB)[[email protected]]; Geary, John
(CFPB)[[email protected]]; Reilly, Deb (CFPB)[[email protected]]; Fravel, Wesley
(CFPB)[[email protected]]; Abney, Wilson (CFPB)[[email protected]]; Proctor,
Althea[[email protected]]; Cronin, Katherine (CFPB)[[email protected]];
Lombardo, Christopher[[email protected]]; Vail, Amber
(CFPB)[[email protected]]; Rexroth, Mariana (CFPB)[[email protected]]; Breslaw,
April (CFPB)[[email protected]]; Suess, Robert (CFPB)[[email protected]]; Harvey,
Imani (CFPB)[[email protected]]; Trueblood, Andrew
(CFPB)[[email protected]]; Brown, Allison (CFPB)[[email protected]];
VanMeter, Stephen (CFPB)[[email protected]]; Levisohn, Ethan
(CFPB)[[email protected]]; Alag, Sartaj[[email protected]]
To:
Canfield, Anna (CFPB)[[email protected]]
From:
Subject: All Hands Meeting
When: Tuesday, May 10, 2011 1:30 PM-2:00 PM (UTC-05:00) Eastern Time (US & Canada).
Where: 5th floor elevator bank
Page 470 of 3826
All Hands Meeting (1).msg <extracted> (Attachment 1 of 2)
*~*~*~*~*~*~*~*~*~*
Please join us for all hands with a special guest visitor.
Page 471 of 3826
Canceled: All Hands Meeting (2).msg <extracted> (Attachment 2 of 2)
To:
Canfield, Anna (CFPB)[[email protected]];
_DL_CFPB_AllHands[[email protected]]; Ladd,
Christine[[email protected]]; Lilly, Antona[[email protected]]; Betts, Kristina
(CFPB)[[email protected]]; Worthman, Katherine (CFPB)[[email protected]];
Leary, Jesse (CFPB)[[email protected]]; Donoghue, Kristen
(CFPB)[[email protected]]; Starr, John (CFPB)[[email protected]]; Chanin,
Leonard (CFPB)[[email protected]]
Cc:
Grover, Eric (CFPB)[[email protected]]; Keane, Micheal
(CFPB)[[email protected]]; Hillebrand, Gail (CFPB)[[email protected]]; Gupta,
Neeraj (CFPB)[[email protected]]; Deutsch, Rebecca
(CFPB)[[email protected]]; Healey, Jean (CFPB)[[email protected]]; Brolin, John
(CFPB)[[email protected]]; Wanderer, Agnes (CFPB)[[email protected]]; Selden,
R. Colgate (CFPB)[[email protected]]; Young,
Christopher[[email protected]]; Petraeus, Holly (CFPB)[[email protected]];
Blow, Marla (CFPB)[[email protected]]; Plunkett, Alexander
(CFPB)[[email protected]]; Coleman, John (CFPB)[[email protected]]; Scala,
Courtney (CFPB)[[email protected]]; Gragan, David (CFPB)[[email protected]];
Tingwald, James (CFPB)[[email protected]]; Shue, Jeffrey
(CFPB)[[email protected]]; Bach, Mary (Stacey)(CFPB)[[email protected]]; Turenne,
Jeannine (CFPB)[[email protected]]; Riley, Jeffrey (CFPB)[[email protected]];
D'Amico, Christina[Christina.D'[email protected]]; Reeder, Garry
(CFPB)[[email protected]]; Petersen, Cara (CFPB)[[email protected]]; West,
Catherine (CFPB)[[email protected]]; Sena, Theresa (CFPB)[[email protected]];
Mosena, Lea (CFPB)[[email protected]]; Gao, Jane (CFPB)[[email protected]]; Geldon,
Daniel (CFPB)[[email protected]]; Pearl, Joanna (CFPB)[[email protected]];
Boenau, Susan (CFPB)[[email protected]]; Dickman, Marilyn
(CFPB)[[email protected]]; Mann, Seth (CFPB)[[email protected]]; Morris, Lucy
(CFPB)[[email protected]]; Herchen, Emily (CFPB)[[email protected]]; Silberman,
David (CFPB)[[email protected]]; DiPalma, Nikki (CFPB)[[email protected]];
McQueen, Suzanne (CFPB)[[email protected]]; Sanford, Paul
(CFPB)[[email protected]]; Jackson, Peter (CFPB)[[email protected]]; Hrdy, Alice
(CFPB)[[email protected]]; Date, Rajeev (CFPB)[[email protected]]; Michalosky, Martin
(CFPB)[[email protected]]; Cordray, Richard (CFPB)[[email protected]];
Cumpiano, Flavio (CFPB)[[email protected]]; Cochran, Kelly
(CFPB)[[email protected]]; Stark, Paula-Rose (CFPB)[[email protected]];
English, Jared (CFPB)[[email protected]]; Twohig, Peggy
(CFPB)[[email protected]]; Gordon, Michael (CFPB)[[email protected]]; Lev, Ori
(CFPB)[[email protected]]; Chow, Edwin (CFPB)[[email protected]]; Vanderslice, Julie
(CFPB)[[email protected]]; Smullin, Rebecca (CFPB)[[email protected]];
McCoy, Patricia (CFPB)[[email protected]]; Lopez-Fernandini, Alejandra
(CFPB)[[email protected]]; Williams, Anya
(CFPB)[[email protected]]; Gorski, Stephanie (CFPB)[[email protected]];
Fuchs, Meredith (CFPB)[[email protected]]; Geary, John
(CFPB)[[email protected]]; Reilly, Deb (CFPB)[[email protected]]; Fravel, Wesley
(CFPB)[[email protected]]; Abney, Wilson (CFPB)[[email protected]]; Proctor,
Althea[[email protected]]; Cronin, Katherine (CFPB)[[email protected]];
Lombardo, Christopher[[email protected]]; Vail, Amber
(CFPB)[[email protected]]; Rexroth, Mariana (CFPB)[[email protected]]; Breslaw,
April (CFPB)[[email protected]]; Suess, Robert (CFPB)[[email protected]]; Harvey,
Imani (CFPB)[[email protected]]; Trueblood, Andrew
(CFPB)[[email protected]]; Brown, Allison (CFPB)[[email protected]];
VanMeter, Stephen (CFPB)[[email protected]]; Levisohn, Ethan
(CFPB)[[email protected]]
From:
Sent:
Tue 5/3/2011 12:53:56 PM
Subject: Canceled: All Hands Meeting
Page 472 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Updated HUD Documents

Mon Apr 25 2011 16:07:18 EDT
HUD Transfer Data 4-25-11 4 pm.xlsx
HUD Employee Recommended Placement DRAFT 4-25-11.docx
Placement Proposals 4-25-11.docx
Attached are four documents. One is the updated placement proposals for the Wally meeting. The other
three are the original matrices, the summary, and the data, which reflect the recent changes we
discussed (b) (5), (b) (6), (b) (2)
Kevin K. Lownds
Review Analyst
(202) 435-7399
Page 475 of 3826
From:
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Date:
Attachments:

Accepted: Prep for HUD Decision Meeting with Wally

Mon Apr 25 2011 15:42:18 EDT
Page 504 of 3826
From:
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Re: ILSA Updated Redline

Mon Apr 25 2011 15:11:44 EDT
Can u call me
_____
To: Scanlon, Thomas
Cc: Glaser, Elizabeth (CFPB)
Sent: Mon Apr 25 14:43:48 2011
Subject: ILSA Updated Redline
Hi Tom,
I hope you enjoyed your weekend. Im in the process of taking inventory of our work thus far on the
Restatement Project in order to transition the materials to Nick and Meredith. During this process, I
noticed that I had provided you with an incomplete version of the ILSA regulations. I did not include 24
CFR part 1720 because it encompassed procedural rules, but weve since decided to include these
rules because they were implemented in connection with an enumerated law.
I have updated the redlined regulation to include them as well, and attached the up-to-date version so
we dont have any issues with version control. Let me know if you have any questions. Thanks!
-K
Kevin K. Lownds
Review Analyst
(202) 435-7399
Page 506 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:
Scanlon, Thomas
RE: ILSA Updated Redline
Mon Apr 25 2011 14:45:06 EDT
Will do. Thanks.

And, yes, I did enjoy a nice weekend. Hope you did, too.
Tom

To: Scanlon, Thomas
Subject: ILSA Updated Redline
Hi Tom,
I hope you enjoyed your weekend. Im in the process of taking inventory of our work thus far on the
Restatement Project in order to transition the materials to Nick and Meredith. During this process, I
noticed that I had provided you with an incomplete version of the ILSA regulations. I did not include 24
CFR part 1720 because it encompassed procedural rules, but weve since decided to include these
rules because they were implemented in connection with an enumerated law.
I have updated the redlined regulation to include them as well, and attached the up-to-date version so
we dont have any issues with version control. Let me know if you have any questions. Thanks!
-K
Kevin K. Lownds
Review Analyst
Page 508 of 3826

(202) 435-7399
Page 509 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

_DL_CFPB_AllHands
Vacancy Announcements - Financial Services and Products Translator

Mon Apr 25 2011 14:26:36 EDT
Colleagues fyi pls

Dennis
Financial Services and Products Translator CN-1040-5B/5B.

Office: Community Affairs
Announcement Closes: April 29, 2011
Who May Apply: All US citizens.
11-CFPB-167P
Financial Services and Products Translator CN-1040-5B/5B.

Office: Community Affairs
11-CFPB-166
Page 577 of 3826
From:
To:

(fydibohf23spdlt)/cn=recipients/cn=bernsteine>; Black, Brad
(fydibohf23spdlt)/cn=recipients/cn=brolinj>; Brown, Amy (CFPB)
Page 578 of 3826

(fydibohf23spdlt)/cn=recipients/cn=chandlerde>; Chopra, Rohit
(fydibohf23spdlt)/cn=recipients/cn=dokkoj>; Dorsey, Darian
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(fydibohf23spdlt)/cn=recipients/cn=forrestda>; Frotman, Seth
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(fydibohf23spdlt)/cn=recipients/cn=lauderdales>; Leiss, Wayne
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(fydibohf23spdlt)/cn=recipients/cn=manns>; Markus, Kent (CFPB)
Page 582 of 3826

group (fydibohf23spdlt)/cn=recipients/cn=starkp>; Sterken,
Nathan (CFPB) </o=ustreasury/ou=exchange administrative group
Page 583 of 3826

(fydibohf23spdlt)/cn=recipients/cn=wittm>; Young, Christopher
Cc:
Bcc:
Subject:
Date:
Weekly Report 4/25

Mon Apr 25 2011 13:18:46 EDT
Page 584 of 3826
Attachments:
CFPB Weekly Report
4/25/2011
Overview
Elizabeth Warren will be on the Daily Show with Jon Stewart on Tuesday to talk about standing up the
CFPB. She will speak on Wednesday at the AFL-CIO Lawyers Conference in San Diego, and with the
California Department of Corporations and California community bankers.
Policy
Cards
We are scheduling meetings to discuss our list of topics that can be standardized or moved to a user
manual to simplify cardholder agreements. We are continuing to develop alternative approaches to
improve communications to existing cardholders around what they are paying in interest and fees. We
will meet this week with three card issuers for a quarterly update.
In the prepaid space, Warren is meeting with the CEO of NetSpend today. We will also speak with
Green Dot this week as well to obtain additional information on their usage patterns. We have
completed a round of mystery shopping and are working on an options memo.
Mortgages
The TILA-RESPA mortgage disclosure consolidation project refined the prototype disclosure forms and
the quantitative testing plan and began finalizing web content for the upcoming outreach program.
Mortgage Markets submitted written comments to the General Accountability Office on its upcoming
foreclosure documentation report. The team also completed a literature review in anticipation of the
proposed qualified mortgage rule, which the Federal Reserve proposed last week.

The CFPB is moving toward signing memoranda of understanding on several issues, including with the
Federal Reserve Board regarding retirement and thrift plan contributions for CFPB employees; on
access to FDIC examination and compliance training materials; governing information-sharing with
other regulators, states, etc.; with OPM and FDIC to provide CFPB Continuity of Operations site; and
with OPM Federal Investment Services Division to support electronic transfer of certain sensitive
confidential information.
Page 585 of 3826
In the field of deposits, we are meeting this week with two of the top three depository institutions and
are scheduling meetings with other institutions as we continue our research.
For our report on remittances and credit scores, we have continued data collection and analysis on
remittance disclosures. We also received completed analysis from Yale Law School clinic interns on
disclosure rules outside the U.S. Western Union informed us that they have reached terms for
obtaining credit files from Experian and are aiming to have their respective agreements with Experian
and the CFPB (drafted and accepted already) signed by April 29. We are making progress on drafts of
sections of the report.
For our study and report on credit scores, we aim to have signed, final data sharing agreements this
week with each credit reporting agency and with FICO.
We will begin to contact regulatory associations including the Money Transmitters Regulators
Association (MTRA), National Association of Consumer Credit Administrators (NACCA), and American
Association of Residential Mortgage Regulators (AARMR). We will then work on detailed plans for
coordination and information-sharing.
Outreach
On Tuesday, Elizabeth Vale is meeting with 100 Connecticut community bankers in Hartford.
Professor Warren will sit for an interview with Deborah Solomon of the Wall Street Journal today, and
on Wednesday, she will sit for interviews with Ben Protess of the New York Times and Mark DeCambre
of the New York Post. On Friday, Warren and the CFPB will host a closed-press meeting with
Americans for Financial Reform.
On Wednesday, CFPBs Community Affairs staff will attend the Interagency Community Affairs
Quarterly Meeting at the FDIC.
On Friday, Holly Petraeus will hold a closed-press roundtable with military advocacy groups, legal
services organizations, and JAGs.
Peggy Twohig will meet this week with representatives from the Community Financial Services
Association of America, a trade association of payday lenders.
Page 586 of 3826
Elizabeth Vale and Rohit Chopra will meet with a consortium of credit unions offering private student
loans.
We will also be meeting with representatives from the Department of Education to discuss the private
education loan ombudsman.
Management
David Forrest will become the CFPBs Chief Technology Officer, moving over from Consumer
Engagement.
Congress passed a new requirement that the CFPB have an audit of its own operations and budget.
Hiring staff support and procuring the audit contract has become a new priority. The legislation requires
that CFPB complete this initial audit and the GAO financial statement audit by mid-October.
We aim to complete work on proposal review and a selection process for a large contact center
provider.
We have identified reasonably priced classroom space at the U.S. Mints 9th Street NE office that could
accommodate entry-level compliance examiner training.
This week, GAO visits ARC to lean about their role in processing CFPB financial transactions (HR,
procurement, financial management).
Monday, April 25
-
Media: Interview with Deborah Solomon (Wall St. Journal)
Meeting with Gary Gensler (CFTC)
Meeting with Dan Henry (NetSpend) (No financial interest, past work, gifts, or AARA/EESA)
Page 587 of 3826
Tuesday, April 26
-
EW in NYC
Media: Daily Show with Jon Stewart
Wednesday, April 27
-
EW in NYC
Media: Interview with Ben Protess (NYT); Meeting with Teresa Tritch (NYT); Interview with Mark
DeCambre and Rich Wilner (New York Post)
Thursday, April 28
-
EW in San Diego
Remarks to the AFL-CIO Lawyers Conference
Meeting with CA Community Bankers (No financial interest, past work, gifts, or AARA/EESA)
Page 588 of 3826
From:

_DL_CFPB_AllHands
Adamske, Steven
To:
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Date:
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Mon Apr 25 2011 11:28:05 EDT
Index

NPR Holly Petraeus: An Army Wife Takes Command
Command and General Staff College Foundation News Leadership runs in the family
Washington Post Lobbying efforts persist long after health-care, financial regulation bills passed
Page 589 of 3826
Wall Street Journal Beware the Financial Fear Mongers
KION 46 (California) Simplified Mortgage Terms
Austin American-Statesman Has Obama lost the voters who elected him?
Politico Morning Money Wheres Warren?
Consumer Credit
Orlando Sentinel Debt collectors must tread lightly on social media
Housing
Housing Wire Iowa AG slams report on campaign contributions
Housing Wire Lawyer intensifies fee-splitting battle against mortgage servicing providers
Bloomberg Americans Shun Most Affordable Homes in Generation as Owning Loses Appeal
Palm Beach Post Local robo-signer alleges her signatures were forged
NPR
Holly Petraeus: An Army Wife Takes Command
April 25, 2011
By Tamara Keith
One of the first people hired to work at the new Consumer Financial Protection Bureau is a small, quiet,
unassuming woman named Holly Petraeus.
And if the name sounds familiar, there's a good reason: She's married to Army Gen. David Petraeus,
the U.S. commander in Afghanistan.
Gen. Petraeus is a celebrity general, respected by people on both sides of the political aisle. And when
it comes to protecting the financial interests of military families, Holly Petraeus, 58, is a force, too. She
will head the Office of Servicemember Affairs, within the consumer bureau created by Congress last
Page 590 of 3826
year as part of the financial system overhaul.
"She's Mom, apple pie, and also a pit bull," says Rod Davis, who worked with Holly Petraeus for six
years at the Better Business Bureau. "You get her in your corner and watch her go."
At the BBB, Petraeus led the Military Line program, which provides financial education and consumer
advocacy for service members.
"She looks very mild-mannered. She looks very conservative, very reserved," Davis says. "But she's
very passionate, and I think it's her passion for what she does that makes her so effective."
A Military Wife, Mother And Daughter
That passion comes from a lifetime of experience. Petraeus is the daughter of a general. Her son,
brother, grandfather and great-grandfather all served in the armed forces. And she's been a military wife
for more than 35 years.
It's something that helps her connect with service members, like those at a listening session she held at
Joint Base San Antonio back in January.
"I know you out there in the audience look at me and think, 'That lady is really old. How could she
possibly know what we're going through?' " she said to a room full of service members and others.
But, she tells them, she and her husband were a young military couple once.
"I know, hard to believe," she says, getting a few laughs. "We did some of the things that you know I
don't recommend people do now which is, buy the hot sports car, you know, sign the contract for the
apartment sight unseen because they sent us a good-looking brochure."
Petraeus knows the unique difficulties faced by military families firsthand. She has moved 23 times in
36 years and spent countless months raising a family essentially on her own while her husband was
deployed.
She says the military is a targeted population, because service members are often young and
Page 591 of 3826
financially inexperienced. They get a steady paycheck, and under military rules can be forced to pay
their debts.
"Outside most large military installations, there's a strip, and it has the 'buy here, pay here' car lots, the
pawn shops, the check cashers, in some cases the payday lenders," Petraeus says. "A new one on me
when we went down to Norfolk recently was a place where you can rent rims for your car."
A 'Nonstandard Resume'
Steering service members away from bad financial decisions is one of the many things Petraeus will
work on in her new job as head of the Office of Servicemember Affairs. How she got to this job is a
story in itself.
"I have a very nonstandard resume," Petraeus says.
When she was first married, Petraeus worked an assortment of random civil service jobs at the bases
where her husband was stationed. Then, she took time off to "do the mom thing" and did volunteer work
at the Army posts. Some 20 years later without even applying she was offered the job at the
Better Business Bureau.
"I think any military spouse ... should be heartened by me," Petraeus says. "I am true evidence that
years of volunteering can actually translate into a paid job."
Then late last year, Petraeus went to talk to White House adviser Elizabeth Warren, who is setting up
the Consumer Financial Protection Bureau. They talked about what the bureau should be doing for
military families. It wasn't a job interview, but Warren said she was so impressed, she knew immediately
that Petraeus should head the Office of Servicemember Affairs.
Others agree.
"They have the right person in the right place, in terms of having Mrs. Petraeus," says Katie Savant,
who does government relations for the National Military Family Association.
Savant says it's still not entirely clear what the new office is going to do. There are already numerous
other programs out there designed to help military families navigate financial pitfalls and report rip-offs,
she says.
Page 592 of 3826
"I think there are some redundant programs that are out there now," Savant says. "We hope that this
new office will not be a redundant program, and that it will actually kind of provide one centralized place
for the information."
The Office of Servicemember Affairs opens for business in July. One thing it will have that many of
these other programs do not is the power to enforce consumer protections. And as one of her friends
put it: The office will also have the "power of Holly Petraeus."
Back to Top
Command and General Staff College Foundation News

Leadership runs in the family
Holly Petraeus leads consumer financial protection efforts for military
April 2011
By Mark H. Wiggins
Before you continue reading this article, sit down in front of your computer and type military loans into
the search window of your favorite Internet search engine. Youll likely see something on the order of:
3,090,000 results in Google; 43,100,000 results in Yahoo; and 46,700,000 results in Bing. Millions of
links all related to military loans.
Its like the Wild West of financial opportunity. Seems everybody has a sales pitch for a service member
looking to score quick cash, a loan, or quick financing for a purchase. Type the same search in
tomorrow and the numbers of results will change, but theyll still be in the millions. Likewise, travel to
your local military base and check the businesses just outside its gates. Loan companies, car dealers,
pawn shops, surplus stores, electronics stores, furniture stores and many more are well-positioned to
compete for servicemembers dollars. Some, not all, try to take advantage of young, financially
inexperienced service members, many of whom are away from home for the first time in their lives.
Page 593 of 3826
So if there is a financial Wild West for service members, whos the sheriff that brings law and order into
the equation? Enter Holly Petraeus.
Holly Petraeus is the head of the newly forming Office of Servicemember Affairs in the Consumer
Financial Protection Bureau (CFPB), a division of the U.S. Treasury Department.
Protecting our service members who answer the call of duty is not only the right thing to do, its also
vital to our national security, said Petraeus in a video message on the CFPB website.
Petraeus is responsible for the CFPBs efforts to protect service members from predatory lenders and
other financial scams. She says providing financial education and information is a big part of the role of
the CFPB and the Office
of Servicemember Affairs. The sheriff title might be a bit of a stretch, but the CFPB does have the
responsibility to supervise banks, credit unions and financial companies and to enforce consumer
financial laws.
One could say that Petraeus is uniquely qualified for her new position. Her last position was with the
Better Business Bureau where she was the director of BBB Military Line, which offers consumer
education for service members. Moreover, as the spouse of the top U.S. commander in Afghanistan
and the former commander here at Fort Leavenworth, Gen. David H. Petraeus, one can imagine shes
seen a lot of issues in our troops financial readiness over their 36 years of marriage and the myriad of
military assignments theyve had together.
During a teleconference in January in which her new position was announced, Petraeus said that her
first priority is to set up a framework for hearing about financial issues from military families and those
who support them. This will
require extensive travel to hear from military families and financial counselors about their most pressing
financial challenges. They will integrate what they learn into the operations of the CFPB and the Office
of Servicemember Affairs.
There are serious financial problems, and they lead to a lot of repercussions: loss of security clearance
and just the ability to do the best job they can do because theyre preoccupied with financial matters,
she said. Petraeus also said that she is also very concerned about the proliferation of Internet scams.
Theres a lot of work to be done there, she added. Its an area thats exploding. Its just too easy to
set up a scam or bad deal on the Internet. Now go back and do that Internet search againthis
sheriff has her work cut out for her.
Page 594 of 3826
This report was edited from the original published by American Forces Press Service, Jan. 10, by
Elaine Wilson.
Back to Top
Washington Post
Lobbying efforts persist long after health-care, financial regulation bills passed
April 23, 2011
By T.W. Farnam
Two historic pieces of legislation, overhauling the nations health-care system and rewriting regulations
governing financial institutions, passed Congress last year after heated debate and intense lobbying.
But even if the bills have departed Capitol Hill, the lobbying on them has not.
Companies and their backers are spending millions on lobbying hoping to roll back key provisions of the
two laws, according to disclosure reports filed last week with the House and Senate.
In the first three months of this year, more than 300 companies, trade associations and lobbying firms
were targeting provisions of the financial regulation law, records show. And more than 400 were
lobbying on the health-care law, the reports show.
Those numbers are down from the peak of activity when the bills were taking shape, but the two issues
are still among the hottest on Capitol Hill.
One of the biggest fights pits retailers against banks over the fees charged for debit card transactions.
An amendment that became part of the financial regulation law, sponsored by Sen. Richard J. Durbin
(D-Ill.), gave the government the ability to cap the fees, which are paid to banks. The fees add up to a
huge cost for retailers, restaurants and other businesses that accept payments by debit card.
Page 595 of 3826
That cap is expected to cost banks billions of dollars. As a result, lobbying on the Durbin amendment
has only picked up since the Senate passed the measure on a vote of 64 to 33.
Its like the Hundred Years War, said one lobbyist working on the issue who declined to be named, to
avoid alienating his clients.
Visa reported spending $1.8 million on lobbying in the first quarter its highest figure ever and a
significant increase over the same period a year ago.
Because lobbying reports do not break out how much money was spent on each issue, it is impossible
to know how much of that $1.8 million was spent on swipe fees. But 11 of the 13 lobbying firms hired by
Visa did list the issue among the topics they were focused on.
Also, other related spending, including that devoted to public affairs and opposition research, is not
included in lobbying figures.
MasterCard spent $930,000 in lobbying in the first quarter, up 13 percent from a year earlier. Visa
declined to comment, and MasterCard officials did not return a request for comment.
On the other side of the issue, Wal-Mart, the nations largest retailer, reported spending $2.4 million in
the first quarter, its highest figure and a 23 percent increase from the first quarter of last year. The
company did not return a request for comment.
The battle over the fees has brought in all the weapons typical of a Washington legislative battle,
including campaign money, constituent fly-ins, endorsement letters from an array of interest groups,
media outreach and broadcast advertisements in lawmakers home districts.
The swipe fee debate is only one part of the financial regulation law that lawmakers and lobbyists are
pushing to change. The House Financial Services Committee is considering legislation to delay the
implementation of rules on derivatives trading and to change the structure of the Consumer Financial
Protection Bureau, which was created in the law.
The health-care law, formally called the Patient Protection and Affordable Care Act, is also the target of
a concerted lobbying push. While the full repeal proposed by House Republicans and recently approved
in the House is unlikely to succeed, given opposition in the the Senate and the White House,
Page 596 of 3826
several provisions of the law face a significant challenge.
Insurance brokers, who help companies purchase insurance and are paid through commissions, are
lobbying to change a provision they view as threatening. The law requires that no more than 20 percent
of health insurance premiums be spent on administrative costs, and brokers are pushing a bill that
would exempt their fees from that cap.
The legislation, sponsored by Reps. Mike Rogers (R-Mich.) and John Barrow (D-Ga.), has drawn
support from 58 other lawmakers.
If the brokers win, consumers lose $1.4 billion in rebates, said Ethan Rome, the executive director of
Health Care for America Now, a coalition of groups that supported Democrats health-care proposals.
Brokers fees from our perspective are clearly an administrative expense, and Congress intended to
categorize them as such.
Brokers argue that the law has gone too far and would severely restrain their revenue. The president of
the National Association of Insurance and Financial Advisors, Terry Headley, said in a recent speech
that many of the brokers are small businesses that will be driven under unless the law is changed.
Consumers will not benefit if agents are forced out of the market and individuals are left without
service, Headley said.
The main trade associations pushing for that change are spending roughly the same amount on
lobbying that they spent last year when the full bill was under consideration.
Other parts of the law targeted by industry include a tax on medical devices as well as the Independent
Payment Advisory Board, a key component of efforts to rein in costs. Device maker Medtronic spent
$1.3 million in lobbying last quarter, up 22 percent from a year earlier. The company declined to
comment.
Back to Top
Page 597 of 3826
Wall Street Journal

Beware the Financial Fear Mongers
April 23, 2011
By Karen Blumenthal
Worried about your financial status? Someone wants to sell you protection.
More and more websites are offering credit and identity-theft monitoring services, and the chance to
buy what look like real credit scores. Credit-card issuers, meanwhile, have revved up their marketing of
debt-protection products.
What are you really getting for your money?
Debt-protection services, which cover your credit-card bill when you can't, can help out if you become ill
or lose your job, protecting your credit score, the Government Accountability Office said in a report last
month. But the services come at a big cost: Annual fees may be more than 10% of your average
monthly balance, and consumers receive only about 21 cents of actual benefits for every $1 spent.
The services are heavily marketed to cardholders, particularly when you call a toll-free number to
activate a card or ask a question, or when a customer-service rep calls to answer an inquiry. About 24
million cards are covered by the services.
Similarly, an estimated 26 million consumers subscribe to some form of credit-monitoring or identityprotection service, according to Experian, one of the three major U.S. credit bureaus.
Credit-report and credit-score monitoring services will cost you up to $30 a month, but the various
services that sell them usually don't provide FICO scoresthe credit scores developed by Fair Isaac
that lenders most commonly use. Instead, the services sell what they call "educational" scoresand
what others have come to call "fako" scores.
Experian, for instance, sells credit-monitoring services and something called an Experian Plus score,
which isn't used by lenders, through its various sites, including Experian.com, FreeCreditScore.com,
FreeCreditReport.com and CreditReport.com, for $14.95 a month.
Page 598 of 3826
Such direct-to-consumer services bring Experian about $700 million in revenue, almost 20% of its total
sales. CreditReport.com and FreeCreditScore.com attracted more than three million unique visitors in
January, according to NetBanker.com, far more than the two million visitors to AnnualCreditReport.com,
where consumers can get free copies of their credit reports annually.
Since the FICO score is proprietary, exactly what the "educational" scores measure isn't always clear.
Take SmartCredit.com, for example. This eight-year-old service offers its own credit, auto and
insurance scores based on the information in your credit report and its own formulas. David Coulter,
CEO of Consumer Direct, SmartCredit.com's parent, says the company has "a couple of Ph.D.s on
staff" and has developed the scores based on its best understanding of what lenders value. But those
scores may or may not actually correlate with what lenders and insurers actually use or calculate
themselves.
For $19.95 or $29.95 a month, SmartCredit customers also get regular monitoring of their credit reports
to prevent identity theft as well as access to links that will connect them directly with their lenders, so
they can ask questions or try to work out debt problems without having to look up phone numbers or
websites.
Among the early tasks of the Consumer Financial Protection Bureau, which opens its doors in July, will
be shining a light on these services.
Congress has asked it to look at the differences between the credit scores that lenders see and the
ones that are sold to the public, and to assess whether those differences hurt consumers. In addition,
the bureau is expected to evaluate the value of debt-protection products for credit cards.
But you don't have to wait for the bureau to act to take action. Consider these options:
You will be much better off paying down debt or setting aside the cost of debt-protection coverage into
your own rainy-day account than paying a credit-card issuer for the service.
Don't pay for information you can get for free. CreditKarma.com provides both the TransUnion
TransRisk score and a Vantage score, developed by all three credit bureaus and used by some
lenders, for free. It makes its money by recommending credit cards and other financial services.
CreditKarma CEO Ken Lin says that even though the scores are highly correlated with FICO scores,
some may still be off by 100 to 150 points. Still, they can give consumers an idea where they stand.
Page 599 of 3826
If you are worried about identity theft, you should check one credit bureau report every four months at
AnnualCreditReport.com. You also can set email or text alerts so you'll know quickly about unusual
transactions in your accounts.
Identity theft is fairly rare, with about 3.5% of consumers reporting some theft or fraud last year.
However, 17% of those who were notified that their information had been compromised reported some
identity fraud or theft last year, according to Javelin Strategy and Research.
If you do try a credit-score or identity-theft service, be aware that the trial periods can be misleading.
Several services promise 30-day trials, but charge your account after five to 10 days. In some cases,
the only way you can cancel is to call during the work week.
Back to Top
KION 46 (California)
Simplified Mortgage Terms
April 24, 2011
By Jenna Espinoza
Consumers and lenders will get their first look at a new, simplified mortgage disclosure form next
month, the acting head of the Consumer Financial Protection Bureau (CFPB) said on April 18th.
The one-page form is intended to offer a straightforward explanation of the major terms of a loan,
including the interest rates, fees, monthly payments, duration and other critical information. Such
simplified loan disclosures have been a major goal of acting CFPB head Elizabeth Warren, who made
the disclosure at a banker's meeting in Louisville today.
Warren said the bureau will release prototypes of the form for evaluation and consumer testing before a
Page 600 of 3826
formal rulemaking begins. The bureau cannot officially propose a rule mandating a new disclosure form
until the CFPB is legally established on July 21.
The form would take the place of two multipage disclosure forms currently in use, which many
consumers find confusing. Warren has been highly critical of the way the terms of mortgages, credit
cards and other consumer loans are presented to borrowers, saying lengthy legal explanations and
extensive fine print tend to obscure the terms of a loan, rather than explain them.
Warren has argued that clarifying loan terms is necessary for consumers to be able to evaluate
competing loan offers and make informed choices, saying that free markets cannot function properly
unless consumers know what they're buying.
The new agency is required to develop new mortgage disclosure regulations under the Dodd-Frank
Wall Street Reform and Consumer Protection Act, which also authorized the agency's creation.
Warren, a Harvard professor who was a major advocate for the creation of the CFPB, was chosen by
President Obama to oversee its creation. Extremely popular among consumer advocates, she is also
considered a leading candidate to be named the bureau's first director, despite opposition by Senate
conservatives who see her as too unsympathetic to business.
Back to Top
Austin American-Statesman
Has Obama lost the voters who elected him?
April 22, 2011
By Preeti Vissa and Olga Talamante
Recently, when President Obama officially announced he was running for re-election, a strange thing
happened among most people we know:
Nothing.
Page 601 of 3826
No one said a word. No one cheered or complained or argued. The disinterest appeared total.
Why should the president's campaign care about our little circle? Because these folks young activists
and organizers, communities of color, working families barely getting by who felt real hope for the first
time in years after Obama won in 2008 are the people who made Barack Obama president. They are
the ones "fired up and ready to go!" who walked precincts, talked to voters, sent in mountains of
small contributions and made 2008 feel more like a movement than an ordinary campaign.
If they don't care, and so far it looks like an awful lot of them don't, Obama is in trouble, no matter what
the Beltway pundits say.
Obama scored some points recently by drawing a line in the sand against dismantling Medicare. But
people expect more from this president than occasionally saying no to the indefensible.
But the president can still reconnect with the voters who elected him. Beyond the recent glimmers of
hope on issues like Medicare and taxes, the president can show he gets it by acting on concrete issues
some obvious, others less so that affect people's lives:
Consumer Financial Protection. In 2008, Obama promised to end "eight years of policies that have
shredded consumer protections, loosened oversight and regulation." Two years later, he signed a
financial regulatory reform measure designed, he said, to do just that.
Now that law, less than a year old and not fully implemented, is under sustained attack, and the
president is virtually missing in action. He hasn't responded to those attacks, which seem to be gaining
traction, in any convincing or sustained way. Having professor Elizabeth Warren set up the new
Consumer Financial Protection Bureau from inside the White House was a good start, but the president
hasn't named a permanent chief. He needs to name one who will set and fight for a strong consumer
protection agenda soon and come out swinging for the essential role of government in protecting
consumers.
Community Reinvestment Act. This is the best law you've probably never heard of, which pushes
banks to prudently invest in the communities they serve. Provisions to improve CRA were going to be
included in financial reform but got dropped in order to get the measure through Congress. Now, CRA is
under shamelessly dishonest attack by the same people who told us that financial deregulation would
solve all our problems. Pushing to improve and expand CRA would show that ordinary citizens, not Wall
Street tycoons, matter to this administration.
Page 602 of 3826
Housing and foreclosures. The tide of foreclosures continues unabated, sucking the life out of the
housing market and the construction industry while millions of hard-working Americans are finding the
path to homeownership blocked. Again, Obama is missing in action. Word is that the president will
delay appointing a permanent head of the Federal Housing Administration till after the 2012 election.
The administration's foreclosure relief program, called HAMP, is a mess. Reforms of the governmentbacked mortgage agencies Fannie Mae and Freddie Mac threaten to further close the doors on
homeownership.
Adding insult to injury, the recently passed budget resolution eliminated all funds for housing counseling
agencies.
This area cries out for leadership. What's the president's plan for helping financially battered families
regain their footing and a viable path to responsible homeownership? What, in short, is Obama's plan
for saving the American dream?
There is still time, Mr. President but not much.
Preeti Vissa is community reinvestment director at the Greenlining Institute (www.Greenlining.org). Olga
Talamante is executive director of the Chicana/Latina Foundation (www.chicanalatina.org).
Back to Top

Wheres Warren?
April 25, 2011
By Ben White
Page 603 of 3826
ICYMI, here is CFPB czar Elizabeth Warrens March calendar. Highlights include an hour-long meeting
with Arianna Huffington and a 15-minute phone call with Paul Krugman. Guess we know who pulls
more weight! (We kid. Please, no angry emails). http://politi.co/f3LBIU
Back to Top
Orlando Sentinel
Debt collectors must tread lightly on social media
April 17, 2011
By Sarah Lundy
Melanie Beacham, who had fallen behind in her car payments, wanted debt collectors to leave her
alone.
MarkOne Financial representatives had emailed her, texted her and called her at home, on her cell and
at work 23 times in one day, according to a lawsuit she filed in Pinellas Circuit Court.
And, a MarkOne employee going by the name of Jeff Happenstance sent a message to the St.
Petersburg woman and her friends on Facebook, the suit said.
That turned out to be a precedent-setting no-no. A judge ruled last month that MarkOne can no longer
contact Beacham, her family or friends on Facebook or any other social-networking site.
It's the first court decision of its kind and serves as a warning for debt collectors to tread lightly when
using social networks to recoup money owed. The suit, in which Beacham alleges harassment, is still
pending in court.
Page 604 of 3826
"That is something we've been fighting for, and we finally got a court ruling on that," said Beacham's
attorney Billy Howard, head of the consumer protection department at the Morgan & Morgan law firm.
Debt collectors' use of social media has become a major issue for the industry.
"It's dangerous ground because it's new ground. Like anything, case law gets built because of
challenges to how people are using something," said Mark Schiffman, public affairs director for the
Association of Credit and Collection Professionals. "We encourage [collection agencies] to make sure
they are very careful in following the law."
After Beacham's case, Howard filed another harassment lawsuit in Duval County. In that case, the
plaintiff accused MarkOne representatives of sending messages on Facebook, asking her to call them,
even though they had contacted her several times by phone already, according to the lawsuit filed
March 31.
Howard has about 10 other cases his firm is investigating that involve debt collectors using social media
to contact debtors.
"This is a new age of harassment," Howard said. "A couple of key strokes you can use one of the oldest
debt collectors' tricks there is that is, to contact family members and friends. Most harassment is one
-on-one, but when you bring in family members and friends that's when you really turn up the
psychological pressure on people."
No one with MarkOne returned a message left in its Jacksonville office.
But in November, the company emailed a statement to The Atlantic magazine about its policy to use
Facebook that said: "MarkOne's policy is to only use Facebook to locate customers when the customer
has a fully public profile, and when the customer has not responded to MarkOne through conventional
means. Our policy is to respect privacy disclosure requirements and no negative or account information
is shared with third parties."
Schiffman said debt collectors can use social media the same way they use a phone book to locate
someone or gather information on an individual. "They can't go any further than that," he said.
That means no posting on walls or sending messages to friends to encourage the debtor to return calls,
he said.
Page 605 of 3826
The Fair Debt Collection Practices Act, enacted in 1978, does not specify the use of social media. But
Schiffman said the same rules apply to social media as they do to phone calls and texting.
A debt collector can only contact another person if the collection agency does not know the debtor's
whereabouts. And, the debt collector cannot tell a third party why the information is needed or discuss a
person's debt.
"We advise our members the collection agencies to handle [social media] with extreme care," said
Schiffman. "Follow the law, it's the best it can be today for a law that was written in 1978. Obviously,
things have changed quite a bit."
Back to Top
Housing Wire
Iowa AG slams report on campaign contributions
April 22, 2011
By Jon Prior
Iowa Attorney General Tom Miller dismissed a recent report on his 2010 campaign contributions from
those involved in the banking industry, calling it "false and misleading at its core."
The National Institute on Money in State Politics released a report this week, detailing which banking
attorneys contributed to Miller's campaign. But in an interview with HousingWire Friday, Miller said all
but one of the attorneys listed as campaign contributors in the report are not involved in the case. Only
Meyer Koplow, a partner at the New York firm Wachtell, Lipton Rosen & Katz, who gave Miller $5,000 in
2010 is involved. He represents Bank of America (BAC: 12.483 +1.41%). However, at the time of the
contribution and at the time of the election, Koplow was not involved in the case.
Page 606 of 3826
The rest of the attorneys, Miler said, "were not involved in the case, not involved in the negotiations."
Only one other person mentioned in the report, Elizabeth McCaul, who gave Miller $10,000 could
possibly be linked to the foreclosure investigation. She works as a partner at the New York-based
consulting firm Promontory Financial, and does some work for BofA. But, like Koplow, at the time of the
contribution, was not involved in the case.
"They (Koplow and McCaul) contributed as friends and because they believed in me," Miller said.
"Nobody with a vested interest jumped in. These two people got involved late in the election."
Miller said $1.6 million was spent against him in the 2010 campaign, seven times the amount spent
against him before. The report points out the disparity between the 2010 contributions and previous
ones, including 2006, when Miller reportedly received $3,500 from donors in the finance, insurance and
real estate sector.
"Amazingly, he compares what I spent in this campaign to what I spent in 2006, when I was
unopposed," Miller said.
The report also points out the amount of money paid to Miller through the Democratic Attorneys
General Association. Miller received $50,000 from DAGA, which includes payments from BofA and
JPMorgan Chase.
However, Miller said BofA contributed far more to the Republican Attorneys General Association than
they did to DAGA. And as a result, RAGA contributed $850,000 to Miller's opponent in 2010, as
opposed to the $50,000, he received from DAGA.
While Miller could not go into the specifics of the proposal, he maintained that the negotiations from his
investigation into the servicer foreclosure processes remains months away. His office has had two
successful meetings with the banks.
Other AGs came out against Miller, claiming the initial proposal he submitted would only entice more
borrowers into a strategic default in order to take advantage of the terms.
Miller said he is wary of the threat of strategic default, and that any settlement would have language
built into it to prevent the practice.
Page 607 of 3826
"We're concerned about strategic default and that's something we want to guard against," Miller said. "I
think the fundamentals of the states working together, of us working with the feds, and the investigation
that was done and with the banks being willing to negotiate in good faith in the two sessions. Those are
all really good fundamentals that can lead to a good settlement."
Back to Top
Housing Wire
Lawyer intensifies fee-splitting battle against mortgage servicing providers
April 22, 2011
By Kerri Panchuk
The alleged splitting of attorney fees between foreclosure law firms and third-party mortgage servicing
providers is the subject of another lawsuit, bringing the number of cases filed on this issue to five within
the past seven months, said Nick Wooten, an Alabama-based plaintiff's attorney involved in all of the
cases.
By mid-May, Wooten said he expects to file 10 to 12 additional cases, making similar allegations about
what he claims are illegal, split-attorney fee arrangements between mortgage servicing outsourcers and
law firms. The cases are concentrated in the Northern District of Mississippi, the Southern District of
Alabama and the Northern District of Florida-Pensacola division.
The latest case involves plaintiff, Susan Marie Harris of Florida, against Lender Processing Services
(LPS: 28.02 -1.37%), its subsidiary LPS Default Solutions Inc., and the Ben-Ezra & Katz law firm.
Harris, who is seeking class-action status of her lawsuit, claims the defendants violated bankruptcy
code by creating contractual agreements that allowed them to "illegally split attorney's fees" with law
firms that signed up to join LPS Default Solutions' attorney network.
Harris alleges the defendants set up a contractual arrangement in which attorneys in the LPS network
compensated LPS Default Solutions by splitting attorney's fees with the outsourcer. Because of this
Page 608 of 3826
compensation model, the plaintiff contends LPS was able to offer its clients namely large mortgage
servicers some services free of charge, expanding its competitive positioning in the default servicing
marketplace.
Harris filed her complaint in the U.S. Bankruptcy Court for the Northern District of Florida Pensacola
division.
A spokesperson for LPS said Friday the company does not comment on specific ongoing litigation
matters, but "has been successful in disposing of similar allegations in the past and is confident it will do
so in the future."
Ben-Ezra also is named as a defendant in the case as the law firm under contract by LPS in this case.
A spokesperson for the Fort Lauderdale, Fla.-based firm was not immediately available for comment.
When asked if every in-network law firm working with LPS Default could face litigation, Wooten said "at
some level, it is likely that each of those law firms will have to address their relationship with LPS." He
estimates that more than 200 firms have contracts with the mortgage servicing outsourcer.
Harris contends in her suit that "LPS Default and the network (law) firms attempt to disguise what are in
fact attorneys fee sharing and referral agreements by characterizing the fees paid by the attorneys to
LPS Default as administrative fees." Harris alleges that when a bankruptcy court is wrapping up one of
the cases handled by LPS and one of its in-network law firms, the law firm applies for attorney's fees
and does "not disclose to the courts that a substantial portion of the fees requested will be paid to LPS
Default."
The result, Harris claims, is a situation where LPS Default and its network law firms "fraudulently
mislead the bankruptcy courts, the bankruptcies and their attorneys as well as the bankruptcy trustee as
to the actual amount of attorneys' fees incurred by the creditors," the complaint states. The complaint
accuses LPS, LPS Default and Ben-Ezra with abuse of the bankruptcy process, fraud on the court,
contempt of bankruptcy code, contempt of federal rules of bankruptcy procedure, breach of the uniform
mortgage covenant, unauthorized practice of law and civil conspiracy.
The Harris case filed in Florida this week resembles existing cases filed by Nick Wooten, where large
mortgage servicing outsourcers are facing the same claims.
The issue of fee-splitting isn't new. It arose in a 2008 Houston bankruptcy case involving Ernest and
Mattie Harris. The couple said its loan servicer, Saxon Mortgage Services, never told the court it had
hired Fidelity National Information Services as its agent. (LPS was spun off from Fidelity in 2008.) The
borrowers claimed that Fidelity's involvement resulted in higher legal fees. Fidelity steadfastly denied
wrongdoing in that case, arguing that its business model created efficiencies that lowered costs for all.
Page 609 of 3826
HousingWire Magazine wrote about the case in its inaugural issue, in September 2008.
Wooten's first bankruptcy-related case, filed last year in the Northern District of Mississippi, makes
similar allegations against Prommis Solutions Holding Corp., its majority owner Great Hill Partners, and
the law firm of Johnson & Freedman. The suit also names Lender Processing Services, and its
subsidiary, LPS Default Services, as defendants.
Another case filed in the Bourbon Circuit Court in Kentucky involves a homeowner who counter sued
Wells Fargo (WFC: 28.63 +0.32%) last year in a foreclosure action. The plaintiff alleged the company
did not own his mortgage by assignment. In addition, the plaintiff accused the Manley, Deas, Kochalski
law firm, LPS and LPS Default Solutions of illegally splitting attorney's fees as part of their contractual
arrangement.
Wooten filed two other cases this month. In the U.S. Bankruptcy Court for the Southern District of
Alabama, a plaintiff named Katrinn Bowden Meeker accused LPS, LPS Default Solutions and the firm of
Sirote & Permutt of reaching "an arrangement to illegally split attorney's fees."
In yet another case, plaintiffs in the Northern District of Mississippi made similar allegations against
LPS, LPS Default and the firm of Morris and Associates.
Back to Top
Bloomberg
Americans Shun Most Affordable Homes in Generation as Owning Loses Appeal
April 19, 2011
By Kathleen M. Howley
Victoria Pauli signed a one-year lease last week to stay in her rental home in Fair Oaks, California. She
had considered buying in the area, where property prices have slumped 57 percent since a 2005 peak.
Page 610 of 3826
In the end, she decided it wasnt worth it.
I know people who have watched their home values get cut in half, and I know people who are losing
their homes, said Pauli, 31, who works as a property manager for a real estate company. Its part of
the American dream to want to own your own home, and I used to feel that way, but now I tell myself:
Be careful what you wish for.
The most affordable real estate in a generation is failing to lure buyers as Americans like Pauli sour on
the idea of home ownership. At the end of 2010, the fourth year of the housing collapse, the share of
people who said a home was a safe investment dropped to 64 percent from 70 percent in the first
quarter. The December figure was the lowest in a survey that goes back to 2003, when it was 83
percent.
The magnitude of the housing crash caused permanent changes in the way some people view home
ownership, said Michael Lea, a finance professor at San Diego State University. Even as the economy
improves, there are some who will never buy a home because their confidence in real estate is gone.
Worse Than Depression
Historically, homes have been a safer investment than equities. During 2008, the worst year of the
housing crisis, the median U.S. home price declined 15 percent, compared with a more than 38 percent
plunge in the Standard & Poors 500 Index.
Americans stay in their homes for a median of eight years, according to the National Association of
Realtors in Chicago. Someone who bought a home in 2002 and sold in 2010 saw a 4.8 percent
increase in value, based on the annualized median price measured by the group. The average annual
gain in the past 20 years was 4.2 percent.
Falling prices have made real estate the best buy in at least four decades. Housing affordability reached
a record in December, according to National Association of Realtors data that go back to 1970. The
group bases its gauge on property prices, mortgage rates and the median U.S. income.
The median U.S. home price tumbled 32 percent from a 2006 peak to a nine-year low in February, data
from the Realtors show. The retreat surpassed the 27 percent drop seen in the first five years of the
Great Depression, according to Stan Humphries, chief economist of Zillow Inc., a Seattle-based real
estate information company.
Page 611 of 3826
Not Risk-Free
If weve learned anything from this mess, its that housing is not a risk-free investment, said Michelle
Meyer, a senior economist at Bank of America Merrill Lynch Global Research in New York. Everyone
knows someone underwater in their mortgage or struggling to sell a home.
About 11 million U.S. homes were worth less than their mortgages at the end of 2010, according to
CoreLogic Inc., a Santa Ana, California-based real estate information company. An additional 2.4
million borrowers had less than five percent equity, meaning theyll be underwater with even slight price
declines, according to the March 8 report. The two categories add up to 28 percent of residences with
mortgages.
Future Plans
The share of Americans who said they plan to purchase a home in the next six months tumbled 23
percent in March, according to the Conference Board research firm in New York. The National
Association of Realtors probably will say tomorrow that existing-home sales were at a 5 million annual
rate in March, up 2.5 percent after a 9.6 percent plunge in February, according to the median estimate
of 74 economists surveyed by Bloomberg.
Work began on 549,000 houses at an annual pace in March, up 7.2 percent from the prior month,
figures from the Commerce Department showed today in Washington. The gain failed to make up for
ground lost in February, when starts fell to the lowest level in almost two years.
The drop in homebuyer confidence may be temporary. Home sales probably will rise 4.1 percent to 5.1
million in 2011, with the biggest increases in the second half of the year, the Mortgage Bankers
Association said in an April 14 report. In 2012, sales may climb 5.9 percent to 5.4 million, the highest
pace since 2007, the Washington-based trade group estimated.
A rebound in home sales depends on the availability of jobs, the mortgage association said. The
unemployment rate probably will decline every quarter of this year and next, falling to 7.9 percent by
2012s end, the trade group said. It was 8.8 percent last month, the lowest in two years.
Improving Employment
We expect that purchase activity will pick up slowly as the improvement in the job market eventually
leads to greater willingness to buy, the mortgage bankers group said.
Page 612 of 3826
Borrowing costs are at historic lows. The average U.S. rate for a 30-year fixed mortgage was 4.69
percent last year, the lowest in annual data going back to 1972, according to mortgage financier
Freddie Mac, based in McLean, Virginia. The rate in March was 4.84 percent, the company said.
By 2012s fourth quarter, the average fixed rate may rise to 6 percent, according to the Mortgage
Bankers Association.
If you can jump through the hoops to get a mortgage, and there will be hoops, then this is an amazing
time to purchase real estate, said Robert Stein, a senior economist at First Trust Portfolios LP in
Wheaton, Illinois, and the former head of the Treasury Departments Office of Economic Policy. There
are going to be a lot of people kicking themselves a few years from now because they didnt take
advantage of the low prices and the low mortgage rates.
Tighter Lending
Cheap financing hasnt done enough to boost home sales in part because lenders are being more
selective with applicants, according to Federal Reserve Chairman Ben Bernanke. Fed policy makers
have described the housing market as depressed in statements following their last eight meetings.
Although mortgage rates are low and house prices have reached more affordable levels, many
potential homebuyers are still finding mortgages difficult to obtain and remain concerned about possible
further declines in home values, Bernanke said in Congressional testimony last month.
The share of banks reporting tighter mortgage standards in the first quarter rose to 16 percent, the
highest since 1991, according to the Feds Senior Loan Officer Survey.
Federal regulators are proposing rules that may make lending even more stringent, including a
requirement that banks and bond issuers keep a stake in home loans they securitize if the mortgage
borrowers have imperfect credit and down payments of less than 20 percent. Borrowers who dont meet
the criteria would pay higher rates to compensate lenders for risk.
Fannie Phase-Out
As mortgage requirements rise, rates could follow as Congress and the Obama administration consider
phasing out government-controlled Fannie Mae and Freddie Mac. The companies hold federal charters
mandating they increase the availability of mortgages through securitization. In Fannie Maes case, that
Page 613 of 3826
order goes back to the Great Depression, when it was created as part of President Franklin D.
Roosevelts New Deal.
There are a lot of unsettled policy issues on the table right now that, if theyre not handled right, could
further set back the housing market, said Richard DeKaser, an economist at Parthenon Group in
Boston. Fannie and Freddie have historically lowered interest rates, and eliminating them will increase
the cost of home ownership.
Lowest in Decade
The U.S. home ownership rate dropped to 66.5 percent in the fourth quarter, the lowest in more than a
decade, according to the Census Department. The rate probably will retreat another percentage point
by 2013, according to Meyer, of Bank of America Merrill Lynch, and Lea, the finance professor. That
would put it back to a 1997 level.
People will still aspire to own their own homes, Lea said. Theyll just be a lot more practical about it.
Pauli, the California renter, said she has no such aspirations, at least for now. She pays $1,500 a month
for her three-bedroom, single-family home with a two-car garage, granite kitchen countertops and
stainless-steel appliances. Her neighbors who bought before the housing crash typically have mortgage
payments of about $2,800 a month, Pauli said.
I dont see myself purchasing, even with all the great prices I see, Pauli said. Going to bed every
night worrying about your home value doesnt sound like a good time to me.
Back to Top
Palm Beach Post

Local robo-signer alleges her signatures were forged
April 24, 2011
Page 614 of 3826
By Kimberly Miller
West Palm Beach resident Liz Mills learned she was a robo-signer when a friend suggested she search
her own name online.
On foreclosure blogs and in at least one newspaper article, the 51-year-old process server was singled
out for the numerous and varying styles of her signatures on summons paperwork used to prove her
efforts in locating homeowners in foreclosure.
Now Mills is coming forward in affidavits filed in three foreclosure cases, saying she didn't sign the
paperwork and never signed in front of a notary despite notary stamps affixed to the documents.
In one case, Mills allegedly signed a return of non-service, meaning the homeowner could not be found,
for a foreclosure in Lehigh Acres near Florida's west coast - a town where Mills said she has never
been.
"I'm not really sure what's going on with all of this or what could happen, but it's upsetting because if
you read the articles it's like they are trying to make the individual process servers the fall guy," said
Mills, who became a process server 12 years ago. "I think they just wanted to move the paperwork
along faster."
Service of process is sometimes the first notice a homeowner has that the bank has filed for foreclosure
.
Sloppy service or "sewer service," as some defense attorneys call bad service of process, can leave a
homeowner in the dark and defenseless until after the final judgment and a notice of sale is sent out.
Defense attorney Tom Ice, of Royal Palm Beach-based Ice Legal, believes Mills' testimony in the three
cases could force them to be re-served, sending the banks back to square one in the proceedings.
"It's always bothered me that a high number of my clients come in and say they didn't know there was a
lawsuit," said Ice, who is defending the homeowners in the cases.
With the crush of foreclosures statewide, process service has become big business. Once entrusted
only to sheriff's deputies, summonses may now be handled by special process servers certified by the
Page 615 of 3826
court. The servers often work for larger companies that dole out the legwork.
Mills worked for several process service companies, including Miami-based Gissen & Zawyer Process
Service Inc.
The Florida Attorney General's Office is investigating the company after allegations of backdating
returns of service, improper billing practices and filing questionable affidavits with the courts.
Mills said she believes her signatures were forged on documents because she has a short name that's
easy to sign.
But Alan Rosenthal, an attorney defending Gissen & Zawyer, said the company believes the documents
in question in the Mills cases bear her true signature.
"Gissen & Zawyer does not have any of its personnel sign affidavits of service other than the process
server whose name is on the signature line, and does not condone such behavior by anyone who works
for them," Rosenthal said. "Gissen & Zawyer believes the signatures on the Liz Mills affidavits are hers."
Process service company Caplan, Caplan and Caplan, which Mills also worked for and is involved in
one of the cases, had no comment.
While Mills' affidavits attesting to forged documents directly affect three foreclosures, there could be an
impact on other cases that bear her name.
Judges have recently dismissed foreclosures based on bad service of process, although the cases can
usually be refiled.
A 4th District Court of Appeal decision in December sided with the homeowner, based on paperwork
that contained an illegible grouping of numbers - either the server's identification number or the time of
service. Both are required by state statute.
Mills, a former waitress, said she became a process server because she was a single mom and it
offered a flexible schedule.
Page 616 of 3826
The typical charge for process service is $45, about $10 of which goes to pay Mills, who may have to
make several visits to a home.
When Gissen & Zawyer didn't think she was working fast enough, she said, she was called to Miami for
a conference.
"They stood there and screamed at me that I was not serving their work fast enough," said Mills, who
worked for the company about 10 months.
Ice said the reprimand shows speed was valued over thoroughness.
"These were processed like an assembly line," said Ice, whose firm handled the 4th DCA case. "The
pressure was not just on Mills. It's on all of the process servers to do whatever it takes to get the job
done quickly."
Back to Top
Page 617 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:
Chat for free: Use instant messaging and your webcam to stay in touch
Mon Apr 25 2011 00:00:00 EDT
Never be out of touch with distant friends and relatives again! Windows Live Messenger makes chatting
fun, free, and simple.
View article...
Page 630 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

FW: Placement Proposals 4-22-11
Fri Apr 22 2011 16:44:06 EDT
Placement Proposals 4-22-11.doc
Marilyn slightly revised chart. Thanks!

Cc: Lownds, Kevin (CFPB)
Subject: Placement Proposals 4-22-11
Hi Marilyn,
Dennis asked that I send the most recent placement proposals for the outstanding HUD employees. He
would like this document, along with your matrix with respect to grade/compensation, to be the basis for
a meeting with Wally this coming Tuesday. I will coordinate with Anya regarding Wallys calendar.
Thanks!
Liz
Page 633 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Klein, Heather (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=kleinh>
RE: Yo
Fri Apr 22 2011 14:13:43 EDT
On my way down
From: Klein, Heather (CFPB)

Subject: RE: Yo
Its a little rainy, but Im up for it if you are.

To: Klein, Heather (CFPB)
Subject: Yo
FrozenYo around 215?
Kevin K. Lownds
Review Analyst
(202) 435-7399
Page 639 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Missing SF-50s
Fri Apr 22 2011 14:03:19 EDT
After my review, it looks like we are missing the following three:

-Shiloh Kremer
(b)(6)
(b)(6)
We do have (b)(6)
however, and I forwarded that to you.
Kevin K. Lownds
Review Analyst
(202) 435-7399
Page 641 of 3826
From:
To:
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Subject:
Date:
Attachments:
Here is (b)(6)

FW: (b)(6)
SF-50
Fri Apr 22 2011 14:02:11 EDT
SF-50-LS.PDF
SF-50. We do have that one.

To: Tingwald, James (CFPB)
Subject: Fw: (b)(6)
SF-50
Importance: High
----- Original Message ----From: (b)(6)

Sent: Tue Apr 19 10:15:59 2011
Subject: (b)(6)
SF-50
Elizabeth,
I left work early on last Friday as scheduled and I was out of the office on Monday. Nonetheless, I
retrieved my most recent SF-50 today and am now sending it. Please find it attached and if you have
any questions, please feel free to let me know.
Regards,
(b)(6)
Page 642 of 3826
From:
To:
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Subject:
Date:
Attachments:

FW: SF50s
Fri Apr 22 2011 13:35:35 EDT

To: 'Shapiro, Barton'
Subject: SF50s
Hi Bart:
We have not received the following SF50s:

1.
Shiloh Kremer
2.
(b)(6)
I have not done a complete breakdown, so there may be others.
Trial is over! We will have to touch base this afternoon or Monday.
Thanks!
Liz
Page 644 of 3826
From:
To:
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Subject:
Date:
Attachments:

RE: Resumes for HUD Attorneys Going to Regulations
Fri Apr 22 2011 13:03:56 EDT
Matchneer.docx
Kayagil.pdf
Devlin.docx
Ceja.docx
Brolin.pdf
Hi Marilyn,
Here are the resumes for these employees. Let me know if you need anything else from us on this.
Thanks!
-Kevin

Subject: FW: Resumes for HUD Attorneys Going to Regulations
From: Dickman, Marilyn (CFPB)

Subject: Resumes for HUD Attorneys Going to Regulations
Liz
Page 792 of 3826
Can you please send me soft copies of resumes for the following individuals?
J. Brolin
P. Ceja
J. Devlin
J. Kayagil
W. Matchneer
Thanks
Marilyn
Marilyn A. Dickman
202-435-7157 (W)
for guidance.
Page 793 of 3826
Matchneer.docx (Attachment 1 of 5)
May 2005 January 2009

United States Department of Housing and Urban Development (HUD) 451 7th
Street, SW, Washington, DC 20410.
Associate Deputy Assistant Secretary for Regulatory Affairs and
Manufactured Housing. Responsible to Deputy Assistant Secretary and
Assistant Secretary for Housing and Federal Housing Commissioner for
all aspects of HUDs consumer financial protection programs, including
the Office of RESPA and Interstate Land Sales and the new SAFE Act
program. Also responsible for the Office of Manufactured Housing
Programs and for supporting FHAs Minimum Property Standards
Program and Technical Suitability of Products Program. Enforcement of
RESPA, the Interstate Land Sales Act and the Manufactured Housing
Construction and Safety Standards Act. Supervised stand up the new
SAFE Act program, including preparation of policy statements and
program regulations. Supervise development of all consumer financial
protection programs. Supervise all program budgets, procurements and
personnel decisions. Attend and address various conferences and meetings
on behalf of HUD.
April 2003-April 2004
Street, SW, Washington, DC 20410.
Acting Deputy Assistant Secretary for Regulatory Affairs and
Manufactured Housing. Responsible to Assistant Secretary for Housing
and Federal Housing Commissioner for all aspects of HUDs consumer
financial protection programs, including the Office of RESPA and
Interstate Land Sales. Also responsible for the Office of Manufactured
Housing Programs and for supporting FHA
s Minimum Property
Standards Program and Technical Suitability of Products Program.
Enforcement of RESPA, the Interstate Land Sales Act and the
Manufactured Housing Construction and Safety Standards Act.
Responsible for development of all consumer financial protection
programs. Responsible for all program budgets, procurements and
personnel decisions. Attend and address various conferences and meetings
on behalf of HUD.
May 2002-May 2005

Street, SW, Washington, DC 20410..
2
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Administrator of the Office of Manufactured Housing Programs.

Responsible to Assistant Secretary for Housing and Federal Housing
Commissioner for all aspects of the program office that administers the
standards and regulations developed pursuant to the Manufactured
Housing Construction and Safety Standards Act. Supervise staff of
engineers and program specialists. Supervise contractors and third party
inspection agencies. Serve as HUDs designated representative on the
Manufactured Housing Consensus Committee, a federal advisory
committee that proposes standards and regulations to the HUD Secretary.
Supervised all program rulemaking, including rules for newly mandated
installation and dispute resolution programs. Attend and address various
conferences and meetings on behalf of HUD.
June 2001-April 2002
United States House of Representatives, Committee on Government Reform,
Subcommittee on Criminal Justice, Drug Policy and Human Resources, B377 Rayburn House Office Building, Washington, DC 20515.
Staff counsel to Chairman. Reviewed status of several programs at
Department of Housing and Urban Development and Department of
Commerce for oversight purposes. Prepared briefing materials and met
with Chairman Souder to determine oversight prerogatives and strategies.
Pursued investigation of various programs.
July 1999-February 2001
United States Occupational Safety and Health Review Commission, 1120 20th
Street, NW, Washington, DC 20036.
Chief Counsel to a Commissioner. The commission is a three-member
independent agency charged with adjudication of legal contests arising
under the federal Occupational Safety and Health Act. Responsible for
briefing Commissioner on all appellate matters before the Commission.
Reviewed the decisions of the Commissions administrative law judges.
Recommended disposition of petitions filed by the parties for review of
those decisions. Review all case materials and conduct research in order
to recommend disposition of all matters pending before the Commission.
Participate in all Commission decisional meetings. Review and edit all
Commission decisions and orders.
February 1999-June 1999
United States Senate, Committee on Small Business, 428A Russell Building,
Washington, DC 20510.
Staff Counsel to the Committee. Assist Committee staff with issues of
3
Page 796 of 3826
administrative law. Recommend amendments to statutes such as the

Equal Access to Justice Act, the Regulatory Flexibility Act, and the Small
Business Regulatory Enforcement Fairness Act. Assist Committee staff
with analysis and oversight of rulemaking by the Occupational Safety and
Health Administration (OSHA).
July 1997-January 1999
United States House of Representatives, Committee on Education and the
Workforce, Subcommittee on Oversight and Investigations, 2181 Rayburn
House Office Building, Washington, DC 20515.
Chief Counsel to the American Worker at a Crossroads Project.
Responsible for advising Chairman and members of the Committee on all
phases of this study of federal labor and employment law. Prepare
briefing papers, correspondence and subpoena process for the Committee.
Research agency custom and practice, interviewed agency staff. Conduct
field investigations. Meet with various industry and labor policy groups in
order assess overall effectiveness of federal labor and employment laws.
Serve as Chairmans counsel at Subcommittee hearings.
Question
witnesses at Subcommittee hearings. Responsible for the final report
summarizing the project's findings and recommending ways in which
federal labor and employment law should be updated.
September 1991-April 1997
United States Occupational Safety and Health Review Commission, 1120 20th
Street, NW, Washington, DC 20036.
Chief Counsel to a Commissioner. The commission is three-member
independent agency charged with adjudication of legal contests arising
under the federal Occupational Safety and Health Act. Responsible for
briefing Commissioner on all appellate matters before the Commission.
Reviewed the decisions of the Commissions administrative law judges.
Recommended disposition of petitions filed by the parties for review of
those decisions. Review all case materials and conduct research in order
to recommend disposition of all matters pending before the Commission.
Participate in all Commission decisional meetings. Review and edit all
Commission decisions and orders.
April 1980-September 1991
Boeggeman, George, Jannace & Hodges P.C., 11 Martine Ave., White Plains,
NY 10606.
Associate with civil litigation firm specializing in defense of general
liability, product liability and professional malpractice litigation before the
New York State and federal courts. Engage in civil trials and depositions.
4
Page 797 of 3826
Prepare pleadings. Negotiate settlements. Brief and argue motions and

appeals. Also responsible for real estate transactions and general practice
of law.
September 1978-April 1980
National Attorneys Title Insurance Company, 142 William Street, White
Plains, NY 10601.
Associate counsel responsible for real estate closings and title research.
EDUCATION
(b)(6)
JD, St. Johns University School of Law, Jamaica, NY 11439.

BA, Pace University, Pleasantville, NY 10570 Summa Cum Laude,
Literature and Communications.
High School Diploma, Mercersburg Academy, Mercersburg, PA 17236.
PUBLICATIONS
A Cup of Coffee with Bill MatchneerManufactured Home Marketing
Sales Management, March 2010, posted on publishers website.
Head Regulator: Bill Matchneer,Modern Homes, Cover Article
September-October 2002.
The Unfinished Business of Civil Justice Reform: Some Thoughts From
a (Former) Tort Lawyer,Common Sense, The National Policy Forum,
Washington, DC, Winter 1995.
Contributing Author, Occupational Safety and Health Law, 1995
Cumulative Supplement, Occupational Safety and Health Law Committee
of the American Bar Association, Bureau of National Affairs, Inc.,
Washington DC.
REFERENCES
Available upon request.
5
Page 798 of 3826
Kayagil.pdf (Attachment 2 of 5)
Page 800 of 3826
Kayagil.pdf (Attachment 2 of 5)
Page 801 of 3826
Devlin.docx (Attachment 3 of 5)
JOSEPH DEVLIN
(b) (6)
(202) 402-5117 (day)

[email protected]
EXPERIENCE -United States Department of Housing and Urban Development
Attorney Advisor, Office of General Counsel
451 7th St. SW, Washington, DC 20410
RESPA/SAFE Division, Office of Insured Housing (2005-2010, first year as Legal Honors Intern)
(RESPA/SAFE was formerly known as GSE/RESPA Division. Also spent several months
working for
Administrative Law Division during this time.)
Supervisors (you may contact): Paul Ceja (202) 402-5085; Joan Kayagil (202) 402-5131.
Primary functions: consulted and advised on regulatory compliance and rulemaking for RESPA,
SAFE, GSEs,
environmental law, and labor law (Davis-Bacon related acts).
Areas of law worked on: Real Estate Settlement Procedures Act (RESPA) compliance and policy;
Secure and
Fair Enforcement for Mortgage Licensing Act (SAFE) compliance and policy; Occasional
coordination with Truth in Lending Act (TILA); Government Sponsored Enterprise (GSE)
mission compliance; Agency rulemaking; Environmental/Historic Preservation compliance and
policy; Davis-Bacon related acts compliance on federal projects; Appropriations law; General
administrative law tasks such as MOUs and delegations of authority; FOIA.
Awards: Secretary's Certificate of Appreciation for work on RESPA rulemaking; numerous leave and
monetary
awards for exceptional service; (b)(6)
Siegel, Brill, Greupner, Duffy & Foster, P.A.
100 Washington Ave. S., Minneapolis, MN 55401
Law Clerk (May 2004-May 2005)
Supervisor: Thomas Goodman (612) 337-6100
Primary functions: wrote briefs, memos, various other research projects; met with clients.
Areas of law worked on: litigation and transactional work involving real estate, land use and other
matters;
antitrust; regulatory compliance; commercial leases; acquisitions; corporate litigation;
construction law;
class actions; insurance; copyright; legal malpractice.
Professor Thomas Sullivan, Provost & V.P. for Academic Affairs, Univ. of Minnesota
182 Bank St. SE, Minneapolis, MN 55414
Research Assistant (May 2003-May 2004)
Supervisor: Thomas Sullivan (612) 625-0051
Conducted research and analysis for a study on recent Supreme Court antitrust cases. Also worked
on various
other research projects involving antitrust and election law.
Judge Stephen C. Aldrich, Minnesota District Court
Hennepin Cty. Courthouse, 300 S. 6th St., Minneapolis, MN 55487
Judicial Extern (January 2004-May 2004)
Supervisor: Judge Stephen Aldrich (612) 348-7146
Performed research, wrote bench memoranda and orders, observed federal and state courts and
cases.
Management Assistance Program for Nonprofits
2314 University Ave. W., Ste. 28, St. Paul, MN 55114
Volunteer Associate (Spring & Summer, 2003)
Supervisor: Charley Ravine (651) 632-7228
Page 803 of 3826
Devlin.docx (Attachment 3 of 5)
Helped start-up nonprofit organizations with administrative requirements for incorporation.

Performed general
legal work & writing.
EDUCATION -University of Minnesota Law School (Minneapolis, MN 55455)

JD(b)(6)
magna cum laude
Order of the Coif
Minnesota Journal of Global Trade, Note & Comment Editor (2004-05); Staff Member (2003-04)
Royal Stone Scholarship (2002-2005)
Deans List (2002-2003)
Deans List with an A average (20032004; 2004-2005)
Columbia University (New York, NY 10027)
PhD(b)(6) ; MA (b)(6)
English Literature (Dissertation: Comedy and Modern Irish Literature)
Frances Steloff Research Fellowship (1990-1991)
Columbia University President's Fellowship (1990-1991)
State University of New York at Albany (Albany, NY 12222)
BA (b)(6)
English major; History minor.
National Merit Scholarship (1978-1982)
New York State Regents Scholarship (1978-1982)
PUBLICATION (on law)
Note, Canada and International Trade in Culture: Beyond National Interests, 14 Minn. J.
Global
Trade 177 (Winter 2004).
LANGUAGES -Reading knowledge of French and Spanish.
PREVIOUS CAREER
College English Teacher: Previous to attending law school I taught undergraduate English courses in
various colleges and universities. This teaching began while I was working on my doctorate at Columbia
University. I taught many courses in writing, as well as literature. The schools I taught at after graduation
were Western State College, Gunnison, Colo. (assistant professor, 1998-2002) and Virginia
Commonwealth University, Richmond, Va. (instructor, 1996-1998). The schools I taught at while working
on my degree were Queens College (City University of New York), Flushing, N.Y.; New York University,
New York, N.Y.; Columbia University, New York, N.Y.; Stevens Institute of Technology, Hoboken, N.J.;
York College (City University of New York), Jamaica, N.Y. In addition to my teaching experience, I also
published several essays on Irish literature in academic journals. While working for four years as an
assistant professor at Western State College, I helped with many administrative matters and served on
the Faculty Senate for the last year I was there.
Page 804 of 3826
Ceja.docx (Attachment 4 of 5)
Paul S. Ceja
(b) (6)
ADDRESS:
PHONE: (202) 402-5085(W)

(b) (6)
SSN:(b) (6)
CITIZENSHIP:
HIGHEST FEDERAL CIVILIAN GRADE:
USA
GS-0905-15 10/96-Present
EMPLOYMENT HIGHLIGHTS:
HUD Assistant General Counsel, RESPA/SAFE.
HUD/OGC program
counsel on RESPA since 2001(as Assistant and Deputy Assistant
General Counsel), and the SAFE Act enacted in 2008.
Senior Advisor to the HUD General Counsel
Counsel, U.S. House of Representatives, Subcommittee on
Housing and Community Development, Committee on Banking,
Finance and Urban Affairs
EMPLOYMENT HISTORY:
Office of the General Counsel
U.S. Department of Housing
and Urban Development
451 Seventh St., S.W.
Washington, D.C. 20410
(202) 402-5085
10/09 Present
Assistant General Counsel, RESPA/SAFE, (GS15, Step 10, Salary $155,000/year, 40

hrs./week
Serve as principal OGC program counsel to the Department on its

regulatory responsibilities involving the Real Estate Settlement
Procedures Act (RESPA), and the Secure and Fair Enforcement
Mortgage Licensing Act of 2008 (SAFE Act). Specifically, as
Assistant General Counsel directs OGCs RESPA/SAFE Divisions
work as program counsel to the Department's regulatory
responsibility involving RESPA, a major consumer protection
statute that governs almost every 1- to 4-family residential real
estate purchase and refinancing transaction involving a mortgage
Page 805 of 3826
loan in the U.S. Among other requirements, RESPA requires loan

originators including mortgage banks, mortgage brokers, and other
settlement service providers to provide disclosures to consumers
regarding the mortgage settlement process. Directed the
RESPA/SAFE Divisions leading role in the development and
drafting of the Department's major RESPA Reform rule, published
in November 2008, significantly revising RESPAs consumer
disclosures. Served as principal counsel in assisting in the
Departments full implementation of the RESPA Reform rule in
January 2010. Served as program counsel in the Departments
efforts on coordination, with the Federal Reserve Board, of
RESPAs disclosure requirements, with the requirements of the
Truth in Lending Act (TILA). Also responsible for drafting or
assisting in the drafting, and legal review, of other
Departmental RESPA issuances, including interpretive rules,
statements of policy, Frequently Asked Questions and RESPA
related legislation. Responsible for the provision of day-to-day
legal advice to HUD RESPA program clients.
As Assistant General Counsel, also serves as HUD program counsel
on the SAFE Act, enacted as part of the Housing and Economic
Recovery Act of 2008 (HERA). This Act provides for the nationwide
licensing and registration of mortgage loan originators through
state licensing systems, and a national registry. HUD has
responsibility for interpretation, implementation and compliance
with the Act. As program counsel direct the Divisions provision
of assistance to HUD's Office of Housing in ensuring compliance
by States with the SAFE Act requirements, through, for example,
the review of State loan originator licensing laws and
regulations, assisting in the development of HUD SAFE Act
guidance materials, assisting in the development of HUD SAFE Act
regulations, and discussing with other Federal Banking regulatory
agencies with responsibilities under the SAFE Act (i.e., the
Federal Reserve, the Comptroller of the Currency, the Office of
Thrift Supervision, the Federal Deposit Insurance Corporation)
common regulatory issues.
11/04 10/09
Assistant General Counsel, GSE/RESPA (GS-15, Step

10, Salary $153,000/year, 40 hrs./week
Served as Assistant General Counsel of the GSE/RESPA

Division, Office of Finance and Regulatory Compliance of the
Page 806 of 3826
Office of General Counsel. Responsible for managing the

GSE/RESPA Division which provided legal counsel to the
Department with regard to its regulation of the Real Estate
Settlement Procedures Act (RESPA), the Government Sponsored
Enterprises (the GSES), and environmental and labor matters
involving the Departments programs. In addition to the
overall Division management responsibilities, including
managing the provision of legal advice, was particularly
involved with directing the Divisions leading role in the
development and drafting of the Department's major RESPA
Reform rule. The GSE/RESPA Division was the principal
drafter of the rule, and worked with the Departments
program office and senior Departmental officials in
completing a proposed and final rule published in November
2008. In addition, the Division was the principal legal
advisor to the Departments efforts to coordinate RESPA with
the TILA disclosure requirements under the Federal Reserve
Board. With regard to the GSEs, provided legal counsel to
the Departments regulatory responsibilities, including the
Departments issuance of regulations, and oversight of the
GSEs mission and charter act compliance.
1/01 11/04
Deputy Assistant General Counsel, GSE/RESPA

(GS15, Step 9, Salary: 126,963/year, 40
hrs./week)
Served as Deputy Assistant General Counsel of the GSE/RESPA

Division of the Office of General Counsel. The GSE/RESPA
Division was responsible for providing legal counsel to the
Department with regard to RESPA, the Departments regulation
of the GSEs, and Environmental and labor matters involving
the Departments programs. Particularly involved with the
development of the Departments RESPA regulatory reform
efforts, and the provision of legal assistance with regard
to the Departments regulatory oversight of the GSEs. Also
served as OGC counsel for the Departments efforts with
regard to the Colonias and migrant farmworker communities.
3/97 1/01
Senior Advisor To the General Counsel (GS-15,

Step 8, Salary: 104,386/year, 40 hrs./week)
Provided assistance to the General Counsel in all major
Page 807 of 3826
areas of responsibility of HUD's Office of General

Counsel (OGC). This included OGC's responsibility as
counsel for HUD's program offices (Federal Housing
Administration, Ginnie Mae, Public and Indian Housing,
Community Planning and Development, and Fair Housing
and Equal Opportunity). Coordinated and monitored
legal, legislative and regulatory matters of particular
interest to the General Counsel, including matters
involving OGC's Office of Insured Housing, Office of
Finance and Regulatory Enforcement, Office of
Legislation and Regulations, and Office of Assisted
Housing and Community Development. Provided legal
advice, researched legal issues, and drafted legal
memorandums and critical OGC correspondence. Attended
Departmental meetings for the General Counsel, and
acted as liaison for the General Counsel to other
Departmental offices such as the Office of
Congressional Relations. For the General Counsel,
handled important OGC matters relating to other Federal
agencies and Congress.
10/96 - 2/97
Deputy General Counsel for Programs and

Regulations (Acting) (GS-15, Step 6, Salary:
$88,000/year, 40 hrs./week)
Principal Deputy General Counsel responsible for overseeing

the work of OGC's Office of Legislation and Regulation,
Office of Insured Housing, and Office of Finance and
Regulatory Enforcement. Specifically responsible for
overseeing OGC's assignments with regard to the development
and drafting of HUD legislation, and requests for technical
legislative drafting assistance from Congress. Also
specifically responsible for overseeing the development of
HUD regulations, and the provision of legal advice to FHA,
Ginnie Mae, PIH and CPD. Represented OGC in Departmental
meetings, and OGC and the Department, in meetings with other
Federal agencies, the White House and Congress.
5/96 - 9/96 Special Assistant to the General Counsel
(GS-14/15, Step 6, Salary: $86,000/year, 40
hrs./week)
Provided assistance to the General Counsel in the day-to-day
operation and management of OGC. Worked on assignments of
Page 808 of 3826
particular interest to the General Counsel, including

legislative, regulatory, program and litigation matters.
Represented the General Counsel in Departmental meetings,
and in meetings with other Federal agencies, the White
House, and Congress. Coordinated and drafted responses to
critical OGC correspondence and on a day-to-day basis
responded to requests for information and assistance from
HUD program offices, Congress and the general public.
1/96 - 6/96
Attorney -- OGC Office of Legislation and

Regulations (on Detail from the OGC Office of
Program Enforcement 1/96-2/96) (GS-14, Step 10,
Salary: $81,217/year, 40 hrs./week)
Assisted the Legislative Division of OGC's Office of

Legislation and Regulations in the drafting of HUD
legislation, as well as Technical Drafting Service
requests from Congress. Specifically drafted HUD
initiated public housing related amendments to
Congressional public housing reform legislation.
Responsible for drafting HUD legislation providing for
the restructuring of HUD programs for Native Americans.
Represented the Office of Legislation and Regulations
in inter-departmental meetings on the public housing
and Native American legislation, and in meetings with
the Office of Management and Budget. Responsible for
monitoring HUD-related immigration legislation in
Congress, and represented OGC at inter-agency White
House meetings on this topic. Drafted side-by-sides of
House-Senate public housing legislation, and
immigration legislation.
5/95 - 12/95
Attorney -- OGC Office of Program Enforcement (GS

13-14, step 10, Salary: $68,000/year, 40
hrs./week)
Assisted the Office of Program Enforcement in carrying

out the Department's affirmative litigation. Worked
with U.S. Attorneys Offices on violations by
multifamily project owners of HUD's regulatory
agreements, including diversions of project funds.
1/95 - 5/95
Attorney -- OGC Office of Legislation and

Regulations (GS - 13, Step 10, Salary:
Page 809 of 3826
$68,000/year, 40 hrs./week)(On Detail from the

Office of Program Enforcement)
Drafted legislation implementing the Secretary's
reinvention "Blueprint" proposal designed to
significantly reorganize programs within the
responsibility of the Department. Responsible for
drafting significant components of the American
Community Partnerships Act of 1995 (ACPA I) which
provided for a major restructuring of public housing
programs -- transitioning those programs to a system of
tenant-based assistance.
5/93 - 1/95
Subcommittee on Housing and Community

Development Committee on Banking, Finance and
Urban Affairs
U.S. House of Representatives
B-303 Rayburn House Office Building
(202) 225-7054
Counsel (Salary: $80,000/year -- 40hrs./week).

Responsible for legislative and legal matters within
the jurisdiction of the Subcommittee, including
hearings, legislative drafting, mark-ups, House floor
actions, and House-Senate conference actions. Reviewed
and monitored the development and implementation of
policies, legislative proposals, and regulations by the
Department of Housing and Urban Development. Met and
discussed housing and community development issues with
federal, state and local government officials, and
representatives of various public and private
organizations and associations. Worked on a wide range
of housing and community development issues, including
issues involving federally assisted housing, ie.,
public housing and section 8; RESPA; the GSEs and their
regulation; fair housing; Empowerment Zones and
Enterprise Communities; pension fund investment in
affordable housing development; and.
4/88 - 4/93
Select Committee on Aging

Page 810 of 3826
Room 712, House Annex I

General Counsel
hrs./week)
(Salary -- $60,000/year -- 40
Principal legal advisor to the Committee Chairman.

Responsible for legal, organizational, and
administrative matters involving the Committee (House
and Committee Rules, ethics issues, Committee
organizational meetings, Committee and Subcommittee
composition, Committee budget issues). Directed the
Committee's review on issues within the Committee's
jurisdictional areas. Reviewed and developed policies,
legislation and regulations, and engaged in oversight
of federal agencies. Organized numerous hearings,
drafted legislation and Committee reports, initiated
and monitored studies and investigations by the General
Accounting Office. Represented the Committee Chairman
and the Committee at various national conferences,
forums, and workshops. Primarily responsible for
issues involving discrimination against the elderly,
including oversight of the enforcement of the Age
Discrimination Act of 1975, the Age Discrimination in
Employment Act, and the operation of the U.S. Equal
Employment Opportunity Commission. Also worked on
various issues involving the low-income elderly and
minority elderly populations.
1/85 - 4/88
Office of the General Counsel

U.S. Department of Health and Human Services
Region III
P.O. Box 13716, 3535 Market Street
Philadelphia, P.A. 19101
Assistant Regional Counsel -- (GS-12, Salary

35,000/year -- 40 hrs./week).
Worked on litigation for the Department of Health and
Human Services. Prepared briefs and pleadings in
conjunction with U.S. Attorneys offices, for submission
to U.S. District Courts and Circuit Courts of Appeals.
Conducted oral arguments before the U.S. Fourth Circuit
Court of Appeals. Drafted memoranda on legal issues of
Page 811 of 3826
concern to the Department.

1979 - 1984
Center on Social Welfare Policy and Law

1029 Vermont Avenue, N.W.
Suite 850
Legislative Analyst.
Monitored and analyzed legislation and regulations.
Participated in Congressional committee hearings and
mark-ups. Prepared comments on proposed regulations.
Provided research for litigation. Assisted
Congressional staff. Met with representatives of
national organizations.
1977 - 1979

Congressional Hispanic Caucus
House Annex II
Legislative/Legal Assistant.
Provided legal and legislative research. Developed the
legal structure of the Congressional Hispanic Caucus.
Assisted in liaison activities with other Congressional
offices, Federal agencies, and the White House.
1975
Department of the Army

Office of the Judge Advocate General
Fort Carson, CO
Legal Assistant.
Assisted military defense counsels in the preparation
of cases for court martial. Provided legal research.
Carried out factual investigations.
EDUCATION: Siena College, Loudonville, NY 12211

B.A.(Political Science)
Graduation -- 1974
University of Colorado School of Law,
Boulder, CO 80309 -- J.D.
Page 812 of 3826
Graduation -- 1977
BAR MEMBERSHIP:
(b) (6)
AWARDS:
Certificate of Appreciation - "In acknowledgement of your commitment and service to
the IMPACT 200 campaign for the Department of Housing and Urban Development. We
commend your leadership and dedication to the directives and mission of this Agency,"
issued in recognition of the publication of HUD's final RESPA rule, and signed by the
HUD Secretary.
01/2009
Certificate of Appreciation - "In recognition of the central role that you played in the
Department's efforts to reform regulations implementing the Real Estate Settlement
Procedures Act in order to improve the quality of information disclosed to home
purchasers and reducing mortgage settlement costs," signed by the HUD Secretary.
10/2008
Certificate of Recognition - "In appreciation of your exemplary performance as a
member of the Government Sponsored Enterprises Team Fiscal Year 2004," signed by
the HUD Secretary.
11/2004
Certificate of Appreciation - "For your exemplary participation and performance as a
member of the Task Force on the Southwest Border Region, Colonias and
Migrant/Farmworker Communities," signed by the HUD Secretary and Deputy Secretary
07/2003
Certificate of Appreciation - "In recognition of your outstanding contributions to the
Office of General Counsel as Senior Advisor," signed by the HUD General Counsel
01/2001
Certificate for Superior Accomplishment - For Assisting in the day-to-day
management of the Office of General Counsel and for aiding the new General Counsel
in a smooth transition to assuming the full duties and responsibilities of the Office of
General Counsel. Mr. Ceja has been intrumental in OGCs role in the implementation of
HUDs new Enforcement Center, HUD 2020 Management Reform Plan, and HUDs
implementation of the Welfare Reform Act.Signed by the HUD General Counsel,
12/1997
Certificate of Superior Accomplishment - For assisting in management of HUD's
Office of General Counsel and for assistance in implementing several key HUD
initiatives. Signed by the HUD General Counsel.
Page 813 of 3826
07/1997
Group Accomplishment Award In recognition of the central role you played in the
development and production of the `American Community Partnerships Act the
legislation creating the Secretarys reinvented Department of Housing and Urban
Development of the 21st Century. 08/1995
10
Page 814 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:
[email protected]
<[email protected]>
Training Verification Receipt: Classified Information Debriefing

Fri Apr 22 2011 11:58:09 EDT
Training Verification
Thank You!
Your information has been submitted for training course:
Classified Information Debriefing

Date & Time of Completion: Friday, April 22, 2011 - 11:58
Name: Kevin Lownds
E-mail: [email protected]
Bureau: - Not Applicable
Course Name: Classified Information Debriefing
Course Number: ClassifiedInformationDebriefing
Page 832 of 3826
From:

_DL_CFPB_AllHands
Adamske, Steven
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Fri Apr 22 2011 11:43:25 EDT
Index

The Nation (blog) GOP Struggles to Dent the Consumer Financial Protection Bureau
MarketWatch Warren tells the controversial truth
Naked Capitalism Sheila Bair as Head of CFPB?
Page 833 of 3826
Daily Kos Geithner: Warren still a candidate for CFPB head post
Reverse Mortgage Daily Bloomberg: Warren Still in the Running For CFPB Director
Wall Street Journal Wall Street, Banks Press to Shape Dodd-Frank Rules
CreditCards.com Going mobile? Link payments to credit cards for best protection
National Institute on Money in State Politics Iowa Attorney General Tom Miller: Campaign
Contributions Rise When Foreclosure Investigation Begins
Rolling Stone (blog) Best Way to Raise Campaign Money? Investigate Banks
Consumer Credit
Associated Press Pa. woman sues over Target debt collection
American Banker Deadline Looms Over Campaign to Delay Durbin
Housing
Housing Wire JPMorgan Chase settles military mortgage dispute for about $54 million
American Banker Next Buzzword for Mortgage Servicing May Be Remod
New York Times Fallout From a Poor Credit Score
Washington Post Strategic defaulters pay bills on time and plan ahead, study finds
The Nation (The Notion blog)

GOP Struggles to Dent the Consumer Financial Protection Bureau
April 21, 2011
By George Zornick
Last month, Representative Randy Neugebauer (R-TX)the powerful chair of the House Financial
Page 834 of 3826
Services Subcommittee on Investigations and Oversighttold the Huffington Post exactly how he felt
about the Consumer Financial Protection Bureau. I dont like them, he said of the agency created
under the Dodd-Frank financial regulatory overhaul and which aims to protect consumers from
predatory purveyors of mortgages, credit cards and other financial products. He added that he didnt
want the CFPB to work at all in the future.
This bold statement was actually a departure from the Republican strategy to date. Instead of attacking
the popular idea of consumer protection and attempting to destroy the CFPB outright, the GOP has
tried to push a variety of funding and organizational changes that could slowly and quietly diminish the
bureaus effectiveness.
Despite his unusually frank talk, Neugebauer was simply proposing a measure that would prevent the
CFPB from being housed in the Federal Reservesomething that will happen later this yearthus
making the bureaus cash flow easier to target in the future.
Another GOP House proposal tried to reduce the bureaus funding in the meantime, but only in the
name of austerity. I am not opposed to strong financial regulation, Representative Jo Ann Emerson (R
-MO) said during a House debate about CFPB funding. But at a time when were trying to do more with
less, I think its important for the agencies to do more with less too.
Republicans brought these indirect assaults into the recent government shutdown standoff, requesting
many of these funding reductions and structural changes. But none of them were accepted in the final
appropriations bill signed by President Obama last week.
The most Republicans could getor were ultimately willing to insist uponwas a provision requiring
two annual audits of the CFPB. House Speaker John Boehner (R-OH) claimed on his website that there
would now be mandatory audits of the new job-crushing bureaucracy set up under Dodd-Frank, and
that they would be conducted by both the Government Accountability Office and the private sector.
That sounds troubling for advocates of financial regulationwill a big bank suddenly be auditing the
CFPB? Well, no. Boehners chest-thumping statement didnt mention the CFPB gets to choose the
auditor, which the bill text doesnt say must be from the private sector, but rather independentso it
could just as easily be a think tank or university.
In fact, the language requiring the independent audit is brief and quite vague about the scope of the
study, and House Democrats who back the CFPB are not very concerned. The independent private
audits of the CFPB will not be consequential, Representative Brad Sherman (D-CA) told The Nation.
Sherman, who worked closely on the Dodd-Frank legislation, also noted that GAO audits trumpeted by
Boehner are already required in the original bill. He said the audit provisions were meaningless except
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to the extent it gave [House Speaker John] Boehner the political cover to agree to the CR compromise.
Representative Barney Frank (D-MA) agreed, and told The Nation that the new audits are essentially
cosmetic and were a consolation prize for not getting the funding reductions. Frank believes that if
anything, the CFPB emerged from the appropriations debate in a stronger position. Its an implicit
acknowledgment that [CFPB] is too popular to take away, he said.
While the GOP wasnt able to slow the CFPBs mission, and directly attacking Wall Street regulations
will likely remain a tricky endeavor for Republicans, there are more opportunities for subtle
troublemaking on the horizon. A permanent director for CFPB must be in place by July 21, and that post
requires Senate confirmation.
If no director is in place by that date, the bureau will be deprived of many of its regulatory powers.
President Obama may permanently nominate Warren, something Republicans will almost certainly try
to blockjust dont expect them to be honest about their motivations.
Back to Top
MarketWatch
Warren tells the controversial truth
Commentary: Fighting the banks, protecting the consumer
April 22, 2011
By Al Lewis
Certain members of Congress keep trying to kill the Consumer Financial Protection Bureau before it is
born, but so far theyre losing to a former Sunday school teacher.
I am not going down on this agency without a fight, Elizabeth Warren said earlier this month at a
Society of American Business Writers and Editors meeting in Dallas. It is a fight worth having.
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Warren, who draws inspiration from Methodist Church co-founder John Wesley, has been preparing the
way for the new agency to open July 21. From the beginning, shes fended off calls that she go away
and battled legislation designed to kill, defund or otherwise neuter her baby.
Reminds me of when our fearless leaders gutted the Securities and Exchange Commission and so
many other regulatory agencies and then asked why there were so many Ponzi schemes.
The plan is, stick with our failed financial system, Warren said of her congressional opponents and the
banking industry that backs them.
Warren wont accept that plan. She wants banks to be held accountable and consumers to receive
honest and clear disclosures about mortgages, auto loans, credit cards and payment systems.
The financial collapse of 2008, she said, was fueled with misleading paperwork. For this view, shes
been branded controversial. Oh, and then there were those other controversial statements she made
when she sat on a panel that oversaw the bank bailouts known as TARP.
We need two central changes, she declared in December 2009. Fix broken consumer-credit markets
and end guarantees for the big players that threaten our entire economic system ... If we dont get those
two right, I think the game is over.
Whoa! End too-big-to-fail before it kills us? Heresy!
Treasury Secretary Timothy Geithner has reportedly wanted to chop Warren off at the knees for her
zealous oversight of his bank-bailout efforts. Yet earlier this week, he acknowledged that Warren
remains in the running to head the Consumer Financial Protection Bureau, after all.
Oh, absolutely, he said during an interview on Bloomberg TV. She is doing an excellent job of
bringing clear disclosure to Americans so they can make a better choice about how to borrow to finance
a home or how to make sure they can responsibly borrow on a credit card.
Anybody who says Warren is controversial has got to be a lending industry huckster or have a
member of Congress in their back pocket. Who else opposes forthright disclosures to borrowers? Who
else avoids questions like What is the price? Can a borrower afford it? or Can a borrower get a
better deal somewhere else?
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This is like the most basic stuff, Warren said. You can tell what a box of cereal costs. You can tell
what a jacket costs. You can even tell, kind of, what a plumber costs. But you cant tell what some of
the most powerful financial decisions in your life actually cost.
The new agency, formed as part of the Dodd-Frank financial-overhaul law, aims to end an era of
lending charlatanism that led to the bust.
Were trying to make the price clear, the risk clear, and make it easy to compare products, Warren
said. If banks cant build a business model without fooling people about the price, or hiding the risks, or
obfuscating the products so nobody can make any direct comparisons, theyve got a problem.
I first interviewed Warren in February 2005 when she was a mere Harvard professor trying to protect
the middle class with her books and research. Back in the mortgage-fueled boom, many believed their
home value would double again, even as others were filing bankruptcy en masse.
Warren had co-authored a study that showed medical bills contributed to about half of all personal
bankruptcies.
I wish I could say that this was a story of people who went to the mall and bought too many Game
Boys, she told me at the time. A broken health-care system is bankrupting middle-class America
and neither the insurance companies, nor the credit industry, nor Congress wants to admit that.
Warren got push back then. And she is getting push back now.
How much of that push back is about money? And how much of the push back is about politics? I dont
think well ever sort it out. Because I think those two have found each other and multiplied their forces.
She endures in her stand against the hollowing out of the middle class at a time when few others dare
to acknowledge the cause.
If anybody thinks what were talking about is controversial, then that just tells you how far weve come
over the last 15 years or so.
Back to Top
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Naked Capitalism
Sheila Bair as Head of CFPB?
April 22, 2011
By Yves Smith
Economics of Contempt and I are typically at loggerheads on financial services industry policy matters
(hes far too positive about the bank reform measures for my taste, even though his technical
explanations are always instructive). But he had an inspired idea today:
I think Obama should seriously consider Sheila Bair for the CFPB job. As a preliminary matter, she can
definitely get 60 votes in the Senate. I know that Chris Dodd approached her last year about the job,
and she said she wasnt interested, but that was then. She still had a year left at the FDIC when Dodd
approached her. Now, with only a couple months left at the FDIC, she might be more receptive. Plus, a
personal appeal from the president is pretty hard to turn down. (Or so I hear no president has ever
made a personal appeal for my help, because theyre all jerks, and I never wanted to be their friend
anyway.)
He does start with a bit of a misperception: that getting a candidate approved by the Senate is a key
hurdle. Given the late date and the requirement that the head of the CFPB be installed by July 21, the
Administration is looking at a recess appointment under any scenario. As much as this might seem to
allow for Elizabeth Warren to get the job, I regard that as a non-starter. Obama himself does not want to
alienate big financial services donors, and enraged Republicans might exact their revenge by gutting
key sections of Dodd Frank.in particular those relating to the CFPB. Most observers think the key
window of vulnerability is through the end of the summer, but enough ire could conceivably make early
fall action possible.
Bair, as a Republican serious about enforcement and current financial regulator, is just about
impossible for anyone to object to seriously. Another observation by EoC:
Bair is also fiercely territorial, which sometimes bleeds into parochial. During the financial crisis, this
was supremely unhelpful. But I think this would be one of her greatest strengths as the CFPB director.
Given the CFPBs bizarre legislative structure, in which the Financial Stability Oversight Council (FSOC)
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can veto the CFPBs rulemakings, you want a CFPB director who is territorial, and maybe even a bit
parochial. The whole purpose of setting up the CFPB was to establish an agency that has a singular
focus: protecting consumers. I think this is necessary as a counterweight to banks and non-bank
lenders, who have a massive informational advantage over retail consumers. In order to be that
counterweight, the CFPB would really benefit from a director who only cares about her own agency.
Saying that women arent team players (in various coded forms) is such a cliche that I discount it more
than a tad. Given that most Americans are pretty unhappy with the one-sided deals cut in the rescue
the banks operation in late 2008 and early 2009, Bairs not playing ball is more easily read as a
rearguard action to try to impose some penalties on miscreant banks (she tried but failed to get Vikram
Pandit ousted from Citi and succeed to some degree in getting that bank to downsize) rather than a
personality defect in operation. So she has has some success as a bureaucratic infighter with the other,
more bank-enabling financial regulators opposed to her. That alone is good reason to want her in this
job.
Back to Top
Daily Kos
Geithner: Warren still a candidate for CFPB head post
April 21, 2011
By Joan McCarter
Last week, the Wall Street Journal reported that the administration was having a hard time finding
anyone who wanted to take over the Consumer Financial Protection Bureau that Elizabeth Warren has
been spearheading since passage of Wall Street reform last year. They may stop looking.
Treasury Secretary Tim Geithner now says that Warren could be the permanent choice.
"Oh, absolutely, and she is doing an excellent job of bringing clear disclosure to Americans so they can
make a better choice about how to borrow to finance a home, or how to make sure they can responsibly
borrow on a credit card," Geithner said when asked in an interview on Bloomberg TV on whether she
remains on the president's list of candidates to run the agency....
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Senator Christopher Dodd, one of the chief authors of financial reform legislation, questioned last year
whether Warren could win enough support to overcome her Republican critics. Dodd retired from the
Senate in the fall.
The Obama administration has approached other candidates about the job, including Federal Reserve
Governor Sarah Raskin, who has been a former state bank regulator and Senate aide.
The reality is Republicans will probably oppose any candidate the administration proposes. They are
particularly hostile to Warren, an extremely effective leader for the agency, but they are nearly equally
opposed to the very existence of this agency and have a number of legislative efforts to completely
neuter it. Apparently the Republicans are opposed to the agency's mission of "preventing abusive or
exploitative practices in home loans, credit cards, and other typical consumer financial transactions."
Back to Top

Bloomberg: Warren Still in the Running For CFPB Director
April 21, 2011
By Elizabeth Ecker
In the latest Consumer Financial Protection Bureau leadership news, Bloomberg News reports that
President Obama has included Elizabeth Warren in a short list of candidates to be considered for the
position of CFPB director. Warren is currently tasked with setting up the CFPB leading up to its July 21
launch date.
The list of potential leaders now includes a group of people with financial-services experience,
according to Bloombergs report, with Warren among them. The administration is hoping for a decision
in the coming weeks, the report says, citing an unnamed government official.
Page 841 of 3826
In recent weeks, the CFPB leadership structure has been challenged by the House Financial Services
Committee, which introduced a bill that would change the leadership structure to a five-member panel,
rather than a single director.
It was recently reported by Reuters that Federal Reserve Governor Sarah Raskin and former Michigan
Governor Jennifer Granholm were being considered for the director position, although Granholm later
said she had declined to be considered.
While Warren has been leading the bureau up to its official start date, if nominated, she would have to
pass a Senate confirmation hearing.
Obama met recently with advisers to discuss the nomination, according to a person briefed on the
talks, the Bloomberg report states. He may announce a nominee with the expectation that he will
make a recess appointment if it becomes clear the Senate wont confirm a director in time for the CFPB
s scheduled July 21 start date, according to a person with knowledge of the bureaus efforts.
Read the Bloomberg article.
Back to Top
Wall Street Journal

Wall Street, Banks Press to Shape Dodd-Frank Rules
April 22, 2011
By Victoria McGrane
Wall Street and the financial industry spent more to lobby Washington in the first quarter of this year
than a year ago when Congress was writing sweeping financial-overhaul legislation, according to a Wall
Street Journal review of lobbying reports released Thursday.
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The law, known as Dodd-Frank, was adopted nine months ago but banks, credit unions, investment
firms and their trade groups now are trying to shape how it is put into practice. The documents show
financial-industry lobbyists are spending time with regulators, who are writing hundreds of rules to carry
out the law, while pushing Congress to roll-back certain provisions, especially new limits on debit-card
fees.
The industry is working to influence a long list of Dodd-Frank rules, including sweeping ones for the
nearly $583 trillion derivatives market and restrictions on the size and activities of the largest banks.
Many are also weighing in on mortgage-finance issues as policy makers address problems with
foreclosures and how to revamp mortgage-lending giants Fannie Mae and Freddie Mac, which now are
under federal control.
The disclosures show that 26 of the financial firms and trade associations that spent the most in 2010
collectively spent $27 million in the three months ending March 31, a 2.7% increase from the $26.3
million spent in the comparable period in 2010.
The industry's first-quarter lobbying tally is its second-highest ever, according to an analysis of data
provided by the Center for Responsive Politics. The 26 entities spent slightly more $27.3 million
between April and June last year, when Dodd-Frank activity on Capitol Hill was most intense.
Wells Fargo & Co. shelled out more on lobbying than any other financial firm, surpassing J.P. Morgan
Chase, which had the top spot in 2010. Wells Fargo's lobbying expenditures nearly doubled to $1.9
million during the first quarter from $1 million in the same period a year ago. A Wells Fargo
spokeswoman declined to comment.
Disclosure documents show the financial industry turned its attention to regulators and executivebranch agencies in charge of implementing Dodd-Frank, and reflect the dozens of meetings the industry
has held with officials at the Federal Reserve, the Treasury Department, the Securities and Exchange
Commission, the Commodity Futures Trading Commission and others.
"There's been a tremendous amount of regulatory activity," said Floyd Stoner, chief lobbyist for the
American Bankers Association. Mr. Stoner estimated Dodd-Frank would generate at least 5,000 pages
of regulations, and said the trade group must ensure the new rules work for its members and the
economy.
"Implementation, implementation, implementation," said Scott Talbott, top lobbyist for the Financial
Services Roundtable, explaining the spending. The Roundtable, which spent about $2.5 million in the
quarter, represents 100 of the largest U.S. financial firms.
Still, many institutions remain focused on Congress. Disclosures for lobbyists working for the
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Community Financial Services Association, which represents the payday-lending industry, show the it
has only lobbied Congress. A spokeswoman for the group declined to comment.
According to disclosures, the trade group spent $590,000 during the first quarter, primarily on DoddFrank and the fledgling Consumer Financial Protection Bureau. The law set up the CFPB and gave it
broad powers to regulate large payday lenders. Republicans have introduced several bills to weaken
the bureau's powers.
John Magill, chief lobbyist for the Credit Union National Association, said its top priority has been
building support for legislation to delay the debit-card rule. The group reported $756,000 of lobbying
outlays for the first quarter, up 12% from the year-ago period. Mr. Magill said that figure doesn't reflect
the group's grassroots lobbying, which has been "extremely busy." The group estimates that along with
its state associations it has generated 144,000 contacts to lawmakers in the first three months of 2011
in support of legislation delaying the debit-fee rule.
Back to Top
CreditCards.com
Going mobile? Link payments to credit cards for best protection
Consumer-protection laws havent kept up with explosion of new payment systems
April 19, 2011
By Connie Prater
Consumer advocates have some advice for the growing number of people turning to mobile commerce
for faster buying: Slow your roll.
Federal consumer protection laws haven't kept up with the emerging payment options available today.
Mobile payment systems have exploded so you no longer have to pull out your wallet to make a
purchase. If you have the right gadget, you can buy that new pair of jeans or get through the subway
turnstile with a wave or a tap. Handheld gaming devices, iPods, iPads, e-book readers, radio frequency
and Near Field Communication-enabled devices, chips embedded in smart phones -- all can spend
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your money.
But ultimately, a purchasing device has to be tied to a way to pay -- whether it be a credit card or debit
account, or a phone bill. A consumer's level of legal protection varies by the type of payment method
used. Some enjoy the protection of federal laws, others don't. Although the wireless industry has
developed a set of voluntary best practices for mobile financial services providers, those guidelines do
not have the force of law, consumer advocates say.
"In the absence of the law, they have to go to the payment provider and ask what they provide," says
Mark MacCarthy, a professor in the communication, culture and technology program at Georgetown
University and a former senior vice president for Visa Inc. "The good news in the payment card world is
that those [credit card] protections are guaranteed by law. You don't have to actually go through the fine
print of those contracts to insure that you're protected. That's not the case in the mobile world."
Consumer groups warn that if not set up correctly, mobile payments can leave you unprotected from
losses if the mobile device is stolen or used to make unauthorized purchases or when buying defective
products. (See the do's and don'ts of mobile payments.)
Different levels of protection
Experts say purchases tied to credit cards offer the best protection against unauthorized uses and
disputes with merchants over billing or defective products. When purchasing merchandise and services
with credit cards, federal law (the Fair Credit Billing Act) protects card users from losses of more than
$50. The payment card networks voluntarily extend the protection to zero liability for cardholders. If you
buy a TV or another item that arrives broken or defective, the credit card company can withhold or take
back payment from the store or merchant if the issue is not resolved. The same is true for billing
disputes.
Debit cards, which are covered under the Electronic Funds Transfer Act, offer less protection against
losses if the mobile device is stolen and no help for disputes with merchants. Debit card purchases limit
customer liability to $500 but could be higher depending on how quickly the cardholder reports the
problem.
Prepaid cards offer the least consumer protections
Prepaid cards, which are rising in popularity and may soon be the sole avenue for receiving Social
Security and other federal government benefits, are not currently required by law to offer consumer
protection against fraud or billing disputes.
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Consumers Union, the nonprofit owner of Consumer Reports magazine, and other groups have already
asked the Federal Reserve to put prepaid cards on the same level as credit cards for consumers'
liability.
"If the mobile payment is tied to a prepaid card, it's neither a debit card nor is it a credit card. Those are
going to fall through the cracks," says Michelle Jun, staff attorney at Consumers Union. Consumer
advocates want federal regulators to put all forms of payment on the same level when it comes to
consumer protection. "Now that mobile payment ventures are emerging in the United States, it's time to
harmonize and extend consumer protections for all payment services."
Jun notes that a portion of the U.S. population is unbanked, may have bad credit and may only have
access to prepaid cards for online or mobile purchases. Those consumers should "keep track of your
transactions as closely as possible and make reports as soon as possible. There really isn't that safety
net to hold them if something goes wrong," Jun says.
Mobile commerce is expected to skyrocket in the coming years. Retailers are anxious to take
advantage of the many direct marketing and speedy customer service opportunities that can present
themselves when, for instance, customers roam stores with GPS-equipped phones that allow wireless
interaction with buyers. The National Retail Federation has developed a Mobile Retail Initiative, a 177page blueprint to help guide retailers into the emerging mobile commerce arena.
ABI Research, a marketing research firm, purchases made via mobile phones in the United States
nearly tripled between 2008 and 2009 from $396 million to $1.2 billion. MasterCard, in its 2011
Advanced Payments Report, projects worldwide mobile phone payments will reach $680 billion by
2016. The report says that contactless payments will make up $320 billion of that.
With new mobile payment options announced almost weekly, Jun, the consumer attorney, says it's
important for consumers to be aware of the potential risks they face if something goes wrong. However,
she adds: "Consumers should not be expected to figure out what protections apply to each competing
new payments venture."
Will financial watchdog agency address the problem?
Consumer groups are hoping the new Consumer Financial Protection Bureau (CFPB) -- approved as
part of the massive Wall Street reform law -- will address mobile payment and card protections when it
launches in July 2011. Many details around the agency remain in flux, however. As of April 2011,
Harvard law professor and Obama adviser Elizabeth Warren is overseeing the creation of the bureau,
but there has been no official nomination of a director for the bureau.
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"The new Consumer Financial Protection Bureau has been vested with strong authority to address
unfair payment practices," U.S. Rep. Carolyn B. Maloney, the New York congresswoman credited with
ushering the credit card reform law through Congress, said in a statement to CreditCards.com.
"Consumers Union raises fair points about the flaws in new forms of payment, and I believe the CFPB
should look closely at them, and take action if consumers need help."
"Many people are offering new services, and they are trying to link them to utilizing the phone. We're
really happy that people are choosing the wireless phone to do this," says Kate Kingberger, director of
wireless Internet development for CTIA The Wireless Association, a 300-member group that includes
the major U.S. cell phone carriers as well as cell phone manufacturers and tower providers.
Some of the new mobile financial services products can be provided by a number of different players,
including financial institutions (offering mobile banking options), software development companies (such
as developers of mobile parking meter payment applications) or telecommunications providers (such as
a wireless cell phone company that provides its own mobile financial services to its customers).
Kingberger says CTIA members who partner with new mobile service providers on new products
require them to follow the best practices. She said all of the wireless carriers are "fully compliant to
CTIA's best practices."
The association's guidelines call for mobile financial services providers to voluntarily create policies
that, at the minimum, limit customer liability. When there is unauthorized use of the mobile device, those
policies, according to the wireless association, should mirror the higher standards established by
federal law for payment cards: a $50 cap for credit cards and the $500 cap for debit cards.
Wireless guidelines vague on dispute resolution
Although the wireless industry has been proactive and early in drafting best practices, their guidelines
still leave the door open for potential problems for consumer who are unsatisfied with the products or
services they receive. When it comes to dispute resolution, CTIA's guidelines simply state that mobile
financial services providers "should develop reasonable dispute resolution processes for handling
disputed payments and transactions." It does not go into specifics about what should be included in
those procedures.
MacCarthy, the former Visa executive, says that's not good enough.
"It's not clear if consumers can bring a merchant complaint to a carrier the way they can with a credit
card," he says. "It's just not crystal clear that if you go a carrier you get help."
MacCarthy, who co-authored an article on the need for more consumer protections for mobile
paymentsthat was published in the banking industry trade publication, American Banker, cites an
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example of purchasing ringtones for your cell phone.
"Say you sign up for ring tones. You try to reach the ring tone provider and you can't reach them. Can
you go to the carrier and say, 'Stop putting the $2.98 charge on my bill every month. I don't want it'? If it
were a credit card and you had this problem, they would take it off and try to resolve the problem. It's
not clear yet that the carriers have that kind of process in place."
Kingberger, from the wireless association, said customers must go to the merchant with disputes about
purchases -- not the cell phone carrier.
"The wireless phone is just a conduit of the information," Kingberger says. She cites the example of
someone who has set up a speed pass account by sending $50 to local transit authority. Their wireless
phone can allow them to go through toll booths or turnstiles and deduct the toll or fare from their transit
account as they drive or pass by.
"If your speed pass or your toll booth account all of sudden came up $20 less, you would call the people
to whom you sent the original $50 -- to whomever the service provider was. They have to uphold their
consumer protections and handle their issues for unauthorized use," Kingberger says. The toll charge
would not appear as a separate item on the cell phone bill. "You would have one more data usage for
the month," she adds.
However, some types of mobile transactions are billed directly to cell phone bills, including ring tones
and what's known in the industry as "short codes." That's when you send a text that includes a short
word or series of numbers -- such as "Haiti" or "REDCROSS." If there is a billing dispute, those are
governed only by the wireless industry's voluntary guidelines.
More confusion: Who ya gonna call?
Kingberger acknowledges that many consumers who are taking advantage of the convenient mobile
payment options that are emerging may be confused about where to go if there is a problem. Those
using their cell phones to make purchases might place their first call for help to their cell phone provider.
"Many people will by default call their phone company first," she says, adding the major cell phone
carriers are training their customer service representatives on how to handle these calls to direct
customers to the right place. She says the carriers are educating cell phone users via e-mails and other
methods.
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MacCarthy and Kingberger agree that Asia, Europe and other parts of the world are ahead of the United
States in adopting mobile payment technology. In many places across the globe, however, consumer
protections lag behind the United States.
Kingsberger predicts the United States will "leapfrog over them in the coming years." She adds: "We
have learned a lot from some of their missteps as well."
Back to Top
National Institute on Money in State Politics

Iowa Attorney General Tom Miller: Campaign Contributions Rise When Foreclosure Investigation
Begins
April 20, 2011
By Kevin McNellis
Iowa Attorney General Tom Miller's campaign war chest got a dramatic boost after he announced his
leadership of the 50-state attorneys general investigation into foreclosure irregularities. Out-of-state law
firms and donors from the finance, insurance, and real estate sector gave $261,445which is 88 times
more than they had given him over the previous decade.
Last fall, The New York Times reported that the nations largest banks were improperlyand potentially
illegallyrushing foreclosure proceedings with faulty or incomplete paperwork, which caused the banks
to temporarily declare a moratorium on pending foreclosures and prompted the state attorneys general
to launch an investigation into their foreclosure practices. The first tangible evidence of that effortled
by Iowa Attorney General Tom Miller since last Octoberwas leaked to the press in March.
With negotiations nearing their conclusion, the final terms of the agreement will have significant
implications for not only the nations largest banks and millions of homeowners, but the entire housing
market and U.S. economy.
Given these stakes, it is not surprising that Attorney General Tom Millerwho has coordinated the
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national investigation and is currently at the center of the final negotiationsreceived large campaign
donations from a variety of contributors with a vested interest in the final terms of the settlement.
Nearly half of the money Miller raised in 2010$338,223 of $785,103was donated after the October
13 announcement that he would be coordinating the 50-state attorneys general investigation.
Contributions To Tom Miller
A detailed look at the campaign contributions made to Iowa Attorney General Tom Miller reveals
several interesting giving patterns.
First, however, these contributions have to be put into the larger context of Tom Millers involvement in
last falls foreclosure moratorium, which began when Ally Financial (formerly GMAC), JPMorgan Chase,
and Bank of America halted their foreclosure proceedings in dozens of states between September 20
and October 1, 2010.
On September 24, Miller announced that his office was opening a civil investigation of Ally Financials
foreclosure processes in Iowa. Two weeks later, on October 7, Millers office issued a press release
stating that Miller had spoken to representatives of JPMorgan Chase, Ally Financial, and Bank of
America regarding their foreclosure proceedings; as well as assigned staff to convene a separate
group of bipartisan state attorneys general and state banking regulators to coordinate states reviews
and responses to the troubling disclosures by mortgage companies.
Almost a week later, on October 13, Millers office made the official announcement that his office was
coordinating a 50-state effort to examine foreclosure practices by major financial lenders.
Millers major contributions from out-of-state lawyers and firms closely tracks these developments.
Between September 30 and Election Day, Miller received $170,300 from lawyers outside of Iowa, which
is two-thirds of all the money he raised from them during the entire two-year election cycle. (For a more
detailed, day-by-day timeline of Millers contributions from lawyers and lobbyists, see his contributions
timeline).
Although it is typical for candidates to raise large sums of money in the month immediately preceding
the election, Millers out-of-state donations in 2010 were a significant departure from his two previous
campaigns, in terms of the amount of money he raised, where it came from, and when.
Miller raised $785,000 in 2010, more than double the $327,196 he raised for his 2006 and 2002
campaigns combined.
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Millers 2010 campaign was unprecedented in the amount of contributions received from outside of
Iowa: $497,000, or 63 percent of his 2010 total, came from out-of-state donors. This is a significant
break from his previous two reelection campaigns, when less than one-tenth of his campaign funds
came from outside of Iowa.
Even more interesting is that it was the lawyers and donors from the finance, insurance, and real estate
(FIRE) sector from outside of Iowa who were largely responsible for this reversal. Out-of-state lawyers
and lobbyists gave Miller $261,445 in 2010, which is 88 times more than they gave over the previous
decade. Out-of-state donors from the FIRE sector gave Miller $56,150 in 2010, compared to $3,500 in
2006 and $1,000 in 2002.
The out-of-state lawyers who suddenly took a strong interest in Millers reelection last fall are among the
most prominent litigators and partners from some of the largest and most famous corporate and class
action firms in the country, which is not surprising given the numerous high-stakes court cases filed in
the wake of the financial collapse of 2008 that could be impacted by the pending settlement.
Back to Top
Rolling Stone (Taibblog)

Best Way to Raise Campaign Money? Investigate Banks
April 21, 2011
By Matt Taibbi
hilarious report has come out courtesy of the National Institute of Money in State Politics, showing that
Iowa Attorney General Tom Miller who is coordinating the investigation into the banks improper
mortgage dealings increased his campaign contributions from the finance sector this year by a factor
of 88! He has raised $261,445 from finance, insurance and real estate contributors since he announced
that he was going to be coordinating the investigation into improper foreclosure practices. That is 88
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times as much as they gave him not over last year, but over the previous decade.
This is about as perfect an example of how American politics works as youll ever see. This foreclosure
issue is a monstrous story that is somehow escaping national headlines; essentially, all of the largest
banks in the country have been engaged in an ongoing fraud and tax evasion scheme that among other
things has resulted in many hundreds of billions in investor losses, and hundreds of thousands of
improper foreclosures. Last week, the 14 largest mortgage lenders a group that includes bailout allstars like Citigroup, Bank of America and Wells Fargo, managed to negotiate a settlement with the
federal government that will mandate some financial relief to homeowners who have been victims of
improper foreclosure practices. Its unclear yet exactly what damages and fines will be involved in the
federal settlement, or how many homeowners will be affected. But certainly there are some who believe
the federal settlement was a political end-run around the states efforts to extract their own deal from
the banks.
Put it this way. If the banks had to pay what they actually owed from the registration taxes/fees they
avoided by using the electronic registry system MERS to the money taken from investors in toxic
mortgage-backed securities to the fees and payments stolen from homeowners via predatory loan
practices and illegal foreclosures they would probably all go out of business. Thats how much money
is at stake here: the very future of financial giants like Bank of America and Citi and JP Morgan Chase
is hanging to a very significant degree on the decisions of politicians like Miller.
Hence the sudden avalanche of money sent Millers way. The numbers are laughable. In 2006, out -ofstate donors gave Millers campaign $10,508. For the 2010 cycle, that number was $497,357. Three
lawyers by themselves Al Gores attorney David Boies, plus Donald Flexner and Robert Silver, all
partners in the firm Boies, Schiller and Flexner gave Miller a total of $60,000.
Guess who Boies firm defended last year, in a suit brought by an Australian hedge fund that claims it
was ripped off in a deal involving toxic mortgage-backed CDOs? Thats right: Goldman, Sachs.
Goldman hired Boies to represent it in a fight against the now-defunct Basis Yield Alpha Fund, which
bought into Goldmans notorious Timberwolf deal one of the shitty deals Senator Carl Levin, in
hearings last year, was haranguing Goldman for selling to unsuspecting clients.
So now we see that Boies and a string of other banker lawyers (including firms that represented Citi,
Chase, Wachovia, and others) are throwing tens of thousands of dollars at Miller. Maybe it wont do
much to influence Miller, but who knows? Maybe he wont plunge the knife in quite so deep now.
Just something to keep an eye on. It would be interesting to see a similar analysis on the money these
same characters have thrown at the Obama administration in the last year.
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Page 852 of 3826
Associated Press
Pa. woman sues over Target debt collection
April 20, 2011
By Joe Mandak
A western Pennsylvania woman filed a federal lawsuit Wednesday against Target Corp. and its law firm
over the discount department store chain's debt collection practices, saying false affidavits were used to
go after customers who allegedly owed money to a subsidiary bank that issues the store's credit cards.
Vicki Higgins' lawsuit seeks class-action status on behalf of thousands of Target customers who have
repaid Target National Bank debts, paid legal fees, lost lawsuits or had their credit scores damaged as
a result of debt collections using the allegedly false affidavits.
The lawsuit seeks unspecified damages and a court order to stop the debt collection practices alleged
by Higgins, who lives in Westmoreland County, east of Pittsburgh.
Jessica Carlson, a spokeswoman for Minneapolis-based Target, said the company had not been served
with the lawsuit and had no comment.
Officials with Target National Bank of Sioux Falls, S.D., and the chain's law firm, Patenaude & Felix
APC, did not immediately return calls from The Associated Press. The suit also names a Target official
identified only as Adam Grim, who signed the debt affidavits, a notary public who attested to the
documents, and several "John Doe" defendants one being an unknown "officer at Target Corporation
who authorized the implementation of the false affidavit factory" described in the lawsuit.
The lawsuit said Target National Bank sued Higgins over an alleged credit card debt in April 2009, then
dropped the case five months later. The lawsuit doesn't say how much Higgins allegedly owed, and her
attorney, Jeffrey Suher, did not immediately return a call for comment.
But the lawsuit contends Higgins incurred unspecified attorney's fees that she should not have had to
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pay because of the collection action which, she claims, was supported by the fraudulent affidavit.
Higgins and similarly situated customers are entitled to compensation because, she claims, the
notarized debt affidavits prepared by Grim claim that he has personally reviewed the customers' records
on behalf of the bank. But the lawsuit contends that in Higgins' case, "Grim didn't review any records
prior to allegedly executing the affidavit."
Higgins also argued in the lawsuit that believes other Target customers were treated in a similar
fashion.
Instead, the affidavit was one of hundreds rubber-stamped by Grim which, the lawsuit contends, is
illegal because the affidavits are used to coerce customers, or convince courts to enforce the debt,
under the false impression that the financial information contained has been reviewed by the bank.
"TNB took the false and misleading affidavits and utilized them to secure judgments against hundreds,
and perhaps thousands, of alleged debtors," the lawsuit said, allegedly violating federal racketeering
and Pennsylvania's fair credit laws.
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American Banker
Deadline Looms Over Campaign to Delay Durbin
April 21, 2011
By Cheyenne Hopkins
WASHINGTON While the banking industry clearly has momentum on its side in the fight to delay a
rule that would limit debit interchange fees, time for Congress to act is rapidly running out.
Most observers said Sen. Jon Tester was still a few votes shy of the 60 needed to ensure passage of a
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bill, and the Montana Democrat must still find a legislative vehicle that can be enacted before the
interchange rule is scheduled to go into effect.
"The million-dollar question is what's the right vehicle," said Jason Kratovil, vice president of
congressional relations at the Independent Community Bankers of America. "We have to connect all the
dots of something the House and Senate will pass and the president will sign before July 21. The
calendar is certainly working against us."
Under the Dodd-Frank Act, a provision by Sen. Dick Durbin, D-Ill., required the Federal Reserve Board
to write a rule ensuring that interchange fees for debit cards are "reasonable and proportional." In
December the Fed issued a proposal to cap interchange rates at 12 cents. Although the plan ostensibly
exempts institutions with assets of less than $10 billion, community banks have said the rule would
harm them.
Tester has introduced a bill that would delay the rule, which is to take effect July 21, by two years while
regulators study its potential impact on community banks. Rep. Shelley Moore Capito, R-W.Va., has
offered a bill that would delay the interchange provision by one year and give the Federal Deposit
Insurance Corp. and other banking regulators more discretion to alter the final rule.
While House passage appears likely, the situation in the Senate remains less certain. Tester has said
he has the 60 votes necessary to ensure passage, but most observers say he has around 55 votes
locked up.
Still, industry observers said Tester is winning more to his side.
"I still think odds are improving every day," said Richard Hunt, president of the Consumer Bankers
Association. "I know the vote count is going up. I also know there is some concentration among some
senators between one-year or a two-year delay. Those who voted for the Durbin amendment would
prefer a one-year delay with a trigger, but if you do a one-year you may lose some votes."
During the Dodd-Frank debate, 64 senators voted to add the Durbin amendment, meaning that at least
some of those would need to shift positions and vote for a delay.
But re-election concerns could help Tester's cause, considering the Montana Democrat is in a tight race
and Democrats are hoping to keep their majority in the Senate. Observers said Senate Majority Leader
Harry Reid has promised Tester a vote if he has the necessary 60 supporters.
"I would be very surprised if the majority leader from Nevada would leave Tester out to dry," Hunt said.
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"He knows he has a tough re-election."
Brian Gardner, a political analyst at KBW Inc.'s Keefe, Bruyette & Woods Inc., said the fact that Tester
is a vulnerable candidate will bring Senate Democratic leadership to his side. But Gardner said Tester
still needs some more votes.
"My guess is he's probably a couple votes short," Gardner said. "This is a situation where those
senators still sitting on the fence may not make up their minds until they walk over to the Senate floor to
make the vote. It is going to be a very close vote."
Tester is also likely to get a free pass from the Obama administration, which so far has resisted efforts
to amend Dodd-Frank.
The Durbin provision "doesn't go to the core principles of Dodd-Frank and it's not something the
administration worked hard on and actively supported," Gardner said. "I'm sure they don't relish the
precedent of amending a provision of Dodd-Frank, but I think they would distinguish amending
Durbin as other provisions of Dodd-Frank."
In addition to garnering the votes, Tester also needs to attach the measure to a fast-moving bill. He had
hoped to attach it to a small-business bill, but that has not panned out. Speculation currently centers on
whether he might attach it to an energy bill related to appliance standards.
"This is such a multidimensional challenge," said Charles Gabriel, managing director at Capital Alpha
Partners LLC. "You have to have a vehicle, and we don't know how much time the Fed is going to give
us."
The Fed was supposed to finalize a rule by April 21 but has delayed it as it considers the 11,000
comments it received on the plan. It is unclear when the central bank will act.
But observers agree a vote must come soon.
"You are never going to have a hard 60," Kratovil said. "At some point you have to call the roll and see
where everyone is. That's the nature of this issue. This is one of those unpleasant ones where people
would not want to get out and stick their necks out until they absolutely have to."
The industry has until July 21 at the latest to get legislation enacted. Congress is scheduled to take
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several recesses between May 2, when it returns from Easter break, and that deadline.
"We may think we have three months, but when you look at the amount of time the Senate and House
will be in session between now and July, it is broken up by three weeks, and there is little certainty what
bills will be offered," said Ryan Donovan, vice president of legislative affairs for the Credit Union
National Association. "So we need to a) get the votes and find the vehicle to attach it to by July 21.
That's going to be a difficult challenge to overcome."
Some observers it may even be possible to delay the interchange rule after it has taken effect.
"The thing working for the retailers and working against the banks is the clock," said Mark Calabria,
director of financial regulations studies at the Cato Institute. "If this doesn't get done by July it makes it
harder to do, but not impossible to do. You could see this get implemented and you see disruptions in
the debit card market, and then something happens. Implementing this thing is going to be the test."
It is also important to note that the industry has gone further than most observers initially expected. The
retailers appeared confident that any attempt to roll back the interchange provision would fail.
But that changed after Fed Chairman Ben Bernanke and FDIC Chairman Sheila Bair expressed doubt
at a Senate Banking Committee hearing in February that the exemption for community banks would be
effective.
"That was a very strong tipping point," Kratovil said. "Within an hour after that hearing our phones were
ringing from [Hill] offices saying, 'Wow, can you come talk to us about this?' It's paved the way for us to
talk about this. That's given us the opening we needed and the platform to make our case."
Since that time, a growing number of lawmakers have expressed support for a delay, including Rep.
Barney Frank, the top Democrat on the House Financial Services Committee.
"The banks got far more momentum than people suggested. I think the retailers underestimated how
much traction this would get on the Hill," Calabria said.
Ken Clayton, chief legislative counsel for the American Bankers Association, agreed.
"There has been a growing recognition by Congress that there are real potential harms to consumers
here that suggest they should step back and look at this more closely," Clayton said. "My sense is
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where there is a will there is a way. And it's the prerogative of the Senate to decide whether they want
to move forward and how to make that happen. It's still unclear what vehicle they will use."
Several industry representatives said that despite the narrowing timetable, they are optimistic Congress
will act.
"Though historically a difficult threshold, we believe momentum continues to grow on delaying and
studying the price-cap rule," said Dan Berger, senior vice president for government affairs for the
National Association of Federal Credit Unions, which has also fought for a delay.
Some observers said that because the industry is angling for a delay and not trying to scrap the
Durbin provision altogether Congress is more inclined to listen.
"Absent all of the issues on the table, it is in the best interest of the public to delay," said Clifford Rossi,
a professor at the University of Maryland. "The Durbin amendment was put together hastily, without a
great amount of scrutiny to it. I think people realize good policy doesn't have to be fast policy."
That was Tester's argument last week when he took to the Senate floor to stump for his bill.
"We need to stop," he said. "We need to study. We need to make sure we are doing the right thing.
Therefore, I ask my colleagues for their bipartisan support on a responsible bipartisan bill to delay this
rule so we can have time to study the consequences of this rule both intended and unintended. Our
economy cannot afford to let this go into effect."
Durbin, the Senate majority whip, is adamantly opposing the delay alongside retailers.
"We did the right thing with interchange fee reform. Let's stand by it and say to Wall Street, major card
issuers, Visa and MasterCard, they have had enough," Durbin said in his own floor speech on April 6.
"They can get a reasonable fee, but not an unreasonable amount out of our economy."
But many observers see Durbin steadily losing ground, particularly after the Illinois Democrat issued a
press release rebutting Jamie Dimon, the chairman and CEO of JPMorgan Chase & Co., who called the
provision "idiotic."
"Durbin seems more isolated, given his recent floor speeches," said Charles Gabriel, managing director
at Capital Alpha Partners LLC. "We haven't seen a single other senator stand up to defend the Durbin
Page 858 of 3826
amendment. Meanwhile, he seems to be locked in a grudge match with Jamie Dimon, who has
effectively distilled the banking and card industries' complaint."
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Housing Wire
JPMorgan Chase settles military mortgage dispute for about $54 million
April 22, 2011
By Kerri Panchuk
JPMorgan Chase agreed to pay about $54 million to settle lawsuits that accused the banking giant's
Chase Home Finance unit of violating the Servicemembers Civil Relief Act of 2003 by failing to promptly
lower interest rates when homeowners entered active duty.
The plaintiffs also alleged the lender violated debt-collection practices.
In a statement, JPMorgan Chase said it would pay $12 million to members of the class-action suit. In
addition, the bank is offering its military customers $27 million in benefits and will set aside $15 million
for additional damages that could be implemented later.
The SCRA protects military personnel on active duty by affording them special protections when it
comes to home foreclosures and mortgage collections.
One case Rowles v. Chase involved a reserve officer in Colorado. The plaintiff, Capt. Jonathon
Rowles, accused the lender of violating the act by failing to promptly implement a 6% interest cap on his
mortgage as stipulated under the federal statute. Rowles accused the lender of failing to keep the 6%
rate consistent throughout his deployment by constantly requiring him to verify his active duty status.
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Furthermore, the officer on behalf of a similarly situated class of military members accused the lender of
employing unlawful collection practices in relation to the loan.
"We are sorry and regret the mistakes our firm made on mortgages for members of the military, and we
d like to thank Capt. and Mrs. Rowles for helping us address them," said Frank Bisignano, chief
administrative officer of JPMorgan Chase who was appointed head of Chase Home Lending in
February.
JPMorgan said Thursday it has implemented a new series of benefits for military personnel. As part of
the package, Chase will lower mortgage interest rates to 4% on loans belonging to service members on
active duty. That cap will extend for another year after service. In addition, there is a military loan
modification program and several homeownership assistance opportunities, including the stipulation
Chase will not foreclose on military personnel who are deployed.
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American Banker
Next Buzzword for Mortgage Servicing May Be Remod
April 21, 2011
By Kate Berry
Lenore Albert, a plaintiff's lawyer in Huntington Beach, Calif., says the consent orders federal regulators
recently issued against the largest mortgage servicers gave her "another tool" to fight foreclosures.
On April 15, two days after the enforcement actions came out, Albert won a court order blocking Aurora
Loan Services from holding foreclosure sales on six homes in Orange County. In their request for a
restraining order, her clients claimed they were harmed by so-called dual tracking, in which Aurora
began foreclosure proceedings at the same time it was evaluating the borrowers for loan modifications.
The consent orders bar this practice.
The borrower plaintiffs "acted diligently upon issuance of the [consent] orders," wrote Judge James V.
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Selna of the U.S. District Court for the Central District of California in Santa Ana in his restraining order.
Servicers can expect more such diligence nationwide.
One likely result of the orders, some industry observers say, is that thousands of borrowers, many of
them currently in litigation against servicers, will get another shot at a loan modification.
"There will be a lot of remodifications for those [borrowers] that fell out of a modification the first time,"
said Art Tyszka, director of document services at Wolters Kluwer Financial Services, which has been
hired by several of the largest servicers to conduct loss-mitigation efforts.
"Several hundred thousand loans at a minimum" will get one more chance, Tyszka said.
"The words 'loss mitigation' and 'loan modification' appear no less than a hundred times in the consent
orders, so it's logical to assume that the regulators are keenly interested in as many borrowers as
possible being put back into loan workouts."
Sean O'Toole, the chief executive of ForeclosureRadar.com, a Discovery Bay, Calif., data company,
said cancellations of foreclosure actions are on track to increase 58% this month compared with the first
three months of the year combined????.
But the reasons could be varied and not just because of the consent orders.
In California, for example, servicers can postpone a foreclosure notice for up to a year. Some of the
cancellations may be attributed to short sales, or to a reluctance on the part of servicers to liquidate real
estate assets while housing prices are still dropping, O'Toole said.
Albert filed her suit, which seeks class-action status, in January against Aurora and Deutsche Bank (the
securitization trustee for the mortgages).
It claims Aurora did not apply the trial payments to the borrowers' mortgages but instead put them into a
"suspense account" that incurred more fees, interest and expenses.
Aurora and its lawyers did not return calls seeking comment, but in court papers the servicer said it
Page 861 of 3826
"made countless efforts to keep [the] plaintiffs in their homes, exploring loss-mitigation options with
them, for sometimes years on end."
Albert estimated that 10 suits seeking class-action status have been filed against other servicers
specifically for "dual-tracking."
The consent order is forcing servicers back to the negotiating table, she said.
"Some of these loans are now getting remodified."
Jeffrey Naimon, a partner at the law firm BuckleySandler LLP in Washington who represents banks,
was skeptical about predictions of a remodification wave.
Servicers, he said, are more focused on understanding the consent order's myriad requirements,
including the federal and state requirements for a foreclosure file review.
"The idea of remodifying loans has not come up," Naimon said. "What they're looking for servicers to
do, is to see if they made appropriate loss mitigation available, and to provide remediation if consumers
suffered financial harm."
Gerald Alt, the president of LOGS Group LLC, a Northbrook, Ill., network of foreclosure and lossmitigation attorneys, said servicers may be hampered by the sheer scope of the consent orders.
"One problem is that if the consent orders say they haven't serviced the loans well enough, what is the
standard?" Alt said. "To some extent, there is a little bit of head-scratching on what they're going to do,
who are they going to pick for the third-party review, how are they going to staff it, and what are the
standards."
More cynical industry observers say federal regulators issued the consent orders before a settlement
was reached with state attorneys general, giving banks "cover," so they could ultimately provide thirdparty reviews showing borrowers were not harmed.
Whether a significant number of borrowers will be helped remains unknown.
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Herb Blecher, a senior vice president at LPS Applied Analytics, a unit of Lender Processing Services
Inc., said that even before the consent orders, servicers have been remodifying loans in significant
numbers but many have redefaulted, which has led to a buildup of loans that have not yet gone to a
foreclosure sale.
"There is this churn going on, where it's is in foreclosure, they pull it out and work on loss mitigation,
and then they put it back in," Blecher said.
Through March, 1.9 million properties were 90 days or more delinquent but had not yet received a
notice of foreclosure, LPS found.
Another 2.2 million properties were in the foreclosure pre-sale inventory.
A major problem is that for 30% of loans currently in foreclosure, borrowers have not made a payment
in more than two years, Blecher said.
As Alt put it, "they may try to remodify borrowers but some are in foreclosure and have not made a
payment in 24 months."
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New York Times

Fallout From a Poor Credit Score
April 21, 2011
By Maryann Haggerty
IF you want to see how quickly you can ruin a great credit score, just skip a mortgage payment.
Page 863 of 3826
Lenders use credit scores to measure how you handle debt. The number youll see most often is your
FICO score. It runs from 300 to 850. The major credit reporting bureaus developed a rival,
VantageScore, with scores from 501 to 990.
Missed mortgage payments, serious loan delinquencies, loan modifications, short sales, foreclosures
and bankruptcies all drag down credit scores. Because a mortgage is such a big slice of anyones credit
profile, it carries more weight than other loans. Both FICO and VantageScore have studied and
quantified those impacts.
They reached similar conclusions: for people with near-perfect records, a single mortgage payment that
s 30 days late reduces a credit score enough to hurt. For anyone, a short sale selling a home for less
than the amount owed can be almost as destructive as a foreclosure.
In contrast, a loan modification when the lender approves new loan terms can have a very, very
minimal effect, said Sarah Davies, the senior vice president for analytics at VantageScore. In some
cases, the borrowers score might drop 10 or 15 points.
With a loan modification, said Joanne Gaskin, the director of global scoring solutions at FICO, the
consumer does not have to go delinquent to get assistance.
Modification horror stories abound; some borrowers have been told they cant be helped unless theyve
already missed payments. That doesnt have to be the case, said Josh Zinner, the co-director of the
Neighborhood Economic Development Advocacy Project, a New York City nonprofit company active in
foreclosure prevention.
The government-backed Home Affordable Modification Program, known as HAMP, specifically permits
modifications for borrowers who can document hardship like a job loss, Mr. Zinner said. What we
advise people in New York to do he said, is reach out to a nonprofit loan counselor or to Legal
Services in order to get a modification with a servicer.
Its not a perfect solution HAMP has been criticized for not helping enough borrowers. There are
plenty of paperwork hassles, and points in the process where credit scores are in peril.
Still, because of some really profound consequences to bad credit, modification is worth pursuing, he
said. Employers increasingly check credit. Housing options may be limited. Virtually all landlords look
at credit, he said, adding that getting a mortgage can be difficult. Car loan and credit card costs jump.
Page 864 of 3826
In a study last month, FICO looked at how choices would affect three hypothetical mortgage holders:
One with a spotless 780 score; another with a good 720, who may have missed a couple of credit card
payments three years ago; a third with a not-great, not-toxic 680, who has sometimes fallen seriously
behind on credit cards or a car loan. (Most lenders consider poor credit about 650 and below, Ms.
Gaskin said.)
30 days late: The gold-plated 780 drops to 670-690, the middling 720 becomes 630-650, and 680 is
now 600-620. Effects are most significant for the strongest borrower. A continued progression is going
to have less and less impact on a score, Ms. Gaskin said.
90 days late: This is seriously delinquent, and brings the onetime best borrower down to 650-670, the
midlevel one to 610-630, and the weakest to 600-620.
Short sale, deed in lieu of foreclosure, or settlement, assuming the balance has been wiped out: The
result is just a bit less serious. The 780 score deteriorates to 655-675; 720 to 605-625; 680 to 610-630.
Foreclosure, or short sale with a deficiency balance owed: For either, 780 is 620-640; 720 is 570-590;
and 680 is 575-595.
At a certain point it might seem as if there was not much difference between bad and worse, but
remember that the lower the score, the longer it takes to climb back.
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Washington Post
Strategic defaulters pay bills on time and plan ahead, study finds
April 21, 2011
By Dina ElBoghdady
Page 865 of 3826
Some borrowers cant keep up with their mortgage payments because theyre struggling to make ends
meet.
Others choose not to keep up even though they can afford their monthly payments, and a new picture is
emerging about who these borrowers are and why they walk away.
A growing body of research shows that these so-called strategic defaulters defy the tell-tale
characteristics of most people whose loans go bad. They pay their bills on time, rarely exceed their
credit-card limits and hardly use retail credit cards, according to a study released Thursday.
And they plan ahead.
They know their credit scores will take a hit after they fall behind on their mortgages, so they tend to
open new credit cards in advance of defaulting, according to Thursdays study, conducted by FICO, the
firm that created the nations most widely used credit scoring system.
These are savvy people who organize themselves, said Andrew Jennings, FICOs chief analytics
officer. This is a planned activity, not an impulse activity.
This relatively new type of behavior is the latest sign of just how profoundly the mortgage crisis has
reshaped consumer attitudes toward their homes and their finances. It is largely driven by plunging
home values, which have left nearly a quarter of the nations homeowners underwater, or owing more
on their mortgages than their homes are worth.
So some do the math and walk.
A team of researchers estimated that 35 percent of defaults in September may have been strategic, up
from 26 percent in March 2009. But they acknowledge in a report published last month that the
numbers are tough to tease out because strategic defaulters have all the incentive to disguise
themselves as people who cannot afford to pay, according to the report by researchers from the
European University Institute, Northwestern University and the University of Chicago.
Thats because lenders have become more aggressive about trying to recoup money lost on
foreclosures, and theyre chasing after borrowers who they suspect have skipped out on a loan they
could have paid.
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In many localities including Virginia, Maryland and the District lenders have the right to pursue
those borrowers and collect the difference between what the property sold for in foreclosure and what
the borrower owed on it, also called a deficiency.
A handful of states do not allow lenders to pursue deficiencies. But in states that do, the laws vary
widely. Some states limit how long the banks have to file a claim or collect the debt. Others may
calculate deficiencies based on the fair-market value of the house. For instance, if a home sells for
$200,000 yet its fair market value is $250,000, the borrower who owes $240,000 on the mortgage
would not have a deficiency.
Many borrowers may not be aware of these laws. Instead, their decision on whether to strategically
default may be tied more to emotion than anything else, the team of university researchers concluded in
last months study.
They found that people are less willing to strategically default if they think its immoral. They are more
likely to do it if they are angry about their financial situation or mistrust the banks and want them to be
better regulated. They are also more willing to proceed if they know someone who defaulted
strategically.
A year ago, another report added to the body of data being gathered about these borrowers. Those who
have high credit scores and new mortgages with relatively large balances are more likely to default than
those who dont, Morgan Stanley analyst Vishwanath Tirupattur wrote.
Morgan Stanleys analysis is cited in the FICO study and meshes with FICOs conclusions. FICO
defined strategic defaulters as borrowers who are underwater on their loans and fell 90 days behind on
their mortgage yet kept up with all their other debts a departure from the traditional pattern of a
typical struggling borrower.
But Sam Khater, a senior economist at the mortgage research firm CoreLogic, said its important to put
the numbers in perspective when trying to figure out how big a challenge these borrowers pose for the
lending industry and the housing market at large.
The more people who default, for any reason, the tougher it will be for the housing market to recover.
Foreclosures sell at a steep discount and drag down the value of the properties around them. Clearing
them off the market is key to a rebound.
But even though 11 million homeowners in this country are underwater, only 7 percent of them have
defaulted, Khater said. If every one of those loans belonged to a strategic defaulter, an unlikely
scenario, its still a relatively small number, Khater said.
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Still, strategic default starts to make sense for borrowers who are extremely underwater on their loans
with little prospect for price recovery, Khater said. But the factors pushing underwater borrowers
toward strategic default are beginning to fade in part because home prices are nearing the bottom.
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Page 868 of 3826
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Thu Apr 21 2011 11:03:25 EDT
Index

Bloomberg Obama Considering Warren Among Consumer Bureau Candidates
Housing Wire Warren's future unknown as CFPB director role remains empty
American Banker The President Disappoints on Financial Appointments
Illinois Times Unreasonable women take on the banksters
Page 877 of 3826
Washington Post Oklahoma attorney general to craft alternative deal in foreclosure settlement
Bloomberg Oklahoma Considers Own Accord With Banks on Foreclosures
Consumer Credit
American Banker Illiteracy and Complexity Dont Mix Well
Credit Slips Is Debit Fee Regulation Anti-Consumer?
Huffington Post Financial Literacy For All Is This Generation's New Civil Rights Issue
Washington Times Report: For-profit colleges defraud students
New York Times (blog) Secured Credit Cards: Not Everyone Qualifies
Housing
Pittsburgh Post-Gazette Proposed rule requiring 20 percent down on a house draws opposition
Washington Post Existing home sales rise, but market shows little momentum
Bloomberg U.S. Finances Are Unsustainable, Obama Says at Facebook Town Hall Event
Bloomberg
Obama Considering Warren Among Consumer Bureau Candidates
April 20, 2011
By Carter Dougherty and Mike Dorning
President Barack Obama has narrowed the list of candidates to lead the Consumer Financial Protection
Bureau to a group of people with financial-services experience including Elizabeth Warren, an
administration official said.
Page 878 of 3826
Warren, the Obama administration adviser setting up the agency, and the other candidates have all
worked in financial services, though not necessarily in private industry, said the official who requested
anonymity because the process isnt public. The administration hopes to make a decision in the next
few weeks, the official said.
Obama met recently with advisers to discuss the nomination, according to a person briefed on the talks.
He may announce a nominee with the expectation that he will make a recess appointment if it becomes
clear the Senate wont confirm a director in time for the CFPBs scheduled July 21 start date, according
to a person with knowledge of the bureaus efforts.
Under a recess appointment, the president would choose a director while the Senate is out of session.
That person could serve through the next session of Congress through 2012.
For example, Obama nominated Donald Berwick to head the Centers for Medicare and Medicaid
Services in April 2010. After the nomination stalled amid Republican opposition, Obama gave him a
recess appointment in July and resubmitted his nomination to the Senate when the new Congress
began in January.
Meetings With Senators
Warren has had meetings in recent weeks with Senate Democrats on the Banking Committee including
Chairman Tim Johnson of South Dakota, Mark Warner of Virginia, Herb Kohl of Wisconsin and Kay
Hagan of North Carolina, according to two people briefed on the discussions.
The meetings have the dual effect of updating the senators on Warrens progress in setting up the
agency created by the Dodd-Frank Act and tamping down opposition to a recess appointment,
according to the person with knowledge of the bureaus efforts.
The administration wants to ensure no Democrats echo likely Republican criticism in the event of a
recess appointment, the person said.
Two people -- former Michigan Governor Jennifer Granholm and former Delaware Senator Ted
Kaufman -- turned back approaches about the consumer bureau job, according to two people briefed on
the talks. Both urged the White House to nominate Warren, 61, one of the people said.
Warren, the White House and Treasury Department adviser assigned to set up the consumer bureau, is
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absolutely still on the list as a possible nominee for the directors job, Treasury Secretary Timothy F.
Geithner said yesterday.
She is doing a terrific job making the case for stronger consumer protection and attracting talented
people to stand up that agency, Geithner said in a Bloomberg Television interview with Peter Cook.
Jen Howard, a spokeswoman for Warren, declined to comment.
Back to Top
Housing Wire
Warren's future unknown as CFPB director role remains empty
April 20, 2011
By Kerri Panchuk
The fate of Elizabeth Warren, the Harvard Law professor whose ideas built the Consumer Financial
Protection Bureau, remains in the lurch as news reports suggest possible director candidates for the
CFPB have passed on the role.
Whoever becomes director of CFPB will play a significant role in the mortgage finance space as the
agency writes rules to thwart abusive, unfair or deceptive lending practices, legal analysts say.
Several news reports suggest Warren may end up being the only candidate for the CFPB director slot
with others walking away from the opportunity.
Possible candidates for the director role included former Sen. Ted Kaufman (D-Del.), former Michigan
Gov. Jennifer Granholm (D-Mich.), and attorneys general from Iowa, Illinois and Massachusetts,
according to The Wall Street Journal. Former Ohio Gov. Ted Strickland and Sarah Bloom Raskin, a
member of the Federal Reserve board also were considered. Most of those fielded for the post turned it
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down, according to the Journal.
The CFPB director will play a significant role in the mortgage finance space as the agency writes rules
to thwart abusive, unfair or deceptive lending practices, legal analysts say.
"I think there are a lot of open issues about what the Consumer Financial Protection Act means," said
Jim Hawkins, a University of Houston Law Professor who has studied the new federal bureau. "The
CFPB has been granted three powers to deal with unfair, deceptive and abusive conduct. But 'unfair'
and 'deceptive' are concepts included in other laws written by federal agencies. But, there are not many
laws allowing regulators to stop abusive conduct. We don't know from the statute what 'abusive
conduct' means, so the director will really shape how effective the bureau is in response to the
abusiveness prong."
The Senate will have to approve the CFPB director a process many skeptics believe is too difficult
for Warren to pass with Republican opposition stacked against her, according to Hawkins.
Hawkins believes possible candidates are shying away because there's a notion Warren's shoes are
too big to fill.
"My thought is that it would be crazy if anyone other than Elizabeth Warren is the director," he said.
"She created the idea, she worked it through the legislative process. She hired the first key personnel. It
is sort of a disconnect to have someone take over what she clearly originated."
When asked about Warren's future including rumors that she might consider a Senate run in
Massachusetts a spokesperson for Warren said, "Professor Warren is 100% focused on doing the job
of building the agency."
Warren's appointment as a special assistant to President Obama and Treasury Secretary Geithner and
her role in forming the CFPB has been criticized by lawmakers, who allege the bureau lacks appropriate
oversight, given its relative power in the mortgage and credit finance sectors.
Warren's role in advising attorneys general on what type of settlement amount would be best to propose
to mortgage servicers also drew criticism earlier this year.
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Page 881 of 3826
American Banker
The President Disappoints on Financial Appointments
April 21, 2011
By Barbara A. Rehm
If the Dodd-Frank Act is a bust, the single biggest reason will be lack of manpower.
Implementing a 2,300-page law is an enormous responsibility and yet no less than a dozen essential
jobs are either unfilled or being done by someone with "acting" before their title.
There are rumors the Obama administration is working on a "package" and will present a slate of
nominees for financial services jobs soon. Let's hope so. But what's taking so long? And why wait for a
grand gesture? The administration should nominate anyone, selected and vetted, who has agreed to
serve.
Perhaps the most bungled appointment involves the new Consumer Financial Protection Bureau. By
now it's a well-told tale, but still so telling of everything that's wrong with this administration's nominating
process.
The administration supported the agency's creation as key to reforming the consumer finance business,
and yet when Dodd-Frank passed in July 2010, the president was not ready to name a leader. Instead
of taking some political heat and nominating Elizabeth Warren as the agency's first director, last
September Obama gave her two other titles and put her in charge. All of the responsibility and some of
the authority, or something like that.
Now, with just a few months before the bureau needs a Senate-confirmed leader so it can actually start
writing rules, the administration still has no one to nominate.
There is even talk that the administration is considering moving one of the few people it has put in a
financial regulatory job Sarah Bloom Raskin, a new governor of the Federal Reserve Board to the
consumer bureau as its first director.
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With so many openings, filling one job by moving someone from another doesn't make a lot of sense.
And the administration is arguably in a tighter spot than it was last year when it chickened out and didn't
appoint Warren. Her fans are more convinced than ever that she is the best choice, and her foes are
just as sure she will be an overbearing disaster. (Personally I think she deserves the job. Warren has
worked hard to get the agency off the ground and gone out of her way to assure bankers she has no
intention of crushing them with needless regulation.)
Speaking of the Fed, wasn't the easiest appointment stemming from Dodd-Frank the new vice chairman
post for supervision? Everyone assumed the job would go to Fed Governor Dan Tarullo, the former
Georgetown law professor appointed by Obama in 2009. But it's been nine months since he signed
Dodd-Frank and Obama hasn't nominated Tarullo. Most people figure he won't. He should.
As chair of the Fed's bank supervision committee, Tarullo is best positioned to do the work, and while
his style rubs some the wrong way there is no denying he has become well versed and thoughtprovoking on banking policy.
To be fair, the nominations mess isn't all Obama's fault. Sen. Richard Shelby, the ranking Republican
on the Senate Banking Committee, has blocked two great nominations.
Peter Diamond won a Nobel prize for economics last October just after Shelby declared him unqualified
to serve on the Fed. Obama has renominated Diamond and even if he does get confirmed the sevenmember Fed will still be short one member.
The other thwarted nomination was Joe Smith's to lead the Federal Housing Finance Agency, which
oversees Fannie Mae and Freddie Mac as well as the Home Loan banks. In a year when housing
finance reform is front and center, it would make sense to have a true leader at the FHFA. Smith did get
past Senate Banking in December, but Shelby objected and the full Senate did not vote on the
nomination before adjourning last year. Smith opted to skip Act 2 of the nomination circus and went
back to running North Carolina's banking department. The FHFA job has been filled since August 2009
by an acting director, Ed DeMarco.
The post of comptroller of the currency has been filled on an acting basis since last August by John
Walsh. If in eight months Obama couldn't find a comptroller he likes, he ought to simply give Walsh the
job on a permanent basis.
Walsh had been the agency's chief of staff and before that the executive director of the Group of 30.
He's well respected and has handled the "acting comptroller" job quite well.
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The Office of the Comptroller of the Currency needs a real leader as it goes through the sensitive work
of taking over the Office of Thrift Supervision.
The OCC and OTS are part of the Treasury Department, and it too is missing some key people. It has
an acting undersecretary for domestic finance in Jeffrey Goldstein, who got a recess appointment over
a year ago. The assistant secretary for financial institutions job has been vacant since Michael Barr left
in January.
Dodd-Frank handed Treasury Secretary Tim Geithner vast responsibilities as chairman of the new
Financial Stability Oversight Council. The council has 15 members and the president still must nominate
someone to represent the insurance industry. The reform law also created the Office of Financial
Research to help spot the next crisis, and mandated its leader be appointed to serve a six-year term. A
director has yet to be nominated.
Obama must replace two other officials who left recently: David Stevens as federal housing
administrator and Neil Barofsky as the special inspector general for Tarp.
But perhaps the most important job Obama needs to fill isn't even open yet chairman of the Federal
Deposit Insurance Corp.
Sheila Bair is leaving when her term expires this summer and it's likely vice chairman Marty Gruenberg
will take over in an acting capacity.
The FDIC is implementing vital pieces of Dodd-Frank. Some of its work will be done jointly with the Fed,
including the living-will rules that will govern how large companies are unwound in a failure.
In Dodd-Frank, Congress debated consolidating regulatory power into one agency, and decided against
it.
But if Obama does not put strong leaders at the Comptroller's Office and the FDIC, then there may very
well be a de facto consolidation, with the Fed calling the shots.
President Obama needs to focus on financial services, find the right people to fill these jobs and get the
nominations to Capitol Hill. Sen. Shelby needs to stand aside and let the president assemble his team.
Page 884 of 3826
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Illinois Times
Unreasonable women take on the banksters
April 21, 2011
By Jim Hightower
Theyre back. Actually, they never left, they just laid low while the heat of political anger blew over.
They are the schemers and scammers of Wall Street who devised the Phantasmagoric Money-FromNothing Good Times Machine that was fueled by indecipherable derivatives and other financial fairy
dust. If youre presently stuck in hard economic times, you have them to thank, for it was their hocuspocus that poof! imploded our economy in 2008.
Responding to public outrage, President Obama and the Democratic Congress passed a reform bill last
year that tightened the rules on these tricksters. But now with Wall-Street-hugging Republicans
running the House and Obama himself turning into Wall Streets best buddy the schemers and
scammers are demanding that Washington loosen those pesky rules so they can restart that Good
Times Machine for their own fun and profit.
For example, the biggest banks are pressing hard for the Treasury Department to exempt a derivatives
game called foreign-exchange swaps from any regulation. These gamble on the ups and downs of
foreign currencies. Not only are they explosively risky, theyre massive, with some $4 trillion being bet
on them every day.
A hiccup in this speculative game can ruin the day of a whole country. But a handful of Wall Street
giants rake in about $9 billion a year handling these high-rolling bets, and they dont want the public
even seeing what theyre doing.
Dont regulate us, they insist, trust us. After all, they say, this currency game is the one derivatives
market that did not crash in 2008.
Page 885 of 3826
Not so fast, slick. The only reason the market for foreign-exchange swaps didnt crash is that the
Federal Reserve poured more than $5 trillion into foreign central banks that year to prop it up.
Such runaway greed by Wall Street is why change is so desperately needed. The Powers That Be
claim that its unreasonable to regulate Wall Street. However, as George Bernard Shaw noted a century
ago, All change comes from the power of unreasonable people.
I think Shaw would agree to one small addendum to his sage observation, which is that such people are
considered unreasonable only by the entrenched powers that always oppose change.
Let me offer two examples of people today who deserve our applause for rankling the establishment
and, in turn, enduring its furious abuse: Sheila Bair and Elizabeth Warren. Both are daring to bring a
stronger consumer and public-interest voice into the closed, cliquish and often self-serving world of
banking.
Bair heads the Federal Deposit Insurance Corp., which gives a big helping hand to banks by insuring
their customers deposits. The FDIC is also supposed to help consumers and taxpayers by regulating
banks. And my goodness unlike some of her predecessors, she has chosen to do both jobs,
including providing tough enforcement of regulations to prevent bank failures, foster real competition
and deter banker finagling.
At a recent meeting, financial chieftains showed their appreciation for her work (and their ugly side) with
a cascade of catcalls, guffaws, snorts and boos as she spoke.
Booed by bankers. Im sure thats unpleasant at the moment but what a badge of honor!
Likewise, Warren is under constant attack by Wall Street bosses and the flock of Republican Congress
critters who shamelessly serve them. She helped create and is now setting up the Consumer Financial
Protection Bureau as a watchdog over banker abuses. To show their gratitude, the bankers got their
GOP mad-dogs to slash the bureaus budget and simply eliminate Warrens salary.
To add your voice in support of these two unreasonable women, go to Bankster USA: www.
banksterusa.org.
Jim Hightower is a national radio commentator, columnist and author.
Page 886 of 3826
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Washington Post
Oklahoma attorney general to craft alternative deal in foreclosure settlement
April 20, 2011
Dina ElBoghdady and Brady Dennis
Oklahomas attorney general said he is prepared to break ranks with a coalition that is crafting a
settlement with the nations largest mortgage servicers, underscoring the challenges law enforcement
officials face as they try to address widespread problems with foreclosure practices.
E. Scott Pruitt said Wednesday that he is opposed to forcing the servicers to pay at least $20 billion in
fines and use the money to reduce the principal on mortgages of underwater borrowers, who owe
more on their loans than their homes are worth.
I have asked my attorneys to prepare me for an option that does not require that, Pruitt said in an
interview.
He said elements of the settlement now under discussion address issues that go beyond the problems
investigated by the states. The abusive practices that prompted dismay with the firms are unrelated to
underwater loans and any fines should be based solely on wrongful conduct, he said.
A series of problems within the mortgage servicing industry including widespread instances of forged
foreclosure documents and flawed paperwork surfaced last fall and prompted federal officials and
the state attorneys general to join forces and take action against the industrys largest players.
As the officials tried to hammer out details of a broad legal settlement behind closed doors, details
reached the news media about the scope of fines under discussion and a possible requirement that
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servicers modify loans for borrowers. But Pruitt said that the lead negotiators had not shared these
specifics with other attorneys general until they met in Washington last month.
Rifts soon emerged, and Pruitt joined a handful of other Republican attorneys general to voice concern,
including Ken Cuccinelli II of Virginia.
The $20 billion to $25 billion fine came as a surprise, Pruitt said. There was a perception that there
was unanimity and that was something I wanted to dispel.
Iowa Attorney General Tom Miller, who has led the settlement talks for the state officials, has
acknowledged that some fellow attorneys general have expressed reservations about the proposals
under discussion.
Theres a great deal of diversity of opinion and personality; we all recognize that, Miller said in an
interview last month. Some of [the attorneys general] have done that publicly; some of them have done
it privately within our family.
Miller said that state attorneys general usually do not pursue cases of corporate wrongdoing in such a
collective fashion. Typically, officials from a handful of states conduct an investigation and work out a
settlement with companies that have broken the law. Other states then decide whether to sign on.
When reports surfaced last fall of widespread problems with foreclosure practices, all 50 state attorneys
general joined the ensuing investigation. Maintaining unity has been difficult as the probe turned into
settlement negotiations with the banks.
A spokesman for Miller declined to comment Wednesday.
The negotiations between the banks on one hand and state and federal officials on the other continued
at a meeting in Washington last week. The two groups reached accord on some issues of the
settlement, but many other items remain unresolved, said a person familiar with the talks.
The Justice Department, the Department of Housing and Urban Development and other federal
watchdogs have joined the state attorneys general in their negotiations with the banks.
The regulator of the nations largest banks, the Office of the Comptroller of the Currency, announced
last week a separate deal with financial firms that requires them, in part, to hire consultants to
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determine whether any borrowers were harmed by shoddy foreclosures practices and reimburse them
for the damage. Some critics say this settlement, which did not include fines, was too soft.
Pruitt said that the settlement talks should continue at the national level and that his office plans to
engage in that process. But in the meantime, he said his attorneys will work to determine what
transpired in Oklahoma and craft an alternative plan specific to the state in case he opposes the
national settlement once it has been finalized.
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Bloomberg
Oklahoma Considers Own Accord With Banks on Foreclosures
April 20, 2011
By David McLaughlin
Oklahoma Attorney General Scott Pruitt, a critic of proposed settlement terms stemming from a 50-state
foreclosure investigation, may break off to seek an alternative accord with banks.
Pruitts office is conducting its own investigation and may negotiate a separate settlement if state and
federal officials leading the nationwide probe reach a deal that forces banks to pay for reductions of
loan balances for borrowers.
If there is a direction the national settlement goes that is inconsistent with our conviction, we have an
option available to us that could still represent the interests of Oklahomans, Pruitt said today in a
telephone interview.
Pruitt is among at least eight Republican attorneys general who have criticized a federal-state
settlement proposal submitted last month to five mortgage servicers, including Bank of America Corp.
(BAC) The 27-page document was offered to start negotiations with banks as part of an investigation
into foreclosure and mortgage-servicing practices.
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In an e-mailed statement earlier today, Pruitts office said he instructed his staff to craft a settlement
that is specific to Oklahomas concerns of punishing bad actors while respecting the appropriate role of
attorneys general.
This alternative to the current proposed term sheet could provide other states with a model to
consider, according to the statement.
Criticized Terms
Attorneys general in Florida, Texas, Virginia, South Carolina, Nebraska, Alabama and Georgia have
also criticized terms that call for a loan-modification program involving principal reductions.
In a March 16 letter to Iowa Attorney General Tom Miller, Pruitt said forcing lenders to reduce mortgage
balances would take away incentives for banks to loan money and destroy an already devastated
housing market. Miller is leading the negotiations for the states.
Since writing the letter, Pruitt said there has been more open discussion about whether the nationwide
settlement should include principal reductions.
Its a process thats more reflective perhaps now of concerns that many of us have, he said in the
interview. It remains to be seen where we end up but as part of that I think its good policy for me in this
office to engage in a very specific inquiry about our state.
Geoff Greenwood, a spokesman for Miller, declined to comment.
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American Banker
Page 890 of 3826
Illiteracy and Complexity Dont Mix Well

April 21, 2011
By Eugene A. Ludwig
There is a growing disconnect between the complexity of modern finance and the pace at which
Americans adapt to it. This disconnect makes Americans ever more vulnerable to mistake and fraud.
Disclosures alone will not resolve the problem, and we cannot expect financial institutions to make up
for the fundamental gap of knowledge in many otherwise educated Americans when it comes to even
basic financial concepts.
There's a great deal at stake. Americans will need more than a rudimentary understanding of financial
concepts if they are to cope with the generational shift from defined benefit to defined contribution
retirement plans. A working knowledge and understanding of financial concepts is even more critical
given the dubious prospects of traditional government-sponsored safety nets, which are becoming less
secure every day as the government falls deeper into debt. Most Americans likely will be on their own in
the pursuit of a comfortable retirement, and it is far from clear that they have the financial knowledge to
avoid the potholes.
Quite the contrary. In a recent survey 55% of working adults said they did not know how much they
need to save in order to retire. That jumps to 74% for people in the 18-to-24 age bracket - a startling
number even when you factor in the frivolity of youth. The results were released earlier this month. They
reflect the importance of President Obama's designation of April as National Financial Literacy Month,
but also show how very far we have to progress to make this more than just a Hallmark greeting card
moment.
The current debate on financial regulation too often fails to appreciate the tenuous grasp that most
Americans have on what market professionals consider to be basic financial products. And yet, a
successful market-driven, free society depends upon citizens who have a solid foundation of financial
knowledge.
It is not realistic to expect broad comprehension of the triparty repo market, the VIX or synthetic
collateralized debt obligations, but with a homeownership rate of 67%, the country's financial stability is
correlated with the number of its citizens who understand the basics of their mortgage, including the
differences between a fixed-rate and adjustable-rate mortgage. As the mix of other financial products
only grows more complex, how will ordinary citizens make informed judgments about insurance, bank
and securities products?
A 2010 working paper by the Federal Reserve Bank of Atlanta examined the link between financial
literacy and subprime mortgage delinquency and concluded that foreclosure starts were two-thirds
lower for individuals with the greatest numerical ability, which was one of the researchers' two
measures of financial literacy. The sample population for this paper consisted of subprime borrowers
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who had obtained mortgages in 2006 and 2007.
As the country confronts issues of economics, climate, energy, national security, general education and
infrastructure it will be all too easy to neglect financial literacy. And there is much that we can do, both
for consumers and policymakers in charge of regulating financial markets. Some suggestions:
* Make a renewed commitment to incorporating basic financial concepts into traditional educational
curricula. The coursework must begin in elementary and middle schools to achieve maximum efficacy.
Regional Fed banks are to be commended for providing a wealth of classroom material on financial
literacy, such as the Federal Reserve Bank of Dallas's interactive Building Wealth program. But much
more needs to be done.
* Help the scores of financial literacy nonprofit organizations find common goals, standardized
programs and a single, more compelling voice. The important grassroots work of organizations
including the Coalition for Debtor Education, the National Academy Foundation and the National
Endowment for Financial Education can be amplified by working hand in hand with governmentsponsored programs, including the Federal Deposit Insurance Corp.'s MoneySmart and the Treasury
Department's Financial Literacy and Education Committee.
* Ensure that the Consumer Financial Protection Bureau achieves its goal of improving financial
literacy, particularly for low- and moderate-income Americans. Congress must also give the CFPB the
resources that it needs to carry out this mission successfully. Indeed, I believe that the CFPB could
achieve much of its mandate and dial down concerns about regulatory overload if it focused serious
attention on consumer education.
* Ratchet up initiatives by financial institutions and their trade groups. Banks in particular have an
opportunity to simultaneously do good and advance their long-term interest by educating potential
customers. Much is done now in this area by several of the trade groups and banks. Integrating the
hard lessons of the past several years into their financial education programs should be a priority.
If we are to have free markets that can innovate in a space as complex as finance, financial education
is not a luxury, but a core competency for navigating a vigorous financial system without becoming
confused, deceived or prone to unsustainable choices. Fostering financial literacy matters immensely to
banks, because the alternative - a more and more paternalistic regulatory regime - threatens to stifle
financial markets, to the even greater detriment of all participants.
Eugene A. Ludwig is a founder and the chief executive of Promontory Financial Group LLC. He was the
comptroller of the currency in the Clinton administration.
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Page 892 of 3826
Credit Slips
Is Debit Fee Regulation Anti-Consumer?
April 20, 2011
By Katie Porter
As Adam noted in a post last week, the large banks now have some odd bedfellows in their fight against
the regulation of debit swipe fees (this issue often goes by the short-hand "Durbin," for the author of the
amendment in Dodd-Frank that requires the Fed to regulate debit fees). Adam suggests that the
National Education Association might be motivated by the number of teacher credit unions in America,
but how do we explain what a Wall Street Journal article characterizes as "entreaties" from the NAACP
and the U.S. Hispanic Chamber of Commerce to delay implementation of the fees and do "further study
of the rule to ensure that it doesn't hurt poor and minority consumers."
The regulation of interchange is a complex issue, and this post does not represent my complete
thoughts on the issue. But I find the argument that fee regulation of debit is anti-consumer to be tough
to swallow. First, let me note that the available data suggest that poor and minority consumers are
currently penalized under the existing payments regime. Poor and minority consumers are more likely
to pay cash, and yet they pay prices for goods and services that reflect the total cost to merchants of
customers who pay with credit cards (most expensive), debit cards (middle), and cash (cheapest). This
is a classic cross-subsidization problem. While industry contests the extent of the harm from the
problem, I am convinced the problem does exist. A reduction in debit fees should help consumers at the
bottom of the distribution because it reduces the degree of cross-subsidization. Second, merchants in
low income areas are particularly unlikely to take debit cards or electronic payments generally and are
more likely to be cash-only operations. Why? Because poor consumers make small purchases, and it is
for these small purchases that the swipe fees have their most bite to the merchants' bottom line. I think
there is at least a plausible argument that by reducing debit fees Durbin might make it affordable for
additional merchants to process payments electronically. Because electronic payments generally
require a bank account, this could have the effect of strengthening incentives for poor and minority
customers to become banked. When the stores in their neighborhoods take debit cards, the shoppers
might go get bank accounts and bank cards.
There are other arguments in favor of and against the proposed debit fee regulations, and there are
approaches other than fee caps that could be used to improve debit markets. But other than the
rumored demise of "free checking" that I discussed last week, I think groups looking out for consumers
should be very cautious about chiming in against the proposed debit regulations.
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Huffington Post
Financial Literacy For All Is This Generation's New Civil Rights Issue
April 20, 2011
By John Hope Bryant
As the nation acknowledges Financial Literacy Month, 2011, it is more obvious to me than ever that
what we are going through now is not a just an economic recession, but a global reset, and that
financial literacy is so much more than a brochure or website.
It became obvious to me as early as May, 2006, when Bob Gnaizda of Greenlining Institute and I
sounded the public alarm in the American Banker that "irresponsible and predatory subprime mortgage
lending was a substantial hazard for the overall economy," that this is not just economic crisis, but a
crisis of virtues and values.
Capitalism for a few
Somewhere along the way we lost our storyline. We moved away from the concept of capitalism and
free enterprise as something that builds or adds value to and for an "us," on some level, and reduced it
to "that thing" that simply makes money for me.
For 100 years, America has been that place where the power of an idea created amazing value for
society, for customers, workers, shareholders, and yes the entrepreneur that created it all. All good,
inasmuch as money, power and position in the world should be the bi-product of creating something of
real value.
The problem is, in the last 10-20 years, American capitalists have confused value for money, effectively
making the bi-product (money, power and position in the world) the product.
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You ask anyone today, why are you in business, and nine times out of 10 they will tell you "I am in
business to make money." Why are you a basketball player? "To get paid." Why are you on Wall
Street? "To make money." Why are you a drug dealer? "To get paid." It seems the only time during my
lifetime when the professional on Wall Street, and the pimp on my old street are the same guy, standing
for the same sad thing. We have lost our storyline.
When someone on Wall Street "shorts" a stock of an otherwise healthy company and for no other
purpose than "getting paid," we must understand that this was not him or her making money, but
transferring wealth. They created nothing, and we have lost our storyline.
The whole game became about money, which is wrong, and as a result we lost our storyline as a
nation.
As a result of this, responsible subprime lending, which is actually a good thing and has arguably done
more to lift poor people out of poverty than anything else over the past 50 years, turned into predatory
subprime lending, which is not a good thing at all. We have lost our storyline as a nation.
But rainbows only follow storms, and people do not change in good times, they change in bad (times).
They do not change when they are comfortable, but rather when they are uncomfortable. Well, it's time
for a change in America, for America's future.
Capitalism for all people
The 20th century was a time marked by the rise of Democracy all around the world. Quoting my
personal hero and HOPE Global Spokesman Ambassador Andrew Young, "communism failed because
it could not create a middle class, and capitalism succeeded precisely because it did create a middle
class, but capitalism itself has begun to fail because it has not made itself relevant to all people."
This then is my cause, and my life's mission: "To teach the world's poor, under-served and the
struggling middle class, the universal "language of money" (financial literacy). To make sure that every
human being has the dignified right to a basic, electronic, debit card accessed bank or credit union
account, and ultimately the economic empowerment tools to change their own lives."
At a time when even reasonable people are beginning to question whether free enterprise and
capitalism is somehow a system somehow rigged against them, financial literacy empowerment holds
the promise of bridging differences between races, cultures and classes, and even nations.
Page 895 of 3826
Teaching individuals the universal "language of money" breaks down barriers and creates a sense of
real opportunity and fairness in the mind, heart and soul of those who feel left behind, and even preyed
upon in the midst of this global economic crisis. Financial literacy empowerment is a door to the world of
small business ownership and entrepreneurship.
Individuals, including oh so many well-educated and middle class American consumers, simply felt
taken advantage of because they didn't truly understand the language of money, and others who did,
played them for all they were worth.
At the end of the day, the essence of this crisis involved individuals who when purchasing a home and
acquiring a mortgage loan, asked "what's the payment" and not "what's the interest rate," and you never
ask what the payment is when there is an interest rate attached. We purchased a home like most folks
purchase a toaster at Sears; by asking "what's the payment?"
This is why I strongly believe that financial literacy is not only "capitalism for all people," but represents
the new civil rights issue for this, our generation, and the first global silver rights empowerment tool for
the next.
This is why I believe that financial literacy will become the gateway to practical 21st century job
creation, and for a generation of young people effectively graduating from college and into a future of
"no jobs." This done as more and more individuals will by necessity have to become self-employment
projects, small business owners and entrepreneurs. More than 100 million new jobs are needed in the
Middle East alone over the next 10-20 years, for a majority population that will be 25 years old or
younger.
This is why I believe that financial literacy, combined with the legacy and amazing story of one Martin
Luther King, Sr, can "reset" the storyline of and behind American free enterprise and capitalism;
representing something that works for all people, and not just a narrow band of the population. Dr.
Martin Luther King, Jr. would not have had the support needed to pursue the civil rights movement "in
the unique way he did" without the key assistance and support of his father, Martin King, Sr, otherwise
known to friends as "Daddy King."
Daddy King and Dr. Martin King, Jr. co-pastored Ebenezer Baptist Church in Atlanta, Georgia, but
Daddy King was also a smart businessman in addition to being a pastor, civil rights leader and activist.
That's right, a successful businessman, up from almost nothing. He owned real estate and had built a
solid middle class existence for his family; an existence that allowed Dr. King to achieve a Ph.D, as a
black man during the 1950's in America. Daddy King even served on the board of a bank, Citizen's
Trust Bank, for more than 40 years. Yes, a bank.
It was Daddy King that often bailed Dr. King out of jail, and it was Daddy King that provided a
foundation for his son, allowing Dr. King to pursue the civil rights movement in earnest, for zero
compensation. Daddy King did that.
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Capitalism and free enterprise are not bad, but rather the greed is. Financial illiteracy is fuel for greed,
and an unreasonable enticement for financial predators.
That's why I like it when Professor Elizabeth Warren of President Obama's new Consumer Financial
Protection Bureau tells me that while the agency must and will deal with federal regulatory issues on the
front-end of its existence, the agenda should be almost all financial literacy empowerment issues on the
back-end, as well as the agency's enduring legacy. I am with her here.
And so, Operation HOPE has taken its call for a silver rights movement seriously;
By partnering with Reverend Dr. Raphael Warnock and Ebenezer Church in Atlanta, Georgia, on the
King Center complex, along with the FINANCIAL SERVICES ROUNDTABLE, Operation HOPE is
building a new HOPE Financial Literacy Empowerment Center at Ebenezer, as an anchor for the new
Martin Luther King, Sr. Community Resource Center, and the new moral "center" for our work globally.
By partnering with DHS/FEMA, later this month, Operation HOPE and HOPE Coalition America will
establish itself as the "economic Red Cross" for a nation, responding when disaster strikes, with the
economic and financial solutions and interventions that everyone then needs.
By partnering with the Gallup organization to create the Gallup-HOPE Financial Literacy Index, where
we will measure and track the correlation between financial literacy, hope, wellbeing and engagement,
for the first time ever, we can change the world for our children, and our children's children.
By launching a movement with Quincy Jones and Ambassador Andrew Young, called 5 Million Kids, to
make smart cool again in America's schools, and turning around the high-school dropout rate in
America by making education "relevant" to our children. Enter the 5MK Make Smart Cool Tour in
America's schools, launching May 9th, 2011 with none other than the iconic Quincy Jones in New York
City. Quincy Jones says it takes 20 years to change a culture, and in the last 20 years it could be
argued we have all made dumb sexy. We need to make smart sexy again in our culture and society.
We are launching Wikia-HOPE Global Money, which is the world's first global financial literacy
curriculum. Free, translated and locally contextualized for each region we launch it in, Wikia-HOPE
Global Money will empower individuals in countries around the world with the basic and universal
"language of money" skills they need to compete in this increasingly economic world. The best part
about Global Money is, you can help! If you want to help us translate it into your home language and
help spread the word in your home country or neighborhood, it is as easy as logging on, getting
involved and getting engaged.
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Already Wikia-HOPE Global Money has been translated into North African French, Arabic, Spanish and
of course English. Forty-five additional languages are yet to come.
For a complete array of what Operation HOPE is up to during Financial Literacy Month, and the silver
rights movement to come, join us at www.operationhope.org.
Help us make financial literacy empowerment the new civil rights issue for our generation, a global
silver rights empowerment tool for generations to come, and ultimately, "capitalism for all people."
Onward with HOPE.
Back to Top
Washington Times
Report: For-profit colleges defraud students
April 20, 2011
By Ben Wolfgang
For-profit colleges, already the target of Senate Democrats, took another beating in a report released
Wednesday by an education trade publication that says such institutions defraud young people.
Youth Today Publisher Sara Fritz, who unveiled the Guide to For-Profit Colleges at the National Press
Club in Washington, said many for-profit institutions promise a first-class education to young people but
instead leave thousands of dropouts with insurmountable piles of loan debt.
There are many, many young people for whom this is the alternative, the best alternative, because
these schools are easy to get into this is obviously an appealing option for kids who didnt do very
well in high school, she said.
Page 898 of 3826
The guide provides details on more than 100 nontraditional college campuses, including trade schools,
fashion institutes, online-only institutions and others. The colleges are compared by graduation and
loan-default rates, tuition costs, transparency in providing information, percentage of revenue from
federal financial aid and other figures.
Andrew P. Kelly, research fellow in education policy studies at the American Enterprise Institute, said
that while the report raises questions, it cannot be used as a blanket indictment of all for-profit
colleges, which vary in size, scope and mission.
For example, Mr. Kelly said graduation rates among nontraditional colleges differ greatly, ranging from
5 percent to nearly 90 percent. The average amount of loan debt after graduation is also widely varied,
with students at some for-profits only a few thousand dollars in the hole after getting their diplomas.
For-profit schools have become a hot-button issue on Capitol Hill, with Senate Republicans threatening
to boycott next months tentative hearing on the subject unless the focus is expanded to include all
colleges and universities.
Sen. Tom Harkin, Iowa Democrat and chairman of the Health, Education, Labor and Pensions
Committee, already has held four hearings on for-profits. Republicans on the committee think
Democrats are waging a war on for-profits and say the biased hearings have been little help in finding
solutions. The problems highlighted by Youth Today, Republicans and for-profit proponents argue, are
present in all corners of higher education.
The survey singles out Corinthian Colleges Inc., which operates more than 100 campuses in the United
States and Canada and offers a wide variety of programs. But Youth Today is encouraging students to
avoid [for-profit colleges] like the Corinthian Colleges because, among other reasons, the company
dedicates more than 20 percent of its budget to student recruitment.
After the report was released, Corinthian came out swinging. Spokesman Kent Jenkins said Youth
Today makes a serious mistake by comparing Corinthian campuses to other for-profit institutions, most
of which, he said, offer vastly different class structures and have very different student bodies.
The statements they made today seem to fundamentally misunderstand the nature of private-sector
colleges, Mr. Jenkins told The Washington Times. They seem to believe we are a one-size-fits-all,
everybody is the same sector. Were not.
He also said Corinthian, like other for-profits, challenges last years Government Accountability Office
Page 899 of 3826
report that found misleading recruitment practices at 15 randomly selected private-sector colleges. The
GAO issued revisions to that report several months later but stands by its general findings.
Youth Today, an independent, nationally distributed education trade publication, is primarily funded
through donations, including money from the Bill and Melinda Gates Foundation, Atlantic Philanthropies
and others.
Back to Top

Secured Credit Cards: Not Everyone Qualifies
April 20, 2011
Tara Siegel Bernard
If your credit was ruined during the Great Recession, using a secured credit card may be a good way to
help improve your standing.
That is, if you can get a secured card.
Not everyone may be immediately eligible, especially if you have a recent bankruptcy on your record. A
reader who recently emerged from bankruptcy wrote to me after she and her husband were denied
secured credit cards from Citibank. That, at least in my mind, raised several questions: Are all people
emerging from bankruptcy unable to get a secured card? Are there other situations where youre likely
to be denied? And is the passage of time the only option for the millions of people whose credit has
been ruined during the recession?
Secured credit cards appear to pose minimal risk to the card issuer. After all, the cardholder is required
to put a certain amount of money into a bank account, say $250 or $500, which is used as collateral.
And the available amount of credit is often equivalent to the amount on deposit. By using these cards
strategically, a person with bad credit can speed up the recovery process by demonstrating positive
behavior: charging only small amounts and paying off their balance each month.
Page 900 of 3826
You need to dilute the negative information on your credit report, and there is no better way to do that
than with a secured card, said Odysseas Papadimitriou, chief executive of CardHub.com, a credit card
comparison site. He said he believes getting denied for these cards are the exception rather than the
rule. But he did say that some banks want to be sure that the bankruptcy is well behind the applicant,
and, in some cases, penalize them a bit for getting into trouble.
So to clarify who is actually eligible for these cards, I called several issuers of secured credit cards and
asked them about their approval policies. Some were more forthcoming than others, but heres what
they said:
Citibank. It depends on the individuals situation, said Sean Kevelighan, a Citi spokesman. He declined
to disclose the factors that it considers when making credit decisions.
(The Bucks reader said the bank refunded her and her husbands secured deposit, totaling $1,000, and
said it could not accept their application because a credit obligation related to a bankruptcy or financial
counseling plan was recorded on your credit bureau report. The reader said they had applied for the
card about 10 months after their debts were discharged in bankruptcy, though they continued to pay
their student loans, mortgage and auto loans during the six-month bankruptcy period. Her husband has
been self-employed since January 2010, though she is not working. Citi looked into the situation at our
request, but declined to say why the couple was denied.)
HSBC. Applicants who provide a security deposit get approved, unless a background check with the
credit bureaus turns up a discrepancy related to the identity of the applicant. Recent bankruptcies do
not make you ineligible, and credit scores are not a factor in the companys decision.
Capital One. If the courts have discharged your debts, an applicant would be immediately eligible for a
secured card. Capital One also considers the applicants ability to repay. Our goal is to provide
reasonable access to credit with the appropriate guardrails in place, said Sukhi Sahni, a spokeswoman
for Capital One.
Bank of America. Generally speaking, applicants must be out of bankruptcy for a year, and must have
another relationship with the bank, like a checking account. Delinquencies on other accounts are also
likely to result in a denial. Over time, we would want to see that they demonstrate the ability to manage
their finances responsibly because ultimately the goal is to graduate them to a nonsecured card, said
Betty Riess, a spokeswoman for Bank of America.
Wells Fargo. Applicants must be out of bankruptcy for a year. The bank also looks at a variety of other
factors, including FICO credit scores and payment history. Wells Fargo only issues credit cards to
current bank customers as a general policy.
Page 901 of 3826
U.S. Bank. The bank declined to comment.
Have you tried to apply for a secured card? What type of situation were you in, and did you qualify?
Back to Top
Pittsburgh Post-Gazette
Proposed rule requiring 20 percent down on a house draws opposition
April 21, 2011
By Tim Grant
A proposed rule intended to prevent the kind of reckless lending and borrowing that heaped so many
toxic mortgages into the marketplace in recent years has alarmed some groups, who argue the
unintended consequences could worsen the nation's housing troubles.
The plan would require home-owners to make down payments of at least 20 percent of the cost of a
home.
"It's a good thing to have more equity in your house, but it's not a good thing for the federal government
to set a 20 percent down payment as the gold standard of mortgage underwriting," said Barry Zigas,
director of Housing Policy for the Consumer Federation of America in Washington, D.C.
"Our ample experience over the last 20 years shows that borrowers with less down payments, with fully
underwritten and sound mortgages, can be successful homeowners."
The multiagency proposal is backed by the Federal Deposit Insurance Corp., the Federal Reserve, the
Page 902 of 3826
U.S. Department of Housing and Urban Development, the Federal Housing Finance Agency, the Office
of the Comptroller of the Currency and the Securities and Exchange Commission.
Public comments on the proposal will be accepted until June 10. The six agencies will evaluate the
comments, make necessary changes and finalize them before carving a new rule in stone.
"We don't know what the final rule will look like or what the time frame will be," said David Barr,
spokesman for the FDIC in Washington, D.C.
As proposed, the 20 percent down payment requirement, which grew out of the Dodd-Frank regulatory
overhaul enacted in July, would not apply to all residential mortgages.
It is intended to apply to mortgages that banks plan to package as mortgage-backed securities to sell to
investors. If lenders do not require a borrower to make the 20 percent minimum down payment, the
financial institutions would be required to hold at least 5 percent of the value of the loan on their books,
a move to make sure they, too, would lose if a loan goes bad.
Banks typically reserve about 1 percent of their total loan portfolio against losses.
The central question in the national debate is whether it is necessary to have so much equity to be a
successful borrower and what impact it would have on middle-class and working class families who
could not easily save that kind of money.
In the Pittsburgh metropolitan area, where the median price of a single-family home stands at $123,900,
a 20 percent down payment amounts to $24,780, not including closing costs.
Groups that oppose the proposal say banks will either decide not to lend money to people who don't
have 20 percent or will charge higher interest and fees to offset the bank's cost of holding the 5 percent
reserve.
It is unclear how soon the rule would impact the housing market, if it is approved. Most home loans in
this country are insured by federal agencies, such as Federal Housing Administration with its 3.5
percent down payment. Those mortgages would continue to be exempt from the 20 percent
requirements.
But not all borrowers or properties qualify for federal programs.
Page 903 of 3826
"I am very much opposed to the proposal," said Howard "Hoddy" Hanna, president and CEO of Howard
Hanna Real Estate Services, based in O'Hara. "There is definitely a public policy movement in
Washington, D.C., that will prohibit less affluent working class people from buying a home.
"Certain segments of the population will probably not be able to own a home in this generation if this
proposal become reality."
The new rule establishing guidelines for the Qualified Residential Mortgage rule would be a complete
pendulum swing from the days of easy credit, which gave birth to mortgage innovations that fueled the
housing boom.
Gone are the years when subprime loans with little or no down payment were readily available to
people with troubled credit histories.
While they are still available, adjustable rate mortgages with floating interest rates that can go up over
time have fallen out of popularity. Interest-only mortgages are rare these days, and stated income loans
that require no proof are nonexistent.
Back when such exotic mortgages were in their heyday, lenders would securitize them and resell them
to investors around the world.
The lenders collected a hefty fee and had no liability if the loan failed.
The 5 percent risk retention rule would make sure that if lenders did not require borrowers to put 20
percent down, the lender would still have a stake in the loan being repaid.
According to the National Association of Realtors in Washington, D.C., first-time homebuyers in 2010
made a median down payment of 4 percent on their homes. Repeat homebuyers made a median down
payment of 16 percent.
Data released by Ginnie Mae showed FHA and Veterans Administration loans turned a modest profit to
the U.S. Treasury and have never needed a bailout.
Page 904 of 3826
"We believe low down payment mortgages should continue to be available to buyers who have
demonstrated financial responsibility and are willing to stay well within their budget," said Walter
Molony, spokesman for the National Association of Realtors.
The mortgage crisis had its roots in the U.S. government's efforts to increase homeownership,
especially among minorities and other low-income groups.
Many fear this new proposal will instead create more hurdles for them.
"In principle, it's a good idea to have more equity, but in practice it is far from the reality of the
marketplace," said Michael Sichenzia, a mortgage expert based in South Florida.
"For the average 24- to 35-year old -- who statistics tell us 39 percent of them still live at home with their
parents -- it will take them 14 years to save a 20 percent down payment for the median house for sale in
America today."
Harlan Platt, a professor of finance at Northeastern University, said the proposed regulation followed
the model used in Canada where it is very difficult, if not impossible, to get a mortgage without a 20
percent down payment.
"I suspect regulators have noticed the financial crisis did not affect Canada," he said.
"But what they have not noticed is homeownership percentagewise in Canada is far below what it is in
the U.S."
Mr. Platt is convinced that if the rule is approved, home prices could decline and more people with
homes underwater -- the houses are worth less than the owners owe -- will walk away, creating a bigger
overhang of unsold properties.
"[Regulators] are behaving like a farmer whose cow ran away through the open barn door, and their
response is to close the barn door," Mr. Platt said. "What they should do is examine whether banks are
doing their due diligence when someone applies for a mortgage, and not create barriers for people who
don't have 20 percent."
The new rule would apply to the conventional loan market.
Page 905 of 3826
The Obama administration and members of Congress are taking steps to reduce the role of government
-backed mortgage giants such as the Federal National Mortgage Corp. (Fannie Mae) and Federal
Home Loan Mortgage Corp. (Freddie Mac), which use government money to buy mortgages on the
secondary market.
Their future role in home mortgage lending could be changing.
Keith Gumbinger, vice president at HSH.com, a financial publisher in Pompton Plains, N.J., specializing
in mortgage information, said only 26 percent of the borrowers in Fannie Mae and Freddie Mac
portfolios would qualify for a mortgage under this rule.
This suggests that a large swath of the homebuying market would either face higher costs or have to
wait to accumulate sufficient funds, which would place downward pressure on home prices.
"In this way, the rule would be considered bad," he said, "at least to those hoping to buy or sell their
homes or recover from underwater situations in any sort of a timely fashion."
Back to Top
Washington Post
Existing home sales rise, but market shows little momentum
April 20, 2011
By Dina ElBoghdady
Sales of previously owned homes rose slightly in March after plunging in February, but the housing
market still shows no real momentum, even though interest rates and home prices remain relatively low.
Page 906 of 3826
Existing home sales rose 3.5 percent to a seasonally adjusted rate of 5.1 million in March from
February, the National Association of Realtors reported Wednesday.
Many economists gave two reasons for the boost in sales: investors buying foreclosed homes at cheap
prices, and cash-strapped borrowers accelerating their purchases before a scheduled increase in fees
for mortgages backed by the Federal Housing Administration.
But last months purchase sales were down 6.3 percent compared with a year earlier, when a federal
tax credit for home buyers temporarily invigorated the housing market.
Theres still nothing out there thats a driving force for the housing market, said Mike Larson, an
analyst with Weiss Research. Psychologically and financially, people are not able or eager to buy
homes.
Joblessness, economic uncertainty and tight lending standards continue to dampen demand for
housing, even though homes are at their most affordable level since the National Association of
Realtors launched its affordability index in 1970. Economists say the housing markets recovery
continues to lag behind that of the wider economy.
The Realtors group reported that the national median price of an existing home fell to $159,600, a 5.9
percent drop from March 2010. Several economists predict that prices will continue to decline at least
through the first half of this year.
One of the main reasons for soft prices is the prevalence of foreclosures and other distressed
properties, which are sold at steep discounts and made up 40 percent of the market last month the
highest share since April 2009, according to a separate survey by the Realtors.
Given the excess supply of foreclosures, its hard to argue that prices will not fall throughout this year,
perhaps by around 5 percent, Paul Dales, a senior economist at Capital Economics, wrote in a note to
clients.
The inventory of homes for sale rose 1 percent to 3.55 million last month. If sales continued at the same
pace, it would take 8.4 months to clear the for-sale homes off the market, the Realtors said. A more
healthy supply would be in the five- to six-month range.
But there are glimmers of hope for the pivotal spring selling season.
Page 907 of 3826
The Mortgage Bankers Association reported Wednesday that applications for mortgages to buy homes
increased 10 percent last week from a week earlier to the highest level since Dec. 3, according to the
groups purchase index.
This pickup in demand should show up in improved existing home sales in April and May, unless
lending conditions tighten, said Patrick Newport, an economist at IHS Global Insight.
Back to Top
Bloomberg
U.S. Finances Are Unsustainable, Obama Says at Facebook Town Hall Event
April 21, 2011
By Roger Runningen and Nicholas Johnston
President Barack Obama, on a cross- country trip to sell his deficit reduction plan, said yesterday that
the nations finances are unsustainable.
At a campaign-style town hall meeting at the headquarters of Facebook Inc., Obama described the
House Republicans budget plan as fairly radical and said members of both political parties in
Washington need to work together to start reducing the federal deficit in a balanced way.
We have an unsustainable situation, he said. We face a critical time where we are going to have to
make some decisions -- how do we bring down the debt in the short term, and how do we bring down
the debt over the long term?
After his appearance at Facebook, Obama turned his attention to a private fundraising dinner in San
Francisco hosted by Marc R. Benioff, chairman and chief executive officer of Salesforce.com, a cloud
computing company. Tickets for the dinner, attended by about 60 people, were $35,800 a person.
Page 908 of 3826
Obama spoke after a performance by singer Stevie Wonder, telling a roomful of early supporters:
Some of you were involved in startups. Well, I was a startup.
We started something in 2008, Obama said of his first presidential campaign. We havent finished it
yet, he said, reeling off needs to overhaul education, improve clean energy programs and reduce debt
and deficits. Im going to need you to help me finish it.
More Fundraising
From there, the president attended a Gen44 Obama fundraising event at the Nob Hill Masonic Center,
where ticket prices ranged between $25 and $2,500, according to a Democratic official who wasnt
authorized to discuss such details publicly.
Obama is to appear at a fundraiser at the St. Regis Hotel in San Francisco today before leaving for
Nevada, a politically important state in 2012 with an open Senate seat. The president is scheduled to
hold a town hall meeting in Reno at ElectraTherm Inc., a small renewable energy company, giving him
a chance to reinforce his push for increased spending on clean-energy technology.
Later in the day, he is to return to California for fundraisers in Los Angeles, including events at Sony
Pictures where actor-singer Jamie Foxx is scheduled to appear.
The fundraising events in San Francisco and Los Angeles are expected to bring in between $4 million
and $5 million, the Democratic official said.
Bill Carrick, a Democratic strategist based in Los Angeles, described the trip as not a full-fledged
campaign trip, but it has some of the dynamics of preparing to run a campaign, such as efforts to start
focusing on swing states early so you can broaden the electoral map.
Reach Out
Facebook, with more than 500 million users, is the worlds largest social network website. It was
founded in 2004 by Mark Zuckerberg.
Obama has used social media sites such as Google Inc. (GOOG)s YouTube to reach out to voters.
Page 909 of 3826
Yesterdays session is the first time he has appeared on Facebook, which passed Google last year to
become the most visited website in the U.S.
Zuckerberg, joined by Chief Operating Officer Sheryl Sandberg, moderated the event. Obama took
questions filed online through the White Houses Facebook page and website, along with those from an
audience of Facebook employees, small-business leaders and Silicon Valley entrepreneurs.
Obama said using Facebook allows us to make sure this isnt just a one-way conversation.
This format and this company, I think, is an ideal means for us to be able to carry on this conversation,
the president said. Were having a very serious debate right now about the future direction of our
country.
Separate Plans
The White House and House Republicans have offered separate plans to reduce cumulative budget
deficits by $4 trillion, over 12 years and 10 years respectively. Obamas plan would include $1 trillion in
tax increases that his advisers say could be raised from families earning at least $250,000, while the
Republicans measure wouldnt raise taxes.
The Republican budget that was put forward I would say is fairly radical. I wouldnt call it particularly
courageous, he said. I would call it short-sighted.
Obama criticized the Republican plan for preserving tax breaks while chopping funds from programs
such as clean energy and for seeking to overhaul Medicare and Medicaid health insurance programs
for the elderly and the poor.
Nothing is easier than solving a problem on the backs of people who are poor or people who are
powerless, he said.
Treasury Yields
While the deficit dominates political debate in Washington, bond market yields in the U.S. are lower now
than when the government was running a budget surplus a decade ago even as Treasury Department
data show that the amount of marketable debt outstanding has risen to more than $9 trillion from about
$4.3 trillion in mid-2007. The yield on the benchmark 10-year note is below the average of
Page 910 of 3826
about 7 percent since 1980 and the average of 5.48 percent in 1998 through 2001, the last time the U.
S. had a budget surplus, according to Bloomberg Bond Trader prices.
Ten-year yields fell four basis points, or 0.04 percentage point, to 3.372 percent at 8:38 a.m. in New
York, according to Bloomberg Bond Trader prices.
Stocks rallied yesterday, as the Dow Jones Industrial Average surged 1.5 percent to 12,453.54, hitting
its highest level since June 2008.
Obama said he remains committed to pushing for an overhaul of the nations immigration laws. He said
members of both parties must cooperate to get it done.
Housing Market
The president said the economy is still not growing quite as fast as we would like even after creating
almost 2 million jobs in the past 18 months. He called the housing market probably the biggest drag
on the economy.
What Im really concerned about is making sure that the housing market overall recovers enough that it
s not such a huge drag on the economy because, if it isnt, then people will have more confidence, they
ll spend more, more people will get hired, and overall the economy will improve, he said. Its still tough
out there.
Back to Top
Page 911 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:
Cumpiano, Flavio (CFPB)

(fydibohf23spdlt)/cn=recipients/cn=cumpianof>
Guava tarts and coconut candy from Puerto Rico

Thu Apr 21 2011 08:51:05 EDT
Feel free to stop by my office (Room 542) for some guava tarts and coconut candy from Puerto Rico.
Enjoy,
Flavio
Flavio Cumpiano
Congressional Liaison
Consumer Financial Protection Bureau (CFPB)
Phone: 202-435-7044
CFPB Website: http://www.consumerfinance.gov/
Page 912 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:
Hart, Maria (CFPB)

_DL_CFPB_AllHands
Clearance Process
Wed Apr 20 2011 15:37:58 EDT
Clearance Process FINAL.PDF
Attached is a memo regarding the Clearance Process. Please direct any questions to the Acting
Executive Secretary Jeff Riley 435-7479
Thanks,
Catherine
Catherine West
Page 913 of 3826
Clearance Process FINAL.PDF (Attachment 1 of 1)
April, 7 2011
MEMORANDUM FOR CFPB STAFF
FROM:
Wally Adeyemo
Chief of Staff
SUBJECT:
Clearance Process
This memo lays out the clearance process all staff should follow for certain internal and external
documents, including maintaining records of these documents. This memo also covers the
process for handling media inquiries and invitations from external parties.
Internal Documents
All documents going to Professor Warren should go through the Office of the Executive
Secretary (Exec Sec). All paper leaving Professor Warrens office will flow back through Exec
Sec to ensure that decisions are implemented, appropriate staff is notified, and proper records are
maintained.
The drafter of a document is responsible for obtaining clearance using the attached clearance
forms (also located on the RRI drive in the Exec Sec folder). Once clearances are obtained, the
drafter should provide the document to Exec Sec for review and submission to Professor
Warrens book. If you are unsure who needs to review a document prior to submission, please
check with Exec Sec.
Most internal documents fall into one of four categories:
(1) Decision Memoranda are used when seeking approval for a course of action. Decision
memoranda should be authored by CFPB Associate Directors (or Assistant Directors . These
memoranda should be submitted to Exec Sec 24 hours before the principal is to receive the
memo. Please use this template when preparing a decision memorandum.
(2) Information Memoranda provide Professor Warren with background on an issue or a set of
issues. These memoranda should be submitted to Exec Sec by 12 noon for inclusion in that
nights briefing book. Please use this template when preparing an information memorandum.
(3) Briefing Memoranda prepare Professor Warren for meetings or events. The most important
aspect of a briefing memorandum is the first one-half page or less that gives a concise
overview and a single top-line goal of the event or meeting. These memoranda should be
submitted to Exec Sec by 12 noon the day before the meeting or event or 48 hours before a
trip or major event. Please use this template when preparing a briefing memorandum.
(4) Meeting Agendas prepare Professor Warren for internal meetings with staff. The agenda
should provide a succinct outline of the issues to be addressed during the meeting. They
should reflect the input of all meeting participants. Team leaders are responsible for getting a
draft of the agenda to Exec Sec by 12 noon the day before the meeting. Please note an
agenda is required for all meetings with Professor Warren.
The following table provides various timelines for submission of internal documents.
1
Page 914 of 3826
Document
Decision Memoranda
Information Memoranda
Briefing Memoranda
Meeting Agenda
Due to Exec Sec

24 hours before the memo is to be presented to the principal
12:00 pm for inclusion in that days briefing book
12:00 pm the day before the meeting or 48 hours before a
trip or major event
12:00 pm for inclusion in that days briefing book
External Documents
All paper developed for external audiences should be submitted to Exec Sec for clearance. The
clearance process generally takes 48 hours during which time a document is reviewed by
selected staff for comments and edits. Exec Sec incorporates all edits received during the
clearance process and returns the document to the drafter. The drafter then reconciles the edits
and sends a revised version to Exec Sec for final legal review.
Correspondence
All correspondence, including emails, to Elizabeth Warren should be referred to the Exec Sec.
Exec Sec will make sure the appropriate response is drafted, cleared, and sent to the
correspondent.
The following table provides various timelines for submission of external documents.
Document
Remarks & Talking Points
Op-Eds
Speeches
Fact Sheets
Blog Posts
Twitter feeds & Facebook posts
Emails
Website Infographics
Website Landing Page Content
Memos to other Administration
Officials
MOUs
Federal Register Notices
Industry Guidance
Testimony
Congressional Reports/Studies
Congressional Correspondence
Other Correspondence for
Professor Warrens signature
1
Due to Exec Sec1

72 hours before speaking engagement
72 hours before desired release
1 week before speaking engagement
72 hours before desired release
48 hours before desired posting
48 hours before desired send time
72 hours before the memo is to be presented to the principal
1 week before agreement needs to be finalized
1 week before desired publishing
1 week before desired publishing
1 week before hearing
Final Draft must be submitted to Exec Sec one week before
due to Congress
72 hours after assigned by Correspondence Unit (48 hours
for drafting, 24 hours for clearance)
Seven days after assigned by Correspondence Unit (5 days
for drafting, 48 hours for clearance)
Note that additional time may be needed for final review if there are significant comments on first review.
Page 915 of 3826
Media Inquiries:
CFPB policy is for all media inquiries, including off the record conversations, to be referred to
the Office of Media Affairs. CFPB staff is not permitted to communicate with the media without
prior approval. This policy applies regardless of the means in which the reporter communicates
with you, or the type of media they represent. (See attached memo for more information on the
media inquiry policy.)
External Invitations and Meeting Requests:

All invitations to speak on behalf of the CFPB or invitations to meet with an external
organization about CFPB must be forwarded to [email protected]. Such invitations
include those directed to Professor Warren and to other members of the CFPB. Invitations will
be reviewed on a weekly basis by our outreach, and press teams. Their review is triggered by
sending the invitation to the [email protected] email box. CFPB staff is not
permitted to accept invitations without receiving approval. Employees should consult with an
ethics official before accepting invitations to and attending events, including events at which
they attend or speak in their official capacity or their personal capacity.
Records
All final documents that have gone through the clearance process should be sent to Exec Sec for
record keeping purposes. This includes all signed agreements.
Attachments:
(1) Frequently Asked Questions
(2) Media Inquiry Policy
(3) Memo Templates
Page 916 of 3826
EXEC SEC PROCESS

Frequently Asked Questions
When does Professor Warren receive her daily briefing book?
Professor Warren typically receives her briefing book each weekday at 5:30 p.m. However, there
are times when Professor Warren needs to leave the office early. When that occurs, Exec Sec
will notify staff that the book will close early.
Why do I need to submit materials by noon if Professor Warren doesnt receive her book
until 5:30pm?
Exec Sec needs time to review the documents before submitting to Professor Warren. Exec Sec
will do a final proofread and will ensure that the appropriate teams have signed off. In many
cases a document will need further circulation or revision. Getting the memo earlier in the day
will ensure any additional steps can be taken before the book closes.
What is the process for getting a memo to Professor Warren? Should I send memos to
Alyssa?
All paper going to Professor Warren must go through Exec Sec. Please do not send materials
directly to Alyssa. The diagram below illustrates the process for getting a memo into Professor
Warrens book. If you have any questions on the process, including when materials are due,
please talk to Exec Sec.
Page 917 of 3826
Where can I find memo templates?

All templates can be found on the RRI drive in the Exec Sec folder.
What is the process for clearing speeches/talking points/remarks/op eds? Why do I need to
give Exec Sec 48 hours?
As youll see from the diagram below, getting to a final document takes a lot of steps. Its also
likely that there will be more than one document in the clearance process at any one time. Given
that the same individuals are responsible for signing off on most documents, we need to give
everyone ample time to review.
* the clearance list will depend on both the type of document and the subject
Do I need to get remarks or talking points cleared if the event is closed press? What if I feel
like I dont need talking points?
Yes, even when an event is closed press we still ask that you send your remarks or talking points
to Exec Sec for circulation. At a minimum, you should prepare talking points if you are speaking
at an event with external participants.
What if I just want to use previously cleared materials? Where can I find those?
You can find all cleared materials in the RRI drive. All communications materials including
speeches, remarks, and talking points can be found in the communications folder.
Why is the clearance process even necessary? Isnt this just more work?
While it can sometimes seem tedious, the clearance process does serve a useful purpose. The
process allows your colleagues a chance to weigh in on issues where they have equities, helps to
ensure we have cohesive messaging on issues, and ensures we are complying with legal
guidance.
When I receive a request to review a document from Exec Sec, what is the best way to
communicate my edits?
Using track changes is the best way to communicate edits and comments. If you have big
picture comments about the tone or direction of a document overall you should email or call
Jeff Riley who will connect you with the author of the document.
5
Page 918 of 3826
From:
Hart, Maria (CFPB)

_DL_CFPB_AllHands
To:
Cc:
Bcc:
Subject:
Date:
Attachments:
CFPB Travel Training - Friday, April 29th @ 3:00 pm -- Room 503 - All are Welcome
Wed Apr 20 2011 15:22:40 EDT
If you are new to CFPB, or if you have been here a while and still dont quite have the hang of our
GovTrip travel system, please attend a travel training next Friday, April 29th, at 3:00 in room 503. Here
are the topics that will be covered:
Preparing a Travel Authorization
Preparing a Voucher from the Authorization
Preparing a Local Voucher
Adjustments and Amendments to an Authorization
Questions and Answers
Thanks,
Catherine West
Page 919 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Hart, Maria (CFPB)
Fw: Fw: Timesheet for Pay Period 8
Wed Apr 20 2011 15:12:37 EDT
Timesheet Pay Period 8.xlsx
Hi Maria,
Attached is my time sheet for pay period 8. Note that I used leave without pay for days that I didn't
come in because Liz had jury duty. Let me know if you have any questions...thanks!
-Kevin
----- Original Message ----From: Kevin Lownds <(b) (6)
Sent: Wed Apr 20 15:08:38 2011
Subject: Re: Fw: Timesheet for Pay Period 8
Page 920 of 3826
Timesheet Pay Period 8.xlsx (Attachment 1 of 1)
Period
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
2010
Week 1
01/03/09
01/17/09
01/31/09
02/14/09
02/28/09
03/14/09
03/28/09
04/11/09
04/25/09
05/09/09
05/23/09
06/06/09
06/20/09
07/04/09
07/18/09
08/01/09
08/15/09
08/29/09
09/12/09
09/26/09
10/10/09
10/24/09
11/07/09
11/21/09
12/05/09
12/19/09
Week2
01/10/09
01/24/09
02/07/09
02/21/09
03/07/09
03/21/09
04/04/09
04/18/09
05/02/09
05/16/09
05/30/09
06/13/09
06/27/09
07/11/09
07/25/09
08/08/09
08/22/09
09/05/09
09/19/09
10/03/09
10/17/09
10/31/09
11/14/09
11/28/09
12/12/09
12/26/09
Page 922 of 3826
From:
Howard, Jennifer (CFPB)

(fydibohf23spdlt)/cn=recipients/cn=howardje>
_DL_CFPB_AllHands
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Wed Apr 20 2011 13:03:17 EDT
Index

Reuters Treasury hits back at Dodd-Frank critics
Credit Union Times Treasury Official Wolin Boosts Consumer Financial Protection Bureau
Politico Morning Money Just Asking: CFPB Edition
The Hill (blog) Treasury touts Dodd-Frank impact on community banks
MortgageOrb.com Geithner: Warren Still Being Considered For CFPB Leadership Position
Bloomberg Bernanke Says Financial Education No Substitute for Regulation
Consumer Credit
American Banker How Much Will Fed Bend On Interchange Fee Plan?
Slate The Bank of Mom and Pop: Person-to-person lending is finally ready to take on banks
and credit card companies
New York Times (Economix blog) How Worrisome Is Student Debt?
Huffington Post Military Veterans At Private Universities Fear Being Robbed Of G.I. Bill Dollars
UPI Credit card debt called 'the American way'
Page 931 of 3826
South Coast Today Our View: Financial literacy part of citizenship
Housing
Wall Street Journal Fed Proposes Minimum Standards for Home Loans
Reuters Fed unveils proposal on U.S. mortgage standards
Bloomberg Banks Kept Waiting for Terms of U.S. Foreclosure Accord as States Divided
Wall Street Journal Apartment-Building Foreclosures Piling Up
Housing Wire Fannie, Freddie foreclosure preventions drop for fifth-straight month
AOL Daily Finance Is It Time to Kill the Mortgage Interest Tax Deduction?
Palm Beach Post Foreclosure leaves North Palm couple's belongings on street for thieves
Grab Bag
Huffington Post Financial System Riskier, Next Bailout Will Be Costlier, S&P Says
New York Times Leader of Big Mortgage Lender Guilty of $2.9 Billion Fraud
Reuters
Treasury hits back at Dodd-Frank critics
April 19, 2011
By David Lawder and Rachelle Younglai
WASHINGTON (Reuters) - The Obama administration fired a fresh salvo at Wall Street on Tuesday,
telling critics of the U.S. financial reform law to knock off their attacks.
Page 932 of 3826
"We will continue to oppose efforts to slow down, weaken, or repeal these essential reforms," Deputy
Treasury Secretary Neal Wolin said of the Dodd-Frank financial reform act signed into law last July.
Republican lawmakers, urged on by Wall Street, have taken aim at Dodd-Frank as many of the rules
putting it into effect are still being written.
They want to restrain the power of the new Consumer Financial Protection Bureau by limiting its
funding, and are seeking less stringent rules on lucrative derivatives trading.
JPMorgan Chief Executive Jamie Dimon took several punches at the financial reforms earlier this
month at an event in Washington, criticizing capital rules, the new U.S. risk council and derivative
reforms.
"It will stifle economic growth and I already believe it is," he said of new international bank capital
standards.
Wolin, taking his firmest tone with the law's critics in months, reminded them on Tuesday of the damage
caused by the 2007-2009 financial crisis and the regulatory gaps that helped cause it.
The deputy secretary is charged with overseeing the law's implementation, including setting up
mechanisms that will determine which financial institutions are considered systemically important and
therefore subject to more stringent capital requirements.
"There will, of course, continue to be disagreements and opposition as we move forward. There will be
critics and naysayers," Wolin told an event sponsored by the Pew Charitable Trusts, a public policy
group.
"But those who are charged with implementing reform have not forgotten why we needed reform. We
needed reform because ultimately, a fragile system benefits no one. We needed reform because we
can't afford another crisis."
RISK COUNCIL UNDER FIRE
At a congressional hearing last week, lawmakers from both parties voiced displeasure with the
Financial Stability Oversight Council set up by Dodd-Frank to ward off threats to the U.S. financial
system.
Page 933 of 3826
The council of regulators is charged with deciding which significant non-bank financial firms, such as
insurers and private equity firms, could pose a risk to the financial system. Those chosen would be
scrutinized by the Federal Reserve and have to abide by costly new rules.
Lawmakers, primarily Republicans, accused the council of being opaque about its criteria for picking the
firms.
Wolin disputed that criticism, saying the council, headed by Treasury Secretary Timothy Geithner, has
sought an abundance of public comment and is more transparent than any other regulatory body he
could think of.
The Federal Reserve released in February some guidelines for how regulation would pick these
"systemic" firms, including a two-year test to determine if a firm's predominant business is financial.
But the proposal leaves insurers and hedge funds guessing if they will fall under the stricter regulatory
regime.
When asked whether the risk council would seek comment on the final designation criteria, Wolin said
the council of regulators had to make that decision. The council will "continue to find ways to get public
input," he said.
The insurance industry and some lawmakers are also upset that an insurance expert, who will be able
to vote on the council, has not yet been appointed.
Wolin said that the administration would nominate that expert "quite soon."
Back to Top
Page 934 of 3826
Credit Union Times

Treasury Official Wolin Boosts Consumer Financial Protection Bureau
April 19, 2011
By Claude R. Marx
The new Consumer Financial Protection Bureau will give other regulators the chance to focus on their
core mission, expand consumer choice and be heavily accountable to Congress, Deputy Treasury
Secretary Neal Wolin said Tuesday
The existence of the CFPB allows prudential regulators (such as the NCUA) to focus on their core
tasks making sure that banks have the capital, the liquidity, and the risk-management tools to ensure
safety and soundness in the system. It allows the CFPB to focus on its own single task to make sure
that consumer financial products are offered in a fair, transparent and competitive way, he said during
a speech on the progress of implementing the financial overhaul bill passed last year.
Wolin didnt address concerns raised by credit union and bank lobbyists that the new bureau would add
to the regulatory burden of financial institutions.
He predicted the bureau will cause consumers to be better informed, causing financial institutions to
offer better products and be a catalyst for innovation.
He also refuted criticisms made by congressional Republicans that the bureau, which is scheduled to
begin operating this summer, would not be held accountable for its actions.
The CFPB must submit annual reports to Congress, the director must testify multiple times each year
on the agencys budget and activities, and the GAO (Government Accountability Office) audits the
CFPBs expenditures annually, Wolin added. The FSOC (Financial Stability Oversight Council) can
review and even reject the CFPBs rules, and, as with any other regulator, Congress has the ability to
overturn any of the CFPBs rules.
House Republicans have introduced legislation that would have the bureau governed by a five-member
board, rather than a director. In addition, they are pushing a bill that would allow the FSOC (of which the
NCUA chairman is a member) to overturn bureau regulations by a majority vote, rather than the current
two-thirds margin.
Back to Top
Page 935 of 3826

Just Asking: CFPB Edition
April 20, 2011
By Ben White
JUST ASKING: CFPB EDITION - What senior financial regulator just became the latest in a long line to
(informally) pass on an (informal) administration request to consider heading up the CFPB? A top
source tells M.M. this person (like others) rejected the job because, despite industry fear, the post is
legislatively weak (Fed/Treasury oversight of rulemakings), has limited jurisdiction (even more limited by
certain ferocious Congressional oversight) and because no one wants to offend CFPB Czar Elizabeth
Warren before its absolutely clear she cannot be confirmed ...
M.M. hears it may take a failed campaign for Warren in the Senate before any serious candidates will
step up for the job. But that may not happen because the White House appears to have little appetite
for a Warren fight given its pro-business move to the center.
Back to Top
The Hill (On the Money blog)

Treasury touts Dodd-Frank impact on community banks
April 20, 2011
By Bernie Becker
Page 936 of 3826
A top Treasury official continued a spirited defense of the Dodd-Frank Wall Street reform bill on
Wednesday, arguing in a post on the departments blog that the regulatory overhaul strengthens the
role of community banks in the financial system.
Neal Wolin, the deputy Treasury secretary, methodically took on critics of the legislations impact on
community banks in his post, saying Dodd-Frank will allow community banks to be on more equal
footing with their competitors.
The lawmakers who drafted the Dodd-Frank Act took great care to protect and strengthen the countrys
rich network of community banks, helping to ensure that we avoid the concentration that exists in the
banking sectors of so many other countries which are dominated by just a handful of very large
institutions, Wolin wrote.
The deputy secretary who a day earlier defended the pace of the Wall Street reform law
implementation specifically said the legislation, among other things, rolls back funding advantages
bigger banks had before the financial crisis and aims to shield community banks from excessive
supervisory burdens.
Lawmakers on both sides of the aisle, and Treasury, have stressed that smaller banks were not the
cause of the crisis. But some Republicans have also fretted that Dodd-Frank puts community banks at a
competitive disadvantage.
For its part, the American Bankers Association has called Dodd-Franks regulatory burdens on
community banks "oppressive." Federal Reserve Chairman Ben Bernanke has said an exemption on
new debit-card fee limits for small banks might not be as effective as hoped, though he has also said
community banks will see a more level playing field because of Dodd-Frank.
In the post, Wolin also noted that Dodd-Frank increased deposit insurance protection and said the law
allowed community banks to better compete with payday lenders and independent mortgage brokers.
Back to Top
Page 937 of 3826
MortgageOrb.com
Geithner: Warren Still Being Considered For CFPB Leadership Position
April 20, 2011
The on-again/off-again debate of nominating Elizabeth Warren to become the first director of the
Consumer Financial Protection Bureau (CFPB) is on again.
Treasury Secretary Timothy Geithner confirmed that Warren remains a candidate for the CFPB helm.
borrow on a credit card," Geithner said in an interview with Bloomberg Television.
Geithner's statement follows media reports that the Obama administration was actively seeking other
candidates to run the CFPB, including former Michigan Gov. Jennifer Granholm and former Delaware
Sen. Ted Kaufman. Other news reports stated that the administration was considering former Ohio Gov.
Ted Strickland and Federal Reserve Board member Sarah Bloom Raskin for the position.
Under the Dodd-Frank Act, the CFPB must have a director in place by July 21, the official launch date
for the agency. Warren, who holds the title of assistant to the president and special adviser to the
secretary of the Treasury, has been the public face of the CFPB since the agency came into being as
part of the Dodd-Frank Act. However, she has been under relentless criticism from Republican
members of Congress following the passage of the Dodd-Frank Act.
Warren is also being championed for another position in Washington. Brent Budowsky, a columnist for
The Hill and an aide to former Sen. Lloyd Bentsen, called on Warren to run for the Senate seat currently
held by Scott Brown, R-Mass., who is up for re-election next year.
"A Warren candidacy would reunite Democrats with the pro-worker, pro-consumer, pro-change, proveteran, pro-reform and women-friendly populist wave that elected Barack Obama in 2008, and was
then lost and surrendered to the Tea Party movement in 2010," Budowsky wrote. Warren has been one
of several potential candidates for the Democratic nomination in the Massachusetts Senate race, but no
challenger to Brown has yet to come forward.
Warren did not issue any comment relating to the Geithner and Budowsky statements.
Back to Top
Page 938 of 3826
Bloomberg
Bernanke Says Financial Education No Substitute for Regulation
April 20, 2011
By Scott Lanman
Federal Reserve Chairman Ben S. Bernanke said financial literacy education and research must be
combined with strong regulation to protect consumers from abusive and fraudulent practices.
Bernanke didnt comment on the outlook for the U.S. economy or monetary policy in a prepared
statement released today and provided for the record of a subcommittee hearing by the Senate
Homeland Security and Governmental Affairs Committee. The panel held a hearing on financial literacy
April 12.
The central bank is working closely with the U.S. Treasury Department to transfer some powers to the
new Bureau of Consumer Financial Protection, Bernanke said.
Back to Top
American Banker
How Much Will Fed Bend On Interchange Fee Plan?
April 20, 2011
Page 939 of 3826
By Donna Borak
WASHINGTON As Congress continues to struggle over whether to delay a pending Federal Reserve
Board plan to cap interchange fees for debit cards, a key question remains unresolved: How far is the
central bank prepared to go on its own to modify the rule?
Fed Chairman Ben Bernanke acknowledged last month that the agency would be unable to finalize the
rule by a April 21 deadline as it wrestles with the 11,000 comment letters it received on the subject.
Many observers see this as a sign the Fed may make significant adjustments, including lifting a
proposed 12-cent interchange cap or altering an exemption for community banks to make it more
effective.
But it's unclear just how willing the Fed is to abandon its initial approach.
"They have ample room to make some changes, but I don't think they can throw out the old proposal
and come out with something different; nor do I think they are going to take the old proposal and
dramatically increase the number from 12 cents to 24 cents," said Gil Schwartz, a partner at Schwartz &
Ballen LLP.
By most accounts the Fed's decision to pause is indicative of the seriousness of its intention to consider
all sides of the issue. Bernanke wrote to lawmakers that the Fed remained committed to finalizing the
rule by July 21, when it is scheduled to go into effect, but needed more time to weigh the issues that
commenters raised.
"If you wanted to adopt the rule as proposed, I'm not sure you need the extra time," said Oliver Ireland,
a partner at Morrison & Foerster LLP.
"But Mr. Bernanke's letter would suggest they're looking at some of this stuff pretty hard."
Under the Dodd-Frank law, the central bank is required to ensure that debit interchange fees are
"reasonable and proportional."
But stakeholders dispute whether the Fed succeeded in that effort, and perhaps took too many liberties
in setting a standard. Bankers and industry representatives argue, for example, that the 12-cent cap is
too low and ignores costs of running a debit system, including fraud prevention. Acting Comptroller of
the Currency John Walsh has sided with the industry on such an issue, arguing the Fed proposal is too
narrow.
Page 940 of 3826
Schwartz said the Fed has room to make "modest" changes to the proposed cap, but it wouldn't move it
high enough to satisfy industry critics.
"They could alter the proposal from a procedural standpoint and come up with a higher number at least
to get it closer to something that would provide a degree of return for the banks, but not something that
would be regarded as anywhere near acceptable or relative to where they are today," Schwartz said.
The Fed has already acknowledged in its legal filings in its lawsuit with TCF Financial Corp. that it
would have discretion to adjust the interchange-fee ceiling.
But not everyone is convinced the Fed would go very far in that direction, especially on what is
considered one of the most controversial aspects of the plan.
"I don't see the board backing off on its proposal," said Ernest Patrikis, a lawyer at White & Case LLP.
"The two sides are just so far apart. I can't see the board making changes that will favor one side over
the other. It's just too difficult now."
Observers said that politically, the Fed likely will try to wait it out, hoping for Congress to act instead.
"There is not a whole lot of wiggle room there," said Cornelius Hurley, director of Boston University's
Center for Finance, Law and Policy. "The politics of this thing seems to change every day with old allies
now being adversaries. You get the impression in this season of Easter that this is a cross the Fed
would just as soon not to have to bear. Putting it off as long as it can gives Congress, or somebody
else, time to step in and say, 'Timeout, let's take another look at this.' "
On one side of the issue are the big-box retailers and merchants, which would like to see lower swipe
fees on debit cards.
They are staunchly opposed by the larger banks, which claim they would lose up to $12 billion in
revenue as a result of the new rule.
Sen. Jon Tester, D-Mont., is pushing a bill to delay the interchange rule by two years while its impact is
studied.
Page 941 of 3826
While the legislation remains a tough sell, one argument has gained traction: that community banks,
which are ostensibly exempt from the plan, may still be damaged by it.
Although the proposal only applies to institutions with more than $10 billion of assets, industry
executives argue it would put smaller banks at a competitive disadvantage, forcing them to lower fees
or potentially face reprisals from retailers.
Some observers say the Fed might find a way to improve the exemption, especially considering that
Bernanke has acknowledged that in its current form, it might not work.
"It may not be the case that, in practice, they are exempt, but I don't know for sure," Bernanke told
lawmakers in February at a hearing before the Senate Banking Committee.
Bernanke has already suggested that one way to address the issue would be for Congress to require
the card networks to differentiate.
Federal Deposit Insurance Corp. Chairman Sheila Bair has already backed such an approach. She
urged the Fed to adopt a two-tiered system to ensure that community banks are truly exempt.
Patrikis said that most agree the board would "try to ensure that networks have provisions for small
banks so that they could charge an interchange fee that was higher than whatever the board is
mandating."
But it's not clear how the central bank would be able to do that, or if any fixes by regulators could
ultimately correct the problem. Some said that's not possible.
"There's been a lot of concern of the small-bank exception, but I for one don't see how they fix that,"
Ireland said. "Maintaining any significant difference in rates in the market just over the long run isn't
going to happen. Market forces are going to drive those rates together."
Back to Top
Page 942 of 3826
Slate
The Bank of Mom and Pop: Person-to-person lending is finally ready to take on banks and credit card
companies
April 19, 2011
By Farhad Manjoo
Things were looking so good for Prosper.com five years ago. To most people, the economy appeared
to be functional, dot-com nightmare stories had faded from memory, and the time seemed ripe for Web
2.0 to take over the world of personal loans. Prosper and several other "person-to-person lending" sites
operated like an eBay for credit: Prospective borrowers put up requests for loans, disclosed their credit
rating and the reason they needed the money, and tried to make a case for lenders to take a chance on
their dreamat attractive premiums.
Though the idea of perfect strangers trading money seemed surreal, several personal-finance experts
said they hoped that companies like Prosper could free borrowers from onerous terms set by credit card
companies and, worse, payday loan stores. "Looking at it from 10,000 feet, this is a great idea,"
Elizabeth Warren, the Harvard Law School professor who is now setting up President Obama's
Consumer Financial Protection Bureau, told me when I first wrote about Prosper in 2006. "It could have
the wonderful effect of making markets work the way they should, driving down the amounts charged
for loans to the true marginal cost."
But that didn't happen. Instead, in 2008, the Securities and Exchange Commission shut Prosper down.
Regulators charged that the site was offering investment securities without having formally registered
with the SEC. Prosper and its competitors, including Lending Club, were forced to get permission from
the government for their operations. Prosper was closed for nine months, and by the time it went back
up, the financial crisis had destroyed the public's appetite for financial innovation. Worse, there were
signs that Prosper's model was fundamentally flawed. As Ray Fisman wrote in Slate in 2009, lenders on
Prosper seemed to be swayed by factors that didn't live up to the claim of democratizing financepretty
women got cheaper loans than homely ones, and lenders were more likely to lend to white people than
black people.
But now things are finally looking prosperous again for peer-to-peer lending sites. Over the past few
months, the company has remade its operations in order to reduce lenders' opportunity to unfairly
discriminate against certain borrowers. Prosper has also seen the public becoming more interested in
lending and borrowing through the site; lending activity is rising, and so far, borrowers are paying back
their loans at a rate that keeps lenders coming back. If you put your money in a savings account today
you'll get back a pathetic 1 percent in interest. Putting your money in Prosper is far riskier than keeping
it in a savings account, but it's also far more lucrative. Over the last two years, the company has
delivered an incredible annual return of 10.4 percent to lenders. Its competitor Lending Club has
delivered 9.65 percent. "We're starting to build a 'third-way' of banking that looks like a better deal for
both sides," Chris Larsen, Prosper's CEO, told me during an interview this week. "We think we can now
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go straight up against the mainstream banking system."
Peer-to-peer lending rests on the idea that traditional banking is gummed up by unfair bureaucracy. For
one thing, advocates of these sites say, credit scores don't accurately reflect a person's ability to pay
people with low credit scores are charged too much for loans even though they may be likely to pay.
(This problem has become worse after the financial crisis, when sudden job losses forced even people
with high credit scores to default on their loans). There's also a lack of competition. The only companies
willing to lend to people with less-than-stellar scores are credit card firmswhose terms are punishingly
variableand payday loan centers, which charge 400 percent or more in interest on an annualized
basis.
By putting lenders directly in touch with borrowersrather than through the banking systemperson-to
-person lending sites claim that they can cut down on overhead costs, thereby making it cheaper to lend
to people with poor credit. They also claim something else: That the peer-to-peer process can evaluate
a person's creditworthiness better than a one-size-fits-all credit score, revealing that some people with
bad credit deserve access to loans. This seems to be playing outmost of Prosper's and Lending
Club's borrowers use lower-rate, fixed-rate loans from the sites to pay off high-rate credit they've
accumulated with credit cards.
In Prosper's early days, the company relied on an auction model to determine the credit rate between
borrowers and lenders. Borrowers told sad stories of financial woe, explained why they were better
credit risks than their scores indicated, and put up honest-looking pictures of themselves. Lenders who
were swayed by these pitches chose the rate at which to make loans to these peoplethe more you
liked the borrower, the less you'd charge for the loan. (Lenders diversified their money across many
different people; in other words, if you had $1,000 to loan, you'd spread it among 10 or 20 borrowers, so
any single default wouldn't wipe you out.)
But Larsen now says that letting lenders determine loan rates didn't work very well. "Credit analysis is a
complicated business, and we found that people couldn't accurately determine risk," Larsen says. In
addition to the problem of discrimination (giving pretty people cheaper loans), lenders were often
swayed by emotional cues into charging too little for risky loansand when the borrowers defaulted,
lenders would blame Prosper for losing their money, and they'd leave the site.
Last year Prosper removed the lenders' ability to choose how much to charge for loans. Now the site
uses its own methods to determine a borrower's credit risk, and then sets a price for loans based on
that determination. When you sign up as a borrower, you tell Prosper your financial history, and then it
gives you a "Prosper Rating" between AA and HR; this corresponds to an interest rate currently ranging
between 5.93 percent and 35.64 percent. Lenders on the site now choose which kinds of borrowers
they'd like to invest in, but not how much to charge those borrowers for loans; the riskier the loans
you're willing to make, the more you're likely to get back in interest. Prosper has also removed pictures
of borrowers from its listings. These two changes have streamlined the way the site operates, and
made it much less likely that lenders will lose their money by charging too little for risky loans. (Lending
Club, which never used an auction model, operates in a similar way.)
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Now that Prosper sets the rates for its loans, it might sound similar to how regular banks operate. But it
differs in two important ways. When you deposit your money in a bank, the bank doesn't give you, as a
lender, any say in how you want that money invested. You can't tell the bank to give you a higher
interest rate because you're willing to stomach the risk of loaning to people with low credit. As a result,
banks today refuse to offer unsecured loans to everyone other than folks with the highest credit scores.
Larsen says that another way Prosper differs from traditional banking is that it has developed risk
models that are much more fine-tuned than credit scores. For instance, Prosper found that people
who've already borrowed and paid back one loan from Prosper are much likelier to pay back a second
or third loanand, as a result, they should get cheaper loans.
In fact, the fixed-term loans that borrowers get from Prosper are just the sorts of instruments that many
consumer advocates recommend for eliminating credit card debt. Larsen says that the only limit to the
site's becoming more useful, now, is a lack of awarenessa lot more people could do well to borrow
from the site instead of relying on credit cards, and a lot of lenders could make more money here than
they can in a bank.
And Prosper isn't the only tech company looking to improve the opaque, closed-off world of finance. It's
part of a range of new venturesincluding Mint, Square, Kickstarter, and othersthat seek to bring a
startup ethos to the business of keeping, lending, and borrowing money. There's now even a twice-ayear conference, called Finovate, devoted to these businesses; at the conference, a parade of startups
line up to show off their plans to revolutionize finance, and many of them find instant investor backing
for their ideas. It might not quite be the dream of a truly democratic determination of risk and credit, but
it's one of the brightest hopes in a credit market still shell-shocked from the recession.
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New York Times (Economix blog)

How Worrisome Is Student Debt?
April 15, 2011
By Judith Scott-Clayton
Student loan debt has risen to its highest level ever, with starting balances averaging $24,000 among
the two-thirds of graduates who borrowed for their degree, Tamar Lewin noted in an article in The New
York Times on Monday. This increase has heightened longstanding concerns that college students are
borrowing too much.
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Economists tend to be less troubled by the trend, Ms. Lewin noted, viewing student loan debt as a
worthwhile investment that pays off over a lifetime. Many economists even raise the concern that an
irrational aversion to debt may lead some capable students to forgo college.
So should we stop worrying about student debt? Or are students and their families right to be alarmed?
The key question is this: Are graduates better off, even with all that debt, than if they hadnt gone to
college at all?
The answer seems clear: even with $24,000 in debt comparable to the cost of a new midsize car
the average four-year college graduate is likely to be substantially better off over the long term than
someone with only a high school education, data show.
Median annual earnings for full-time workers with a bachelors degree are around $53,000, compared
with $33,000 for those with a high school diploma, and unemployment rates among college graduates
are just over half of the rates for those without a degree.
Yet there are at least three reasons this level of debt may be troubling.
First, while the returns to a college degree accrue over a lifetime, loan repayments are typically
expected within 10 years of graduation. And graduates dont typically earn $53,000 in their first year of
employment; it may take a decade or more to reach this level. The median graduate is likely to start out
somewhere closer to $35,000.
Current Population Survey, Census Bureau Earnings were calculated using October data, 1999-2008,
on individuals with only a bachelors degree who were employed full time and not enrolled in school.
Second, not every graduate will get the average outcome. For those who do worse, the debt may be
particularly burdensome. And it is not easy for students (or even economists) to predict what the
economy will be like several years from now, or how any individual will fare in it.
So while it may be an excellent investment on average, there is a real risk that some graduates with
$24,000 of debt will face unmanageable monthly payments particularly in the early years of their
careers.
On the standard 10-year repayment schedule with a fixed interest rate of 6.8% (the current rate for
unsubsidized federal student loans), monthly payments would be about $276. If payments up to 10
percent of gross monthly income are considered affordable, then a graduate would need to earn
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$33,000 annually to comfortably manage this debt. Most will do so, but many will not.
Third and perhaps most important, not every borrower will graduate. Among 2003-4 college entrants
who ultimately borrowed $22,000 or more, 31 percent did not have any postsecondary credential six
years later (see chart below). And unemployment rates and earnings for people with some college, no
degree look much more similar to those with only a high school diploma than they do to bachelors
degree recipients.
U.S. Department of Education, National Center for Education Statistics, BPS: 2009 Beginning
Postsecondary Students
Luckily, federal loans have options beyond the 10-year repayment plan, and many students take
advantage of them. Graduated, extended or income-contingent repayment plans may offer substantially
lower monthly payments, with repayment periods of up to 25 years (see these loan repayment
calculators offered by Mark Kantrowitz of www.finaid.org).
Policy changes tucked into last years health care act also strengthened protections for those who face
economic hardships.
These additional options and protections which apply only to federal loans, not private loans
reduce but do not eliminate the risk students take when they borrow for their education. So anxiety is
likely to continue because, frankly, this stuff is complicated, and the consequences of defaulting on a
student loan are severe.
Plenty of resources are available to help students learn how to borrow responsibly. But some, like this
56-page federal guidebook, may be too much for young adults to digest, given high rates of financial
illiteracy. Those who try to navigate these resources on their own may come away feeling frightened
rather than informed.
Policies like the one at Tidewater Community College in Virginia, which require students to estimate
their loan repayments and plan their budgets before taking a loan, may be the best strategy for
promoting wise borrowing decisions.
No one is ever going to love their student loans. But we dont want students to be afraid of them, either
because forgoing a college degree may be the biggest risk of all.
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Huffington Post
Military Veterans At Private Universities Fear Being Robbed Of G.I. Bill Dollars
April 19, 2011
By Amanda M. Fairbanks
NEW YORK -- Cameron Baker, a 27-year-old Air Force veteran, knew it was finally time to make his
exit from military life: After two deployments to Iraq and three additional years spent as a private
contractor, Baker had grown not only hyper-vigilant, but plagued by anxiety, rage and despair. His days
were pockmarked with what he describes as pretty horrific violence occurring at regularly scheduled
intervals.
At 18, he left his childhood home in Arlington, Texas and joined the Air Force. If Baker hadnt enlisted,
he predicts that hed still be in Texas, working at a dead-end, minimum-wage job. But once out, Baker
enrolled at South Plains College, a community college in nearby Levelland, where a 3.9 grade-point
average landed him a spot in the honor society. Subsequently, Baker flashed across Columbia
Universitys radar -- where he, along with hundreds of other high-achieving veterans, were recruited to
attend its School of General Studies, many as part of the Yellow Ribbon Program, which is a provision
of the Post-9/11 G.I. Bill.
Since its passage in 2008, the revamped G.I. Bill provides veterans who have served for a minimum of
three years since Sept. 11, 2001 with full tuition at public two- and four-year schools. Money is allocated
on a state-by-state basis and capped according to the highest amount of public in-state tuition. The
Yellow Ribbon Program acts as a supplement so that eligible veterans can afford to attend private
institutions. The money can also be used to cover out-of-state public schools and graduate or doctoral
programs. In this way, the promise of the Yellow Ribbon Program was that it would enable veterans like
Baker to attend private institutions free of cost.
Baker arrived at Columbias Morningside Heights campus with a specific understanding: Between
money provided by the Post 9/11 G.I. Bill (presently capped at $1,010 per credit hour for a full-time
student in New York State), in addition to Columbias contribution of $5,100 as part of the Yellow
Ribbon Program, and the V.A.s matching grant, not to mention a separate stipend for housing and
other incidentals, hed be able to earn a bachelors degree without having to incur any personal debt.
But those rules changed in December of last year when the law was amended. Baker and his
classmates were promised one thing and subsequently given another.
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Beginning Aug. 1, 2011, the current crop of students at Columbia, not to mention other veterans from
across the country, will see their tuition capped at $17,500, regardless of the state in which they reside.
For Baker, and many of his classmates, taking on increased debt simply isnt an option.
I come from a very low socio-economic background, explains Baker, who along with 119 in the current
class of 203 veterans at the School of General Studies, qualifies as needing the most financial
assistance. My family cant afford to help me out. I mean, at this point, Im the one whos supposed to
be helping them out.
The new law wont just impact veterans at Columbia. The tuition cap of $17,500 will affect veterans
enrolled at or planning to attend private institutions in seven states -- Arizona, Michigan, New
Hampshire, New York, Pennsylvania, South Carolina and Texas.
Nationwide, according to the U.S. Department of Veterans Affairs, $9.9 billion has been allocated since
the inception of the Post-9/11 G.I. Bill. Between August of 2009 and July of 2010, 547,945 veterans
have used the new bill to pay for college.
Further, of the more than half a million veterans enrolled, 335,334 attend a public institution. An
additional 121,655 attend a private for-profit institution, like the University of Phoenix, which conducts a
majority of its courses online. Finally, 90,956 attend a private nonprofit institution, such as Columbia.
Both Sen. Charles E. Schumer (D-N.Y.) and Rep. Jeff Miller (R-Fla.) have recently introduced pieces of
legislation aimed at grandfathering in currently enrolled students that will be impacted by tuition caps
come August.
Our veterans cant afford to have the rules changed on them midway through their college careers,
said Schumer in a statement. This bipartisan bill is an urgent priority. If we fail to act, veterans across
the country will face the equivalent of a tuition hike at the start of the fall semester.
Miller released a similar statement, adding: I am also pleased that this bill is fully paid for and does not
increase the deficit or create new spending.
Schumers legislation would exempt those enrolled prior to Jan. 4, 2011. Miller uses April 1, 2011 as his
start date. Finally, while Miller has specified that it will pay for the increased cost by freezing veterans
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benefits for two years in order to cover the cost of the bill, Schumer has yet to indicate such an offset.
Meanwhile, veterans at Columbia are still holding out hope.
Columbia University has more veterans on its campus than any other school in the Ivy League. The
School of General Studies, which was established in 1947 to educate the large number of young men
returning home from World War II, has 203 veterans presently enrolled.
Peter J. Awn, dean of the school, has overseen its program for 14 years.
Prior to the Yellow Ribbon Program, the School of Graduate Studies enrolled 60 veterans during the
2008-2009 academic year. Since the revamped G.I. bill, and increase in resources, the numbers have
more than tripled.
For current students, they came in under one set of parameters, and they never had to worry about
their finances, says Awn. Lo and behold, the rugs been pulled out from beneath them. Its now our
responsibility to help them regroup and walk through what they can afford financially and what they can
absorb in terms of loan debt.
Despite Columbias hefty $6 billion endowment, Awn concedes that hes not sitting atop a pot of liquid
cash. Hes actively trying to solicit contributions from both foundations and wealthy individuals to help
bridge the gap. A donation of $1.2 million would ensure that the current class could continue as planned
-- and graduate debt-free. According to Awn, should Columbia be able to expand its current grant of
$7,000 per student, the V.A. has agreed to match it dollar for dollar.
From his office overlooking Broadway, Awn is certain the change in the new law will negatively impact
young veterans hoping for a shot at an Ivy League degree. As a consequence of reduced aid, he
predicts that future enrollment numbers will plummet.
For the time being, Awn is holding out hope that the currently enrolled veterans at Columbia might be
grandfathered in. Still, he worries: In the current climate, of everyone getting thrown under the bus, why
worry about throwing vets under the bus?
Last year, the New York Times chronicled Bakers struggle with post-traumatic stress disorder. What
ravages him now is a worry of a different sort -- namely, how hell afford the increased cost of tuition
come fall.
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When he arrived on Columbias campus for the first time over a year ago, he never imagined that
financial worries might mean he wouldnt finish.
To complete his degree in political science over the next year and a half, Baker faces between $50,000
and $60,000 in student loans. Its a gamble hes unwilling and unable to make. And unless federal
legislation is passed to amend the existing law, whereby exempting currently enrolled students, he will
likely be forced to drop out.
What Baker doesn't have is a contingency plan.
You need your veterans to come back and better themselves so they not only integrate, but better
engage with society, says Baker, whose closely shorn buzz cut is one of the last visible remnants of his
prior life. Why, when we have the opportunity to enter an institution like this, are we not allowed to
finish what we started?
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UPI
Credit card debt called 'the American way'
April 19, 2011
CORVALLIS, Ore., April 19 (UPI) -- Younger Americans using credit cards and piling up debt are being
enabled by parents who encourage them to use credit as a "safety mechanism," a study says.
Oregon State University researchers found Americans spent 9.3 percent of their income in 2008
servicing debt, and in 2010 more than 24 percent of U.S. homes had an upside-down mortgage, an
OSU release reported Tuesday.
Researchers found even though consumers acknowledge they should limit their debt, they take on
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significant debt because doing so has become normal or, as one study participant put it, "the American
way."
Some younger participants in the study noted that they did not want to use credit but felt they had to so
they could finance cars and homes in the future.
And most of the younger participants said they were encouraged by their parents to have credit cards,
and started using credit at a much younger age than did those older than 50.
"Over time, credit card use and heavy debt has become normalized in our culture," OSU researcher
Michelle Barnhart said. "Even though we say as a society, 'don't get in debt,' the overwhelming
messages being sent out -- from the way credit is used to approve or disapprove us for services to
political leaders telling us to spend after a big disaster to prove our patriotism -- all of this has created a
culture of debt.
"It's easy to sit back and blame consumers for just spending too much, but the truth is we have an
entire infrastructure set up to support, maintain and encourage credit card use and debt," Barnhart said.
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South Coast Today

Our View: Financial literacy part of citizenship
April 20, 2011
Editorial
It's not uncommon for school kids to wonder sometimes with a tinge of sarcasm to what use they'll
put algebra, physics or European history when they grow up.
But there may be no more important topic for citizens living in a democratic and capitalistic nation like
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ours than financial literacy.
The fallout of citizen inexperience and lack of knowledge was in clear view during the years leading up
to this recession, when well-meaning but financially illiterate Americans signed documents they didn't
understand, undertook payments they couldn't make, and tried to live under sliding wages and
increasing costs all with no budget for doing so.
And yet, we don't teach financial literacy, and most high schoolers graduate and go on to college
without having had control over a simple checkbook, credit card or debit card.
That makes National Financial Literacy Month under way now a crucial opportunity for increased
awareness and perhaps a change in the way we learn about money.
According to President Obama's proclamation of the month, "Americans' ability to build a secure future
for themselves and their families requires the navigation of an increasingly complex financial system."
We've all experienced some of the complexity credit card inserts, mortgage closings, financial aid
applications but how do we acquire the navigation skills?
The proclamation offers several resources: www.myMoney.gov, www.ConsumerFinance.gov or toll-free

888-MyMoney.
The first resource offers specific tools for learning about and calculating such financial knowledge as
saving and spending, investing and retirement, insurance, debt and credit and consumer rights.
That leads to the second site, the Consumer Financial Protection Bureau, the new agency created by
the Consumer Protection Act. The bureau's sole job is to look out for the interests of Americans as they
interact with the nation's financial structure credit cards, banking, mortgages, debt management,
bankruptcy.
The brainchild of Harvard University professor Elizabeth Warren, the bureau offers in-depth information
on all the topics listed above plus something more: You can ask questions of the bureau and get help
for consumer-related problems.
This is where you turn when your credit card company suddenly and for no reason raises your
borrowing rate or drops your borrowing limit to near what you've already used. Here's where you turn
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when you think the mortgage company you've approached is not playing by the rules. Here's who you
call when in the midst of financial trauma, a shady bankruptcy company finds you.
But there's more that Americans can do to protect themselves: They can take responsibility for their
own knowledge.
Read a book on financial literacy. Take a class. Watch financial literacy programming on television.
Keep up with the world of finance through your favorite news outlet.
In other words, take a course in Financial Literacy 101, and when you've finished on that level, cash in
your knowledge for a more secure future.
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Wall Street Journal

Fed Proposes Minimum Standards for Home Loans
April 19, 2011
By Alan Zibel
During the housing boom, many lenders and mortgage brokers didnt operate with consumers best
interest in mind.
They enabled and sometimes encouraged borrowers to take out loans with interest rates that shot
upward after an introductory period even ones in which the principal balance rose over time.
The Dodd-Frank financial overhaul passed last year aims to prevent these practices from coming back,
mandating that lenders ensure that all borrowers have the ability to pay back their home loans.
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As required by the Dodd-Frank law, the Federal Reserve on Tuesday proposed a set of minimum
standards for home lending, creating an ability-to-repay requirement for most home loans, as part of
an effort to make sure that U.S. lenders dont return to the shady practices of the housing market boom.
(See the highlights.)
Lenders would be able to meet that standard by verifying the consumers income or assets or making a
qualified mortgage that requires the lender to calculate the maximum interest payment in the first five
years.
Loans that meet that standard would have protections against lawsuits. They also would have
restrictions on fees and would not allow the principal balance to grow.
The Fed also provided two more options for satisfying the ability-to-repay standard. Those affect
lenders refinancing mortgages with risky features and those in rural and other underserved areas.
The Fed is seeking comments on the proposal by July 22. However, the central bank will not complete
the process, as its authority over mortgage lending rules is scheduled to transfer to the new Consumer
Financial Protection Bureau on July 21. At that point, the consumer bureau is charged with taking over
the proposal.
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Reuters
Fed unveils proposal on U.S. mortgage standards
April 19, 2011
By Dave Clarke
WASHINGTON, April 19 (Reuters) - Lenders would be required to make sure prospective borrowers
were able to repay their mortgages before giving them a loan, under a proposal released by the Federal
Reserve on Tuesday.
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The rule, which is required by the Dodd-Frank financial reform law, is intended to tighten lending
standards and combat home lending abuses that contributed to the 2007-2009 financial crisis.
In the lead-up to the crisis, for instance, borrowers could obtain a mortgage without providing any proof
of income or employment as the market churned out "subprime" loans to borrowers who were unable to
afford them.
The rule would establish minimum underwriting standards for most mortgages such as requiring a
lender to verify a borrower's income, the amount of debt they have and whether they have a job.
Many banks have already tightened lending requirements after the mortgage market soured during the
crisis and the rule may have a limited immediate impact.
"This is where the banking industry is at, anyway," said Robert Jaworski, a lawyer with Reed Smith who
follows housing oversight.
Building on existing truth-in-lending laws, lenders could be sued by the borrower if they do not take the
proper steps to check a borrower's ability to repay.
In an important provision for the lending industry, the law provides protections from this type of liability if
a loan meets specific standards defining a "qualified mortgage."
A qualified mortgage could not include interest-only payments, a balloon payment and regular
payments that could add to the loan principle.
The Fed, however, is grappling with how to implement this legal protection.
The Fed said the law is "unclear" about how to define a "qualified mortgage" that would get a safe
harbor, meaning it would be fully protected from litigation, or whether a borrower could still challenge
the loan in court.
In its proposal, the Fed is seeking comment on two possible ways of defining a qualified mortgage.
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Under the first scenario, lenders would get more legal protection.
It would give lenders a legal safe harbor if the "qualified mortgage" does not violate the payment
provisions -- even if the loan does not comply with the general underwriting standards such as income
verification.
As a second possible definition of a "qualified mortgage," the Fed proposes requiring that such a loan
meet the requirements laid out in option one as well as the general underwriting standards.
Lenders will likely support the first option presented by the Fed, said Bob Davis, executive vice
president for mortgage, markets and public policy at the American Bankers Association.
"They generally will prefer certainty," he said.
The Fed is seeking comments on the proposal through July 22.
The final rule will be implemented by the Consumer Financial Protection Bureau, which opens its doors
on July 21.
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Bloomberg
Banks Kept Waiting for Terms of U.S. Foreclosure Accord as States Divided
April 20, 2011
By David McLaughlin
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Attorneys general negotiating the settlement of a nationwide foreclosure investigation have yet to
approach banks with a proposed dollar amount that would fund principal reductions for borrowers, a
state official said.
The states have agreed on some terms while failing so far to reach an accord on monetary payments
by lenders, a person familiar with the talks said last week. Eight Republican attorneys general have
publicly challenged the concept of principal reductions as part of a 50-state settlement.
Last month, officials representing the state probe and the Justice Department submitted settlement
terms to five mortgage servicers, including Bank of America Corp. (BAC) and JPMorgan Chase & Co.
(JPM) They called for a substantial portion of an unspecified monetary amount to go toward a loan
modification program. Virginia Attorney General Kenneth Cuccinelli and six other Republican attorneys
general assailed the proposal as an overreach of state power, with four calling principal reduction a
moral hazard.
Youre declaring in advance who the winners and losers are, Georgia Attorney General Sam Olens
said in an interview yesterday. Im a little concerned that this process disengages the normal market
forces.
The six-month probe was triggered by claims of faulty foreclosure practices following the housing
collapse, which state officials said may violate their laws. Geoff Greenwood, a spokesman for Iowa
Attorney General Tom Miller, a Democrat who leads the investigation, said in an interview that the
states havent presented a dollar figure to the banks, declining further comment.
Some Monetary Payment
Another person familiar with the talks said state negotiators are discussing what form a financial
component may take, and that there will be no settlement without a monetary payment. The person,
who declined to be identified because the talks are private, said it may take four months to reach a deal.
Bank of America, JPMorgan, Wells Fargo & Co. (WFC), Citigroup Inc. (C) and Ally Financial Inc. are the
five companies involved in the talks with the 50 states.
In his March 22 letter to Miller, Cuccinelli said the settlement proposal, or term sheet, given the five
lenders appears to reach well beyond the scope of our enforcement role, and, in some instances, far
exceeds the scope of the misconduct which was the subject of our original investigation.
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State Objections
The letter was also signed by Greg Abbott of Texas, Pam Bondi of Florida and Alan Wilson of South
Carolina. The attorneys general of Oklahoma, Alabama and Nebraska sent Miller a letter with their
objections March 16.
The proposal to reduce homebuyers loans rewards those who simply choose not to pay their
mortgage, some of the attorneys general told Miller.
Last month, mortgage servicers agreed with U.S. banking regulators to a series of reforms, including
conducting a review of loans that went into foreclosure in 2009 and 2010 and improving procedures for
modifying loans and seizing homes.
The 50 states and the Justice Department seek to set requirements for how banks service loans and
conduct home foreclosures.
Any state agreement with servicers or banks on principal reductions will depend on the size of the
writedowns, the incentives for the servicers built into the settlement and other details, which continue to
be sorted out, said the first person familiar with the negotiations.
In the Toolbox
Our position has been that principal reductions are one tool in the toolbox, and should only be used in
appropriate circumstances, Iowas Miller said yesterday in an e-mailed statement. We have never
advocated broad-based principal reductions that would pick winners and losers or trigger strategic
defaults.
Miller has said that the states and the banks have a long way to go to reach an agreement.
Though not in accord on financial penalties or loan reductions, significant progress has been made on
other settlement terms, said that person, who declined to be identified because the talks are private.
Agreements in principle have been reached on several issues, said the person, who didnt specify the
areas of accord as they may change as talks proceed.
Dan Frahm, a spokesman for Charlotte, North Carolina-based Bank of America, and Thomas Kelly, a
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spokesman for New York- based JPMorgan, didnt return calls seeking comment.
Broad-Based
In a speech to a group of attorneys general earlier this month, Bank of America Chief Executive Officer
Brian Moynihan said broad-based principal reductions arent a sound policy decision for America.
Fairness is a major concern, he said, according to the prepared text of the speech. Its hard to see
how we could justify reducing principal for many delinquent customers who represent a small portion of
borrowers, but not for the vast majority of our customers who have stayed current on their loans.
In their agreements earlier this month, federal banking regulators including the Office of the Comptroller
of the Currency said the consent decrees entered into with the 14 banks wont prevent them from
issuing fines later.
In addition to Bank of America and JPMorgan, also taking part in those agreements were San Francisco
-based Wells Fargo, New York-based Citigroup, the GMAC unit of Detroit-based Ally Financial, Aurora
Bank FSB, EverBank Financial Corp., HSBC Holdings Plc, OneWest, MetLife Inc., PNC Financial
Services Group Inc. (PNC), Sovereign Bank, SunTrust Banks Inc., and US Bancorp.
Iowas Miller said earlier this month that the state effort to reach a nationwide agreement would
continue unabated.
Back to Top
Wall Street Journal

Apartment-Building Foreclosures Piling Up
April 20, 2011
By Nick Timiraos and Dawn Wotapka
Page 960 of 3826
For more than three years, Fannie Mae has faced surging foreclosures on deteriorating home loans.
Now, it also has to deal with an uptick in souring loans backing apartment buildings made as the market
peaked four years ago.
Last year, Fannie acquired 232 properties through foreclosuremore than double the amount in 2009
and loans backing another 481 properties were seriously delinquent. The rise is a reminder that
despite the rebound in apartment-building prices in leading markets, owners and their lenders are still
hurting in many parts of the country.
Fannie's experience with University Crossroads, a 150-unit apartment complex adjacent to Arizona
State University in Tempe, Ariz., shows why it is now dealing with a rising pile of foreclosed properties.
In 2006, Fannie bought a $5.4 million mortgage, helping Landco, a closely held commercial-property
firm, finance the $8.2 million purchase.
Property values climbed higher, fueled in part by investor demand for rental apartments that could be
converted into for-sale condominiums. Landco secured a $2.7 million follow-on mortgage from Fannie in
2007. The housing bust and recession hit Arizona hard. Landco stopped making payments after the
property's income plunged and asked Fannie to restructure the deal in 2008.
"We couldn't justify putting another nickel into it because it would just be throwing money down a rat
hole," says Mark Lester, the firm's acting chief executive. "It made no business sense." Both sides
couldn't agree on workout terms, and the property was later relisted for $4.4 million, nearly half of the
2006 sale price.
Fannie typically restructures every two in five delinquent mortgages, while it forecloses on properties
the rest of the time. Those decisions are driven by "whichever saves the taxpayer the most money,"
says David Worley, Fannie's chief risk officer for multifamily.
Four statesArizona, Florida, Georgia and Ohiorepresent 39% of Fannie's seriously delinquent
loans, even though they account for 10% of multifamily holdings. Meanwhile, 40% of loans backed by
Fannie are in California and New York, and those states accounted for just 3% of losses last year. More
than one-third of Fannie's loan losses last year came from those purchased in 2007, when property
values peaked.
In February, 16% of the multifamily loans backing commercial mortgage securities were delinquent,
according to Trepp LLC. The delinquency rate was 3.7% for banks reporting to the Federal Deposit
Insurance Corp. at the end of 2010 and lower still, 0.7%, for Fannie. Mr. Worley says the industry is
seeing a "very rapid recovery" in the apartment sector.
Page 961 of 3826
Freddie Mac, Fannie's smaller sibling, has seen significantly stronger performance from its multifamily
book. It held just 14 foreclosed properties at the end of last year, and its delinquency rate stood at
0.26%. The firm reported nearly $1 billion in net income from its multifamily business last year, versus a
$511 million net loss in 2009.
Fannie and Freddie ramped up their purchases of apartment-building loans in 2007 and 2008, as
private lenders retreated. The firms' share of multifamily loan purchases jumped to 85% in 2009, from
29% in 2007, according to the Mortgage Bankers Association. Last year, the mortgage titans accounted
for 56% of such loans, replaced in part by a jump in lending by the Federal Housing Administration.
Policy makers actively encouraged Fannie and Freddie to boost their multifamily lending over that span,
though the firms tightened their underwriting standards in mid-2008. Fannie and Freddie buy apartmentbuilding loans that other lenders originate as part of their mission to support affordable housing. By
providing a fluid source of credit for landlords, the companies theoretically benefit tenants.
Freddie and Fannie single-handedly kept the multifamily industry from experiencing the credit crunch
that walloped the office and retail sectors. The companies own or guarantee around 40% of the market,
with $325 billion in multifamily mortgages.
Apartment values began stabilizing in some markets last year and have been rising in markets such as
New York and Washington, where the economy has fared better. The market also is being buoyed by
favorable demographics and the aftermath of the housing bust, which has transformed would-be
homeowners to renters. This has fueled demand at a time that very little new supply is being added.
Values of buildings owned by real-estate investment trusts are within 10% of their 2007 peak, according
to Green Street Advisors, a research firm.
But vacancies hit 30-year highs during the recession and still haven't recovered in many markets.
Fannie plans to take advantage of the improving market in many regions by selling a chunk of
foreclosed apartment buildings, along with stakes in future repossessions, to Related Cos., according to
people familiar with the matter. Under the terms of a deal, the New York private real-estate company
would buy a 25% stake in Fannie's inventory. Related would be required to invest in maintenance and
management of the buildings.
The government took control of Fannie and Freddie in 2008, and taxpayers are on the hook for $134
billion and counting, as loan losses on single-family housing wiped out thin reserves. Apartment-related
losses pale in comparison. Fannie actually recorded net income of $216 million from its multifamily
Page 962 of 3826
business last year, up from a $9 billion net loss in 2009. (About half of that loss was due to write-downs
on low-income-housing tax credits.)
By contrast, Fannie reported net losses of $26.7 billion and $63.8 billion from its single-family business
in 2010 and 2009, respectively.
Back to Top
Housing Wire
Fannie, Freddie foreclosure preventions drop for fifth-straight month
April 19, 2011
By Jon Prior
Foreclosure prevention actions in February, such as modifications or repayment plans, dropped for the
fifth-straight month at Fannie Mae and Freddie Mac, according to the Federal Housing Finance Agency.
Servicers working on loans held by the government-sponsored enterprises provided 55,070 total
foreclosure prevention workouts, down from nearly 61,000 the month before and below the 77,800
actions taken one year ago. The peak came in March 2010, when servicers completed more than
101,400 actions.
Completed modifications made up more than half of the prevention actions at 25,424 in February, down
from 31,000 the previous month and the lowest total of any month in the last year. Servicers completed
nearly 15,000 repayments plans and 7,827 short sales. Roughly 6,200 forbearance plans were started,
followed by 540 deeds-in-lieu of foreclosure for the month.
Workouts through the Home Affordable Refinancing Program, which the FHFA recently extended [1]
another year, totaled 47,000 loans in February, up from 41,000 the month before.
Page 963 of 3826
Foreclosure starts outnumbered preventions. Servicers started 66,477 foreclosures on GSE loans in
February, down from more than 91,000 in the previous month and 71,000 a year earlier. The peak for
foreclosure starts came in July 2010, when servicers began 121,600 foreclosures.
The serious delinquency rate on the combined portfolios at Fannie and Freddie dropped 2 basis points
to 4.18% in February, down almost a full percentage point from 5.03% a year ago.
Nearly half of Fannie and Freddie borrowers claimed a curtailment of income as the reason behind their
delinquency, followed by excessive obligations at 14%, and 8% of borrowers cited unemployment as
their hardship.
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AOL Daily Finance

Is It Time to Kill the Mortgage Interest Tax Deduction?
April 20, 2011
By Charles Wallace
With proposals from both President Obama and Republican leaders to broaden the tax base, it seems
likely that some cherished income tax deductions may be reduced or even eliminated, and one leading
candidate for the chopping block is the deduction for mortgage interest.
Though many economists argue the mortgage interest deduction doesn't work properly, most
Americans don't agree. A poll by USA Today and Gallup published Friday showed that 61% of
Americans oppose eliminating the mortgage interest tax deduction to either lower the overall tax rate or
as a way to reduce the federal deficit. In fact, the poll showed that a majority of Americans were against
eliminating any tax deductions.
But both the Obama deficit reduction plan and the plan put forward by U.S. Rep. Paul Ryan (R-Wisc.)
would require some tax changes. "It's hard to imagine you could do a lot of base broadening while
leaving the mortgage deduction completely untouched," says Alan D. Viard, a resident scholar at the
Page 964 of 3826
American Enterprise Institute in Washington, D.C. "I think it is fair to say that each of them would end up
having to do something with the mortgage deduction if they really wanted to carry through on what they
are promising."
According to the Treasury Department, the budget for 2012 projects that the mortgage interest
deduction will cost the budget around $100 billion. But Eric Toder, co-director of the Urban-Brookings
Tax Policy Center in Washington, estimates that elimination of the deduction would only generate $70
billion to $80 billion, because some people would pay off their mortgages early if the law is changed.
"Most of the deduction is going to the people who are itemizing -- relatively high-income people who
would be home owners anyway," Toder says. "People on the margin -- who might be thinking about
renting or buying -- can't use the deduction."
AEI's Viard says the deduction actually "encourages people to own bigger homes or more expensive
homes. It is hard to see the public purpose in that objective."
Who Gains the Most From the Deduction?

There is no dispute that the deduction benefits higher-income earners more than lower- and middleincome Americans. If you're in the 35% tax bracket, you get $35 of savings for every $100 of mortgage
interest you pay, but if you're in the 15% tax bracket, you only get $15. So it's hard to claim that the
deduction is targeted at people who are on the fence on the question of buying a home vs. renting.
But a counter-argument comes from Robert Dietz, an economist with the National Association of Home
Builders, who says that elimination of the mortgage deduction would have "a huge impact" on first-time
home buyers.
In the early years of a 30-year, fixed-rate mortgage, Dietz notes, the largest part of each payment goes
directly to interest -- only a little goes to paying down the loan's principal. As a result, he says, recent
first-time buyers are the ones for whom interest makes up the largest share of the household budget,
and it is they who would be hurt the most by an elimination of the mortgage interest deduction.
Dietz maintains that 70% of the benefits from the reduction in tax liability go to people earning between
$50,000 and $200,000 a year. Eliminating the mortgage deduction "would have the effect of delaying
the home ownership status of some people, as they would have to accumulate a larger down payment
before they became home owners," he says.
Toder says he doubts that elimination of the deduction would divert potential homeowners into
becoming renters. "I think what it would probably do is reduce the amount of money you would spend
on a house," he says.
Page 965 of 3826
And, he notes, if there are no transition rules, current homeowners could get squeezed painfully if the
deduction is eliminated while they have to carry on making the same old mortgage payments.
An Alternate Proposal
One plan that is gaining currency was suggested by President Obama's budget reform commission,
which was headed by former Sen. Alan Simpson (R-Wyo.) and Erskine Bowles, former chief of staff to
President Clinton.
They proposed to eliminate the mortgage interest deduction and replace it with a 12% credit for interest
paid. While that would be less than many taxpayers now receive for the current credit, lower-income
earners such as seniors would be entitled to claim the new credit even if they don't file for itemized
deductions.
The current limit for the proposed deduction is mortgages on $1 million homes. Viard says by making
interest credit available to people who don't itemize deductions and placing a limit on the dollar value of
the house, it wouldn't encourage people to buy more expensive houses.
"This credit is much more focused on what may be the legitimate goal of encouraging home ownership
instead of this clearly illegitimate goal, which I am not sure anybody has identified, of encouraging
bigger houses," Viard says.
Or perhaps we can eliminate mortgage interest from consideration altogether. After all, Canada and
Britain don't allow it as a tax deduction, and the real estate markets are booming in both countries.
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Palm Beach Post
Page 966 of 3826
Foreclosure leaves North Palm couple's belongings on street for thieves

April 15, 2011
By Bill DiPaolo
NORTH PALM BEACH Code enforcement officials responded Friday to protect furniture and other
personal items that eviction officials placed in the driveway of a Lighthouse Drive home.
"People were like buzzards around fresh meat. At one point, there must have been a dozen cars.
People were grabbing and taking everything," said Chuck Huff, the village community development
director.
People illegally sifted through mattresses, desks, lamp shades, dishes, books, golfing equipment and
dozens of other items. Property piled on a person's driveway is not open to the public without the
owner's permission, Huff said.
"It's sad. My wife's bowling trophies are somewhere in there. We're a very sentimental family," said
Christopher James, the former owner of the home that was foreclosed on earlier this year.
Foreclosure proceedings were completed in January. The six-bedroom, three-bathroom home is owned
by First National Mortgage Association, according to county records.
James and his wife Leah operated Christopher's Florist and Christmas store on the east side of U.S. 1
at Northlake Boulevard. Well-known for its annual elaborate Christmas displays, the store closed in
2006 after being open 25 years.
The couple moved to Perry, in North Florida. They kept their Lighthouse Drive home. They opened
another Christmas store in Perry.
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Page 967 of 3826
Huffington Post
Financial System Riskier, Next Bailout Will Be Costlier, S&P Says
April 19, 2011
By Shahien Nasiripour
The financial system poses an even greater risk to taxpayers than before the crisis, according to
analysts at Standard & Poor's. The next rescue could be about a trillion dollars costlier, the credit rating
agency warned.
S&P put policymakers on notice, saying there's "at least a one-in-three" chance that the U.S.
government may lose its coveted AAA credit rating. Various risks could lead the agency to downgrade
the Treasury's credit worthiness, including policymakers' penchant for rescuing bankers and traders
from their failures.
"The potential for further extraordinary official assistance to large players in the U.S. financial sector
poses a negative risk to the government's credit rating, S&P said in its Monday report.
But, the agency's analysts warned, "we believe the risks from the U.S. financial sector are higher than
we considered them to be before 2008."
Because of the increased risk, S&P forecasts the potential initial cost to taxpayers of the next crisis
cleanup to approach 34 percent of the nation's annual economic output, or gross domestic product. In
2007, the agency's analysts estimated it could cost 26 percent of GDP.
Last year, U.S. output neared $14.7 trillion, according to the Commerce Department. By S&Ps
estimate, that means taxpayers could be hit with $5 trillion in costs in the event of another financial
collapse.
Experts said that while the cost estimate seems unusually high, there's little dispute that when the next
crisis hits, it will not be anticipated -- and it will likely hurt the economy more than the last financial crisis.
"The impact of the next crisis will be greater because the economy is in a much more fragile state," said
Andrew Lo, professor of finance at the MIT Sloan School of Management.
"My worry about the next financial crisis is it will come from some corner we haven't really thought
Page 968 of 3826
about, and we'll be locked into more constraints on the Fed's ability and on the Treasury's ability to
really do anything," said Jeremy Stein, an economics professor at Harvard University who worked as an
adviser to both the Treasury Department and the White House in 2009.
The constraints are a result of the last round of multiple bailouts.
"I think it's literally going to be politically harder to put in resources, for better or for worse," Stein said.
That could either induce those in the financial system to take less risk, forestalling the next breakdown,
or, "the mop up will be more difficult," Stein said.
The U.S. banking industry poses as much of a credit risk as Spain's, S&P wrote in an April 8 report in
which it judged 92 nations' banking sectors. Spain is frequently mentioned as a candidate for an
international bailout because many of its banks are under-capitalized, its banking system remains
dogged by delinquent bubble-era loans and it faces losing investor confidence.
The ranking is partly based on the quality of a nation's financial regulation and lending patterns. U.S.
bank regulators failed to prevent the crisis or the poor lending that led to it, S&P analysts wrote in a Jan.
6 report.
"Systemic risk is greater now," said Mark T. Williams, a finance professor at Boston University and a
former bank examiner for the Federal Reserve. "It was uncorked because of the fall of Lehman
Brothers, and the genie has been let out of the bottle," he said, referring to the September 2008 failure
of the former investment bank.
The continued rise of globalization and the separate growth of derivatives -- financial instruments that
aim to spread risk -- have led to greater connections between countries, industries and companies,
Williams said. The level of so-called interconnection has tied firms to one another in ways experts do
not completely understand. Regulators and policymakers didn't know how interconnected various banks
and insurance companies were prior to the near-financial meltdown of 2008.
Because the giant insurer American International Group, better known as AIG, was connected to so
many firms through derivatives, policymakers felt forced to bail the company out when it ran into
trouble.
"Systemic risk knows no national boundaries," said Williams, who published "Uncontrolled Risk," a book
on the topic, last year. "It is not random or a force of nature, it is man made. [And] the global financial
market remains fragile due to weak policies, lax regulation, poor accountability and systems not
designed to capture global risk management."
Page 969 of 3826
The risk of another financial collapse also has increased, Lo of MIT argues, because banks have not
accounted for losses on poorly-performing assets they're still hiding on their books; lawmakers' likely
aversion to another bailout should the system run into trouble again; and the perception that many
national economies aren't as durable as they were just a few years ago. China, for example, was able
to help the U.S. through the depths of the last crisis thanks to the steps it took to increase domestic
spending.
But today, China is trying to cool down an over-heating economy.
"Next time around, if we see another systemic shock, it will be very difficult for us to depend on our
foreign trading partners to cushion that kind of a blow," Lo said. "The world economy is not as resilient
as it was just a few years ago."
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New York Times

Leader of Big Mortgage Lender Guilty of $2.9 Billion Fraud
April 19, 2011
By Ben Protess
The founder of what was once one of the nations largest mortgage lenders was convicted of fraud on
Tuesday for masterminding a scheme that cheated investors and the government out of billions of
dollars. It is one of the few successful prosecutions to come out of the financial crisis.
After more than a day of deliberations, a federal jury in Virginia found Lee B. Farkas, the former
chairman of Taylor, Bean & Whitaker, guilty on 14 counts of securities, bank and wire fraud and
conspiracy to commit fraud. Mr. Farkas, 58, faces decades in prison for his role in the $2.9 billion plot,
which prosecutors say was one of the largest and longest bank fraud schemes in American history and
led to the 2009 collapse of Colonial Bank.
Theres no question that it is very momentous and a very significant case, said Lanny Breuer, the
Page 970 of 3826
assistant attorney general for the criminal division of the Justice Department.
The 10-day trial was a rare win for federal prosecutors in the aftermath of the financial mess. The
Justice Department has yet to bring charges against an executive who ran a major Wall Street firm
leading up to the disaster. An earlier case against hedge fund managers at Bear Stearns ended in
acquittal. Prosecutors dropped their investigation into Angelo R. Mozilo, the former chief of Countrywide
Financial, which nearly collapsed under the weight of souring subprime home loans.
Six other Taylor, Bean & Whitaker executives including its former chief executive and former
treasurer have already pleaded guilty. Some agreed to testify against Mr. Farkas at his trial.
Mr. Farkas took the stand during the trial to defend his actions and deny any wrongdoing. A lawyer for
Mr. Farkas did not respond to a request for comment.
The scheme began in 2002, prosecutors say, when Taylor, Bean & Whitaker executives moved to hide
the firms losses, secretly overdrawing its Colonial Bank accounts, at times by more than $100 million.
To cover up the actions, prosecutors said that the lender sold Colonial about $1.5 billion in worthless
and fake mortgages, some of which had already been bought by other institutional investors. The
government, in turn, guaranteed those fraudulent home loans.
In a related plot, Mr. Farkas and other executives created a separate mortgage lending operation,
called Ocala Funding. The subsidiary sold commercial paper to big financial firms, including Deutsche
Bank and BNP Paribas. When Taylor, Bean & Whitaker collapsed, the banks were unable to get all of
their money back.
During the course of the fraud, prosecutors said, Mr. Farkas pocketed some $20 million, which he used
to buy a private jet, several homes and a collection of vintage cars. His shockingly brazen scheme
poured fuel on the fire of the financial crisis, Mr. Breuer said.
With the credit crisis in full swing, Mr. Farkas and other Taylor, Bean & Whitaker executives persuaded
Colonial to apply for $570 million in federal bailout funds through the Troubled Asset Relief Program, or
TARP.
The Treasury Department approved the rescue funds, on the condition that Colonial was able to raise
$300 million in private money. The Taylor, Bean & Whitaker executives falsely led the bank into thinking
it had investors lined up. Ultimately, the government did not give any money to Colonial.
Shortly thereafter, in August 2009, Colonial filed for bankruptcy, the same time that Taylor, Bean &
Page 971 of 3826
Whitaker failed.
Todays verdict ensures that Farkas will pay for his crime an unprecedented scheme to defraud
regulators during the height of the financial crisis and to steal over $550 million from the American
taxpayers through TARP, Christy Romero, the acting special inspector general for the TARP program,
said in a statement.
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Page 972 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

_DL_CFPB_AllHands

Tue Apr 19 2011 11:45:07 EDT
Index


Lexington Herald-Leader Obama adviser speaks at University of Kentucky
Kentucky Kernel Presidents adviser gives advice on managing money
Reverse Mortgage Daily CFPB Subject to Annual Audits, Study
Dow Jones Newswires Consumer Finance Agency Nears Mortgage 'Prototype'
Bloomberg Warren Says Consumer Bureau to Release Model Mortgage Forms
Louisville Courier-Journal Consumer agency head courts bankers in Louisville
Business First of Louisville Elizabeth Warren speaks for gathering of bankers
Reuters Warren still candidate for consumer agency: Geithner
New York Times (blog) Actually, Jamie Dimon Now Likes New Consumer Bureau
Consumer Credit
New York Times (blog) Ally Bank Offers Remote Deposit, but Not From Your Phone
Page 985 of 3826
American Banker White Houses Online ID Strategy to Rely on Banks

Washington Times Shoppers squeezed by spat over debit card use
Housing
New York Times Letting the Banks Off the Hook
Dow Jones Newswires Fed Proposes Minimum Home Lending Standards
Wall Street Journal (blog) Could Debt Worries Accelerate Fannie, Freddie Overhaul?
American Banker Group Seeks GSE Wind-Down
USA Today Mortgage Complaints Raised Red Flags
American Banker It's an Employer's Market For Home Loan Officers
Lexington Herald-Leader
Obama adviser speaks at University of Kentucky
April 19, 2011
By Karla Ward
Elizabeth Warren, special assistant to President Obama, said the fine print in some financial documents
is "like shrubbery that muggers can hide in," but she hopes a newly formed federal agency will make
the industry more consumer-friendly.
"Consumers ought to be able to compare three or four credit cards, three or four mortgages," she said.
Warren, who also serves as special adviser to the Secretary of the Treasury on the Consumer Financial
Protection Bureau and is a law professor at Harvard University, delivered the annual Chellgren Lecture
at the University of Kentucky on Monday night.
Page 986 of 3826
In an address titled "Debt, Credit and the Middle Class," Warren pointed to data indicating that, over
more than three decades, the percentage of disposable income Americans put toward savings has
decreased, while their debt has increased. Home values have grown, but so has mortgage debt, and
home equity as a share of home value has declined.
All that, she said, has "made families more vulnerable."
At the same time, she said, consumer credit law became a "tangled" mass, enforced by seven different
federal agencies and governed by 19 federal statutes.
Meanwhile, in the finance industry, "non-bank" companies such as mortgage brokers and payday
lenders grew up in competition with banks.
In such an environment, she said, "the products themselves start to shift." For example, credit card
companies, she said, implemented "front end-back end pricing," in which they lowered interest rates
while adding fees and penalties consumers might not readily notice.
"You end up with a market that stops working," she said.
Warren said the Consumer Financial Protection Bureau, created by Congress last July, was formed
with a vision of making pricing more clear and allowing consumers to better evaluate risk.
It brings the disparate authorities for regulating the consumer finance industry under one roof with a
goal of smarter rules, better governance and more financial education for consumers.
"It can't fix it all, but it might be able to fix part of it," Warren said.
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Kentucky Kernel
Page 987 of 3826
Presidents adviser gives advice on managing money

April 18, 2011
By Alex Ruf
College students have a lot to balance. Students have to keep track of their classes, their jobs,
extracurricular activities and their personal finances. Elizabeth Warren, special adviser for the
Consumer Financial Protection Bureau, is trying to make debt easier to understand.
On Monday, Warren gave the annual Chellgren lecture titled Debt, Credit and the Middle Class to a
crowed Memorial Hall. She spoke on how the world, especially for the middle class, has changed since
the previous generation.
Warren serves as assistant to the president and special adviser to the secretary of the treasury on the
Consumer Financial Protection Bureau. She is the author of nine books, two of which made it on the
bestsellers list, and has been mentioned as one of Time magazines 100 most influential people in the
world in both 2009 and 2010.
Warren began her speech with a series of slides showing the amount the average American man
makes over time, and then compared it to an average couple. Both cases saw increases until the
1970s, when the average wage for a single man leveled out. In 2005, the average single man made
less than he would have in the 70s.
In one generation the economics of the middle class shifted, Warren said.
Not just the amount of money people make has changed since the 70s but also the amount of money
Americans save. Americans have been saving less and less since the 1970s, Warren said. Recently,
Americans are saving their money more, but that is because people begin to save more in times of
economic recession.
As saving goes down, debt goes up, Warren said.
Student loans are quickly becoming the largest form of personal debt in America. Oftentimes college
students are susceptible to falling in the risk of massive debt by the time college is over. Most of it
comes from trying to pay for school, but the rest comes from credit card debt.
Page 988 of 3826
Credit card debt is on the rise with college students. Many students do not read the fine print on the
contracts they sign with credit card companies. This lack of reading leads to problems, such as a
massive increase in interest rates.
Warren is an adviser for the Consumer Advisory Board. She works to try to relieve some Americans
from debt. Warrens goal is to make mortgages and credit card contracts easier to understand for the
average American. She wants to get out of fine line mentality that most contracts seem to be stuck on.
This will give us the chance to fill the hole in the bottom of the boat for the middle class, she said.
Back to Top

CFPB Subject to Annual Audits, Study
April 18, 2011
By Elizabeth Ecker
The Senate continuing resolution passed Friday that will fund the government through the remainder of
the fiscal year also included Consumer Financial Protection Bureau provisions; one of which will subject
the CFPB to two annual audits, and the other which will require an annual study on the government
agency.
The first audit will require an independent review of the CFPBs operations and budget by an auditing
firm the bureau will choose, according to the American Bankers Association. The second audit will
require a Government Accountability Office review of CFPBs financial statements to ensure compliance
with generally accepted government accounting standards.
The study, according to the continuing resolution, will include an analysis of the impact of regulation on
the financial marketplace, including the effects on the safety and soundness of regulated entities, cost
and availability of credit, savings realized by consumers, reductions in consumer paperwork burden,
changes in personal and small business bankruptcy filings, and costs of compliance with rules,
including whether relevant Federal agencies are applying sound cost-benefit analysis in promulgating
rules.
Page 989 of 3826
In recent weeks, Elizabeth Warren, CFPB leader and assistant to President Obama, has defended the
agency against proposals that would change CFPB governance from a single director to a five-member
commission, and would make it easier for the Financial Stability Oversight council to overturn CFPB
regulations.
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Dow Jones Newswires

Consumer Finance Agency Nears Mortgage 'Prototype'
April 18, 2011
By Doug Cameron
LOUISVILLE, Ky. (MarketWatch) -- The new U.S. consumer finance watchdog will next month start
testing a new version of the standard mortgage disclosure form, the academic overseeing the agency's
creation said Monday.
The planned revamp of the Real Estate Settlement Procedures Act, or RESPA, form was a key priority
of the Consumer Financial Protection Bureau, ranking ahead of improved disclosure for credit card
products.
"In May, we will be looking at our first [mortgage form] prototypes," Elizabeth Warren told Dow Jones
Newswires on the sidelines of a banking conference in Louisville, Ky. The agency has been consulting
with banks on the format and content of the RESPA revamp for a number of months.
Formal rule-writing will not start until after its launch on July 21. Warren provided few other details of the
agency's rule-writing initiatives beyond mortgages and credit cards.
"The much bigger part of what we do will be supervision and enforcement," she said. She said ramping
up the agency's oversight of thousands of non-bank financial institutions "would be a long slope."
Page 990 of 3826
Warren, the White House adviser tasked with preparing the new agency for its launch, also said the
proposal contained in the 2011 federal budget for the agency's finances to be scrutinized via audit didn't
challenge its independence.
"I still feel comfortable with two audits," she said.
The new agency's remit and structure remains under intense scrutiny, and the White House has yet to
nominate a director for the agency, created as part of the Dodd-Frank financial reforms.
She told bankers that the notion of the agency being overseen by a five-person panel of commissioners
had been discussed last summer.
"The idea of going back to try and change that piece is just designed to throw sand in the gears," she
said. Critics concerned about regulatory overreach have called for the agency to be overseen by a
bipartisan panel rather than a single director.
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Bloomberg
Warren Says Consumer Bureau to Release Model Mortgage Forms
April 18, 2011
By Carter Dougherty
Elizabeth Warren, the Obama administration adviser charged with setting up the U.S. Consumer
Financial Protection Bureau, said the agency will soon release model mortgage forms that may become
the basis of new regulations on home finance.
Weve come up with a couple of prototypes, Warren said today during a meeting with community
bankers in Louisville, Kentucky. In a few weeks, well be ready to share those prototypes.
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Warren, 61, has made simplification of mortgage disclosure forms a centerpiece of her work at the new
agency, which is scheduled to officially begin work in July. Warren has said that many of the forms now
in use are duplicative.
Warren has touted mortgage disclosure as a way community banks can make inroads against larger
rivals like JPMorgan Chase & Co. (JPM) and Bank of America Corp. (BAC) If disclosure is simpler and
less costly, community banks can compete based on their close ties to customers, she said.
A community banking model works for American families, Warren said during the session.
Warren highlighted how the new agency has built outreach to community banks into its initial structure,
with a box on its organizational chart for a liaison to community banks and other small firms.
In Our Face
We dont need a box for the biggest financial institutions, Warren said. Theyll be in our face every
day.
In an interview, Warren said that public release of the prototypes would come before advance notice of
proposed rulemaking. After the release, she said in her remarks, the bureau will seek public comment,
and has budgeted for five phases of testing of the forms with consumers.
The inspector general of the Treasury Department, which currently houses the bureau, has said these
notices, an early phase of creating new regulations, could come before the agency is scheduled to
assume its full powers on July 21.
The Dodd-Frank financial regulatory overhaul signed by President Barack Obama in July requires the
new agency to propose regulations on mortgage disclosure by July 21, 2012.
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Page 992 of 3826
Louisville Courier-Journal
Consumer agency head courts bankers in Louisville
April 18, 2011
By Chris Otts
Elizabeth Warren, architect of the new U.S. Consumer Financial Protection Bureau, met a luke-warm
reception from community bankers during a Federal Reserve conference in Louisville on Monday.
Warren, a Harvard University professor known for her consumer advocacy, is helping to get the
consumer protection agency off the ground as a special adviser to the U.S. Treasury Department. A
director of the bureau has not yet been named.
Created as part of the Dodd-Frank financial reform that President Obama signed into law last year, the
agency will enforce laws related to consumer financial products like mortgages and credit cards.
Steve Trager, chief executive of Louisville-based Republic Bank, pressed Warren during a question-and
-answer session at the Olmsted about whether banks will have a way to appeal rules and requirements
created by the new agency without fear of retaliation from regulators.
Trager bemoaned the lack of accountability on the part of certain of our current regulators and said
that, while Warren seems even-handed, your successor might not be so reasonable.
Earlier this month Republic sued its regulator, the Federal Deposit Insurance Corp., saying the agency
was unfairly trying to stop the bank from making loans backed by anticipated tax refunds.
In a exchange that lasted 25 minutes, Warren said rules made by the consumer agency will be subject
to veto by a two-thirds majority of the other banking regulators, and that, unlike current regulators, the
consumer agency will have to ask Congress when it wants more funding, rather than just raising fees
on banks.
She also said consolidating functions into the new agency will make it more accountable.
Page 993 of 3826
Trager said the structure described by Warren doesnt give me total comfort and that he worries about
a branch of government that is emboldened by such a lack of challenge. In the long term, it does
create an unhealthy environment.
Pressed again by Trager, Warren emphasized how bankers will be able to complain to other regulators
about the actions of the CFPB.
Look, all I can say is, its something you cant do with any other regulator, she said. If youre unhappy
with anything any other regulator does, the reality is, youre stuck with it.
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Business First of Louisville

Elizabeth Warren speaks for gathering of bankers
April 18, 2011
By Kevin Eigelbach
Elizabeth Warren, special advisor to the Secretary of the Treasury on the Consumer Financial
Protection Bureau, spoke about the bureau at a gathering today at The Olmsted that was attended
mostly by bankers and banking industry representatives, at The Olmsted.
The occasion was A Day with the Commissioner, a seminar put on by the Kentucky Department of
Financial Institutions and the Federal Reserve Banks of St. Louis and Cleveland. The commissioner in
question was the departments commissioner, Charles Vice, who also spoke, along with Federal
Reserve Bank of St. Louis president James Bullard.
The main attraction, however, was Warren, who has been given the task of creating the bureau, which
opens its doors this summer. Theres been a lot of media speculation that Warren will be asked by
President Obama to lead the bureau, but that hasnt happened yet.
Page 994 of 3826
Congress authorized creation of the bureau as part of the Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010. Its responsibilities include carrying out federal consumer financial
laws by creating rules for those laws, enforcing those laws and creating a consumer complaint center
and monitoring financial markets for new risks to consumers.
Warren briefly described the bureau and its purposes, then took questions from the audience. She only
had time for three, because her reply to Republic Bank & Trust Co. president Steve Tragers question
was rather lengthy.
Trager spoke for community bankers who fear that the new bureau will add yet another layer of
regulations to an already highly regulated industry He also worried about the bureau abusing its power.
You appear to be a very fair-minded, reasonable person ... but your successor may not be, Trager
said. There are people in Washington who are borderline unsavory, he added.
Only borderline? Warren replied, prompting laughter from the audience.
She tried to allay Tragers concerns by explaining that the bureau would be consolidating the regulatory
functions of seven different agencies, which has the potential to reduce the number of regulators the
banks deal with. For the first time ever, it also would apply consumer financial protection laws to
institutions that are not banks, such as check-advance lenders and the like, which would help level the
playing field for community banks.
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Reuters
Warren still candidate for consumer agency: Geithner
April 19, 2011
By Mark Felsenthal
(Reuters) - Controversial consumer watchdog Elizabeth Warren remains under consideration to run a
Page 995 of 3826
new consumer financial protection agency, Treasury Secretary Timothy Geithner said on Tuesday.
borrow on a credit card," Geithner said when asked in an interview on Bloomberg TV on whether she
remains on the president's list of candidates to run the agency.
Congress created the new bureau as part of the Dodd-Frank financial reform law put in place last
summer in the wake of one of the most severe financial panics in U.S. history.
Elizabeth Warren, a law professor who headed a commission to investigate the administration's
massive rescues of banks during the crisis, has been helping the Obama administration set up the
Consumer Financial Protection Bureau, which is due to begin operations in July.
Warren was an obvious front-runner to lead the new agency, but ran into opposition from Republicans
over the perception that she was too confrontational with the financial services industry.
Senator Christopher Dodd, one of the chief authors of financial reform legislation, questioned last year
whether Warren could win enough support to overcome her Republican critics. Dodd retired from the
Senate in the fall.
The Obama administration has approached other candidates about the job, including Federal Reserve
Governor Sarah Raskin, who has been a former state bank regulator and Senate aide.
The bureau's job is to preventing abusive or exploitative practices in home loans, credit cards, and other
typical consumer financial transactions, and was a key piece of the legislation.
"We saw a financial crisis that caused devastating damage to average Americans in part because they
weren't given the basic protections governments need to provide and we're going to fix that," Geithner
said.
Republicans, who gained substantial political momentum after big gains in mid-term elections in
November, have made reversing elements of that legislation a top priority. They have said that
uncertainty and red tape created by the measure hampers business and job creation.
Some lawmakers and lobbyists have proposed changing leadership of the bureau to a five-member
Page 996 of 3826
commission instead of a single director, in an attempt to diffuse its power. Another proposal would fund
the agency through congressional appropriations rather than through the Federal Reserve, reducing its
independence.
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New York Times (Dealbook blog)

Actually, Jamie Dimon Now Likes New Consumer Bureau
April 18, 2011
By Ben Protess
Jamie Dimon, it turns out, has a soft spot for the governments new consumer financial bureau.
We need to create a Consumer Financial Protection Bureau that is effective for both consumers and
banks, Mr. Dimon, chief executive of JPMorgan Chase, said in his April 4 letter to shareholders.
Yes, this is the same Mr. Dimon who last month complained that various new rules facing Wall Street
would damage America. And it is the same JPMorgan that (unsuccessfully) lobbied lawmakers to kill
plans for an independent consumer financial agency.
The hostility was all just a misunderstanding, Mr. Dimon said.
It has been widely reported that we were against the creation of a Consumer Financial Protection
Bureau (C.F.P.B.), he told shareholders in his letter. We were not we were against the creation of a
standalone C.F.P.B., operating separately and apart from whatever regulatory agency already had
oversight authority over banks.
In the end, lawmakers struck a compromise, fashioning the bureau as an independent arm of the
Federal Reserve. The bureau receives funding from the central bank rather than Congress, and the Fed
cannot restrict what the bureau does with the money. Still, a council of financial regulators can overrule
the consumer bureaus rules.
Page 997 of 3826
The bureau, formed as part of the Dodd-Frank Act, will soon gain authority to supervise and regulate
wide swaths of lenders, including payday lenders, mortgage firms and big Wall Street banks like
JPMorgan.
Mr. Dimon said he welcomed the scrutiny.
Strong regulatory standards, adequate review of new products and transparency to consumers all are
good things, he said. Indeed, had there been stronger standards in the mortgage markets, one huge
cause of the recent crisis might have been avoided.
The kind words are somewhat surprising given Mr. Dimons history with Elizabeth Warren, the Obama
administration official responsible for setting up the consumer bureau.
Ms. Warren, in a February 2010 op-ed piece in The Wall Street Journal, said: For years, Wall Street C.
E.O.s have thrown away customer trust like so much worthless trash. She went on to call out Mr.
Dimon by name, saying he is wrong to believe that financial crises are inevitable.
Mr. Dimon is apparently not holding any grudges.
I want her effort to be a success, Mr. Dimon told Fortune in October. The things she has said about
me? I dont take them personally.
Ms. Warrens rhetoric has eased since her missive in The Journal, a switch that coincided with her
becoming a Washington insider. In September, President Obama tapped Ms. Warren, then the
chairwoman of the Congressional Oversight Panel, to set up the bureau. Although Mr. Obama stopped
short of nominating Ms. Warren to be its first director, her name is still in the running for the spot.
Meanwhile, she has begun a Wall Street charm campaign, meeting with every big bank chief including
Mr. Dimon. In February, he was the only Wall Street chief she talked with, one of at least three
discussions Mr. Dimon has had with the bureaus staff, the records show.
Now, Mr. Dimon said he acknowledged that there were many good reasons that led to the creation of
the C.F.P.B., adding that if the bureau does its job well, the agency will benefit American consumers
and the system.
Page 998 of 3826
His good will, however, did not extend to other aspects of the Dodd-Frank law.
Mr. Dimon, in the letter to shareholders, said the laws restrictions on debit card swipe fees was passed
with no fact-finding, analysis or debate, had nothing to do with the crisis and potentially will harm
consumers.
Mr. Dimon was just as harsh on new rules forcing banks to spin off some of their derivatives trading
desks. We believe that it makes our system riskier not safer, he said.
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Ally Bank Offers Remote Deposit, but Not From Your Phone
April 18, 2011
By Ann Carrns
A holy grail of modern consumer banking is the ability to deposit checks electronically without having to
schlep to a branch or an A.T.M. Because online-only banks dont have branches to begin with, you
would think they would be leaders in this, but others have beaten them to the punch.
Both USAA in San Antonio, a bank with limited walk-in locations that serves military families, and J.P.
Morgan Chase, with thousands of brick-and-mortar branches, have been out in front on mobile
deposits. Both allow customers to deposit paper checks instantly by snapping photos of them with their
smartphones and pressing a button. PNC Bank and U.S. Bank, too, offer deposits via apps for the
iPhone. Pretty cool.
Now the online Ally Bank said it would start offering remote deposit on Wednesday for its customers.
(Finally! one commented on the banks Facebook page.) Compared with smartphone deposits, Allys
approach seems almost quaint: Customers use a computer and a scanner. Theres no mobile phone
option.
Page 999 of 3826
Still, Ally is ahead of its branchless competitor ING Direct, which will offer remote deposit in the near
future, a spokesman said. And the move is welcomed by Allys customers, who previously had to
arrange for direct deposits into their account, transfer funds from another bank or send checks for
deposit via snail mail.
Customers who already have a computer and a desktop scanner dont need to buy extra equipment, a
bank spokeswoman, Beth Coggins, said. When they log into their bank account, they can access
instructions that walk them through the deposit process, which involves scanning both sides of the
check before zapping it to Ally. Theyll get an e-mail confirming the transaction.
Ms. Coggins said the bank tested the system over several months with its own employees to work out
bugs before offering it to customers. Safety and security are extremely important for us, she told me in
a phone interview.
For example, the system requires checks be endorsed in a specific way, so that they cant be presented
for deposit or cashing elsewhere after theyre scanned, she said.
Not everyone will get to use the service right away; the bank is offering it in stages so it can make
adjustments as it rolls out.
Paper checks are less common than they used to be, but theres clearly still a demand for ways to
convert them electronically into bank funds, Ms. Coggins said. Our customers have been asking for it,
and so we think theres a need.
Does your bank offer remote deposit? If not, how do you handle check deposits? Or, if you can already
deposit checks remotely at your bank, what has been your experience?
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American Banker
White House's Online ID Strategy to Rely on Banks
Page 1000 of 3826
April 19, 2011

By Jeremy Quittner
Banks and other payment providers are expected to take a leading role in the White House's revised
strategy for securing consumer identities online.
The guidelines, which the Obama administration announced Friday, would create, under the National
Strategy on Trusted Identities in Cyberspace, a so-called identity ecosystem for "interoperable, secure
and reliable credentials."
The strategy, which further develops prospective policies included in a draft proposal published last
June, gives private industry the leading role, and government a supporting role, in securing online
transactions. Consumers would have one identity, managed either through a token or other technology,
on a smart card or on a smartphone.
Such ideas have been bandied about for years, and are generally referred to as "federated IDs."
Because the banking world has already developed similar identities for consumers, banks are expected
to take a leading role in the NSTIC. The system has already gotten a favorable response from financial
institutions, technology vendors and industry associations.
The "NSTIC is setting the ground rules of how companies will cooperate with each other in the
ecosystem," said Michael Barrett, the chief information security officer for PayPal Inc. of San Jose,
Calif. "It is setting up a standardized set of rules, technically and policywise."
In an email, Wells Fargo & Co. of San Francisco, said, "protecting our customers from fraud and identity
theft is a top priority and crucial to helping our customers succeed financially. Therefore, we will
continue to support the administration in their efforts to enhance information security and identity
protection through the NSTIC program."
Similarly, the American Bankers Association, which said it has worked closely with the Obama
administration and the Department of Homeland Security on the strategy, said the NSTIC moves online
security for consumers in the right direction.
"The administration recognizes the central role that the private sector, and the financial services
industry, needs to play," said Doug Johnson, vice president of risk management policy for the ABA.
Page 1001 of 3826
Johnson said one of the main things that the ABA has tried to promote via the strategy is the
importance of consumers taking responsibility for their own online security.
The new strategy, in fact, emphasizes choice: Consumers must opt in; they would choose between a
multitude of security vendors; and they would choose from among various forms of identity protection
including, but not limited to, secure tokens generated on key chain fobs, smart cards and smartphones.
As opposed to previous efforts at enabling identity management online experts have pointed to
Microsoft Corp.'s Passport as one approach that had limited success because it was specific to only
one company the NSTIC recognizes that there are many different systems and ID providers.
"We learned in late '90s and early 2000s that there had to be more than one ID provider, and an
ecosystem," Barrett said.
The Smart Card Alliance of Princeton Junction, N.J., said the prominence given to smart cards in the
strategy was important, because smart cards have effectively secured transactions in the health care,
financial services and government sectors.
"Smart cards have proven to be the gold standard for ID credentialing and security," said Randy
Vanderhoof, executive director of the alliance.
Still, industry analysts said a unifying method for securing online interactions and transactions would
likely need to create varying levels of authentication, based on the kind of transaction involved.
Financial transactions would need a stronger security criteria, while lower-impact transactions, such as
connecting to a news website or social network, might require something less stringent.
One of the big roadblocks, said Julie Conroy McNelley, senior risk and fraud analyst at Aite Group LLC,
is that banks and other financial institutions have invested a huge amount resources in their customers'
security and they might be hesitant to share those credentials in a more general, federated
environment.
"The federated ID has a great use for low-value, low-risk transactions," McNelley said. "But would
financial institutions ever accept someone else's credentials for their website, or push theirs out? The
answer is no."
Page 1002 of 3826
Dave Jevans, the chairman and founder of IronKey Inc. of Sunnyvale, Calif., said the idea of
government involvement was critical because the shift to a new standard will require a source of
funding.
The "NSTIC moves things in the right direction," Jevans said. The "government can help drive
consumer adoption, but the reality is there are millions of websites" that allow consumers to make
payments, he said. "None of this is free."
Avivah Litan, a vice president and distinguished analyst at Gartner Inc., said a recent example of an
interoperable ID is Facebook Connect, where users can connect their Facebook accounts to partner
websites that also use trusted authentication methods. "This is already happening in low-risk
applications," Litan said.
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Washington Times
Shoppers squeezed by spat over debit card use
April 18, 2011
By Tim Devaney
Consumers are finding themselves squeezed in a heavyweight bout between the nation's big banks and
big retailers over the "swipe fees" imposed when shoppers use their debit card at the register. And both
sides warn the little guy will suffer if the other side wins.
As part of last year's financial regulatory law backed by President Obama, Congress asked the Federal
Reserve to regulate the swipe, or interchange, fees that retailers pay to banks every time a customer
pays with a debit card.
The result is a proposed cap of 7 cents to 12 cents on each transaction down significantly from the
current average of 44 cents that would cost the banking industry about $16 billion a year, according
to 2009 data from the Fed. Retailers could but would not be required to pass those savings along
to consumers.
Page 1003 of 3826
The regulation was supposed to be completed this week. But Fed officials say they will need more time
to consider the impact on all sides. With so much money at stake, both sides have been lobbying
furiously on Capitol Hill, in full-page newspaper ads and even with posters in the District's Metro
subway system.
Banks argue the government should stay out of the free market, saying the industry can regulate itself.
"The federal government should not be dictating the price a public company should be charging," said
Richard Hunt, president of Consumer Bankers Association. "Period."
If the rule is imposed, it's a "mathematical certainty" that banks will compensate with new fees in other
areas, Mr. Hunt said. That could mean new charges and fees for checking, debit, and online accounts.
It could also lead banks to drop checking accounts for customers with low activity or balances under
$200.
JPMorgan Chase has even floated the idea of capping debit-card purchases at $50 to $100 if the
regulation is imposed.
Consumer groups, which are siding with retailers, say the banks are employing a "stupid bank trick" to
scare shoppers and protect their profits. They point to similar threats banks made against credit card
and overdraft fee regulations in recent years.
"I think the banks are like the boy crying 'wolf,'" said Ed Mierzwinski, spokesman for U.S. PIRG, a
consumer group. "They're running around on Capitol Hill acting like their job is to protect consumers.
But their job is to make money. That's all they've ever cared about."
Bartlett Naylor, financial policy advocate for Public Citizen, another consumer group, added, "Banks will
charge whatever they can get away with. That will happen either way."
Retailers say the swipe fees are one reason for rising prices at stores across the country. If the bank
fees were reduced, they predicted, competition among merchants would force down prices as well.
"There should be a pretty dramatic benefit for both retailers and customers," said Mallory Duncan,
general counsel for the National Retail Federation. "You try to provide more value to your customers
than the guy across the street."
Page 1004 of 3826
But some wonder whether the retail chains will actually pass along the savings to consumers. Even if
they do, consumers might not notice the price differences, when retailers would be saving only about 32
cents to 37 cents not on each product, but on the entire order, whether the tab is $5 or $5,000.
"I think retailers did not look at the best interest of the consumers," Mr. Hunt said. "Merchants are trying
to get a benefit for free and it's going to hurt consumers."
Scott Watkins, a senior consultant with Anderson Economic Group in Lansing, Mich., predicted that
banks and retailers will notice a difference in their share of the pie, but consumers will likely end up
paying virtually the same amount, whether in swipe fees or new fees that the banks add to compensate
for the loss.
At the store, Mr. Watkins doesn't expect merchants to immediately cut prices.
"You're probably not going to see prices go down," he said. "But it might allow for a slower increase of
prices in the future."
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New York Times

Letting the Banks Off the Hook
April 18, 2011
By Joe Nocera
Judging by last weeks performance, it sure looks as though the countrys top bank regulator is back to
its old tricks.
Though, to be honest, calling the Office of the Comptroller of the Currency a regulator is almost
Page 1005 of 3826
laughable. The Environmental Protection Agency is a regulator. The O.C.C. is a coddler, a protector, an
outright enabler of the institutions it oversees.
Back during the subprime bubble, for instance, it was so eager to please its clients yes, thats how
O.C.C. executives used to describe the banks that it steamrolled anyone who tried to stop lending
abuses. States and cities around the country would pass laws requiring consumer-friendly measures
such as mandatory counseling for subprime borrowers, or the listing of the fees the banks were going to
charge for the loan. The O.C.C. would then use its power to either block or roll back the legislation.
It relied on the doctrine of pre-emption, which holds, in essence, that federal rules pre-empt state laws.
More than 20 times, states and municipalities passed laws aimed at making subprime loans less
predatory; every time, the O.C.C. ruled that national banks were exempt. Which, of course, rendered
the new laws moot.
Youd think the financial crisis would have knocked some sense into the agency, exposing the awful
consequences of its regulatory negligence. But you would be wrong. Like the banks themselves, the O.
C.C. seems to have forgotten that the financial crisis ever took place.
It has consistently defended the Too Big to Fail banks. It opposes lowering hidden interchange fees for
debit cards, even though such a move is mandated by law, because the banks dont want to take the
financial hit. Its foot-dragging in implementing the new Dodd-Frank laws stands in sharp contrast to,
say, the Commodity Futures Trading Commission, which is working diligently to create a regulatory
framework for derivatives, despite Republican opposition. Like the banks, it views the new Consumer
Financial Protection Bureau as the enemy.
And, as we learned last week, it is doing its darndest to make sure the banks escape the foreclosure
crisis a crisis they created with their sloppy, callous and often illegal practices with no serious
consequences. There is really no other way to explain the settlement it announced last week with 14
of the biggest mortgage servicers (which includes all the big banks).
The proposed terms call on servicers to have a single point of contact for homeowners with troubled
mortgages. They would have to stop the odious practice of secretly beginning foreclosure proceedings
while supposedly working on a mortgage modification. They would have to hire consultants to do spotchecks to see if people were foreclosed on improperly. (Gee, I wonder how thats going to turn out?)
If youre thinking: thats what they should have done in the first place, youre right. If youre wondering
what the consequences will be if the banks dont abide by the terms, the answer is: there arent any.
And although the O.C.C. says that it might add a financial penalty, Ill believe it when I see it. While
John Walsh, the acting comptroller, called the terms tough, theyre anything but.
Page 1006 of 3826
No, the real reason the O.C.C. raced to come up with its weak settlement proposal is that last month, a
document surfaced that contained a rather different set of terms with the banks. These were settlement
ideas being batted around by the states attorneys general, who have been investigating the foreclosure
crisis since late October. The document suggested that the attorneys general were not only trying to fix
the foreclosure process but also wanted to penalize the banks for their illegal actions.
Their ideas included all the terms (and then some) included in the O.C.C. proposal, though with more
specificity. Unlike the O.C.C., the attorneys general had devised a way to actually enforce their
settlement, by deputizing the new consumer bureau, which opens in July. And they wanted to impose a
stiff fine possibly $20 billion which would be used to modify mortgages. In other words, the
attorneys general were trying to help homeowners rather than banks.
By jumping out in front of the attorneys general, the O.C.C. has made the likelihood of a 50-state
master settlement much less likely. Any such settlement needs bipartisan support; now, thanks to the O
.C.C., theres a good chance that Republican attorneys general will walk away. The banks will be able
to say that theyve already settled with the federal government, so why should they have to settle a
second time? If they wind up being sued by the states, the federal settlement will help them in court.
Its a vintage O.C.C. move, said Prentiss Cox, a law professor at the University of Minnesota who was
formerly an assistant attorney general. It is clearly an attempt to undercut the A.G.s
Old habits die hard in Washington. The O.C.C.s historical reliance on pre-emption should have died
after the financial crisis. Instead, its merely been disguised to look like a settlement.
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Dow Jones Newswires

Fed Proposes Minimum Home Lending Standards
April 19, 2011
By Alan Zibel
NEW YORK -(Dow Jones)- The U.S. Federal Reserve on Tuesday proposed a set of minimum
standards for home lending as part of an effort to ensure that consumers can afford mortgages they
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take out.
The rules were required by the Dodd-Frank financial overhaul passed last year, which tasked lenders
with ensuring that all borrowers have the ability to pay back their home loans.
During the housing boom, many borrowers took out mortgages with interest rates that shot upward after
an introductory period. Some even took out mortgages in which the principal balance rose over time.
The Fed's proposal creates an "ability-to-repay" requirement for most home loans, as part of an effort to
make sure that U.S. lenders don't return to those practices.
Lenders would be able to meet that standard by verifying the consumer's income or assets or making a
"qualified mortgage" that requires the lender to calculate the maximum interest payment in the first five
years.
Loans that meet that standard would have protections against lawsuits. They also would have
restrictions on fees and would not allow the principal balance to grow.
The Fed also provided two more options for satisfying the "ability-to-repay" standard that impact lenders
refinancing mortgages with risky features and those in rural and other underserved areas.
The Fed is seeking comments on the proposal by July 22. However, the central bank will not complete
the process, as its authority over mortgage lending rules is scheduled to transfer to the new Consumer
Financial Protection Bureau on July 21. At that point, the consumer bureau is charged with taking over
the proposal
The rules are separate from another proposal last month that could have a much bigger impact on the
mortgage industry.
That proposal would require firms that package mortgages and other assets to hold 5% of the credit risk
on their balance sheets under the theory that lenders will adopt more-prudent lending standards if they
have "skin in the game."
While regulators have proposed that mortgages with a 20% down payment should be from these riskretention rules, industry groups and consumer advocates alike contend that regulators crafted the
exemption too narrowly.
Page 1008 of 3826
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Wall Street Journal (blog)

Could Debt Worries Accelerate Fannie, Freddie Overhaul?
April 18, 2011
By Nick Timiraos
Most Washington pundits dont expect any major political action on mortgage giants Fannie Mae and
Freddie Mac before the 2012 election, but growing jitters over the nations debt illustrate one potential
catalyst that could keep the current conservatorship of the firms from dragging on indefinitely.
On Monday, Standard & Poors placed the U.S. AAA-rating on negative outlook. It cited the potential
cost of the U.S. governments conservatorship of the mortgage-finance giants in tilting the scales in its
decision. Heres what S&P said:
We estimate that it could cost the U.S. government as much as 3.5% of GDP to appropriately capitalize
and relaunch Fannie Mae and Freddie Mac, two financial institutions now under federal control, in
addition to the 1% of GDP already invested.
And in a question-and-answer brief:
Do the finances of the U.S. government-supported enterprises (GSEs) affect the U.S. sovereign rating?
Yes. We estimate that the government might have to inject up to $280 billion to cover losses at Fannie
Mae and Freddie Mac; this includes $148 billion already spent. (Both GSEs are already in
conservatorship.) Moreover, by our estimates, that $280 billion could swell to $685 billion if the
government capitalizes Fannie and Freddie on a commercial basis.
Some analysts may take issue with those loss projections. Others will note that the U.S. will try to
attract private, not public, funds to recapitalize any successors to Fannie and Freddie. Margaret Kerins,
an analyst at Royal Bank of Scotland, writes in a research note Monday that such an outcome is highly
Page 1009 of 3826
unlikely.
The government has so far avoided bringing Fannie and Freddie onto the governments books because
that would boost the federal deficit by tens of billions and it could swell the total debt of the U.S. (Recall
that Fannie Mae was privatized in 1968 when the Johnson administration was trying to reduce the
countrys debt.)
The Bush administration cited the temporary nature of the governments stewardship of Fannie and
Freddie in opting not to incorporate those obligations back onto the governments books.
There are plenty of reasons why the political establishment has been slow to act on Fannie and
Freddie: The housing market is fragile and possibly unable to digest major changes right now. No one
likes the current arrangement, but it does appear to be working (how else to explain mortgage rates that
have spent the last 18 months below 5%). And any political solution on Fannie and Freddie will have to
forge consensus between conservatives and liberals who publicly remain very far apart about what
housing-finance should look like.
But for anyone wondering, what, if anything, will accelerate the timetable for untangling Fannie, Freddie,
and Uncle Sam, the debt picture certainly serves as one plausible catalyst.
Back to Top
American Banker
Group Seeks GSE Wind-Down
April 19, 2011
By Donna Borak
The New Democrat Coalition is calling for the wind-down of Fannie Mae and Freddie Mac and more
reliance on a private mortgage market.
The 43-member coalition, which is led by Reps. Jim Himes, D-Conn., and Gary Peters, D-Mich., on
Page 1010 of 3826
Friday issued eight principles for policymakers to consider for a reform of housing finance. They include
preservation of the 30-year fixed-rate mortgage and a robust private market with limited government
support.
"We need a housing finance system that preserves the American dream of homeownership and
preserves access to affordable mortgages for middle-class families," Peters, a co-chairman of the
coalition, said in a press release. "However, we also need reforms that reduce the risk to taxpayers and
that create conditions for the private sector to play a larger role in the secondary mortgage market."
Additionally, any government guarantee, they argued, should only cover the securities, and any
company issuing securities should be subject to strong regulation and be required to be well capitalized
and capable of withstanding deep losses.
They also said any guarantee must also be explicit and priced in a way that fully accounts for the risk
borne by taxpayers.
Back to Top
USA Today
Mortgage Complaints Raised Red Flags
April 13, 2011
By Brad Heath
Months after the Obama administration launched a $29 billion effort to rescue millions of homeowners
from foreclosure, complaints about the program started pouring in to the Treasury Department officials
in charge of making it work.
Homeowners said in letters that mortgage firms wouldn't return their phone calls. They said the
program's rules were bewildering. They waited months to get a response from their servicers, and the
responses they got were sometimes maddening. One man who asked his mortgage firm for help
lowering his monthly payments to avoid foreclosure ended up paying $1,400 more a month instead.
Page 1011 of 3826
Those complaints -- some plaintive, others boiling with frustration -- were among the earliest signs of
shortcomings in the Home Affordable Modification Program, which uses federal bailout money to
encourage mortgage firms to modify loans for struggling homeowners. USA TODAY requested copies
of the complaints under the Freedom of Information Act in June 2009, weeks after the program started.
Officials released 2,069 pages of documents on Monday.
By now, most of the problems they document are unsurprising: In the two years since it began, the
foreclosure relief program has led to permanent loan modifications for about 630,000 borrowers, far
fewer than the 3 million to 4 million that President Obama's administration said would benefit. And some
have slipped back into default. The program has been faulted repeatedly by auditors for confusing rules
and inadequate oversight.
But, coming just days before federal regulators are expected to announce new rules for the nation's
largest mortgage servicers, the letters nonetheless offer a view of the frustration and desperation
borrowers faced.
"I would normally address this letter to an individual responsible for handling my case. Unfortunately, I
have never spoken to that person," one borrower wrote in 2009, frustrated with months of paperwork
and false starts. "This process has gone on too long."
Treasury officials acknowledge that the mortgage relief program has struggled, particularly at the
outset, but said they have taken steps to address the problems identified in borrowers' complaints.
Starting next month, the Treasury will issue what amounts to a report card on how the largest mortgage
servicers are handling requests for loan modifications. Those that don't pass face the threat of losing
out on incentive payments. "We have a long way to go," spokeswoman Andrea Risotto said.
Consumer advocates have said the administration should have done more at the outset to force
mortgage firms to modify mortgages instead of relying on incentive payments tied to successful loan
modifications.
"If you never get that far, if they're abusing people by not giving modifications, nothing really happens,"
said Alys Cohen, a staff attorney at the National Consumer Law Center.
The Treasury Department removed borrowers' names and other identifying information from the letters
before releasing them to USA TODAY. Phyllis Caldwell, chief of the Treasury's Homeownership
Preservation Office, said that when letters came in, officials tried to resolve the problems with the letter
writers' applications.
One of the borrowers who wrote to the Treasury complained of trying to get a modification from
Page 1012 of 3826
JPMorgan Chase for six months without a reply. Others said their paperwork had been lost or that the
process had dragged on so long they were told they had to start over.
"This is my third letter to you for help, my file is stalled, and I'm physically, mentally and financially
exhausted," one borrower wrote to Treasury Secretary Timothy Geithner in September 2009. "My file is
being passed around like a hot potato, and no one seems accountable."
Back to Top
American Banker
It's an Employer's Market For Home Loan Officers
April 19, 2011
By Paul Muolo
Mortgage loan officers are still smarting over the Federal Reserve's new compensation rules, but if
anyone's celebrating it's the folks whose job is to actually hire loan officers and their wholesale
counterparts, account executives.
"It's a fun time to be recruiting," said Lisa Schreiber, executive vice president in charge of wholesale
lending for TMS Funding in Milford, Conn. "There are so many good account executives out there right
now with 20, 25 years of experience."
Schreiber's job is to hire experienced account executives whose job is to gather product from loan
brokers. Lately TMS has had the pick of the lot because of the Fed's loan officer rule and a slowdown in
industrywide originations and wholesale lending.
When volumes fall account executives lose their jobs, which results in a buyer's market for senior sales
executives. Earlier this month TMS issued a press release touting its hiring of six new account
executives. These sales managers' former employers are a who's who of wholesale lending: AmTrust,
Bank of America, Chase, Countrywide, U.S. Bank and Wachovia, to name a few. Even more telling is
the number of years the six account executives have been in the business: 30, 28, 20, 20, 19 and 16.
Page 1013 of 3826
The lesson here may be that only the very experienced should apply.
Paul Hindman, managing director of the recruiting firm Management Advisors International, said lenders
are assessing their hiring needs like never before. With volumes likely to decline this year, it's all about
evaluating and hiring the very best loan officer, Hindman said. "Companies can no longer afford to hire
just the warm body the right hire is critical," he said.
Those bodies better have good ties to Realtors, because the market this year will be driven by home
purchases rather than refinancings, said Bill Dallas, chairman and CEO of Skyline Financial in Agoura
Hills, Calif.
"Oh, my God, the resumes I've seen," said Dallas, who has headed both prime and subprime shops.
"Right now there's a lot of LOs out there looking for homes," he said.
Skyline's origination volume is about what it was this time a year ago. The company employs about 135
loan officers, but its mix of production has shifted from 25% purchase money loans in the fourth quarter
to 65% in the first quarter. "The purchase business is the environment we've wanted," Dallas said. "We
think we can compete better against the big banks."
There has always been a perception that nonbank lenders are more adept at gathering purchase
money loans than most of the nation's megabanks, with Wells Fargo being a notable exception. Wells
has always cultivated strong ties to Realtors and home builders, though builders are not big players
these days because the new-home market is depressed. (Wells, according to figures compiled by
National Mortgage News, is the perennial market leader in retail home finance.)
But banks, especially publicly traded ones that answer to shareholders, are quick to cut staff in a
downturn, creating an opportunity for nonbank players. (Wells is cutting 1,900 mortgage workers,
though it claims very few of those are loan officers.)
One company scooping up talent from depositories is the privately held Mortgage Master of Walpole,
Mass. "We're picking up LOs from both bankers and brokers," said Paul Anastos, its chief operating
officer.
Although Mortgage Master has been hiring for the past two months, it's uncertain about what it may do
the next two months. Last year Mortgage Master funded $6 billion in loans and was one of the largest
retail lenders in all of New England. When asked about what it may fund this year, CEO Leif Thomson
was noncommittal. "We'll gain market share. That's all I can say right now," he said.
Page 1014 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

RE: HUD Updates
Tue Apr 19 2011 04:29:17 EDT
Thx Kev Den
3-letter names are cool, right liz?
Dennis Slagter
202-435-7143 (1801 L St)
(b) (6)
for guidance.

To: Slagter, Dennis (CFPB)
Subject: HUD Updates
Hi Dennis,
Page 1016 of 3826
Per your request, Liz asked me to send along the most up-to-date versions of the HUD matrices to you.
These have not been changed since the emails went out to CFPB managers last week. Let me know if
you have any questionsthanks!
-Kevin
Kevin K. Lownds
Review Analyst
(202) 435-7399
Page 1017 of 3826
From:
To:

(fydibohf23spdlt)/cn=recipients/cn=bernsteine>; Black, Brad
(fydibohf23spdlt)/cn=recipients/cn=brolinj>; Brown, Amy (CFPB)
Page 1018 of 3826

(fydibohf23spdlt)/cn=recipients/cn=chandlerde>; Chopra, Rohit
John </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=cochranj>; Cochran, Kelly
(fydibohf23spdlt)/cn=recipients/cn=dokkoj>; Dorsey, Darian
Page 1019 of 3826

(fydibohf23spdlt)/cn=recipients/cn=forrestda>; Frotman, Seth
Page 1020 of 3826

Cordelia (CFPB </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=lauderdales>; Leiss, Wayne
Page 1021 of 3826

Page 1022 of 3826

Cathaleen </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=skinnerc>; Slagter, Dennis
Page 1023 of 3826
group (fydibohf23spdlt)/cn=recipients/cn=starkp>; Sterken,

Nathan (CFPB) </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=wittm>; Young, Christopher
Cc:
Bcc:
Page 1024 of 3826
Subject:
Date:
Attachments:
CFPB Weekly 4/18

Mon Apr 18 2011 19:27:29 EDT
CFPB Weekly Report

4/18/2011
Overview
Elizabeth Warren is in Kentucky today delivering the University of Kentucky College of Law Randall
Park Speaker Series talk on Debt, Credit and the Middle Class. Her presentation will focus on how
middle class families have increasingly turned to debt over the last generation to pay for core expenses,
and the need for the CFPB to provide important protections for families using consumer financial
products and services. Warren will also meet with community bankers in Louisville that morning. Both
events are open to the press.
The CFPB expects to sign a memorandum of understanding with the Financial Crimes Enforcement
Network (FinCEN) this week to provide access to Bank Secrecy Act data for use by the Supervision and
Enforcement teams.
Policy
Cards
We are continuing to develop approaches to improve transparency and comparability and to simplify
cardholder agreements. We have submitted for internal review suggested topics that can be
standardized or moved to a users manual as a means of simplifying cardholder agreements, and
following clearance plan one-on-one discussions with some issuers and consumer groups. We will be
speaking this week with some outside experts on an approach to improve communications to existing
cardholders. We have scheduled calls with the top issuers beginning next week.
In the prepaid space, we met by phone with the two top issuers to obtain additional data on the way
their products are being used, with a further consultation scheduled for next week. We will be
developing an options memo this week.
Mortgages
Members of the mortgage markets and regulations teams met with Fed staff for a briefing on their draft
proposed rule to implement Title XIVs ability to repay and qualified mortgage provisions. Pending
Board approval, staff expect the proposal to be released shortly for a 90-day period. The TILA/RESPA
mortgage disclosure team continues to prepare for the first round of qualitative testing in May by
Page 1025 of 3826
refining content and iterating on design of the sample forms, of which new versions will be reviewed
next week. The mortgage servicing project is drafting policy memos on our authority to resolve servicing
issues regarding Fees/Payments and Loss Mitigation.

In the field of deposits, we met with National Consumer Law Center and U.S. PIRG and reviewed a new
study released by U.S. PIRG on fee disclosures.
We will complete the procurement process relating to an agreement to obtain mortgage industry data
collected through the Nationwide Mortgage Licensing System. We expect to begin receiving data
immediately thereafter.
We will be reaching out to individual state banking and financial services agencies next week in an
effort to have them sign on to the information-sharing memorandum of understanding. We will also be
reaching out to state agencies that have already signed on to coordinate our receipt of state supervisory
information.
The Bureau is entering into an information-sharing MOU with the Federal Financial Institutions
Examination Council that will permit the CFPB to participate in working groups before the Director joins
the Council.
The Department of Justice released its 2010 Annual Report to Congress under the Equal Credit
Opportunity Act. DOJ reports that it received 49 referrals from bank regulatory agencies involving a
possible pattern or practice of discriminationan increase of 58% from last year and more than double
the referrals in 2008. From our internal discussions with staff of the DOJs Civil Rights Division, we
understand that, over the last several years, the bank regulatory agencies referred a number of financial
institutions that will transfer to the CFPB. We are working with Civil Rights Division staff to craft an
appropriate MOU that will help facilitate our overall coordination, including furthering CFPBs
understanding of the referral matters involving transferring institutions.
Outreach
On Wednesday, Holly Petraeus will meet with the former Sergeant Major of the Army, Jack Tilley, who
is the director of the American Freedom Foundation, which is focused on veterans employment issues.
On Thursday, Peggy Twohig, Petraeus, Corey Stone, and others will host executives in the nonbank
auto lending industry and representatives from AFSA.
Page 1026 of 3826
Also on Thursday, Raj Date will be speak at a conference hosted by UC Irvines Paul Merage School of
Business. While in California, he will also meet with David Haithcock of the California Independent
Bankers.
Credit Information Markets will meet with the CEO of Experians U.S. operations.
Warren will speak with community bankers in Kentucky, New York, Alabama, and California.
Management
We have completed solicitations of interest to OCC and Fed employees. We received approximately
100 responses from OCC employees and 300 responses from Fed employees.
After receiving thousands of applications for examiner positions from the public, we will begin selecting
candidates for consideration for examiner positions.
We will present a request for funding to purchase an eDiscovery system, which will ensure that we have
the litigation support technology necessary to bring enforcement actions and to defend lawsuits brought
against the Bureau.
We received two new FOIA requests: for personnel forms OPM 1652 (Request for SES Non-career or
Limited Appointment Authority) and SF50 (Notification of Personnel Action) for all senior staff
(Associate Directors and above or equivalent) from October 1, 2010 through present; and for personnel
forms OPM SF85 (Questionnaire for Non-Sensitive Positions) for all senior staff.

Monday, April 18
-
EW in Kentucky
Media: Meeting with Carter Dougherty
Remarks to Kentucky Dept. of Financial Institutions
University of Kentucky Law School Series Lecture
Page 1027 of 3826
Tuesday, April 19
-
EW in Kentucky
Meeting with Kentucky Law and Econ Faculty
Thursday, April 21
-
Meeting with Gene Dodaro (GAO)
Meeting with Sheila Bair (FDIC)
Page 1028 of 3826
From:
To:

Royster, Felicia (CFPB)
accounts/cn=standard users/cn=roysterf>
Cc:
Bcc:
Subject:
Date:
Attachments:
RE: STEP End Date

Mon Apr 18 2011 15:38:48 EDT
Thanks, Felicia!
From: Royster, Felicia (CFPB)

Cc: Cronin, Katherine (CFPB); Hart, Maria (CFPB)
Subject: RE: STEP End Date
Hi Kevin, the exit instructions are below we will process your separation action effective 5/11/11:
Employee Entry and Exit System
Office Name: DO Information Technology

Hours: M-F, 7:00 A.M. to 10:00 P.M.
Main Phone Number: HELPDESK (202) 622-1111
New Employee:
Administrative contacts should make all Enter on Duty requests (including detailees, interns and
contractors). Allow 5 business days.
Exiting Employee:
Pre-exit requests may be done by the administrative contact or employee leaving Treasury.
Use the Employee Entry/Exit (EEE) system for both requests
If not using the EEE system, provide the Helpdesk with the following information:
New Employee:
1. Point of contacts name and phone number
2. Users name
3. Users start date
4. Users title
Page 1033 of 3826
5. Users department code

6. Whether the user is a DO employee, detailee, intern, or contractor
7. User location
8. Required IT equipment and services, (including phone, fax, etc.)
Exiting Employee:
1. Users name
2. Users location
3. Users telephone number
4. Users exit date
Please let me know if you have any questions or need assistance.
Thanks
Felicia Royster
Human Capital Team
202-435-7193 (1801 L Street Room 554)
202-435-7329 (Fax)
(b) (6)
for guidance.

Sent: Friday, April 15, 2011 9:29 AM
To: Royster, Felicia (CFPB)
Subject: RE: STEP End Date
Great. The last day will be May 11, 2011. Thanks so much, Felicia!
From: Royster, Felicia (CFPB)
Page 1034 of 3826

Subject: Re: STEP End Date
Hi Kevin just let me know via email when last day will be and I will send you exiting instructions.
Thanks
Felicia
_______________________
Pardon the typos or grammatical misses, all thumbs response is being sent from BlackBerry.
_____
To: Royster, Felicia (CFPB)
Sent: Fri Apr 15 09:20:36 2011
Subject: STEP End Date
Hi Felicia,
Im not sure if you are the right contact person for this, but I wanted to touch base regarding the end
date of my STEP internship program with CFPB. I know the appointment technically lasts one year
(ending in early January 2012), but my agreement with my supervisor, Liz Glaser, was that this
internship would end at the conclusion of my semester (May 11, 2011). As such, I imagine that Ill need
to resign in the next few weeks, but Im not sure what the process for doing this would be. Any
information you can provide for me (including who, if not you, would be the best person to discuss this
with) would be greatly appreciated. Thanks!
-Kevin
Kevin K. Lownds
Review Analyst
(202) 435-7399
Page 1035 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

HUD Updates
Mon Apr 18 2011 15:31:13 EDT
Hi Dennis,
Per your request, Liz asked me to send along the most up-to-date versions of the HUD matrices to you.
These have not been changed since the emails went out to CFPB managers last week. Let me know if
you have any questionsthanks!
-Kevin
Kevin K. Lownds
Review Analyst
(202) 435-7399
Page 1039 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:
Harvey, Imani (CFPB)

_DL_CFPB_AllHands
Syncing Your Blackberry and Landline Phones

Mon Apr 18 2011 15:26:42 EDT
Hi Team,
Your friends down in IT are here to help and serve you with the equipment and technology resources
you need to support your efforts.
Syncing Blackberrys with Landlines If you need to e-mail the Help Desk to ask that they sync your
landline phone number and your blackberry number (which should happen automatically at onboarding, so please double-check that its not working before you e-mail them), please be sure to send
both phone numbers (landline and Blackberry) in your e-mail.
Older/Broken Equipment Should you have new software or hardware needs, please reach out to the
Help Desk (x21111) or to our CFPB Help Desk Liaison, Michael Botelho, but also let us know when you
re no longer using that hardware or software. If equipment is malfunctioning or past its prime, e.g. a
Blackberry battery, please dont throw it out as its still government property; instead, alert the Help
Desk and let them know.
If you have specific questions, dont hesitate to reach out to any of us on the Technology Team or to
Michael Botelho in particular.
Thanks,
Rachael Goldfarb
Deputy Chief Technology Officer
Page 1053 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Re: HUD
Mon Apr 18 2011 15:02:59 EDT
Just called u again. Can u call me

_____
Sent: Mon Apr 18 15:00:24 2011
Subject: RE: HUD
Was in a meeting with Tom for 1063(i). Free now though, let me know what you want to do

Subject: Re: HUD
Juist called u
_____
Sent: Mon Apr 18 14:03:24 2011
Subject: HUD
FYI---Dennis left a folder on your chair that asked for an updated matrix/status on HUD. Did you hear
back from Wally on that? If so, I can update for you
Kevin K. Lownds
Review Analyst
Page 1054 of 3826

(202) 435-7399
Page 1055 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:
Scanlon, Thomas
RE: Section 1063(i) stuff

Mon Apr 18 2011 14:02:25 EDT
Great. No worries. I am walking up now and will see you soon.

Tom
_____________________________________________
To: Scanlon, Thomas
Subject: RE: Section 1063(i) stuff
I was planning on updating that list this week, unfortunately, so I don't have an up-to-date version. I'll
see you in 15, thanks!
-K
_____________________________________________
From: Scanlon, Thomas
Subject: RE: Section 1063(i) stuff
Hi Kevin,
If you have an updated list of issues that we are working on, please bring a few copies of that list. But
otherwise, there is no need to prepare.
Thanks,
Tom
To: Scanlon, Thomas
Subject: Accepted: Section 1063(i) stuff
When: Monday, April 18, 2011 2:15 PM-2:45 PM (UTC-05:00) Eastern Time (US & Canada).
Where: 1801 L St.
Hi Tom,
Sounds good. Is there anything you'd like me to prepare in advance of this meeting?
Page 1059 of 3826
-Kevin
Page 1060 of 3826
From:

_DL_CFPB_AllHands
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Mon Apr 18 2011 13:03:40 EDT
Index

Dow Jones Newswires US Consumer Finance Agency Needs Single Director Warren
Dow Jones Newswires Jamie Dimon: Consumer Bureau Could Benefit Financial System
The Hill Elizabeth Warren for Senator
Bloomberg Foreclosure Probe Talks Said to Yield Some Agreements With Banks
New York Times Wrongful Foreclosures
It
American Banker Regulatory Order Really a Win for Embattled MERS and the Banks That Use
Consumer Credit
American Banker White House Announces Strategy to Protect Business, Consumer Identity
Online
American Banker 20% of Phones May Have NFC by 2014
Page 1069 of 3826
American Banker JPM, Wells May Prompt Other Banks to Issue EMV Cards in U.S.
Housing
Housing Wire Florida finally rolls out Treasury's $1 billion fund for distressed homeowners
The Hill (blog) Report: IRS pays out $513 million in tax credits to homebuyers who didn't qualify
Dow Jones Newswires

US Consumer Finance Agency Needs Single Director Warren
April 18, 2011
By Doug Cameron
LOUISVILLE, Ky. (Dow Jones)--The White House adviser overseeing the new Consumer Financial
Protection Bureau said Monday it would be "a really bad idea" for it to be overseen by a panel rather
than a single director.
Elizabeth Warren, the person in charge of preparing the new agency for a July 21 launch, said the
notion of it being overseen by a five-person panel of commissioners had been discussed last summer.
"The idea of going back to try and change that piece is just designed to throw sand in the gears," she
said at a community banking conference in Louisville. Critics concerned about regulatory over-reach
have called for the agency to be overseen by a bipartisan panel rather than a single director.
The White House has yet to nominate a director for the agency, created as part of the Dodd-Frank
financial reforms.
Back to Top
Page 1070 of 3826
Dow Jones Newswires

Jamie Dimon: Consumer Bureau Could Benefit Financial System
April 15, 2011
J.P. Morgan Chase & Co. (JPM) Chief Executive Jamie Dimon surprisingly had some very positive
things to say about the Consumer Financial Protection Bureau in his annual letter to shareholders.
Republicans and the financial industry have steadily criticized the bureau, a centerpiece of the DoddFrank financial overhaul, as an unnecessary, all too powerful new regulator that will deal a blow to
financial markets.
Dimon, however, sounded somewhat approving of the consumer watchdog agency.
First he says reports that J.P. Morgan opposed the creation of the consumer bureau were wrong. What
the firm opposed was the structure, he says. Dimon explains he just didn't want the bureau to be set up
as a stand-alone agency, apart from other regulators that already have oversight over banks.
"We thought that a CFPB should have been housed within the banking regulators and with proper
authority within that regulator," he writes. "This would have avoided the overlap, confusion and
bureaucracy created by competing agencies."
But he goes on to say "there were many good reasons" that led to the bureau's creation.
"If the CFPB does its job well, the agency will benefit American consumers and the system," he adds.
"Strong regulatory standards, adequate review of new products and transparency to consumers all are
good things."
He even seemed to echo a point repeatedly made by White House adviser Elizabeth Warren that the
consumer bureau can help prevent future housing crises.
Page 1071 of 3826
"Indeed, had there been stronger standards in the mortgage markets, one huge cause of the recent
crisis might have been avoided," he said. "Other countries with stricter limits on mortgages, such as
higher loan-to-value ratios, didn't experience a mortgage crisis comparable with ours."
And the kicker? He says new financial rules could be helpful.
"What happened to our system did not work well for any market participant--lender or borrower--and a
careful rewriting of the rules would benefit all," he wrote.
Back to Top
The Hill
Elizabeth Warren for Senator
April 18, 2011
By Brent Budowsky
I support the movement to draft Elizabeth Warren to run for the U.S. Senate seat in Massachusetts. If
she runs, the race would be one of the most closely watched and potentially transformative campaigns
of 2012.
A Warren candidacy for the Senate seat currently held by Scott Brown (R-Mass.) would reunite
Democrats with the pro-worker, pro-consumer, pro-change, pro-veteran, pro-reform and women-friendly
populist wave that elected Barack Obama in 2008, and was then lost and surrendered to the Tea Party
movement in 2010.
To understand the political power and national impact if the Elizabeth Warren narrative wins back the
Kennedy seat that was lost in 2010, consider a recent Gallup poll.
Gallup asked voters which institutions have too much power, too little power and the right amount of
Page 1072 of 3826
power.
Gallup found that 71 percent believe lobbyists have too much power, 67 percent believe major
corporations have too much power, 67 percent believe banks and financial institutions have too much
power, 58 percent believe the federal government has too much power and 43 percent believe labor
unions have too much power.
When Gallup includes voters who believe these institutions should have more power, 24 percent
actually believe labor should have more power. In the net too much power polling, lobbyists score 63
percent, large corporations 58 percent, banks 59 percent, the federal government 49 percent and labor
only 19 percent.
It is a mythology of the right, accepted by a timid White House, that independents have become more
conservative. Independents agree with the Gallup numbers quoted above, believe the national
economy and jobs are urgent priorities and support the public option, rather than destroying Medicare
as voters know it.
Elizabeth Warren could campaign and win on a platform to take back America from the special interests
that rule Washington, for the American people politicians were elected to serve.
If Warren runs for the Senate, she would be the pure-play candidate for change and the true heir to the
Boston Tea Party. She would rally the liberal base while appealing to working-class voters, middle-class
consumers, reformist independents, women unhappy with savage Republican budget cuts, military
families abused by financial institutions and the poor, who are largely invisible in official Washington.
I would prefer the president name Warren to formally head the new consumer protection agency. For
very bad reasons he hasn't, and won't.
Imagine Elizabeth Warren unchained from what huge numbers of Massachusetts and American voters
believe is a rancid and filthy system of business as usual in Washington, and free to have an intelligent
and serious conversation with voters about issues that affect their daily lives.
Warren could discuss the fairness of finance with multitudes of voters who use credit cards, finance
mortgages, seek small-business loans and are victimized by abuses against military families of heroes
who serve the nation.
Warren could advance a thoughtful conversation with women who seek equity in pay, workers who
seek fair-wage jobs, mothers and fathers who seek the best education for their daughters and sons and
Page 1073 of 3826
all who believe the dream should be the way of life of a great nation, not a campaign slogan that
disappears the day after one election ends and fundraising for the next begins.
If Elizabeth Warren runs, she would bring the serious, honest, baloney-free and respectful debate that
is long overdue in American politics. She would bring a debate that would inform and excite the voters,
worthy of the Senate seat once held by the irreplaceable man we miss so much, Edward Kennedy.
Back to Top
Bloomberg
Foreclosure Probe Talks Said to Yield Some Agreements With Banks
April 18, 2011
By David McLaughlin
Attorneys general negotiating a settlement of a 50-state investigation of foreclosure practices have

reached agreements with lenders on some terms while failing so far to reach an accord on potential
monetary payments by the banks, said a person familiar with the talks.
The probe was triggered by claims of faulty foreclosure practices following the housing collapse which
law enforcement officials said may violate state law. Significant progress has been made on a deal with
lenders, which include Bank of America Corp. (BAC) and JPMorgan Chase & Co. (JPM), with
agreements in principle reached on several issues, said the person, who didnt specify the areas of
accord as they may change as talks proceed.
It may take at least two months to reach a final agreement, said the person, who declined to be
identified because the talks are private. An accord remains out of reach because states want principal
reductions for borrowers, which is more than banks agreed to in deals reached with U.S. regulators last
week, said Allison Schoenthal, a lawyer at Hogan Lovells in New York.
Principal reductions I dont think are going to be agreed to by banks, and I dont think the banks see a
need for a penalty when, in their view, they havent done anything wrong, said Schoenthal, who
represents lenders and servicers and isnt involved in the talks.
Page 1074 of 3826
Geoff Greenwood, a spokesman for Iowa Attorney General Tom Miller, who leads the negotiations for
the states, declined to comment. Dan Frahm, a spokesman for Charlotte, North Carolina- based Bank
of America, and Thomas Kelly, a spokesman for New York-based JPMorgan, didnt respond to e-mails
seeking comment.
Set Requirements
The 50 states, along with federal agencies including the Justice Department, seek to set requirements
for how banks service loans and conduct home foreclosures.
Last month, the states submitted proposed settlement terms to five mortgage servicers, and have been
meeting with bank officials to reach a final settlement. The proposal called in part for monetary
payments by banks to go toward a loan modification program that would reduce loan principals for
homeowners.
In a speech to a group of attorneys general earlier this month, Bank of America Chief Executive Officer
Brian Moynihan said broad-based principal reductions arent a sound policy decision for America.
Fairness is a major concern, he said, according to the prepared text of the speech. Its hard to see
how we could justify reducing principal for many delinquent customers who represent a small portion of
borrowers, but not for the vast majority of our customers who have stayed current on their loans.
Principal Reductions
Any agreement on principal reductions will depend on the size of the writedowns, the incentives for the
servicers built into the settlement and other details, which continue to be sorted out, said the person
close to the negotiations.
Miller said last month after a meeting between banks and state and federal officials that the two sides
had a long way to go to reach an agreement.
The 14 mortgage servicing companies who reached deals with U.S. regulators agreed to conduct a
review of loans that went into foreclosure in 2009 and 2010, and improve their procedures for modifying
loans and seizing homes.
Page 1075 of 3826
They also agreed to stop foreclosing on homes while negotiating lower mortgage payments for
borrowers.
The regulators included the Office of the Comptroller of the Currency, the Fed, the Office of Thrift
Supervision and the Federal Deposit Insurance Corp.
Signed Agreements
In addition to Bank of America and JPMorgan, also taking part in the regulator agreements were Wells
Fargo & Co. (WFC), Citigroup Inc. (C), the GMAC unit of Ally Financial Inc., Aurora Bank FSB,
EverBank Financial Corp., HSBC Holdings Plc, OneWest, MetLife Inc., PNC Financial Services Group
Inc. (PNC), Sovereign Bank, SunTrust Banks Inc., and US Bancorp.
Bank of America, JPMorgan, San Francisco-based Wells Fargo, New York-based Citigroup and Detroitbased Ally are the five companies involved in the talks with the 50 states.
The federal regulators said their agreements with the servicers are designed as a tool for state and
federal law enforcement agencies as they seek a global settlement.
A flood of borrower delinquencies caused by subprime loans and the collapse of housing prices led
servicers to rely on workers who failed to track paperwork or improperly signed legal documents to
speed foreclosures.
Reports of so-called robo-signing prompted some lenders to temporarily suspend foreclosures last year.
The banks didnt admit or deny regulators findings as part of their agreements.
Iowas Miller said the settlements with regulators wouldnt affect the larger state effort to reach a
nationwide agreement.
Back to Top
Page 1076 of 3826
New York Times

Wrongful Foreclosures
April 16, 2011
Editorial
We were worried recently when we saw an advance draft of legal agreements between federal
regulators and the nations big banks to address and correct foreclosure abuses. The actual deals were
as bad as we feared.
It turns out that the inquiry that preceded the agreements was limited to reviews of foreclosureprocessing functions things like paperwork handling and work-force supervision. The reviews found
big processing problems no surprise there and the agreements call for more staff and better
management.
What was not looked for is far more significant. Because so few files were examined, the regulators
report says, the reviews could not provide a reliable estimate of the number of foreclosures that should
not have proceeded. So much for the burning question of the extent of wrongful foreclosures. The
reviews also did not look at potential abuses outside the foreclosure process, including unreasonable
loan fees and misapplied loan payments. Such faulty charges can precipitate default by making it
impossible for borrowers to catch up on late payments.
Nor did the reviews focus on faulty loan-modification processes, like instances in which bank
employees wrongly told borrowers they needed to be delinquent to qualify for new loan terms.
Delinquency subjects borrowers to late fees, damaged credit and an increased risk of falling hopelessly
behind. It also harms mortgage investors who are stuck with the loan losses. But it can be profitable for
banks that service loans; they can extract late fees from the borrower or upon the foreclosed homes
sale.
To add insult to injury, the agreements leave it largely up to the banks to investigate themselves on
those issues. They require banks to choose, hire and pay independent consultants to check a sample of
pending foreclosures; banks are then supposed to reimburse wronged borrowers. The regulators
pledge to ensure that the reviews are comprehensive and reliable. Were not holding our breath.
The agreements do not include monetary penalties, though regulators say fines are coming. Regulators
appear divided over whether the agreements should preclude efforts by the states to correct and punish
foreclosure abuses. The Federal Reserve and the Federal Deposit Insurance Corporation have stated
clearly that the agreements do not stop other enforcement actions. The Office of the Comptroller of the
Currency has not ruled out such interference. Over all, an important opportunity has been missed for
real reform, redress and accountability.
Page 1077 of 3826
Back to Top
American Banker
Regulatory Order Really a Win for Embattled MERS and the Banks That Use It
April 18, 2011
By Kate Berry
To many in the industry, federal regulators just gave Mortgage Electronic Registration Systems a big
stamp of approval.
In an April 13 consent order, regulators never questioned the underlying business model of Merscorp
Inc., whose private loan registry has become a lightning rod for foreclosure litigation.
The Office of the Comptroller of the Currency did not even attempt to address the controversy being
litigated in hundreds of courts across the country: Does MERS have the legal right to foreclose on a
borrower?
That omission is now being construed as a "win" for the largest banks.
"For MERS there is a potential silver lining in this cloud," said David Dunn, a partner at the law firm
Hogan Lovells in New York who represents banks. "The [consent] order has, in effect, validated their
procedures and processes. Given the attacks MERS has come under in all sorts of state courts, that's
good news. It could have been a lot worse."
Several mortgage servicers, particularly Bank of America Corp., had alerted shareholders last month of
the possibility of fines, penalties and even hits to earnings if MERS' business model had been upended.
For now, that model remains intact, lawyers say.
Page 1078 of 3826
Regulators also did not question the validity of allowing hundreds of bank employees to be designated
as "certifying officers" of MERS an issue plaintiff's lawyers maintained amounts to its own robosigning scandal. Such certifying officers will have to be identified and tracked, but they can still sign
legal documents such as mortgage assignments and lien releases in MERS' name, regulators said.
"The premise of MERS remains as valuable today as the day it was conceived," said Allen Jones, a
managing director at RiskSpan Inc., a Stamford, Conn., analytics and advisory firm, and a former
executive of default management at B of A.
MERS did not come out of the regulators' examination completely unscathed. Given that 31 million
residential mortgage loans are recorded on the MERS system, ensuring the accuracy and reliability of
data reported by the servicers will be a significant challenge. Banks are particularly spooked by
regulators' requirements that MERS "maintain adequate reserves for contingency risks and liabilities."
"For a little and thinly staffed enterprise like MERS, it will be a harder process," said Ellen Marshall, a
partner at Manatt, Phelps & Phillips LLP.
Marshall said the 14 largest bank servicers face "substantial costs" complying with their own consent
orders and getting MERS in compliance.
The Reston, Va., company must hire significantly more staff, get its finances in order and comply with
third-party audits and added scrutiny (where none existed before) from its 25 shareholders, including B
of A, Wells Fargo & Co., JPMorgan Chase & Co., Fannie Mae and Freddie Mac.
"The staffing, reviews and audits will be costly," Marshall said. MERS "will pay for it presumably by
assessing its members." (MERS' revenue comes solely from its 2,184 active members, which pay
annual fees determined by their size and transaction fees for loan registration.)
Moreover, MERS still faces hundreds of lawsuits from borrowers claiming it lacks standing to initiate a
foreclosure or to assign a mortgage to the actual noteholder. To reduce its litigation costs, MERS told
its members in February to stop foreclosing in its name. MERS now will assign the mortgage back to
the noteholder, essentially resolving many of the legal questions surrounding which entity has the right
to foreclose.
Still, after seven years and 385 lawsuits, only 17 were decided against MERS, and the company has
not paid a single monetary judgement from any court case, said Karmela Lejarde, a MERS
spokeswoman. It continues to win the vast majority of legal challenges.
Page 1079 of 3826
In recent weeks courts in Massachusetts, Kansas and New Hampshire have upheld the standing of
MERS in foreclosure cases. An Arizona court will decide Monday whether a closely-watched lawsuit,
alleging MERS was designed to unlawfully avoid county recording fees, may proceed. Last year six
class-action lawsuits against MERS in Arizona, California and Nevada and more than 80 individual suits
claiming various forms of fraud were dismissed.
MERS also has hired some politically savvy executives who will be addressing the consent order
including Kurt Pfotenhauer, the CEO of the American Land Title Association, as chairman, and Paul
Bognanno as president and CEO.
Bognanno ran Principal Financial Group's mortgage lending business in the 1990s and more recently
was chairman of the mortgage insurer Radian Guaranty.
"I don't think the regulators alone can decide some of the issues that are applicable under state law,"
Marshall said, although "they certainly signaled that they didn't see anything in the state law cases that
fundamentally undercut the overall model."
Federal regulators did clear up some of the confusion about promissory notes. In a footnote, they wrote:
"The ownership of the note is determined by the Uniform Commercial Code and, if a change in
ownership of a note is not recorded in MERS or is recorded incorrectly, the transfer is still valid."
Banks have largely stayed the course with MERS because of the substantial benefits that led to its
creation in 1985 by a few staff members of the Mortgage Bankers Association.
MERS was structured for a dual purpose: to eliminate the need by banks to prepare and record
successive assignments of mortgages each time ownership was transferred, and to avoid paying
county recorder fees.
"The trend right now is in their favor," Jones said.
Back to Top
Page 1080 of 3826
American Banker
White House Announces Strategy to Protect Business, Consumer Identity Online
April 18, 2011
By Jeremy Quittner
The Obama administration announced Friday the release of a strategy to protect consumer and
business identities in cyberspace.
Called the National Strategy for Trusted Identities in Cyberspace, the policy, drafted last June, would
create an "Identity Ecosystem" to enable consumers to obtain a single identity credential, described as
a piece of software that could be stored on a smartphone, smart card or in a token. The software
generates one-time digital passwords.
The single identity would replace the multitude of IDs and passwords that customers use when signing
onto websites that contain valuable information, such as banking sites. It could also be used in ecommerce, or to prove identity in the physical world.
"We must do more to help consumers protect themselves, and we must make it more convenient than
remembering dozens of passwords," Gary Locke, Commerce secretary, said in the press release.
The NSTIC calls for an initiative led by the private sector, supported by government, to develop the
technologies, standards and policies necessary to create the Identity Ecosystem. "Working together,
innovators, industry, consumer advocates and the government can develop standards so that the
marketplace can provide more secure online credentials, while protecting privacy," Locke said.
Back to Top
American Banker
20% of Phones May Have NFC by 2014
April 18, 2011
Page 1081 of 3826
By Andrew Johnson
The availability of NFC smartphones an ingredient many say is necessary for mobile payments
systems to take off may be a less onerous problem by 2014, a report from Juniper Research said.
The U.K. research firm predicted in a report released Thursday that at least one in five smartphones will
have near-field communication technology worldwide in the next three years. North America should
account for more than half of the 300 million NFC phones Juniper says could be available by then,
according to the report.
Back to Top
American Banker
JPM, Wells May Prompt Other Banks to Issue EMV Cards in U.S.
By Andrew Johnson
April 15, 2011
Now that two of the largest U.S. banks have thrown their weight behind chip cards, there could soon be
a competitive impetus for others to put the cards in Americans' hands.
This summer, JPMorgan Chase & Co. and Wells Fargo & Co. will join a few smaller financial institutions
that are already issuing such cards to customers. For consumers to fully gain the added security
benefits of the EMV Integrated Circuit Card Specifications, which involve storing credentials on the
encrypted chip in the card, most U.S. merchants would need to upgrade to terminals that can read the
cards.
JPMorgan Chase and Wells Fargo have no illusions that the retailers are in a hurry to do so. They are
issuing the cards to help U.S. customers who have been spurned when trying to make payments while
traveling Europe, where EMV is commonplace. Other big issuers in this country may have to follow suit
to keep customers happy.
Page 1082 of 3826
"American travelers overseas are having problems," said Patricia Hewitt, the director of the debit
advisory service at Mercator. "They're calling issuers and saying, 'We don't want to have to switch to
someone else's card or carry another card and we want to be able to transact easily overseas.' "
Offering EMV cards may not be enough to attract customers from other banks, but it helps solidify
relationships with clients that travel frequently, who "can represent a more profitable account
opportunity" for issuers, Hewitt said.
Still, Hewitt and others were skeptical that moves by JPMorgan Chase and Wells Fargo would prompt U
.S. merchants to upgrade their payment terminals to accept EMV cards.
Indeed, neither Wells Fargo nor JPMorgan Chase is promoting EMV for domestic use at this stage.
"This particular technology is just much more focused on our international travelers and the reality of the
overseas payment environment," David Porter, the general manager of card services at JPMorgan
Chase, said in an interview Thursday.
"We're not looking to the future necessarily here," he said. "It's just looking at the present."
The imprimatur of JPMorgan Chase and Wells Fargo is not a compelling enough reason for retailers to
take similar steps, experts said.
"Merchants have got to spend money" to upgrade, said Eric Grover, a principal with payments
consulting firm Intrepid Ventures in Minden, Nev. They may not be willing to do so unless required to by
the networks or encouraged to by a shift in liability for fraudulent payments.
The amount of fraud is smaller in physical point of sale transactions than in online commerce, which
EMV does not address, Grover said.
"EMV has some efficacy at the point of sale but it doesn't address the online environment, where
the fraud problem is an order of magnitude greater," he said.
JPMorgan Chase said Thursday it plans to begin issuing an EMV version of its Visa Inc.-branded
Palladium credit card, offered to its private, investment, treasury and commercial banking clients,
starting in June. It will add other Chase-branded cards marketed at frequent international travelers,
such as airlines rewards cards, later in the year.
Page 1083 of 3826
Porter would not say how many cards the company plans to issue.
JPMorgan Chase is using an EMV specification called chip-and-signature, which allows a cardholder to
authenticate a transaction by signing for it like they would with the more common magnetic-stripe credit
cards today.
The more common authentication method for EMV is chip-and-PIN, meaning a cardholder must enter a
PIN to complete a transaction.
"We just wanted to make that as easy and hassle-free process as possible," Porter said about the
decision to forgo using a PIN.
While requiring a PIN "absolutely adds" an extra layer of security, PIN authentication is not a
requirement to meet EMV standards, said George Peabody, the director of the emerging technologies
advisory at Mercator Advisory Group.
"The choice to do chip-and-PIN versus chip-and-signature is really an implementation decision on the

issuer's behalf," Peabody said. "That is configured on the chip itself."
Regardless, "signature EMV is a huge improvement over mag-stripe" security, Peabody said.
While using a PIN to conduct debit card transactions is familiar in the U.S., it is an unfamiliar concept for
U.S. credit card users.
"It does exist for cash advances at ATMs, but no one knows their [credit card] PIN," Peabody said.
Wells Fargo announced on Wednesday that it will issue 15,000 EMV cards to consumer cardholders
who are frequent international travelers.
Its cards will let users conduct both chip-and-PIN and chip-and-signature transactions, a spokeswoman
for the San Francisco company said.
Both Wells Fargo and JPMorgan Chase are including magnetic stripes on their cards so customers can
use them at U.S. merchants.
Page 1084 of 3826
Some large U.S. retailers, including Wal-Mart Stores Inc., have advocated the adoption of chip-and-PIN
cards.
Wal-Mart has installed terminals that could read chip-and-PIN cards.
"While we are pleased to see movement in the U.S. to the global EMV standard, we envision the most
robust authentication environment to be chip and PIN only, with no mag-stripes or signatures," Jamie
Henry, the senior director of payment services at the Bentonville, Ark., retailer said. "The most recent
announcements are targeted to international travelers, but no solution will be complete until all U.S.
consumers can benefit," he said.
JPMorgan Chase's and Wells Fargo's announcements add to the small roster of financial institutions
that have been offering EMV cards on a smaller scale in the U.S., including State Employees' Credit
Union in Raleigh, N.C., and United Nations Federal Credit Union, which caters to U.N. employees.
Travelex Currency Services Inc. last year announced plans to offer MasterCard Inc.-branded prepaid
EMV cards in foreign currencies at 180 U.S. retail locations.
Back to Top
The Hill (blog)

Report: IRS pays out $513 million in tax credits to homebuyers who didn't qualify
April 15, 2011
By Vicki Needham
The IRS paid out more than $500 million in first-time homebuyer tax credits to people who probably
didn't qualify, a government investigator said Friday.
Page 1085 of 3826
The IRS needs to strengthen its controls over all refundable tax credits, the Treasury Inspector General
for Tax Administration (TIGTA) concluded in a report released publicly on Friday.
The largest portion of that half-billion that could be recovered is $326 million from 47,576 taxpayers who
weren't first-time homebuyers, J. Russell George, the Treasury inspector general for tax administration,
said in the report.
Other credits went to more than 1,000 prison inmates worth $7.7 million couples who both
claimed the tax credit worth about $11.4 million taxpayers who bought homes before the credit
went into effect about $17.6 million and to more than 13,400 people who did not actually buy
homes, claiming $97.8 million in credits, although the IRS argued the estimates are too high.
In addition, the IRS disallowed $531,134 in tax credits claimed by 96 taxpayers who were under age 18,
making it unlikely they purchased a home, according to the report.
"The IRS has taken positive steps to strengthen controls and help prevent the issuance of inappropriate
homebuyer credits," George said. "However, many of the actions occurred after hundreds of thousands
of homebuyer credits had already been issued, including fraudulent and erroneous credits totaling
millions of dollars."
The report recommended, and the IRS agreed, that the agency should seek legislation to provide the
agency with math-error authority to deny credits when supporting documentation is not provided for a
refundable credit.
"The timing and differences in the various legislative provisions also created complexity and confusion
for taxpayers and return preparers, as well as the real estate industry," the IRS said in a written
response to the audit. "The IRS addressed this challenge by providing timely, understandable and
extensive outreach and education to the public. Nevertheless, this complexity undoubtedly contributed
to numerous errors and erroneous claims."
Eligible homebuyers who purchased a home in 2008, 2009 or 2010 could claim up to an $8,000
refundable credit on their tax return. In November 2009, Congress extended the credit through April 30,
2010, and expanded it to longtime owners who bought new homes. They had until Sept. 30 to complete
their purchases. There were income requirements on top of purchase restrictions.
The popular yet complicated tax credit, which provided nearly $27 billion to roughly 4 million taxpayers,
was designed to get the struggling housing market moving again and provide a boost to the economy
during the recession.
Page 1086 of 3826
In 2009 and 2010, the IRS reported that it issued tax credits of $12.3 billion and $13.7 billion,
respectively, on par with expected estimates.
In all, the agency examined more than 400,000 returns, saving more than $1.3 billion, and identified
more than 200 criminal schemes, according to the agency response.
Back to Top
Housing Wire
Florida finally rolls out Treasury's $1 billion fund for distressed homeowners
April 18, 2011
By Kerry Panchuk
The Florida Housing Finance Corp. is finally ready to put $1 billion in Treasury Department funds to use
by funding solutions for distressed homeowners across the state.
On Monday, the agency began accepting applications for the Florida Hardest-Hit Fund, a program that
offers qualifying borrowers two options for saving delinquent mortgages. The Treasury Department
disbursed funds from its $7.6 billion Hardest-Hit Fund last summer, but the roll-out is just now taking
place.
Wells Fargo (WFC: 29.38 -1.71%) is also in talks with the Arizona Department of Housing to join a
program providing principal reduction on delinquent mortgages using some of the $268 million allocated
to the southwest state through HHF, a source familiar with the negotiations said earlier this month. Bank
of America is also doing the same in the state.
Plan one under Florida's program offers unemployment mortgage assistance that runs up to six months
or $12,000 in total payments, whichever threshold is reached first. In addition, the mortgage loan
reinstatement program was deployed to bring delinquent mortgages up to date, with the cap at $6,000.
Page 1087 of 3826
Florida Housing Finance Corp. launched a pilot program in Florida's foreclosure-ridden Lee County in
March. Homeowners across the state can now submit applications.
The program is the result of a 2010 Treasury initiative in which the federal agency created the Housing
Finance Agency Innovation Fund for the hardest-hit housing markets. The Treasury agreed to allocate
millions of dollars to states riddled with distressed loans and suffering from high housing depreciation
rates. The states include Florida, California, Arizona, Michigan and Nevada.
Back to Top
Page 1088 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:
Scanlon, Thomas
RE: Section 1063(i) stuff

Mon Apr 18 2011 12:01:16 EDT
Hi Kevin,
If you have an updated list of issues that we are working on, please bring a few copies of that list. But
otherwise, there is no need to prepare.
Thanks,
Tom
To: Scanlon, Thomas
Subject: Accepted: Section 1063(i) stuff
When: Monday, April 18, 2011 2:15 PM-2:45 PM (UTC-05:00) Eastern Time (US & Canada).
Where: 1801 L St.
Hi Tom,
Sounds good. Is there anything you'd like me to prepare in advance of this meeting?
-Kevin
Page 1089 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:
Mestre, Juan (CFPB)

(fydibohf23spdlt)/cn=recipients/cn=mestrej>
_DL_CFPB_AllHands
Mandatory - Building Evacuation and Shelter-In-Place Training for April 2011

Mon Apr 18 2011 11:47:23 EDT
Good Morning,
For those CFPB employees and contractors who have not attended the mandatory Building Evacuation
and Shelter-In-Place Training. It will be conducted on the following date and time.
Date and Time: Thursday April 21, 2011, 10:00 am to 11:00 am
Where: Conference Room: 8003, 8th Floor
Instructor: Department of the Treasury, Office of Emergency Programs.
Our goal is to ensure all CFPB personnel and contractors are aware of emergency procedures and
more importantly everyone remains safe and accounted for.
Out of 175+ CFPB staff members only 92 have taken the course of training, to date. Please mark your
calendar for the above mentioned session, if you have not taken the course.
Let me know if you have any questions.
v/r,
Page 1090 of 3826
Juan Mestre
Implementation Team - Security
1801 L Street, N.W.
Room #: 7517
E-Mail: [email protected]
OFC#: 202-435-7045
(b) (6)
(b) (6)
Page 1091 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

(fydibohf23spdlt)/cn=recipients/cn=darlinge>
(fydibohf23spdlt)/cn=recipients/cn=slagterd>; Dickman, Marilyn
(fydibohf23spdlt)/cn=recipients/cn=dickmanm>; Black, Brad
group (fydibohf23spdlt)/cn=recipients/cn=cronink>; DiPalma,
Nikki (CFPB) </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=sensibav>; Tamberrino, Mary
(fydibohf23spdlt)/cn=recipients/cn=wanderera>; Patross, Whitney
(fydibohf23spdlt)/cn=recipients/cn=patrossw>; Harvey, Imani
All Hands Distributions Re: Human Capital

Mon Apr 18 2011 10:30:14 EDT
Page 1094 of 3826
Good morning everybody,

In the event that you have information that needs distribution to CFPB's All Hands list, please send it to
Dennis directly with a courtesy copy to Marilyn Dickman and me.
Thank you!
Eben
Page 1095 of 3826
From:
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Bcc:
Subject:
Date:
Attachments:
How to create an online photo album

Mon Apr 18 2011 00:00:00 EDT
Windows Live Photo Gallery makes uploading, editing, and storing and sharing photos easy. Read this
article to find out how, with just a few clicks, you can create custom online photo albums for special
events, trips, or hobbies.
View article...
Page 1097 of 3826
From:
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Bcc:
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Date:
Attachments:

_DL_CFPB_AllHands
Weekly Outreach Calendar Apr 18-22, 2011
Sun Apr 17 2011 16:32:24 EDT
Events & Meetings w External Groups Apr 18 - 22, 2011

EW Remarks w Kentucky Community Bankers: A Day with the Commissioner. Open Press.
EW Keynote at University of Kentucky School of Law. Open Press.
LKennedy remarks at Skadden, Arps, Slate, Meagher & Flom LLP Fair Lending conference. Closed
Press.

HPetraeus Meeting w American Freedom Foundation
ALopez-Fernandini Meeting w Presidents Advisory Council on Financial Capability

EW Call Time w Community Bankers in CA, AL, NY
Raj Date remarks at UC Irvine, Paul Merage School of Business. Closed Press.
PTwohig Meeting w AFSA/Auto Lending Comm
Page 1098 of 3826
DSilberman Call w Discover

CStone Meeting w Experian
Zixta Q. Martinez
202.435.7204
Page 1099 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

_DL_CFPB_AllHands
Weekly Outreach Calendar Apr 18 - 22, 2011
Fri Apr 15 2011 17:24:34 EDT
Events & Meetings w External Groups Apr 18 - 22, 2011

EW Meeting w Kentucky Community Bankers: A Day with the Commissioner. Open Press.

EW Keynote at University of Kentucky School of Law. Open Press.

HPetraeus Meeting w American Freedom Foundation
ALopez-Fernandini Meeting w Presidents Advisory Council on Financial Capability

EW Call Time w Community Bankers
RDate remarks at UC Irvine, Paul Merage School of Business. Closed Press.
PTwohig Meeting w AFSA/Auto Lending Comm
Page 1100 of 3826
DSilberman Call w Discover

CStone Meeting w Experian
Zixta Q. Martinez
202.435.7204
Page 1101 of 3826
From:
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Bcc:
Subject:
Date:
Attachments:

FW: Onboarding Folder

Fri Apr 15 2011 16:50:45 EDT
From: Shue, Jeffrey (CFPB)

Subject: Onboarding Folder
Link
Jeffrey Shue, Esq.

Policy Analyst
U.S. Department of the Treasury
Tel. (202) 435.7397
(b) (6)
[email protected]
Page 1102 of 3826
From:
To:
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Subject:
Date:
Attachments:

Scanlon, Thomas
RE: 1063(i) Items

Fri Apr 15 2011 15:48:36 EDT
I will indeed be here on Monday afternoon. I arrive at 2 pm, and would be able to meet anytime
thereafterthanks Tom!
-K

Subject: Re: 1063(i) Items
Great, thanks. Also, are you around next Monday afternoon? If so, you and I might need to sit down for
30 minutes with Rebecca and Brett, the new attorneys in the General Counsel's office. (Evidently Liz
will be serving on the jury.) I'll drop you a note Monday with an update.
Tom
_____
To: Scanlon, Thomas
Sent: Fri Apr 15 15:41:22 2011
Subject: 1063(i) Items
Hi Tom,
I hope youre enjoying your vacation. I wanted to send along some work from this week, but there is no
urgency to these documents, so please dont worry about them until you return.
Attached are:
Page 1103 of 3826
-the redlined statute and regulations from the Omnibus Appropriations Act, 2009, an enumerated law
that we included in the list but had not yet addressed for the restatement project
-a summary of the enforcement scheme under the Alternative Mortgage Transaction Parity Act
(AMTPA), as we discussed
Ive also begun the process of organizing and compiling all of the files that I have from the restatement
project so we can facilitate a smooth transition with Nick. Ill contact him next week to set up a meeting
to brief him on our progress.
Thanks,
Kevin
Kevin K. Lownds
Review Analyst
(202) 435-7399
Page 1104 of 3826
From:
To:
Cc:
Bcc:
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Date:
Attachments:
Scanlon, Thomas
Out of Office: 1063(i) Items

Fri Apr 15 2011 15:41:24 EDT
I will be out of the office until Monday, April 18, and will have only occasional access to email. If you
need to contact one of my colleagues in the General Counsel's office, please call Yvette Kinard or
Martha Chacon-Ospina, at (202) 622-0480, and either will assist you.
Thanks,
Tom
Page 1107 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:
Kern, Shaun (CFPB)

(fydibohf23spdlt)/cn=recipients/cn=kerns>
RE: Docs
Fri Apr 15 2011 15:41:24 EDT
Awesome. Thanks Kevin.

To: Kern, Shaun (CFPB)
Subject: Docs
Hey Shaun,
Nice talk today. Attached are the Maine and Oklahoma exemptions that were issued by the Board. I
looked at them, and they were done in response to a request from the states, so it was not done on its
own motion, but I think it still has relevance to this issue. Ill be back Monday, so happy to talk more
then (or later today if you want). Enjoy the weekend.
-K
Kevin K. Lownds
Review Analyst
(202) 435-7399
Page 1108 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Scanlon, Thomas
1063(i) Items
Fri Apr 15 2011 15:41:22 EDT
AMTPA Enforcement Scheme 4-15-11.docx
Omnibus Appropriations Act 16 CFR 322 4-11-11.doc
Section 626 of the Omnibus Appropriations Act 4-8-11.doc
Hi Tom,
I hope youre enjoying your vacation. I wanted to send along some work from this week, but there is no
urgency to these documents, so please dont worry about them until you return.
Attached are:
-the redlined statute and regulations from the Omnibus Appropriations Act, 2009, an enumerated law
that we included in the list but had not yet addressed for the restatement project
-a summary of the enforcement scheme under the Alternative Mortgage Transaction Parity Act
(AMTPA), as we discussed
Ive also begun the process of organizing and compiling all of the files that I have from the restatement
project so we can facilitate a smooth transition with Nick. Ill contact him next week to set up a meeting
to brief him on our progress.
Thanks,
Kevin
Kevin K. Lownds
Review Analyst
(202) 435-7399
Page 1109 of 3826
12 CFR 213.9 Oklahoma Exemption.docx (Attachment 1 of 2)
SOURCE: 47 FR 42171-02
NOTICES
FEDERAL RESERVE SYSTEM
[Regs. M and Z; Doc. No. R0415]
Consumer Leasing, Truth in Lending; Order Granting Exemptions to the States of Massachusetts,
Oklahoma and Wyoming
Friday, September 24, 1982
*42171 AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Order.
SUMMARY: The Board has determined that the exemptions from the revised federal Truth in
Lending Act requested by the states of Massachusetts, Oklahoma and Wyoming should be
granted. Massachusetts sought an exemption from chapters 2 (credit transactions) and 4 (credit
billing) of the act for transactions subject to the Massachusetts Truth in Lending Act; Oklahoma
sought an exemption from chapters 2 and 5 (consumer leases) of the act for transactions subject
to the Oklahoma Consumer Credit Code, and Wyoming sought an exemption from chapter 2 of
the act for transactions subject to the Wyoming Consumer Credit Code.
EFFECTIVE DATE: October 1, 1982.
FOR FURTHER INFORMATION CONTACT: Rugenia Silver or Lynn Goldfaden, Staff Attorneys,
Division of Consumer and Community Affairs, Board of Governors of the Federal Reserve System,
Washington, D.C. 20551 at (202) 4523667 or (202) 4523867.
SUPPLEMENTARY INFORMATION: (1) General. The Truth in Lending Act (15 U.S.C. 1601 et seq.)
directs the Board to exempt from that act transactions that are subject to state laws meeting
certain requirements. Under section 123 of the act, consumer credit transactions may be exempt
from chapter 2 (credit transactions) if the applicable state law is substantially similar to the
federal act and the state demonstrates adequate provision for enforcement. Sections 171 and
186 prescribe the same exemption standards for chapter 4 (credit billing) and chapter 5
(consumer leases), respectively, except that the Board, in making exemption determinations
under those chapters, is also to consider whether the state law is more protective of the
consumer.
A state law need not exactly mirror the comparable federal requirement in order to be considered
substantially similar. However, any variations should be few in number and minor in nature, in
order not to deprive consumers of any federal protections nor significantly complicate compliance
by creditors. In measuring the adequacy of enforcement, the Board looks to whether the state
requires restitution for certain violations, has adequate funding and personnel, and in other ways
demonstrates a commitment to effective enforcement of its laws.
Under the original Truth in Lending Act, the Board granted exemptions to Connecticut, Maine,
Massachusetts, Oklahoma and Wyoming for chapter 2. Those exemptions expire on October 1,
1982, the mandatory effective date of the Truth in Lending Act as revised by Congress in Pub. L.
96221. Effective that date, the Board granted new exemptions to Connecticut and Main under
the revised act (47 FR 36931, August 24, 1982). At the same time, the Board published notice of
applications from the Sates of Massachusetts, Oklahoma and Wyoming for exemptions from the
revised act (47 FR 36962, August 24, 1982). In order to assure final action on the requests by
October 1, 1982, the Board requested comments by September 15, 1982.
Page 1123 of 3826
Massachusetts requested an exemption from chapters 2 and 4 of the revised act, based on
chapter 140D (consumer Credit Costs Disclosure) of the General Laws of Massachusetts, and
implementing regulations (209 Code of Massachusetts Regulations section 32.00 et seq.). After
analysis of the state law and regulations, and consideration of the state's enforcement
provisions, the *42172 Board has determined that the state of Massachusetts meets the
standards for exemption and that its application should be granted as requested.
Oklahoma applied for an exemption from chapters 2 and 5 of the act, pursuant to the Oklahoma
Consumer Credit Code as revised (Title 14A Oklahoma Statutes 1101et seq.) and implementing
regulations. In its August notice, the Board noted one variation in the state law that limits the
scope of that exemption. Because the state law and regulations contain no counterpart to 132
through 135 of the federal act and 226.12 of Regulation Z (credit card rules), an exemption
from the requirements of chapter 2 does not extend to those provisions of chapter 2 relating to
credit card issuance and liability. With this one exception, the Board believes that the Oklahoma
statute and regulations meet the requirements for exemption and that the state has adequate
provision for enforcement. Therefore, the Board has determined that the Oklahoma exemption
should be granted, with the limitation noted.
Wyoming applied for an exemption from chapter 2 of the federal statute for transactions subject
to the Wyoming Consumer Credit Code, as amended in 1982 (W.S. 4014101 through
4014702), and implementing regulations. In its August notice, the Board noted one significant
variation in the state law relating to the term residential mortgage transaction.
That term is
defined in the federal act and regulation and used in several important federal provisions,
including the early disclosure rules of 226.19, the finance charge rules in 226.4(e), and the
exceptions from the right of rescission under 226.23. Wyoming law did not use that term,
using instead terms such as real property mortgage that are not defined in
th same manner as
residential mortgage transaction. For this reason, the Board was concerned that the coverage
of the special mortgage provisions would be significantly altered under the Wyoming statute.
Since publication of the notice, the state of Wyoming has revised its statute and implementing
regulations by replacing the relevant state terms with there term residential mortgage
transaction, defined in accordance with the federal Truth in Lending Act and Regulation Z. With
this change, the Board has determined that the Wyoming statute and regulation are substantially
similar to the federal statute, that the state has adequate provision for enforcement, and that
the exemption should be granted as requested.
By the close of the comment period, the Board had received 10 comments regarding the
exemption requests. Several commenters questioned apparent discrepancies between the federal
act and certain of the state laws, relating to cash discounts under section 167 of the federal act,
in the case of Oklahoma and Wyoming, and the special federal rules for residential mortgage
transactions, in the case of Wyoming (discussed above). Effective October 1, 1982, Wyoming
and Oklahoma are adopting revisions to their rules which reflect the revised federal act and
regulation. No substantive evidence was offered by commenters to cast doubt on the adequacy
of the states' enforcement efforts.
In accordance with Appendix B of Regulation Z and Appendix A of Regulation M, the Board
reserves the right to revoke an exemption if at any time it determines that the standards
required for exemption are not being met. The state receiving an exemption undertakes to
inform the Board within 30 days of any change in its relevant law or regulations. The Board will
inform the appropriate state official of any revisions in the federal statute or regulation that must
be adopted by the state in the future in order to maintain its exemption. Should an amendment
or other revision to a state law become necessary because of a corresponding congressional or
Board action, the Board will allow sufficient time to the state to revise its laws and regulations in
order to preserve substantial similarity.
Page 1124 of 3826
(2) Order of exemption. The following order sets forth the terms of the Massachusetts, Oklahoma
and Wyoming exemptions. Notice of the exemptions will be included in the official staff
commentaries on Regulations Z and M.
Order
The states of Massachusetts, Oklahoma and Wyoming have applied for exemptions from the
federal Truth in Lending Act as revised on March 31, 1980 (Title VI of the Depository Institutions
Deregulation and Monetary Control Act of 1980, Pub. L. 96221). Pursuant to sections 123, 171
and 186 of the act, the Board has determined that the laws of those states are substantially
similar to the federal law and that there is adequate provision for enforcement of those laws.
Therefore, the Board hereby grants those exemptions as follows:
Massachusetts. Effective October 1, 1982, credit transactions that are subject to chapter 140D
(Consumer Credit Costs Disclosures) of the General Laws of Massachusetts, established by
chapter 733 of the Acts of 1981, and its implementing regulations are exempt from chapter 2
(credit transactions) and chapter 4 (credit billing) of the federal Truth in Lending Act. This
exemption does not apply to transactions in which a federally chartered institution is a creditor.
Oklahoma. Effective October 1, 1982, credit and lease transactions that are subject to the
Oklahoma Consumer Credit Code (Title 14A Oklahoma Statutes 1101et seq.) and its
implementing regulations are exempt from chapter 2 (credit transactions) and chapter 5
(consumer leases) of the federal Truth in Lending Act. The exemption does not apply to sections
132 through 135 of the federal act, nor does it apply to transactions in which a federally
chartered institution is a creditor or lessor.
Wyoming. Effective October 1, 1982, credit transactions that are subject to the Wyoming
Consumer Credit Code (W.S. 4014101 through 4014702) and its implementing regulations
are exempt from chapter 2 (credit transactions) of the federal Truth in Lending Act. The
exemption does not apply to transactions in which a federally chartered institution is a creditor.
By order of the Board of Governors of the Federal Reserve System, September 22, 1982.
James McAfee,
Associate Secretary of the Board.
Page 1125 of 3826
12 CFR 213.9 Maine Exemption.docx (Attachment 2 of 2)
SOURCE: 47 FR 36961-02
NOTICES
FEDERAL RESERVE SYSTEM
[Regs. M and Z; Doc. No. R-0394]
Consumer Leasing, Truth In Lending; Order Granting Exemptions to the States of Maine and
Connecticut
Tuesday, August 24, 1982
*36961 AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Order.
SUMMARY: The Board has determined that the exemptions from the revised federal Truth in
Lending Act requested by the states of Maine and Connecticut should be granted. Maine sought
an exemption from chapters 2 (credit transactions), 4 (credit billing), and 5 (consumer leases) of
the act for transactions subject to the Maine Consumer Credit Code, while Connecticut sought an
exemption from chapters 2 and 4 of the act for transactions subject to the Connecticut Truth in
Lending Act.
EFFECTIVE DATE: October 1, 1982.
FOR FURTHER INFORMATION CONTACT:
Rugenia Silver or Lynn Goldfaden, Staff Attorneys, Division of Consumer and Community Affairs,
Board of Governors of the Federal Reserve System, Washington, D.C. 20551 at (202) 452-3667
or (202) 452-3867.
SUPPLEMENTARY INFORMATION: (1) General. Sections 123, 171, and 186 of the Truth in
Lending Act (15 U.S.C. 1601 et seq.) direct the Board to exempt from the act's requirements
transactions that are subject to comparable state laws, if certain conditions are met. For
purposes of chapter 2 of the statute (credit transactions), the Board is directed to grant an
exemption if it determines that the state law imposes requirements substantially similar to those
imposed under chapter 2 and that there is adequate provision for enforcement. The exemption
standards for chapter 4 (credit billing) and chapter 5 (consumer leases) are identical to those for
chapter 2, with two modifications. Section 171(b), which sets forth exemption criteria for chapter
4, authorizes the Board to consider whether a state law gives greater protection to the
consumer, *36962 while 186(b), addressing the exemption criteria for chapter 5, authorizes
the Board to consider whether the state law gives greater protection and benefit to the
consumer.
The Truth in Lending Act was substantially revised by Congress on March 31, 1980 (Title VI of
the Depository Institutions Deregulation and Monetary Control Act of 1980, Pub. L. 96-221).
Prior to the revision of the act, five statesConnecticut, Maine, Massachusetts, Oklahoma and
Wyominghad been granted exemptions from chapter 2 of the Truth in Lending Act. As of
October 1, 1982, those exemptions will expire unless renewed in accordance with the revised
Truth in Lending Act.
The states of Maine and Connecticut applied to the Board for a continuation of their exemptions
under the revised Truth in Lending Act. Notice of those exemption requests, with an opportunity
for public comment, was published on April 15, 1982 (47 FR 16210).
Page 1126 of 3826
Maine's exemption request covered chapters 2, 4 and 5 of the revised federal statute and
Regulations Z (Truth in Lending) and M (Consumer Leasing). The comparable state provisions
that form the basis for its exemption request are contained in Article VIII of the Maine Consumer
Credit Code (Title 9-A, M.R.S.A.) and Rules of the Administrator (Rule 02-030-240), known as
Regulation Z-2. In its notice, the Board noted six variations from federal Regulations Z and M
that were not incorporated into Maine's regulation. In the Board's view, those variations were not
substantial and would not adversely affect Maine's exemption request. The Board indicated its
belief that Maine's law and regulation were substantially similar to the federal law and regulation
and that the state had demonstrated adequate provision for enforcement. Therefore, subject to
comment, the Board proposed to exempt transactions subject to the Maine Code and Regulation
Z-2 from chapters 2, 4 and 5 of the federal Truth in Lending Act.
The state of Connecticut applied for an exemption from chapters 2 and 4 of the Truth in Lending
Act. The basis for Connecticut's exemption request is the revised Connecticut Truth in Lending
Act (Chapter 657 of the Connecticut General Statutes, sections 36-393 through 36-417 inclusive,
as amended by Public Act 81-158). Subject to comment, the Board indicated its belief that
Connecticut's law was substantially similar to the federal statute and that the state had
demonstrated adequate provision for enforcement of that statute. Therefore, the Board proposed
to exempt transactions subject to the Connecticut Truth in Lending Act from chapters 2 and 4 of
the federal Truth in Lending Act.
The Board has received 20 comments regarding the exemption notices. Some comments
addressed the specific exemption proposals and others discussed the more general issue of the
Board's standards for measuring the substantial similarity of a state law. Several creditor groups
were concerned by the Board's finding that substantial similarity does not require a mirror image
of the federal law in order to support an exemption. The Board continues to believe that this
definition properly interprets the congressional standard, balancing the needs of states to
address local concerns with the needs of creditors and consumers for general uniformity in truth
in lending disclosures and protections. The Board notes that this standard, permitting certain
minor variations in exempt states' laws, represents a continuation of the same standard applied
in the original exemptions granted in 1970.
In accordance with Appendix B of Regulation Z and Appendix A of Regulation M, the Board
reserves the right to revoke an exemption if at any time it determines that the standards
required for an exemption are not met. The state receiving an exemption undertakes to inform
the Board within 30 days of any change in its relevant law or regulations. The Board will inform
the appropriate state official of any revisions in the federal statute or regulation that must be
adopted by the state in the future in order to maintain its exemption. Should an amendment or
other revision to a state law become necessary because of a corresponding congressional or
Board action, the Board will allow sufficient time to the state to revise its laws and regulations in
order to preserve substantial similarity.
(2) Order of exemption. The following order sets forth the terms of the Maine and Connecticut
exemptions. Notice of the exemptions will be included in the official staff commentaries on
Regulations Z and M.
Order
The states of Maine and Connecticut have applied for exemptions from the federal Truth in
Lending Act as revised on March 31, 1980 (Title VI of the Depository Institutions Deregulation
and Monetary Control Act of 1980, Pub. L. 96-221). Pursuant to sections 123, 171, and 186 of
the act, the Board has determined that the laws of those states are substantially similar to the
federal law and that there is adequate provision for enforcement. The Board hereby grants those
exemptions as follows:
Maine. Effective October 1, 1982, credit or lease transactions that are subject to Article VIII of
Page 1127 of 3826
the Maine Consumer Credit Code (Title 9-A, M.R.S.A. ) and its implementing regulations are
exempt from chapter 2 (credit transactions), chapter 4 (credit billing), and chapter 5 (consumer
leases) of the federal Truth in Lending Act. This exemption does not apply to transactions in
which a federally chartered institution is a creditor or lessor.
Connecticut. Effective October 1, 1982, credit transactions that are subject to the Connecticut
Truth in Lending Act (Chapter 657 of the Connecticut General Statutes, sections 36-393 through
36-417 inclusive, as amended by Public Act 81-158) are exempt from chapter 2 (credit
transactions) and chapter 4 (credit billing) of the federal Truth in Lending Act. This exemption
does not apply to transactions in which a federally chartered institution is a creditor.
By order of the Board of Governors of the Federal Reserve System, August 20, 1982.
William W. Wiles,
Secretary of the Board.
Page 1128 of 3826
From:
To:
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Date:
Attachments:

Fri Apr 15 2011 13:28:36 EDT

Regulation P Redline 1202 10 (110).docx
REDLINE REG E 12 CFR 2005 12-27-10 inc TS edits and all card amend.docx
EFTA 15 USC 1693 12-23-10 (without Comments for easier reading).docx
Equal Credit Oportunity Act Redlined.docx
Reg B 12 CFR 202 Appendix A Federal Enforcement Agencies 3 10 11 800pm.docx
REG B CFR 202 3 Limited exceptions 03 09 (2).docx
ECOA's Reg B CFR 202 3 Limited exceptions 3-17-11 10am.docx
ECOA's Reg B 12 CFR 202 Appendix A Federal Enforcement Agencies 3 17 11 10am.
docx
Page 1130 of 3826
Equal Credit Oportunity Act Redlined.docx (Attachment 4 of 8)
Page
1691a. Definitions; rules of construction

(a) The definitions and rules of construction set forth in this section are applicable for the purposes of this
subchapter.
(b) The term applicantmeans any person who applies to a creditor directly for an extension, renewal, or
continuation of credit, or applies to a creditor indirectly by use of an existing credit plan for an amount exceeding
a previously established credit limit.
(c ) The term Bureaumeans the Bureau of Consumer Financial Protection.

(d) The term creditmeans the right granted by a creditor to a debtor to defer payment of debt or to incur debts
and defer its payment or to purchase property or services and defer payment therefor.
(e) The term creditormeans any person who regularly extends, renews, or continues credit; any person who
regularly arranges for the extension, renewal, or continuation of credit; or any assignee of an original creditor who
participates in the decision to extend, renew, or continue credit.
(f) The term personmeans a natural person, a corporation, government or governmental subdivision or agency,
trust, estate, partnership, cooperative, or association.
(g) Any reference to any requirement imposed under this subchapter or any provision thereof includes reference to
the regulations of the Bureau under this subchapter or the provision thereof in question. 1691b. Promulgation of
regulations by the Bureau
(a) The Bureau. shall prescribe regulations to carry out the purposes of this subchapter. These regulations may
contain but are not limited to such classifications, differentiation, or other provision, and may provide for such
adjustments and exceptions for any class of transactions, as in the judgment of the Bureau are necessary or proper
to effectuate the purposes of this subchapter, to prevent circumvention or evasion thereof, or to facilitate or
substantiate compliance therewith.
(b) Such regulations may exempt from the provisions of this subchapter any class of transactions that are not
primarily for personal, family, or household purposes, or business or commercial loans made available by a
financial institution, except that a particular type within a class of such transactions may be exempted if the
Bureau determines, after making an express finding that the application of this subchapter or of any provision of
this subchapter of such transaction would not contribute substantially to effecting the purposes of this subchapter.
( c)An exemption granted pursuant to paragraph (b) shall be for no longer than five years and shall be extended
only if the Bureau makes a subsequent determination, in the manner described by such paragraph, that such
exemption remains appropriate.
(d) Pursuant to Bureau regulations, entities making business or commercial loans shall maintain such records or
other data relating to such loans as may be necessary to evidence compliance with this subsection or enforce any
action pursuant to the authority of this chapter. In no event shall such records or data be maintained for a period of
less than one year. The Bureau shall promulgate regulations to implement this paragraph in the manner prescribed
by chapter 5 of Title 5.
2010 Thomson Reuters. No Claim to Orig. US Gov. Works.

Page 1252 of 3826
From:
To:
Huang, Eugene (CFPB)

</o=ustreasury/ou=do/cn=recipients/cn=huange>
Eugene Huang
(b) (6)
Cc:
Bcc:
Subject:
Date:
Attachments:
Thank you and farewell

Fri Apr 15 2011 13:18:04 EDT
Dear CFPB Colleagues,
It has been a tremendous privilege and pleasure working with each of you during the course of the past
several months to deliver upon the promise of the Consumer Financial Protection Bureau. I have been
truly grateful to you for your advice, counsel and friendship and the opportunity that I have had to learn
and grow from each of you. The work that each of you are doing will be of tremendous value to the
American public, and I will be cheering each of you on from afar as you work towards July 21st and
beyond.
I will be joining a new venture capital firm focused on investment opportunities in the clean technology
space in the very near future. The firm will be based in Chicago, and I hope that you will visit. After
today, I can be reached at my personal email address at (b) (6)
or at
(b) (6)
My best wishes,
Eugene
Page 1268 of 3826
From:

_DL_CFPB_AllHands
Adamske, Steven
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Fri Apr 15 2011 12:06:45 EDT
Index

Bloomberg Times Nearly Up for Elizabeth Warren
Reuters Consumer cops: Why we need Mary Schapiro and Elizabeth Warren now
Raleigh News & Observer On the lookout
Page 1269 of 3826
Daily Kos White House finding few takers for CFPB chief job
Wall Street Journal The Right Foreclosure Fix
Wall Street Journal (blog) Regulator: Banks Face Costly Foreclosure Fixes
Reuters Outside review will help set foreclosure fines
American Banker Walsh Defends Regulators Over Servicer Action
Housing Wire OCC couldnt wait for state AG settlement
Naked Capitalism Proposed Bill on Foreclosure Fraud and Servicer Standards Shows
Shortcomings of Attorney General and Federal Regulatory Responses
Consumer Credit
New York Times (blog) Get Bad Loan Terms? Now Youll Get Some Clues Why
New York Times (blog) How Worrisome Is Student Debt?
American Banker Tester Touts Bill to Delay Interchange Fee Limits
American Banker BB&T to Add Fee to Free Checking
CNBC Guest Blog Papadimitriou: Membership Fee Increases Signal Fundamental Flaws at
Bank of America
Lexington Herald-Leader (Kentucky) Consumers won with defeat of payday lending restrictions
Housing
Tampa Tribune Military man returns from war to find home foreclosed
Los Angeles Times Banks are foreclosing while homeowners pursue loan modifications
New York Times Broker Fee Rules Take Effect
New York Times Hard-Pressed Homeowners Facing Another Financial Threat
New York Times (blog) Budget Deal Cuts Reverse Mortgage Counseling
Housing Wire Lawmakers to consider reducing QRM down payment to 10%
Page 1270 of 3826
Bloomberg
Times Nearly Up for Elizabeth Warren
April 14, 2011
By Carter Dougherty and Robert Schmidt
Elizabeth Warren is the architect behind the Consumer Financial Protection Bureau, the new agency
created to police many financial products, including mortgages, and a centerpiece of the
Administration's reform efforts. Opposition from Wall Street, Republicans, and some moderate
Democrats prevented the Harvard law professor and longtime critic of the banking sector from being
nominated to head the bureau after its creation last year. Instead, President Barack Obama appointed
Warren as a special adviser in September and asked her to prepare the bureau for its July 21 launch.
The move was seen by her supporters as a chance for Warren to placate her critics and clear the way
for an eventual nomination.
Six months later, there's little evidence Warren has succeeded. Opposition from Wall Street banks and
Republicans has only intensified after her involvement in proposing a $20 billion fine on the mortgage
industry. While she's won the support of many small community banks, Warren has converted no new
allies in the Senate, leaving her short of the 60 votes needed for confirmation. Before retiring in
January, Senator Christopher J. Dodd (D-Conn.), co-author of the Dodd-Frank regulatory reform bill that
created the consumer agency, urged Obama to put somebody else in the joba vote of no confidence
that helps explain rumors that Warren is considering alternative paths, including a run for the Senate.
Representatives for Warren declined to comment.
In recent weeks the Administration has reached out to two other Democrats, former Michigan Governor
Jennifer Granholm and former Senator Ted Kaufman of Delaware, about taking the job, according to
people familiar with the Administration's deliberations. Both declined. Senate Banking Committee
Chairman Tim Johnson (D-S.D.) calls Warren "one of a number of excellent potential candidates" but
says the Administration needs to move forward.
Speed matters because Republicans see an opportunity to weaken the bureau. Over the past few
months the GOP has introduced bills that would replace the director post with a five-member
commission and reduce the bureau's budget and authority. Warren "has raised more concerns than she
has allayed," says Representative Patrick McHenry (R-N.C.), who favors reining in the agency. Michael
Lux, chief executive officer of Progressive Strategies, a liberal consultancy, says Republicans' criticism
is a tactic "to scare up campaign contributions from banks" and make it politically costly for Obama to
give Warren a recess appointment, which requires no congressional approval and would allow her to
lead the bureau through 2012.
In her interim role, Warren's authority is limited and she can't pass binding regulations. But she has
Page 1271 of 3826
already hired dozens of consumer bureau staff members, secured a permanent home for the agency
near the White House, begun work on a fraud-alert hot line, and hosted conferences on credit cards
and mortgages. She has also spent much time meeting with small lenders across the country, working
to convince them that the CFPB's rules will level the playing field and help them compete with the big
banks. Robert L.Palmer, chief executive officer of the Community Bankers Association of Ohio, says his
members are enthusiastic. If Warren "leaves, and the direction changes, we're not going to be very
receptive," Palmer says.
Big banks have received less attention. Warren's February calendar reveals only one discussiona
phone callwith a Wall Street executive (Jamie Dimon of JPMorgan Chase (JPM) and a few meetings
with trade groups representing the large banks. "She met with people, which is nice," says Sam
Geduldig, a Republican banking lobbyist. But "actions speak louder than words."
One recent action, in particular, rankles financiers. Documents released in the past few weeks show
that Warren advised the federal and state officials investigating alleged wrongful foreclosures to include
in any settlement with the mortgage industry a $20 billion fine and a requirement to reduce loan
balances for several million struggling homeowners. Republicans on the House Financial Services
Committee say she failed to properly disclose her role in the negotiations while giving testimony on Mar.
16. Treasury Secretary Timothy Geithner called Federal Reserve Chairman Ben Bernanke from Europe
earlier this month to assure him that he didn't support the settlement offer, according to two people
briefed on the matter. "The mortgage stuff has really confirmed the kinds of concerns that people have
had about her," says Wayne Abernathy, an executive vice-president at the American Bankers Assn.,
whose members include the largest banks.
A recess appointment may be Warren's last chance at running the consumer protection agency. Liberal
groups that include the blog Daily Kos are encouraging her to run instead for the Senate in 2012
against Scott Brown, the freshman Republican from Massachusetts. Some Republican legislators may
prefer her as a colleague rather than as a regulator. Warren "might be a nice professor," says McHenry,
"but she hasn't shown herself capable of running a government organization."
The bottom line: It's looking less likely that Warren will ever run the CFPB. Liberals are urging her to
consider a run for the Senate.
Back to Top
Reuters
Page 1272 of 3826
Consumer cops: Why we need Mary Schapiro and Elizabeth Warren now
April 15, 2011
By John Wasik
Two women are fending off a vicious man-handling of investor protection.
As Congress pettily wrangles over the debt limit and the next budget, Mary Schapiro and Elizabeth
Warren are fighting to protect you against the ravages of Wall Street.
Wall Street and its Republican allies would like to make the Dodd-Frank financial reforms disappear.
The money trust has been pouring millions into lobbying to eviscerate the budget of the Securities and
Exchange Commission and blocking the formation of the Consumer Financial Protection Bureau.
Mary Schapiro, who chairs the SEC, said she cant kick start the myriad pro-investor rules of DoddFrank without adequate funding. Republicans, lead by Budget Committee Chairman Paul Ryan, want to
starve the beast in their fiscal year 2012 proposal.
Ryans new budget proposal wants to cut off the SEC budget at its knees by giving the SEC $112
million for fiscal year 2012. That effectively freezes the top securities regulators funding at 2008 levels.
The current budget deal gives the agency a slight increase in funding.
Remember what happened to Wall Street in 2008? The Obama Administration wants $308 million for
the SEC to prevent another year like that from happening. The money trust has deliberate amnesia.
While the SEC gathers most of its revenue from fees and fines, it cant seed key investor protections
like an office of investor advocate without the additional funds. Its budget was supposed to double
under Dodd-Frank over the next five years. The money trust wants to keep the status quo and de-fund
the agency.
Schapiro, who told a group of business journalists last week that investor protection would be hobbled if
she didnt get adequate funding, said under current budget proposals there will be fewer cops on the
beat.
Also on the chopping block is one of the most powerful investor safeguards of Dodd-Frank: fiduciary
duty for brokers. This one rule, endorsed by an SEC study earlier this year, would make brokers legally
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responsible to put their clients interests first. Right now, they only have to follow flimsy suitability
rules, which gives them leeway to sell a raft of unsuitable investments like derivative-loaded structured
products.
Although the SEC said it is still writing the fiduciary rule, after intense industry lobbying and the
objection of two of its Republicans commissioners, Schapiro told me the agency would do more
economic analysis on the proposal and take it up again in the second half of this year.
As a long-time observer of the agency, I can tell you that once the SEC decides to re-study a proposal,
its often a death knell or produces an indefinite delay. The agency has been sitting on a proposal to
reform onerous 12(b) 1 fees on mutual funds for years, even though these are marketing expenses that
needlessly eat into your returns.
Elizabeth Warren is fighting a separate battle to save the funding and independence of her consumer
bureau, which President Obama asked her to start up. Republicans have proposed that another
commission run the agency or answer to other regulators, which is the bureaucratic equivalent of
neutering it.
The consumer bureau, Warren hopes, would curb anti-consumer credit practices in banking. Her
common-sense approach is simple: Boil every credit agreement down to a plain-language form that tells
you how much it will cost you, is it affordable and is it the best deal. Thats something that would benefit
every American who gets a credit card, mortgage or other financing.
Not only are GOP proposals punitive to Warrens fledgling agency, they are unfair. No other banking
agency would have to answer to a commission or be hostage to Congressional appropriations. The
Office of the Comptroller of the Currency, a banking regulator, has a single director and obtains its
budgets from bank fees, for example.
Were not going down without a fight, says Warren, who is also a proponent of making the free market
work for consumers in promoting accountability and competition.
There shouldnt even be a fight over these two agencies. After the money trust nearly deep-sixed the
global economy in 2008, triggered a massive recession and unemployment, they should welcome more
cops on the beat. They are like three-year-olds with a pile of money and an endless supply of finger
paint. They need parental supervision or things will get messy again.
Warren and Schapiro are right. You dont police banks and brokers by stifling oversight. Let Washington
know you want to keep politics out of your portfolio.
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Raleigh News & Observer

On the lookout
April 15, 2011
Editorial
All right, let's stipulate that not all bankers are like Jimmy Stewart's nemesis in "It's a Wonderful Life,"
ready to stuff your cash in a newspaper and lie, cheat and steal while sending someone innocent to
prison. But the near collapse of America's financial system thanks to a reckless mortgage industry and
the network of greedy, big-bank risk-takers that built a financial house of cards for many small and large
investors was a desperate call for help.
Another call came from some in that financial industry, and the taxpayers obliged with a bailout in the
hundreds of billions of dollars.
But now, with the stars realigned and the industry coming back, some of the biggest bankers are
fighting increased federal regulation that was supposed to be part of the deal. It's as if they're saying:
What bailout? Get out of the way, leave us alone. We've got another brink to drive to and we're in a
hurry.
President Barack Obama fought hard for regulation to protect consumers from going over the edge, a
key part of which is a Consumer Financial Protection Bureau, which will work with a wide area of
responsibility and authority, from mortgage oversight to keeping an eye on the credit card industry.
Republicans in Congress fought against the agency every step of the way, to the point where Elizabeth
Warren, a former Harvard professor and recognized authority on the financial industries and consumer
protection, had to be named a presidential adviser focused on the bureau, instead of its chairperson or
director. That might have brought a rejection by Congress.
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Warren came to Charlotte this week for a meeting convened by North Carolina Attorney General Roy
Cooper, with other attorneys general, to talk about the role of state officials in enforcing consumer
protection laws. It was an appropriate role for Cooper, both as president of the National Association of
Attorneys General and as a long-time strong advocate for consumer protection in this state.
Basically, Warren maintains that her agency can't get the job of enforcement of financial laws done by
itself. State attorneys general will be on the front lines when it comes to pursuing and prosecuting
rascals in the financial industry. (It's important to note that when Warren started designing the bureau,
she was emphatic in saying she wasn't out to get anyone, that those institutions playing by the rules
had nothing to fear.)
For her part, Warren wants the mortgage industry, the regulation of which is understandably priority
one, to be clear with consumers, providing a simple document explaining the terms of a loan over its
lifetime.
Many homebuyers (some of whom should not have been buyers at all, based on traditional
qualifications) got in trouble when they discovered their initial payments would escalate. Once they did,
their furniture was on the street.
For their part, the AGs will be the ones pursuing those institutions that do not follow the rules. They'll
watch as well for the need to enforce other rules from the bureau as they are developed.
Warren well understands that the states have their own priorities to worry about.
But safeguarding consumers in the financial markets is not just a national issue, and with constant
agitation from big banks and investment houses to loosen or just forget about all the regulation put in
place after the Great Recession, those consumers are going to need protection now more than ever.
Back to Top
Daily Kos
Page 1276 of 3826
White House finding few takers for CFPB chief job

April 14, 2011
By Joan McCarter
Elizabeth Warren might end up being the nominee to be permanent head of the Consumer Financial
Protection Bureau, as the White House can't find anyone willing to take the job. Warren has been
spearheading the effort to get the new agency up and running, but is generally not expected to be
Obama's permanent nominee because of strong congressional opposition to her, specifically.
White House officials seeking someone to run the Consumer Financial Protection Bureau have so far
failed to find a nominee, with several candidates rebuffing the administration's overtures, according to
people familiar with the process.
One concern of some: That accepting would undercut Elizabeth Warren, the Harvard law professor and
consumer advocate who is currently a special adviser to the president charged with setting up the
bureau. She remains a hugely popular figure among many Democrats and anathema to many
Republicans.
Many on the left want Ms. Warren, a longtime critic of the financial industry who pushed to create the
consumer protection agency, to become its director.
The nascent bureau must have a director in place by July 21 in order to get a slate of broad powers to
attack fraudulent and abusive financial practices....
A White House spokeswoman said Mr. Obama "will consider a number of candidates for the position of
director. The President believes Elizabeth Warren is a powerful voice for American consumers and that
she has been extraordinarily effective at standing up the agency thus far. We are not going to get ahead
of the President's process by commenting on whether specific individuals are under consideration for
specific personnel openings."
Ms. Warren, through a spokeswoman, declined to comment.
Another issue for potential candidates must be the unrelenting efforts of the GOP to dismantle the
CFPB, since they have lined up on the side of fraudulent and abusive financial practices against
consumers. It's not hard to imagine that few people would want to become the new target in place of
Warren, in addition to an unwillingness to try to fill her shoes.
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Wall Street Journal

The Right Foreclosure Fix
Fair and orderly mortgage servicing vs. political points
April 15, 2011
Editorial
When last year's mini-scandal about sloppy mortgage practices erupted, two public policy approaches
emerged: Banking regulators wanted to identify mortgage servicers' bad practices and fix them. The
Department of Justice, state Attorneys General, the Consumer Financial Protection Bureau and others
wanted to use the episode to punish companies and score political points. That distinction became
clearer Wednesday when banking regulators released their findings and enforcement actions.
The Comptroller of the Currency, the Federal Reserve and the Office of Thrift Supervision spent about
three months investigating 14 institutions, including big banks that service mortgages and
clearinghouses that manage the paperwork. They found "critical weaknesses" in "governance
processes, foreclosure documentation preparation processes, and oversight and monitoring of thirdparty vendors," though no evidence of widespread, wrongful foreclosure. The regulators will eventually
levy monetary fines.
Meantime, the companies have two months to fashion a comprehensive reform plan. Servicers will
have to overhaul their internal processes and staffing procedures to fix foreclosure practices; put in
motion a third-party review of potential wrongful foreclosuressince the regulators couldn't examine
every loanand take remedial actions when needed; and establish teams to report back to the
regulators on compliance with these rules in perpetuity. As OCC chief John Warsh put it, the feds want
"to fix what is broken, identify and compensate borrowers who suffered financial harm, and ensure a fair
and orderly mortgage servicing process going forward."
That may seem like a logical solution, but not to so-called "consumer advocates." Last week 53 groups,
including the NAACP, the American Federation of State, County and Municipal Employees, and the
Center for Responsible Lending, sent a letter to the regulators complaining that the draft enforcement
action permitted servicers to "design a plan to comply with existing laws and contracts." No, you didn't
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misread that quote.
The hard truth is that these groups don't want merely to fix the original "robo-signing" problem or they'd
support the banking regulators' approach. They back the state AG, Department of Justice and
Consumer Financial Protection Bureau team that wants, as Iowa state Attorney General Tom Miller told
Congress in November, to transform "the loan modification system" and "change the paradigm within
the current system." They want to force servicers to modify loans for distressed borrowers, even if those
borrowers are still paying their bills. They can then claim the political credit for beating up on the banks,
just in time for an election year.
There's ample evidence that this approach would do nothing to revive the housing market. Three years
into the crisis, most delinquent borrowers simply can't afford to live in the homes they're in. In a new
paper, economists Charles Calomiris, Eric Higgins and Joseph Mason point out that mandating banks
to modify loans would encourage some borrowers to strategically default, delay foreclosures, slow new
home construction and increase interest rates for every borrower as banks pass on the additional costs
which would hurt poorer borrowers the hardest and prolong the housing market pain.
Without that second group agitating for extrajudicial punishment and behind-closed-doors regulation,
the mortgage servicers might have breathed a sigh of relief to have the banking regulators' action
behind them. Instead, they have to worry about possible additional actionand then, come July, a
Consumer Financial Protection Bureau that may want to punish them further. Is it any wonder that
foreclosures are stalled, excess capacity is weighing down the housing market, and home prices are
still falling?
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Regulator: Banks Face Costly Foreclosure Fixes
April 14, 2011
By Alan Zibel
A federal bank regulator is defending his agencys response to mortgage-servicing problems, saying
that orders announced earlier this week will result in substantial expenses for the banking industry.
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We found significant deficiencies that represent not only unsafe and unsound practices, but a
breakdown in way customers are treated, acting Comptroller of the Currency John Walsh said
Thursday in a speech to Women in Housing and Finance, a Washington business group. This is a very
serious problem that servicers are going to have to do substantial work and absorb substantial expense
to fix.
Mr. Walshs agency, acting with the Federal Reserve and Office of Thrift Supervision, on Wednesday
ordered major banks and thrifts to overhaul their foreclosure practices. The regulators found that 14
lenders filed foreclosures with improper documentation and lacked sufficient staff to properly handle
distressed borrowers.
The orders followed a probe of mortgage-servicing abuses that came to light last fall. They were issued
to the nations largest banks, including Bank of America Corp., Wells Fargo & Co., J.P. Morgan Chase
& Co. and Citigroup Inc. They didnt include fines, though regulators plan to impose them at a later date.
The action came under immediate fire, however, from consumer advocates and Democrats on Capitol
Hill. Sen Jack Reed (D., R.I.) called them vague and toothless and a slap on the wrist.
However, Mr. Walsh noted that banks are required to pursue a comprehensive, independent review of
their foreclosures over the past two years to identify and compensate any borrowers that were harmed
by foreclosure processing problems.
We will be supervising compliance very closely, Mr. Walsh said. Banks must actively look for
borrowers who suffered financial harm and also evaluate the cases of any borrower who asks for a
review.
However, he noted that regulators own reviews of a sample of 2,800 foreclosure cases found a small
number of improper foreclosures. Those include cases that should not have gone forward under a law
blocking military foreclosures, ones in which the borrower was in bankruptcy and cases in which
borrowers were already on the verge of having their loans modified.
Over the next several months, well have an opportunity to take a much more comprehensive look at
the cases of individual borrowers who were foreclosed upon, Mr. Walsh said. At that point, he said,
regulators will be able to make much better judgments about how much to fine banks.
The comptrollers office and the Fed have been working on a new set of industrywide standards for the
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mortgage-servicing industry. That effort, Mr. Walsh said, is being joined by the Federal Housing
Finance Agency, which regulates mortgage titans Fannie Mae and Freddie Mac, and the new
Consumer Financial Protection Bureau.
The mortgage-servicing process and that industry is going to be changed a lot, Mr. Walsh said.
Back to Top
Reuters
Outside review will help set foreclosure fines
April 14, 2011
By Dave Clarke
An independent review of U.S. banks' foreclosures over the past few years will help regulators
determine the fines banks will have to pay for mortgage servicing abuses, acting Comptroller of the
Currency John Walsh said on Thursday.
Bank regulators on Wednesday announced that 14 large housing lenders had agreed to overhaul their
mortgage operations and compensate borrowers who were wrongly foreclosed upon. The regulators
said fines would be determined later.
Bank of America Corp, Wells Fargo & Co, JPMorgan Chase and Citigroup Inc are among the banks that
settled, without admitted or denying wrongdoing.
Under the agreement, these mortgage servicers will have to hire an outside consultant to "look back" at
foreclosure actions that took place between January 2009 and December 2010.
"As we gather additional information from continuing exam work and the look-back about the extent of
harm from processing failures, this will inform our decision on Civil Money Penalties," Walsh said in a
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speech at a lunch sponsored by the Women in Housing and Finance.
Where problems are found in the reviews, banks must compensate these borrowers for financial
damages they suffered. Those restitution payments are separate from the financial penalties that
regulators are expected to impose on the banks.
"This is an open-ended obligation, with no dollar cap, and we will be supervising compliance very
closely," Walsh said about restitution for borrowers.
A group of 50 state attorneys general and about a dozen federal agencies have been probing bank
mortgage practices that came to light last year, including the use of "robo-signers" to sign hundreds of
unread foreclosure documents a day.
State attorneys general and the federal agencies had previously hoped to announce simultaneous
settlements, but the bank regulators decided to move first.
Walsh defended this decision in his speech on Thursday, arguing it would not impact the state attorneys
general's probe and that if regulators waited any longer it could have further hurt borrowers.
"To delay further could expose additional borrowers to harm, and leave the safety and soundness of the
banks unaddressed," he said. "Our job as supervisors is to fix what is broken, and compensate those
who are harmed, and that's what our enforcement actions will do."
Back to Top
American Banker
Walsh Defends Regulators Over Servicer Action
April 15, 2011
By Kate Davidson
Page 1282 of 3826
WASHINGTON Acting Comptroller of the Currency John Walsh defended the bank regulators
Thursday for moving forward with an enforcement action against the top 14 mortgage servicers even
while several of those banks continue to negotiate with state attorneys general and other federal
agencies.
As talks between law enforcement officials and the banks continued to drag on, Walsh said bank
regulators had no choice but to take action despite criticism from some corners that doing so helped
the servicers gain leverage in the negotiations.
"The simple answer is that we all have our jobs to do and, while we fully supported the goal of reaching
simultaneous conclusions to our various enforcement actions, having established the scope of
problems in our area of jurisdiction, the bank regulators had to move forward," Walsh said in a speech
to the Women in Housing and Finance.
Walsh said the regulators' move should not undercut the other talks.
"My hope is that our enforcement actions will establish a framework, and the actions that state law
enforcement officials and the other federal agencies may take will be complementary to, and consistent
with, what we are doing," he said.
Walsh said that delaying action could have exposed borrowers to additional harm, and left safety and
soundness concerns unaddressed.
The order requires servicers to improve loss-mitigation efforts and foreclosure proceedings and create a
single point of contact for troubled borrowers. Regulators are also forcing servicers to upgrade
technology systems for record keeping, payments and fees, ban so-called dual tracking of mitigation
efforts and foreclosure procedures, improve oversight of third parties and hire third-party consultants to
review recent foreclosure activities.
Walsh said the order should restore credibility to the servicer process.
"That's very important because widely reported foreclosure-processing defects have not only harmed
individual troubled borrowers but they have undermined confidence in the system," Walsh said.
"Given the state of the mortgage markets, taking these steps to restore confidence is a matter of
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urgency."
But he also continued to echo a key defense of banks involved in the settlement talks that the
foreclosure process, while flawed, did not lead to improper foreclosures or push borrowers into
delinquency.
"As bad as the mortgage servicing breakdown was, it was not the cause of mortgage delinquencies that
led to the surge in foreclosures," Walsh said.
"Rather, it was the unprecedented surge in foreclosures that exposed and exacerbated weaknesses
that already existed in the process."
Walsh reiterated that regulators are also planning to establish separate servicing standards as part of a
rulemaking process. Talks are already underway among the Office of the Comptroller of the Currency,
the Federal Reserve Board, the Federal Deposit Insurance Corp., the Federal Housing Finance Agency
and the Consumer Financial Protection Bureau, he said.
"There will be challenges with figuring out how to mash all of this together," Walsh said.
"Because a safety- and soundness-based standard applies to banks, trying to connect that seamlessly
with a consumer protection standard applied to nonbanks will be intellectually challenging, but I think
that it can be done."
While some limited servicing standards were included as part of the risk-retention plan, Walsh said a
separate rulemaking would allow regulators to implement new rules much faster.
Walsh said the standards would strengthen accountability and responsiveness in dealing with
borrowers, ensure that troubled homeowners are presented with a range of alternatives before the
initiation of a foreclosure, and require improved communication with borrowers and the development of
a complaint resolution process.
"This is something we can do in a prompt and straightforward way, and more important, it's something
that will have very significant benefits for homeowners," Walsh said.
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Housing Wire
OCC couldnt wait for state AG settlement
April 14, 2011
By Jon Prior
John Walsh, the Comptroller of the Currency, said his office and the Federal Reserve needed to move
quickly to fix a broken mortgage servicing system. Therefore, they could not wait for the 50 state
attorneys general to finalize their own solution.
On Wednesday, the OCC and the Fed announced consent orders signed by 14 mortgage servicers
requiring these companies to fix mishandled foreclosures. In 2010, employees were found to be signing
affidavits improperly and in some cases illegally. Distressed borrowers thinking they were near a
modification were foreclosed on, and communication lines between homeowners and their servicer
were flooded and overwhelmed.
The servicers have 60 days to give their plans to the regulators, even as they negotiate a separate
settlement with other agencies and the 50 state attorneys general. Walsh said the problem found from
their investigation was serious, and that the servicers have to do "substantial work and absorb
substantial expense to fix." But many said the settlement the OCC and the Fed struck undermines the
AGs, even though Miller denied the claims.
"The simple answer is that we all have our jobs to do and, while we fully supported the goal of reaching
simultaneous conclusions to our various enforcement actions, having established the scope of
problems in our area of jurisdiction, the bank regulators had to move forward," Walsh said. "To delay
further could expose additional borrowers to harm, and leave the safety and soundness of the banks
unaddressed. Our job as supervisors is to fix what is broken, and compensate those who are harmed,
and thats what our enforcement actions will do."
Walsh added that the only reassurance from his investigation was that borrowers in these foreclosures
were seriously delinquent. More than 90% of the borrowers who received a foreclosure in 2010 hadn't
made a mortgage payment in six months, he said in a speech Thursday before the trade group Women
in Housing Finance.
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"[A]s we take steps to solve the processing problem and ensure that troubled borrowers receive the full
protections available under federal and state laws, our actions are unlikely to fundamentally change the
trajectory of the foreclosure problem," Walsh said.
RealtyTrac reported Thursday morning that foreclosures dropped 27% during the first quarter of 2011.
But that was because of the pause in the process as these companies worked to correct their issues.
But Walsh said the breakdown in the foreclosure process did not cause the housing crisis and the
settlement struck between servicers and his office will not halt the rising levels of foreclosures.
Walsh said the affidavit problems, which have garnered the most provocative images of the scandal
was not the only issue. Breakdowns occurred at almost every turn, Walsh said.
"Robo-signing may be the image that has lodged most firmly in our minds from news reports, but other
deficiencies, beyond the mishandling of affidavits, were equally serious," Walsh said. "That such routine
business operations could be so badly mismanaged as to raise safety and soundness concerns was,
quite frankly, astounding."
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Naked Capitalism
Proposed Bill on Foreclosure Fraud and Servicer Standards Shows Shortcomings of Attorney General
and Federal Regulatory Responses
April 15, 2011
By Yves Smith
Its more than a tad ironic that Senator Carl Levin released a strongly-worded report on Wall Streets
role in the financial crisis, focusing on abuses and failures of oversight in the residential mortgage and
CDO markets, when the officialdom is engaged in yet another whitewash of further crisis fallout, that of
servicing and foreclosure related abuses.
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One effort at pushback comes via a bill proposed today by Senator Sherrod Brown and Representative
Brad Miller, the Foreclosure Fraud and Homeowner Abuse Prevention Act of 2011. While some
provisions need further work, its an ambitious and badly needed effort that targets many servicer
abuses.
Unlike other efforts at servicing reform, this one considers the needs of investors as well as of borrower.
That matters because investors are treated badly by servicers and currently face obstacles to
disciplining them. Many of the bills requirements are sound, such as eliminating the exemption that
MBS trustees now have from the Trust Indenture Act, limiting some of the banks avenues for extend
and pretend, ending dual track, improving disclosure of fees and charges, and allowing borrowers to
challenge foreclosures if the bank has not considered a loan modification, with an obligation to offer a
principal mod when it makes sense for investors.
There are some efforts to improve servicer incentives that I am less certain will work. Servicers would
be construed to have a fiduciary duty to investors. That could only be prospective. Servicers wont work
under those conditions; the business isnt that profitable even in the best of times.
The bill also would have delinquent borrowers be serviced by special servicers. That makes sense
since most servicing platforms were built around the idea of basic processing at a time when
delinquency, foreclosures and losses were low.
Having an independent party manage all defaults (not just cherry picked ones) is a good idea. But the
big question is who will these independent servicers be? They dont really exist now and thats because
it is an expensive business with large liquidity demands via hedging.
Historically, in deals where the investors were worried about the strength or quality of the servicer (ie
the bank wanted the deal to have a weak servicer, and the investors wanted a stronger one), the
investors would require that a special servicer be appointed on day one and written directly into the
pooling and servicing agreement. While the loans were performing, the special servicer would get a
small retainer fee (3-5 basis points per annum) but would get to step up to the full fee when they took
control of servicing of the loans in default. It was a structure that worked pretty well it helped keep the
basic servicer honest, knowing that they could have the entire servicing business taken away and given
to a special servicer if the loans performed poorly.
However, offering new, real modifications is really like underwriting a new loan. If the special servicer is
unaffiliated with a major bank, it would not have an underwriting department. Nor would it have the
ability to fund refinances of performing loans. And it seems unrealistic to expect a special servicer to
enter the new loan underwriting business.
Its not clear how the fees provided for (100 basis points untranched) would actually be collected and
held, and what the formula would be for paying them to the special servicer, and how and when they
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would be reversed back to the investors if the deal performed well and there wasnt much need for
special servicing.
The bill also prohibits servicers or their affiliates from owning seconds may not be workable. However, if
the servicing is split out between basic collections and special servicing, the solution might be to permit
parties who lend and perform basic servicing to own seconds, but bar the special servicers.
The bill intended to reduce conflicts and increase investor ability to discipline servicers but missed some
key issues. It does have a provision that would limit so-called tranche warfare but the bigger barrier to
investors taking action against trustees (who would then deal with the servicer) is that it has become the
standard in the industry to require investors to waive their rights to sue unless 25% of the investors sign
up. That clearly has to go.
Finally, many servicers are reluctant to allow deep principal modifications because they would mean
that the servicer could not get reimbursed for their advances of principal and interest. This is a real
source of conflict in the transactions. The bill seeks to limit the amount of principal and interest that the
servicer advances, but that reduces the severity of the tension rather than eliminating it.
Overall this is a promising effort, but there are still some thorny issues that need to be resolved. I hope
the sponsors can iron them out.
Back to Top

Get Bad Loan Terms? Now Youll Get Some Clues Why
April 14, 2011
By Tara Siegel Bernard
Did you apply for a loan but receive a higher interest rate than you think you deserve? Youre now
entitled to receive a few clues about how the lender arrived at its decision.
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A federal law that went into effect at the beginning of the year requires lenders to make certain
disclosures to consumers when they receive less favorable credit terms than those given to borrowers
with more pristine credit histories. That may come in the form of a higher interest rate, or a smaller line
of credit.
Lenders can comply with the new law, which is essentially an update to the Fair Credit Reporting Act,
by sending you one of two notices, said Careen Foster, director of scores product management at
FICO, the company that developed the FICO credit score, the measure used most frequently by
traditional lenders to determine creditworthiness.
In one of those notices, the lender must disclose which credit report it used to judge you most
lenders use the reports created by the three major credit bureaus, Experian, Equifax and TransUnion.
The lender also must provide information on how to get a free copy of the report. Before the new rule,
only individuals who were denied credit were entitled to a free copy. You must request the copy within
60 days of receiving the letter known as a risk-based pricing notice though it wont include a
copy of your credit score.
Alternatively, lenders can choose to send all consumers who are approved for credit another notice
known as the credit score disclosure notice that will include their credit score. In most cases, the
score will be one of your three FICO scores.
The goal of the new rule is to help consumers more broadly understand how their credit reports are
used, and encourage them to identify any errors and request to have them fixed, Ms. Foster said. By
getting consumers engaged in the process, we will help everyone make better decisions, she added.
But starting July 21, anyone who is denied credit or who receives less favorable terms than other
borrowers must receive a free credit score (if a credit score was used in the lenders decision). The new
rules sprang from the financial regulation overhaul last year.
All of the disclosure notices will start to look pretty similar at that point, Ms. Foster said. This is good
for consumers because they will get the credit score the lender uses, which is going to be the FICO
score more often, she added. It will also include the factors as to why their score wasnt higher and
what they can do to improve their score or get better terms next time.
Technically speaking, the July law requires the so-called risk-based pricing notices to include a score, in
addition to information about where to get the credit report the lender used in the decision.
Lenders are already required to send a letter to consumers who are denied credit or whose existing
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terms were changed for the worse. The notice must outline their reasons and provide information on
how to get a copy of their credit report. In July, those letters must include scores too, said Manas
Mohapatra, an attorney in the division of privacy and identity protection at the Federal Trade
Commission.
Some lenders, however, will continue to comply with the law by sending notices with scores to all
borrowers who receive credit. FICO has a Web site, ScoreInfo.org, which provides more information for
consumers about the changes.
Have you received one of these notices in the mail? If so, was it helpful in clarifying why you received
the terms you did?
Back to Top
New York Times (Economix blog)

How Worrisome Is Student Debt?
April 15, 2011
By Judith Scott-Clayton
Student loan debt has risen to its highest level ever, with starting balances averaging $24,000 among
the two-thirds of graduates who borrowed for their degree, Tamar Lewin noted in an article in The New
York Times on Monday. This increase has heightened longstanding concerns that college students are
borrowing too much.
Economists tend to be less troubled by the trend, Ms. Lewin noted, viewing student loan debt as a
worthwhile investment that pays off over a lifetime. Many economists even raise the concern that an
irrational aversion to debt may lead some capable students to forgo college.
So should we stop worrying about student debt? Or are students and their families right to be alarmed?
The key question is this: Are graduates better off, even with all that debt, than if they hadnt gone to
college at all?
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The answer seems clear: even with $24,000 in debt comparable to the cost of a new midsize car
the average four-year college graduate is likely to be substantially better off over the long term than
someone with only a high school education, data show.
Median annual earnings for full-time workers with a bachelors degree are around $53,000, compared
with $33,000 for those with a high school diploma, and unemployment rates among college graduates
are just over half of the rates for those without a degree.
Yet there are at least three reasons this level of debt may be troubling.
First, while the returns to a college degree accrue over a lifetime, loan repayments are typically
expected within 10 years of graduation. And graduates dont typically earn $53,000 in their first year of
employment; it may take a decade or more to reach this level. The median graduate is likely to start out
somewhere closer to $35,000.
Second, not every graduate will get the average outcome. For those who do worse, the debt may be
particularly burdensome. And it is not easy for students (or even economists) to predict what the
economy will be like several years from now, or how any individual will fare in it.
So while it may be an excellent investment on average, there is a real risk that some graduates with
$24,000 of debt will face unmanageable monthly payments particularly in the early years of their
careers.
On the standard 10-year repayment schedule with a fixed interest rate of 6.8% (the current rate for
unsubsidized federal student loans), monthly payments would be about $276. If payments up to 10
percent of gross monthly income are considered affordable, then a graduate would need to earn
$33,000 annually to comfortably manage this debt. Most will do so, but many will not.
Third and perhaps most important, not every borrower will graduate. Among 2003-4 college entrants
who ultimately borrowed $22,000 or more, 31 percent did not have any postsecondary credential six
years later (see chart below). And unemployment rates and earnings for people with some college, no
degree look much more similar to those with only a high school diploma than they do to bachelors
degree recipients.
Luckily, federal loans have options beyond the 10-year repayment plan, and many students take
advantage of them. Graduated, extended or income-contingent repayment plans may offer substantially
lower monthly payments, with repayment periods of up to 25 years (see these loan repayment
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calculators offered by Mark Kantrowitz of www.finaid.org).
Policy changes tucked into last years health care act also strengthened protections for those who face
economic hardships.
These additional options and protections which apply only to federal loans, not private loans
reduce but do not eliminate the risk students take when they borrow for their education. So anxiety is
likely to continue because, frankly, this stuff is complicated, and the consequences of defaulting on a
student loan are severe.
Plenty of resources are available to help students learn how to borrow responsibly. But some, like this
56-page federal guidebook, may be too much for young adults to digest, given high rates of financial
illiteracy. Those who try to navigate these resources on their own may come away feeling frightened
rather than informed.
Policies like the one at Tidewater Community College in Virginia, which require students to estimate
their loan repayments and plan their budgets before taking a loan, may be the best strategy for
promoting wise borrowing decisions.
No one is ever going to love their student loans. But we dont want students to be afraid of them, either
because forgoing a college degree may be the biggest risk of all.
Judith Scott-Clayton is an assistant professor at Teachers College, Columbia University.
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American Banker
Tester Touts Bill to Delay Interchange Fee Limits
April 15, 2011
Page 1292 of 3826
By Cheyenne Hopkins
WASHINGTON Sen. Jon Tester, D-Mont., took to the Senate floor Thursday to lobby for support of
his bill to delay the Durbin interchange rule by two years, arguing it would hurt small businesses and
community banks.
"No one has explained to me why studying the impact of this rule is a bad idea We need to stop; we
need to study; we need to make sure we're doing the right thing," Tester said. "Therefore, I ask my
colleagues for their bipartisan support on a responsible bipartisan bill to delay this rule so we can have
time to study the consequences of this rule both intended and unintended. Our economy cannot afford
to let this rule go into affect."
Under the Dodd-Frank Act, the Federal Reserve Board was required to write a rule ensuring that
interchange fees for debit cards are "reasonable and proportional."
But the industry has vigorously protested the proposal released in December, which would cap
interchange rates at 12 cents. Community banks argue and top regulators agree that the proposal
could also hurt small banks despite an ostensible exemption in the law for institutions with less than $10
billion of assets.
Without a delay, however, the Fed must finalize the rule before it goes into effect in July. Tester is
hoping to attach his bill to a broader piece of legislation soon after Congress returns from its Easter
recess.
"Smaller banks don't have the means to make up revenue from this federal mandate and they don't
have the volume to make up this revenue elsewhere like bigger banks do," he said. "My concern is this
proposed rule will further harm the loss of market share by community banks. It will lead to further
consolidation in the banking industry. Community banks and credit unions simply cannot compete
against Wall Street unless they provide products like debit cards."
Banks also have threatened to end some perks associated with debit cards such as free checking
if the Durbin rule goes into affect.
"Make no mistake about it the price caps called for by this Durbin amendment will lead to fewer debit
cards offered by community banks and credit unions," Tester said. "It will limit the size of debit card
transactions and it will end free checking for small businesses as they rely on these institutions. These
changes will limit the ability of small businesses to conduct daily business. They will increase banking
costs and could limit lending capability of small institutions."
Page 1293 of 3826
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American Banker
BB&T to Add Fee to Free Checking
April 15, 2011
By Sara Lepro
Another bank, BB&T Corp., is revamping its checking account lineup.
On June 3, the Winston-Salem, N.C., company's Free Checking account will become Bright Banking,
an account that will carry a monthly maintenance fee of $10.
There are a number of ways customers can have the fee waived, including maintaining a $1,500
average checking balance, making one direct deposit of at least $100 a month or having a mortgage
with the bank.
BB&T officially launched the account Monday. Current customers were first alerted of the change earlier
this month, said Merrie Tolbert, a BB&T spokeswoman, but they will not be moved to the product until
June.
For those who opened a Free Checking account between Feb. 22 and April 10, BB&T will waive the
maintenance fees for June, July and August, Tolbert said.
Additionally, BB&T replaced its free small-business checking account with a product called Business
Value 150, which also carries a $10 monthly maintenance fee that can be waived if certain
requirements are met.
Other banks, including Toronto-Dominion Bank's U.S. subsidiary TD Bank, and Bank of America Corp.,
Page 1294 of 3826
have redesigned their checking account offerings in the last several months to increase revenue amid
new regulations that have put restrictions on fees.
BB&T is also testing a fee for paper statements in Kentucky, Indiana and South Carolina.
"BB&T has focused on finding solutions to the ever-changing financial services landscape," Tolbert
said. "We have to balance providing products and services that will help our clients build a foundation
for sound financial management and maintaining our fiduciary duty to our shareholders."
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CNBC Guest Blog

Papadimitriou: Membership Fee Increases Signal Fundamental Flaws at Bank of America
April 14, 2011
By Odysseas Papadimitriou
When credit card companies institute new fees or raise their interest rates, most people concentrate on
how the change impacts consumers.
While this is indeed a relevant, crucial concern, it is also somewhat shortsighted.
Fee implementation and interest rate increases can make things difficult for a card holder, sure, but its
what these fees or interest rates reveal about that cards issuer itself that is perhaps more telling. This is
indeed the case with Bank of America and its plan to increase annual revenue by close to $180 million
through the application of $59 membership fees to 5% of its credit card accounts beginning in May.
The financial impact of these fees on those required to pay them is only part of the story. The rest is
how these fees break the intent of the new credit card law and how they indicate a concerning lack of
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underwriting sophistication on the part of Bank of America that perhaps foreshadows future struggles
from the financial giants credit card division.
The CARD Act of 2009 was implemented, in large part, to increase transparency within the credit card
industry and to eliminate bait-and-switch tactics and other predatory practices that once misled and took
advantage of consumers. While many credit card companies have taken to and flourished within this
new credit card landscape it unfortunately appears as if some credit card companies have exhibited a
commitment to exploiting loopholes within the law rather than making substantive changes that will
foster long-term success under its rules. Bank of America, in certain respects, appears to be one such
company.
While Bank of Americas membership fees do not technically break the law, they do violate the intent of
the CARD Act provision that makes it illegal for credit card companies to raise the interest rate on an
existing balance unless the account holder is at least 60 days delinquent.
You see, interest rate increases and new fees are both defined as finance charges when applied to
consumer accounts with revolving debt. And since Bank of America will be using risk indicators like high
credit utilization, late payment trends and below-average FICO scores to determine which of its
customers will receive the new fees, indebted accounts are likely to be predominantly targeted. This
means that Bank of America might as well be increasing the interest rates on existing balances
because there is no effective difference between doing so and using risk-based re-pricing to
strategically implement membership fees. Both increase the cost of debt for a customer segment
unable to simply switch issuers because of the very existence of their balances.
Bank of Americas membership fees are thus unlikely to survive. This is particularly true since the
Federal Reserve has exhibited a newfound reformatory focus since the CARD Act took effect in
February 2010, resulting in the recent passage of amendments that will close two loopholes within the
law. In addition, Elizabeth Warren, the acting head of the Consumer Financial Protection Agency, has
pledged to continue in the Feds watchdog footsteps and has specifically expressed her determination
to enforce not only the letter of the CARD Act, but the intent and spirit as well.
This begs the question: What are Bank of Americas prospects for the future?
As of right now, the answer to this question has to be that they are bleak because not only is the
company already at an underwriting disadvantage, as evidenced by the fact that its credit card division
lost more money than that of any other major bank in 2009, it also appears to be confused. On the one
hand, it has extended certain credit card protections beyond what the law requires. On the other, its
membership fees seem to reflect an organizational desire to evade the laws intent.
This type of organizational direction is quite troubling, and if substantive changes are not made soon,
not only will Bank of America find itself on the wrong side of further federal regulations but the gap that
exists between it and the competition will continue to grow as well. Therefore, instead of turning to a
Page 1296 of 3826
quick fix, Bank of America must approach its fundamental problems with a focus on improving
underwriting practices and operational efficiencies in order to foster long-term growth.
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Lexington Herald-Leader (Kentucky)

Consumers won with defeat of payday lending restrictions
April 11, 2011
By Kevin Borland
Kentucky consumers value choice. Whether it's what brand of soft drink to buy, or what model car to
drive, Kentuckians want the right to make their own decisions for their own reasons.
At its heart, that is what the battle over payday lending is about, the consumers' right to choose which
financial products are best for them and their individual circumstances.
During the recent session of the General Assembly, self-appointed consumer activists once again tried
to deny Kentuckians options in the short-term credit market by pushing a bill to force payday lenders out
of the state. Fortunately, there were enough bipartisan free-market advocates in the legislature to
defeat this infringement on consumer rights; but the activists swore to return with the same bill next
year.
Efforts to put annual percentage rate caps on payday loans are driven by a fundamental
misunderstanding of the product and pursued by organizations funded by competitors in the short-term
loan market place. Kentucky state law specifically prohibits payday lenders from charging interest.
Payday loans are a single-payment, fee-based product. Opponents use misleading and ambiguous
language in an attempt to trick legislators and the public into believing that borrowers are subjected to
high interest rates, late fees, rollover charges, and all sorts of other charges that are illegal in Kentucky.
Payday loans are completely transparent. When a customer takes out the loan, they know exactly how
much will be owed at the end of the loan period.
Page 1297 of 3826
Payday lending opponents in Kentucky consist largely of Citizens of Louisville Organized and United
Together (CLOUT), the Kentucky Coalition for Responsible Lending (KCRL) and the AARP. CLOUT
and the KCRL are heavily funded by banks and credit unions that compete in the short-term credit
market.
We welcome banks and credit unions in the market, since competition generally results in lower cost
options and higher quality services for consumers. But it is hypocritical for CLOUT and KCRL to attack
payday lending while accepting funding from companies that offer competing products, such as bank
overdraft programs that an FDIC study says often cost far more than a payday loan.
The AARP, on the other hand, is a direct competitor to payday lenders. The AARP credit card, issued
through Chase Financial, offers cash advances which pile fees on top of interest, making an AARP
cash advance not only expensive, but difficult for the borrower to predict the final cost of the loan.
At the end of the day, if CLOUT, KCRL and AARP feel there are some consumers who are being
harmed by over reliance on payday lending, they should focus their efforts on finding viable alternatives
for those individuals, not depriving all consumers of financial choices. Perhaps such organizations as
these would consider offering their own cash advances at no charge for low-income families with
specific needs?
A payday advance is not the best option for every consumer in every situation. But we also know it is
very often the least expensive, more desirable option for thousands of hard-working families. The
decision to make this choice should be that of the consumer, not the legislature or a consumer activist.
Kevin Borland is the Kentucky spokesman of Community Financial Services Association of America, the
national association of payday lenders.
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Tampa Tribune
Page 1298 of 3826
Military man returns from war to find home foreclosed

April 14, 2011
By Shannon Behnken
CLEARWATER - United States Coast Guardsman Keith A. Johnson returned last year from serving in a
defense role overseas to find his bank had foreclosed on his home. It was set to be auctioned off at the
courthouse the next day.
It was a shock, Johnson said. He never was served legal notice of the foreclosure lawsuit against him,
court documents show.
The lender, Wells Fargo Bank, also failed to serve his wife, though court records show it had sent her
numerous letters about a modification request up until a few weeks before a judge granted the
foreclosure.
Johnson's case is particularly troubling, military law experts say, because the federal Servicemembers
Civil Relief Act is intended to protect military members from losing their homes while away. The act has
received national attention in recent months as service members have come forward to complain about
foreclosures, and some lenders have admitted to foreclosing in error.
In this case, Wells Fargo told the court it couldn't find Johnson to serve him the suit. So the lender's
attorney, in accordance with the Servicemember Act, asked the judge to appoint a guardian ad litem to
represent Johnson. The St. Petersburg firm representing Wells Fargo, the Law Office of Douglas C.
Zahm, recommended Tampa attorney Jay D. Passer, and the court approved the appointment.
"It's almost like playing cards against two opposing people and you're by yourself," Johnson said. "On
one hand you're playing against this guy, while this guy's over there setting the deck against you."
Three months later, Passer said he also couldn't locate Johnson. He told the court the plaintiff's
pleadings "appear to be in compliance" with state law, court records show. That report was key to
allowing the foreclosure to proceed.
"That report waived the service member's rights even though the attorney didn't speak with him one
time," said Col. John S. Odom, Jr., a nationally-recognized military lawyer whose book, A Judge's
Guide to the Servicemembers Civil Relief Act , is expected to be released later this year by the
American Bar Association.
Page 1299 of 3826
"The goal of the [ad litem] attorney should not be to move the suit forward," Odom said. "It is to halt the
foreclosure until the defendant can defend himself."
Passer told the Tribune he verified that Johnson was in the Coast Guard but assumed he was living
locally.
"I don't think of the Coast Guard as deploying people," Passer said. "It seemed a minimal chance he
was overseas. If I had heard anything about him being (overseas), I would have asked the judge for a
stay."
That is exactly what should have happened, said Henry P. Trawick Jr., a Sarasota lawyer and author of
Florida's Practice and Procedure, a textbook used by lawyers.
"An attorney ad litem is supposed to defend the person just as though they were being paid $1 million a
day to do it," Trawick said. "I think it's ridiculous that they couldn't find him, but even then, the attorney
should have tied it up in court until his client returned."
Wells Fargo spokeswoman Vickee Adams said there are details of the case she can't share because of
confidentiality laws that protect consumers.
However, she said the lender worked for three years to either modify Johnson's loan or arrange a short
sale. She said the couple was aware that the situation was moving toward foreclosure.
"We did everything we could, and there were obligations the homeowner was unable to meet," Adams
said. "We followed the service member act by requesting an attorney ad litem, and we were acting on
the validity of the court document filed by his court-appointed attorney."
Passer said he sent a letter to the Coast Guard but never heard back. He told the court he also
searched drivers license and death records among other databases to locate him.
"Some of my letters weren't returned to me, so I assumed [Johnson] got them," Passer said.
St. Petersburg foreclosure defense attorney Matt Weidner, who now represents Johnson, said it would
have been easy to find him.
Page 1300 of 3826
"All he had to do is walk up to the Coast Guard gate in Clearwater and say, "I need to find this guy,'"
Weidner said. "The military knows where their people are. I don't think his level of inquiry is sufficient for
even a civilian."
During the process, Johnson's wife had moved into a different home in Hillsborough County after the
couple had their fourth child and needed more room. The bank didn't have trouble finding her there to
discuss modification requests, Weidner said.
Vilisia Johnson said she never received letters about the foreclosure, and none of the bank
representatives she spoke with on the phone told her about them.
"I'd been working with the bank, month after month after month, and they had never mentioned anything
[about the foreclosure lawsuit]," she said.
The foreclosure was granted last June, and the home was supposed to be sold in August. Since that
time, it's been in limbo.
If the foreclosure wasn't proper, Adams said, a judge can reverse it.
"We rescind foreclosure sales all the time," she said.
Meanwhile, Johnson waits on his day in court.
He was granted his emergency request to the court to stop the sale of the home. For now, Johnson is
living in the home, but Wells Fargo's judgment still stands.
Johnson said he knows he would have likely lost the home even if he had been served notice of the
foreclosure lawsuit. But maybe if he had been, he said, he would have done things differently.
"I would have pushed harder for a short sale instead of having my wife work on a modification, which
was just wasting time," he said. "I hope to get this figured out before I'm sent somewhere else."
Page 1301 of 3826
Back to Top
Los Angeles Times

Banks are foreclosing while homeowners pursue loan modifications
April 14, 2011
By Alejandro Lazo
Mortgage lenders call it "dual tracking," but for homeowners struggling to avoid foreclosure, it might go
by another name: the double-cross.
Dual tracking refers to a common bank tactic. When a borrower in default seeks a loan modification, the
institution often continues to pursue foreclosure at the same time.
Lenders contend that dual tracking simply protects their investment if the homeowner is unable to
qualify for new loan terms. Mortgage servicers can lose money if they don't foreclose in a timely
manner, and repossessions often are complicated and lengthy.
But regulators and consumer advocates say the practice lulls some homeowners into thinking they are
no longer at risk of having their homes taken away. Regulators are now aiming to curtail the practice as
part of an overhaul of the foreclosure system.
"We don't think that a homeowner who is making a good-faith effort to work through their troubled
mortgage should have the roof ripped out from over them while they are negotiating, or trying to
negotiate," said Geoff Greenwood, a spokesman for Iowa Atty. Gen. Tom Miller.
On Wednesday, federal banking regulators issued settlements with major banks and home-loan
servicers that would, among the many provisions, stop foreclosure once a homeowner is approved for a
temporary mortgage modification. In ordering the changes, the regulators said they found "critical
weaknesses" in the way the lenders handled foreclosures.
Page 1302 of 3826
The settlements drew immediate fire from activists who said they did not go far enough, particularly in
addressing the two-track foreclosure process. A separate coalition of state attorneys general and
federal agencies including the departments of Justice, Treasury and Housing and the Federal Trade
Commission is still negotiating details of a foreclosure-system overhaul that could include a near-ban of
the practice.
"The dual-tracking issue is of major concern," said Greenwood, whose boss is leading the negotiations
for the attorneys general of all 50 states and federal agencies.
The state attorneys general have issued their demands in a detailed, 27-page term sheet. Banks have
responded with their own proposals. Negotiations between the two groups continue.
The demands by the attorneys general would prohibit lenders from starting the foreclosure process on a
home if a borrower has submitted an application for a loan modification. That is a significant step
beyond what the federal regulators have ordered, according to consumer advocates, because often
borrowers struggle even to get their loan modification packages reviewed.
"The settlement policy on dual tracking completely misses the point," said Alys Cohen, attorney for the
National Consumer Law Center, referring to the deal cut Wednesday by banking regulators. "You have
to obtain the loan modification before they stop the foreclosure."
Shirley Robertson of Oxnard has firsthand experience with dual tracking.
Robertson learned last summer that her home was scheduled to be sold at a foreclosure auction, so
she contacted her lender, JPMorgan Chase & Co. Robertson said she had fallen behind on mortgage
payments for her home and a rental house because the economic downturn put her catering business
in a tailspin.
Chase postponed the sale so that Robertson could file for a modification of the loan she could no longer
afford. She filed the paperwork to the bank and twice was asked to file new packages because the bank
said information was missing, according to a lawsuit Robertson filed against the bank and copies of
letters she shared with The Times.
She said she faxed her third paperwork package to Chase on Aug. 23, the day before the deadline set
by Chase. But that same day, the home was sold at a foreclosure auction. Robertson said she still had
equity in the home, meaning the amount owed to the bank was less than the price the house could
have brought.
Page 1303 of 3826
"They have stolen that equity from me," said Robertson, 64. "If I had known they were going to do this, I
would have sold the damn house myself, and not be penniless."
Chase declined to comment on the details of Robertson's situation.
Robertson now lives in the house that was once a rental. Chase granted her a loan modification on that
home, she said, but she is struggling to make thosepayments because work is hard to find.
The proposed terms from the attorneys general regarding dual tracking require that mortgage servicers
provide homeowners a written list of any missing documentation from their modification package within
10 days of submission. Mortgage servicers would also be required to immediately notify a homeowner
in writing of any new sale date if the foreclosure clock has already begun when a borrower reaches out
for a modification.
If a loan modification is denied, then a mortgage servicer would be required to submit an affidavit in
court summarizing all of the efforts to work with a borrower and the basis for denying a modification. In
states such as California, where a court order isn't required to foreclose on a property, the mortgage
servicer would be required to send that sworn statement directly to the borrower.
The Obama administration in effect banned dual tracking in most cases last summer under its signature
foreclosure relief initiative program. But the vast majority of mortgage workouts now occur outside of
that initiative through banks' in-house programs.
Lenders completed about 1.24 million of those proprietary modifications in 2010 compared with nearly
513,000 through the government's Home Affordable Modification Program, according to Hope Now, a
private-sector group of mortgage servicers, investors, insurers and nonprofit counselors. Banks took
back 1.07 million homes from delinquent borrowers last year.
"The biggest problem is that a majority of the modifications today are proprietary," said Peter Swire, a
former economic advisor to President Obama specializing in housing issues. "The banks are not on the
hook for their non-HAMP modifications."
Homeowners seeking to get their loans modified are confronted with cases of lost paperwork and
difficulties communicating with their lenders. Often two separate departments within a bank are
pursuing the different tracks, Swire said.
"They have their foreclosure people and then somewhere else they have their modification people,"
Page 1304 of 3826
said Swire, now a senior fellow at the Center for American Progress. "They are often in different cities."
Vicki Vidal, associate vice president of public policy for the Mortgage Bankers Assn., said that many
times borrowers are unwilling to face reality and ignore overtures from lenders until foreclosure begins.
"Getting that foreclosure notice is a wake-up call to a lot of borrowers," she said. "To some degree that
pressure is not necessarily a bad thing."
Most major banks service loans for investors who have set up specific rules governing how and when
they must proceed with a foreclosure. If a bank doesn't follow those guidelines, it can lose money.
Furthermore, depending on the jurisdiction, certain states can set up strict timelines for when certain
steps in a foreclosure must be taken. If those deadlines aren't met, duplicate costs can result.
"These are state-imposed limitations that we have that can be very real in our world," Vidal said.
Back to Top
New York Times

Broker Fee Rules Take Effect
April 14, 2011
By Maryann Haggerty
THERE have been changes in federal rules covering how mortgage brokers are paid, and while legal
challenges to them persist, the question now is how the new system will work in practice.
Regulators and consumer advocates say borrowers are bound to benefit. Broker trade groups say their
Page 1305 of 3826
industry will shrivel and consumer costs will go up.
Mortgage brokers are middlemen who work with multiple lenders to arrange home loans for customers.
They say they add value by helping borrowers find the best deal; their detractors say they add costs
that have been hidden in complex fees.
The business has contracted significantly in the last five years. In 2005, during the real estate boom,
brokers accounted for 31 percent of mortgages originated, according to Inside Mortgage Finance, a
trade publication. Last year it was just 11 percent, and the market was only half as big.
Brokers used to be compensated by a mix of borrower-paid origination fees and lender-paid fees. The
most controversial was a yield spread premium, paid by lenders when a broker placed a borrower in a
loan that charged higher interest than other loans. The justification was that higher rates allowed lower
upfront closing costs. The criticism was that the premiums were an incentive to push expensive loans
and that the system contributed to a flood of risky loans and thus to the financial crisis.
In response, the Federal Reserve put out rules that prohibit loan originators from being paid by both the
borrower and lender on the same deal, and also barring commissions based on anything other than
loan size. The rules were set to take effect April 1; two trade groups sued, delaying enactment a few
days before a federal appeals court allowed it. Both the National Association of Mortgage Brokers and
the National Association of Independent Housing Professionals say they will keep pressing their
lawsuits.
On the front line, the problem is that there has been no clear guidance on exactly how to arrange
commission structures for employees who originate loans, said Melissa Cohn, the president of the
Manhattan Mortgage Company, a loan brokerage firm.
To be honest with you, she said, in some cases its going to create higher-priced mortgages.
Although the spirit of the law is to protect borrowers, she added, the reality of it is its just going to
cause more confusion.
Mike Anderson, the director of the National Association of Mortgage Brokers, speaking just two days
after the rules went into effect, said: Its already happening. Rates have already gone up; fees have
gone up. Mr. Anderson, who is also a broker in New Orleans, cited situations in which brokers could no
longer cut fees to make deals go through, and others in which banks were raising charges. The rules
basically pick the winners and losers, he said, with the winners being the big banks. The losers are the
small businesses.
The Facebook page of the National Association of Independent Housing Professionals is full of
complaints from what appear to be mortgage brokers saying the rules will hurt their business, and
recounting how unnamed lenders have raised prices.
Page 1306 of 3826
Despite industry opposition, the change is a victory for borrowers, according to representatives of the
Center for Responsible Lending, an advocacy group long critical of the yield-spread premium system.
Borrowers should be getting more honest services from the originator theyre working with, said
Kathleen E. Keest, a senior policy counsel, because that originator is no longer going to have a conflict
of interest if they put a borrower in a loan with a higher interest rate or riskier terms.
If people were saying that the way things worked, worked well, she added, thats one thing, but its
very clear the way things worked before didnt work for anybody. The notion we need to have the same
rules is denying what happened. Its denying that the way the market was working was disastrous for
everybody.
Back to Top
New York Times

Hard-Pressed Homeowners Facing Another Financial Threat
April 14, 2011
By Ngoc Nguyen
Estrella Bryant was at risk of losing her San Francisco town house last year.
Ms. Bryant, 70, had not fallen behind on her mortgage payments. Instead, she owed $560 in dues to
the Parkview Heights Homeowners Association. The association turned over the case to a collection
agency and threatened to foreclose unless Ms. Bryant paid off her debt, which increased tenfold
because of fees and interest.
Its been a nightmare, said Ms. Bryant, a Filipina immigrant who lives on Social Security and
occasional bookkeeping jobs. She said she repeatedly asked Parkview Heights representatives why
she was dealing with a debt collector instead of the association.
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Arent you supposed to help homeowners? she asked.
With the help of a lawyer, Ms. Bryant worked out a payment plan and saved her home. But her ordeal
reveals another dimension to the foreclosure crisis, in which homeowners associations nationwide have
the same powers as banks and mortgage lenders, and they can exercise a little-known right to
foreclose on homes. California law permits associations to initiate foreclosure proceedings when a debt
exceeds $1,800, or if a lower amount of dues is owed for more than one year.
One out of every four California homeowners belongs to a homeowners association entities that sell
property and provide services in residential subdivisions with support from member dues. There are
more than 15,000 associations in Northern California, according to Levy, Erlanger & Company, a
professional services firm that caters to them.
Last year, associations foreclosed on about 300 Bay Area homes twice as many as five years ago,
according to an analysis by New America Media, a nonprofit news organization. The study used data
from ForeclosureRadar.com, an independent Web site.
Association-initiated foreclosures are still a small fraction of the overall total in the Bay Area and
elsewhere. But advocates for housing rights said the problem ran much deeper, as associations used
the threat of foreclosure to intensify pressure on troubled homeowners. The associations often work
with debt collectors who add fees and collection costs, causing the debt to skyrocket.
People come up with money through a painful process; their home is being held hostage and the debt
collector knows it, said Marjorie Murray, who directs the Center for California Homeowner Association
Law, an Oakland advocacy group.
Last week, the California Senate Judiciary Committee passed a bill to curtail predatory practices by
collection agencies that can lead to ballooning debt and foreclosure proceedings. It would close a
loophole that enables collection agencies to apply payments to their own fees and collection costs
before paying down the original debt to homeowners associations. Current law forbids this, but debt
collectors exploit vagueness in it to get homeowners to waive their rights.
Senator Ellen M. Corbett, Democrat of San Leandro, who co-sponsored the bill with the Center for
California Homeowner Association Law, said the legislation was designed to give struggling
homeowners a chance to catch up on payments to homeowners associations.
Unscrupulous debt collectors are increasing the amount owed based on penalties and fees, and
foreclosing on peoples homes, Ms. Corbett said in an interview. Its a terrible practice. The penalties
are just way too harsh.
Page 1308 of 3826
But Bay Area homeowners associations say they are feeling the same squeeze as the homeowners.
Ken Johnson, president of the Eden Shores Homeowners Association in Hayward, said most
homeowner associations were run by volunteers, who have neither the time nor the expertise to chase
down delinquent homeowners.
Mr. Johnson said roughly half of his developments 500 tract homes are in some stage of foreclosure,
primarily because of mortgage defaults. Many of those homeowners are also delinquent on their
assessments, he said. That means Eden Shores has less money to provide services, including
maintenance of common areas like streets, swimming pools and parks.
Mr. Johnson said associations were not interested in taking over distressed properties. They dont want
to be liable for it; they just want the funds, he said.
Andrew Fortin, a spokesman for the Community Associations Institute, an organization that supports
homeowners associations nationwide, said the ability to collect dues was essential to ensure that
associations were able to provide crucial services.
You can understand why an association would want to be on top of collecting assessments, or
everyones property value becomes zero, Mr. Fortin said.
For homeowners, however, that process can be painful.
Ms. Bryant said she got into trouble when her bookkeeping assignments started to dwindle in the
depressed economy. She began to pay her assessments every other month and fell two months
behind. She said she had no idea her home was at risk until she received a notice from a collection
agency.
By then, the agency, Association Lien Services, had applied an additional $1,000 in fees, documents
show. To stave off foreclosure, Ms. Bryant said, she was desperate to work out a payment plan, but the
agencys offer required her to sign an agreement to allow her payments to go toward collection costs
before being applied to her delinquent dues, circumventing a state law requiring that payments go
toward the original debt before being applied to fees.
Instead of signing the document, Ms. Bryant obtained a pro bono lawyer. She recently paid the full
amount she owed the association and worked out a deal to pay a fifth of the nearly $2,500 in collection
costs.
Page 1309 of 3826
Jane Fay, president of the Parkview Heights Homeowners Association, said that she sympathized with
Ms. Bryant but that she believed the board acted responsibly in trying to collect the overdue
assessments.
She did not agree with all of her debt collectors practices, Ms. Fay said, but homeowners associations
have few options besides pursuing the debt. Delinquents must shoulder part of the blame, she said.
Youre an adult, she said. You havent paid, and you know you havent paid. There are
repercussions.
Ms. Fay said she was named president of the association in the middle of Ms. Bryants dispute and did
not have enough information to know right or wrong. She said the association waived some late
charges and interest.
We dont want the association to be making money off of homeowners who are in dire financial straits,
Ms. Fay said.
For collection agencies, however, the foreclosure process can be profitable.
David Swedelson is managing partner of Swedelson & Gottlieb, a Southern California law firm that
operates Association Lien Services. Mr. Swedelson said homeowners associations contracted with
collection agencies because the latter could cut through government red tape and requirements and
resolve cases a lot faster.
Mr. Swedelsons law firm boasts on its Web site that it can collect delinquent assessments, costs and
fees in 90 percent of cases, and said it believed that foreclosure is the fastest and most effective way
to collect overdue assessments.
Back to Top
Page 1310 of 3826

Budget Deal Cuts Reverse Mortgage Counseling
April 14, 2011
By Ann Carrns
One casualty of the latest federal budget deal: Funds for counseling older Americans seeking reverse
mortgages, or loans that let those 62 and over tap their home equity.
The latest proposal for the current fiscal year, which is scheduled for final votes in Congress imminently,
cuts $88 million from the Department of Housing and Urban Developments budget for loan counseling
programs, including for reverse mortgages, a HUD spokesman confirmed Thursday. Some $9 million of
that total is reserved for reverse mortgage counseling, which helps borrowers understand the benefits,
costs and risks, of such loans, says Barbara Stucki, vice president for home equity initiatives at The
National Council on Aging.
The cuts mean that unless groups like the NCOA, which use HUD grants to offer the counseling free to
potential borrowers, can raise other funds, they will have to charge for the service. The counseling is
mandatory under federal regulations, so borrowers would still have to get it before getting their loan. But
they may have to shell out their own money, Ms. Stucki says.
Funds for counseling remain available through September, Ms. Stucki says. Because of a HUD
budgeting quirk, NCOA and other such outfits actually are financng current counseling sessions with
money from the prior federal fiscal year budget. So cutting the money out of this years budget, which is
fiscal 2011, actually stops the flow of funds for the next fiscal year, which starts Oct. 1.
Peter Bell of the National Reverse Mortgage Lenders Association says its unlikely any effort to restore
the funds will succeed at this point because this bill is moving way too fast. The move, he said, has
taken everyone by surprise, since overall funds for housing counseling had recently increased due to
the fallout form the housing crash.
The upshot is that borrowers are likely to have to pay for counseling. HUD does allow its approved
counseling agencies to charge fees previously they were capped at $125, but that limit was recently
lifted, says Mr. Bell. But agencies getting HUD grants generally dont charge for it. In fact, the agencies
cant charge certain low-income borrowers, so its unclear how those applicants will receive counseling
unless the counseling agency eats the cost.
Lenders themselves are prohibited from financing counseling, since they have an incentive to make the
loan. Its possible that the counseling fee could be rolled into the loan, if the borrower ultimately ends up
Page 1311 of 3826
getting one. But Ms. Stucki says she doesnt think thats such a great idea; the whole premise of
counseling, after all, is that some homeowners shouldnt borrow the money in the first place, and wont
complete an application.
Counseling for reverse mortgages is especially important because they are marketed to people 62 and
older, who are vulnerable to wrecking their nest eggs if they run into trouble with the loans. Unlike a
home equity loan, where you have to pay the money back, with a reverse mortgage the bank pays you,
either in a lump sum or in monthly payments. Once you no longer live in the home, you or your executor
(if youre dead) sells it and pays the bank back.
Advocates for the elderly have been lobbying hard for better and broader reverse mortgage counseling.
A case in point: Recently, the loans have been a subject of a lawsuit brought against HUD by the AARP
Foundation and others because some older borrowers who werent listed on the loan documents ended
up in foreclosure proceedings. After their spouses died, they were unable to get a new loan in their own
name, or sell the house for enough money to pay off the loan. Requiring both spouses to attend
counseling could help avoid such situations, advocates argue.
Back to Top
Housing Wire
Lawmakers to consider reducing QRM down payment to 10%
April 14, 2011
By Jon Prior
Lawmakers in the House of Representatives are considering a push to lower the 20% down payment
required for exemption of the recently proposed risk-retention rules on securitized mortgages.
The House capital markets subcommittee held a hearing Thursday on the risk-retention rule proposed
in March and its unintended consequences. The rule, approved by federal regulators, would require
lenders to maintain 5% of the risk on mortgages pooled into securities. An exemption was also
established. Any qualified-residential mortgage that has, among other requirements, 20% down would
be exempt from risk retention.
Page 1312 of 3826
Critics of the rule claim the 20% down is too high, and that lenders wanting to avoid holding onto the
risk would price out low- to middle-income borrowers and further constrict demand for an already
struggling housing market.
"I disagree that all residential mortgage loans will have to fall under the QRM. Risk retention is not
meant to stop securitization. It's meant to make it more responsible," said Rep. Barney Frank (DMass.). "But there are arguments that 20% is too high of a number, and I'm willing to work with others
on that."
The feeling was nearly unanimous among those on the subcommittee. Rep. Spencer Bachus (R-Ala.)
said the rule is contrary to the Treasury Department's recent recommendation to redesign the mortgage
finance market and bring in more private capital to the market.
"There are aspects of the rule that raise questions," Bachus said.
The new acting director of the Federal Housing Administration, Bob Ryan, who was previously its chief
risk officer, testified Thursday that an alternative definition for the QRM allows regulators to consider a
10% down payment instead.
"We are concerned by the 20%. It may be too high. We are seeking feed back on the performance
benefits of lowering it," Ryan said.
Several trade and consumer advocacy groups wrote a letter to regulators this week asking for revisions
to standards on the QRM to not lockout credit-worthy borrowers.
"I fear it does not serve as a caution light but perhaps as an absolute stop sign," said Rep. Jeb
Hensarling (R-Texas). "Any time you get the mortgage bankers, the mortgage insurers, the Center for
Responsible Lending and Congressional Black Caucus to agree on something, maybe this committee
should pay a little bit of attention."
However, regulators at the hearing, including Michael Krimminger, general counsel for the Federal
Deposit Insurance Corp., said not all homebuyers will have to meet the higher QRM standards.
"On the contrary, we anticipate that loans meeting the QRM exemption will be a small slice of the
market, with greater flexibility provided for loans securitized with risk retention or held in portfolio,"
Krimminger said.
Page 1313 of 3826
Federal Housing Finance Agency Chief Economist Patrick Lawler said lowering the QRM down
payment to 10% would increase the share qualifying GSE loans in the market to 32% from 27%. He
said these loans, however, would be much riskier. The 90-day delinquency rate on a loan with 10%
down is consistently twice as high, Lawler said.
"Concerns have been raised about the impact this standard would have on the availability or cost of
finance for homebuyers who are unable to put down 20% of the purchase price," Lawler told the
subcommittee.
Kevin Schneider, CEO, of the mortgage insurer Genworth Financial (GNW: 12.20 -0.49%) testified that
many Americans would have to save up for more than a decade before being able to afford the 20%
down payment. At a typical savings rate, he said, a family earning $50,000 per year would need 11
years to save up that down payment on a median-priced home of $153,000.
Henry Cunningham, board member of the Mortgage Bankers Association, said if the current proposal is
put into effect, millions of consumers would either put off buying or home or pay "unnecessarily high
rates."
"In the midst of a very fragile housing recovery, the government is throwing a devastating, unnecessary
and very expensive wrench into the American dream," Cunningham said.
Back to Top
Page 1314 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

RE: Public Affairs Question

Fri Apr 15 2011 10:02:51 EDT
Thank you very much, Zixta!
-K
From: Martinez, Zixta (CFPB)

Subject: RE: Public Affairs Question
Good Morning Kevin,

Yes. Please tell your friend to send the invitation to me or Leandra English. ZQM

To: Martinez, Zixta (CFPB)
Subject: Public Affairs Question
Hi Zixta,
Im a legal intern in the Human Capital division, and I just had a quick question for you. A friend of mine
contacted me about potentially securing a CFPB representative to speak on a panel at a conference for
state Attorneys General later this year. Would you be the appropriate contact person to direct her to? If
not, do you know who would be? Thanks in advance for your help.
-Kevin
Page 1316 of 3826
Kevin K. Lownds
Review Analyst
(202) 435-7399
Page 1317 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Kern, Shaun (CFPB)
RE:
Fri Apr 15 2011 10:02:18 EDT
Will do, Ill come down in a little while
From: Kern, Shaun (CFPB)

Subject: RE:
Hey Kevin, no problem. Im still working on this stuff, if you want to come down and shoot the bull, you
re welcome to

Subject: RE:
Hey Shaun,
Im here today. Sorry for the delay in replying; I wasnt here on Tues or Wed this week

Subject: RE:
Hi Kevin,
Page 1318 of 3826
Actually, I only come in on Tues. Wed. Fri. Ill touch base with you one of those two days?
Shaun

Subject: Re:
Hey Shaun,
Will do. Let's talk Monday? This stuff is really interesting to me.
-K
_____
Sent: Fri Apr 08 17:28:08 2011
Subject:
Hi Kevin
Nice talk, much appreciated. Check out Fn. 9, when you can.
Shaun
Page 1319 of 3826
Invitation Process Upd Feb 2011.docx (Attachment 1 of 1)

Meeting & Speaking Invitations Process
The following process applies to all requests and invitations that you receive to represent the CFPB at
external meetings, panels, roundtables, conferences and other events. Please do not accept such
invitations until the same are considered through the outlined process.
Please forward ALL invitations to speak on behalf of the CFPB or invitations to meet with an
external organization about CFPB implementation to [email protected]. Such
invitations include those directed to Elizabeth Warren AND to other members of the CFPB.
Speaking and meeting invitations should be forwarded to the following email inbox:
[email protected].
Please note if the event or meeting is OPEN or CLOSED to press.
Additionally, staff is encouraged to include information, such as equities, history, proposed
agenda or topic, audience size and makeup or in the event of a meeting request, the likely meeting
participants and any information that you consider helpful in determining whether the specific
invitation should be accepted or declined. You may also include your inclination about whether
the specific invitation should be accepted or declined.
Invitations will be reviewed on a weekly basis. The goal is to respond to staff within 5 working
days of your submission with a recommendation/approval. If the invitation is time sensitive or if
the organizer has requested a decision sooner, please so indicate.
Once an invitation is cleared to accept, please create an invitation through Microsoft Outlook
Calendar and please include Zixta Martinez and Leandra English in the accompanying outlook
invitation.
To stay informed about upcoming CFPB speaking and meeting events, a notional calendar is
available on SharePoint, under Front Office/Outreach.
Please contact Leandra (5-7355) or Zixta (5-7204) with any questions.
Page 1321 of 3826
From:
To:
Cc:

CFPB.culturerocks
(fydibohf23spdlt)/cn=recipients/cn=cfpbculturerocks>; Alag,
Sartaj </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=alags>; Hrdy, Alice (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=hrdya>; _DL_CFPB_AllHands
Gorski, Stephanie (CFPB)
accounts/cn=standard users/cn=gorskis>; Sena, Theresa (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=senat>; Reeder, Garry (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=reederg>; Taiwo, Ebunoluwa
(fydibohf23spdlt)/cn=recipients/cn=taiwoe>; Patross, Whitney
(fydibohf23spdlt)/cn=recipients/cn=patrossw>; Williams, Anya
(fydibohf23spdlt)/cn=recipients/cn=williamsany>; Slagter,
(fydibohf23spdlt)/cn=recipients/cn=slagterd>; Keane, Micheal
(fydibohf23spdlt)/cn=recipients/cn=keanem>; Brolin, John (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=brolinj>; Silberman, David
(fydibohf23spdlt)/cn=recipients/cn=silbermand>; Coyle, Raymond
(CFPB) </o=ustreasury/ou=do/cn=recipients/cn=coyler>; D'Amico,
(fydibohf23spdlt)/cn=recipients/cn=damicoc>; Sealy, William
(fydibohf23spdlt)/cn=recipients/cn=sealeyw>; Fuchs, Meredith
(fydibohf23spdlt)/cn=recipients/cn=fuchsm>; Martinez, Zixta
(fydibohf23spdlt)/cn=recipients/cn=martinezz>; Pearl, Joanna
(fydibohf23spdlt)/cn=recipients/cn=libermanj>; Bach, Mary
(fydibohf23spdlt)/cn=recipients/cn=bachs>; Meyer, Erie (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=meyerer>; Shue, Jeffrey
(fydibohf23spdlt)/cn=recipients/cn=shuej>; Gordon, Michael
(fydibohf23spdlt)/cn=recipients/cn=gordonm>; Lev, Ori (CFPB)
users/cn=levo>; Kunin, Noah (CFPB) </o=ustreasury/ou=exchange
Page 1322 of 3826
(fydibohf23spdlt)/cn=recipients/cn=kuninn>; Plunkett, Alexander
(fydibohf23spdlt)/cn=recipients/cn=alexanderp>; VanMeter,
(fydibohf23spdlt)/cn=recipients/cn=vanmeters>; Abney, Wilson
(fydibohf23spdlt)/cn=recipients/cn=abneyw>; Coleman, John
(fydibohf23spdlt)/cn=recipients/cn=colemanjo>; Gragan, David
(fydibohf23spdlt)/cn=recipients/cn=gragand>; Gao, Jane (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=gaoj>; Michalosky, Martin
(fydibohf23spdlt)/cn=recipients/cn=michaloskym>; Taylor, Doug
(fydibohf23spdlt)/cn=recipients/cn=taylord>; Sanford, Paul
(fydibohf23spdlt)/cn=recipients/cn=sanfordpa>; Cronin,
group (fydibohf23spdlt)/cn=recipients/cn=cronink>; Horan,
Kathleen (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=horank>;
Lombardo, Christopher </o=ustreasury/ou=exchange administrative
group (fydibohf23spdlt)/cn=recipients/cn=lombardoc>; Holmes,
Cordelia (CFPB </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=holmesc>; Cronan, Russell
(fydibohf23spdlt)/cn=recipients/cn=cronanr>; Reilly, Deb (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=reillyd>; Huang, Eugene
(CFPB) </o=ustreasury/ou=do/cn=recipients/cn=huange>; Herchen,
Emily (CFPB) </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=herchene>; Wanderer, Agnes
(fydibohf23spdlt)/cn=recipients/cn=wanderera>; Date, Rajeev
(fydibohf23spdlt)/cn=recipients/cn=dater>; Geldon, Daniel
(fydibohf23spdlt)/cn=recipients/cn=geldond>; Petersen, Cara
(fydibohf23spdlt)/cn=recipients/cn=petersenc>; Blow, Marla
(fydibohf23spdlt)/cn=recipients/cn=blowm>; Vanderslice, Julie
(fydibohf23spdlt)/cn=recipients/cn=vanderslicej>; McQueen,
Suzanne (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=mcqueens>;
Suess, Robert </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=seussr>; Lopez-Fernandini,
Alejandra (CFPB) </o=ustreasury/ou=exchange administrative
group (fydibohf23spdlt)/cn=recipients/cn=lopez-fernadinia>;
Harvey, Imani (CFPB) </o=ustreasury/ou=exchange administrative
group (fydibohf23spdlt)/cn=recipients/cn=harveyi>; Reese,
Angelique (CFPB) </o=ustreasury/ou=exchange administrative
group (fydibohf23spdlt)/cn=recipients/cn=reesea>; Callan,
Nicole (CFPB) </o=ustreasury/ou=exchange administrative group
Page 1323 of 3826
(fydibohf23spdlt)/cn=recipients/cn=callann>; Ellis, Claudia

(Washington) (b) (6)
>
Bcc:
Subject:
Date:
Attachments:
RE: CFPB Lunch & Learn: CFPB's Front Office & Clearance Process
Fri Apr 15 2011 09:56:24 EDT
I hope you find the time to join us today.

-----Original Appointment----From: CFPB.culturerocks
Sent: Tuesday, April 12, 2011 3:29 PM
To: CFPB.culturerocks; Alag, Sartaj; Hrdy, Alice (CFPB); _DL_CFPB_AllHands; Adeyemo, Adewale
(Wally) (CFPB)
Cc: Gorski, Stephanie (CFPB); Sena, Theresa (CFPB); Reeder, Garry (CFPB); Taiwo, Ebunoluwa
(CFPB); Patross, Whitney (CFPB); Williams, Anya (CFPB); Slagter, Dennis (CFPB); Keane, Micheal
(CFPB); Brolin, John (CFPB); Silberman, David (CFPB); Coyle, Raymond (CFPB); D'Amico, Christina;
Sealy, William; Fuchs, Meredith (CFPB); Martinez, Zixta (CFPB); Pearl, Joanna (CFPB); Bach, Mary
(Stacey)(CFPB); Meyer, Erie (CFPB); Shue, Jeffrey (CFPB); Gordon, Michael (CFPB); Lev, Ori (CFPB);
Kunin, Noah (CFPB); Plunkett, Alexander (CFPB); VanMeter, Stephen (CFPB); Abney, Wilson (CFPB);
Coleman, John (CFPB); Gragan, David (CFPB); Gao, Jane (CFPB); Michalosky, Martin (CFPB); Taylor,
Doug (CFPB); Sanford, Paul (CFPB); Cronin, Katherine (CFPB); Horan, Kathleen (CFPB); Lombardo,
Christopher; Holmes, Cordelia (CFPB; Cronan, Russell (CFPB); Reilly, Deb (CFPB); Huang, Eugene
(CFPB); Herchen, Emily (CFPB); Wanderer, Agnes (CFPB); Date, Rajeev (CFPB); Geldon, Daniel
(CFPB); Petersen, Cara (CFPB); Blow, Marla (CFPB); Vanderslice, Julie (CFPB); McQueen, Suzanne
(CFPB); Suess, Robert; Lopez-Fernandini, Alejandra (CFPB); Harvey, Imani; Reese, Angelique
(CFPB); Callan, Nicole (CFPB); 'Ellis, Claudia (Washington)'
Subject: CFPB Lunch & Learn: CFPB's Front Office & Clearance Process
When: Friday, April 15, 2011 12:30 PM-1:30 PM (UTC-05:00) Eastern Time (US & Canada).
Where: Conference Room 503 - Conference Bridge Number 202-927-2255 (Code: 218890)
*~*~*~*~*~*~*~*~*~*
You are Invited to a CFPB Lunch & Learn!
Topic: CFPB's Front Office and Clearance Process
Date: Friday, April 15, 2011
Time: 12:30 pm - 1:30 pm
Place: Room 503 1801 L St.
Facilitator: Wally Adeyemo
Purpose: This is the perfect opportunity to learn more about the inner workings of the CFPB's Front
Office and Clearance Process. Attached to this invite is a variety of documents that will help you
navigate the Clearance Process.
<< File: Media Inquiry Policy FINAL .pdf >> << File: EW INFORMATION MEMO template.doc >> <<
Page 1324 of 3826
File: EW DECISION MEMO template.doc >> << File: EW BRIEFING MEMO template.doc >> << File:
Clearance Process FINAL.PDF >>
Page 1325 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Herchen, Emily (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=wanderera>; Plunkett,
group (fydibohf23spdlt)/cn=recipients/cn=alexanderp>; Black,
Brad </o=ustreasury/ou=do/cn=recipients/cn=blackb>; Megee,
accounts/cn=standard users/cn=megeec>; Slagter, Dennis (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=slagterd>; Glaser, Elizabeth
accounts/cn=standard users/cn=glasere>; Royster, Felicia (CFPB)
accounts/cn=standard users/cn=roysterf>; Burden, Gail (CFPB)
accounts/cn=standard users/cn=burtong>; Tingwald, James (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=tingwaldj>; Cronin,
group (fydibohf23spdlt)/cn=recipients/cn=cronink>; Lownds,
(fydibohf23spdlt)/cn=recipients/cn=lowndsk>; Hart, Maria (CFPB)
</o=ustreasury/ou=do/cn=recipients/cn=hartm>; Dickman, Marilyn
(fydibohf23spdlt)/cn=recipients/cn=dickmanm>; Tamberrino, Mary
(fydibohf23spdlt)/cn=recipients/cn=tamberrinom>; DiPalma, Nikki
(fydibohf23spdlt)/cn=recipients/cn=dipalman>; Harpe, Pam (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=harpep>; Coyle, Raymond
(CFPB) </o=ustreasury/ou=do/cn=recipients/cn=coyler>; Mann,
Seth (CFPB) </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=manns>; Gorski, Stephanie
accounts/cn=standard users/cn=gorskis>; Sensiba, Vicki (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=sensibav>
RE: Anyone avail. At 8 To help move chairs in 503?

Fri Apr 15 2011 08:37:37 EDT
Just got in. Still need chairs removed?

-----Original Message----From: Herchen, Emily (CFPB)
Page 1337 of 3826

To: Wanderer, Agnes (CFPB); Plunkett, Alexander (CFPB); Black, Brad; Megee, Christine (CFPB);
Slagter, Dennis (CFPB); Darling, Eben (CFPB); Glaser, Elizabeth (CFPB); Herchen, Emily (CFPB);
Royster, Felicia (CFPB); Burden, Gail (CFPB); Tingwald, James (CFPB); Cronin, Katherine (CFPB);
Lownds, Kevin (CFPB); Hart, Maria (CFPB); Dickman, Marilyn (CFPB); Tamberrino, Mary (CFPB);
DiPalma, Nikki (CFPB); Harpe, Pam (CFPB); Coyle, Raymond (CFPB); Mann, Seth (CFPB); Gorski,
Stephanie (CFPB); Sensiba, Vicki (CFPB)
Subject: Anyone avail. At 8 To help move chairs in 503?
Morning!
We're unable to get the DO movers back to remove some chairs from rm 503 this morning in prep for
EW's welcome ceremony. If you are available for a few minutes around 8 to help move a couple of
chairs, I would be extremely thankful for your assistance!
Page 1338 of 3826
From:

_DL_CFPB_AllHands
Adamske, Steven
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Thu Apr 14 2011 12:15:34 EDT
Index

Wall Street Journal For Complaints, Dont Call Consumer Bureau Yet
Philadelphia Inquirer (blog) The so-called Consumer Financial Protection Bureau?
CBS Political Hotsheet Could Elizabeth Warren end up leading consumer protection bureau?
Page 1341 of 3826
Naked Capitalism Might Elizabeth Warren Get the CFPB Nod After All?
Politico Mobile Payments: Who will regulate?
Credit.com Congress Quietly Charts a Path for the Consumer Financial Protection Bureau
American Forces Press Service Officials Seek Input on New Consumer Protection Office
Deposit Accounts Banks Not Meeting Truth in Savings Act Requirements
BlueOregon Local Wells Fargo branches seemingly unaware of federal law
Housing Wire House bill introduced to crack down on mortgage servicers
American Banker Regulators Force Mortgage Servicers to Upgrade Systems, Establish Single
Point of Contact
New York Times Report Criticizes Banks for Handling of Mortgages
Wall Street Journal Big Banks Get Foreclosure Orders
Naked Capitalism Regulators Issue Weak Consent Orders to Whitewash Mortgage Abuses
American Banker Regulatory Order Likely to Help Mortgage Servicers in Talks with State AGs
Reuters Bank foreclosure review must be credible: Bair
Huffington Post Regulators Take Light-Touch Approach Towards Banks for Homeowner
Abuses
Housing Wire OCC, Fed actions will not impact AG investigation: Miller
Housing Wire - $535 billion in mortgages may need foreclosure review
Housing Wire Some servicers express regrets over foreclosure issues, others defend status
Consumer Credit
Bloomberg For-Profit Colleges Lose Effort to Block Proposed Rules
American Banker Durbin to Dimon: Debit Reform Overdue, Not Idiotic
Inside Higher Ed No Repayment Plan, No Loan
Housing
American Banker MERS and LPS, Vendors to Mortgage Servicers, Also Hit with Orders
Page 1342 of 3826
Wall Street Journal Senate Report Lays Bare Mortgage Mess
Wall Street Journal

For Complaints, Dont Call Consumer Bureau Yet
April 13, 2011
WASHINGTONLocked in a battle to keep her two-bedroom Panama City Beach, Fla. home out of
foreclosure, Brenda Smith was anxious to register her concerns with the new Consumer Financial
Protection Bureau. There was one problem: the watchdog's Consumer Response Center isn't
responding to consumers.
Until it opens this summer, aggrieved consumers like Ms. Smith, a 67-year-old real estate broker, have
been left to complain about the organization charged with handling their complaints.
"I've been waiting on this wonderful agency, and now I can't get in touch with them," said Ms. Smith. "I
need some help desperately."
About 60 complaints a month have been coming in to the Consumer Response Center, created by last
year's passage of the Dodd-Frank financial-overhaul law, despite a note on the bureau's website
explaining the lack of a posted phone number or email address: "We can't help yet because the
Consumer Response Center is still being established."
On July 21, the agency expects to be able to handle complaints of the credit-card variety. But its
authority over other types of businesses, like pay-day loan-makers and purveyors of other nonbank
products, won't begin until it has a Senate-confirmed director in place. The White House has yet to
name a nominee.
For the Consumer Response Center, the bureau envisions a high-tech hub that can collect information
by phone, fax, mail, web chat and, eventually, via social media and mobile texts. For the time being,
complaints from enterprising consumers are rolling in via fax and snail mail.
Page 1343 of 3826
When Ms. Smith couldn't find a phone number, she reached out to the office of Paul Volcker, the former
Federal Reserve chief who recently stepped down as the head of President Obama's economic
recovery council. Mr. Volcker's assistant gave Ms. Smith a number for the White House, where an
operator provided her with a number to the consumer bureau. When she reached the bureau she was
told, unfortunately, there wasn't much the agency could do until it starts up this summer.
The Dodd-Frank law directs the bureau to collect complaints about allegedly deceptive or abusive
financial products and services. It will be the first banking industry regulator to listen to consumers'
issues related to businesses like check-cashing services and so-called "pay-day loans," which aren't
technically classified as banks but which still offer such financial services.
White House adviser Elizabeth Warren, charged with starting the agency, said last month that the
nascent bureau had already received about 300 consumer complaints. Mortgage- and home loanrelated complaints account for about 50% of the grievances, credit card-related complaints made up
about 20%, and issues concerning consumer loan and deposit products accounted for another 5% of
the complaints, she said.
Ms. Warren said the bureau has also received a handful of complaints related to credit reports, debt
collection and some products that likely fall outside of the bureau's jurisdiction such as insurance and
investment products.
Until it is ready to go, the bureau will "respond to complaints with the contact information for government
agencies that currently can help and have the infrastructure to address those complaints," Ms. Warren
said in the written testimony.
Financial institutions already are on edge about how the agency will collect, handle and address
complaints. Banks fear that the bureau, which can impose fines of as much as $1 million a day on
companies that break consumer-protection laws, will penalize them because of complaints posted on
websites such as Facebook and Twitter.
"Good entities' reputations can be unfairly tarnished and compromised by frivolous complaints if such
complaints are used to form conclusions without the benefit of all of the relevant facts," said the
American Financial Services Association and the Mortgage Bankers Association in a joint comment
letter sent to the bureau in February.
The agency has taken a couple of procedural steps toward getting the consumer-response service
running. Earlier this year, the Treasury Department issued a notice on the bureau's plan to set up the
"Consumer Inquiry and Complaint Database." Last month, the bureau put out a call for contractors that
can help develop the response center. Proposals were due earlier this month. Bureau aides also plan to
reach out to financial firms and other regulatory agencies.
Page 1344 of 3826
"We're definitely working hard to engage with all stakeholders and will pick up the pace of that [work]," a
bureau official said. "The key in building a start-up is you have to come up with a priority list. This is a
critical part of the CFPB's mission, and it's at the top of our priority list to make sure we get it right."
Back to Top
Philadelphia Inquirer (Inquiring Consumer blog)

The so-called Consumer Financial Protection Bureau?
April 13, 2011
By Jeff Gelles
The new CFPB survived the latest budget deal, though Democrats agreed that it would be subjected to
two annual audits, according to the "On the Money" blog at the Hill. Undoubtedly that will save a bunch
of taxpayer dollars.
The new agency is charged with protecting consumers in part to help prevent a repeat of the out-ofcontrol lending that preceded the 2008 financial collapse. It won't be fully functional till July, but it
already has an active website, ConsumerFinance.gov, that's worth checking out if you're curious.
Still, opponents such as House Speaker John Boehner can't resist sniping. The Hill says Boehner's
office touted the deal this way yesterday:
The agreement subjects the so-called Consumer Financial Protection Bureau (CFPB) created by the
job-destroying Dodd-Frank law to yearly audits by both the private sector and the Government
Accountability Office.
St. John's University law professor Jeff Sovern, who blogs on consumer law, calls the characterization
disrespectful, and wonders about whether critics would call Boehner "the so-called Speaker" ...
Page 1345 of 3826
or referred to the House of Representatives as the so-called elected representatives of the people.
Instead of, you know, of the banks.
Sniping, of course, is a two-way street.
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CBS Political Hotsheet

Could Elizabeth Warren end up leading consumer protection bureau?
April 13, 2011
By Stephanie Condon
President Obama may end up nominating Elizabeth Warren, a Wall Street critic championed by the left,
as the chief of his new Consumer Financial Protection Bureau simply because no one else will take the
job, according to the Wall Street Journal.
The White House has reportedly spoken with several potential potential candidates about the new
position, only to have them turn down the job in deference to Warren, who is now spearheading the
agency's creation. Both the White House and Warren declined to comment to the Journal on the
situation.
The administration, the Journal reports, has reached out to possible candidates including Michigan's
former Democratic Gov. Jennifer Granholm, former Sen. Ted Kaufman (D-Del.) and the attorneys
general from Iowa, Illinois and Massachusetts. Other possible nominees reportedly include Democratic
former Ohio Gov. Ted Strickland (D) and Federal Reserve Board member Sarah Bloom Raskin.
Pointing to other reports that she's under consideration for the job, Granholm said on Facebook
recently, " I have declined to be considered for this post... I think nominating Elizabeth Warren is a fight
worth waging."
Page 1346 of 3826
Liberals have urged the president to nominate Warren, calling her a proven, strong advocate for
consumer protections. But last fall, when the administration tapped Warren to create the agency, White
House officials told CBS News that Mr. Obama was unlikely to nominate Warren to lead the agency
because of the fierce opposition she faced from Republicans and their Wall Street backers.
The Consumer Financial Protection Bureau (CFPB) was established under the Wall Street reform
legislation Congress passed last year, and the new chief must be confirmed by the Senate. Given the
GOP's opposition to Warren and reservations with the CFPB in general, as well as the Democrats'
weak majority, her confirmation could indeed be difficult.
The CFPB is supposed to start its operations -- and thus must have a director in place -- by July 21.
The agency is tasked with writing some of the new rules dictated by the Wall Street reform legislation,
as well as supervising and enforcing the rules that guide non-bank financial firms, such as payday
lenders.
Even before the CFPB is up and running, Republicans are working to weaken the agency and to
dismantle parts of the overall Wall Street reform legislation. In February, for instance, House
Republicans passed a spending measure (which died in the Senate) that limited funding for the CFPB
to $80 million for the rest of the fiscal year -- about half of what the bureau requested.
House Financial Services Chairman Spencer Bachus, who's leading efforts to alter the new financial
reforms, has said the CFPB should be run by a five-member commission rather than a single director.
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Naked Capitalism
Might Elizabeth Warren Get the CFPB Nod After All?
April 14, 2011
By Yves Smith
Page 1347 of 3826
A Wall Street Journal report suggests that Elizabeth Warren might wind up getting nominated to head
the Consumer Financial Protection Bureau despite fierce Congressional opposition because other
possible nominees have turned down the job, in many cases because they want Warren to have it:
failed to find a nominee, with several candidates rebuffing the administrations overtures, according to
Republicans.
That deadline could result in the White House nominating Ms. Warren, now a special adviser to the
president charged with setting up the bureau. She is believed to want the job but her candidacy likely
would trigger a Senate confirmation battle. President Barack Obama could avoid that fight by appointing
her during a congressional recess before July 21.
Id be delighted to be proven wrong, since I do think Warren is the best choice, but I see the odds of this
happening as zero:
1. Obama is moving further and further to the right. As Glenn Greenwald points out:
Like most first-term Presidents after two years, Obama is preoccupied with his re-election, and
perceives not unreasonably that that goal is best accomplished by adopting GOP policies. The
only factor that could subvert that political calculation fear that he could go too far and cause
Democratic voters not to support him is a fear that he simply does not have: probably for good
reason. In fact, not only does Obama not fear alienating progressive supporters, the White House
seems to view that alienation as a positive, as it only serves to bolster Obamas above-it-all, centrist
credentials
2. A Warren nomination would be over Geithners dead body. He has succeeded in extending his
influence beyond that of a typical Treasury secretary; he has no reason to have a media-genic regulator
crossing swords with him (as Warren would).
Page 1348 of 3826
Just as CEOs tend to be chosen based on selection criteria that are artificially narrow, so to are
candidates for major bureaucratic roles often chosen for their glittering resumes when candidates who
are less flashy but have germane experience can often rise to the occasion. There are no doubt other
choices once his recruiting team starts to cast its net wider, and thats the far more logical route for
them to go than a Warren recess appointment.
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Politico
Mobile payments: Who will regulate?
April 14, 2011
By Elizabeth Wasserman
As more Americans learn how to shop with their cellphones, Washington is trying to figure out who
should answer the call to regulate this new form of commerce.
A variety of competing business sectors from telecoms to financial institutions to Internet companies
are launching pilots of new technology they hope will replace consumer reliance on credit cards with
the wave or tap of a mobile phone.
The problem is, no one knows which agency should regulate.
They want to make your mobile phone akin to your wallet, said Suzanne Martindale, an attorney and
associate policy analyst in Consumers Unions San Francisco office, who recently co-authored a white
paper about mobile payments. But the laws havent necessarily caught up to the state of the payment
technology.
In particular, Martindale said, banking laws and policies governing private data and consumer protection
may need to be extended to cover mobile payments.
Page 1349 of 3826
Over the past few weeks, the titans of industry have been elbowing one another to unveil rollouts of
phone-based payments.
Earlier this month, Isis a mobile commerce venture pairing AT&T, T-Mobile and Verizon Wireless
with Discover Financial Services announced it will deploy in Salt Lake City by the middle of next
year, letting residents use mobile phones to pay for public transportation, shop at stores and redeem
coupons. Last month, Samsung and Visa publicized plans to let revelers at the 2012 Olympic Games in
London pay with phones containing whats been dubbed the buying chip.
Meanwhile, Google is widely reported to be working with MasterCard and Citigroup on a smartphone
payment system to be tested in San Francisco and New York City. A host of other companies from
Microsoft to Amazon to BlackBerry maker Research in Motion are expected to weigh in with
products, as well.
They all want a slice of that transaction revenue in the same way Visa or MasterCard gets now with
credit card purchases, said Nick Holland, a mobile transactions analyst at Yankee Group, a research
firm.
Federal officials are starting to try to understand how the long arm of the law will apply.
Mobile payments may cross regulatory domains covered by many different federal agencies. The
Federal Reserve Board, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency and
other agencies regulate banking. The Federal Communications Commission has authority over wireless
carriers. The Federal Trade Commission, meanwhile, protects consumers from fraud and privacy
violations.
The Federal Reserve Banks of Atlanta and Boston have been trying to address this issue among
other questions surrounding mobile payments in a working group of wireless carriers, issuing and
acquiring banks, credit card brands, payment processors and trade associations. The group has met
five times over the past 16 months.
In a report issued March 25, the group concluded that members want to understand sooner rather than
later the regulatory focus and oversight regimen of each agency in the mobile payments world, as well
as the applicability of current regulations and laws to the mobile environment, in order to avoid potential
missteps as they proceed to develop mobile payments solutions.
Richard Oliver, executive vice president for the Retail Payments Risk Forum at the Atlanta Fed, told
Page 1350 of 3826
POLITICO in an interview that the group asked the Fed to begin to communicate with various regulatory
agencies about potential issues that may be raised by the expected wave of mobile payments.
In terms of Internet payments, existing regulations and consumer protections have generally been
applied based on the type of payment whether by credit card, debit card, gift card or another
account, Oliver said. But the prospect of other types of companies moving into payment processing
raises questions about what happens if a phone is lost or stolen or if security or data are compromised.
Are the telecoms worried that they would bear some responsibility? Oliver asked. What about the guy
who makes the secure chip on the new platform?
The mobile payment technology, called near field communication, is expected to be integrated into most
popular smartphones in the not-too-distant future from the BlackBerry to the iPhone and everything
in between.
Sprint is waiting for FCC approval for the Samsung Nexus S 4G before it can go on the market. The
mobile payments industry is nascent, but this is something that consumers are interested in and want to
learn a lot more about, and we see our industry moving in that direction, said Sprint spokesman John
Taylor.
NFC is a short-range exchange of wireless data between a chip in the phone that acts as a reader and
other chips embedded in, for example, a payment kiosk or a subway turnstile. In addition to replacing
credit cards or cash, NFC holds the potential for mobile downloads of ads or coupons from interactive
posters or signs. NFC can even allow people to arrange payments from phone to phone.
The mobile payments industry is still getting off the ground in the U.S., although its already proliferating
in Latin America, South Asia and Africa, where more people typically have cellphones as opposed to
bank accounts. For some U.S. consumers, their first experience has been with donations or purchases
via text message the charges for which then appear on their wireless phone bills.
The adoption by wireless carriers and cellphone makers of NFC technology is expected to help boost
mobile payments in the U.S. to $214 billion by 2015, according to a report by Aite Group, a research
group focused on the financial services industry.
Although mobile payments are just getting off the ground, public interest groups are already sounding
the alarm about the potential harm consumers may face.
As with credit cards, the sensitive financial data stored on mobile phones will become targets for
Page 1351 of 3826
thieves and the unscrupulous, Harley Geiger, policy counsel for the Center for Democracy &
Technology, wrote in a white paper published this week.
The upside, though, is that the security of NFC-enabled phones could be quite good, or at least no
worse than a credit card, Geiger wrote. Since smartphones are miniature computers, strong
cryptography and authentication protocol can be built into their systems but it is up to device
manufacturers and service providers to ensure these protections are in place for NFC transactions.
Geiger said in an interview that it is too soon to determine whether new laws or regulations are needed.
However, in the Consumers Union paper, Martindale and co-author Gail Hillebrand, CUs financial
services campaign manager, outlined a series of steps lawmakers and regulators need to take to
ensure consumers making mobile payments are protected. The paper, published in March, said the
Federal Reserves Regulation E which provides a framework for rights and responsibilities in electric
fund transfer systems needs to be extended to mobile phone users who charge payments to prepaid
phone deposits. That rule also should be amended to include a right to reverse disputed charges when
goods or services arent delivered on time, similar to protections for credit card users under the Fair
Credit Billing Act.
In addition, the CU paper said, wireless carriers should be added under Regulation Z which
implemented the Truth in Lending Act to ensure that consumers who charge mobile payments to
wireless accounts have the same protections against unauthorized use and billing errors as consumers
who use credit cards.
Consumers Union also suggested that the new Consumer Financial Protection Bureau and states may
be able to close the gaps and extend existing consumer protections, regardless of whether they pay
by cash, charge or cellphone.
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Credit.com
Congress Quietly Charts a Path for the Consumer Financial Protection Bureau
Page 1352 of 3826
April 13, 2011

By Jean Noonan
Last week all the news about Congress focused on the budget battle and whether the inability of
Democrats and Republicans to agree would result in a government shut-down. While the budget battle
raged in public, a deal on another contentious issue was being quietly forged. It looks like the left and
the right might actually reach an agreement, and the result could be good for consumers. Im talking
about the Consumer Financial Protection Bureau, how it will be managed, and who will be in charge.
Last week, the House Subcommittee on Financial Institutions and Consumer Credit held a hearing to
discuss the future of CFPB, and it seems a deal is in the works. The agency has been hotly debated
since it was first proposed.
Title X of the Dodd-Frank Wall Street Reform Act created the CFPB, and called for it to be run by a
single director appointed by the President and confirmed by the Senate. Consumer advocates strongly
supported Elizabeth Warren for the appointment. Professor Warren has written and spoken about
consumer protection for a couple decades, and after all, the Bureau was her brainchild; who better than
she to be its first director?
The banks gagged at the thought. The position would be an extremely powerful one, and they viewed
her as far too doctrinaire for job. There were doubts about whether she could be confirmed by the
Senate, even before the mid-term elections. The White House charted a shrewd course; rather than
nominate her and have a confirmation battle that might fail, or pass her over for someone else and incur
the wrath of her supporters, the President named her as a Special Advisor to the Treasury Department,
charged with getting the agency up and running.
So what has happened during her tenure of several months? Lots of good work and little controversy.
Her appearances before Congressional committees by and large have gone well. She has been smart,
respectful, and inclusive. Her answers to tough questions have generally beenreasonable. No
fireworks. Lots of competence.
But some more radical elements have vowed not only to keep her from ever becoming the Director, but
have advocated dismantling the bureau before it even becomes operational in July. The rhetoric on
both sides hinted that we might be in for a showdown that could paralyze things as only Congress can
do so well.
Then, rumors of a compromise began to surface. The Republicans would allow Professor Warren to be
confirmed as the first head of the CFPB. In exchange, the Democrats would agree to amend the
structure of agency from a single director to a five-member bipartisan board, which Professor Warren
would chair.
Page 1353 of 3826
The idea for a board as opposed to a single director is not a new one. The original House-passed
version of the bill that became Title X of the Dodd-Frank Act included a five-member board as part of
the leadership on the consumer protection agency that eventually became the CFPB. The White House
s original proposal for financial reform, released in June 2009, called for the creation of a consumer
financial protection agency governed by a board. One might assume, then, that a return to the original
governance proposed by the White House and the Democratic leadership in the House of
Representatives would not be too hard to sell now to the Congressional Democrats. I happen to think
this compromise, if it comes about, may be even better for consumers.
How it Could Work
First, a five-member board may avoid the sharp swings in policy when the political power changes in
Washington. Just as some financial institutions fear a director who might protect consumers without
regard for the legitimate concerns of banks, consumer advocates must worry that a conservative
president and Congress could appoint a director who would gut important consumer protections. A fivemember bipartisan board with staggered terms would moderate possible extremes in either direction
and provide for stability and respect for the institution.
Aside from the philosophical balance that a bipartisan board provides, there are practical benefits. What
happens to the CFPB when it lacks a Senate-confirmed director? Does it lack the legal authority to take
official action, whether that is finalizing a rule or taking an enforcement action against a bad company? I
know from experience that these questions can have tricky answers.
For a decade I was the General Counsel of the Farm Credit Administration, an agency run by a threemember board, whose members were appointed by the President and confirmed by the Senate.
Fortunately, we were never without two Senate-confirmed members during my tenure, but there were
some close calls. I dreaded the possibility I would have to advise the agency that it could not take action
regarding a failing bank because, without a quorum, the board could not act. Having a single director
who holds the ultimate power greatly increases the chance the CFPB would experience periods without
a Senate-confirmed agency head.
The model of the five-member commission arose during the Progressive era and was warmly embraced
by New Deal liberals. The Federal Trade Commission, where I served through the administrations of
five presidents, is a great example of a Progressive era five-member commission. There were periods
where there was more friction than collegial discourse, but these were few. I always sought to get all
five votes in support of my matters before the Commission, and I generally succeeded.
Last weeks hearing focused on bills that would restructure the CFPB. The witnesses were generally
supportive of a change to a five-member commission, although prominent consumer advocates were
largely absent from the witness list. Was this hearing designed to lay the groundwork for a
compromise? I hope so. A back-room deal that would combine a five-member commission with having
Professor Warren at its head could be a surprisingly good deal for all of us.
Page 1354 of 3826
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American Forces Press Service

Officials Seek Input on New Consumer Protection Office
April 13, 2011
By Army Sgt. 1st Class Michael J. Carden
JOINT BASE MYER-HENDERSON HALL, Va., April 13, 2011 Treasury Department officials met here
today with service members and their families to better understand financial challenges in the military
community.
Holly Petraeus, head of the Office of Servicemember Affairs in the Treasury Departments Consumer
Financial Protection Bureau, has been traveling to military posts throughout the country and leading
dialogues with troops and their families since January.
Petraeus and Elizabeth Warren, the treasury secretarys special advisor for the Consumer Financial
Protection Bureau, are gathering feedback they hope will help them when the new offices officially
stand up July 21.
A significant part of what were here to do is be a voice for military families and better understand the
financial issues facing military personnel, Warren said to an audience of about 70 troops and spouses.
She added that she and Petraeus want to make sure that military families have adequate access to
financial education, and that there are adequate rules to protect military families.
For the first time, Warren explained, the Consumer Financial Protection Bureau will have jurisdiction
over lenders outside the traditional banking system, such as mortgage brokers, title loaners and check
cashers, all of which have preyed on military communities, she said.
Page 1355 of 3826
The bureau can enforce better practices and financial laws on those groups that they previously could
not, she added, citing the importance of military families input when dealing with such vendors.
We want to ensure that your perspective is in the DNA of this agency right from the beginning, Warren
said. If we do this right, we have an opportunity with this agency to make some real changes.
Petraeus echoed Warrens sentiments, expressing happiness at being asked to head an office
dedicated to addressing financial concerns of service members, as well as hearing and responding to
their complaints. Her office, she said, will ensure military families have the financial education they need
to make good financial decisions.
I pledge to do everything that I can to be sure that my office serves you, she told the group today.
Petraeus has been a military spouse for 36 years. Her husband, Army Gen. David H. Petraeus,
commands U.S. and NATO forces in Afghanistan. She understands the kinds of financial challenges
military families deal with, she said.
It may be hard to believe now, but my husband and I were once a young Army couple who didnt make
a whole lot of money, she said. And we werent that smart about what we did with it. We made some
of the rookie financial mistakes I try to warn people about today.
For example, she said, they had to have the hot sports car, and they bought furniture at rent-to-own
stores. They also once signed an apartment rental contract without physically checking out the place,
because the picture in the brochure looked nice, she added.
I think the lack of credit cards and easy loans in those days protected us from getting into too much
trouble, Petraeus said. Unfortunately, thats not the case for military families today.
People seeking a loan, a credit card or even debt relief today will find many expensive or outright
fraudulent deals waiting for them, especially on the Internet, she added.
Because servicemembers have a guaranteed paycheck each month, troops and their families are
attractive targets for scammers, Petraeus said, and the militarys culture ensures troops pay their debts.
That makes you a population at risk, she said.
Page 1356 of 3826
Properly managing finances may be difficult for younger service members and deployed troops,
Petraeus said. Because predatory lenders see them as means for potential profit, she added, her office
will help troops know how to spot red flags and will respond should they become targets of predatory
lending.
Its because of these special risks and the unique sacrifices you make for your country that Congress
created my office, she said. The conversation we have with you today and with other families in the
coming months will help us decide how the Office of Servicemember Affairs should operate and what
needs immediate attention.
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Deposit Accounts
Banks Not Meeting Truth in Savings Act Requirements
April 13, 2011
By Ken Tumin
Many banks don't make it easy to learn about their account fees, and this was shown in a new study
that was just released. The U.S. Public Interest Research Groups (PIRG) released the study titled Big
Banks, Bigger Fees 2011: A National Survey of Bank Fees and Fee Disclosure Policies. Here's an
excerpt of its findings:
PIRG staff visited 392 bank branches in 21 states to determine compliance with the Truth In Savings
Act requirement that "prospective customers" have the right to "complete" fee schedules.
Fewer than half (38%) of branches complied easily with this legal request; nearly one quarter (23%)
refused to comply at all. A total of only 55% provided correct information eventually, only after repeated
requests for information.
Page 1357 of 3826
What's suppose to be in a fee disclosure? Some of the fees required by the Truth in Savings Act
include:
Maintenance fees, such as monthly service fees
Fees to open or to close an account
Fees related to deposits or withdrawals, such as fees for use of the institution's ATMs
Fees for special services, such as stop-payment fees, fees for balance inquiries or verification of
deposits, fees associated with checks returned unpaid, and fees for regularly sending to consumers
checks that otherwise would be held by the institution
The report included several amusing responses that the PIRG staff received in their bank visits. Here
are a few of the best ones:
Georgia: This bank didnt have one, the bank staff said, "I don't even have a list. Let me see if I can
think of some for you off my head...."
Florida: They didn't give me the info until I listened to their whole spiel about different accounts.
New York: We don't USUALLY give these out.
The report mentioned that many banks told them to look online for the fee disclosures. Here's what the
report said about that:
To test the hypothesis that many branch staff extolled, look online for what you want, we did. This
month, when we looked online to verify the fee data obtained in person for the report, we found
inadequate disclosures online. First, we found that many sites had no detailed online fee schedules.
Some banks didnt even list basic fees for accounts. Note that the Truth In Savings Act does not require
online disclosures.
At the end of the report they included recommendations for consumers and for regulators.
Its recommendations for consumers were pretty basic. As you might expect it warned about interest
checking. Even before our ultra-low interest rate environment, these interest checking accounts rarely
paid enough interest to make the monthly fees and minimum balance requirements worthwhile.
Page 1358 of 3826
Most of the report's recommendations for regulators were directed to the new Consumer Financial
Protection Bureau (CFPB). One of the recommendations for this bureau makes sense and it should be
able to get wide acceptance:
The CFPB should extend the requirements of the Truth in Savings Act of 1991 (Regulation DD) to the
Internet. The law requires only paper disclosures provided in-person or by mail.
That would make it a lot easier for me and everyone here who reviews account details online. There
was also the recommendation that the Truth in Savings Act require a simple tabular format for the "most
important savings and checking account disclosures."
Credit unions and the NCUA were also mentioned. It's interesting to see what the report had to say
about them:
Credit unions generally have fewer and lower fees than banks, but their account disclosures are even
murkier than most bank disclosures. The NCUA should, with advice from the CFPB, issue model
guidelines on fee disclosures and require credit unions to explain the basic terms of their accounts in a
better way.
If regulators are going to pursue changes to the Truth and Savings Act, in my opinion, they need to also
improve disclosure requirements for CDs so there's no longer any question about the size of the early
withdrawal penalty, if an early withdrawal will be allowed and if the early withdrawal penalty will remain
unchanged until maturity (see post).
Back to Top
BlueOregon
Local Wells Fargo branches seemingly unaware of federal law
April 13, 2011
By Jon Bartholomew
Page 1359 of 3826
Yesterday, OSPIRG released a new report about bank fees. The report, "Big Banks, Bigger Fees - A
National Survey of Bank Fees and Fee Disclosure Policies" shows that nationally, 24% of bank
branches surveyed failed to provide undercover consumers with a list of bank fees as required by the
Truth in Savings Act. These results are similar to what the GAO found in their 2008 investigation on the
same topic.
This list of fees, their "fee schedule", is important for consumers to be able to shop around to get the
best deal on a bank account. We list 18 different tips for consumers shopping for a bank account in the
report, and on our blog today.
Of the bank branches we surveyed in Oregon, most complied with the law, although a couple didn't
provide the fee schedule on first request - we had to ask more than once for it. But at three branches of
Wells Fargo in Portland, we NEVER received the information, even after several requests. Therefore,
we gave them an "F" for all three branches in our report.
Wells Fargo didn't like this, as indicated in the report at the Portland Business Journal. But their
response indicated that they don't seem to understand the Truth in Savings Act that they must operate
under. Their spokesman said "I cant speak to what happened when any of the OSPIRG researchers
walked into our branches, but I can tell you with absolute certainty that if they told a banker they wanted
to actually open an account, the banker would have given them the 60-page account guide."
That's a big whoopsie on their part. The Truth in Savings Act specifically states that the fee schedule
must be "made available to any person upon request," and NOT just to those interested in opening an
account. Besides, a 60 page guide? The fee schedule is supposed to be a short document, not some
tome you need to go over with your attorney.
The same undercover consumers had no problem getting fee schedules from Portland branches of
Umpqua and U.S. Bank, and were also able to get one from Bank of America after a couple requests.
Why didn't Wells Fargo provide it? Do they not understand federal regulations? Do they not care?
There's one big reason why compliance with this law is so poor.
Lack of enforcement.
Since the Truth in Savings Act was enacted, the bank regulators have largely turned a blind eye to
enforcing it. However, soon that may be a problem of the past. The Consumer Financial Protection
Bureau (CFPB) is getting ready to launch in July, and they will have jurisdiction to enforce this law.
Since their only charge is to protect consumers, they are more likely to enforce this law more
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aggressively. However, the new Congress has been threatening to weaken this new agency before it
even gets up and running.
We can't let them do this. We need a strong CFPB that will ensure consumers have all the information
they need to make good decisions and enforce the laws that protect them.
In the meantime, we urge the local branches of Wells Fargo to look again at the requirements of the
Truth in Savings Act and ensure their policies fully comply with the law.
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Housing Wire
House bill introduced to crack down on mortgage servicers
April 13, 2011
By Jon Prior
Rep. Elijah Cummings (D-Md.) introduced a bill in the House of Representatives pushing for more
requirements such as modifications and disclosures before servicers can file a foreclosure case.
The bill, H.R. 1477, is a companion to S.489 introduced by Sen. Jack Reed (D-R.I.). Both bills would
apply to loans not only covered by the U.S. government, including the Federal Housing Administration
and the government-sponsored enterprises, but to all mortgages falling under the supervision of the
Consumer Financial Protection Bureau.
The legislation also provides $1 billion to the National Housing Trust Fund for state and local
governments to access when establishing foreclosure mediation programs and other purposes. And it
establishes other requirements to these servicers.
"This legislation will force servicers to staff up," Cummings said in a conference call with reporters.
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Servicers cannot pursue a foreclosure on these loans until the borrower has been considered for a
modification, ending the practice of "dual-tracking," according to the bill. It also requires lenders to show
they have the legal right to foreclose and provides an appeals process for homeowners who are denied
a modification.
Servicers would be required to provide the borrower documentation on why the mod was denied,
including the net-present-value test, the note and proof of assignment on the mortgage, any pooling and
servicing agreement and payment history.
Cummings said the legislation directly addresses the robo-signing scandal uncovered late last year, in
which major servicers were found to be signing affidavits en masse and without a proper review of the
loan information. On Tuesday, Cummings wrote a letter to the Office of the Comptroller of the Currency,
saying that from what he has learned so far, the deal is not stringent enough. This legislation, he said,
will be.
The OCC plans to release details of the consent order Wednesday afternoon.
Sen. Reed echoed those very comments, calling the OCC consent order "vague, toothless and
unacceptable."
"We are at a very critical moment," Reed said. "If we don't address the foreclosure crisis, the housing
market will continue to be a drag on the overall economic recovery."
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American Banker
Regulators Force Mortgage Servicers to Upgrade Systems, Establish Single Point of Contact
April 14, 2011
Page 1362 of 3826
By Cheyenne Hopkins
WASHINGTON After months of investigation, the federal banking regulators issued Wednesday a
final cease and desist order against the 14 largest servicers that will require them to overhaul their
operations, including improving loss mitigation efforts and foreclosure proceedings and creating a single
point of contact for troubled borrowers.
The order will also require servicers to upgrade technology systems for recordkeeping, payments and
fees, ban so-called "dual tracking" of mitigation efforts and foreclosure procedures, force enhanced
oversight of third parties and mandate a third party consultants to review recent foreclosure activities.
Although the servicers agreed to the orders, they did not admit to or deny regulators' allegations. Nor
did they pay a monetary fine. Several of the same servicers are facing a separate action from the 50
state attorneys general and other federal agencies which is likely to include a fine. Bank regulators, too,
said some kind of fine was still in the offing.
"The Federal Reserve believes monetary sanctions in these cases are appropriate and plans to
announce monetary penalties," the central bank said in a press release. "These monetary penalties will
be in addition to the corrective actions that the banking organizations are expected to take pursuant to
the enforcement actions."
Regulators also released an 18-page report on the result of their investigation in which they noted
weaknesses throughout the foreclosure and loss mitigation process.
"Although borrowers whose foreclosure files were reviewed were seriously in default at the time of the
foreclosure action, some servicers failed to accurately complete or validate itemized amounts owed by
those borrowers," the report said. "At those servicers, this failure resulted in differences between the
figures in the affidavit and the information in the servicing system or paper file. In nearly half of those
instances, the differences which were typically less than $500were adverse to the borrower.While
the error rates varied among the servicers, the percentage of errors at some servicers raises significant
concerns regarding those servicers' internal controls governing foreclosure-related documentation."
In their enforcement actions, regulators said they found "deficiencies and unsafe and unsound practices
in residential mortgage servicing and in the banks' initial handling of foreclosure proceedings."
The regulators said that banks, contrary to law, filed affidavits for which they did not have personal
knowledge or were not properly notarized. They also engaged in foreclosure litigation without ensuring
that mortgage documentation was properly endorsed, failed to devote sufficient staffing and resources
to the foreclosure process, and did not properly oversee outside and third-party vendors.
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But regulators also backed up a key bank defense that despite significant problems in the foreclosure
process, they did not uncover proof that institutions had wrongfully foreclosed on troubled borrowers.
"Examinations of these eight national bank servicers identified significant weaknesses in mortgage
servicing and foreclosure governance that resulted in unsafe and unsound practices," the Office of the
Comptroller of the Currency said in a press release. "The scope and degree of these practices differed
among the servicers; however, based on the sample of the files reviewed by OCC examiners,
borrowers in the sample were seriously delinquent at the time of foreclosures and servicers held the
notes and the documents required to foreclose."
The investigation report said that, "with some exception, examiners found that notes appeared properly
endorsed, and mortgages appeared properly assigned."
"The loan-file reviews showed that borrowers subject to foreclosure in the reviewed files were seriously
delinquent on their loans," the report said. "The reviews also showed that servicers possess original
notes and mortgages and therefore had sufficient documentation available to demonstrate authority to
foreclosure."
While a monetary fine is still in the offing, some banks have already seen losses related to their
servicing units. In its first quarter earnings announcement on Wednesday, JPMorgan Chase & Co. said
that it is taking a $1.1 billion pretax loss from mortgage servicing rights assets adjustment and allocating
$650 million in pre-tax expenses for costs related to foreclosures.
Under the order, banks are also required to reimburse any borrower who has been harmed by the
institutions' actions.
Regulators are forcing the servicers to hire an independent consultant to conduct a review of their
foreclosure actions from Jan. 1, 2009 to Dec. 31, 2010. The independent review should determine if
lenders filed affidavits properly, charged improper fees to borrowers, and conducted loss mitigation
activities in accordance with standards established under the Home Affordable Mortgage Program. In
general, the review must determine if there were errors or deficiencies in the foreclosure review that
resulted in financial harm to a borrower.
Banks must also stop conducting foreclosure proceedings at the same time they are pursuing loss
mitigation efforts with a borrower. Regulators are requiring banks to establish a single point of contact
for borrowers throughout the loan mitigation and foreclosure process.
The order also directs the banks to upgrade their loss mitigation and foreclosure proceedings, including
Page 1364 of 3826
improving communication, increasing staff, reviewing borrower complaints, ensuring proper credit from
payments to borrower's accounts, and establishing mitigation procedures for second liens.
Banks must also upgrade their management information systems or technology systems that record
payments and fees charged.
Banks also must improve their practices for outside consultants or third-party providers such as law
firms. The banks must submit a plan to improve controls and oversight of their activities with the
Mortgage Electronic Registration System.
Separately, the bank regulators and the Federal Housing Finance Agency are issuing orders against
MERS and Lender Processing Services, which processes foreclosure documents. The order requires
the companies to enhance governance and quality control and perform audits.
Under the cease and desist orders, banks must submit detailed action plans to regulators describing
how they plan to comply with the order including timing, metrics and staffing. The regulators plan to
share those details with the Justice Department with the hope of helping that side move toward an
agreement with the servicers in the ongoing settlement talks.
The state AGs offered terms to the top five servicers in February that were primarily focused on pushing
for principal reductions. But banks have said such a plan is a nonstarter.
On Tuesday, Brian Moynihan, the chief executive officer of Bank of America Corp., dismissed calls for
principal reductions.
"In general, we do not see broad-based principal reduction as a sound policy decision for America,"
Moynihan said at the National Association of Attorneys General Presidential Initiative summit in
Charlotte, N.C. "Fairness is a major concern it's hard to see how we could justify reducing principal
for many delinquent customers who represent a small portion of borrowers, but not for the vast majority
of our customers who have stayed current on their loans or to reduce principal for an investor, or a
person who took out a cash-out refi at the height of the value in their market, when others were more
conservative. There are unintended consequences to any policy, and we don't know what kinds of
incentives such a policy could introduce into the market. There also is a question of whether it impacts
the customer in any meaningful way."
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Page 1365 of 3826
New York Times

Report Criticizes Banks for Handling of Mortgages
April 13, 2011
By David Streitfeld
Banks did a poor job of handling the flood of foreclosures over the last several years, in some cases
even moving ahead with evictions when they clearly should not have, according to a long-awaited
report released Wednesday by federal regulators.
In response to the problems detailed in the report, 14 mortgage servicers have now signed consent
agreements promising changes, including new oversight procedures.
Regulators said the enforcement actions were tough measures that would make the banks accountable.
The banks are going to have to do substantial work, bear substantial expense, to fix the problem, the
acting comptroller of the currency, John Walsh, told reporters in a conference call.
JPMorgan Chase, one of the servicers signing the agreement, said that it was adding as many as 3,000
employees to meet the new regulatory demands. Jamie Dimon, its chief executive, called it a lot of
intensive manpower and talent to fix the problems of the past.
Other servicers who signed agreements included Bank of America, Citigroup and GMAC. Two firms that
handle aspects of the foreclosure process, Lender Processing Services and Mortgage Electronic
Registration Systems, also signed consent agreements. But consumer activists were unimpressed,
saying the reforms let the banks police themselves.
The banks who caused the economic crisis and received government bailouts are getting a free pass
while homeowners still struggle to save their homes, said Alys Cohen of the National Consumer Law
Center, a nonprofit consumer advocacy group.
The other regulatory bodies involved in the examination and the enforcement actions were the Federal
Reserve and the Office of Thrift Supervision. The Federal Deposit Insurance Corporation played a more
limited role.
Page 1366 of 3826
Problems at the servicers were significant and pervasive adding up to a pattern of misconduct and
negligence, the Federal Reserve said. The Fed said it planned to announce monetary penalties for the
servicers it regulates at a later date.
Mr. Walsh also said the comptroller would impose penalties. The question is timing and amount, he
said.
One enforcement action requires servicers to hire an outside consultant who will review complaints by
borrowers who say that their homes were improperly foreclosed. If the consultant agrees with the claim,
the servicer might need to pay restitution.
During their review, the examiners said they saw an unspecified number of cases in which foreclosures
should not have proceeded due to an intervening event or condition. Those circumstances included
families in bankruptcy or borrowers who were either qualified for or in the middle of doing a trial loan
modification.
Mortgage servicers will be required to offer families fighting foreclosure a single point of contact, but
that does not require the same caseworker. Many families have complained that the servicers routinely
lost documents and had trouble keeping track of individual cases.
The report said that mortgage servicing units of the banks did not properly oversee their own or thirdparty employees at law firms, had inadequate and poorly trained staffs and improperly submitted
material to the courts.
The report and enforcement actions came six months after the problems of the way foreclosures were
handled became public. Some of the issues included bank employees who acted as robo-signers,
blindly processing thousands of foreclosure affidavits. The servicers, under pressure from lawyers
representing homeowners, admitted to lapses last fall and imposed brief foreclosure moratoriums.
Details of the enforcement actions, which have leaked out over the last two weeks, have been widely
criticized by politicians, consumer and housing groups.
Vague and toothless, said Senator Jack Reed, a Rhode Island Democrat who has already introduced
legislation to improve the foreclosure process. Democrats introduced the legislation in the House on
Wednesday.
Page 1367 of 3826
State attorneys general, who started a separate investigation, are still working with the Obama
administration to change the foreclosure process in a more fundamental way. Two administration
officials interrupted negotiations with the banks on Wednesday to stress they were actively working
toward a settlement, although they declined to give any details.
This process is going to take some time, said Thomas J. Perrelli, an associate attorney general for the
United States.
About two million households are in foreclosure and another two million near it. Several million home
buyers have already lost their homes to foreclosure, often after attempts at loan modifications went
nowhere.
Michael D. Calhoun of the Center for Responsible Lending said that the regulators report made it clear
why so many loan modifications failed: the servicers were inept.
If the guys couldnt get the basic paperwork right, what were the chances we were going to get the
more complicated modifications right? Mr. Calhoun said.
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Wall Street Journal

Big Banks Get Foreclosure Orders
Regulators Detail Steps Lenders Must Take to Revamp Processes; Fines Are Still to Come
April 14, 2011
By Victoria McGrane, Alan Zibel, and Robin Sidel
U.S. regulators hit the nation's largest banks with a first round of sweeping penalties for improper homeforeclosure practices, issuing detailed orders to revamp the way they deal with troubled borrowers.
Page 1368 of 3826
The orders issued on Wednesday to 14 financial institutions didn't include fines. Officials said they are
coming.
"There will be civil money penalties; the question is timing and amount. But we're not letting that clock
run forever," Acting Comptroller of the Currency John Walsh told reporters. The orders were issued by
his office, the Federal Reserve and the Office of Thrift Supervision.
The bank regulators' action came as Obama administration officials and representatives of state
attorneys general met with the bank representatives in an ongoing effort to reach a broader deal over
alleged mortgage-servicing abuses, which brought foreclosures to a near halt last fall. All sides want a
settlement that can resolve the issue so foreclosures can proceed again, which could help the sickly
housing market.
Some attorneys general and administration officials have pushed for banks to pay more than $20 billion
in civil fines or to devote a comparable amount to modifying mortgages held by distressed borrowers.
Several officials said the regulators' action wouldn't undermine the broader settlement talks. "This
doesn't change what we are doing," said Iowa Attorney General Tom Miller in an interview. Mr. Miller,
who is spearheading the 50-state investigation, said, "We are moving ahead full speed."
Outside observers said the orders could make it harder for state attorneys general to extract greater
concessions from the banks.
"The biggest stick in this fight just settled, so there's going to be a lot less pressure on the banks to
agree to a radical resolution to resolve the state complaints," said Jaret Seiberg, an analyst in
Washington with MF Global.
Mark Zandi, chief economist at Moody's Analytics, said the agreement appears to require only "modest
changes" to banks' foreclosure process and is unlikely to have a big impact on the housing market or
broader economy. Still, Mr. Zandi added, "the foreclosure process will remain bogged down and a true
bottom in the housing market elusive" until the banks reach a complete settlement with the state
attorneys general.
Bank executives said the changes ordered would be anything but modest. "It's very demanding and
there is a lot that we have to do," said one bank official. "It will be fairly expensive and a big resource
drain."
Page 1369 of 3826
The regulators issued the orders to the nation's four largest banksBank of America Corp., Wells
Fargo & Co., J.P. Morgan Chase & Co. and Citigroup Inc. Also receiving orders were Ally Financial Inc.,
HSBC Holdings PLC, MetLife Inc., PNC Financial Services Group Inc., SunTrust Banks Inc., U.S.
Bancorp, Aurora Bank, EverBank, OneWest Bank and Sovereign Bank.
Under the orders, banks have 60 days to establish plans to clean up their mortgage-servicing
processes to prevent documentation errors.
The orders also direct banks to take steps to ensure they have enough staff to handle the flood of
foreclosures, that foreclosures don't happen when a borrower is receiving a loan modification and that
borrowers have a single point of contact throughout the loan-modification and foreclosure process.
Banks must hire an independent consultant to conduct a "look back" of all foreclosure proceedings from
2009 and 2010 to evaluate whether they improperly foreclosed on any homeowners and require each
company to establish its own process to consider whether to compensate borrowers who have been
harmed.
Critics, including other regulators, believe this process and other aspects of the orders leave too much
discretion to banks.
J.P. Morgan, in a statement, acknowledged that the consent orders "are targeted directly at
weaknesses in our processes and controls." The New York bank took a charge of $1.1 billion in the first
quarter to reflect higher mortgage-servicing costs that resulted from a string of new regulations enacted
after the financial crisis.
Other banks said many of the required changes already are under way. "This is an unprecedented
measure and a tough message to take, but it will make mortgage servicing practices better across the
board," Wells Fargo said. The San Francisco bank said it already has taken numerous actions to
address the issues, including hiring 10,000 employees since 2009 to deal with foreclosure issues.
PNC Financial Services sought to distance itself from the industry's mess, saying that it represents just
1.5% of the mortgage-servicing business. A spokesman for the Pittsburgh bank said that its internal
review had determined that the bank didn't foreclose on customers without a "valid reason or
appropriate documents."
Even before the orders became public, critics charged that the bank regulators were letting servicers off
too easy and were undercutting the broader talks.
Page 1370 of 3826
The OCC, which has been the target of most criticism, defended the enforcement orders. "They require
substantial corrective actions," Mr. Walsh said. "The banks are going to have to do substantial work,
bear substantial expense to fix the problems that we identified" as well as to identify and compensate
homeowners that suffered financial harm.
The Federal Deposit Insurance Corp. in a statement called the orders "only a first step" and declared its
full support for the broader talks. "The enforcement orders announced [Wednesday] complement, rather
than pre-empt or impede, this ongoing collaboration," it said.
Back to Top
Naked Capitalism
Regulators Issue Weak Consent Orders to Whitewash Mortgage Abuses
April 14, 2011
By Yves Smith
Last week, we inveighed against an effort by Federal banking regulators to undermine the 50 state
attorney general settlement negotiations on foreclosure and mortgage abuses. This affair is becoming a
pathetic spectacle, in that the state initiative, which looks to be an exercise in form over substance, still
might prove to be enough of a nuisance to the banks that the Powers that Be in Washington feel
compelled to do what they can to hamstring it. The first effort was to have a joint settlement, which we
dismissed as a barmy idea given the disparity in state and Federal issues. Not surprisingly, the Feds
withdrew after the first negotiating session with the banks.
The current end run is apparently led by the Ministry of Bank Boosterism more generally known as the
OCC and comes via consent decrees that were issued Wednesday (weve made that inference given
the fact that John Walsh of the OCC presented the findings of the so-called Foreclosure Task Force, an
8 week son-of-stress-test exercise designed to give the banks a pretty clean bill of health, as well as
media reports that the OCC was not participating in the joint state-Federal settlement effort).
This initiative is regulatory theater, a new variant of the ongoing coddle the banks strategy. It has
become a bit more difficult for the officialdom to finesse that, given the extent and visibility of bank
Page 1371 of 3826
abuses. Accordingly, the final consent decrees are more sternly worded and more detailed than the
drafts we saw last week, and also talk about imposing fines. But reading them reveals that there is
much less here than meets they eye.
The Fed published an interagency report that gave an overview of the Foreclosure Task Force effort
and consent decrees which confirms the regulators see no evil posture. It admits the Foreclosure Task
Force effort was inadequate:
While the reviews uncovered significant problems in foreclosure processing at the servicers included in
the report, examiners reviewed a relatively small number of files from among the volumes of
foreclosures processed by the servicers. Therefore, the reviews could not provide a reliable estimate of
the number of foreclosures that should not have proceeded.
Even more telling, not only was the examination insufficient in scope, but it was also procedurally
flawed:
The loan-file reviews showed that borrowers subject to foreclosure in the reviewed files were seriously
delinquent on their loans. As previously stated, the reviews conducted by the agencies should not be
viewed as an analysis of the entire lifecycle of the borrowers loans or potential mortgage-servicing
issues outside of the foreclosure process. The reviews also showed that servicers possessed original
notes and mortgages and, therefore, had sufficient documentation available to demonstrate authority to
foreclose.
The interesting question is whether the regulators are as dumb as that paragraph indicates, or merely
playing dumb on the no doubt accurate assumption that the vast majority of readers wont detect what
is amiss. As we said we suspected earlier, and this text confirms, the authorities made no independent
verification of whether the charges were warranted; their review merely confirmed that the banks own
records did show borrowers to be in arrears. There was no effort to check servicer records against
borrower payments (an issue in a case we highlighted yesterday which led a bankruptcy court judge to
sanction both Lender Processing Services and the foreclosure law firm) or whether the charges resulted
from improper deduction of fees first (by contract and Federal law, borrower payments are to be
credited to principal and interest first, fees second), padded or double charged fees, force placed
insurance, and other abuses that can greatly increase the amount a borrower allegedly owes.
Similarly, the authorities are playing dumb as far as chain of title issues are concerned, and are
accepting the American Securitization Forum party line that possessing the note is sufficient to initiate a
foreclosure, when courts in many jurisdictions are responding favorably to chain of title issues. Its
simply impossible that the regulators involved in this review havent heard of the Massachusetts
Supreme Judicial Court Ibanez decision, but there is absolutely no admission that servicers are having
considerable difficulty foreclosing when challenged due to their inability to produce properly endorsed
notes.
Page 1372 of 3826
The Fed document also provides an overview of the consent decrees, but we thought readers might
enjoy reading the actual text of one (the example is Bank of America):
Note that the overview document, after fessing up to doing a less than adequate job of investigating,
then fobs the effort over to the miscreants themselves. They are supposed to hire an independent
consultant to investigate certain residential foreclosure actions from January 1, 2009 to the end of
December 2010.
You can drive a truck through this language. First, anyone competent to do this job will not be
independent. They will have or want to develop a relationship with the servicer. Second, certain
residential foreclosure actions means only a subset need to be examined, and their is no language
requiring that the sample be representative or even of meaningful size. A review of 5 foreclosures would
meet the standard set forth in the text. Admittedly, the OCC gets to review the engagement letter, and
the section discussing what goes in the letter indicates they expect a statistical sample will be used. But
lets not kid ourselves as to what is really going on. As Adam Levitin wrote:
So heres whats going down. The bank regulators are going to provide cover for the banks by
pretending to discipline them very hard, but not really doing anything. The public will see a stern C&D
order, but there wont be any action beyond that. Its as if the regulators are saying so all the neighbors
can hear, Banky, youve been a bad boy! Come inside the house right now because Im going to give
you a spanking! And then once the door to the house closes, the instead of a spanking, theres a
snuggle. But the neighbors are none the wiser. The result will be to make it look like the real cops (the
AGs and CFPB) are engaged in an overzealous vendetta if they pursue further action.
The tipoff to the lack of seriousness of this effort is the timelines. The engagement letter is submitted for
review after the consultant is hired, meaning that the officials expect to change it as at most only around
the margins. The review is supposed to be concluded 120 days after the letter is approved. Given that it
will probably take 2-3 weeks to develop and review the final report with the client before submitting it to
the regulators, that allows only a bit over three months to do the investigation, which is insufficient if it
were to be done in sufficient depth.
Some other faux tough features:
1. A compliance committee which has a majority of non-bank employees as members. See our earlier
comment re independence. There are plenty of people whod be delighted to have a sinecure like this
and be amenable to not rocking the boat
2. Auditable trail requirement. This could be a nuisance and entail costs.
3. Review of customer complaints. Any properly run business would be doing that now; presumably, it
Page 1373 of 3826
gets kicked over to the compliance committee.
4. The fines. These could in theory be onerous but in practice, since they come out of a selfadministered exam, Id not get my hopes up here.
Lenders Processing Services and MERS are getting separate consent orders, but since they are
perceived to be critical infrastructure to the mortgage industrial complex, expect them to get a kid glove
treatment as well.
For the most part, the consent orders throw a lot of stern language but little in the way of real teeth
around requirements to follow existing law. Since that servicers have violated past consent orders, and
theres no reason to think anything has or will change, this looks to be yet another example of Potemkin
reforms.
Back to Top
American Banker
Regulatory Order Likely to Help Mortgage Servicers in Talks with State AGs
April 14, 2011
By Cheyenne Hopkins
WASHINGTON An enforcement action against a bank is almost always bad news for the institution
involved.
But a federal bank regulators' order released Wednesday against the top 14 mortgage servicers was
likely to help, not hurt, the banks, providing them with added leverage as they attempt to negotiate a
separate settlement with the 50 state attorneys general and several federal agencies.
While the order requires the servicers to overhaul their operations, it also bolsters a key bank defense
Page 1374 of 3826
namely, that the significant problems uncovered in the process have not led to improper
foreclosures. It also allows banks to argue that the banking agencies have already addressed many of
the issues that the state AGs would like to see resolved.
"It will work in the banks' favor," said Paul Miller, managing director of FBR Capital Markets Corp. "It's a
good way to say to the attorneys general, 'The federal banking agencies have it handled.' "
The order was quickly seized on by both sides, with lawmakers who want to see tougher actions calling
it weak and ineffective, while banking industry representatives said it appropriately dealt with problems.
The state AGs and Obama administration officials, meanwhile, praised the order but insisted their
negotiations were not undercut by it.
"We don't agree with that," said Tom Perrelli, an associate attorney general at the Justice Department,
in a conference call with reporters.
Perrelli emphasized that the agencies have yet to assess monetary penalties although even bank
regulators have said they are necessary and said certain areas, including federal trade and
bankruptcy provisions, were not covered by the order released Wednesday.
"We are negotiating directly with servicers" so "that those action plans fully satisfy the state AGs as well
as the other federal enforcers," Perrelli said. "We're working with the servicers on how they will address
the subset of issues in the federal orders as well as a broader set of issues."
Although a monetary penalty was not included in the order, the Federal Reserve Board and other
federal officials made it clear one is in the offing.
"We have capacity to levy substantial fines which could be used for a variety" of measures, said Helen
Kanovsky, the general counsel of the Department of Housing and Urban Development, on the
conference call.
But several Democratic lawmakers were hardly satisfied with the enforcement action, accusing
regulators of being too soft on the banks in an attempt to help them with negotiations with the state
AGs.
"The consent orders released today fail to hold servicers accountable for the egregious, and often
Page 1375 of 3826
illegal, actions taken against American homeowners during the worst economic crisis since the Great
Depression," Rep. Maxine Waters, D-Calif., said in a press release. "I fear that these consent orders
are merely an attempt to do an end run around our state attorneys general, and replicate the failed
policy of preemption that exacerbated our subprime crisis and brought us to this point."
On a conference call with reporters, acting Comptroller of the Currency John Walsh defended the
enforcement order, arguing it addressed significant issues.
"They require substantial corrective actions," Walsh said. "We consider them tough orders covering the
whole range of issues we examined. The banks are going to have to do substantial work to fix the
problems we identified. I just don't accept the proposition that this is not a hard-hitting and complete
approach."
The order requires servicers to improve loss mitigation efforts and foreclosure proceedings and create a
single point of contact for troubled borrowers. Regulators also will force servicers to upgrade technology
systems for record keeping, payments and fees, ban so-called dual tracking of mitigation efforts and
foreclosure procedures, force enhanced oversight of third parties and mandate third-party consultants
to review recent foreclosure activities.
Under the order, banks are required to reimburse any borrower who has been harmed by the
institutions' actions. Servicers must hire an independent consultant to review all foreclosure actions
from Jan. 1, 2009, to Dec. 31, 2010, to determine if mistakes were made.
Industry representatives said the order was commensurate with the problems uncovered by regulators'
investigation into foreclosure practices. "It addresses not only the robo-signing allegations but also the
greater criticisms that have came out from the crisis that the loss mitigation wasn't adequate, the
compliance programs weren't adequate, the outside supervision wasn't adequate," said Stephen
Ornstein, a partner at SNR Denton. "It at least tries to address the system problems for servicers since
the crisis began."
But Mark Calabria, director of financial regulations studies at the Cato Institute, said the order would
undercut state AGs as they negotiate separate deals with the banks. "This really undermines [Iowa
Attorney General Tom] Miller and the rest of the AGs because it shows a split between them and the
other regulators," he said. "It will also undermine any efforts to put together class actions. It does create
a burden for anyone who wants to put together a class action on this because the bank regulators are
saying there is no systemic issue here."
Still, analysts said it was clear the battle is not over. The state AGs are likely to continue to push for
principal reductions.
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"This settlement sidesteps the broader fight of whether banks should engage in principal reduction but it
doesn't end that fight," said Jaret Seiberg, an analyst for MF Global Inc.'s Washington Research Group.
"We fully expect the state attorneys general to continue to press for principal reduction for any deal. And
that's the threat that is going to hang over the banks for the next several months."
But Seiberg also agreed the banks now have a stronger hand.
"The state attorneys general lost leverage today because the bank regulators had the power to impose
remedies without the need for litigation," he said. "With the federal regulators out of the picture, the
states have less leverage."
A key to that is bank regulators' contention that no borrowers were improperly foreclosed on as a result
of the mistakes in the process. "The loan-file reviews showed that borrowers subject to foreclosure in
the review files were seriously delinquent on their loans. The reviews also showed that servicers
possessed original notes and mortgages, and therefore, had sufficient documentation available to
demonstrate authority to foreclosure," regulators said in an 18-page report on their investigation of
servicer practices.
Robert Davis, executive vice president of government relations for the American Bankers Association,
said this backs up the bankers' arguments. "This will settle the argument about what the banks did
wrong and the identifiable consumer harm," Davis said. "There is information now that is public that is
not easy to refute and I think this narrows the scope of the negotiations to have a final resolution."
But consumer groups continued to argue regulators were just wrong. "The implications that everything
that's happened to date are pretty proper is really insensitive and missing the point of what the
problem has been of people getting loans that are unsustainable," said John Taylor, the president of the
National Community Reinvestment Coalition.
Josh Rosner, managing director of the research firm Graham Fischer & Co., also said it's clear from
court filings that some borrowers have been hurt as a result of servicer mistakes. "It flies in opposition of
court cases that we've seen finding specific examples where borrowers were improperly foreclosed
upon and the banks and their third party contractors were engaged in problematic pervasive practices,"
Rosner said.
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Page 1377 of 3826
Reuters
Bank foreclosure review must be credible: Bair
April 14, 2011
By Dave Clarke
Banks face a serious risk of litigation and damage to their reputations if a key aspect of a settlement
with bank regulators over foreclosure abuses is not credibly enforced, Federal Deposit Insurance Corp
Chairman Sheila Bair said on Thursday.
On Wednesday, bank regulators announced that 14 large housing lenders had agreed to overhaul their
mortgage operations and compensate borrowers who were wrongly foreclosed upon.
Under the agreement, these mortgage servicers will have to hire an outside consultant to review
foreclosure actions that took place between January 2009 and December 2010.
Where problems are found, banks must compensate these borrowers for financial damages they
suffered.
"Frankly, as the insurer of these institutions, the litigation and reputational risk, we think, is significant so
it is very important that that process has some credibility and integrity," Bair told the National
Community Reinvestment Coalition's annual conference.
Borrowers who were harmed must receive help, she added.
Bank of America Corp, Wells Fargo & Co, JPMorgan Chase and Citigroup Inc are among the 14
financial institutions and service providers that settled with the Office of the Comptroller of the Currency,
the Federal Reserve and the Office of Thrift Supervision.
Bair said her agency would have a limited role in enforcing the settlement, but the FDIC will make its
views on the review process known to banks and other regulators.
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Critics of the plan have said it is not clear how the reviews will work and what type of problems will
result in the banks' making payments to borrowers who were wrongly foreclosed upon.
"You have an outside reviewer chosen by the bank reviewing things under an uncertain standard and
then also deciding what the harm was," Georgetown University law professor Adam Levitin, who has
been critical of the mortgage industry and its record-keeping, said in an interview on Wednesday.
Under the agreement, banks will have to choose an outside consultant that is "acceptable" to the
regulators.
Acting OCC head John Walsh told reporters on Wednesday that his agency would be looking closely
over banks' shoulders while the reviews are carried out.
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Huffington Post
Regulators Take Light-Touch Approach Towards Banks For Homeowner Abuses
April 14, 2011
The nation's 14 largest mortgage firms must compensate wronged homeowners after federal bank
regulators determined the companies broke federal and state laws by improperly foreclosing on an
incalculable number of distressed borrowers. The agencies announced such penalties Wednesday, the
first in what is likely to be a series of enforcement actions targeting the country's biggest banks and
costing them billions.
Lenders like Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial
systematically broke rules and took shortcuts when foreclosing on homeowners last year, the regulators
said. Their three-month review launched after documents and videos of so-called robo-signers -- people
who signed thousands of foreclosure documents a day without reading them or knowing what was in
them -- surfaced, leading the biggest banks to halt home seizures.
Page 1379 of 3826
Bank examiners found the firms employed practices that "failed to conform to state legal requirements."
In other words, they broke the law.
The banks must stop such practices and fix the way they process home loans, according to agreements
they signed Wednesday with the Federal Reserve, Office of the Comptroller of the Currency and the
Office of Thrift Supervision.
The Fed said the review uncovered a "pattern of misconduct and negligence" in the way mortgage
servicers processed home repossessions, which represent "significant and pervasive compliance
failures." All three agencies deemed the practices to be "unsafe and unsound," an industry label that
essentially means the actions threaten the viability of the institutions and the banking system.
But the agencies don't even know the full scope of the problem, they admitted in a joint report outlining
their findings. They did not fully review whether borrowers were assessed improper fees, as critics have
widely alleged, nor did they investigate mortgage servicing issues outside of the foreclosure process.
Last November, Fed Governor Sarah Bloom Raskin said servicing flaws were "part of a deeper,
systemic problem."
Additionally, the agencies only examined a "relatively small number of files from among the volumes of
foreclosures processed by the servicers," the regulators said in their report.
By comparison, more than 2.8 million homes received a foreclosure filing in 2009, and nearly 2.9 million
residences got one last year, according to RealtyTrac, a California-based data provider.
"Therefore, the reviews could not provide a reliable estimate of the number of foreclosures that should
not have proceeded," the agencies said in their report.
The banks were forced to hire independent auditors to review "certain residential mortgage loan
foreclosure actions." In other words, regulators did not demand they review every foreclosure.
"There is evidence that some level of wrongful foreclosures has occurred," the Federal Deposit
Insurance Corporation said in a statement, adding that Wednesday's agreements with the banks "do
not purport to fully identify and remedy past errors in mortgage-servicing operations of large institutions"
and that "much work remains."
Page 1380 of 3826
Fines are "appropriate" and will be assessed, the Fed said in a statement. The OCC chief also told
reporters that fines are coming. An amount was not announced.
Yet while the agencies outlined goals for the firms, it's up to the banks to determine what specific
actions they need to take, and how to implement the new procedures. With the exception of a few items
-- like forcing the lenders to establish a single point of contact for each borrower -- the regulators
essentially asked the banks to follow existing rules and laws.
Meanwhile, attorneys general from all 50 states, state bank supervisors, and other federal agencies
continue to pursue their own probe of the biggest mortgage companies.
Attorneys General Beau Biden of Delaware and Tom Miller of Iowa both said in statements that the
OCC's actions would not impact the state probe.
Representatives from 10 state attorneys general offices, along with officials from the Justice
Department and the Department of Housing and Urban Development, met with banks again on
Wednesday, part of a two-day meeting that marks the second time they've discussed the ongoing
investigation with bank representatives, Associate U.S. Attorney General Tom Perrelli said on a
conference call with reporters.
"We have substantial ability to assess fines and penalties, as do the state AGs," said Helen Kanovsky,
HUD's general counsel and top legal adviser to HUD Secretary Shaun Donovan. HUD and the state
officials have abilities to set fines that go "well beyond what the federal banking regulators can do" or
what the "banking regulators ever set out to do," she added.
At this point, state officials are only focusing on the top five firms -- Bank of America, JPMorgan, Wells,
Citi and Ally. The states' audit of Ally, the fifth-largest mortgage handler in the country, was the "most indepth analysis and investigation of any of the servicers that has been done or will be done," Miller said
in an interview.
State regulators will use their findings from Ally as part of the settlement negotiations with the other
large mortgage firms, Miller said, as practices were likely the same across the biggest firms -- a point
underscored by Wednesday's announcement.
Federal regulators publicly praised the three banking agencies for their work, yet were quick to note that
the consent orders with the targeted firms mark simply the first step of a process designed to fix the
"pervasive" problems that plague the industry, punish the banks for wrongdoing and compensate
Page 1381 of 3826
homeowners for their losses.
Privately, officials described the action as confirmation of a strategy long pursued by the OCC, a lighttouch approach the agency hopes will force the hand of other regulators to quickly settle, rather than
pursue in-depth investigations or levy costly penalties on the banks.
Officials are pursuing as much as $30 billion in penalties against the five biggest mortgage firms. Some
attorneys general want a thorough review of borrowers' loan files in order to be able to confidently
survey the damage wreaked by faulty bank practices.
The nation's five largest mortgage firms have saved more than $20 billion since the housing crisis
began in 2007 by taking shortcuts in processing troubled borrowers' home loans, according to a
confidential presentation prepared for state attorneys general by the nascent consumer bureau inside
the Treasury Department and obtained by The Huffington Post.
The report, prepared by the Bureau of Consumer Financial Protection, suggests that amount should be
used as a starting point in settlement discussions with the targeted firms. Many more billions would
likely have to be levied as penalties in order to discourage the firms from taking a similar approach in
the future and to compensate homeowners for bank abuses, including reducing distressed borrowers'
loan balances.
The OCC rejects that approach. Republicans in Congress say such a penalty could hurt banks' capital
levels and stifle their ability to lend.
But a Wednesday report by the International Monetary Fund dismisses such concerns.
If Bank of America, JPMorgan, Citi and Wells reduced housing debt on first mortgages by 15 percent for
borrowers expected to be at risk of foreclosure over the next year and a half and then lowered loan
balances by 30 percent for seriously-delinquent borrowers and those in foreclosure through 2015,
they'd face little consequence, the IMF said.
"Our stress tests highlight the capital strength of U.S. banks," it said in its report, noting the lenders'
ability to manage "even under a severe shock."
The IMF's estimates are based on a widespread principal reduction program that would impact millions
of homeowners, far beyond what's currently under discussion in the foreclosure abuse probe.
Page 1382 of 3826
State regulators and some federal agencies similarly believe that a principal reduction program would
not impede banks' ability to lend or maintain a healthy balance sheet.
Of the public statements issued by the nation's four banking regulators, those of the OCC and OTS
were the tamest, according to a review. The OCC said the enforcement actions are "comprehensive"
and will "fix the problems" it found.
The Fed said they found a "pattern of misconduct and negligence." The FDIC said the review was
"limited" and discussed the need for a "thorough regulatory review" so agencies could identify the
extent of the problem.
Neither termed the enforcement actions "comprehensive," nor did they claim the consent orders would
fix what's broken in an industry with "structural problems," which is how Raskin described mortgage
servicing.
Both the Fed and the FDIC mentioned the state regulators and federal agencies working with them. The
FDIC specifically said the consent orders should not impede or preempt the state action.
The OCC and OTS, which are merging as part of last year's financial reform law, did not make any such
statements.
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Housing Wire
OCC, Fed actions will not impact AG investigation: Miller
April 13, 2011
By Jon Prior
Page 1383 of 3826
Iowa Attorney General Tom Miller said actions taken Wednesday by the Office of the Comptroller of the
Currency and the Federal Reserve against mortgage servicers found to be improperly foreclosing on
homeowners will not impact the 50 state AG investigation he is leading.
"We are reviewing the actions of the Office of the Comptroller of the Currency (OCC) and related
agencies," Miller said. "However, their actions will not impact our investigation of the nations largest
servicers and pursuit of a joint settlement."
After lenders and some third-party vendors were found to be mishandling foreclosure affidavits and
filing against homeowners while in the modification process, the 50 AGs, led by Miller, launched their
investigation. Federal regulators hopped aboard, too. But at some point in the negotiation process, the
OCC and the Fed split off and pursued their own actions, announced Wednesday.
Meanwhile, Miller and a central band of state AGs are working to find a consensus among their own
ranks during their settlement talks with the banks. The U.S. Department of Justice, the Treasury
Department, the Federal Trade Commission and the Department of Housing and Urban Development
will continue to work with the AGs as they pursue a settlement. Even Elizabeth Warren, the special
adviser to the Treasury, who is putting together the Consumer Financial Protection Bureau, has been
pulled in for her input.
The Fed and the OCC signed consent forms with lenders requiring these companies to comply with
state law and retool their loss mitigation processes to give homeowners a chance at modification before
foreclosure. Regulators made room for monetary sanctions as well, but have yet to release an exact
amount.
"Todays actions by the OCC will not limit our pursuit of remedies and reforms," Miller said. "We will
continue our own efforts to ensure that the nations servicing and foreclosure system is fair to
homeowners, banks, and investors.
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Housing Wire
$535 billion in mortgages may need foreclosure review
April 14, 2011
Page 1384 of 3826
By Jon Prior
Mortgage servicers may have to review as much as $535 billion in loans for possible remediation to
borrowers who suffered financially from improper foreclosures, according to an estimate from the
investment bank Keefe, Bruyette & Woods.
Remediation was one of the requirements of the consent orders signed between 14 mortgage servicers
and the Office of the Comptroller of the Currency and the Federal Reserve after an investigation into
foreclosure problems. The regulators found the problem had spread industry wide.
KBW said the amount of remediation could be lower given how many loans the servicers reviewed
before the settlement. Ally Financial (GJM: 23.7801 -0.04%) and other servicers have maintained that
they did not wrongfully foreclose on any borrower. Actual losses from the remediation could be as low
$5.4 billion, spread out over the 14 servicers, KBW said.
"In addition, investors may be unsettled by the difficulty associated with estimating the impact to
mortgage servicing revenues from higher servicing expenses and monetary remediation and this could
be an overhang on the shares of companies involved until all is settled," KBW said.
Washington thinktank MFGlobal said many of the servicers had already begun implementing some of
the changes in the consent orders such as putting borrowers through the modification process before
foreclosure. But analysts there said the settlement could undermine the still ongoing negotiations
between the 50 state attorneys general and the servicers.
"The deal incorporates much of what the states wanted except for the $20 billion penalty, the principal
write down requirement, and the triple damages threat for even minor violations of the settlement,"
MFGlobal said. "The banks will never agree to any of those conditions."
If the negotiations breakdown, litigation may follow. But Iowa AG Tom Miller, who is leading the
negotiations, said Wednesday that the OCC and Fed settlement would not affect his. Both regulators
said as much the same day.
Some lawmakers, however, believe the OCC and Fed settlement didn't go far enough. Sen. Jack Reed
(D-R.I.) said the enforcement actions should have been done years ago.
"Today it comes off as too little, too late," Reed said. "The vague and toothless remedies outlined by the
OCCs consent orders merely require banks to do what they should have already been doing."
Page 1385 of 3826
Rep. Maxine Waters (D-Calif.) said she was disappointed by the settlement but that she wasn't
surprised given their failure during the foreclosure crisis.
"They fail to hold servicers accountable for the egregious, and often illegal, actions taken against
American homeowners during the worst economic crisis since the Great Depression. They are lacking
in direction and standards, and all existing evidence points to the fact that our regulators enforcement
will be weak," Waters said.
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Housing Wire
Some servicers express regrets over foreclosure issues, others defend status
April 14, 2011
By Kerri Panchuk
Mortgage servicers rushed to defend their platforms Thursday after federal regulators sent consent
orders to 14 companies saying they would need to revamp their foreclosure processing procedures.
MetLife Inc. (MET: 43.83 -0.77%) said meeting all applicable decrees continues to be a focus of the
company, but added that MetLife Bank services only one percent of the U.S. home mortgage market
and "has not experienced the high volume of foreclosures that many servicers have experienced."
The bank added that "MetLife Bank has never issued and does not own nontraditional mortgage
products such as pay-option ARMs and subprime loans, which have the highest rate of default."
Ally Financial Inc. (GJM: 23.79 0.00%) said it "deeply regrets" an error uncovered in the firm's
processing of certain foreclosure affidavits, according to a statement from the lender.
Page 1386 of 3826
The Detroit-based financial services firm made that statement after it signed a consent order from the
Federal Reserve and the Federal Deposit Insurance Corp. instructing mortgage servicers to review and
revamp foreclosure processes.
To comply with the order, Ally has put together an internal team of executives from its various divisions
GMAC Mortgage, Ally Financial and Ally Bank to oversee the implementation of the order.
In response to issues related to the processing of foreclosure affidavits, Ally said it has "acted with
urgency and rigor in addressing and remediating the issue. Through our review to date, Ally has not
found any instance where a homeowner was foreclosed upon without being in significant default."
The company added that "GMAC has substantially upgraded its operations over the past two years"
and now has a Tier 1 servicer rating from the Department of Housing and Urban Development.
The bank said it completed 610,000 loan workouts in the past three years.
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Bloomberg
For-Profit Colleges Lose Effort to Block Proposed Rules
April 12, 2011
By John Lauerman
Congressional supporters of for- profit colleges failed to block further regulation of the industry in a
budget deal struck by Congress and the Obama Administration, lawmakers said.
The agreement made last week to avoid a government shutdown doesnt include an amendment that
Page 1387 of 3826
would have thwarted the regulations, known as gainful employment, according to a statement
yesterday by Republican Representative John Kline of Minnesota, chairman of the House education
committee, who sponsored the proposal.
The regulations would tie for-profit colleges eligibility for federal student aid to graduates incomes and
loan repayment rates. The Education Department, which is developing the rules, said last year that it
will release them in early 2011. Education Secretary Arne Duncan should acknowledge bipartisan will
to defeat the proposed changes, Kline said in the statement.
Instead of facing regulatory roadblocks laid down by the Department of Education, students should
have every chance to get the skills and training they need to succeed in the workplace, Kline said.
Congress and attorneys general in four states are investigating the $33 billion for-profit college industry
for its recruiting practices and use of government funds. Students at for-profit colleges default on federal
loans at twice the rate of those at nonprofit public universities and three times the rate at private
nonprofit colleges.
The Bloomberg For-Profit Education Index of 13 companies fell 2.3 percent at the 4 p.m. New York time
close of U.S. markets. Apollo Group Inc. (APOL), operator of the University of Phoenix and the biggest
U.S. for-profit college, dropped 90 cents, or 2.1 percent, to $41.11 in Nasdaq Stock Market composite
trading.
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American Banker
Durbin to Dimon: Debit Reform Overdue, Not Idiotic
April 14, 2011
By Cheyenne Hopkins
The fight over the interchange amendment heated up on Wednesday when Sen. Dick Durbin, D-Ill.,
sent JPMorgan Chase & Co. Chief Executive Jamie Dimon an open letter defending the provision.
Page 1388 of 3826
In the letter, Durbin shot back against Dimon's recent claims that the amendment is "idiotic" and instead
said banks are giving misinformation to benefit their fight against the provision.
"Clearly, debit interchange reform has displeased many in the financial services industry," Durbin wrote.
"Your industry is used to getting its way with many members of Congress and with your regulators, and
my amendment and the Federal Reserve's draft regulations were not written the way you wanted. But
that does not mean they were written poorly or that the process that created them was flawed The
American people deserve to know the real story about the interchange fee system and the ways that
banks in general and Chase in particular have abused that system."
The banks have aggressively been fighting a provision in Dodd-Frank sponsored by Durbin that orders
the Federal Reserve Board to set rules governing interchange fees banks charge merchants. Sen. Jon
Tester, D-Mont., has a bill that would delay the interchange rule for two years.
In the lengthy letter, Durbin dismissed bankers' claims that the amendment didn't have proper analysis
and is price fixing.
"Of course, my amendment does not create price fixing it constrains the price fixing that Visa and
MasterCard currently perform on banks' behalf," Durbin wrote.
He also disputes that banks need the fees to pay for maintenance of debit cards and the interchange
provision harms consumers. JPMorgan Chase has threatened to end free checking for debit card
members and rewards programs for debit holders if the amendment isn't delayed.
"There is no need for you to threaten your customers with higher fees when you and your bank are
already making money hand-over-fist," Durbin said. "And there is no need to make such threats in
response to reform that simply tries to spare consumers from bearing the cost of interchange fees that
are anticompetitive and unreasonably high. Interchange reform is necessary and it is long overdue."
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Page 1389 of 3826
Inside Higher Ed
No Repayment Plan, No Loan
April 14, 2011
By David Moltz
Tidewater Community College, in Virginia, will soon require students to go above and beyond Education
Department requirements to receive federal loan funds. Starting next fall, students who want the college
to certify their eligibility for student loans must complete personal budget worksheets, outlining a
realistic picture of their financial situation both before and after graduation, and a student loan
repayment plan estimating how their monthly payments fit into those budgets.
Tidewaters recognition that it needs to take greater responsibility for educating its students on the
implications of financial aid debt, as its administration recently argued to its board, comes at a time
when other community colleges are actively discouraging their students from taking out loans to pay for
their education. For example, last month in North Carolina, the state legislature voted to allow
community colleges to opt out of offering federal loans to their students, a requirement that had been
approved only a year earlier. Several community college presidents in the state had expressed concern
that participation in the federal loan program would put their students at risk of losing federal financial
aid if too many students at their institution do not repay their loans.
By most measures, Tidewater has a firm handle on student loan debt. Last academic year, the college
disbursed nearly $85 million in all types of financial aid to more than 19,000 of its students. Of that
amount, it disbursed more than $31 million in student loans to 7,880 students. The average one-year
loan debt was $3,990, and the colleges official cohort default rate for 2008 was 7.6 percent.
While her institution looks to be in good shape, Deborah DiCroce, Tidewaters president, said she felt
the college could do more to help its students borrow responsibly and make sound investments in
their education.
Its not a handout, DiCroce said of student loans. Its not something that goes away when the college
experience is completed or not completed. Theres a commitment to repay a loan that has as much
weight to it as any other kind of borrowing one might do. My concern, as we are ramping up our
financial aid program, is keeping a close eye on our default rates, as one of our measures of
accountability. It just became clear that we needed to take a step beyond what the feds require. Where
is our responsibility to educate a borrower on this type of investment?
With this in mind, last summer, DiCroce charged her administrative team to come up with a new set of
steps, in addition to those required by the Education Department, for approval of student loan requests
at Tidewater.
Page 1390 of 3826
When you look at the current loan process, one could argue its oversimplified, said Daniel DeMarte,
Tidewaters vice president for academic and student affairs. In about a half an hour, a savvy student
could zip through it and have access to thousands of dollars. Nowhere in the process does it slow you
down to realize that youre borrowing a lot of money. We needed to get them to slow down and require
them to do some more thinking before we disburse anything. To do that we need to get them to think
ahead, Whats the return on investment? The second step is to keep in front of them and not forget
that they borrowed money.
When Tidewaters central financial aid office receives a student direct loan request next fall, it will
prepare a student loan repayment plan for each application. This student loan repayment plan provides
a summary of the students borrowing history, at Tidewater and all other institutions, and estimates a
monthly payment based on the existing debt and the new loan request. The plan outlines the
obligations of loan repayment and demands student acknowledgment of them. In one example provided
by college officials, a student who borrows $7,500 is told that one year after graduation, he or she
would need to make an estimated monthly payment of $86.
The student must then fill out two budget worksheets. One asks the student to estimate his or her
current monthly expenses from rent and transportation to insurance and childcare and income.
The worksheet ends showing the student his or her remaining discretionary funds. Tidewater officials
hope students will consider how their estimated student loan payments might fit into their current
budgets if they left college, either by dropping out or by graduating.
The second worksheet asks students to fill out a similar budget to anticipate their financial situation after
graduation. It includes resources to help them estimate their future job titles and average starting
salaries in specific fields. Student loan payment is part of their new projected monthly expenses on this
worksheet, which notes that loan repayments should never exceed 15 percent of one's monthly income.
Tidewater students will then submit both the loan repayment plan and the worksheet to the central
financial aid office, constituting their official acceptance of the loan and accompanying responsibilities.
After these documents are processed, the loan award will be made. Tidewater officials stress that no
loan funds will be made until the [students have] completed all steps. College officials will also review
these forms to see if the plans students are submitting are realistic. As students have to reapply for aid
each year, they will have to complete Tidewaters additional requirements each year as well.
Phyllis Milloy, Tidewaters vice president for finance, said she is aware that some students may choose
not to list their monthly expenses in such an itemized fashion, citing privacy concerns over categories
like child care and medical.
There will always be somebody who will say, none of your business, Milloy said. They dont have to
list all their expenses under different categories. They can just list them all under other expenses. Well
roll with it. Still, we are operating under the principle that the students will appreciate the education we
Page 1391 of 3826
re going to provide them and embrace these extra steps and the value added here.
Milloy added that she doesnt think many students will find these extra steps burdensome or too
personal. She said she ran the worksheets by her two daughters, who are both taking out student loans
to pay for graduate school, to get their impression. She said both told her they wish theyd had
something like this when they first took out loans.
Tidewater officials say they are prepared to deny student loan requests and renewals if students do not
complete the extra steps they have developed. Jennifer Harpham, Tidewaters director of central
financial aid, explained that the federal government mandates that, unless a student tells the college he
or she has no intention to repay a loan, the college does not have a right to deny him or her a student
loan. But, she said, the federal government does require that students complete entrance counseling,
and each college determines what that process will be for its students. The additional steps at
Tidewater constitute this counseling, she said.
In this context, DiCroce said, if a student refused to complete the worksheets, it would give the college
cause to believe that that student had no intention of repaying his or her loans. And so, we wouldnt
hesitate" to decline to certify the student's eligibility.
From a cost standpoint, DiCroce expects that she may have to hire additional financial aid advisers,
given the additional work required of them by these new requirements. She is convinced, however, that
the change will make a big difference on her campus.
Its the right thing to do for the student, DiCroce said. Its also the right thing to do for the institution in
terms of its accountability. How can we move forward with a student making this kind of investment
without educating them on the obligations of this investment?
Back to Top
American Banker
MERS and LPS, Vendors to Mortgage Servicers, Also Hit with Orders
April 14, 2011
By Kate Berry
Page 1392 of 3826
In addition to the 14 biggest mortgage servicers, two of the biggest vendors to the industry received
cease-and-desist orders from regulators Wednesday. One was stronger than the other.
Lender Processing Services Inc. and Merscorp Inc.'s Mortgage Electronic Registration System were
both cited for "significant compliance failures" and "unsafe and unsound business practices" related to
foreclosures. Regulators are requiring both companies to hire independent consultants, take remedial
steps to address past failures and hire additional staff.
But only LPS, a publicly traded company in Jacksonville, Fla., that provides foreclosure-related services
to banks, faces the possibility of having to reimburse servicers and borrowers if an independent review
finds anyone was financially harmed by its failure to properly execute mortgage documents.
In a Securities and Exchange Commission filing, the company noted that "the order does not make any
findings of fact or conclusions of wrongdoing, nor does LPS admit any fault or liability." The filing said
the agencies "have not yet concluded their assessment of whether any civil money penalties may be
imposed." LPS shares fell 3%, to $30.19 each.
MERS, in particular, has become a lightning rod in the controversy over foreclosures. But the company,
which is owned by its 5,000 members (including the top two servicers, Bank of America Corp. and Wells
Fargo & Co.), said it is already implementing changes to tighten corporate governance, improve internal
controls and address quality-assurance issues identified by federal regulators.
MERS, in Reston, Va., cited changes it made in February, when it told members not to foreclose in its
name mostly because borrowers have filed so many suits claiming the company has no standing to
foreclose even though MERS has been listed as the lienholder in many foreclosure filings. MERS even
issued a press release Wednesday calling the review of its practices "a major step forward" for the
industry. (The orders against servicers were also viewed as a positive for the industry; see related
story.)
The Office of the Comptroller of the Currency led the on-site review of MERS, coordinating with the
Federal Deposit Insurance Corp., Federal Housing Finance Agency and the Federal Reserve Board.
The Fed led the interagency review of LPS. The agencies have the authority to examine the firms under
the Bank Service Company Act.
MERS has 30 days to hire a third party to analyze and assess its directors, officers, management and
staffing needs. It has 90 days to create a plan to establish adequate internal control, risk management,
audit and reporting requirements.
Page 1393 of 3826
Regulators also highlighted potential problems with MERS' finances and ordered the company to create
a plan that would identify whether it needs additional capital and where the money would come from.
MERS also has to identify and monitor its funding and liquidity risk, provide a plan to reduce
discretionary expenses and improve earnings, and maintain adequate reserves for "contingency risks
and liabilities."
MERS also must develop a strategy to manage lawsuits effectively. The company has 90 days to
comply with the consent order. Within 20 days, MERS must form a compliance committee of three
directors, two of whom cannot be employees.
LPS also must hire an independent consultant within 10 days to conduct a risk assessment of its default
management services, including whether its mortgage-servicer clients are exposed to risks from its past
failures in executing mortgage documents.
Within 45 days, LPS has to hire an independent consultant to review how mortgage documents were
executed at two subsidiaries, DocX LLC and LPS Default Solutions Inc. from January 2008 through
December 2010. The company has 45 days to submit a remediation plan that identifies problems with
mortgage documents not meeting legal requirements and determines if any foreclosure sales can be
remediated.
Among other issues, the review will determine whether LPS employees had personal knowledge of the
information contained in foreclosure affidavits, whether documents were notarized correctly, and
whether fees and expenses charged to borrowers were accurate.
Back to Top
Wall Street Journal

Senate Report Lays Bare Mortgage Mess
Panel Recommends a Range of Remedies for Financial Sector; I Found White Elephant, Flying Pig
April 14, 2011
By Carrick Mollenkamp and Liz Rappaport
Page 1394 of 3826
Some call the concept of owning a home the American dream.
Wall Street bankers called it something different: "Pigs." "Crap." A "white elephant, flying pig and
unicorn."
Those descriptions of the U.S. mortgage market were highlighted in a U.S. Senate report Wednesday
that offered one view of the events leading up to the financial crisis of 2008.
Senate investigators spent two years gathering and analyzing 5,901 pages of confidential emails and
documents from Washington Mutual Inc., Goldman Sachs Group Inc., Deutsche Bank AG, and
regulators including the Office of Thrift Supervision. Though lacking evidence of outright fraud, the
report shows Wall Street in gritty, day-to-day detail, angling to profit from a booming mortgage market,
and then scrambling to cope with its collapse.
As the Senate wrapped up its report, the Securities and Exchange Commission neared the end of an
investigation that is likely to result in settlements with Wall Street firms that sold mortgage-bond deals at
the heart of the financial crisis, according to people familiar with the situation.
Unlike the politically divisive report issued by the Financial Crisis Inquiry Commission, this report
received bipartisan support, signed by both Senate Permanent Subcommittee on Investigations
Chairman Sen. Carl Levin (D., Mich.) and the panel's ranking Republican, Sen. Tom Coburn of
Oklahoma.
The Senate panel recommended a range of financial-sector fixes. It said bank regulators should
examine mortgage-related securities to identify any possible legal violations and use Goldman Sachs
as a case study in implementing conflict prohibitions. The panel also recommended that the Financial
Stability Oversight Council should evaluate risky lending practices and the impact they might have on
the U.S. financial system.
The subcommittee's recommendations are aimed at enhancing certain provisions of the Dodd-Frank
financial-regulatory overhaul or implementing the act by using the information in the Senate report.
It trains much of its ire on Goldman Sachs, which Sen. Levin said deceived some clients by betting
against home loans in 2006 and 2007, while simultaneously selling mortgage securities. At a news
conference Wednesday, Senate staffers manned large posters with headings such as "Goldman
Conflicts of Interests" and "The Hudson Scam," in reference to a particular Goldman bond offering.
Page 1395 of 3826
A Goldman spokesman said that "while we disagree with many of the conclusions of the report, we take
seriously the issues explored by the subcommittee. We recently issued the results of a comprehensive
examination of our business standards and practices and committed to making significant changes" to
strengthen its disclosure and client relationships.
The report shows how on Dec. 14, 2006, executives gathered in a conference room adjoining the office
of Goldman Chief Financial Officer David Viniar. They agreed the firm needed to cut its bullish bets on
mortgage bonds.
The Senate report alleges that Goldman then undertook a multibillion dollar series of trades to hedge its
bullish bets by selling mortgage-related trades to allegedly unsuspecting investors. The head of
Goldman's mortgage unit recommended managers of Goldman's sales force issue "ginormous" sales
credits to those who could find investors anywhere in the world.
A Goldman executive found one in Australia. On April 26, 2007, in an email with the subject line
"utopia," the executive said, "I think I found white elephant, flying pig, and unicorn all at once."
A month later, another Goldman executive lamented his firm's reputation after a stretch of risky
mortgage deals Goldman had sold. He described debt managers that worked with the firm as "street
wh managers."
"It pains me to say it but citi, ubs, db [Deutsche Bank], lehman, and ms [Morgan Stanley] have much
stronger franchisesamong large dealers only ML [Merrill Lynch] is more reviled than [Goldman's]
business," the executive wrote.
Sen. Levin said Wednesday that he believed some Goldman executives may have misled Congress
during a committee hearing in April 2010. He didn't specify how.
A Goldman spokesman said bank employee testimony was "truthful and accurate."
The beginning of the report details a breakdown in how home mortgages were originated and how
warnings went ignored.
The report alleged that in 2004 the chief risk officer at Seattle lender Washington Mutual signaled
concerns about housing prices falling and loose lending standards. The report said the officer was
called "Dr. Doom" and issued a 2004 memo that said poor underwriting "will come back to haunt us."
Page 1396 of 3826
His warnings went unheeded, the report said.
Washington Mutual's senior management did nothing to stop the lending practices at the lender's loan
offices in Southern California even after the bank conducted an internal investigation in 2005 that found
"an extensive level of loan fraud," according to a Washington Mutual internal memo cited in the Senate
report.
Instead, the bank rewarded salespeople at Washington Mutual for making large volumes of loans, and
enticing them with trips. A 2005 awards dinner for top producers in the "President's Club" was held in
Maui, Hawaii, and hosted by Magic Johnson, the former National Basketball Association star.A senior
bank executive emceed the event and began by saying, "I'm told that the age-old tradition here at
Washington Mutual is, 'What happens at President's Club stays at President's Club.' And who am I to
mess with tradition."
In September 2008, Washington Mutual was seized by regulators and sold to J.P. Morgan Chase & Co.
By late 2006, loans originated by Washington Mutual and a subsidiary called Long Beach were
underpinning mortgage securities, and some Wall Street traders were ahead in seeing the problems. In
late 2006 and early 2007, a Deutsche Bank trader named Greg Lippmann went to London and Lisbon
to tell senior officials at the German bank that it needed to reverse course and bet against housing or
end long mortgage trades.
Unlike Goldman traders who refrained from cursing in emails and preferred an "LDL" or "let's discuss
live" communication strategy, Mr. Lippmann coarsely described his views in emails. He called troubled
mortgage bonds "pigs" and "crap." In August 2006, he told an investment fund, "I don't care what some
trained seal bull market research person says this stuff has a real chance of massively blowing up."
A spokesman for Mr. Lippmann declined to comment. The report said Deutsche in 2007 and 2008
made $1.5 billion on bearish mortgage trades while the bank, due to bullish bets, lost nearly $4.5 billion
on separate trades.
The report singles out Deutsche for what it views as a conflict of interest: Mr. Lippmann urged clients to
bet against the market while the bank was investing or selling securities that relied on borrowers paying
their mortgage loans.
In 2005, a Wall Street trader at Deutsche Bank described the implosion of the credit markets in a
parody of a Vanilla Ice rap song titled, "CDO, Oh Baby," which included lyrics such as, "There are never
ends to real estate booms."
Page 1397 of 3826
A Deutsche spokeswoman said: "As the PSI report correctly states, there were divergent views within
the bank about the U.S. housing market. Moreover, the bank's views were fully communicated to the
market through research reports, industry events, trading desk commentary and press coverage."
Back to Top
Page 1398 of 3826
From:

To:
Cc:
Bcc:
Subject:
Date:
Attachments:
Fw: HUD Resumes

Wed Apr 13 2011 23:11:25 EDT
Fyi
_____
From: Adeyemo, Adewale (Wally) (CFPB)
Cc: Slagter, Dennis (CFPB); Canfield, Anna (CFPB)
Sent: Wed Apr 13 22:57:50 2011
Subject: RE: HUD Resumes
Thanks, Liz. Have we talked to consumer response about making offers to (b) (6), (b) (2), (b) (5)

To: Adeyemo, Adewale (Wally) (CFPB)
Subject: HUD Resumes
Will bring you hard copies.
Page 1402 of 3826
CFPB Phase II Pay Range Questions (4-13-11).doc (Attachment 1 of 1)
PHASE II PAY RANGES

HC CC QUESTIONS
1.
In RMR/Regulations, there will be 23 line attorneys transferring from the FRB. They range in grade from FR 27-29, with three of
them at the FR 29. Under the current org structure, all line attorneys are meant to report to five Managing Counsel supervisory
positions. If, as currently designed under Comp II, supervisory leads are meant to stay within the 7A payband, which crosswalks
to the FR 28, then we will end up with an anomaly of 7Bs reporting to 7As, which I see as a problem.
2.
If a candidate is currently in the GS 10 pay band and is offered a position which is a CN 4 pay band, would the candidate come in
lower than their current salary or the GS 10 pay band?
3.
What do we do about the current vacancy announcements posted with the Phase I ranges especially for the 6A level which is
quite different from the current 6A level?
4.
Are we honoring the ranges as currently posted?
5.
What do we do about the pending competitive offers under the Phase I range do we continue to apply that pay range or switch
to the new range?
6.
Are we holding current draft vacancy postings so that we can put the new pay ranges in the announcement?
7.
How will prior salary history factor into paysetting? Subject or objective process?
8.
What will be the process for obtaining past pay (asking for it in announcement? From a SF50? Reporting in resume? Requested
after preliminary selection?)
9.
What happens if a job was posted at a Phase I pay range and we are about to make an offer to a candidate? Should we use
Phase I or II pay ranges?
10. If a 1064 transfer transfers in and is over the salary maximum, what happens after the two-year pay protection?
11. How will we account for career ladder positions which traditionally start at the CN-3A/GS-5 equivalent? Will we require people
to serve two years at the Grade 3 before moving to 4B? I'm specifically thinking about this regarding SCEP appointments.
1
April 13, 2011

Page 1405 of 3826
CFPB Phase II Pay Range Questions (4-13-11).doc (Attachment 1 of 1)
PHASE II PAY RANGES

HC CC QUESTIONS
12. How are we defining which positions fall under "Bureau Resources Band" versus "Professional Resources Bands"? Are we doing
this broadly by occupational series...for example all 303 and 326 positions fall under this or will it be on a case-by-case basis?
13. How will current employees who began at CFPB on career ladder positions under phase 1 be compensated when they become
eligible for promotion to the next level under phase 2? For example, a person in a 4B/5A/5B/5C career ladder position who
began as a 5A in phase 1 making $83,489 would only be paid $85,000 when promoted to a 5B under Phase 2. This doesn't seem
like an adequate increase in salary for a promotion. Same goes for someone as 4B under phase 1 making $67,851 when they
are promoted to a 5A under phase 2 and only get an increase to $72,772; and someone who is a 5B under phase 1 making
$100,822 who's promotion to 5C under phase 2 would equate to a reduction in pay to $98,000. What's the minimum
compensation increase for someone getting promoted?
14. With the Compensation Decision Tool Part I, it would make sense to start with a decision tree for which of the band types you
will choose (ex. Bureau resources, professional resources, Sr Management/experts, Executives) and then work into a position
assessment that covers all bands within a particular type. How can we best incorporate that?
15. How do we distinguish between the three performance levels at band 3 and 4 in the bureau resources category from those
within professional? What does this look like in terms of PDs to basic qualifications determinations to pay setting?
a.
For example, if we write a PD at the 4 (P2A) and post an announcement, how do we set basic qualifications that
account for the experiences of several GS levels? Are we raising the bar, finding middle ground or lowering it?
16. How do we educate staff about how a "3" is different than a "3a-b-c" - both in terms of responsibilities/qualifications and pay
setting? (Especially important is where agencies like FRB and OCC have one pay range per level)
2
Page 1406 of 3826
Cc:
Bcc:
Subject:
Date:
Attachments:
Revised CFPB_Phase II Ranges v3 April 13.pptx

Wed Apr 13 2011 15:44:52 EDT
Revised CFPB_Phase II Ranges v3 April 13.pptx
Hi Team:
Attached is the PPT presentation from today's meeting. Please review the
timeline on slide 7 and let us know if you any comments by COB today.
Thanks,
Amy
(See attached file: Revised CFPB_Phase II Ranges v3 April 13.pptx)
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whom it is addressed. If you are not an intended recipient, you may not
use, read, retransmit, disseminate or take any action in reliance upon it.
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any unauthorized access, disclosure, use or tampering that may occur during
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obligation, contract or warranty of Towers Watson, unless the firm clearly
expresses such an intent.
Page 1408 of 3826
From:

_DL_CFPB_AllHands
Adamske, Steven
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Wed Apr 13 2011 11:51:40 EDT
Index

Wall Street Journal Consumer Job Remains Vacant
Congress.org CFPBs future in flux
MinnPost Elizabeth Warrens consumer protection dream is following a rugged trajectory toward
reality
Page 1422 of 3826

Crains Cleveland Business Ted Strickland could be White Houses consumer financial
protection guy
Politico Morning Money Is Warren the Next Warren?
Bank Systems & Technology CFPB Signs Joint Statement Of Principles With Attorneys General
Reverse Mortgage Daily CFPB to Partner with State Officials
Huffington Post The Real Winner Of The Budget Deal: Auditors
Reuters Bank regulators poised to announce mortgage pacts
New York Times Rules for Mortgage Servicers Are Criticized as Ineffective
Credit Slips The Value of Rule of Law: 20 Basis Points
Reuters Calomiriss ridiculous take on the mortgage settlement
Rortybomb Five Points on that New Anti-Foreclosure Fraud Settlement Paper by Calomiris,
Higgins and Mason
American Banker Iowa AG Miller Blasts Bank-Funded Servicer Settlement Study
Housing Wire CRL fights fed-level consent order for mortgage servicers
Housing Wire OCC foreclosure consent order to cost JPMorgan Chase $1 billion in 1Q
Charlotte Observer Attorneys general urge BofA: Be a leader in fixing mortgage problems
St. Louis Post-Dispatch Too big to punish: Banks cut a deal on robo-signing scandal
New York Post JPMorgan dogged by mortgage talks
Consumer Credit
American Banker CardHub.com Calls for CARD Act Rules to Apply to Small-Business Cards
Credit Slips Free Checking
American Banker Coping with New Consumer Credit Risk Realities
Politico Morning Money Durbin Dings Dimon
Wall Street Journal (blog) NAACP Sets Record Straight on Swipe-Fee Rule
Page 1423 of 3826
Housing
Wall Street Journal New Rules for Home-Loan Brokers
American Banker To Avoid Foreclosures, Try Forbearance
Housing Wire Tech snafu, improper foreclosure affidavit lead to sanctions for LPS
Los Angeles Times Dont bank on loan modifications or debt aid that cant be promised
Wall Street Journal

Consumer Job Remains Vacant
April 13, 2011
By Deborah Solomon
failed to find a nominee, with several candidates rebuffing the administration's overtures, according to
Republicans.
The nascent bureau must have a director in place by July 21 in order to get a slate of broad powers to
attack fraudulent and abusive financial practices.
That deadline could result in the White House nominating Ms. Warren, now a special adviser to the
president charged with setting up the bureau. She is believed to want the job but her candidacy likely
would trigger a Senate confirmation battle. President Barack Obama could avoid that fight by appointing
her during a congressional recess before July 21.
Page 1424 of 3826
The White House has unsuccessfully reached out to possible nominees, including Democratic former
Michigan Gov. Jennifer Granholm, Democratic former Delaware Sen. Ted Kaufman and attorneys
general from Iowa, Illinois and Massachusetts, these people said. Among those under consideration for
the post include Democratic former Ohio Gov. Ted Strickland and Federal Reserve Board member
Sarah Bloom Raskin.
A White House spokeswoman said Mr. Obama "will consider a number of candidates for the position of
director. The President believes Elizabeth Warren is a powerful voice for American consumers and that
she has been extraordinarily effective at standing up the agency thus far. We are not going to get ahead
of the President's process by commenting on whether specific individuals are under consideration for
specific personnel openings."
Ms. Warren, through a spokeswoman, declined to comment.
The CFPB is an independent agency that gets its funding through the Federal Reserve, rather than
through Congressional appropriations. Its requested budget for fiscal year 2011 is $134 million. The
agency's rulings can be overturned by the Financial Stability Oversight Council and such a move must
be initiated within 10 days of a rule being issued and with a two-thirds majority.
A recent report by inspectors general of the Federal Reserve and the Treasury Department said the
agency can't exercise the new powers it received as part of last year's financial-regulatory overhaul law
until a confirmed director is in place. Those powers include the authority to supervise non-bank financial
firms, such as payday lenders, and prohibit unfair, deceptive or abusive practices related to consumer
financial products.
"I'm very concerned that if the White House doesn't act immediately to nominate a qualified director, this
agency will begin its life without the ability to use all of its tools to protect consumers," said Travis
Plunkett of the Consumer Federation of America.
Some proponents of the agency say the White House limited its options by deciding last year to appoint
Ms. Warren as a special adviser to the president, rather than nominating her as director. At the time, it
was unclear whether Ms. Warren would be confirmed. But appointing her special adviser irked many
lawmakers who saw it as an attempt to sidestep the Senate confirmation process.
Getting anyone confirmed as director now may be more difficult. Democrats control a narrower majority
in the Senate and could have trouble garnering 60 votes needed for confirmation, given criticism of the
agency. Alabama Republican Sen. Richard Shelby, who has called the CFPB's creation "a mistake,"
already has worked to scuttle the nomination of Joseph Smith to head the Federal Housing Finance
Agency, and opposes the nomination of Peter Diamond to the Fed board.
Page 1425 of 3826
Mr. Shelby has said he believes Ms. Warren is too ideological for the job and criticized Mr. Obama for
appointing her to the temporary post. More recently, Sen. Shelby accused Ms. Warren of leading a
"regulatory shakedown" of mortgage servicers after news reports focused on her role in advocating stiff
penalties for foreclosure problems.
House Financial Services Chairman Spencer Bachus, a critic of the CFPB who has introduced
legislation to blunt its powers, said the agency shouldn't be run by a director but rather by a fivemember commission.
"All other agencies have that setup," Mr. Bachus said. "This is really the most powerful agency ever
created. The director has unlimited authority, there's no accountability, she reports to no one and
she's already asserting authority she doesn't have."
The threat of a confirmation battle has hindered the administration's search, with some potential
candidates expressing concern about the process, according to people familiar with the matter. But the
bigger challenge appears to be huge support for Ms. Warren, whom many don't want to upstage.
"My personal feeling is that Elizabeth Warren should have that position," said Mr. Strickland, who said
he hasn't been approached by the administration. "She's an impressive person .... My preference would
be for her to maintain that position."
Ms. Granholm, in a Facebook posting last week, said she had taken herself out of the running. "I think
nominating Elizabeth Warren is a fight worth waging," she wrote.
People familiar with the matter said Ms. Bloom Raskin is an attractive candidate because she just won
Senate confirmation to the Fed and Republicans may be hard-pressed to find something new to block
her nomination. However, there is concern in the White House about poaching a governor from the Fed,
which already has two vacancies on its seven-member board.
Back to Top
Congress.org
Page 1426 of 3826
CFPBs future in flux

April 13, 2011
By Kristin Coyner
The Obama administration is intently building the Consumer Financial Protection Bureau that a
Congress controlled by Democrats enacted last year even as a Congress now partly controlled by
Republicans is trying to smother the bureau in its infancy.
Big banks and other financial companies spent many months fighting the very idea of the consumer
bureau, which is supposed to oversee the consumer lending industry and help prevent the abuses and
risky lending that contributed to the 2007 financial crisis and recession.
Industry opposition has been so strong that even the bureaus director is temporary the White House
realized it would be difficult if not impossible to win Senate confirmation of Harvard law professor and
consumer advocate Elizabeth Warren for the job, so instead she was hired as a consultant to get the
bureau up and running.
Since then, Republicans have introduced bills that would replace the bureaus director with a fivemember commission, make it easier to overturn any regulations the bureau issues and require it to seek
annual appropriations from Congress. The Federal Reserve, where the bureau is to reside starting this
summer, is not subject to appropriations.
Meanwhile, the bureau is growing. Eight months after it was created by the Dodd-Frank financial
regulatory law, the staff numbers about 175, and five of the six associate directors have been hired.
Only the public affairs slot hasnt been filled.
A quick look at the latest hires suggests that the administration is drawing employees from a range of
industries, but it seems that big banks wont be able to count on many cozy relationships with regulators
on the inside.
One prominent hire, Gail Hillebrand, who is the associate director of consumer education and
engagement, has some serious consumer-advocacy bona fides, having most recently worked as a
senior attorney at Consumers Union.
More worrying for bankers is the new enforcement officer, the former Ohio Attorney General, Richard
Cordray. Hell be the sharp end of any new regulations written by the agency, and he spent a good bit
of his former career suing some of the financial heavy hitters, including Merrill Lynch and AIG.
Page 1427 of 3826
To be sure, many on the staff have spent time working on the private side of the financial industry.
Catherine G. West, the incoming chief operating officer, was a senior executive at the credit card
company Capital One and its predecessors in the Washington area. And general counsel Len Kennedy
was an attorney and lobbyist for Sprint Nextel.
Rajeev V. Date, who has been an adviser to Warren in setting up the bureau and is now associate
director for research, markets and regulations, is a former banker who sided with those trying to more
closely regulate the financial industry with the 2010 Dodd-Frank law.
Date had been a managing director at Deutsche Bank and a senior vice president at Capital One. He
also founded a think tank, the Cambridge Winter Center for Financial Institutions Policy, to research
issues being debated in the Dodd-Frank law. The New York Times reported that he also was a director
of a company that helped arranged loans for consumers with questionable credit.
But other new executives added to the bureau have not been drawn from banking. For instance, Dennis
Slagter, the chief human capital officer, worked at the Millennium Challenge Corporation, which was
created by the Bush administration to target foreign aid to nations making improvements in human
rights, and before that in the Pentagon with Army manpower programs.
The bureaus assistant director for procurement is David Gragan, a long-term procurement and
contracting official who was most recently the chief procurement officer in D.C. Mayor Adrian Fentys
administration.
Back to Top
MinnPost
Elizabeth Warrens consumer protection dream is following a rugged trajectory toward reality
April 13, 2011
By Dave Beal
Page 1428 of 3826
DALLAS If it were a movie, it might be called "The Elizabeth Warren Story."
Warren, the Harvard Law School professor tapped by President Obama to set up the Consumer
Financial Protection Bureau, spoke here last week to the Society of American Business and Economic
Writers. She expressed surprise without singling out her critics that the bureau has been
hammered so persistently.
Among the most prominent critics are bankers, Republicans in Congress and elements of the media,
including editorial writers at the Wall Street Journal.
Her advocacy has stirred up so much blowback that last fall, she embarked on what a Wall Street
Journal news story described as a "charm offensive" to defend and strengthen her campaign for the
new consumer bureau. She has been venturing into her critics' heartlands to make her case for
example, when she spoke up for the agency last month at a meeting of the U.S. Chamber of
Commerce.
A map of the United States at the emerging agency's office measures the progress of her campaign.
Blue push pins represent personal meetings she has had explaining the bureau and advocating for it.
Red pins mark one-on-one calls she has made. White pins stand for meetings with groups.
Bankers' views split in Minnesota

Despite her efforts, debate over the agency's role continues around the nation and in Minnesota, too,
where the heads of two state banking groups express differing views.
Marshall MacKay, president and CEO of the Eagan-based Independent Community Bankers of
Minnesota, got a red pin after she called him for a 15-minute telephone conversation in December. A
month later, he heard her speak at a meeting with bankers. That merited a white pin.
"Each time I've heard her speak, she's been genuine in her comments," says MacKay. "She's very
consistent in what she says and believes."
MacKay thinks Warren has made progress in persuading smaller and midsize banks about the value of
the new agency, but he doesn't believe that she has made similar gains with large banks that are often
her targets. "She would create change" that's needed, he said, while readily conceding not all banks
agree with his view.
Page 1429 of 3826
He questions, though, whether Warren understands well enough the differences between larger banks
and community banks, which, he argues, have much stronger personal relationships with their
customers than the big banks.
MacKay's association represents mostly smaller banks, often in rural areas. Another organization, the
Minnesota Bankers Association in Eden Prairie, represents almost all of the state's other banks,
including giants Wells Fargo and U.S. Bancorp.
Joe Witt, president and CEO of the MBA, didn't get a red pin and wasn't at any of those white-pin
meetings. Unlike MacKay, he thinks the new agency would be better run by a panel, rather than a
single director. He says the agency's powers are too great.
Witt says the mission of the new agency to concentrate solely on services to consumers is a bad idea
because that would take away attention from the "safety and soundness" of banks. He says, for
example, banks now delay recording deposits of checks immediately in order to have time to make sure
the checks are good. An agency dedicated entirely to consumers' concerns might want deposits of
checks to be recorded with little or no delay, thus increasing the risk for the banks.
Star power
Elizabeth Warren, 61, has the charisma of a Hollywood star. She is the only professor to have twice
won the top teaching award at the Harvard Law School. She has been a persistent researcher and
advocate for bankruptcy law reforms and has argued for years that vast portions of the American middle
class are being squeezed financially, sometimes by financial service businesses fixated on maximizing
profits.
She was the "TARP cop" who led oversight of the Troubled Asset Relief Program, which directed the U.
S. Treasury Department to buy illiquid assets from banks to help them repair balance sheets weakened
by the meltdown.
The idea for such an agency has long been the dream of Warren, who ranks as one of America's most
tenacious, articulate and best-known consumer advocates. It is seen more as a potential nightmare by
many bankers, who fear it will spell more regulation. They have long complained about being overregulated by a host of agencies while thousands of non-bank rivals face little or no regulation.
Warren pledges to stick with her effort to get the agency up and running. "This is not going to go down,"
she declared. The bureau, she noted, has launched its website, posted her schedule on it and
published a quarterly spending report.
Page 1430 of 3826
It was mandated by the Dodd-Frank overhaul of financial regulation, which was approved by Congress
in the wake of the 2008 financial meltdown. The agency will "go live" July 21, nested as an independent
agency within the Federal Reserve System.
The Dodd-Frank legislation gives Obama the power to appoint a director for the bureau, subject to
approval by the Senate. He has yet to name that person, but there is widespread speculation that
Warren wants and will get the job. Asked if she expected to take the job, she said that was up to
Obama.
In February, the Republican-led House approved a bill that would cut the agency's funding to $80
million from $143 million and eliminate her salary. Rep. Spencer Bacchus, the Alabama Republican
who chairs the House Financial Services Committee, is a leading critic. Last month, he charged that
Warren went beyond her mandate in planning for the agency by getting engaged in negotiations to
settle disputes between state attorneys general and the mortgage service industry over questionable
foreclosure practices. She has rejected that charge.
Accountability a key function

Warren told the journalists that the agency will make financial regulators more accountable by
concentrating consumer-related regulation within the new agency instead of having it fragmented
among a tangle of seven existing federal agencies.
"We had a system where the big banks could choose their own regulators," she said. "Scattered
responsibility meant no one was accountable. And it meant "regulatory arbitrage" wherein banks could
choose their own regulators.
Responding to critics who say the country doesn't need another federal agency to regulate finance, she
said, "We don't need one more weak federal agency. Our regulatory system failed us."
Warren described the new agency's powers as limited because Congress can restrict its budget, other
agencies can veto its rules, and a powerful financial services industry has the resources to monitor its
activities. She rejected a proposal, backed by the banks, to replace the director with a five-member
panel.
Some of the proposals to limit the powers of the new agency would force it to "kowtow" to lobbies, she
added.
A primary goal of the agency would be to help consumers answer two basic questions about financial
services: Can they afford them, and how can they shop for the best deals? Such a role would help
markets perform better, as opposed to hobbling them, she said.
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Warren described the agency as a three-legged stool: writing rules as required by Dodd-Frank,
supervision and enforcement, and financial education.
She said 50-page documents explaining mortgage and credit card agreements scream out to
consumers, "Do not read me." In one instance, she said, two federal agencies squabbled for 15 years
over how to combine a single form.
Non-bank financial leaders now unregulated will be covered by the new agency, Warren added.
She said she watched for years as wages remained flat, consumer debt rose and "debt products grew
more dangerous I watched and I worried and I warned as the nation's middle class became hollowed
out."
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Crains Cleveland Business

Ted Strickland could be White Houses consumer financial protection guy
April 13, 2011
By Scott Suttell
Ted Strickland seems to be generating more interest now that he's out of office than he ever did as
governor.
A Wall Street Journal story about the White House's inability so far to find someone to run the
Consumer Financial Protection Bureau says Mr. Strickland is among those now under consideration.
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It has been a messy process, with several candidates rebuffing the administration's overtures,
according to The Journal.
The White House unsuccessfully has reached out to possible nominees, including Democratic former
Michigan Gov. Jennifer Granholm, Democratic former Delaware Sen. Ted Kaufman and attorneys
general from Iowa, Illinois and Massachusetts, the newspaper reports. In addition to Mr. Strickland,
another candidate under consideration is Federal Reserve Board member Sarah Bloom Raskin.
The apparent concern is that accepting the job would undercut Elizabeth Warren, the Harvard law
professor and consumer advocate who is currently a special adviser to the president charged with
setting up the bureau, The Journal says. She remains a hugely popular figure among many
Democrats and anathema to many Republicans, the newspaper reports. (Presumably because the
longtime critic of the financial industry actually would take seriously the job of regulating the financial
industry.)
This is the second high-profile job for which Mr. Strickland is under consideration; his name also has
come up as a possibility to chair the Democratic National Committee.
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Is Warren the Next Warren?
April 13, 2011
By Ben White
IS WARREN THE NEXT WARREN? - WSJs Deborah Solomon on pg. A2 runs down the list of people
of have said no to the CFPB gig (Jennifer Granholm, Ted Kaufman and attorneys general from Iowa,
Illinois and Massachusetts) in part because saying yes might undercut Elizabeth Warren as she sets
up the agency. This means the White House might have no choice but to nominate Warren to meet a
Page 1433 of 3826
July 21 deadline. But last time we checked the votes were not there (or close to there) to get her
through. WSJ story: http://on.wsj.com/ihqE22
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Bank Systems & Technology

CFPB Signs Joint Statement Of Principles With Attorneys General
April 12, 2011
By Matt Gunn
The Consumer Financial Protection Bureau and the National Association of Attorneys General (NAAG)
on Monday moved toward the formation of a partnership between federal and state officials in the name
of consumer protection.
The groups agreed on a Joint Statement of Principles, or a declaration that the two groups are on the
same page, so to speak. Elizabeth Warren, assistant to the President and special advisor to the
Secretary of the Treasury on the CFPB, discussed the significance of the partnership, as the bureau
begins its task of consolidating regulatory duties and enforcing policy.
"Because of that consolidation, there will now be an agency that is fully accountable for getting the job
done," Warren said in prepared remarks. "And because we will be accountable, we plan to put in place
a rigorous program of consumer compliance supervision coupled with strong enough enforcement to
ensure compliance. Law enforcement will be foundational to our success."
The two groups' stated goals are to protect consumers from illegal products and services, set rules to
improve the marketplace for both consumers and businesses and promote the understanding of
financial services.
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"People are hurt every day by unfair financial products," said Roy Cooper, North Carolina attorney
general and president of the NAAG. "This agreement will put more cops on the beat to protect
consumers and businesses that are doing the right thing."
The parties agreed to:
Develop joint training programs and share information about developments in federal consumer
financial law and state consumer protection laws that apply to consumer financial products or services
Share information, data, and analysis about conduct and practices in the markets for consumer
financial products or services to inform enforcement policies and priorities
Engage in regular consultation to identify mutual enforcement priorities that will ensure effective
and consistent enforcement of the laws that protect consumers of financial products or services
Support each other, to the fullest extent permitted by law as warranted by the circumstances, in
the enforcement of the laws that protect consumers of financial products or services, including by joint
or coordinated investigations of wrongdoing and coordinated enforcement actions
Pursue legal remedies to foster transparency, competition, and fairness in the markets for
consumer financial products or services across state lines and without regard to corporate forms or
charter choice for those providers who compete directly with one another in the same markets
Develop a consistent and enduring framework to share investigatory information and to

coordinate enforcement activities to the extent practicable and consistent with governing law
Share, refer, and route complaints and consumer complaint information between the CFPB and
the state attorneys general
Analyze and leverage the input they receive from consumers and the public in order to advance
their mutual goal of protecting consumers of financial products or services
Create and support technologies to enable data sharing and procedures that will support
complaint cooperation
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Page 1435 of 3826
CFPB to Partner with State Officials

April 12, 2011
By Elizabeth Ecker
The fledgling Consumer Financial Protection Bureau will partner with state attorneys general to bolster
its enforcement capabilities, White House Adviser Elizabeth Warren announced during a speech
yesterday.
Warren, who is currently heading up the new bureau in preparation of its July 21 launch, spoke of a new
joint statement of principles on Monday, outlining the cooperation between the CFPB and state
officials. She spoke before the National Association of Attorneys General (NAAG) at a Presidential
Initiative Summit in Charlotte, North Carolina.
Attorneys general are natural partners for the CFPB in our enforcement work, just as state banking
supervisors are natural partners in our supervision work, Warren said. Indeed, you are indispensible
partners. You are the states chief law enforcement officers. You are also on the front lines of consumer
protection, and you are intimately familiar with the range of problems that hit American families the
hardest.
Warren recently hired former Ohio attorney general Richard Cordray as enforcement chief of the CFPB
and has stressed the importance of partnering with state officials to improve the bureaus mission.
The new consumer agency is not yet fully operational, but we already have taken steps to turn our
partnership into a reality, she said. The CFPB and the NAAG Presidential Initiative Working Group
have prepared a Joint Statement of Principles, and I am pleased to report that this joint statement has
been adopted. Our hard work is already taking tangible form.
The CFPB has begun to make hires for its leadership team, and has come under scrutiny of House
Republicans who proposed bills that would inhibit the CFPBs capabilities. The bureau is on schedule
for its July 21 launch.
See Warrens prepared remarks for NAAG.
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Page 1436 of 3826
Huffington Post
The Real Winner Of The Budget Deal: Auditors
April 12, 2011
By Sam Stein
WASHINGTON -- The budget deal agreed to by White House and congressional negotiators Friday
night may be built upon the notion of belt-tightening and austerity. But the bill could potentially be a
major job boon for one sector.
Auditors and auditing play a recurring role in the text of the final continuing resolution, as government
agencies are required to repeatedly report on their activities. In total, the word "audit" is mentioned 20
times in the body of the resolution and the word "report" (as in, "file a") is seen on at least 60 pages.
Often the function is required in exchange for funds; sometimes, however, it's for the sake of
transparency or, more cynically, politics. There are, for instance, several targets for audits outlined in
the bill that encompass domestic policy programs that have drawn intense Republican ire.
Within 90 days of the budget resolution's passage, the Comptroller General of the United States is
required to report on the costs and processes of implementing President Barack Obamas health care
law. The information sought includes the name of the contractors, their general areas of expertise, and
the amount of money expended on each such contract, entered into by the Department of Health and
Human Services and other Federal departments and agencies to provide services. HHS also must
reveal the firms its hired to facilitate contracting with such contractors, and the consultants who have
been hired ... to assist in implementing [the legislation].
The resolution also requires a Government Accountability Office audit of the requests the Obama
administration has received for waivers from the health care legislation's requirements, to take place no
later than 60 days after its passage. In the same time frame, the GAO must submit a report to Congress
on the impact of comparative effectiveness research funding. Within 90 days for the bills passage, the
Centers for Medicare & Medicaid Services must submit a report to Congress that contains an estimate
of the impact of the guaranteed [coverage] issue, guaranteed renewal, and community rating
requirements under the law.
Health care isnt the only Obama-era measure the budget deal tackles. The newly-created Bureau of
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Consumer Financial Protection gets its fair amount of sunlight as well, as the resolution calls for both an
annual independent audit and an annual GAO audit of the bureau.
The scope of material subjected to the probes goes deeper, however, than the CFPB itself. According
to the bill's language, the Comptroller General of the United States shall conduct a study of financial
services regulations, including activities of the Bureau. This means an analysis of the impact of
regulation on the financial marketplace, including the effects on the safety and soundness of regulated
entities, cost and availability of credit, savings realized by consumers, reductions in consumer
paperwork burden, changes in personal and small business bankruptcy filings, and costs of compliance
with rules, including whether relevant Federal agencies are applying sound cost-benefit analysis in
promulgating rules. Within 30 days, the Comptroller General is supposed to suggest legislative or
administrative action that it may determine to be appropriate.
Health care and consumer financial protection are just two of the more high-profile areas the bill
subjects to audits or reports.
By midsummer, the body scanner debate may be back in the news, as the resolution requires the
Secretary of Homeland Security to submit to the House and Senates appropriations committees a
detailed report on efforts and the resources being devoted to develop more advanced integrated
passenger screening technologies for the most effective security of passengers no later than Aug. 15.
In the foreign policy realm, the budget bill mandates a coordinated audit from the Special Inspector
General for Afghanistan Reconstruction, the Inspector General of the Department of State, and the
Inspector General of the United States Agency for International Development within 45 days. Every
month, meanwhile, the Department of Defense will report on operating costs of the Iraq war (and
withdrawal). With respect to private contracting, the Secretary of Defense must provide reports not only
on major defense acquisitions but also the process of assessing winning bids.
Then there are the lower-profile audits, bound to produce reports that, according to Daniel Schuman,
director of the Advisory Committee on Transparency at open-government group Sunlight Foundation,
Congress will almost surely gloss over.
The budget bill, for example, dictates that the Secretary of the Treasury reports to the Committees on
Appropriations that the Asian Development Bank is making substantial progress toward the following
policy goals in exchange for support. The Department of the Treasury, Departmental Offices, Salaries
and Expenses must transfer funds to the National Academy of Sciences for a carbon audit of the tax
code. And before signing off on financial assistance, the Secretary of State is required to report to the
Committees on Appropriations on steps being taken by the Government of Chad to implement a plan
of action to end the recruitment and use of child soldiers, including the demobilization of child soldiers.
Not all of the bill's language will result in more data sharing. Despite its emphasis on auditing, the bill
also calls for significant cuts to programs that help promote government transparency, as noted in a
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blog post on Tuesday by the Sunlight Foundation. The electronic government fund, which pays for
USASpending.gov, Data.gov, and the IT Dashboard, saw its funding reduced to $8 million (it once stood
at $34 million).
But while Sunlight bemoaned those particular cuts, it begrudgingly acknowledged that, if properly
utilized by Congress, the bill's emphasis on auditing and polling could be a positive development.
As long as the reporting requirements are sensibly crafted, we think it is a good thing, said Schuman.
Often times, if there isnt someone who says 'you really need to look at this report' Congress simply
wont focus on these things.
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Reuters
Bank regulators poised to announce mortgage pacts
April 13, 2011
By Dave Clarke and Clare Baldwin
U.S. bank regulators plan to announce settlements later on Wednesday with the largest lenders over
allegations of shoddy foreclosure practices, but the pacts will not include financial penalties.
JPMorgan Chase & Co Chief Executive Officer Jamie Dimon said on an earnings conference call that
the regulators would release consent orders that would make the banks fix weaknesses in foreclosure
documentation.
Fines will probably come later, he said.
The Office of the Comptroller of the Currency, the Federal Reserve and the Office of Thrift Supervision
have spent the past few days completing the settlements with some of the largest U.S. banks, including
Page 1439 of 3826
Bank of America Corp, Wells Fargo & Co, JPMorgan Chase and Citigroup Inc.
The pacts would resolve only part of a large probe involving a group of 50 state attorneys general and
about a dozen federal agencies.
The partial settlement leaves open the question of the banks' total costs stemming from the foreclosure
paperwork mess. It also fails to resolve legal uncertainty that has stalled foreclosures, keeping the
recovery of the broader housing market in limbo.
Federal regulators and state attorneys general have been investigating bank mortgage practices,
including the use of "robo-signers" to sign hundreds of unread foreclosure documents a day, that came
to light last year.
Some lenders, including Bank of America and Ally Financial, temporarily suspended foreclosures late
last year while they scrubbed their servicing practices, but government agencies have been pushing for
broader reforms.
At first, all the government agencies involved in the probes said they wanted to announce deals with
servicers at the same time so there would be a clean conclusion to the process.
That unity began to fracture as the attorneys general, along with some parts of the Obama
administration, pushed for principal reduction on troubled mortgages and fines of about $20 billion,
beyond what the bank regulators wanted.
On Wednesday, Dimon said the housing market needed a good, comprehensive foreclosure settlement.
"Keeping this mess going on is not a good thing for anybody," Dimon said on the earnings call. "We
have homes that have been sitting out there for 500 days rotting that we can't do anything about. That is
not good for the housing market."
JPMorgan gave an early glimpse of the costs of cleaning up its foreclosure practices. The bank said it
would take a $1.1 billion pretax loss for increased mortgage servicing costs.
The partial settlement has also drawn criticism from consumer groups and some Democratic
lawmakers.
Page 1440 of 3826
On Tuesday, Democratic Representative Elijah Cummings wrote to acting OCC head John Walsh,
asking him to postpone finalizing the consent agreements.
He said regulators should brief Congress on what misdeeds their mortgage servicing probe had
uncovered.
Cummings also said he was introducing "sweeping legislation" to increase consumer protections and
transparency in the foreclosure process, as well as to hold banks and servicers accountable for
providing relief to qualified homeowners.
"I remain deeply concerned with any proposed consent orders that would allow mortgage servicers to
continue disregarding their legal and contractual obligations, and that fail to rectify the damage that
servicers have inflicted on borrowers, investors, communities, and the U.S. economy," Cummings
wrote.
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New York Times

Rules for Mortgage Servicers Are Criticized as Ineffective
April 12, 2011
By David Streitfeld
Hopes back in January that the troubled foreclosure process could be fixed with decisive and simple
actions have disappeared with the ice and slush.
Only one remedy is in sight, and few like it.
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Fourteen mortgage servicers have signed consent orders with the Office of the Comptroller of the
Currency and other regulators, promising to improve their processing systems and to treat delinquent
borrowers better. The agreements with the servicers, which include Bank of America, Wells Fargo,
JPMorgan Chase and GMAC, will be executed as early as this week.
Adding to the already widespread criticism of the measures, the ranking minority member of the House
Committee on Oversight and Government Reform formally asked regulators on Tuesday to put them
off.
Representative Elijah Cummings, a Democrat from Maryland, said in a letter to the comptrollers office
that he was deeply concerned that the consent orders would allow mortgage servicers to continue
disregarding their legal and contractual obligations.
Mr. Cummings said in an interview that he wanted the regulators to regroup and do a better job. A
spokesman for the comptrollers office declined comment.
House Democratic members plan to introduce legislation on Wednesday that offers what they say is a
better fix. The Preserving Homes and Communities Act of 2011, which was introduced in the Senate
last month, would require lenders to evaluate homeowners for modifications before initiating
foreclosure, create an appeals process for those who are denied modifications, place limits on
foreclosure-related fees and require servicers to prove they have the legal right to foreclose.
Similar changes were sought this winter by the Obama administration and the 50 state attorneys
general as part of a single comprehensive settlement. That was shortly after servicers revealed that
they had been ignoring local laws and regulations in their haste to reclaim houses.
A global settlement was always unlikely and quickly became impossible. The regulators, on their own
authority, sent the servicers cease-and-desist letters and are now proceeding to adopt the new rules,
which ask the servicers to strengthen their internal controls.
Consumer and housing groups were quick to find fault with the consent orders, saying they basically
allowed the mortgage servicers to police themselves.
The servicers are being asked to sign something that says they promise to follow the laws that they
have been breaking for years, with no real penalty for all of those illegal acts. And why exactly would we
trust them now? asked Melissa Huelsman, a foreclosure defense lawyer in Seattle.
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Meanwhile, negotiations are apparently continuing between the attorneys general and the lenders. The
process is very slow, and both Democratic and Republican attorneys general have criticized aspects of
it.
The attorneys general have asked for the servicers to pay a settlement fee of $20 billion or more, much
of which would go to cut the debt of delinquent borrowers.
The response by the servicers has been that it would be immoral to cut debt in such a fashion and that
doing so might hurt the economy as banks passed along their fines to consumers. A recent Bank of
America Merrill Lynch report on the talks with the attorneys general was titled, How to Destroy a
Fragile Housing Recovery.
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Credit Slips
The Value of Rule of Law: 20 Basis Points
April 12, 2011
By Adam Levitin
The rule of law is not even worth 20 basis points. That's the ultimate message in a recent paper by
Charles Calomiris, Eric Higgins, and Joseph Mason evaluating the proposed AG mortgage servicing
settlement. Calomiris et al. estimate that the settlement will raise mortgage costs at least 20bps, and
they think that's too much.
Recognize what they're really saying: that 20-45bps is too high a price to pay for the rule of law. They
value the rule of law at less than 20bps. At present conversion rates, that's about 30 shekels of silver.
The whole Calomiris et al. document is rather strange, as it's hard to do any serious evaluation of the
settlement without knowing the terms. We've seen a proposed servicing standards term sheet from the
AGs and we've seen a CFPB analysis of disgorgement of wrongful profits and the costs of potential
principal reductions, but it's way premature to attempt any sort of real evaluation of a settlement.
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Unless, of course, the goal is not a serious evaluation of a settlement, but an attempt to forestall a
settlement. Which is what this paper is.
So let's get down to brass tacks. The paper is financed by the financial services industry, including
institutions that would be affected by the settlement. That's properly disclosed, but would three
academics otherwise take the time to write up a 29-page paper evaluating a proposed 27-page term
sheet that is an incomplete part of a settlement?
Like every good bit of financial services lobbying clothed in academic garb, it's got its perfunctory claim
about the necessary increase in the cost of credit as a result of the regulation: 20-45 bps. I've blogged
before about how bogus statistics are the financial services industry's go-to lobbying tool (here and here
and here; see here for a Fisking of an earlier bogus statistic), and we can now add another chapter to
that sorry story. In retrospect, the card industry really missed the boat by not making up a bs number
regarding the CARD Act.
Calomiris et al.'s 20-45 bps number is little more than a back of the envelope guess. It's extrapolated
from a range of studies including those of non-US credit markets, pre-2008 US mortgage markets, and
studies of "strategic default" that use overly broad definitions of strategic default. Lots of obvious
problems there.
What I love about this concocted number, however, is that it leaves Calomiris, Higgins and Mason hoist
on their own petards. 20-45bps is basically what consumers currently pay for the protections of judicial
foreclosure. So servicers are going to be forced to perform what they contracted to do. Boo-hoo.
The 20-45 bp estimate of the increased cost of mortgages as a result of the settlement is in perfect
accord with the difference in mortgage costs between judicial and nonjudicial foreclosure states.
Federal Reserve economist Karen Pence has a marvelous study on the difference in mortgage credit
availability between judicial and nonjudicial states. In an extended (but unpublished) version, she
translates the difference in credit availability into credit costs. She finds that mortgages in judicial
foreclosure states cost 22-30 bps more than in nonjudicial foreclosure states, depending on LTV. In
other words, borrowers in judicial foreclosure states pay another 22-30bps in exchange for the legal
protections of judicial foreclosure.
The AG settlement would make servicers comply with existing law in judicial foreclosure states. In other
words, it would make servicers give mortgagors what they had bargained for--adherence to judicial
foreclosure rules. So what Calomiris et al. are really saying is that if mortgage servicers had to actually
follow the law and honor the mortgage contract, then it would cost them just about what the
homeowners bargained for in judicial foreclosure states. That's just the internalization of externalities.
Servicers tried to cut corners and cheat on their bargain and if the worst effect is that they are forced to
honor their bargain, it's a pretty good regulatory outcome.
Calomiris et al. also misread the $24B figure in the CFPB powerpoint as representing the dollar figure
for principal write-downs. That's not what it is in the CFPB powerpoint. That's the dollar figure for
wrongful profits from robosigning, etc. In other words, the $24B is a disgorgement figure. Calomiris et
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al. base their entire argument on the assumption that the $24B has nothing to do with the harms caused
by robosigning and is simply gratuituous principal reduction. By their own conclusion, however, the
settlement should address illegal behavior directly, so the $24B fine should be something that they
would support, as it is disgorgement of illegal profits.
There's lots of other whacky claims in the document too. It continues to view the settlement terms as
mandatory; no servicer is compelled to settle--it's a choice for the servicer to make. The settlement is
nothing more than a contract offer. If servicers don't want to do principal mods, then they don't have to
settle.
The paper also insists that servicers are fiduciaries of investors. Servicers should be fiduciaries, but I
don't know of any servicer that considers itself a fiduciary or of any caselaw that say so. Servicers think
that they are bound by the contractual language in the PSA and nothing else. What's more, whether
they are fiduciaries or merely subject to contract, it's all pretty irrelevant given that there's virtually no
oversight of servicers. There's no way to verify that servicers are only foreclosing when a mod would be
NPV negative or that their NPV calculations are at all reasonable. Indeed, I have heard of servicers that
use one NPV calculation for short sales and another for mods. Let's be honest about what valuation is-an educated guess, compounded by another guess. Change the input assumptions in NPV models and
you'll get very different outcomes. But Calomiris et al. are very content to rely on the belief that
servicers are true and faithful agents. This is very strange given Joseph Mason's other work on
servicing, which is quite cognizant of all of the problems in the servicing world. Thus Mason has
previously written about "standard and well-acknowledged conflicts of interest between servicers and
investors".
Let's get real about mortgage servicers. The world of mortgage servicing is the world of Private Snafu.
Four years into the crisis, and many servicers still don't have basic operational kinks worked out. Many
of the large servicing shops still use fax (yes, fax!) as their primary form of communication with
borrowers. If you have 40,000 pages of fax coming in a day, of course things are going to go wrong.
Even if servicers wanted to be faithful agents, it's ridiculous to think that they're getting stuff right.
Calomiris et al. try to argue based on HAMP that mods don't work. All that the HAMP experience can
possibly show is that half-assed mods don't work. Of course HAMP mods don't work--they're basically
roll-overs into remodeled subprime loans: low FICO, high LTV, increasing interest rates, balloon
payment. We don't know whether serious principal reduction mods work because we haven't seen them
in action. But there's every reason to believe that they will because if you put borrowers back to positive
or near positive equity and give them affordable payments, then it's just a sustainably underwritten
mortgage.
The only solution I see offered by Calomiris et al. is to let foreclosures take their course. It will take
several years for the housing market to clear if that's all we do. I'm going to post separately on this, but
anyone who thinks that we can clear this market via foreclosure is nuts. Foreclosure is an inefficient,
incredibly slow method of market clearing that produces lots of negative externalities. The settlement
might actually speed up foreclosures which have ground to a halt in several states.
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Finally, back to that 20-45bp number. The calculation of this figure is really pretty silly and not a serious
academic exercise. It's a guess. It's also a very unfair figure to pin on the settlement. If the residential
private-label MBS market is to get restarted, mortgage servicing will have to be radically reformed.
There's no doubt that going forward servicing will cost more. Servicers massively underpriced relative to
the costs of performing their contracts. This has nothing to do with the AG settlement proposal. The real
question is whether the AG settlement proposal will add costs to mortgage servicing above and beyond
the costs that will be imposed by the market. It's far from clear whether there are any given how skittish
private-label MBS investors are (and rightfully so).
I would have thought that rule of law was priceless; that without it markets could not function, homo
homini lupus and all that. But apparently, rule of law is not even worth a lousy 20bps.
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Reuters
Calomiriss ridiculous take on the mortgage settlement
April 12, 2011
By Felix Salmon
Cheyenne Hopkins of American Banker, who first published the terms of the proposed mortgage
servicer settlement in March, has now got her hands on a ridiculous paper from Charlie Calomiris, Eric
Higgins, and Joseph Mason, which says that the settlement is a bad one which could cost the economy
$10 billion a year.
You only need to look at the bottom of the first page of the paper to see where this thing is going.
First of all, theres nothing in the proposed settlement saying that principal write-downs should be
conducted regardless of borrower distress. To the contrary, the talk of principal reductions explicitly
applies only to delinquent mortgages. Which actually the authors know full well, since on page 10 they
say that the settlements approach to loan modifications would encourage strategic default. They cant
really have it both ways.
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As for the fact that the paper was bought and paid for by the very banks opposing the settlement,
Mason tells Hopkins that we never allow any funder to dictate our conclusions. But of course he doesn
t need to, since the authors know full well what theyre expected to produce. Its basically a variation on
that notorious Greenspan op-ed: attempts to regulate the financial services industry have failed in the
past, therefore theres no point in even trying any more.
Some of what the authors write about loan servicers defies belief:
NPV calculations are already used by servicers, exercising their fiduciary duty to maximize the value of
payouts to investors, in determining whether a borrower qualifies for a loan modification
That servicers have not modified more loans indicates that, under their NPV analyses, additional
modifications would not result in higher payouts for investors, despite the benefits of avoiding a
protracted and expensive foreclosure process
Servicers already use NPV analyses as a matter of course. If a servicer finds a modification to be NPVpositive, then it will likely modify the loan without any regulatory oversight.
Even bankers arent making these arguments with a straight face any more. But, as HL Mencken
famously said, there is no idea so stupid that you cant find a professor who will believe it and the
banking industry, here, seems to have found just those professors.
In fact, this isnt stupidity: Calomiris et al arent stupid. But its intellectual dishonesty: they know full well
about the various lawsuits and other attempts that mortgage-bond investors are making to get servicers
to change their ways, and they also know full well that banks servicing departments are badly-run and
fundamentally broken. But somehow, after taking a long bath in bankers dollars, theyve managed to
persuade themselves that those banks always exercise their fiduciary duty to investors and never
foreclose when doing so makes little financial sense. (And, for that matter, theyve also persuaded
themselves that taking large amounts of money to write papers for the financial services industry has no
effect on what they end up writing.)
As for the authors attempts to quantify the costs of the settlement, they use numbers in the CFPB
report uncovered by Shahien Nasiripour which says that effective special servicing of delinquent loans
would have cost 75 bps/yr more than the actual costs incurred except the way they put it is very
different:
The CFPB recently estimated that five servicers avoided $24 billion in costs between 2007 and 2010,
yielding a 75 basis-point reduction in interest rates.
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Er no, the CFPB nowhere says or even hints that there was any kind of reduction in interest rates as a
result of the banks broken servicing operations. (And it wasnt five servicers, it was nine.)
Im also particularly fond of the way that the authors calculate the increase in foreclosure inventory
brought on by an increase in strategic defaults. For simplicity, they say in footnote 48, we assume all
strategic defaults result in foreclosure.
What?
The entire reason why strategic defaults would go up, according to the paper, is that borrowers will
know that if they default, theyll get a loan modification. And yet somehow by the time we reach footnote
48, all those borrowers are mistaken, and in fact they wont get a loan mod: theyll be foreclosed upon
instead.
Its unclear whether this paper was ever intended for public consumption, or whether its just something
for banks to quietly pass on to their lobbyists, who in turn will show it to lawmakers. But its certainly
harder to take Calomiris seriously in his attempts to revisit Dodd-Frank when hes happy churning out
hack-work like this which shows him to be completely captured by Wall Street.
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Rortybomb
Five Points on that New Anti-Foreclosure Fraud Settlement Paper by Calomiris, Higgins and Mason
April 12, 2011
By Mike Konczal
Cheyenne Hopkins got her hands on a financial industry funded paper from Charlie Calomiris, Eric
Higgins, and Joseph Mason, The Economics of the Proposed Mortgage Servicer Settlement (hence
CHM) attacking proposed settlement surrounding servicing requirement. I imagine a lot of people will
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see this paper in the next few days, so lets create a readers guide to it. Theres two parts to the
proposed settlement a push for principal reduction in cases of duress, and guidelines for new
servicing best practices, and both parts come under fire, with the settlement cost[ing] $7 billion to $10
billion a year.
First, readers will find a certain schizophrenia driving the argument. The first thing to know is that
foreclosures are good for the economy delay of foreclosures, would harm the broader economy. If
thats the case, then strategic defaults should be no big deal, because theyll help clear to market
prices. But the entire first half of the paper is worry about strategic defaulters. Maybe servicers, the
middlemen between borrowers and lenders, have conflicts of interest causing unnecessary
foreclosures? Foreclosures usually hit borrowers pretty hard. Nope, servicer incentives are perfectly
lined up.
Homeowners are dangerous, foreclosures are a great thing and the largest banks have no conflicts with
and arent screwing up their servicing jobs as middlemen between borrowers and lenders. These are
the talking points of the major servicing banks, not investors, not borrowers and certainly not
communities. CHM ignore the well-documented conflicts, assume all modifications are created equal,
dont mention the best cure for moral hazard, emphasize lowering the cost of capital at all costs, and
frankly come up with small numbers anyway. In order:
Conflicts
Theres been a pretty well-established critique that says that servicers have different priorities than
lenders. For instance, see National Consumer Law Centers Why Servicers Foreclose When They
Should Modify and Other Puzzles of Servicer Behavior, (pdf) by Diane E. Thompson, which has this
useful chart:
The settlement is designed to solve this conflict. How does CHM know that there isnt a problem with
these conflicts? Heres their evidence: As such, NPV calculations are already used by servicers,
exercising their fiduciary duty to maximize the value of payouts to investors. Servicers have a fiduciary
responsibility to investors to make sure they maximize the payouts to investors. No conflict possible.
The large number of foreclosures and the huge loss-given-default are economically efficient because,
at the end of the day, servicers have a fiduciary responsibility to investors.
Except that there isnt any fiduciary responsibility. Heres Adam Levitin previously explaining the issue:
The critical thing to realize about servicers is that they are not subject to any oversight. Investors lack
the information to evaluate servicer decisions, while securitization trustees are paid far too little to want
to stick out their necks and supervise servicers (with whom they often have cozy business
relationships). A securitization trustee is not a general purpose fiduciary; it is a corporate trustee with
very narrow duties defined by contract, and entitled to rely on information supplied by the servicer. So
weve got a case of feral financial institutions, a sort of servicers run wild, with both homeowners and
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MBS investors bearing the costs of unnecessary foreclosures, all because servicers misjudged the
housing market and didnt charge enough to cover the costs of properly performing their contractual
duties.
Lets be clear. Any type of fiduciary is with the trustee, not with the servicer, which is a separate
contract. Even that isnt a fiduciary like they mean it. Their evidence for a lack of problems isnt true.
Theres no fiduciary responsibility between the investors and the servicers. And the servicers arent
subject to meaningful market competition. Homeowners dont choose their servicers, and investors don
t have the tools to enact meaningful oversight. Is the idea reputational effects will be sufficient
regulation?
What Kind of Modification?
They quote some studies from 2009 for evidence of modifications failing, perhaps not realizing that the
literature has moved on extensively in the past year. Heres Sumit Agarwal, Gene Amromin, Itzhak BenDavid, Souphala Chomsisengphet and Douglas Evanoff on Market-Based Loss Mitigation Practices for
Troubled Mortgages Following the Financial Crisis (October 2010), which finds [c]onsistent with the
idea that securitization induces agency conflicts, we confirm that the likelihood of modification of
securitized loans is up to 70% lower relative to portfolio loans. That research also reported this crucial
chart:
Check out the low rates of redefaults on principal reduction. CHM say that modifications fail because
look at all these failed interest rate reduction modifications. Again, servicers love modification that
increase principal and reduce interest rates because they are paid as a percent of the principal.
Investors hate them, because the loss-given-default (what they are left with in a foreclosure) is so high
in this recession. But this conflict isnt in the paper.
Moral Hazards
So they spend the paper with the priorities backwards: they assume the big servicing banks,
presumably the ones paying the bills for the paper, have no problems whatsoever while strategic
defaulters are going to appear in waves, when well-documented theorectical and empirical evidence
shows the servicing banks to be a cesspool of a failed business model and no evidence whatsoever for
strategic defaulters. (Federal Reserve Board: The fact that many borrowers continue paying a
substantial premium over market rents to keep their homes challenges traditional models of hyperinformed borrowers.)
The paper is very concerned with moral hazard, the idea that people will default to take advantage of
a modification who could otherwise pay. As the October 2009 COP report said we can design any
settlement to remove moral hazard by putting pressure on borrowers:
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Third, program eligibility rules are designed to prevent borrowers who do not have genuine financial
difficulties from obtaining any loan concessions. In other words, borrowers are screened to minimize
moral hazard. Applicants for modifications must document their income, in order to prove that they
cannot afford their full contract payment without modification. Borrowers who can already afford their
mortgage will not receive a modification. The documentation requirements have been demanded by
investors precisely to prevent moral hazard issues from arising. They can create difficulties for
homeowners with a genuine need, but the extra transaction cost is justified on the basis that it will
minimize moral hazard for undeserving borrowers.
If this is a concern we can amplify the filtering mechanism. Remember if we really want to eliminate
moral hazard, make sure that creditors are acting in a collective manner, make sure that those who see
the upside first absorb most of the downside as well as put the correct emphasis on the ongoing value
of keeping someone in their homes we have this amazing technology called the bankruptcy code. As
others have pointed out to me, CHM should be all about mortgage cramdown if they are this worried
about moral hazard.
Lower the Cost of Lending at All Costs!
Heres a peek into the conservative worldview. Felix Salmon has a particularly brutual take on this
paper, and he catches this argument:
As for the authors attempts to quantify the costs of the settlement, they use numbers in the CFPB
report uncovered by Shahien Nasiripour which says that effective special servicing of delinquent loans
would have cost 75 bps/yr more than the actual costs incurred except the way they put it is very
different:
The CFPB recently estimated that five servicers avoided $24 billion in costs between 2007 and 2010,
yielding a 75 basis-point reduction in interest rates.
Er no, the CFPB nowhere says or even hints that there was any kind of reduction in interest rates as a
result of the banks broken servicing operations. (And it wasnt five servicers, it was nine.)
Ouch. But actually think this through: What the CFPB is estimating there is the estimated costs of the
servicers actually doing their job. If they hired enough people, paid them well, put the infrastructure in
place, and actually kept track of who owned what in line with the strictest interpretation of trust law.
They didnt do this, and even the biggest bank supporter must think the banks probably could have
been more careful with how they kept track of their documents. The entirely of their existence, from
securitization law to REMIC tax code, depended on it, and they failed.
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Instead of something regrettable, CHM celebrate it! By cutting all those corners with actually keeping
track of documentation, etc. think of the savings that were passed onto consumers. They also assume it
was all passed onto consumers, but leave that aside for a second. By being incredibly irresponsible, by
shoving the risks into the tail, the banks were able to lower the mortgage rate. Awesome except for the
ravaged economy.
For what it is worth, the best empirical evidence tells us that cramdown wouldnt raise the cost of capital
because we are talking about something that is going to be in default, and take a huge hit, anyway.
Numbers
Also, last point. Given how hard they go into this paper, given that all their assumptions (We use a 25
percent increase in strategic defaults for illustrative purposes onlyFor simplicity, we assume all
strategic defaults result in foreclosure) are very favorable to their results, is anyone else kind of
disappointed that they highest number they massaged is a cost of $10 billion?
Because the costs to the economy of unnecessary foreclosures add up quite quickly. Marcus Stanley
from Americans for Financial Reform and myself came up with the following in two emails. Two million
modifications (see their footnote #43). 30% cure rate, 50% redefault rate of those leftover (see pages 3,
9) both very conservative numbers leaves us with 700,000 modification. Lets grab a number from
Mortgage Loan Modification: Promises and Pitfalls, Joseph Mason (same guy) The cost of a typical
foreclosure has been estimated to be about $60,000, or about 20-25 percent of the loan balance (legal
fees alone can cost $4,000), and those costs are expected to be higher in times of home price
depreciation. So $60K times 700 K is $42 billion in costs to investors, which is a far worse prospect
than the $10 billion they find in costs.
Meanwhile the costs to homeowners, local governments and neighbors are estimated around $30,000
per foreclosure. So thats $21 billion in costs to communities!
See, not hard. So wheres my financial services industry research paycheck?
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American Banker
Iowa AG Miller Blasts Bank-Funded Servicer Settlement Study
April 13, 2011
By Cheyenne Hopkins
WASHINGTON Iowa Attorney General Tom Miller blasted a study Tuesday that said proposed
servicer settlement terms could cost the economy $10 billion a year. Miller, who is leading the
settlement on behalf of the attorneys general, said the study was "grossly inaccurate," and noted it was
paid for by the financial services industry, including some of the servicers involved in talks with the AGs.
"This is a flawed study based on inaccurate assumptions, and it reaches grossly inaccurate
conclusions," Miller said in a press release. "This study was bought and paid for by the industry, and
that fact is reflected throughout."
The study found that the proposed settlement with the top five mortgage servicers could prolong the
foreclosure crisis, drive up mortgage interest rates, slow new home construction and cost $7 billion to
$10 billion a year. The study, which was obtained by American Banker, was written by three
economists: Charles Calomiris, a professor of financial institutions at Columbia Business School; Eric
Higgins, a professor of finance at Kansas State University; and Joseph Mason, the chair of banking at
Louisiana State University and a senior fellow at the Wharton School.
Miller said the study's conclusions were wrong.
"The study's assertion that our proposed settlement will lengthen foreclosures is off the mark," he said.
"Our proposal, if properly implemented by the servicers, should not increase the duration of
foreclosures. By making foreclosures functional, servicers will make up time they're losing now. The
current dysfunctional system prolongs foreclosures."
Miller is conducting the settlement talks along with the Justice Department, Housing and Urban
Development and the Consumer Financial Protection Bureau.
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Housing Wire
CRL fights fed-level consent order for mortgage servicers
April 13, 2011
By Kerri Panchuk
The Center for Responsible Lending and dozens of other consumer agencies asked federal regulators
to forgo any proposed consent orders intended for mortgage servicers. The consumer advocacy group
says a national solution in this case, may be misguided.
Instead, the CRL and partnering agencies contend that regulators should "withdraw the proposed
consent orders issued to the nation's mortgage servicers to work with the state Attorneys General and
U.S. Department of Justice to obtain a joint settlement that will address illegal servicing practices." The
CRL indicated in its letter that home ownership and consumer advocates would prefer settlements and
solutions that employ state solutions as opposed to the federal government unilaterally crafting
solutions with servicers.
CRL in its letter addressed to the Federal Reserve, the Office of the Comptroller of the Currency, the
Federal Deposit Insurance Corp., and the Office of Thrift Supervision said the draft consent orders do
not hold mortgage servicers accountable for illegal practices and do nothing to end the cycle of
foreclosures.
The CRL also criticizes regulators, saying the government agencies are going back to a model where
they rely on federal regulators to stamp out problem areas when in fact state agencies may be better
suited for this work.
"Certain federal regulators of this nations financial institutions have allowed servicers to flout the laws
under which they operate as well as the mortgage contracts with homeowners, government agencies,
and investors," CRL wrote.
"For example, during the years leading up to the current foreclosure crisis, the OCC aggressively tried
to block state enforcement actions that could have dealt effectively with many of the industry practices
that are wreaking havoc upon the American public today. These consent orders continue that pattern of
attempting to block effective action at the state level, while permitting abusive practices by federallyregulated institutions to continue unchecked."
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Rep. Elijah Cummings (D-Md.) also sent a letter to John Walsh, acting comptroller at the OCC, asking
him to postpone a consent agreement with mortgage servicers and instead focus on greater
transparency from the OCC about the agreement.
"It is imperative that we know the results of the OCCs investigation before any deal is inked with the
mortgage servicers," said Cummings. "I want to know what abuses they identified, which banks
committed them, and how their proposed consent agreement is going to fix these problems. Based on
what I have read about the proposed consent agreement, I am not encouraged at all."
Cummings office said Wednesday the OCC responded to Cummings' request last night and agreed to
brief him on the consent order. The OCC consent order is being released today.
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Housing Wire
OCC foreclosure consent order to cost JPMorgan Chase $1 billion in 1Q
April 13, 2011
By Jon Prior
JPMorgan Chase (JPM: 46.65 +0.02%) reported $1.1 billion in first quarter risk management losses for
newly implemented mortgage servicing practices.
The rising compliance costs come as a result of the Office of the Comptroller of the Currency and the
Federal Reserve investigation into industry-wide foreclosure practices. A spokesman for Chase said the
costs come in the form of an adjustment in the fair market value of the mortgage servicing rights.
The bank reported $5.6 billion in earnings for the quarter as expenses in the mortgage department went
up. The bank's Chief Financial Officer Doug Braunstein said in a conference call with investors
Wednesday morning that the first-quarter loss came from a "fair value adjustment for increased
servicing costs." CEO Jaime Dimon said the costs do not include a direct fine or penalty.
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A spokesperson for the OCC said the complete settlement and report will be released Wednesday
afternoon.
Late in 2010, major mortgage servicers began correcting faulty affidavits signed by employees without a
proper view of mortgage documentation in foreclosure cases. Federal regulators and the state attorneys
general launched investigations into servicing practices at the major firms.
While the OCC and the Fed will announce their own settlement Wednesday, other regulators and the
state AGs are still in negotiations that could take months still.
A report from a three economists, paid for by the financial services industry, showed the settlements
could push foreclosure inventories, raise servicing costs across the industry, and push mortgage rates
up for consumers. The Iowa AG, the lead investigator in the case called the study fundamentally
"flawed."
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Charlotte Observer
Attorneys general urge BofA: Be a leader in fixing mortgage problems
April 12, 2011
By Kirsten Valle Pittman and Rick Rothacker
Over boxed lunches in Charlotte, state attorneys general today asked Bank of America Corp. chief
executive Brian Moynihan to take a "personal interest" in ongoing talks to resolve mortgage servicing
concerns, N.C. Attorney General Roy Cooper said.
"We urged Bank of America to be a leader in those negotiations, to come forward and do the right
thing," Cooper said of the private meeting held before Moynihan's speech to the National Association of
Attorneys General.
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In essence, Moynihan strode into the lion's den when he gave the lunchtime address at the
association's summit on financial reform at the Charlotte Westin. State attorneys generals are seeking a
settlement with Bank of America and other large banks over their mishandling of foreclosures and loan
modifications.
In his remarks, the Charlotte bank's CEO praised the efforts by the officials to help consumers and
promised his bank was working hard to do the same. But he reiterated his opposition to any proposal
that broadly reduces loan balances for struggling homeowners, even as Bank of America takes this step
for certain customers, such as service members.
"Fairness is a major concern," Moynihan said in his prepared remarks, saying it would be hard to justify
reducing principal for a small number of delinquent borrowers when most customers have stayed
current on their loans.
Cooper said that Moynihan reacted positively during the private meeting with a group of attorneys
general, but said the two sides didn't get into details. As for Moynihan's remarks about principal
reduction, Cooper said "that is just going to be one of the issues that will be debated."
Iowa Attorney General Tom Miller, who is leading the probe by the attorneys general, said the meeting
was his first face to face with Moynihan and called it a good discussion. He wouldn't detail the
conversation, but said attorneys general continue to seek a way to reduce loan balances for borrowers
in a way that doesn't cause current borrowers to purposely default to gain the benefit.
"It's one of the tools in the toolkit to try and resolve these problems, but it's one that has to be handled
very carefully so that we don't have strategic default," Miller said.
Another participant in the discussion, Illinois Attorney General Lisa Madigan said Moynihan noted in the
meeting that Bank of America inherited its foreclosure problems. The bank acquired troubled lender
Countrywide Financial Corp. in 2008.
Moynihan was "clear about that but also clear that he wants it to be resolved and is willing to work with
the attorneys general and the federal regulators to get that done," Madigan said.
Moynihan declined to answer reporters' questions after his speech. A bank spokesman wasn't able to
immediately comment on the meeting.
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The attorneys generals are joined by the U.S. Justice Department and other federal agencies in their
settlement talks, even as federal banking regulators such as the Office of the Comptroller of the
Currency are sealing separate agreements with banks requiring them to improve their processes.
Cooper said it was still possible that all states and federal regulators could reach a global settlement,
but reiterated the OCC's pacts will be a "floor not a ceiling." "It really depends on how much the OCC
wants to work with the federal agencies and the states," Miller said.
In a question-and-answer session with audience members, Moynihan defended the size of his bank
after a Federal Reserve official in a morning speech at the meeting called for a slimming down of banks
deemed "too big to fail."
Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, told the group new financial
reform efforts were doomed because the country's biggest banks were still operating with a "safety net"
- an assurance that the government would prevent them from failing - and would continue to take on too
much risk. Hoenig called large U.S. banks essentially public utilities or government-sponsored entities
and said they should be restricted to commercial banking activities, rather than investment banking, too.
Moynihan countered that his bank's size allows it to best serve its clients - and that "no one is too big to
fail." "To be competitive, it's the right thing for the customers," he said.
In the minutes before Moynihan spoke, a small crowd of homeowners and clergy gathered in the
Westin's lobby, urging the attorneys general to take a tough stance on banks on the issue of
mishandled foreclosures and loan modifications.
"We ask that you work with us so we can get our lives back together," said homeowner Jenny Barker of
High Point, who lost her job and is now facing foreclosure. She held a sign that said, "Remove your
blindfolds. Work with us and not against us!!"
Moynihan and the protestors' leader, Gerald Taylor, met briefly before the speech, bank spokesman
Larry Di Rita said. "It was very cordial," he said.
During his remarks, Moynihan called foreclosures the toughest problem the bank faces and stressed
the lender's efforts to modify loans for struggling borrowers. He also praised Taylor for his efforts to help
service members struggling with foreclosures.
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St. Louis Post-Dispatch

Too big to punish: Banks cut a deal on robo-signing scandal
April 12, 2011
Editorial
The 2008 financial crisis introduced most Americans to the concept of too big to fail. Now comes a not
-unrelated corollary: too big to punish.
Federal banking regulators have begun signing deals with 14 mortgage-servicing companies some
of them arms of too big to fail banks that would enable the servicers to avoid as much as $20 billion
in fines for finagling foreclosure documents.
The consent agreements would end the governments investigation into the so-called robo-signing
scandals that erupted last fall. Mortgage companies acknowledged that theyd been processing home
foreclosures without obtaining documents that established the provenance of the loans.
In most cases, that was because the mortgage companies had sold the loans, which then were
chopped into pieces and sold as mortgage-backed securities. Determining precisely who owned the
loans in default was problematic, so companies solved it by forging documents and signatures.
The consent agreements, in effect, will require the companies to promise not to do that again. The
servicers will have to stop foreclosing while loans are in the modification process. They must promise to
stop bouncing consumers from one office to another and establish a single point of contact.
But they may not have to pay a dime in fines. And, more significant, they wont be required to try to
work out mortgages that might be saved.
Getting a timely deal was important. More than 4 million homes are in the foreclosure process; many of
them have been in limbo during the robo-signing negotiations. This has created uncertainty in the
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housing market.
But getting the right deal would have been better. Such a deal would have required banks to work out
any loan that still could be salvaged by reducing principal to the point at which a homeowner could
afford the payments.
That basic concept dont borrow more than you can afford was widely ignored in the housing
boom. The obverse was ignored, too: Dont lend a customer more money than he can reasonably be
expected to pay back, even if you can make a killing flipping mortgage securities.
With the housing market still depressed and the prospect of more foreclosed properties coming onto the
market, it would seem to be in everyones best interest to salvage what can be salvaged. But with one
in four homes under water worth less than what is owed on it workouts could get to be expensive,
so banks avoid them if possible. And now financial regulators have made it possible.
The precipitous action by U.S. banking regulators the Federal Reserve, the Office of the Comptroller
of the Currency, the Office of Thrift Supervision and the Federal Deposit Insurance Corp. undercuts
a parallel effort by the 50 states attorneys general to reach a settlement with the mortgage industry.
The Obama administrations mortgage modification program, enacted in 2009 with funds from the
Troubled Asset Relief Program, has been a huge disappointment. The idea was to help up to 4 million
homeowners by 2012. About 540,000 have been helped so far.
Neil Barofsky, who is stepping down as TARPs inspector general, called the program poorly designed,
poorly managed and poorly executed."
TARP helped the big banks get healthy in a hurry, but it failed many homeowners. And now, with the
consent agreements, the Obama administration is letting the banks off the hook yet again.
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New York Post

JPMorgan dogged by mortgage talks
April 13, 2011
By Mark DeCambre
Don't blame Jamie Dimon for having home loans on his mind today.
Mortgage servicer settlement talks are expected to dominate JPMorgan Chase's first-quarter earnings
conference call when it kicks off the banks' reporting season this morning.
The nation's second-largest bank and a number of other major mortgage servicers already have
received a lengthy draft of a so-called consent order from The Office of the Comptroller of the Currency,
the Federal Reserve and the Federal Deposit Insurance Co.
The draft settlement, which is separate from negotiations that banks are having with the 50 state
attorneys general, is expected to be signed by the nation's top banks, including JPMorgan, Bank of
America, Wells Fargo and Citgroup, as earlier as tomorrow.
Sources familiar with the consent order say that it prescribes a litany of "fixes" for the mortgage fiasco
and identifies a number of "weaknesses" that resulted in big bank-owned mortgage servicers tossing
millions of Americans out of their homes.
Those fixes include:
* Enhancing their mortgage servicing software and processing systems
* Revamping their communications process with homeowners
* Improving system processes around original documentation and notarization.
"These rules are tough and will pose significant costs [to banks]," said one official close to the process.
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Dimon is expected to spend some time speaking about how much money the bank might have to cough
up in hiring and complying with the new rules.
At this point, few institutions have had a chance to tabulate the precise price tag of compliance.
"I think it's difficult to quantify the costs at this time," said Jason Goldberg bank analyst at Barclays
Capital.
That said, financial institutions have been buffering any increases in its offering services by passing on
costs to consumers, Goldberg notes.
JPMorgan is hoping, however, that the mortgage mess takes a backseat to its results, which are
expected to be better than expected, according to sources.
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American Banker
CardHub.com Calls for CARD Act Rules to Apply to Small-Business Cards
April 13, 2011
By Andrew Johnson
Consumer protections under the CARD Act should be applied to small-business credit cards, according
to a lead-generation website that tracks card products.
Most of the 10 largest credit card issuers make small-business cardholders personally liable for use and
report account activity to their personal credit reports, CardHub.com's study found. The study, released
Tuesday, was based on a review of account applications and terms and conditions as well as contact
with the banks.
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Small-business cards were exempt from the Credit Card Accountability, Responsibility and Disclosure
Act of 2009, which put limits on issuers' ability to raise interest rates, charge late fees and take other
actions on consumer accounts.
CardHub.com said its findings show that CARD Act measures should already apply to small-business
cards.
In March Rep. Nita Lowey, D-N.Y., introduced legislation that would apply some of the same provisions
to small businesses by amending portions of the Truth in Lending Act.
Sixty-four percent of businesses with 50 or fewer employees used small-business cards and 41% used
personal cards as of the end of 2009, according to a study the Federal Reserve Board published last
year.
The CardHub.com study rated the 10 largest credit card issuers on disclosure transparency, giving
them a "good," "mediocre" or "bad" rating based on whether it is easy to determine whether a smallbusiness card customer is personally liable for use and whether the bank reports the use of such cards
to credit bureaus for customers' personal credit reports.
Wells Fargo & Co. was the only issuer on the list to receive a "bad" rating. CardHub.com said it is
unknown whether Wells Fargo customers are personally liable. The bank also did not say whether it
reports use of small-business credit cards, the study said.
In response to questions from American Banker, a Wells Fargo spokeswoman said by email that its
small-business cardholders are personally liable for card use and it does report to the major credit
bureaus when a customer's account charges off.
Citigroup Inc., HSBC and U.S. Bancorp each received a "mediocre" rating. All three issuers hold
customers personally liable for small-business card use. Citi reports use to cardholder's personal credit
reports depending on the situation, the study said. HSBC and U.S. Bancorp did not respond to the
question for CardHub.com.
A U.S. Bancorp spokeswoman said by email that USB reports to the cardholder's consumer credit
bureau when it charges off an account.
Citi and HSBC did not immediately respond to inquiries Tuesday.
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American Express Co., Bank of America Corp., Capital One Financial Corp., JPMorgan Chase & Co.
and Discover Financial Services received a "good" rating.
USAA Federal Savings Bank, which was included in the study, does not offer a small-business credit
card, so it did not receive a rating, CardHub.com said.
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Credit Slips
Free checking
April 13, 2011
By Katie Porter
With banks under pressure from the CARD Act's regulation of fees and the pending implementation of
price limits on interchange fees under the Durbin amendment to Dodd-Frank, the scary tales are
periodically resurfacing about how government is about to cause the death of "free checking," this great
perk that consumers have enjoyed at the bank's largesse in recent years. As Adam Levitin wrote here
at Credit Slips several months ago, free checking is often far from free. Adam focuses on the kinds of
behavior requirements to obtain a free account, like maintaining a certain balance and having direct
deposit.
There is another way to evaluate the prevalence of "free checking," which is to look at service charges
on deposit accounts. The GAO concluded in a 2008 report on Bank Fees that banks service charges
on deposit accounts as a percentage of total income "increased overall during the period [2000 to 2006)
with a slight decline in recent years." If free checking were really free, then we would have expected a
sharp drop in services charges on deposit accounts. Yet even well before the financial crisis and the
regulatory "horribles" of overdraft fee regulation, debit interchange regulation, and the mere existence of
the Consumer Financial Protection Bureau that supposedly will be the death of free checking, deposit
accounts were far from free. Consumers paid banks lots of money on deposit accounts even in the
good ol' days when they were offering "free checking" to large swaths of Americans.
A study of "relatively financially sophisticated" consumers in 2006 and 2007 by Victor Stango and
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Jonathan Zinman found that 31% of consumers paid zero deposit account fees. Among the 69% who
paid fees, the median paid was $4.83; at the 75th percentile; consumers paid $14.75. This included
overdraft fees, ATM fees, monthly account fees, and transfer fees. I bet these numbers would look
much higher for a representative cross-section of Americans who were not, as Zinman and Stango
explain, more educated, more wealthy, and more technologically-savvy. I think gathering and publishing
these data would be a great project for the FDIC's or the Consumer Financial Protection Bureau's
research divisions. The public and policymakers cannot evaluate claims that we will lose the benefit of
free checking without knowing the extent to which Americans really get free checking today. In reality, a
minority of Americans has ever had free checking. Put another way,there is a big difference between an
account that is marketed as free and whether a consumer actually pays any dollars in a given month for
using a deposit account.
p.s. Perhaps my problem is definitional. I recently saw an advertisement that something was "absolutely
free." Hhhmm . . . I had thought "free" was like "pregnant"; no such thing as a "little bit free". You are
either are paying (not free) or you are paying (free). Now I'm wondering if I am being ripped off if I am
not getting "absolutely free" things.
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American Banker
Coping with New Consumer Credit Risk Realities
April 13, 2011
By David D. Gibbons
A decade ago it was virtually impossible to get banks to take the risks of consumer lending seriously.
Amid seemingly insatiable risk appetites in the global capital markets and falling underwriting and
pricing standards, banks began building substantial portfolios of mortgages, home equity loans, credit
cards and auto loans.
"Creative financing" and "new paradigm" were uttered on various squawk boxes with predictable
regularity. Consumers gobbled up banks' relentless credit offerings and spent in record fashion to
sustain their participation in a waning American Dream.
Page 1465 of 3826
Efforts to raise alarms including mine, as deputy comptroller of credit risk at the Office of the
Comptroller of the Currency did not compel change. "No bank ever failed because of consumer
credit problems" was an oft-repeated bromide. Supervisors, fearful of criticism that constraining credit
would hurt the economy, were reluctant to act.
It was widely assumed that banks could nimbly measure and manage consumer credit risk based on
the richness of data, the power and predictability of consumer credit risk models, the laws of large
numbers and the ability to price for, and lay off, risk.
Bankers are still calculating the costs of complacency: Trillions in losses, millions of foreclosures,
thousands of lawsuits, hundreds of bank failures (with more to come), federal and state fiscal crises and
severely damaged reputations with every meaningful constituency (customers, regulators, public
esteem, Capitol Hill, etc.).
Predictably after the lending excesses of the past decade, the industry finds itself in the throes of an
unprecedented wave of regulation and consumer protection. The settlement terms recently proposed to
mortgage servicers by the state attorneys general have raised questions about the merits of this latest
wave and whether it will lead to excesses of its own, but what's not debatable is that for the foreseeable
future, consumer credit risks and issues will be fixed on the industry's radar screen. Some thoughts on
navigating the environment:
Supervisors should pay attention to, and act upon, their own early-warning tools. Poor risk
selection and underwriting cannot be rationalized away without consequences. Beware "creative
financing" and "new paradigms."
Legislators should eliminate inherent conflicts between supervision and policy so that they can
serve their intended checks-and- balances roles. Legislators and regulators should resist quick fixes for
the housing market: Advocacy for foreclosure avoidance and modification is one thing; compulsory
forbearance is another.
Bankers should regularly measure where the markets are taking their lending and pricing
standards and decide whether it is worth the trip. In doing so, they must embrace the fact that collateral
is merely a precautionary supplement to a sound extension of credit, and is not designed to be a cure
for bad lending decisions. In emphasizing repayment capacity, they will learn to resist lending to highly
leveraged consumers. Stretching the last possible dollar of income available for debt service is a recipe
for disaster financially and reputationally. When a highly leveraged business goes bad, few seem to
care, but when a highly leveraged consumer defaults, the lender is frequently assigned the blame.
Bad credits boomerang. Bankers attempting to sell their mistakes are likely to get them back.
Bankers who price for risk must retain increased revenues in the form of reserves and capital,
and not dividend them away or otherwise leverage them.
The laws of large numbers speak to statistics and predictability. They are less relevant in
deciding how to serve individuals fairly and appropriately. Also, models are only as good as the
assumptions fed into them, and their use must be judiciously governed.
Invest in robust risk management for consumer lending.
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Bankers' attitudes toward their customers, and the risks they carry, must improve. Banks that navigate
well through the next few years will commit to responsible lending, improved delivery and service, and
strong risk management. Sales practices, know-your-customer, fairness and service will count.
Rational judgment must complement the efficiencies of the laws of large numbers. And bankers must
avoid the lure of financing consumers that believe in an inalienable right to spend beyond their means.
David D. Gibbons is a managing director at Promontory Financial Group and a former deputy
comptroller of the currency for credit risk and special supervision.
Back to Top

Durbin Dings Dimon
April 13, 2011
By Ben White
DURBIN DINGS DIMON - Sen. Dick Durbin (D-Ill.) wrote to JPMorganChase CEO Jamie Dimon
criticizing comments Dimon (and other bank executives) have made about the need to raise fees to
make up for lost revenue based on Durbins debit card swipe fee amendment: There is no need for you
to threaten your customers with higher fees when you and your bank are already making money handover-fist. And there is no need to make such threats in response to reform that simply tries to spare
consumers from bearing the cost of interchange fees that are anticompetitive and unreasonably high.
Durbin asked that Dimon make the letter available to investors, noting that the bank has its first quarter
earnings conference call this morning. M.M. guesses the chances of that happening are about the same
as Donald Trump becoming president, which is to say ... not so good. Full letter: http://politi.co/h6zjBd
Page 1467 of 3826
Back to Top
Wall Street Journal (Washington Wire blog)

NAACP Sets Record Straight on Swipe-Fee Rule
April 12, 2011
For the past month, U.S. financial-industry officials have embraced the NAACP as an ally in their fight
against federal rules to rein in the debit card-processing fees that financial firms charge retailers.
But the feeling isnt mutual.
On Tuesday, the civil-rights organization sought to set the record straight.
Hilary Shelton, director of the NAACPs Washington bureau, sent a letter to House Speaker John
Boehner (R., Ohio) offering clarification of NAACP position on interchange fees. He made it clear he
doesnt want a delay, and fully supports the provision in last years Dodd-Frank financial overhaul law
that required the Federal Reserve to impose the lid on the so-called swipe fees.
Mr. Shelton said an earlier letter to Mr. Boehner has been misconstrued as offering support for banks
efforts to delay the limits proposed by the Fed.
Mr. Shelton said he realized people had the wrong idea when a MasterCard Inc. official recently
thanked him for his March letter. Mr. Shelton said he was shocked because he doesnt support banks
push for a delay in the rules.
It threw me off, he said.
Page 1468 of 3826
Some have taken our position somewhat out of context, Mr. Shelton said. We support [Sen. Dick]
Durbins amendment. Hopefully, we are putting this to bed so we can move ahead.
In his original letter, Mr. Shelton argued that the rules impact on underserved communities needs to be
further examined fully to ensure that it will not raise fees or otherwise harm at-risk communities,
including communities of color.
But Mr. Shelton said he was never suggesting that the rule should be delayed in order to study the
issue.
The Feds not-yet-finalized rules regulating interchange fees are set to go into effect in late July. The
financial industry is fighting the regulations, which could cost it billions of dollars in lost fee revenue,
while retailers are battling back with the argument they are being overcharged.
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Wall Street Journal

New Rules for Home-Loan Brokers
April 10, 2011
By Amy Hoak
New rules governing how mortgage loan officers are paid for their work in originating home loans are
meant to protect consumers and make it clearer how the mortgage professional is making money off
the loan.
But some in the industry say the rules are creating new problems.
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The Federal Reserve's rules are aimed at limiting predatory lending. They prohibit loan officers from
being compensated based on the loan's terms and conditions other than the loan amount. For example,
a loan officer can't earn a higher commission for selling a mortgage with a 5.25% rate versus a 5% rate,
says Tom Meyer, chief executive of J.I. Kislak Mortgage, a mortgage lender based in Miami Lakes, Fla.
Mortgage brokers and loan officers are prohibited from "steering" people into mortgages based on the
compensation they'd receive. Another element effectively creates a rule on who pays a mortgage
broker: Either the lender pays the broker directly or the consumer does -- but both can't pay for the
services.
With the new rules, "consumers shouldn't have to worry about brokers putting their own financial
interest in front of the consumer's," says Kathleen Keest, senior policy counsel for the Center for
Responsible Lending, a nonprofit consumer advocacy group. Unlike some in the industry, she says she
doesn't think the rules will increase borrowers' mortgage costs.
Some in the industry also claim that the rules' nuances put mortgage brokers at a competitive
disadvantage -- giving them less flexibility on compensation than large banking institutions -- and it will
ultimately usher more business to larger banks.
It's a matter that held up the implementation of the new rules, which were supposed to go into effect
April 1. The U.S. Court of Appeals issued an emergency stay at the last minute, in response to requests
from industry trade groups. But after additional review, the rules went into effect April 5.
"I like the idea of a level playing field. I like the intent of structuring what is realistic for a loan officer to
make," says Lisa Schreiber, executive vice president of wholesale lending at TMS Funding, based in
Milford, Conn. But some elements of the new rules, she says, could end up costing consumers more. A
wholesale mortgage operation provides underwriting decisions and makes funding available to
mortgage brokers.
One example of how consumers might be affected: A broker will lose some flexibility in altering his or
her compensation, if it's being dictated by the lender, Ms. Schreiber says.
"Say for whatever reason -- maybe you were having a hard time getting documentation and you had to
wait -- the loan took longer than expected. There may be costs associated with that extra time. That
was usually taken care of by the broker -- that broker has been able to reduce his or her compensation,"
Ms. Schreiber says. "With the new regulation, you as a consumer will have to pay for any fees. The
broker will legally not be able to help you pay."
Consumer advocacy groups, however, say these rules were needed to help protect consumers from
unscrupulous loan officers unfairly trying to profit from mortgage loans, Ms. Keest says. It's a practice
Page 1470 of 3826
that played a role in the mortgage mess that rocked the country, according to the Center for
Responsible Lending.
"The new rules should mean that [the mortgage process is] more competitive, more transparent and
should mean, overall, that it won't be more costly for the simple reason that more transparency and lack
of conflict of interest should mean it's less costly," Ms. Keest says.
Cameron Findlay, chief economist for LendingTree, an online marketplace that connects consumers
with lenders, says compensation issues didn't create the mortgage crisis.
"The crisis was created not by the origination of loans but the creation of loan types and securitization
and sale of those structures to investors. Compensation was fuel on the fire, but did not create the fire,"
he says.
Consumers in the market for a loan need to be extra vigilant about comparison shopping in the weeks
ahead -- making sure that what they're being quoted and offered is competitive, Mr. Meyer says.
"In the short term, [the rules are] going to be so novel and so uncertain there may be a short-term cost
to the borrowers," he says. "I expect this is going to be a fluid environment in the next couple of months,
with confusion about what is permissible and what is not."
But this isn't the only change the mortgage industry faces in the near future.
A proposal presented by federal regulators in March laid out a way to require banks to retain more "skin
in the game," or financial capital, when packaging and selling mortgage loans -- a move to prevent
some of the lending problems that arose and led to a meltdown in the credit markets. Also this year,
there was a proposal on the future of Freddie Mac and Fannie Mae, the two government-sponsored
enterprises currently under government conservatorship.
Both proposals, if and when they come to pass, may affect consumers, industry experts say. And one
result may be that mortgages get more expensive.
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Page 1471 of 3826
American Banker
To Avoid Foreclosures, Try Forbearance
April 13, 2011
By Allan I. Mendelowitz
Little noticed since the end of the housing price bubble is how the primary cause of mortgage defaults
has changed.
Three years ago the major cause of mortgage defaults was tied to the subprime mortgage mess.
Private-sector mortgage originators lent money to borrowers who lacked the means to repay their loans.
These borrowers counted on future price appreciation to enable them to refinance into loans that were
more affordable. When the bubble burst, these borrowers were stuck with their unaffordable monthly
mortgage payments and mortgage balances that exceeded the declining value of their homes.
In the spring of 2009, the government launched Hamp, which was intended to make these mortgages
affordable by modifying their terms so that the monthly payments were permanently reduced to 31% of
a borrower's current monthly income. However, by the time the government introduced its mortgage
modification program, the characteristics of the typical borrower in delinquency had changed.
For the past couple of years the major cause of mortgage delinquencies and defaults has been
unemployment. The evidence is the number of prime mortgage delinquencies that has exceeded
subprime mortgages delinquencies during this period.
This turn of events should not come as a surprise to students of housing finance. In the prime mortgage
space it is well understood that the main causes of mortgage defaults are tied to major adverse life
events: divorce, serious illness or death, or the loss of a job. It was inevitable that the sharp rise in
sustained unemployment would lead to an equally sharp rise in mortgage defaults unrelated to the
subprime mess.
Sadly, Hamp was generally beyond the reach of these homeowners. A lender is only obligated to offer a
Hamp modification when it is in the investor's interest, as defined by the program's net present value
test. When household income has plunged because of job loss, the financial interest of the lender is
better served by foreclosing.
Page 1472 of 3826
However, homeowners who have lost their jobs do not want to walk away from their mortgage
obligations. If they are delinquent or in default on their mortgages it is because they have lost jobs in
this difficult period of high and sustained unemployment and do not have the income to make their
monthly payments. They do not need permanent modifications to their mortgage terms. What they do
need is forbearance on their monthly obligations for a reasonable period of time, during which they can
find new jobs. An appropriate time frame is one that reflects the current job market in which it takes
much longer to find reemployment than in the past. This problematic reality is the reason unemployment
insurance payments have been extended to 99 weeks.
A proposal focusing on forbearance for unemployed homeowners put forward by Federal Reserve
economists on the website of the Boston Federal Reserve more than two years ago. It anticipated the
rise in mortgage defaults due to unemployment, and it was structured with commendable incentives. In
the summer of 2010, the Treasury did introduce a short-term forbearance program, requiring
participating servicers to offer three months of forbearance to qualified unemployed homeowners.
Unfortunately, three months is far too short a period given the current job market, and anecdotal reports
are that mortgage servicers are not offering the program.
Nevertheless, a well-structured forbearance program would likely save many homeowners from
defaulting on their mortgages, and it would do so at a very modest cost. For example, a full year of
forbearance for a mortgage with a monthly payment of $1,000 would only cost about $300 at current
interest rates. In this difficult budget environment, it is unreasonable to expect that even the modest
funding needed for such a program would come from the Congress.
Nevertheless, there is a potential source of funding. The state attorneys general are on the verge of an
agreement with mortgage servicers to settle allegations of mishandling mortgage servicing and
foreclosures. The amount of the anticipated settlement is reported to be in the neighborhood of $20
billion.
If some of these funds were used to support a well-structured forbearance program for unemployed
borrowers they would be sufficient to help literally millions of unemployed homeowners and are likely to
be the most effective way to prevent a large number of avoidable foreclosures.
Such a program would be a highly welcome turn of events for the entire housing market as well. In
addition to the obvious pain that avoidable foreclosures cause homeowners, failing to keep people in
their homes is particularly problematic for the entire housing market at this time.
The large number of distress sales on the market and the even larger number of anticipated
foreclosures continues to put sustained downward pressure on home prices. If home prices were still at
the stratospheric levels of the peak of the bubble, downward pressure on prices would be a healthy
correction.
Page 1473 of 3826
However, housing prices are now back to their long-term trend level and the needed correction in
housing prices has taken place. Any further price declines will overshoot on the downside, depressing
prices below their long-term equilibrium level, and unnecessarily adding to the broad-based loss of
household wealth.
Forbearance for mortgage payments for unemployed workers would yield benefits for all by avoiding
this outcome.
Allan I. Mendelowitz is a former chairman of the Federal Housing Finance Board.
Back to Top
Housing Wire
Tech snafu, improper foreclosure affidavit lead to sanctions for LPS
April 12, 2011
By Jon Prior
The U.S. Bankruptcy Court for the Eastern District of Louisiana will sanction Lender Processing
Services (LPS: 31.17 -0.06%) after an employee at the firm was found to have improperly signed a
court affidavit that put a nondefaulted borrower in line for foreclosure.
Ron and LaRhonda Wilson were current on their mortgage and making payments under a courtapproved Chapter 13 bankruptcy plan when Option One Mortgage Co., their mortgage servicer,
attempted to foreclose in early 2008 by filing a series of motions with the court.
The U.S. Trustee, a U.S. Department of Justice unit responsible for overseeing the administration of
bankruptcy cases, eventually intervened in the dispute and last December asked the Louisiana court to
sanction LPS for what it said was the firm's misrepresentation of payments received, but not properly
posted to the borrower's account.
Page 1474 of 3826
U.S. Bankruptcy Judge Elizabeth Magner ruled in an order entered last week that the affidavit of
indebtedness an LPS employee signed on behalf of Option One, attesting to the debt owed and alleged
nonpayments, was a fraud on the court.
In its own brief filed with the court in February, LPS attorneys said there was no clear and convincing
evidence that the company misrepresented its knowledge of unposted payments. It blamed Option
One's law firm, Monroe, La.-based The Boles Law Firm, for blatantly misusing the LPS technology
platform. An evidentiary hearing will be held to determine the sanctions. A date for the hearing has not
been set.
The case
In September 2007, the Wilsons filed for bankruptcy when they defaulted on their mortgage, owned by
Option One, now American Home Mortgage. Monthly payments were scheduled with the court to pay
back what they owed, and the plan was confirmed in December 2007.
But the following January, Option One filed a motion for relief from stay, alleging the Wilsons had failed
to meet that plan and asking the court to allow a foreclosure to proceed. In February 2008, the
borrowers contested the motion and claimed they were current on the plan. When Option One failed to
prove the default the motion was dismissed, but a second motion was filed soon thereafter, alleging the
Wilsons had been in default for over four months.
In the second motion, Option One included an affidavit signed by Dory Goebel, who was named as an
assistant secretary at Option One under a corporate resolution a common practice in the industry in
which a company gives limited authority, such as authority for signing foreclosure affidavits, to another
person. Goebel was identified in the case as an LPS employee. Goebel's affidavit affirmed the Wilsons
missed monthly installments since November 2007 through February 2008, and showed the last
payment was applied to the balance in October 2007.
At a hearing in April 2008, however, the Wilsons showed complete receipts for payments made from
October 2007 through March 2008.
According to the Magner ruling, what followed was a series of hearings that saw The Boles Law Firm
and LPS attempting to track down proof of the default instead finding a mix-up involving a mortgage
finance system reliant on computer technology.
During a court hearing on the case in June 2008, the attorney at Boles admitted the Wilsons were, in
fact, current on their loan.
Page 1475 of 3826
Technology snafus
LPS provides much of the underlying technology used to manage mortgage servicing in the U.S.,
establishing a library of underlying loan information and data. Option One employees put their loan
information into that library, and when attorneys need it to process foreclosures and other actions, they
would "check out the information," an LPS attorney told the court in August 2008.
The company expanded beyond technology into providing services for clients, as well. One of the
services LPS provided at the time since discontinued years ago was to execute affidavits of
indebtedness attesting that an employee, such as Goebel in the Wilson case, had reviewed material
information regarding the borrower's loan, payment history and amount owed.
"[I]t was simply one less thing that the client had to do, that we would do," the LPS attorney said,
according to court documents. "She (Goebel) would go into their system, look at what has been posted,
what hasnt been posted. And I think what happened here was just a series of miscommunications."
Goebel testified at that hearing, as well, explaining that LPS employees had no way to verify received
but unposted payments.
The problem in the Wilson case occurred because, although the Wilsons filed for bankruptcy in
September 2007, the LPS bankruptcy workstation was not set up until two months later. So, when the
Wilsons made their first October 2007 payment under the court-approved bankruptcy plan, it was not
posted to the correct month but instead to the already past-due June 2007 installment.
From then on, the Wilsons were considered in default as far as the computer system was concerned.
The 'sham' affidavit
Once the Wilsons contested their alleged redefault on the mortgage in February 2008, LPS discovered
the misapplied October 2007 payment entered by Option One into its system. While a manual
correction fixed some of the misapplied and unapplied payments, it did not fix all of errors in the
computer system which now told Boles to consider the Wilson loan past due as of December 2007,
instead of October 2007.
LPS contended the Boles Law Firm knew of payments the law firm had previously been forwarded that
weren't yet posted in the computer system, noting it had "attempted on numerous occasions to remind
Page 1476 of 3826
the [Boles] Firm that it was in possession of the unposted payments."
Regardless, Judge Magner ultimately held LPS responsible for filing what she characterized as a
"sham" affidavit of indebtedness with the court, based upon the misinformation in its technology system.
"The affidavit is typical. It purports to be executed under oath before a notary and two (2) witnesses,"
Magner said in her ruling. "It provides the name and title of the affiant and represents that the affiant
has personal knowledge of the facts contained in the affidavit. In fact, it is a sham."
LPS officers executed 1,000 documents per day for Option One and other clients, and testified that
each day Goebel received roughly 30 documents to sign, according to court documents. Ms. Goebel
allocated two hours per day for "document execution" and she estimated in her testimony that it took
her between five and 10 minutes to sign each one, reviewing the computer record of those payments
posted.
The judge characterized Goebel as an "earnest young woman but with no training or experience in
banking or lending" for her job and title of "assistant secretary." Goebel admitted she would have signed
the affidavit, even if she knew of the unposted payments, without questioning it because her signature
was requested by legal counsel at The Boles Firm.
"It is evident that LPS blindly relied on counsel to account for the loan and all material representations.
In short, the affidavit was nothing other than a farce and hardly the evidence required to support relief,"
Magner wrote in her ruling.
Magner said default affidavits were meant to be a lender's representation to the court of the status of
the loan and were accepted routinely in state and federal courts in lieu of live testimony. "They are an
accommodation to the lending community based on a belief by the courts that the facts they present are
virtually unassailable. The deference afforded the lending community has resulted in an abuse of trust,"
Magner wrote.
Enough blame to go around
In a brief filed in February 2011, LPS attorneys claimed the questioning of Goebel during the August
hearing "strayed outside of the protocol she followed to broad, often imprecise, questioning about what
other Fidelity employees did, or should have done, as part of the relationship between and among
Fidelity, Option One Mortgage Co., and the Boles Law Firm."
LPS attorneys also claimed that the Boles Law Firm knew of the unposted payments involving the
Page 1477 of 3826
Wilsons, since the firm had specifically requested payments to be forwarded to it yet the firm then
filed a motion to lift stay without mentioning those same payments. Further, LPS cited previous cases
finding that "a clear and convincing standard of proof" is required for punitive sanctions.
"The [U.S. Trustee] has failed to show with clear and convincing evidence that Ms. Goebel should be
imputed with the knowledge of everyone at Fidelity or that Ms. Goebel intentionally sought to deceive
this court," LPS attorneys said in their final brief filed with the court prior to Magner's ruling.
Nearly every major mortgage servicer, already struggling with a foreclosure inventory too large for many
to handle, has had to correct and refile improperly signed affidavits in courts across the country. Refiled
affidavits totaled in the tens of thousands for some servicers, and have led to months of delays in the
foreclosure process.
Federal regulators and the 50 state attorneys general launched investigations and began settlement
negotiations with the nation's largest mortgage servicers in the wake of the revelations. The Office of
the Comptroller of the Currency expects to release its own settlement Wednesday, while sources tell
HousingWire the coalition of other federal regulators and the AGs could take months if any such
settlement is reached at all.
When the initial reports of improper affidavits and other foreclosure problems first appeared last year, it
became clear that no single company was alone in bowing to a push for blind efficiency. In her ruling,
Magner suggests that such shortcuts were rampant across an entire industry.
"The fraud perpetrated on the court, debtors and trustee would be shocking if this court had less
experience concerning the conduct of mortgage servicers. One too many times, this court has been
witness to the shoddy practices and sloppy accountings of the mortgage service industry," Magner said
in her ruling. "With each revelation, one hopes that the bottom of the barrel has been reached and that
the industry will self correct. Sadly, this does not appear to be reality."
Back to Top
Los Angeles Times

Dont bank on loan modifications or debt aid that cant be promised
Page 1478 of 3826
April 11, 2011

By David Lazarus
Like a lot of homeowners, Mar Vista residents Faith and Gary Hunt found money a little tight during the
recession and hoped they could work out some more accommodating terms with their lender, Chase
bank.
To improve their odds, they said they turned to a law firm that said it could possibly cut their mortgage
payment in half. They also signed on with a "debt management" company that, according to the Hunts,
said it could eliminate their credit card debt.
After making thousands of dollars in payments, the Hunts said, neither business would return their calls
or emails, and the couple received no assistance with their mortgage or their plastic.
"I don't think they ever did anything to help us," Faith, 47, told me.
With millions of people facing foreclosure, the Hunts' experience highlights the potential perils of
seeking assistance from businesses that claim they can ease your financial obligations.
Some may indeed be legit. But many others will be happy to accept your money and do little if anything
to get you off the hook.
The Hunts own a four-bedroom house in the San Gabriel Valley. It's an investment property that they
rent out to tenants. They pay Chase about $1,700 a month on their mortgage.
In late 2009, the couple received a solicitation in the mail from Mesa Law Group in Costa Mesa saying it
might be able to reduce their mortgage balance and payments as much as 50%. Intrigued, the Hunts
set up an appointment to speak with a representative of the firm.
"We had talked to the bank about refinancing, but it seemed like it would be very hard," Faith recalled.
"But Mesa said they could lower our monthly payment to around $700."
"They were very confident," added Gary, 49. "They said it was almost 100% that they could do it."
Page 1479 of 3826
It would cost the Hunts $3,500 in legal fees, to be paid in two installments of $1,750. It's illegal in
California for upfront fees to be charged for loan modification assistance. But Mesa said it would tap the
cash only as work was completed.
Meanwhile, the couple mentioned that they were carrying about $35,000 in credit card debt. They said
the Mesa representative offered to sign them up with a company called National Debt Management
Group that supposedly could eliminate their obligations within three years.
The Hunts said they were subsequently instructed by a National Debt Management representative to
pay about $500 a month into an escrow account managed by the company that would be used to
negotiate with their creditors.
Flash forward to February of this year. By that point, the Hunts said, Chase had turned them down for a
loan modification not once, not twice, but three times. They also said about $2,000 was withdrawn from
their escrow account, although National Debt Management apparently hadn't done anything to reduce
their credit card debt.
The Hunts asked Mesa Law Group for their money back and said they were thinking about reporting the
firm to the State Bar of California for having charged an upfront fee.
In response, a Mesa representative sent an aggressive letter defending the firm's actions.
"We consider this extortion," the representative, Denny Lake, wrote. "Your letter is filled with lies and
inaccuracies, and Mesa Law Group will aggressively defend ourselves against any false and fraudulent
claims."
He added that the Hunts would be "liable for any legal fees that we may accrue defending ourselves"
and that "we will use every resource at our disposal to collect this from you."
Not long after, the couple decided to contact me.
I did some nosing around and quickly discovered that Mesa Law Group and National Debt Management
share the same address in an office building near John Wayne Airport, as well as the same phone
number.
Page 1480 of 3826
When I called the number, the woman who answered said National Debt Management was "a different
department" of the law firm.
The Better Business Bureau gives Mesa a grade of F because the firm fails to respond to complaints
and because of "grossly misleading" ads.
Paul Petersen, the head of Mesa Law Group, told me he couldn't comment on the Hunts' case because
the dispute was ongoing.
But he said complaints are all too common from clients who didn't see the outcome they'd hoped for.
"Unfortunately, when people are not approved for a loan modification, they are not happy about it,"
Petersen said.
He said Mesa has helped modify about 700 mortgages but that the firm never promises results. "We
agree to process the paperwork and put our best effort in," Petersen said.
He said National Debt Management used to lease space in his office building but is no longer there. He
said National Debt Management "is not affiliated with nor is it any part of Mesa Law Group."
I asked why the two companies share the same phone number. Petersen said this is because calls for
both firms are handled by "a central answering service."
All I know is that a couple of days after I spoke with Petersen, the Hunts said they got a call from
someone at National Debt Management saying the company's owner had decided to fully refund their
money.
Petersen said he had recommended to the firm that it give the Hunts back their money.
A spokesman for National Debt Management, Jacob Meier, said the $2,000 deducted from the escrow
account had been to cover fees. He said that money, plus other funds paid to the company by the
Hunts, would now be returned to settle the matter.
The couple may not be as fortunate with Mesa Law Group.
Page 1481 of 3826
If they'd taken a closer look at their contract with Mesa, they'd have seen language saying the firm
doesn't guarantee any results. Perhaps a Mesa representative gave the impression that a loan
modification would be a slam dunk, but the contract makes no such promise.
Any business can say it will help with a loan modification or reduce your debt, but all it can actually do is
serve as an intermediary. You can apply for assistance from your mortgage lender yourself, just as you
can try to negotiate new terms with creditors.
Undeterred by Mesa's threats, the Hunts did lodge a complaint with the State Bar. A spokeswoman for
the agency said she couldn't comment on whether other such complaints have been received or
whether Mesa is currently under investigation.
Petersen said he couldn't comment on what his firm will now do.
Gary Hunt, for one, is ready to wash his hands of the whole thing.
"We'll write this off to experience and get on with our lives," he said.
Probably a wise decision.
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Page 1482 of 3826
CHCO Meeting today in Full Disclosure from 1130 - 1230 with a special emphasis on Comp II.
Dial-In information is as follows:
202.927.2255
(b) (6)
Regards,
Eben
Page 1485 of 3826
From:
To:
Cc:

accounts/cn=standard users/cn=gorskis>
Tamberrino, Mary (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=tamberrinom>; Black, Brad
accounts/cn=standard users/cn=glasere>; Harpe, Pam (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=slagterd>; Tingwald, James
(fydibohf23spdlt)/cn=recipients/cn=wanderera>; Coyle, Raymond
(CFPB) </o=ustreasury/ou=do/cn=recipients/cn=coyler>; Johnson,
Tranell (Contractor) </o=ustreasury/ou=exchange administrative
group (fydibohf23spdlt)/cn=recipients/cn=johnsontr>; Ellis,
Claudia (Contractor)(CFPB) </o=ustreasury/ou=exchange
(fydibohf23spdlt)/cn=recipients/cn=elliscl>; Patross, Whitney
(fydibohf23spdlt)/cn=recipients/cn=patrossw>
Page 1487 of 3826
Bcc:
Subject:
Date:
Attachments:
Transfer Process Timeline Update

Tue Apr 12 2011 21:59:44 EDT
Transfer Process Timeline DRAFT 4-6-11.xlsx
Human Capital Team,
Good Evening! Since most of the Transferee Solicitations have closed and we are now moving into
the resume review phase of the transfer, the recruitment team will be updating the timeline going
forward. Attached is a current representation of what is going on in the process. Please feel free to let
me know if you have any questions.
Thank you,
Stephanie
Page 1488 of 3826
Media Inquiry Policy FINAL .pdf (Attachment 5 of 5)
March 4, 2011
MEMORANDUM FOR CFPB STAFF
FROM:
Wally Adeyemo
SUBJECT:
Media Inquiry Policy
Below is the CFPB policy on media inquiries:
All media requests and inquiries are handled by the CFPB Media Affairs Office.
All media requests and inquiries should be reported to Media Affairs.
CFPB staff is not permitted to speak with any media representative unless they have approval to do so by
Media Affairs.
As noted above, CFPB policy requires all media inquiries to be handled by or reported to CFPBs Office of Media
Affairs, and the policy prohibits CFPB staff from communicating with the media without prior approval from
Media Affairs. All such requests and inquiries should be directed to Jen Howard, CFPBs Senior Spokesperson.
Below are some guidelines to follow:
A media representative is anyone who is soliciting information for broad dissemination such as bloggers
and trade association representatives or industry observers (as well as the traditional reporter).
The policy covers inquiries from media representatives with whom you have an established relationship.
The policy covers inquiries from media representatives who contact you for an off the record
conversation.
The policy covers any means in which a media representative communicates with you (for example,
informal conversation, telephone call, email, text). Media representatives may also contact you through
social media, such as Twitter or Facebook.
The policy covers all media representatives regardless of where they work, including television networks,
print newspapers, wire services, trade publications, blogs, and newsletters, amongst others. If a media
representative approaches you after speaking on a panel open to the public, or calls you directly, you should
politely decline the request and refer the person to Media Affairs. In addition, you should report all such
media inquiries to Media Affairs.
Note that media representatives may not always identify themselves as members of the media and,
therefore, you should always consult Media Affairs when you receive any inquiry.
Following this policy will ensure that we are responding to press inquiries in the proper manner and providing the
public with accurate and consistent information. In addition, it will make sure that appropriate ground rules are
established.
Media Affairs Contact:
Jen Howard, Senior Spokesperson
Desk: 202-735-7454
(b) (6)
Page 1509 of 3826
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Date:
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Black, Brad
No CHCO meeting today

Tue Apr 12 2011 12:48:21 EDT
Meeting should have been moved. Stay tuned for rescheduled time.
Page 1510 of 3826
Mary
Mary Tamberrino
202-435-7022 (phone)
(b) (6)
for guidance.
Page 1511 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

_DL_CFPB_AllHands
CFPB Weekly Report 4/12

Tue Apr 12 2011 12:38:50 EDT
CFPB Weekly Report

4/12/2011
Overview
Yesterday, when she addressed the National Association of Attorneys General (NAAG) Presidential
Initiative in Charlotte, North Carolina, Elizabeth Warren announced that State attorneys general and the
CFPB finalized a Joint Statement of Principles. Holly Petraeus also addressed the NAAG Presidential
Initiative Conference in Charlotte today.
On Tuesday, Petraeus will testify about financial education for servicemembers before the Senate
Homeland Security and Government Affairs Subcommittee on Oversight of Government Management,
the Federal Workforce, and the District of Columbia.
On Wednesday, Professor Warren and Holly Petraeus will be at Joint Base Myer-Henderson Hall in
Virginia for a town hall with servicemembers. The event is open to the press.
On Thursday, Petraeus will participate in a seminar hosted by the House Committee on Veterans
Affairs concerning the Servicemembers Civil Relief Act.
On Thursday, Rich Cordray will discuss the vision and priorities of the CFPBs Enforcement Division at
the National Community Reinvestment Coalition annual meeting in Washington, D.C. This event is open
to the press.
Professor Warren is tentatively scheduled this week for an interview on the PBS Newshour to discuss
the progress to date standing up the CFPB.
Page 1512 of 3826
Policy
Cards
We are continuing to develop approaches to improve transparency and comparability and to simplify
cardholder agreements. We met this week with American Express to review the results of their pricing
look-back and will be receiving industry data next week. We have scheduled calls with the top issuers
beginning in two weeks after their release their first quarter earnings.
We are continuing to develop policy options in the prepaid space. We met last week with the industry
trade association and with Senator Menendezs staff.
Mortgages
For the TILA/RESPA mortgage disclosure project, we are making final preparations for the first round of
qualitative testing in May, including outreach, the design and content of sample forms, and completing
interviews on the timing of firm mortgage quotes. We completed a memo assessing customer service
problems in mortgage servicing. Work has also begun on the reverse mortgage study mandated by
Dodd-Frank and a reverse mortgage primer.

Regarding deposits and deposit loans, we met last week with the Pew Safe Checking project and are
meeting this week with the National Consumer Law Center. We are scheduling meetings with the
Center for Responsible Lending, the large depository institutions, and several research firms.
We released a letter from General Counsel Len Kennedy regarding section 1071, explaining the Bureau
s interpretation that lenders are not obligated to begin collecting and reporting data concerning credit
applications by women-owned, minority-owned, and small businesses until the Bureau issues
implementing regulations.
We expect to sign a memorandum of understanding with FinCEN. This will provide the CFPB with
access to FinCEN Bank Secrecy Act data, which will be used by Supervision and Enforcement.
We have conducted interviews of approximately 90 OTS transfer candidates for Bank Supervision.
Approximately 50 candidates have been informed about our intent to provide them with written offers.
A memorandum of understanding for the sharing of information between CFPB, OCC, and OTS was
signed by all agencies.
Page 1513 of 3826
The fair lending team will begin participation in the interagency fair lending task force which meets
bimonthly to discuss trends and emerging issues.
Outreach
On Monday, Professor Warren will meet with the North Carolina Bankers Association and 38 of its bank
heads in Charlotte, NC. On Tuesday and Thursday, Professor Warren will speak to community bankers
from California, Arkansas, and Kentucky.
On Tuesday, Steve Antonakes and Dan Sokolov will participate in a meeting with the ABAs
Compliance Committee.
Also on Tuesday, Petraeus will attend the White House Launch of its Military Families Initiative.
On Wednesday, Steve Antonakes and Zixta Martinez will meet with the California Reinvestment
Coalition.
Rich Cordray will deliver remarks at the American Council on Consumer Interests conference in
Washington, D.C. on Thursday. That same day, Kelly Cochran will deliver remarks at American Bar
Association Consumer Financial Services Committee Meeting.
On Friday, Petraeus will head to Oklahoma City where she will meet with Governor Fallin and the
Adjutant General of Oklahoma, Major General Myles L. Deering. On Saturday she will give the keynote
address before the Oklahoma National Guard Volunteer Workshop. This summer, the Oklahoma
National Guard is embarking on its largest deployment since the Korean War.
CFPB staff will meet with the State Department Federal Credit Union, the Pentagon Federal Credit
Union, and the National Credit Union Association in Columbus, Ohio, at the Ohio Credit Union
Association convention.
Corey Stone will speak at, and Rebecca Smullin will attend, a Ford Foundation and World Bank event
on cross-border remittances.
Page 1514 of 3826
We will also meet with the ABAs community bank group, and with the Education Department on
financial literacy.
Management
We intend this week to award the contract for an interim consumer interaction system.
We will also launch an internal staff directory.
We have received a new FOIA request for any CFPB communications regarding branding.

-
Calls with California and Arkansas Community Bankers

-
Town Hall at Joint Base Myer-Henderson Hall with Secretary Geithner and Holly Petraeus

-
Calls with Massachusetts and Kentucky community bankers
Page 1515 of 3826
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_DL_CFPB_AllHands
Adamske, Steven
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Tue Apr 12 2011 12:28:43 EDT
Index

NAAG Speech
Charlotte Observer Warren: Feds need states help with banking reform
Bloomberg Consumer Bureaus Warren Outlines Accord With State Regulators
Reuters US consumer bureau to have new rules in 2012
Page 1516 of 3826
Dow Jones Newswires Consumer Bureau, Attorneys General Partner On Enforcement
MarketWatch Federal consumer bureau details plans for states
National Mortgage Professional Magazine CFPB and State Attorneys General Partner on
Protecting the American Consumer
American Banker Consumer Bureau, AGs Tout Cooperation
Charlotte Business Journal Financial consumer watchdog Elizabeth Warren wants one-page
mortgage disclosure
WBTV News (Charlotte) Elizabeth Warren talks new govt agency in Charlotte
WSOC TV (Charlotte) Officials Talk Foreclosure Prevention In Charlotte
Dow Jones Newswires Consumer Protection Bureau Working On Fair-Lending Rule
American Banker CFPB Says Card Data Not Yet Required
The Hill (blog) Spending deal forces consumer bureau to open its books
Wall Street Journal SEC, CFTC Win Funding Increases in Budget Deal
Dallas Morning News (blog) Elizabeth Warrenright person for a nearly impossible task
Dallas Morning News Consumer watchdog agency backer Elizabeth Warren sees hope for new
bureau
The Hill (blog) Mrs. Warrens profession
American Banker Budget Pact Includes Audits of CFPB
Wall Street Journal Hatch Seeks Dodd-Frank Delay
The Hill (blog) Delay implementation of Dodd-Frank
Credit Union Times Push to Modify New Consumer Bureau Well Under Way
Credit Union Times Capito Holds Forth on Interchange, Other Issues
Reverse Mortgage Daily CFPB Leader Warren Stresses Accountability, Defends Bureau
CNBC Mad Money with Jim Cramer Lightning Round
Business First Elizabeth Warren to speak to bankers at Olmsted
The Hill Liberals need a plan
Page 1517 of 3826
Wall Street Journal Critical Signs in Foreclosure Talks
Bloomberg Schneiderman Says Foreclosure Deal Shouldnt Block State Probes
American Banker Study: State AG Servicer Terms Could Cost Economy $10 Billion a Year
Consumer Credit
New York Times Burden of College Loans on Graduates Grows
TechCrunch Peter Thiel: Were in a Bubble and Its Not the Internet. Its Higher Education.
American Banker Tech Firms Side With Banks in Fight to Delay Durbin Amendment
Credit Slips How Credit Card Companies Get Around the Card Act
Elgin Courier News (Illinois) Options abound for the desperate without credit
Huffington Post Military Spouses Face Difficulties Finding Employment
Housing
Housing Wire Florida foreclosure defense attorneys allege rocket docket abuses
American Banker New Questions about Banks Force-Placed Insurance Deals
American Banker Whats Behind the Comeback in Private Deeds
Housing Wire Illinois Supreme Court forms committee to deal with foreclosure mess
Housing Wire Foreclosure note enough for trustee standing: Florida appellate court
Housing Wire Housing advocacy groups investigate lenders, asset managers
Wall Street Journal (blog) Real Estate Bust Hasnt Dimmed Americans Faith in Real Estate
Wall Street Journal (blog) Commentary: Right-to-Rent Would Ease Foreclosure Mess
Charlotte Observer
Warren: Feds need states help with banking reform
Top U.S. consumer-finance cop speaks at attorneys general meeting in Charlotte
Page 1518 of 3826
April 12, 2011

By Rick Rothacker
Consumer Financial Protection Bureau architect Elizabeth Warren sent a strong message Monday that
enforcement will be a top priority - and that she wants state officials to serve as additional cops on the
beat.
In a speech in Charlotte, the Obama administration official said more than half of her nascent agency's
budget will be devoted to enforcing financial laws. Warren also announced an agreement with state
attorneys general to share information and coordinate investigations.
Speaking to a gathering of state attorneys general, the former Harvard University professor praised the
officials for their investigation of lenders' foreclosure practices - and for moving more swiftly than federal
banking regulators.
"Collaboration between the CFPB and the attorneys general offers tremendous promise," she said in
remarks to the National Association of Attorneys General. "By working together, we can make the whole
greater than the sum of our parts."
In a question-and-answer session, Warren also shared details about the first regulation the bureau is
developing: a requirement that mortgage lenders provide consumers a one-page, easy-to-read
document that would give essential details about a loan's cost before closing.
Warren's appearance came as part of a two-day conference hosted by N.C. Attorney General Roy
Cooper on the landmark Dodd-Frank financial reform law. The keynote speaker today is Bank of
America Corp. chief executive Brian Moynihan, whose appearance is expected to draw a demonstration
from a group advocating for struggling homeowners.
N.C. United Power, a network of clergy members, wants to urge the attorneys general to pursue a
strong settlement with Bank of America and other lenders over their foreclosure practices, said director
Gerald Taylor. The bank says it's reaching out to the group.
The CFPB is one of the most significant forces to emerge from the Dodd-Frank law passed by
Congress last summer. Warren is charged with constructing the agency, which officially goes into
operation in July, although it's not clear yet who will run it. She has won praise from consumer
advocates for her tough attitude but is a lightning rod for critics who say the bureau is too powerful. Its
proposed fiscal 2012 budget calls for $329 million to cover its operations.
Page 1519 of 3826
Under Dodd-Frank, state attorneys general are authorized to enforce the federal law and its regulations,
with certain exceptions. It gives new firepower to state officials who in the past have found their efforts
to police national banks "pre-empted" by federal banking regulators.
The agreement announced by Warren is between the CFPB and a working group of attorneys general
from six states, including North Carolina. Over time, the goal is to get other states on board and to flesh
out more detailed guidelines.
The agreement calls for the development of joint training programs, the sharing of information to
develop law enforcement priorities and coordinated investigations. The federal and state officials will
also work to share and refer consumer complaints.
Iowa Attorney General Tom Miller, whose state is party to the agreement, said it will promote "a lot
more cooperation, a lot more efficiency of what they do and what we do, and as a result will be
something that is very good for the American consumer."
Regulators often talk about working together, but Warren's remarks are part of a clear trend that shows
she's serious about cooperating with others to leverage the resources of her start-up agency, said Don
Lampe, a Womble Carlyle attorney who represents financial institutions.
"I think this is more than just a speech and more than just rhetoric," said Lampe, who is attending the
conference.
The desire to coordinate among agencies is a positive but businesses still have a concern about how it
will play out, said Andy Pincus, an attorney with Mayer Brown who spoke on a panel about the new law.
Legitimate businesses want to know what the rules of the road are and who will be enforcing them, he
said. "The proof will be in the pudding," he said of the agreement.
Warren spent the first part of her presentation giving prepared remarks that she said needed to be "read
and approved" by multiple parties. But she spent the rest of her 45 minutes answering questions mostly
from attorneys general.
In explaining the agency's effort to revamp the mound of documentation consumers receive before a
mortgage closing, she called the current paperwork "the worst part of regulation," saying "you produce
some cost for the mortgage originator and almost no benefit for the customer."
Page 1520 of 3826
Her "dream" is that consumers will one day receive a one-page "mortgage shopping sheet" that details
the monthly payment, the cash needed at closing and the time it will take to pay off the loan.
Consumers could then easily compare and contrast products. The agency plans to make public and test
various prototypes before proposing a final regulation, she said.
After her brief stop in the nation's second biggest banking center, Warren told reporters she had a
straightforward message for banks, large and small.
"If you really want to offer an honest product to your consumer and you're willing to engage in head-tohead competition, I'm your new best friend," she said. "If you're not, then I'm probably not your new best
friend."
Back to Top
Bloomberg
Consumer Bureaus Warren Outlines Accord With State Regulators
April 11, 2011
By Carter Dougherty
The U.S. Consumer Financial Protection Bureau being created under the Dodd-Frank Act will join
forces with state attorneys general to maximize protections against predatory lending and share
enforcement costs, Obama administration special adviser Elizabeth Warren said today.
We want to protect consumers from unlawful acts or practices, said Warren, who announced a joint
statement of principles at a National Association of Attorneys General conference in Charlotte, North
Carolina. We want to provide clear rules that improve the marketplace for consumers and remove
unfair competition.
Warren, 61, has courted the attorneys general as partners since President Barack Obama appointed
her to set up the bureau in September. Under todays agreement, the regulators will conduct joint
training programs, share information and cooperate on enforcement to the fullest extent permitted by
Page 1521 of 3826
the law, according to a statement from the U.S. Treasury Department, which is housing the bureau
until it starts work in July.
I hope the days of playing us off against each other at the state and federal level are over, Warren
said. There should not be daylight between us.
The consumer bureau will help attorneys general financially by picking up the costs of preparing
enforcement cases, such as writing legal briefs and hiring expert witnesses, Warren said. States will
also get a budgetary boost from fines and penalties assessed in enforcement actions, she said.
We want to be very mindful of our need to be helpful to the state attorneys general, Warren said.
Sought Grants
Some state attorneys general had asked Warren whether the consumer bureau would make grants of
federal money available for state enforcement efforts.
Indiana Attorney General Greg Zoeller said in an interview that the consumer bureau should not
dictate exactly how states use the money because of the administrative costs. Its not just the
resources, its the strings that come attached to federal money, Zoeller said.
Dodd-Frank, the regulatory overhaul law enacted in July, calls for the bureau to get a portion of the
Federal Reserves operating budget amounting to about $500 million annually.
The federal and state regulators will seek legal remedies to foster transparency, cooperation, and
fairness in the markets for consumer products or services across state lines, without regard to corporate
forms or charter choice, Treasury said. They will also coordinate work on a consumer complaint
system, according to the statement.
People are hurt every day by unfair financial products, North Carolina Attorney General Roy Cooper
said in the Treasury statement. Together, we can pose a greater deterrent to unscrupulous financial
services providers, said Cooper, who is chairman of the national attorneys general group.
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Page 1522 of 3826
Reuters
US consumer bureau to have new rules in 2012
April 11, 2011
By Joe Rauch
Update 2
(Official clarifies Warren's remarks that she meant April 2012 for introduction of new consumer rules,
not January 2012. Also clarifies number of new regulations being introduced under the Dodd-Frank Act
from 34 to as many as 20, and clarifies that the Fed and CFPB are not working together on new
regulations, but working on timing and implementation of the rules)
* Bureau to have at least some regulations in place
* Warren says group working with Fed on new rules (Adds byline and background on Warren)
CHARLOTTE, N.C., April 11 - New consumer financial regulations will be in place as soon as April
2012, according to the White House adviser helping to set up the new consumer financial protection
bureau.
Elizabeth Warren, speaking at the 2011 summit of the National Association of Attorneys General, said
the Consumer Financial Protection Bureau is working with the Federal Reserve to smooth the timing
and implementation of the new rules. The new rules are mandated by 2010 Dodd-Frank Act, with some
of the latest rules being crafted by the Fed taking effect early next year.
"There will be some, but not all, in place" by next January, she said in response to a question from the
audience.
Page 1523 of 3826
Federal regulators are responsible for up to 20 new consumer-oriented regulations by early 2013,
Warren said.
The CFPB will take over much of the regulatory responsibility from the Fed over the next year. The
agency was a key part of the financial industry reform legislation enacted into law last summer.
Warren said the CFPB will get its rule-making authority on July 21, when it is officially open for
business.
Warren, a Harvard Law School professor, has been an outspoken consumer advocate and is serving as
an adviser to President Barack Obama and the U.S. Treasury Department to help set up the new
agency.
She has long been considered a potential nominee to be director of the CFPB, but she has been
controversial and may have trouble winning Senate confirmation.
The agency will police mortgages and credit cards and try to curb predatory practices in the financial
industry.
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Dow Jones Newswires

Consumer Bureau, Attorneys General Partner On Enforcement
April 11, 2011
The new U.S. consumer watchdog agency is working to enhance its partnership with state attorneys
general, a federal-state collaboration that's trumpeted by consumer advocates but has financial firms on
edge.
Page 1524 of 3826
On Monday, Elizabeth Warren, the White House adviser tasked with preparing the new Consumer
Financial Protection Bureau for its July 21 launch, announced a new "joint statement of principles" that
sheds some light on how the agency wants to cooperate with the state officials on enforcement issues.
The statement says the consumer agency and the state attorneys general will seek to share information
and analysis, engage in regular consultation to identify enforcement priorities, and develop a framework
to share information related to investigations, among other things.
While the cooperation is seen as a way to boost the federal agency's ability to protect consumers in
states across the nation, critics are likely to be skeptical of the partnership. Warren's role in mortgage
settlement talks between state attorneys general, Obama administration officials and banks has
sparked ire among Republicans and financial industry players. Warren has said she has provided
advice on the settlement negotiations to address alleged mortgage servicing abuses revealed last year.
But Republicans argue that Warren has been more deeply involved in the matter and that the bureau
has overstepped its authority.
In addition, financial industry officials have raised concern that the Dodd-Frank financial overhaul, which
created the consumer bureau, gives states too much power to work with the consumer agency to
enforce federal laws.
At the same time, Warren has made clear that a strong partnership with the states is a key part of the
bureau's enforcement plans. She hired Richard Cordray, a former Ohio attorney general, as the
bureau's enforcement chief. In addition, Warren has routinely met with attorneys general about the
mortgage servicing settlement and other issues.
"I anticipate that our cooperation will have a profound effect on the consumer financial markets,"
Warren said Monday.
Speaking from a summit in Charlotte, N.C., Warren said enforcing consumer protection laws is one of
the bureau's key missions. She noted that more than half of the bureau's resources will be devoted to
enforcing consumer protection laws.
"I think everyone in this room is aware of the deep structural problems that impeded both state and
federal cooperation and effective federal enforcement of consumer protection laws in the years leading
up to the 2008 financial crisis," she said.
The Consumer Financial Protection Bureau was created as a new agency solely focused on protecting
Page 1525 of 3826
consumers from abusive financial products. On July 21, when the bureau launches, it will inherit the
ability to enforce consumer protection laws that are currently spread among several federal agencies. In
addition, Dodd-Frank gives the bureau authority over thousands of companies that offer mortgages and
pay day loans but have escaped federal regulation because they are not banks.
The bureau will help eliminate "the sort of patchwork of rules and enforcement that permitted some
lenders to hit-and-run as they shifted locations and charters," Warren said in her remarks, adding that
state attorneys general will be "indispensable partners" for the bureau.
"Law enforcement will be foundational to our success," she added.
However, Bank of Bennington President Leslie Andersen last week told a U.S. House panel that she
worries that the Dodd-Frank financial overhaul gives "unfettered authority to state attorneys general and
prudential regulators" to enforce the consumer bureau's authorities and rules. Speaking on behalf of the
American Bankers Association, Andersen said her small, 80-plus-year-old, Nebraska bank would face
"complicating and conflicting standards."
In contrast, Warren in her speech at the National Association of Attorneys General Presidential Initiative
Summit said the collaboration between the consumer bureau and the attorneys general "offers
tremendous promise."
Dodd-Frank gives attorneys general the authority to enforce certain rules written by the consumer
bureau.
Warren said she wants to ensure that the consumer bureau is complementing state efforts, rather than
duplicating.
"Working together with you, 'the people's lawyers' across our nation, I am convinced that we can do
better," Warren told the summit.
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Page 1526 of 3826
MarketWatch
Federal consumer bureau details plans for states
Consumer agency and attorneys general to train together: Warren
April 11, 2011
By Ronald D. Orol
Branded by Republicans as having undue influence in bank foreclosure settlement talks, the top Obama
Administration adviser on a new consumer protection bureau on Monday detailed the ways the new
agency will work with states to enforce laws.
Collaboration between the consumer bureau and the attorneys general offers tremendous promise,
Special Advisor to the Treasury Elizabeth Warren told a gathering of attorneys general in Charlotte, N.
C. By working together, we can make the whole greater than the sum of our parts.
Warrens comments come as top House Republicans have expressed concern about her participation
in ongoing mortgage settlement talks between bank regulators, financial institutions and attorneys
general over shortcomings in how banks handled foreclosures.
She is assigned with setting up a Consumer Financial Protection Bureau, or CFPB, charged with writing
rules for mortgages and other credit products. The Obama administration hasnt nominated the bureau
s first director yet.
GOP lawmakers on the House Financial Services Committee and Warren clashed at a recent hearing
over the level of her involvement in the settlement talks between regulators and large financial
institutions. Bank regulators are expected to announce a settlement with banks in the coming days, but
a broader deal between the institutions and attorneys general is still months away.
Warren did not mention the settlement talks in her prepared remarks, but she discussed a broader
partnership between the new consumer bureau and attorneys general. The sweeping post-crisis DoddFrank Act creates the consumer bureau. It also empowers attorneys general to enforce regulations that
the consumer agency writes.
She talked about how the CFPB will develop joint training programs with AGs, share information on
developments in state and federal laws and develop new communications channels. She said the two
groups will also coordinate collecting, investigations and responding to consumer complaints.
Page 1527 of 3826
Moving forward, consistent and effective enforcement of consumer financial laws will require our
sustained collaboration, Warren said.
Warren didnt comment on whether she was working with the attorneys general in settlement talks after
revelations about foreclosure-documentation errors at big banks and a stalled application process for
many troubled borrowers seeking to modify their mortgages.
However, she argued that the attorneys general were the first to identify the problems.
None of us should ever forget that attorneys general were among the first to sound the alarms that
foreclosure processes were riddled with flaws long before the stories of robo-signing and false
affidavits began to appear in headlines across the country, and even longer before the nations chief
banking regulator concluded that the practices violated both state and local laws and damaged the
mortgage market and the larger economy, she said.
Back to Top
National Mortgage Professional Magazine

CFPB and State Attorneys General Partner on Protecting the American Consumer
April 11, 2011
The Consumer Financial Protection Bureau (CFPB) and the Presidential Initiative Working Group of the
National Association of Attorneys General (NAAG) have announced agreement on a Joint Statement of
Principles, the first step in forging a new partnership between federal and state officials to protect
consumers of financial products and services. Elizabeth Warren, Assistant to the President and Special
Advisor to the Secretary of the Treasury on the CFPB, highlighted the agreement in her remarks at the
NAAG Presidential Initiative Summit in Charlotte, NC.
I anticipate that our cooperation will have a profound effect on the consumer financial markets, Warren
told state attorneys general and others gathered at the summit, according to her prepared
Page 1528 of 3826
remarks. Together, we can pose a greater deterrent to unscrupulous financial services providers. We
can protect more consumers, and we can ensure that more institutions follow the rules.
The Joint Statement of Principles was developed to advance three goals shared by the CFPB and state
attorneys general to ensure protections for consumers of financial products and services: Protect
consumers of financial products or services from unlawful acts or practices; provide clear rules that
improve the marketplace for consumers and remove unfair competition for the benefit of law-abiding
businesses; and find ways to promote understanding and address concerns raised by consumers about
financial products or services as efficiently and effectively as possible.
People are hurt every day by unfair financial products, said North Carolina Attorney General Roy
Cooper, who serves as President of the NAAG. This agreement will put more cops on the beat to
protect consumers and businesses that are doing the right thing.
In the Joint Statement, the parties agree to:
Develop joint training programs and share information about developments in federal consumer
financial law and state consumer protection laws that apply to consumer financial products or services;
Share information, data, and analysis about conduct and practices in the markets for consumer
financial products or services to inform enforcement policies and priorities;
Engage in regular consultation to identify mutual enforcement priorities that will ensure effective
and consistent enforcement of the laws that protect consumers of financial products or services;
Support each other, to the fullest extent permitted by law as warranted by the circumstances, in
the enforcement of the laws that protect consumers of financial products or services, including by joint
or coordinated investigations of wrongdoing and coordinated enforcement actions;
Pursue legal remedies to foster transparency, competition, and fairness in the markets for
consumer financial products or services across state lines and without regard to corporate forms or
charter choice for those providers who compete directly with one another in the same markets;
Develop a consistent and enduring framework to share investigatory information and to

coordinate enforcement activities to the extent practicable and consistent with governing law;
Page 1529 of 3826

Share, refer, and route complaints and consumer complaint information between the CFPB and
the state attorneys general;
Analyze and leverage the input they receive from consumers and the public in order to advance
their mutual goal of protecting consumers of financial products or services; and
Create and support technologies to enable data sharing and procedures that will support
complaint cooperation.
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American Banker
Consumer Bureau, AGs Tout Cooperation
April 12, 2011
By Cheyenne Hopkins
The Consumer Financial Protection Bureau and the 50 state attorneys general released a joint
statement on Monday designed to strengthen their ability to work together.
Elizabeth Warren, the Obama administration official in charge of setting up the CFPB, said the
statement of principles would help the agency continue to rely on the attorneys general for the best
enforcement of consumer protection laws.
"Collaboration between the CFPB and the attorneys general offers tremendous promise. By working
together, we can make the whole greater than the sum of our parts," Warren said Monday in a speech
to the National Association of Attorneys General Presidential Initiative Summit in Charlotte, N.C. "In the
Dodd-Frank Act, Congress authorized attorneys general to enforce certain regulations that the CFPB
writes, and in many cases to enforce our statute directly. These provisions are critical. While the value
of shared law enforcement goals between federal and state officials is obvious to many of us in this
room, we also know that federal banking regulators often have acted at cross-purposes with the
attorneys general and state regulators in the past."
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Under the agreement, the CFPB pledges to develop joint training programs with the AGs, share
information, data and analysis about conduct and practices of consumer financial products, consult
regulators to identify mutual enforcement priorities, pursue legal remedies, coordinate enforcement
activities and create and support technologies for data sharing.
In the speech, Warren touted the work of the attorneys general.
"Attorneys general are natural partners for the CFPB in our enforcement work, just as state banking
supervisors are natural partners in our supervision work," she said. "Indeed, you are indispensable
partners. You are the states' chief law enforcement officers. You are also on the front lines of consumer
protection, and you are intimately familiar with the range of problems that hit American families the
hardest."
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Charlotte Business Journal

Financial consumer watchdog Elizabeth Warren wants one-page mortgage disclosure
April 11, 2011
By Adam ODaniel
Elizabeth Warren, the woman tapped by President Obama to create the Consumer Financial Protection
Bureau, told a Charlotte audience Monday morning some of the bureau's first work will be to create a
single-page disclosure form for all home buyers.
Warren, a Harvard professor, said the bureau has already created four drafts of a form that industry and
consumer watchdogs will review before a final version is put to use. The form will explain in plain
language the terms of a home mortgage, including interest rate, principal, loan type, monthly payments
and other important information. Mortgage originators will be required to use the form.
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The disclosure is designed to help borrowers better understand the terms of their mortgage. And she
called the existing regulations that require dozens of arcane disclosure forms one of the most ineffective
rules in place today.
Warren said much of the subprime bubble was created by lenders steering unsuspecting borrowers into
overpriced subprime loans that later became a burden for borrowers and contributed to the housing
downturn and recession.
"We sold instability into the system," she said. "Those products were so laden with fine print that it was
literally impossible to compare" with other mortgage offers.
Warren gave a keynote address at the National Association of Attorneys General Monday morning in
Charlotte. N.C. AG Roy Cooper is the president of that group this year. He organized the summit on
consumer financial protection issues. It concludes Tuesday after a speech by Bank of America CEO
Brian Moynihan.
Warren has been a lightning rod for both praise and criticism as Obama's point-person on consumer
protections for banking customers. Republicans argue the bureau she's building will be too heavyhanded on the nation's banks. Left-leaning politicos are hoping the new agency and its muscle will
prevent future problems like the foreclosure crisis now crippling the U.S. housing market.
For much of her 50-minute slot, Warren explained the CFPB's intent to work alongside state attorneys
general to enforce new and existing laws governing financial institutions and how they interact with
consumers. She said she hoped the federal bureau and state agencies can work together to fight the
powerful bank lobby and other groups that have tried to pit the groups against each other as a method
for delaying progress.
Warren said more than 50% of the bureau's budget will be dedicated to supervision and enforcement of
consumer protection laws.
She admitted preventing all scams and unsavory practices isn't a realistic goal. But she did vow to
make sure basic consumer-oriented financial products are safeguarded.
"We won't be able to prevent every single scam or economic bubble," she said. "But the next one isn't
going to be found in people's mortgages, credit cards or checking accounts."
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WBTV News (Charlotte)

Elizabeth Warren talks new govt agency in Charlotte
April 11, 2011
By Melissa Hankins
Elizabeth Warren, President Obama's new consumer cop, is building a government agency to protect
you.
"Some days I feel like Bob the builder," Warren told WBTV's Melissa Hankins. "You know, you get up
and you see how you can put something together for American families. We can actually make
government work in this area."
The Consumer Bureau is not yet operational - it's still being formed - but Warren came to Charlotte
today to tell bankers and lawyers and politicians that it will bring fairness to American finances, policing
everything from mortgages to credit cards to checking accounts.
"You know, my message to all bankers, large and small, is if you really want to offer an honest product
to your consumer...if you're willing to engage in head to head competition...I'm your new best friend,"
Warren said. "If you're not...than I'm probably not your new best friend."
The conference today was really North Carolina Attorney General Roy Cooper's gig, and Warren said
he's been instrumental in the process of the country's financial reform, especially when it comes to
holding mortgage providers accountable. In fact, Cooper is trying to get the big banks to pay for their
blunders.
"We haven't discussed a figure with them," Cooper said. "But obviously there's been fraud committed
on the court, and there needs to be consequences for that."
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WSOC TV (Charlotte)
Officials Talk Foreclosure Prevention In Charlotte
April 11, 2011
Charlotte was center stage Monday for a major national discussion on foreclosure prevention.
Attorneys general from across the United States met in Charlotte to talk about how to protect
homeowners.
More than 1,800 foreclosures were started in March in Mecklenburg County, so there's no question
foreclosures are still a major issue.
They have not put enough resources into trying to mediate some of these terrible loans that were made
out there with consumers, North Carolina Attorney General Roy Cooper said.
Cooper is focusing on protecting consumers from mortgage scams targeting those in or close to
foreclosure, and he's not alone. On Monday, presidential adviser Elizabeth Warren, who's helping put
together the country's new Federal Consumer Bureau, was in Charlotte outlining a new plan to work
with states to hold mortgage providers more accountable.
We've got to make it so these financial products are not loaded with tricks and traps, not loaded with
fine print, Warren said.
Among Warren's ideas is creating a one-page document for homebuyers that would show interest rates,
length of loans, other fees and total costs of loans. It would allow easier comparisons of loans and,
Warren hopes, help end predatory loans that helped spark the recession.
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If you really want to offer an honest product to your consumer, if you're willing to engage in head-tohead competition, then I'm your new best friend, she said. If you're not, then I'm probably not your new
best friend.
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Dow Jones Newswires

Consumer Protection Bureau Working On Fair-Lending Rule
April 12, 2011
The Consumer Financial Protection Bureau's general counsel Monday said the new watchdog agency
will work "expeditiously" on a fair- lending rule that will require banks and other financial firms to report
information about their small-business customers.
Leonard Kennedy, the bureau's general counsel, also clarified that the new data-reporting obligations-which are aimed at helping regulators understand credit applications by small, women-owned and
minority-owned businesses--won't go into effect until the rules have been finalized.
Kennedy said he was responding to "multiple inquiries" about when financial firms would have to start
collecting the information. Some financial firms have groaned about new data-collection requirements in
the Dodd-Frank financial overhaul Congress passed last summer, arguing that the informationgathering could be burdensome for small firms.
"Given the sensitivity of the data at issue, we believe Congress intended that the bureau first provide
guidance regarding appropriate procedures, information safeguards, and privacy protections," Kennedy
said in a document issued by the consumer bureau. "Waiting to commence information collection until
implementing regulations are in place will also ensure that data is collected in a consistent,
standardized fashion that allows for sound analysis by the bureau and other users of the data."
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The Dodd-Frank financial overhaul directs lenders to gather information about whether businesses are
a women- or minority-owned or small businesses. Lenders will be required to submit the data to the
consumer bureau, which is slated to start up as an independent consumer watchdog agency July 21.
Kennedy said the new data will help regulators ensure that banks are providing loans in a fair manner
while also shedding light on the credit needs of small businesses.
Kennedy said the bureau will be reaching out to financial firms, small- business groups and nonprofit
organizations for input as it starts to develop the data-collection rules, adding that he expects "the public
will have a full opportunity to comment" on the agency's proposed regulations.
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American Banker
CFPB Says Card Data Not Yet Required
April 12, 2011
By Cheyenne Hopkins
The Consumer Financial Protection Bureau sent a letter to banks on Friday notifying them that they do
not yet have to comply with a Dodd-Frank requirement that mandates data collection on credit
applications by women and minorities.
The Dodd-Frank law requires financial institutions to collect and report information to the CFPB on
credit applications made by women- and minority-owned businesses and small businesses. Leonard
Kennedy, the CFPB's general counsel, notified institutions that the section does not become effective
until the CFPB issues guidance on how to record and store such data.
"In light of inquiries we have received regarding the timing of financial institutions' obligations under
section 1071, we have reviewed the statutory text, purpose and legislative history and conclude that
their obligations, including for information collection and reporting, do not arise until the bureau issues
implementing regulations and those regulations take effect," Kennedy wrote. "Given the sensitivity of
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the data at issue, we believe Congress intended that the bureau first provide guidance regarding
appropriate procedures, information safeguards and privacy protections. Waiting to commence
information collection until implementing regulations are in place will also ensure that data is collected in
a consistent, standardized fashion that allows for sound analysis by the bureau and other users of the
data."
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Spending deal forces consumer bureau to open its books
April 12, 2011
By Peter Schroeder
The six-month spending package unveiled early Tuesday morning by House Republicans would ramp
up the oversight of the new Consumer Financial Protection Bureau (CFPB).
The bill, which would fund the government through the remainder of the fiscal year, includes a provision
that would require the CFPB to submit to two audits per year one conducted by the Government
Accountability Office, and another by an independent auditor.
The audits will allow examiners to pore over the operations, financial statements and budget of the new
agency, which has come under criticism from Republicans since its creation as part of the Dodd-Frank
financial reform law.
The office of House Speaker John Boehner (R-Ohio) touted the provision Tuesday.
"The agreement subjects the so-called Consumer Financial Protection Bureau (CFPB) created by the
job-destroying Dodd-Frank law to yearly audits by both the private sector and the Government
Accountability Office," his office said in a statement.
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However, the White House claimed Saturday that Democrats were able to fight off GOP efforts to limit
the CFPB's funding.
GOP lawmakers contend that the bureau, set to begin work in July, has been handed significant powers
that it could use to stifle innovation in the financial sector. House Republicans have proposed a handful
of bills that would alter the bureau, including replacing a single director tasked with heading the agency
with a bipartisan commission, and bringing the bureau's budget under the purview of congressional
appropriators.
CFPB backers, including the presidential assistant in charge of setting up the agency, Elizabeth
Warren, contend these bills are an attempt to limit the effectiveness of the agency before it gets up and
running.
The spending package, which will be voted on later this week, also includes a provision mandating the
Comptroller General of the United States to begin conducting annual studies of all the government's
regulations on the financial services industry.
Specifically, the bill requires an examination into what impact government rules are having on financial
markets, how much it costs companies to comply with those rules and whether regulators are
conducting cost-benefit analyses when writing rules. All those issues had been identified as areas of
concern by Republican lawmakers since the Dodd-Frank financial reform law was enacted.
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Wall Street Journal

SEC, CFTC Win Funding Increases in Budget Deal
April 12, 2011
By Corey Boles and Jessica Holzer
WASHINGTONFinancial-regulatory agencies fared reasonably well as a result of the funding deal
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struck by congressional lawmakers late last week, dodging the steep budget cuts that Republicans had
proposed.
Terms of the compromise were released early Tuesday after congressional staff spent the days since
the deal was reached trying to agree to specific funding levels for federal government agencies and
programs.
The Securities and Exchange Commission will get $1.2 billion over the remaining months of fiscal 2011,
which ends on Sept. 30. This is $100 million less than the architects of the Dodd-Frank financial
regulatory overhaul had hoped it would receive to implement the measures created by the law.
But the agency's budget is increased by $74 million from fiscal year 2010the last period for which
Congress passed a budgetand it is $116 million higher than would have been the case had an earlier
spending bill passed by the Republican-controlled House been implemented.
The Commodity Futures Trading Commission will receive $203 million under the budget deal, according
to the details released. This is a 20% increase over its budget during fiscal 2010, and $90.7 million
more than Republicans would have allocated to it in their funding plan.
The budget increases represent a victory for SEC Chairman Mary Schapiro and CFTC Chairman Gary
Gensler, whose arguments before Congress in recent months appeared to have persuaded some key
Republicans to back away from cuts to their agencies. The regulators told lawmakers the earlier Housepassed spending plan would disrupt their core enforcement efforts, force them to furlough staff and halt
implementation of parts of the Dodd-Frank law.
The budget increases include new authority the CFTC had requested to make hiring and technology
investment decisions over a two-year, rather than a one-year, period. They also contain $37.2 million to
upgrade the commission's computer systems, a $17.2 million jump over current technology spending
levels.
The Internal Revenue Service also escaped the budget cuts envisaged by House Republicans. The taxcollecting agency was facing a 5%, or $603 million, cut under the GOP spending plan, but this wasn't
included in the final deal. It will receive a budgetary allocation of just over $12 billion.
Republicans had also sought to limit funding available to the newly created Consumer Financial
Protection Bureau, but that provision was stripped out of the final spending agreement. Language was
added to the bill creating a mandate for the Government Accountability Office to conduct an annual
audit of the consumer agency. The consumer bureau was created as part of Dodd-Frank in an effort by
Democrats to provide transparency to consumers active in the credit card, mortgage and personal loan
markets.
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Republicans have been widely critical of the entity, arguing that it simply creates more bureaucracy and
red tape, and will do little to protect consumers. As it will sit under the auspices of the Federal Reserve,
one of the GOP's primary complaints is that the agency wouldn't be subjected to much congressional
oversight. Aides say the audit provision was added to address these complaints.
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Dallas Morning News (Opinion Blog)

Elizabeth Warrenright person for a nearly impossible task
April 11, 2011
By Jim Mitchell
Make no mistake -- I'm a fan of Elizabeth Warren.
For those who can't place the name, she's the assistant to the president and a special adviser to the
secretary of the Treasury who is overseeing the startup of the new Consumer Financial Protection
Bureau. She also headed a TARP oversight panel, and has the knack of speaking in plain, direct
purposeful sentences. In other words, she's just the right person to put into place procedures to force all
those financial companies who hide behind 25-page "disclosure" documents to put their terms into plain
English. It's sad that we need a bureau to get financial companies to lay out the facts, but such is life.
And if you wonder about how transparent this bureau could be, just look at this offering -- her daily
schedule online, updated monthly and current through the end of March. Even if you think this is a bit
dramatic, you have to admire someone who puts herself out there in this way.
I heard Warren last week here in Dallas at the Society of American Business Editors and Writers
conference, and I came away with a great optimism about her resolve, but downtrodden about whether
lawmakers will let this developing unit do its job. Warren is the only reason the bureau even has a
fighting chance. She says several bills in Congress have taken aim at the bureau, seeking to block it
entirely, or failing that, tie its hands in ways that would render it ineffective. Says Warren:
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"What we are trying to do here is make the price fair, the risk fair and make it easy to compare products.
That's good for consumers and ultimately good for underwriters.
"This is the shocking notion that you can tell what a box of cereal costs, what a jacket costs and you
can even kind of tell what a plumber costs, but you can't tell what some of the most powerful financial
decisions you will make in your life actually cost? It's nuts."
"Give us a strong agency... or no agency at all. We don't need one more sorry agency that kind of half
pretends to be something and doesn't really accomplish anything."
Amen on all three counts
And I'm rooting for her.
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Dallas Morning News

Consumer watchdog agency backer Elizabeth Warren sees hope for new bureau
April 11, 2011
By Eric Torbenson
While the nation's hopes for a federal consumer watchdog rest pretty much on her shoulders, Elizabeth
Warren seems as energized as ever about the prospect of building such an agency.
"Well, a year ago The Wall Street Journal ran a story on its front page saying the agency was dead,"
she said through a raspy voice Friday at the Society of American Business Editors and Writers
conference. "We've come a long way from that."
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The government's proposed Consumer Financial Protection Bureau has two aims when it comes to
simplifying financial products such as mortgages and credit cards, Warren said:
Show how much a loan or credit card would really cost consumers, giving them a chance to know if
they could actually afford it.
Give consumers enough understanding to be able to shop terms around and get the best deal possible
on rates and fees.
Long disclosure statements filled with legal pitfalls have trapped consumers for too long, Warren said.
Getting simpler documents may be the area where consumers find the most value in the agency's work.
For example, she said, the agency has taken two forms in a typical mortgage that are five or six pages
long and combined them into a single page in prototypes.
Warren said that in making mortgages in the past, bankers vetted their potential customers in person,
asking hard questions about affordability and payments before lending.
"That's gone missing today," she said, leaving consumers vulnerable to getting into deals they don't
fully understand.
To be sure, she said that some consumers made mistakes during the housing boom in choosing
adjustable rate mortgages that sharply increased in payment over time.
The foes of the consumer agency are clear to Warren -- big banks and the many politicians backed by
them who want it watered down or eliminated. A toothless agency is not her goal.
"If it's going to be weak, we'd just as soon not have it at all," she told the audience of business
journalists. Proposals to have the agency funded through Congress' formal appropriations process
would politicize its work too much, she said.
Another proposal that Warren sees as diluting the agency's work would give other regulatory agencies
the ability to overrule the bureau's actions.
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While backers hope that President Barack Obama will name Warren as the head of new agency, her
title remains assistant to the president and special adviser to the secretary of the Treasury.
She said her job is to "stand up" the new bureau, "which I work on 14 hours a day." Who runs it "is a
question best directed at the president."
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The Hill (Congress Blog)

Mrs. Warrens profession
April 12, 2011
By Bartlett Naylor
Goodness, some members of Congress really don't like Elizabeth Warren. Is it because she's a law
professor? From Harvard? Or is it simply that she threatens to end "unfair, deceptive or abusive
practices," which is what the Dodd-Frank charges the Consumer Financial Protection Bureau with
doing?
Consider what's transpired in the last few weeks. Two weeks ago, House Financial Services Committee
chairman Spencer Bachus (R-Ala.), along with key subcommittee chair Shelley Moore Capito (R-W.
Va.), "all but accused Professor Elizabeth Warren of lying to Congress" in the characterization of our
colleague Ed Mierzwinski of U.S. PIRG.
Bachus and Capito alleged that the existence of draft CFPB materials offering advice to the state
attorneys generally about the negotiation of a settlement with the large mortgage servicers (4 of the 5
biggest are owned by the biggest banks) somehow means that the CFPB is meddling in matters beyond
its purview.
And last week, several members of Congress launched new efforts to immobilize the power of any new
CFPB chief.
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First, Sen. Jerry Moran (R-Kan.) introduced a bill to make the CFPB subject to the congressional
appropriations process. Presently, the CFPB's budget derives from the Federal Reserve and does not
need to be appropriated annually by the Congress - a process often characterized by unseemly specialinterest mischief and interference with important agency missions.
Next, Moran introduced a bill that would freight the CFPB with a commission. House members
introduced parallel legislation. A strong chief is needed to empower a new consumer protection agency;
the goal of those proposing a commission structure is to slow the agency down and hamper it in
performing its duties.
Republican members of Congress are not shy in their views. Rep. Bachus infamously said, "In
Washington, the view is that the banks are to be regulated, and my view is that Washington and the
regulators are there to serve the banks." Rep. Blaine Luetkemeyer (R-Mo.) said the CFPB was "the last
thing that our lenders need." Rep. Robert Dold (R-Ill.) ridiculed the "theoretical consumer protection" the
agency would provide.
"This is not about Elizabeth Warren," Bachus said. "This is about giving one person total unbridled
authority and power."
But Warren hasn't even been named to head the agency yet, and so to us this seems like it is about far
more than Professor Warren and her work. The attack on the CPPB bears a suspicious taint of putting
big banks ahead of the American public. There should be no reason for members of Congress to shy
away from ending "unfair, deceptive or abusive" banking We implore them to do so.
Bartlett Naylor is financial policy advocate for Public Citizen's Congress Watch.
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American Banker
Budget Pact Includes Audits of CFPB
Page 1544 of 3826
April 12, 2011

By Cheyenne Hopkins
An agreement between the Obama administration and lawmakers over this year's fiscal budget includes
audits of the newly created Consumer Financial Protection Bureau.
The budget would subject the CFPB to yearly audits by the private sector and the Government
Accountability Office to "monitor its impact on the economy, including its impact on jobs, by examining
whether sound cost-benefit analyses are being used with rulemakings," according to a summary from
House Speaker John Boehner.
It's unclear how this new requirement will work with the Dodd-Frank law, which already requires the
GAO to annually audit the "financial transactions of the bureau."
The White House said in a blog post that it was able to fight off proposed budget cuts to the CFPB.
Republicans had sought to include a provision that would limit the CFPB's annual budget to $80 million.
The agency has requested $134 million from the Federal Reserve Board budget for fiscal 2011.
"They also wanted to limit funding for the establishment of the new Consumer Financial Protection
Bureau and block the Environmental Protection Agency from enforcing clean air and water rules," the
blog post said. "While we made significant cuts, we just couldn't afford to cut these important programs
that are critical to our nation."
Language on the agreement is expected to be released late Monday with the House voting on the bill
Wednesday. A CFPB spokesman declined to comment.
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Wall Street Journal
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Hatch Seeks Dodd-Frank Delay

April 11, 2011
WASHINGTONSen. Orrin Hatch, the top Republican on the Senate Finance Committee, wants a time
-out on new rules created by the Dodd-Frank financial overhaul that Congress passed last summer until
other leading nations adopt similar regulatory changes.
"Otherwise, we are guaranteeing that our financial institutions will be placed in the untenable situation of
competing with international institutions whose host countries refuse to be burdened by the same
constricting framework which we so readily heaved upon ourselves," Sen. Hatch said in a letter sent to
Treasury Secretary Timothy Geithner on Friday, days before international finance ministers are set to
meet in Washington.
The Utah senator said he is particularly concerned about the new Consumer Financial Protection
Bureau and its ability to write rules that would affect the nation's largest banks.
New rules written by the consumer bureau and other agencies could "push financial activity to foreign
banks" and deal a blow to international trade and federal revenue, Sen. Hatch said.
The letter comes as Senate Republican leaders have amplified their criticism of Dodd-Frank. Earlier this
month, Senate GOP leaders endorsed a bill written by tea-party favorite Sen. Jim DeMint (R., S.C.) that
would repeal the financial overhaul. Sen. Hatch also supports the full repeal of Dodd-Frank, a
spokeswoman said Monday.
"I have real concerns that a lack of due diligence in the implementation of Dodd-Frank will result in
unduly burdensome regulations that will undermine the competitiveness of our domestic financial
industry, putting our nation at odds with our trading partners and placing further strain on an already
stressed corporate tax structure," Sen. Hatch wrote in the letter.
He highlighted a recent report from analysts at a U.K. investment branch of J.P. Morgan Chase that
suggests Dodd-Frank regulations will hurt the competitiveness of the U.S. financial-services sector.
"While I support well-reasoned efforts to strengthen our financial system, if implementation is rushed,
the administration risks crippling our financial institutions by making them uncompetitive and less able
to provide the vital services imperative to a robust and sustained economic recovery," he said.
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In the letter, Sen. Hatch asks Mr. Geithner to answer five questions aimed at gleaning whether Mr.
Geithner believes Group of 20 countries will adopt regulations similar to those included in Dodd-Frank.
"There are significant outstanding issues surrounding global coordination of this regulatory framework,"
Sen. Hatch wrote. "I strongly believe that these concerns demand delay of further implementation and
rulemaking of Dodd-Frank Act provisions until and unless we receive assurances that international
partners agree to adopt similar regulatory reforms."
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The Hill (Congress Blog)

Delay implementation of Dodd-Frank
April 11, 2011
By Sen. Orrin Hatch
Sen. Orrin Hatch (R-Utah) sent Treasury Secretary Timothy Geither the following letter Friday.
Dear Secretary Geithner:
As the Ranking Member of the United State Senates Committee on Finance (Committee), I have an
obligation to consider the impact that federal policy has on Americas international economic
competitiveness, and the impact that those policies have on international trade and federal revenues.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) contained hundreds
of provisions requiring or allowing federal rulemaking through the newly created Consumer Financial
Protection Bureau in the Department of the Treasury (Department). I have real concerns that a lack of
due diligence in the implementation of Dodd-Frank will result in unduly burdensome regulations that will
undermine the competitiveness of our domestic financial industry, putting our nation at odds with our
trading partners and placing further strain on an already stressed corporate tax structure.
A recent report from analysts at the British investment branch of JPMorgan Chase highlighted the anti-
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competitive impact of these regulations. The authors concluded, [w]e agree with the views expressed
by some members of the Senate on the potential negative impact the restrictions on market making
related activities rules might have on the competitiveness of the U.S. financial services sector. While I
support well-reasoned efforts to strengthen our financial system, if implementation is rushed, the
Administration risks crippling our financial institutions by making them uncompetitive and less able to
provide the vital services imperative to a robust and sustained economic recovery.
The goal of global financial stability is one that can be shared by our trading partners, and the adoption
of common regulatory standards by competing nations is essential to a level playing field. We can
certainly be in agreement that international regulatory disparities would be tremendously harmful to our
nation. Yet, I am concerned that regulations implementing Dodd-Frank are now being drafted without
adequate consideration of the possibility that they will push financial activity to foreign banks that fail to
adopt similar regulations.
It is critical that the Committee receive updates as to whether our trading partners and international
financial organizations are enacting reforms consistent with our interests, particularly given that many
individuals indicate that aspects of the Dodd-Frank Act closely align with ongoing efforts of G-20
nations. Last November, the White House Press Secretary released a G-20 fact sheet which stated, [t]
he U.S. is working closely with the European Union and others to ensure that the G-20s ambitious
agenda for regulatory reform is implemented. Additional reports indicate that the administration is in
the continued process of consulting with G-20 countries to advance the goals of international regulatory
reform.
In order to facilitate proper Senate oversight of the implementation of the Dodd-Frank financial
framework, I respectfully request that you provide my office with the following information:
1) Have formalized consultations occurred with G-20 nations regarding implementation of provisions
and principles included in the Dodd-Frank Act, including the Volcker rule?
2) Whether any provisions of the Dodd-Frank Act are unlikely to become part of the international
financial regulatory framework, and reasons why.
3) Information as to whether the administration believes that failure of G-20 nations to adopt similar
provisions to the Dodd-Frank Act will place US financial institutions at a competitive disadvantage with
their foreign competitors.
4) Details on any action the administration has undertaken in furtherance of the International Policy
Coordination section of the Dodd-Frank Act.
5) Dates which the administration believes G-20 nations will formally adopt and implement provisions
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akin to the Volcker rule.
There are significant outstanding issues surrounding global coordination of this regulatory framework. I
strongly believe that these concerns demand delay of further implementation and rulemaking of DoddFrank Act provisions until and unless we receive assurances that international partners agree to adopt
similar regulatory reforms. Otherwise, we are guaranteeing that our financial institutions will be placed
in the untenable situation of competing with international institutions whose host countries refuse to be
burdened by the same constricting framework which we so readily heaved upon ourselves.
Thank you for your prompt attention to this matter. I would appreciate your working with my staff to
discuss these issues before April 28, 2011.
Sen. Orrin Hatch (R-Utah) is the ranking member of the Senate Finance Committee.
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Credit Union Times

Push to Modify New Consumer Bureau Well Under Way
CUNA, NAFCU Join Effort to Modify Power of New Bureau of Consumer Financial Protection
April 13, 2011
By Claude R. Marx
The new Consumer Financial Protection Bureau doesnt even begin operations until July and already
CUNA and NAFCU and some on Capitol Hill are pushing for changes in how much power it has and
what its structure will be.
House Republicans want the bureau to be run by a five-member board, with a chairman appointed by
the president, rather than a presidentially appointed director. They have also introduced a measure to
make it easier for the council of regulators to overturn rules issued by the bureau, which will be an
independent agency housed inside the Federal Reserve.
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CUNA and NAFCU are approaching the legislation differently. CUNA isnt taking a position on whether
the bureau is run by a board or an individual, but if Congress goes the board route, the trade group
wants to ensure that one board member has credit union experience. NAFCU favors having the bureau
run by a board.
Both groups favor changing the law to allow a simple majority of the members of the Financial Stability
Oversight Council to overturn bureau regulations, rather than the current two-thirds.
Credit union executives representing the groups offered their suggestions during an April 6 hearing of
the House Financial Services Committees subcommittee on financial institutions and consumer credit.
State Employees Credit Union of Maryland President/CEO Rodney Staatz, representing CUNA, told the
panel that the changes will help achieve the associations goals of a "regulatory regime in which
consumer protection is maximized and regulatory burden is minimized."
Washington Gas Light FCU President/CEO Lynnette Smith told the panel the bureau is "potentially
problematic" and will create "burdensome and unnecessary" compliance costs. She testified on behalf
of NAFCU.
Subcommittee Chairman Shelley Moore Capito (R-W.Va.) said she empathizes with the regulatory
burden faced by community banks and credit unions and wanted to be sure that Congress did what it
could to add to that.
Capito noted that even as the consumer bureau is getting ready to begin working, the individual banking
regulators are still keeping their consumer protection offices, and this could lead to duplication and to
extra work for financial institutions. She also criticized President Obama for not having named a
permanent director for the bureau.
In response to a question from Capito, Smith said it takes her staff at least 30 days to prepare for her
credit unions NCUA exam and 30 days to prepare for her annual outside audit. She said that the NCUA
does a good job of keeping her credit union on the straight and narrow, and it doesnt need additional
exams or oversight by the new bureau.
She also told lawmakers that the increased regulatory burden was one of the reasons that there are
fewer credit unions, and this is worrisome because credit unions are often the lenders of last resort.
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Staatz suggested that the current $10 billion in assets threshold for mandating that financial institutions
be directly examined by the bureau should be indexed for inflation. That differs from NAFCUs
approach, which is to raise the threshold to $50 billion.
Staatz also recommended that lawmakers require regulatory agencies to demonstrate each year how
they have reduced the regulatory burden of financial institutions and mandate that the bureau study on
statutory and regulatory improvements for reducing compliance burdens.
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Credit Union Times

Capito Holds Forth on Interchange, Other Issues
Panel Chair Also Eyes Consumer Financial Protection Bureau, Business Lending Programs,
Institutional Soundness
April 13, 2011
By Claude R. Marx
Less than four months into her tenure as chairman of the House subcommittee with primary jurisdiction
over credit unions and other financial institutions, Rep. Shelley Moore Capito (R-W.Va.) has already
tackled a wide range of issues.
These have included the Federal Reserves proposed rule regulating debit interchange fees, the new
bureau that will regulate consumer financial products and the safety and soundness of financial
institutions.
Capito, who chairs the House Financial Services Committees Subcommittee on Financial Institutions,
has been in Congress since 2001. She recently sat down with Credit Union Times to discuss some of
the issues on the committees agenda.
Credit Union Times: So whats the next step for the bill to delay the implementation of the Feds
interchange rule that you introduced?
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Rep. Capito: Right now the legislation, which calls for a one-year delay, is still getting co-sponsors. We
have 59 right now and it is bipartisan and we are adding a couple in a day. We are watching very
closely whats happening in the Senate. I think its very important for the Senate to make that first move,
at least on the floor, because they are the one here thats going to have the steepest hill to climb, I
believe. Ive spent the last week meeting with my constituents, the retailers, credit unions, and I am
looking for a fair way to move forward on this as this is a fairly controversial issue.
CU Times: Do you have a sense if it is introduced in the House that there will be enough support to
pass it?
Capito: I dont really know, but I know that by the Fed pushing back on the date when they will release
the final rule, with all the groups weighing in, it shows the broad-based skepticism about moving forward
with the rule as printed. So I think there would be a lot of support for it in the House; whether there will
be full support for it remains to be seen.
CU Times: Your panel has broad purview over credit unions, banks and the like. What will you be
looking at over the next couple of months?
Capito: The area I represent is mostly served by community banks and credit unions so it is important to
me that they have the ability to lend, create mortgages and offer the personalized services that I think in
a lot of ways they are well positioned to do. We will look at whether certain programs, such as the
[community bank] small business lending program are really doing what they are supposed to. Also, the
exemptions that were carved out for community banks and credit unions may not be being applied, so
we are going to look at that more deeply. And we will look at the setting up of the Consumer Financial
Protection Bureau as well.
CU Times: The House Republicans have been very critical of the bureau and would like to scale it back
or repeal it. But the sentiment is different in the Senate. Do you see a way to reconcile the different
positions between the chambers?
Capito: I dont think that dismantling the bureau, while some of us want to do that, weve got to deal in
reality here. Weve put forth some ideas, to have a five-person board and spread the responsibility over
the agency over an array of decision makers. We also want to change the funding mechanism. It is
currently funded by the Fed, but we want to have it funded by Congress. Because by having it as part of
the appropriations process it is an important means of oversight.
CU Times: What about the Senate?
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Capito: We do talk to the Senate and these issues are important there. But being able to assess the
Senate [and the chances of our bills passing there] is way beyond my level of responsibility.
CU Times: Any other changes?
Capito: We will put forward legislation to change the number of votes on the regulatory council to
overturn a bureau decision from two-thirds to a majority. Also, I am concerned that we still dont have a
director nominated, and if we dont have one soon. we may start the bureau without a permanent
director and that would be a bad position to be in.
CU Times: You mentioned regulations by the bureau, but credit unions and banks already face a myriad
of regulations from the NCUA and FDIC. Are you pleased with the way those regulators have handled
their responsibilities?
Capito: What we learned over the last several years is that credit unions mostly have stayed within their
missions, governed by their members and have been diligent at playing by the rules. But sometimes
they have been adversely impacted by those who didnt play by the rules. So what I want is a nimble
and efficient regulator that will closely watch financial institutions.
CU Times: Anything youd like to see done differently?
Capito: Not by the NCUA. I think things have been moved along and overseen quite reasonably. The
FDIC is going in a different direction because of what Congress mandated in terms of ordered
liquidation. The current system gives an advantage to larger institutions over smaller banks and credit
unions, and I dont like that.
CU Times: On regulations, how do you strike a balance between enough regulation to ensure safety
and soundness and avoid another financial meltdown and not so much that you stifle innovation?
Capito: What doesnt help is creating a one-size-fits-all plain vanilla financial product that goes across
the spectrum of all banks and credit unions is not the way to help my constituents who are relying on
those smaller institutions to be the economic developers and personal financiers. At credit unions, when
the member walks in the door, the employees know them and know their circumstances. What will work
for them is different than for another person. So you dont want to lose the flexibility.
CU Times: Credit unions have been pushing for a long time for the right to accept secondary capital and
they would like Congress to give them the ability to do that. What are your thoughts about the
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subject?
Capito: Thats been in the committee for five or six years. As we move along, first we are trying to
address the issues around Dodd-Frank and credit issues and lending issues. As we move to the next
year and a half this might be something we can look at. I have not formulated an opinion on it yet. I
need to learn more about it. There are two different positions on it, as you know.
Back to Top

CFPB Leader Warren Stresses Accountability, Defends Bureau
April 11, 2011
By Elizabeth Ecker
In a speech Friday, Consumer Financial Protection Bureau leader and assistant to President Obama,
Elizabeth Warren stressed the importance of accountability and defended the agency against proposed
bills that aim to limit its authority.
Warrens speech, given before the Society of American Business Editors and Writers at the groups
spring conference in Dallas, outlined the responsibilities of the CFPB and addressed its potential
limitations.
There are proposals in both chambers of Congress for Dodd-Frank repeal, which would eliminate the
consumer agency before its born. In other words, we would stick with a failed system, Warren said in
her address, which she made following a hearing last week regarding the Bureaus structure and
authority. That hearing, held on April 6, examined proposals that would change CFPB governance from
a single director to a five-member commission, appointed by the President, with no more than three
members from the same political party. Another proposal would make it easier for the Financial Stability
Oversight Council to overturn CFPB regulations.
Warren spoke of the increasing danger of debt used by American families leading up to the recent
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economic collapse and hollowing of the middle class. The CFPB aims to help make markets fair for
buyers and sellers, and improve accountability, according to Warrens remarks. However, she said, the
agency has a unique challenge.
The CFPB is the only bank regulatorand perhaps the only agency anywhere in governmentwhose
rules can be overruled by a group of other agencies, she said. While we cannot interfere with other
agencies rulemaking efforts, no matter how much we think consumers will be harmed by their rules,
other agencies can veto our rules. This is an extraordinary restraint, another assurance that we can be
held to account for our actions.
Specific proposed legislation pointed to by Warren would subject the CFPB to the appropriations
process, a restriction she said would damage accountability of the agency.
In addition to holding the marketplace accountable, Warren closed remarks with a request: Please stay
engaged with the consumer agency. Through a website launched in advance of the Agencys
enforcement, scheduled to take effect on July 21, the CFPB continues to communicate with consumers.
If youll stay engaged, well do our best to make sure you can always see what were up to, she said.
See Warrens prepared remarks.
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CNBC Mad Money with Jim Cramer

Lightning Round
April 11, 2011
By Jim Cramer
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CRAMER: I dont expect this stock [Bank of America] to move until later in the year. Theres really
nothing cooking that is going to get it going. And we have Elizabeth Warren, the czar, may be
appointed the Consumer Protection Czar for the banks. This stock right now: dead money. So why own
it? Because if you believe like I do that there could be a turn in America within the next year, Bank of
America could go substantially higher.
Back to Top
Business First
Elizabeth Warren to speak to bankers at Olmsted
April 12, 2011
By Kevin Eigelbach
Elizabeth Warren, assistant to President Obama and special advisor to the secretary of the treasury on
the Consumer Financial Protection Bureau, will lead a question and answer session for banking leaders
across the state on April 18 at the Olmsted in Louisville.
The event is part of A Day with the Commissioner, sponsored by the Kentucky Department of
Financial Institutions. James Bullard, president of the Federal Reserve Bank of St. Louis, is scheduled
to give the keynote address at lunch.
Other speakers include William F. Githens, president and CEO of The Risk Management Association,
and K.C. Conway, executive managing director for real estate analytics at Colliers International.
We are providing this venue for Kentuckys commercial bankers to gather and discuss the key issues
they face today, as well as to hear the latest from banking industry leaders, said Charles Vice, the
commissioner of the department. Kentucky banks have performed well overall during the economic
downturn, and it is important for them to prepare as the economy recovers.
The program, which is co-sponsored by the Federal Reserves St. Louis and Cleveland regions, will be
held from 8:30 a.m. to 4 p.m. and a complementary breakfast and lunch will be served.
Page 1556 of 3826
Back to Top
The Hill
Liberals need a plan
April 11, 2011
By Brent Budowsky
In the absence of a national leader, progressives need an actionable plan including a sweeping
progressive budget proposal, a national convention of progressive activists and thinkers, a major
fundraising drive supporting progressive House and Senate candidates and a campaign of state ballot
initiatives similar to those under way in Wisconsin and Ohio.
In 2008, America did not elect a great progressive president in the tradition of Roosevelt or Kennedy.
One can support President Obamas reelection but accept that he will not govern like a historic
champion of progressivism, populism or powerful systemic reform.
For many progressives, populists and reformers, their monumental victories in the elections of 2006 and
2008 have turned to monumental disappointment.
The events of 2009 and 2010 resulted in the rise of the Tea Party movement, the depression of the
progressive base, the Republican landslide in 2010, the rush to the right by Republicans and the
rush to the right by Obama compared to previous Democratic presidents.
If the present looks dark for progressive populists, the road to renewal looks clear. It lies with supporting
Obama but accepting that he is not the great progressive populist leader, reformer or champion we
expected.
Liberals need a plan. I propose this: Dont wait for Obama. Dont get mad. Organize. Mobilize.
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Champion the proposals we support in the battle of ideas. Fight for them. Fight for candidates who
stand with us to regain control of the House and retain control of the Senate. Fight for state ballot
initiatives we can win.
If the Conservative Political Action Conference can host a convention, why cant liberals do it with
leading champions of women, workers, consumers, the earth, the poor, large liberal donors and
progressive allies in the old and new media?
If conservative Rep. Paul Ryan (R-Wis.) can propose a sweeping budget bill, why cant progressives? I
believe voters will choose the public option, consumer protection offered by Elizabeth Warren and a fair
progressive tax code over the destruction of Medicare, windfall profits for oil companies and loopholes
for those who cheat military families and millions of consumers.
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Wall Street Journal

Critical Signs in Foreclosure Talks
April 12, 2011
By Nick Timiraos
Hopes are fading for a far-reaching settlement between regulators and banks over improper home
foreclosures as some regulators press ahead to reach their own settlements with banks that others
involved in the talks deem weak.
The dispute pits federal regulators against state attorneys general, who are seeking stiff penalties and
comprehensive changes in the way banks foreclose on homeowners and modify loans. Advocates of
tougher sanctions accuse federal banking regulators, including the Office of the Comptroller of the
Currency and the Federal Reserve, with going easy on the banks.
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Federal regulators are on the verge of sending their orders, and federal and state officials are
scrambling to maintain an uneasy alliance as talks reach a critical point and test whether there can be a
universal settlement.
Banks' inability to move properties through the foreclosure process could further delay any housingmarket recovery. Over the past two months, differences between federal and state officials emerged
over the proper remedies to potentially fraudulent foreclosure-filing practices. Those divisions have
raised the prospect that states and federal agencies may ultimately issue their own orders
independently.
Already, there are signs of discontent. A letter sent Monday to the Federal Reserve from 22 current and
former members of the board's Consumer Advisory Council called the proposed consent orders
"profoundly disappointing" and said they leave "too much discretion" to mortgage companies. They fail
to impose penalties, the letter said, for their wrongful conduct. A Fed spokeswoman declined to
comment.
Meanwhile, officials on all sides played down concerns that federal regulators' pending enforcement
actions could undercut states' and other federal agencies' efforts to push for stronger sanctions. "The
steps that have been taken by regulators should coordinate well with the progress we're making with
the state attorneys general," said Housing Secretary Shaun Donovan in an interview.
A spokesman for the OCC said the pending orders "create a framework for remedial action, but there's
no reason that additional procedures sought from the states can't fit within that framework. Nothing
that we're doing is intended to impede any action by the state attorneys' general."
The orders are expected to give banks 60 days to establish plans for ensuring their mortgage-servicing
processes provide clearer controls to prevent the kind of documentation errors that brought foreclosures
to a halt last fall. The action plans also will require servicers to hire more staff to better aid borrowers
through loan modifications.
Federal regulators aren't yet issuing financial penalties. But if they are to reach a coordinated
settlement, their orders put pressure on state attorneys general and other federal officials to hash out a
deal within the 60-day time frame that regulators have given banks to prepare their action plans. It isn't
clear whether state attorneys general are prepared to strike a deal within that time frame.
There already are some signs of splintering within the 50-state group. Some state officials agree with
the Obama administration's view that a quick settlement has the best chance of providing immediate
outreach to troubled homeowners. But others have expressed concerns that the price of that deal would
be too low by providing "broad amnesty" to servicers.
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"We are going to make a very concerted effort at a comprehensive settlement that does not nip and
tuck at the edges," said a spokesman for Iowa Attorney General Tom Miller, who is spearheading the
effort.
Under terms of the pending enforcement actions by the OCC and Fed, mortgage servicers also will be
required to put in place procedures designed to give troubled homeowners a single point of contact
during a loan modification and ensure that foreclosures don't happen when a borrower is receiving a
loan modification.
But those terms, some of which were included in a "term sheet" that state attorneys general delivered
last month, highlight a difference in approach between bank regulators and the states. For example,
state officials have proposed requiring more aggressive write-downs of second-lien mortgages when
first mortgages are modified, while a draft order from federal regulators is less specific. It simply
mandates banks to maintain policies "for considering modification" of any second mortgage.
State officials have proposed a more extensive overhaul because banks' problems go beyond flawed
foreclosure filings. Instead, they extend "much earlier in the process" where homeowners haven't been
properly evaluated for loan modifications, Mr. Donovan said, referring to examinations conducted by the
Federal Housing Administration. "Those steps weren't taken in far too large a number of cases."
The Justice Department has led the effort to coerce an unwieldy mix of state attorneysgeneral and
federal agencies to hash out a deal. People familiar with the talks say internal disagreements have at
times left them outmaneuvered by the banks, which have resisted calls for any broad loan-principal
write-downs.
"It sure looks like [regulators] are setting up the banks to be able to go out and say to the attorneys
general, 'You can't touch us,'" says Margot Saunders, a lawyer with the National Consumer Law Center.
Back to Top
Bloomberg
Page 1560 of 3826
Schneiderman Says Foreclosure Deal Shouldnt Block State Probes

April 12, 2011
By Karen Freifeld and David McLaughlin
The resolution of a 50-state probe of foreclosure practices shouldnt block individual states from
investigating the mortgage-servicing industry, according to the office of New York Attorney General Eric
Schneiderman.
Any settlement agreement should preserve the ability of attorneys general to follow the facts where
they lead and not be precluded from conducting comprehensive investigations, Lauren Passalacqua, a
Schneiderman spokeswoman, said yesterday in a statement.
The statement came as chief law enforcement officials from some states attended a North Carolina
gathering sponsored by the National Association of Attorneys General. In March, the attorneys general
sent a 27-page term sheet to the biggest U.S. mortgage servicers, laying out possible changes to
foreclosure practices, including new documentation rules and calling for a loan-modification program.
The attorney general of New York has expressed some concerns about his ability to pursue cases
outside of the settlement and we are working to see if we can address those concerns, Geoff
Greenwood, a spokesman for Iowa Attorney General Tom Miller, said in a telephone interview
yesterday. Miller is helping to lead a state-federal probe of mortgage- servicers.
Greenwood declined to comment further on the discussions or details of a proposed settlement.
Continue Negotiations
In an e-mail, he said he thinks all states as well as banks have understandable concerns about how a
settlement may limit state actions. He said he didnt know whether other attorneys general had talked to
Miller about the issue. Some mortgage servicers, including Bank of America Corp. (BAC), have been
sued by states.
The executive committee will discuss these issues, and we undoubtedly will attempt to work through
them as we continue our negotiations, he said in the e-mail.
The largest U.S. mortgage servicers began signing agreements with regulators to improve procedures
after federal investigations found they conducted foreclosures without proper review or complete
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documentation, two people with direct knowledge of the negotiations said last week. These agreements
are separate from the 50-state probe.
Risk-Management Practices
The so-called consent decrees, which could be signed by as many as 14 servicers including Bank of
America Corp. and Wells Fargo & Co. (WFC), require companies to strengthen their systems for
handling foreclosure documents and communicating with borrowers who are behind on their payments,
said two people briefed on the matter, who spoke on condition of anonymity because the agreements
arent public. The deals also require firms to improve auditing and risk-management practices, the
people said.
Banking regulators issuing the consent decrees -- the Federal Reserve, the Office of the Comptroller of
the Currency, the Office of Thrift Supervision and the Federal Deposit Insurance Corp. -- are moving
forward with procedural remedies while continuing negotiations over possible monetary penalties, they
said.
Schneiderman, 56, last week issued subpoenas to Pillar Processing LLC and the law firm of Steven J.
Baum, according to a person familiar with the matter. Baums firm specializes in foreclosures in New
York state. Pillar shares an address with the law firm and processes foreclosure paperwork.
Seeking Documents
The attorney general asked for documents submitted on behalf of the law firm in court and to parties
representing individuals in foreclosure, according to the person, who declined to be identified because
the matter isnt public. He is also seeking documents from Baum relating to procedures governing Pillar
s services to the law practice, said the person. The New York Times reported on the subpoenas April 9.
Passalacqua declined to comment on the Baum and Pillar subpoenas and probe.
Baums law firm, located in Amherst, New York, has attracted lawsuits and fines for its actions during
the housing crisis. The firm has been accused of overcharging, filing false documents and representing
parties on both sides of a mortgage transfer.
In December, in response to questions about his work, Baum wrote that consumer activists and
attorneys representing homeowners have their own agenda in this process, including degrading the
legal work we conduct on behalf of our clients.
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Earl V. Wells III, a spokesman for Baum, said yesterday that the firm is cooperating fully with the
attorney generals office. He declined to comment further. Tailwind Capital LLC, the private equity firm
that owns Pillar, didnt immediately return a call for comment.
Back to Top
American Banker
Study: State AG Servicer Terms Could Cost Economy $10 Billion a Year
April 12, 2011
By Cheyenne Hopkins
WASHINGTON A proposed settlement with the top five mortgage servicers could prolong the
foreclosure crisis, drive up mortgage interest rates, slow new home construction and cost $7 billion to
$10 billion a year, according to a study from three top economists.
The study, which was commissioned by the financial services industry including some of the
servicers involved in negotiations unequivocally states that terms sought by the 50 state attorneys
general and a host of federal agencies would do more harm than good.
It was written by three economists: Charles Calomiris, a professor of financial institutions at Columbia
Business School; Eric Higgins, a professor of finance at Kansas State University; and Joseph Mason,
the chair of banking at Louisiana State University and a senior fellow at the Wharton School.
The 25-page study, obtained by American Banker, is an analysis of the proposed settlement offered by
the state AGs in February.
"We find that a settlement along these lines would generate significant unintended negative
consequences for housing and financial markets," the study said. "In particular, we find that the
settlement is unlikely to provide broad or lasting benefits We conclude that the settlement would
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serve to extend, rather than end, the foreclosure crisis."
Under the 27-page term sheet, servicers would have to make sweeping changes to their processes,
including new requirements for mortgage documentation, interaction with borrowers, relationships with
active military personnel, loan modifications, principal reductions, bankruptcy proceedings, short sales
and technology systems. The servicers have rejected those terms, arguing they are too onerous.
The study echoes their concerns, saying it would be prohibitively expensive to implement and only
serve to disrupt the market. According to the study, the terms would increase servicing costs and drive
up defaults, increasing foreclosure inventory by $297 billion. It would also raise mortgage rates, by 20 to
45 basis points per year, hurting the economy.
"This proposed settlement is completely unreasonable with the constraints of the marketplace and
consumers," Mason said in an interview. "If we want recovery from the mortgage crisis, the clearest
path forward is to recognize the losses of banks and the borrowers, and allow the market to reallocate
homes from those who cannot afford them to those who can. Preventing the market from doing so will
only prolong the mortgage crisis."
When the study is released, it is almost certain to garner criticism from consumer groups and others,
who are likely to note that it was funded by industry money. But Mason defended its integrity.
"The banks have no say in the conclusion," he said. "Whenever I do research and the other two authors
on this we never allow any funder to dictate our conclusions. We're academics. If it makes sense to
us as economists, we will write it. If it doesn't, we won't. The base of economics is real financial
constraints by real people with budgets."
The study is just the latest attack on the proposed settlement, which was made public by American
Banker on March 7. Iowa Attorney General Tom Miller, who is leading the settlement talks on behalf of
the AGs, has faced objections from other AGs who argued the settlement went too far by pushing
principal reductions. Several Republican lawmakers have also criticized the proposed terms, arguing
they are essentially making new laws through enforcement actions.
The banks have offered a counterproposal that would focus on system improvements, but does not
include a push for principal reductions.
The crux of the economists' argument is that the AGs' settlement terms would significantly slow the
foreclosure process as servicers tried to reduce principal and overhaul systems. That would have a
severe impact on the economy, the academics said.
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"Our review of existing economic research, as well as our own analysis, leads us to conclude that the
settlement, including its delay of foreclosures, would harm the broader economy: stalling construction of
new homes; reducing consumer spending and investment; and reducing credit access and economic
growth," the study said. "In particular, we believe the settlement cost itself would increase interest rates
by 20 to 35 basis points a year, as imposing additional costs on lenders would lead lenders to require
higher returns. Furthermore, an increase in strategic defaults as a result of the settlement could
increase the foreclosure inventory by $297 billion, and increase interest rates by another 10 basis
points."
The economists took issue with a private February report by the Consumer Financial Protection Bureau
first published by The Huffington Post that claimed the five largest servicers avoided $24 billion in
costs between 2007 and 2010 by cutting corners in the servicing industry. The CFPB document said
banks should be fined at least that figure.
But the economists said that the AG settlement could cost the economy $7 billion to $10 billion a year
due to delayed foreclosures, increased servicing and compliance costs and the hike in interest rates.
"What we found particularly important was the additional cost of delay if you just start adding those
up they get really long, and they increase the foreclosure time by 150%," Mason said. "If you just start
thinking every day in foreclosure is a cost to the banks, this raises the cost to the banks."
While the AG terms were focused on fostering more loan modifications, the economists said there was
no sign that would help.
"One problem with mandated loan modification is that even significant principal reductions cannot cure
the mortgage loan origination issues that are at the heart of the foreclosure crisis," the study said.
Further, the economists wrote that forced principal reductions create incentives for the borrower to
default and seek modifications, known as strategic default. They estimate the settlement could increase
strategic defaults by 25%.
"For borrowers who can actually repay their modified mortgage, the settlement would allow them to
extract concessions from the bank," the report said. "For borrowers that cannot repay the mortgage, the
settlement would allow them to delay foreclosure for an extended period of time."
The proposed settlement would add steps to the foreclosure process such as preventing dual tracking
of loan modifications and foreclosure, and allowing borrowers 30 days to challenge a modification
denial.
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"Adding up the delays, not including those with indeterminate or undefined time periods, the foreclosure
process could be delayed up to 280 days, which would increase the existing 17-month foreclosure time
line by over 50%," the study said. "Such additional delay would substantially increase the cost of
foreclosure to banks and investors."
Overall, the economists said the settlement could adversely affect the very group it was intended to
assist.
"Unfortunately the terms of the settlement appear to reflect the absence of regulators with broad
understanding of the housing market and its relationship to the national economy," the economists
wrote. "Although mandating principal reductions certainly seems 'pro-borrower' on the surface, there is
substantial economic research that suggests that the benefits to borrowers would likely be illusory, and
the costs to the nascent economic recovery would likely be significant."
The study comes as federal banking regulators are preparing to release their own cease-and-desist
orders against the 14 largest servicers. The consent orders are likely to be less far-reaching than the
proposed AG settlement terms.
Back to Top
New York Times

Burden of College Loans on Graduates Grows
April 11, 2011
By Tamar Lewin
Student loan debt outpaced credit card debt for the first time last year and is likely to top a trillion dollars
this year as more students go to college and a growing share borrow money to do so.
While many economists say student debt should be seen in a more favorable light, the rising loan bills
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nevertheless mean that many graduates will be paying them for a longer time.
In the coming years, a lot of people will still be paying off their student loans when its time for their kids
to go to college, said Mark Kantrowitz, the publisher of FinAid.org and Fastweb.com, who has compiled
the estimates of student debt, including federal and private loans.
Two-thirds of bachelors degree recipients graduated with debt in 2008, compared with less than half in
1993. Last year, graduates who took out loans left college with an average of $24,000 in debt. Default
rates are rising, especially among those who attended for-profit colleges.
The mountain of debt is likely to grow more quickly with the coming round of budget-slashing. Pell
grants for low-income students are expected to be cut and tuition at public universities will probably
increase as states with pinched budgets cut back on the money they give to colleges.
Some education policy experts say the mounting debt has broad implications for the current generation
of students.
If you have a lot of people finishing or leaving school with a lot of debt, their choices may be very
different than the generation before them, said Lauren Asher, president of the Institute for Student
Access and Success. Things like buying a home, starting a family, starting a business, saving for their
own kids education may not be options for people who are paying off a lot of student debt.
In some circles, student debt is known as the anti-dowry. As the transition from adolescence to
adulthood is being delayed, with young people taking longer to marry, buy a home and have children,
large student loans can slow the process further.
Theres much more awareness about student borrowing than there was 10 years ago, Ms. Asher said.
People either are in debt or know someone in debt.
To be sure, many economists and policy experts see student debt as a healthy investment unlike
high-interest credit card debt, which is simply a burden on consumers budgets and has been declining
in recent years. As recently as 2000, student debt, at less than $200 billion, barely registered as a factor
in overall household debt. But now, Mr. Kantrowitz said, student loans are going from a microeconomic
factor to a macroeconomic factor.
Susan Dynarski, a professor of education and public policy at the University of Michigan, said student
debt could generally be seen as a sensible investment in a lifetime of higher earnings. When you think
about whats good debt and whats bad debt, student loans fall into the realm of good debt, like
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mortgages, Professor Dynarski said. Its an investment that pays off over the whole life cycle.
According to a College Board report issued last fall, median earnings of bachelors degree recipients
working full time year-round in 2008 were $55,700, or $21,900 more than the median earnings of high
school graduates. And their unemployment rate was far lower.
So Sandy Baum, a higher education policy analyst and senior fellow at George Washington University,
a co-author of the report, said she was not concerned, from a broader perspective, that student debt
was growing so fast.
Indeed, some economists worry that all the news about unemployed 20-somethings mired in $100,000
of college debt might discourage some young people from attending college.
A decade ago, student debt did not loom so large on the national agenda. Barack and Michelle Obama
helped raise awareness when they spoke in the presidential campaign about how their loan payments
after graduating from Harvard Law School were more than their mortgage payments.
We left school with a mountain of debt, Mr. Obama said in 2008. Michelle I know had at least
$60,000. I had at least $60,000. So when we got together we had a lot of loans to pay. In fact, we did
not finish paying them off until probably wed been married for at least eight years, maybe nine.
Even then, Mrs. Obama said, it took the royalties from her husbands best-selling books to help pay off
their loans.
In 2009, the Obama administration made it easier for low-earning student borrowers to get out of debt,
with income-based repayment that forgives remaining federal student debt for those who pay 15
percent of their income for 25 years or 10 years, if they work in public service.
But if the Obamas experience highlights the long payback periods for student debt, their careers also
underscore the benefits of a top-flight education.
College is still a really good deal, said Cecilia Rouse, of Princeton, who served on Mr. Obamas
Council of Economic Advisers. Even if you dont land a plum job, youre still going to earn more over
your lifetime, and the vast majority of graduates can expect to cover their debts.
Even believers in student debt like Ms. Rouse, though, concede that hefty college loans carry extra
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risks in the current economy.
I am worried about this cohort of young people, because their unemployment rates are much higher
and early job changing is how you get those increases over their lifetime, Ms. Rouse said. In this
economy, its a lot harder to go from job to job. We know that theres some scarring to cohorts who
graduate in bad economies, and this is the mother of bad economies.
And there is widespread concern about those who borrow heavily for college, then drop out, or take
extra years to graduate.
Deanne Loonin, a lawyer at the National Consumer Law Center, said education debt was not good debt
for the low-income borrowers she works with, most of whom are in default.
Unlike most other debt, student loans generally cannot be discharged in bankruptcy, and the
government can garnish wages or take tax refunds or Social Security payments to recover the money
owed.
Students who borrow to attend for-profit colleges are especially likely to default. They make up about 12
percent of those enrolled in higher education, but almost half of those defaulting on student loans.
According to the Department of Education, about a quarter of students at for-profit institutions defaulted
on their student loans within three years of starting to repay them.
About two-thirds of the people I see attended for-profits; most did not complete their program; and no
one I have worked with has ever gotten a job in the field they were supposedly trained for, Ms. Loonin
said.
For them, the negative mark on their credit report is the No. 1 barrier to moving ahead in their lives,
she added. It doesnt just delay their ability to buy a house, it gets in the way of their employment
prospects, their finding an apartment, almost anything they try to do.
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TechCrunch
Peter Thiel: Were in a Bubble and Its Not the Internet. Its Higher Education.
April 10, 2011
By Sarah Lacy
Fair warning: This article will piss off a lot of you.
I can say that with confidence because its about Peter Thiel. And Thiel the PayPal co-founder, hedge
fund manager and venture capitalist not only has a special talent for making money, he has a special
talent for making people furious.
Some people are contrarian for the sake of getting headlines or outsmarting the markets. For Thiel, its
simply how he views the world. Of course a side benefit for the natural contrarian is it frequently leads
to things like headlines and money.
Consider the 2000 Nasdaq crash. Thiel was one of the few who saw in coming. Theres a famous story
about PayPals March 2000 venture capital round. The offer was only at a $500 million-or-so
valuation. Nearly everyone on the board and the management team balked, except Thiel who calmly
told the room that this was a bubble at its peak, and the company needed to take every dime it could
right now. Thats how close PayPal came to being dot com roadkill a la WebVan or Pets.com.
And after the crash, Thiel insisted there hadnt really been a crash: He argued the equity bubble had
simply shifted onto the housing market. Thiel was so convinced of this thesis that until recently, he
refused to buy property, despite his soaring personal net worth. And, again, he was right.
So Friday, as I sat with Thiel in his San Francisco home that he finally owns, I was curious what he
thinks of the current Web frenzy. Not surprisingly, another Internet bubble seemed the farthest thing
from his mind. But, he argued, America is under the spell of a bubble of a very different kind. Is it an
emerging markets bubble? You could argue that, Thiel says, but he also notes that with half of the world
s population surging to modernity, its hard to argue the emerging world is overvalued.
Instead, for Thiel, the bubble that has taken the place of housing is the higher education bubble. A true
bubble is when something is overvalued and intensely believed, he says. Education may be the only
thing people still believe in in the United States. To question education is really dangerous. It is the
absolute taboo. Its like telling the world theres no Santa Claus.
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Like the housing bubble, the education bubble is about security and insurance against the future. Both
whisper a seductive promise into the ears of worried Americans: Do this and you will be safe. The
excesses of both were always excused by a core national belief that no matter what happens in the
world, these were the best investments you could make. Housing prices would always go up, and you
will always make more money if you are college educated.
Like any good bubble, this belief while rooted in truth gets pushed to unhealthy levels. Thiel talks
about consumption masquerading as investment during the housing bubble, as people would take out
speculative interest-only loans to get a bigger house with a pool and tell themselves they were being
frugal and saving for retirement. Similarly, the idea that attending Harvard is all about learning? Yeah.
No one pays a quarter of a million dollars just to read Chaucer. The implicit promise is that you work
hard to get there, and then you are set for life. It can lead to an unhealthy sense of entitlement. Its
what youve been told all your life, and its how schools rationalize a quarter of a million dollars in debt,
Thiel says.
Thiel isnt totally alone in the first part of his education bubble assertion. It used to be a given that a
college education was always worth the investment even if you had to take out student loans to get
one. But over the last year, as unemployment hovers around double digits, the cost of universities soars
and kids graduate and move back home with their parents, the once-heretical question of whether
education is worth the exorbitant price has started to be re-examined even by the most hard-core
members of American intelligensia.
Making matters worse was a 2005 President George W. Bush decree that student loan debt is the one
thing you cant wriggle away from by declaring personal bankruptcy, says Thiel. Its actually worse than
a bad mortgage, he says. You have to get rid of the future you wanted to pay off all the debt from the
fancy school that was supposed to give you that future.
But Thiels issues with education run even deeper. He thinks its fundamentally wrong for a society to
pin peoples best hope for a better life on something that is by definition exclusionary. If Harvard were
really the best education, if it makes that much of a difference, why not franchise it so more people can
attend? Why not create 100 Harvard affiliates? he says. Its something about the scarcity and the
status. In education your value depends on other people failing. Whenever Darwinism is invoked its
usually a justification for doing something mean. Its a way to ignore that people are falling through the
cracks, because you pretend that if they could just go to Harvard, theyd be fine. Maybe thats not true.
And that ripples down to other private colleges and universities. At an event two weeks ago, I met
Geoffrey Canada, one of the stars of the documentary Waiting for Superman. He talked about a
college he advises that argued they couldnt possible cut their fees for the simple reason that people
would deem them to be less-prestigious.
Thiel is the first to admit some of this promised security is true. He himself grew up in a comfortable
upper-middle-class household and went to Stanford and Stanford Law School. He certainly reaped
advantages, like friendships with frequent collaborators and co-investors Keith Rabois and Reid
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Hoffman. Today he ranks on Forbes billionaire list and has a huge house in San Francisco with a butler.
How much of that was him and how much of that was Stanford? He doesnt know. No one does.
But, he argues, that doesnt mean its not an uncomfortable elitist dynamic that we should try to change.
He compares it to a world in which everyone was buying guns to stay safe. Maybe they do need them.
But maybe they should also examine some of the reasons life is so dangerous and try to solve those
too.
Thiels solution to opening the minds of those who cant easily go to Harvard? Poke a small but solid
hole in this Ivy League bubble by convincing some of the most talented kids to stop out of school and
try another path. The idea of the successful drop out has been well documented in technology
entrepreneurship circles. But Thiel and Founders Fund managing partner Luke Nosek wanted to fund
something less one-off, so they came up with the idea of the 20 Under 20 program last September,
announcing it just days later at San Francisco Disrupt. The idea was simple: Pick the best twenty kids
he could find under 20 years of age and pay them $100,000 over two years to leave school and start a
company instead.
Two weeks ago, Thiel quietly invited 45 finalists to San Francisco for interviews. Everyone who was
invited attended no hysterical parents in sight. Thiel and crew have started to winnow the finalists
down to the final 20. Theyll be announced in the next few weeks.
While a controversial program for many in the press, plenty of students, their parents and people in tech
have been wildly supportive. Thiel received more than 400 applications and most were from very highend schools, including about seventeen applicants from Stanford. And more than 100 people in his
network have signed up to be mentors to them.
Thiel thinks theres been a sea-change in the last three years, as debt has mounted and the economy
has faltered. This wouldnt have been feasible in 2007, he says. Parents see kids moving back home
after college and theyre thinking, Something is not working. This was not part of the deal. We got
surprisingly little pushback from parents. Thiel notes a handful of students told him that whether they
were selected or not, they were leaving school to start a company. Many more built tight relationships
with competing applicants during the brief Silicon Valley retreat a sort of support group of like-minded
restless students.
Of course, if the problem Thiel sees with the higher education bubble is elitism, why were so many of
the invitees Ivy League kids? Where were the smart inner-city kids let down by economic blight and a
failing education system of a city like Detroit; the kids who need to be lifted up the most? Thiel notes it
wasnt all elites. Many of the applicants came from other countries, some from remote villages in
emerging markets.
But the program has a clear bias towards talent, and like it or not, talent tends to be found in private
universities. Besides, hes not advocating that stopping out of school is for everyone any more than hes
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arguing everyone should be an entrepreneur. But to start a new aspirational example an alternative
path it makes sense to start with the people who have all the options. Everyone thinks kids in innercity Detroit should do something else, Thiel says. Were saying maybe people at Harvard need to be
doing something else. We have to reset what the bar is at the top.
That hints at another interesting distinction between the housing bubble and the education bubble:
Class. The housing bubble was mostly a middle-class phenomenon. Even as much of the nation was
wrapped up in it, there was a counter narrative on programs like CNBC and in papers like the Wall
Street Journal pooh-poohing the dumb people buying all those condos in Florida. But with education,
theres barely any counter-narrative at all, because it is rooted in the most elite echelons of the upper
class.
Thiel assumes this is why his relatively modest plan to get 20 kids to stop out of school for a few years
is so threatening to a lot of the people who have the biggest megaphones to scream about it. The
people who are the most critical of this program are the ones who are most complacent with where the
country is right now, he says.
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American Banker
Tech Firms Side With Banks in Fight to Delay Durbin Amendment
April 12, 2011
By Cheyenne Hopkins
WASHINGTON A group of technology firms sent a letter last week to senators urging them to
support a delay to the Durbin interchange amendment, citing privacy concerns and fears about the
security of debit transactions.
TechNet, a group that includes Apple, eBay, Google, HP, Facebook, Microsoft, and Yahoo sent the
letter asking senators to support a bill by Sen. Jon Tester, D-Mont. that would delay the interchange
rule, which would limit interchange fees on debit cards, for two years.
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"While clearly not its intent, the Durbin amendment will drive networks to cut costs by routing
consumer's financial transactions through cheaper networks regardless of a network's security or
functionality," wrote Rey Ramsey, president and CEO of TechNet. "The proposal would also affect
existing networks' operations. Today, robust protection of financial data is the priority. But under the
new regime, cost?savings will become the number one priority, a situation that could reduce the
incentive for ongoing investments in security infrastructure. The new regime would also make it more
difficult for banks and other financial institutions to quickly and efficiently identify fraud and other
financial infringements on networks operating with minimal security components."
Tester is being supported by the banking industry, which argues a Federal Reserve Board proposal to
implement the Durbin amendment does not properly account for the costs of fraud prevention. Sen.
Richard Durbin, D-Ill., who authored the provision, has been fighting bank efforts to delay or repeal the
measure.
TechNet warned that the Durbin amendment will have substantial unintended consequences that will
threaten the security and privacy of consumer's transactions.
"The additional time proposed by Senator Tester is a common sense solution that would allow all the
parties affected by the Durbin amendment consumers, banks, merchants and network operators
to assess more fully the potential cyber-security threats posed to financial transactions and develop and
adopt any necessary solutions to address such possible risks," Ramsey said.
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Credit Slips
How Credit Card Companies Get Around the Card Act
April 12, 2011
By Nathalie Martin
Want to do a riddle? Try this.
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Mrs. Marquez wrote herself a $5,000 check from her credit card company....you know, those ones that
come in the mail with the bill? Her family makes just $40,000 a year, but the card company approved
this loan, under an offer advertized as 0% interest for one full year, starting April 1, 2010, a transaction
clearly covered by the Card Act. In July of 2010, Ms. Marquez needed another $5,000, so the company
allowed her to take out another $5,000, same terms, with the 0% deal expiring on July 1, 2011. The fee
was $150 per transaction, not bad in and of itself. The Marquez' diligently paid on the loan so that they'd
pay the whole first $5,000, in full, by April 1, 2011. Now the credit card company says they owe interest
at some huge amount, on an amount close to $5,000? Can the company do this? Hint: The Card Act
requires that payments be applied to the highest interest portion of the loan first (after the minimum
payment), but both loans are allegedly interest only.
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Elgin Courier News (Illinois)

Options abound for the desperate without credit
April 11, 2011
By Dave Gathman
Youre desperate. Maybe the transmission has just fallen out of your 1998 Accord. Or the boss has cut
your hours and the rent is overdue. You have a job or maybe some welfare or unemployment income.
But maybe your credit record is, shall we say, a little ugly. Maybe you dont have a checking account,
and because of that bad credit score, no regular bank wants you as a customer. Maybe youre in the
country illegally and dont have a Social Security number.
Well, if youre in the neighborhood of McLean Boulevard and Big Timber Road, youre in luck. Right at
the corner is a gigantic PLS payday loan store that will lend you a few hundred bucks pretty easily if
you dont mind an interest rate that Illinois Attorney General Lisa Madigans office describes as
legalized loan sharking.
If PLS rejects you, a block down the street along McLean youll find a smaller payday loan store called
Fast Cash In A Flash. Right next door to that you can trade your wedding ring for cash at Marellis Gold
Exchange.
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And right across the street from those two is Elgins first and only pawn shop, Windy City Jewelry &
Loan, where you can borrow anywhere from $50 to $63,000 by leaving that wedding ring, or maybe
your high school clarinet, as collateral.
That neighborhood may be unique in the concentration of such businesses, but not in the presence of
them. Since the early 1990s, 10 or more payday loan stores have popped up around Elgin and in
surrounding villages. And since the value of gold and silver began shooting toward astronomical levels,
an equal number of gold-buyback places have popped up.
Many misconceptions
Of all the ways to get money fast, the pawn shop has the seediest reputation. But thanks to government
controls, it actually may be the most respectable of these venues where you can borrow money or sell
something. In fact, it could be one of the wisest choices for someone whos desperate but doesnt
qualify for a low-interest bank loan.
Owner Lee Amberg and manager Stacy Wetstone, who opened the Elgin Windy City Pawn Shop in
January, said generations of crime stories have left people with a lot of misconceptions about their
trade: that people bring items to a pawn shop, get money for them and never come back again; that
pawn shops are the main way for burglars to fence stolen goods; and that the shops are frequented
mainly by the poor.
Actually, Amberg said, people should look at a pawn shop as more like a loan company than a flea
market. Customers take out loans for 60 days each and turn over merchandise as collateral to
guarantee that loan. If the customer doesnt pay off the loan, the item becomes the property of the shop
and is set out for sale in the shops showroom.
Its too soon to say what Elgin customers will do, Wetstone said, but in the Windy City pawn shop they
have operated for 23 years in Evanston, 89 percent of the customers eventually pay off their loans and
reclaim the item they brought in.
The charge for those loans is 3 percent interest per month, or the equivalent of 36 percent a year. That
s a lot compared to most bank loans or even credit cards. But its drastically less than what is charged
by payday loan and car title loan stores, as we shall see. Also, the shop doesnt even check on the
customers credit history, and, if they default on the loan, that is not reported to the credit bureaus,
either.
We dont really want to own your watch. We want to get our loan money back and collect our interest,
Amberg said. So we work with borrowers. Ill call them up and ask if they remember that their loan is
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due Monday.
Windy City also charges a fee to cover the cost of storing and insuring each item, which Wetstone says
varies according to the item.
By law, Wetstone said, every customer has to present a photo identification, and the serial number of
each item is recorded. Nationwide, only one-one-thousandth of 1 percent of stolen items show up in a
pawn shop, Amberg said.
You develop a sixth sense, Amberg said. If someone brings in something worth $1,500 and I offer
him $120 and he says, Sure, that item is probably stolen. If I plug it in and ask him to show me how it
works and he has no idea, thats suspicious.
Working in a pawn shop, you have to learn about a lot of different things, Wetstone said. All long-term
employes at Windy City study to become certified diamond appraisers. A large proportion of what
customers bring in is electronic products, so the employees have to learn how to work those.
As for estimating a fair value, the Internet has been a godsend, Wetstone said. We used to have piles
of blue books for all different kinds of used merchandise.
Not everything does get redeemed, however, as a salesroom full of assorted merchandise attests.
Glass cases hold jewelry and rings that borrowers never reclaimed. There are lots of musical
instruments and electronic appliances nine guitars, a Noblet clarinet, stereo speakers, some laptops
and DVD players. A 19-inch TV is offered for $58.88, a 20-inch for $698.88.
A framing nail gun is priced for $198.88. That was turned in as collateral by a contractor who had no
work and couldnt pay his guys, Wetstone says sadly.
My typical customer is not the destitute person, Amberg said. Its the middle-class person whose
transmission has gone out or who has lost his job and cant pay the taxes. We had a rush of people
right before the Cook County property taxes came due on April.
The biggest loan I ever made, in Evanston, was for $63,000. A man had showed up at the closing to
buy a house and found out he owed $63,000 more. The loan was secured by a lot of different items.
Legalized loan sharking
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Illinois now has more payday loan stores than McDonalds, then-Lt. Gov. Pat Quinn said in 2004. He
was holding a press conference urging conventional banks to provide alternatives to an industry that
charges interest rates once enjoyed only by guys in back alleys who promised to break your legs if you
failed to keep up with your payments.
Last June, six years after he spoke, the now-Gov. Quinn signed into law a bill really cracking down on
the payday loan industry in part by limiting the interest its stores can charge to no more than about
400 percent on an annual percentage basis.
Heck, before that, some operators were charging 1,300 percent.
On the official website of Illinois Attorney General Lisa Madigans office, www.illinoisattorneygeneral.
gov, Madigans staff goes one step beyond that.
Because of their extremely high interest rates and many charges and fees, payday loans and
installment loans are truly legalized loan sharking, the website warns consumers. You should exhaust
all possible resources family, church, friends before you even consider taking out one of these
high-cost loans.
PLS Financial, a Chicago-based chain employing 3,000 people in nine states, got its name from the
phrase payday loan store. Its stores on North McLean and at National and State streets in Elgin
proclaiim Payday Loans and Car Title Loans. But PLS President Robert Wolfberg said that
technically, the chain doesnt do payday loans anymore.
According to the nonprofit Illinois Legal Aid organization and the states attorneys office, the classic
payday loan worked like this: A person would borrow money for a term that might be as short as two
weeks until the borrowers next pay day or as long as a few months. Often, he would pay the
interest each two weeks or so and then pay the principal back as one big balloon payment at the end.
Often, the lender required the borrower to hand over a check for the amount of each payment, postdated for the day each payment was due.
The borrower often was unable to make that balloon payment at the end, by which time he often had
paid more in interest than the amount he had borrowed. So the loan company would persuade him to
roll over the loan into a new loan. The debt tended to go on forever.
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Despite their generous limits on interest rates, the 2010 Payday Loan Reform Act and a related one in
2005 include safeguards to protect borrowers from getting stuck in endless, escalating debt. The acts
ban balloon payments, limit how loans can be rolled over, limit how many consecutive days a borrower
can be in debt to the same lender, ban most fees and limit how big a percentage of a new borrowers
income can be devoted to loan payments.
Wolfberg said PLS and 90 percent of the similar firms in Illinois now offer only fully amortized
installment loans.
Wolfberg said the typical PLS customer must pay interest every two weeks equal to 15.5 percent of the
principal remaining unpaid. The borrower pays a fixed amount each week if he gets paid every week, or
each two weeks if he gets paid every two weeks.
Wolfberg said a borrower will be turned down if he has no job or other source of steady income. But like
the pawn shop, PLS does not check customers credit records or report bad loans to the credit bureaus.
Wolfberg said car title loans are another big part of such stores business. A borrower puts up as
collateral the title to his paid-off car. He then can obtain a loan of up to $4,000 for six months, with
interest of $33.33 per month for each $100 borrowed.
Spying on the competition
What does a typical payday loan look like? To spy out the competition, pawn shop owner Amberg sent
one of his employees to apply for a $100 loan from the PLS store down the street. The loan papers the
man brought back show he must pay $18.76 every two weeks for 12 payments. The total interest cost
of having that $100 for about half a year comes to $125.11. That equals an annual percentage rate of
400.26 percent, according to the documents.
But Wolfberg argues that that intimidating percentage rate is misleading, since the borrower finishes
paying off the loan and paying interest long before a whole year has passed.
If you were staying in a hotel and paying $200 a night, would you say that the hotel was charging you
$73,000 a year? Wolfberg asks. Its more accurate to say that our borrower is paying 15.5 percent
every two weeks.
Only 15 percent of PLS customers default on their loans, he said.
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Banks and credit unions do not offer short-term unsecured loans, Wolfberg said. For most customers,
all they need is a little help between paydays to cover a car repair expense or some other minor
expense. PLS is there to help.
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Huffington Post
Military Spouses Dace Difficulties Finding Employment
April 12, 2011
By David Wood
WASHINGTON -- Among the 14.8 million Americans looking for work, the men and women married to
military personnel face barriers others don't.
Military families move on average every 2.9 years, making it hard to pursue a single career or
accumulate the experience employers want. Labor markets near sprawling bases like Fort Hood, Tex.
or Fort Benning, Ga. are often saturated with overqualified military spouses eager for work. Many times,
the certification or license required for skilled professions like nurses or teachers are state specific,
adding another bureaucratic hurdle to overcome with every move.
Of course, many military spouses -- mostly women -- run their households singlehandedly while their
partners are deployed or away on long training missions. And many wives are expected to volunteer
long hours running the military's family readiness groups, which provide communications and support to
families, while their husbands' unit are deployed.
Small wonder military spouses are having a difficult time finding work. The most recent data from the
Bureau of Labor Statistics, from November 2009, shows 8.4 percent of military wives were seeking jobs
and couldn't find one, compared to 5.3 percent of women in civilian families.
"It is difficult -- you are constantly moving so having a career is extremely hard,'' said Kristy Kaufmann,
whose husband is an Army officer. "Sometimes you can get a job waitressing or at the post exchange,
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but for people who want more of a career, that can be challenging.''
For enlisted troops, the pressure on spouses to find work can be intense. "They don't get paid a lot of
money, so you really have to have a dual income family,'' said Kaufmann, who consults with the
Defense Department on spouse employment issues.
To make matters worse, when a military spouse loses her job because her partner is transferred, at
least 14 states -- including states with military bases, such as Idaho, Missouri and Louisiana -- don't
provide unemployment insurance because such transfers are seen as "voluntary.''
Tianne Travis had a job she loved, working at a bank while her husband was stationed at Eglin Air
Force Base in Florida. But she was thrown out of work when he was reassigned to Andrews AFB in
Washington. "That's the way the military is,'' she said. "I resigned and came to Maryland and was really
searching.'' Although the Pentagon and Labor Department offer help,
she and others have found the process to access the right kind of help bewildering.
Applying for a federal job, for instance, can be tricky. Even though military family members often get
precedence for federal jobs, Travis didn't know all the inside tricks to getting a job. "Your resume has to
have all the right key words in it for someone to even look at it,'' she discovered. "I had to pull that
information on my own.''
But those who've been in the military community for a while have seen big improvement in the job
picture for military spouses. "When I came into the military 23 years ago, the big question was whether
military spouses should work. You had to convince people you could be successful in your own right
and still be supportive of your military spouse's career,'' said Pamela McBride, the wife of an Army
officer and a successful businesswoman, job counselor and author of books on successful careerbuilding.
Since that time, when job opportunities and career assistance was "very limited,'' there has been "an
explosion of assistance and training'' for job-hunting military spouses, she said. But success depends
as well on personal drive and determination, and she advises military spouses to "take a deep breath,''
look around and define your goals.
Rather than just seeking a job, she said, "We have to learn how to define our own success, which may
not be a corporate career and climbing up all the steps. Make a wish list of what you want to do, and
use a slow deliberate approach to get there, filling in gaps in your resume, networking, working with
people who can help.''
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Housing Wire
Florida foreclosure defense attorneys allege rocket docket abuses
April 11, 2011
By Jon Prior
Judges pushing Florida's so-called 'rocket docket' ignored court rules regarding affidavits and often
issued final judgments the same day a foreclosure filing was docketed, according to an American Civil
Liberties Union lawsuit.
In July, the 20th Judicial Circuit Court of Florida faced a backlog of 40,000 civil and foreclosure cases
filed over the previous three years. But affidavits filed last week by ACLU attorneys representing
homeowners, suggest Florida's attempt to speed up the process has been a detriment to homeowners
challenging their foreclosures.
The ACLU filed its petition with a Florida appellate court last week in an attempt to block the court from
rushing foreclosures through this "rocket docket." In its filing, defense attorneys from across the state
complained of judges' actions.
The rocket docket was used in all five counties in the southwestern Florida circuit: Lee, Collier,
Charlotte, Hendry and Glades.
Todd Allen, a foreclosure defense attorney practicing in both Collier and Lee counties, has represented
283 defendants since September and attends hearings in Lee County three to four times per week,
according to an affidavit he filed with the ACLU lawsuit.
"Because the judges assigned to foreclosure cases hear them in consolidated blocks of time and tend
to spend only a few minutes on each case, the structure of the 'mass foreclosure' docket in Lee County
allows me to observe dozens of foreclosure proceedings each time I attend a hearing in one of my own
cases," Allen said in a signed affidavit.
Page 1582 of 3826
He filed an order with the court in November to dismiss a foreclosure case from HSBC Bank on the
grounds that the bank's attorneys did not attach sworn or certified copies of all papers referred to in an
affidavit as required under a court rule.
Judge James Thompson of the 20th Circuit Court ruled that in his 30 years on the bench he had never
understood the court rule requiring the copies and he said it did not apply to a foreclosure case, Allen
said.
"I find this statement particularly disturbing because the subject matter referred to in these affidavits is
often quite complex it typically includes detailed accounting and financial documents," Allen said.
Justin Cottrell, another attorney working in the area, claimed records were properly attached to
affidavits roughly 10% of the time, according to his affidavit attached to the ACLU petition.
"On the occasions when I have seen defense attorneys make arguments based on failure to attach
records, I have repeatedly seen judges reject this argument," Cottrell said.
Little voice for the delinquent?
By the end of January the court had reduced its backlog by more than 10,000 cases, claims Charles
Cadrecha, another attorney practicing in these counties.
In his signed affidavit, he stated that foreclosure defense attorneys often tried to dismiss cases when
the plaintiff showed a deficiency, but time and again, the judge responded "that the importance of
reducing the caseload meant that the case needed to keep moving forward," Cadrecha claimed.
Part of this effort includes denying a delinquent homeowner a say in court, according to the affidavits.
Todd Allen said this issue is the "most frustrating." Lee County judges, he said, have dismissed a
homeowner's right to pursue what he sees as valid discovery requests if the homeowner is not current
on the mortgage.
"On several occasions, Judge (Hugh) Starnes has disposed of this issue by asking whether a
homeowner is current on his or her mortgage; if the answer is no, Judge Starnes will state that
discovery has no bearing on the bank's right to foreclose," Allen alleged. "Being current on one's
mortgage is not the sole issue in a foreclosure case, nor is it dispositive."
Page 1583 of 3826
The numbers
Michael Olenick is a software engineer and CEO of Legalprise, which operates a database of judicial
foreclosure docket data in Florida. The database is maintained by downloading case information and
filings directly from the servers in 26 of Florida's 67 counties.
He found final judgment of foreclosure had been entered 5,290 times since January 2009 on the same
day as a notice of filing or affidavit was docketed. A final judgment was entered another 1,660 times
within 20 days of the filing, and 6,950 times within 20 days of "some piece of summary judgment
evidence."
Olenick found moving cases onto the rocket docket began in August, during which 1,923 cases were
set for the mass docket. That number peaked three months later in December when nearly 5,000 cases
were set for the rocket docket in that month alone. He believes "these numbers to substantially
undercount the true total" because he excluded docket entries with slight typographic or stylistic
variations.
Working through the backlog
Florida has one of the most backlogged foreclosure systems in the country. According to RealtyTrac, it
holds the eighth highest foreclosure rate with one in every 472 properties receiving a filing in February.
However, it holds the highest amount of lis pendens, or suits pending, at 8,667 that month.
The overload has caused banking attorneys, not just the courts, to ramp up speeds to the point where
some are now alleging they cut corners. The Florida attorney general has put several firms under
investigation for a range of issues, including robo-signed documents, notarization problems and
improper process servicing, to forged documents.
The most prominent firm suspected of the dealings is the law offices of David J. Stern, which ceased
foreclosure work March 31 and was delisted from Nasdaq, as banks and the government-sponsored
enterprises pulled their business.
The banks have defended their foreclosure actions. In a third-quarter conference call with investors,
Bank of America (BAC: 13.35 -1.04%) CEO Brian Moynihan said past foreclosure decisions were
accurate and borrowers who received an eviction were delinquent on their loan for 560 days on
average.
Page 1584 of 3826
Beyond banks, others are suspect of the ACLU allegations, claiming that there could be just as much
evidence of properly completed foreclosure cases.
"While the ACLU relies upon a host of statistical and anecdotal evidence to support its lack of due
process contentions, I expect there may be equally significant statistics and anecdotal evidence going
the other way which may undercut the ACLU's position," said Anthony Laura, a partner at the law firm
Patton Boggs.
A spokesperson for the 20th Circuit Court declined to comment.
Florida Bar President Mayanne Downs wrote in an email to several attorneys, defending the Lee
County judges. She said claims of them acting inappropriately were unfounded.
"They actually show judges working hard to do their jobs as well as they can, and to find the appropriate
way to process the staggering caseloads they must manage," Brown said in the email that was
confirmed by HousingWire. "These thoughtful judges are communicating about how best to proceed,
trying to understand what their colleagues are doing, sharing approaches, and obviously interested in
the best possible approach to a difficult problem."
In their affidavits, however, the foreclosure defense attorneys said the legal system feels weighted
against them and their clients, has discouraged many from continuing to practice and has left even
more homeowners without proper representation.
"As a result of these problems, I am skeptical about accepting future foreclosure cases in Lee County,"
lawyer Cadrecha said.
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American Banker
New Questions about Banks Force-Placed Insurance Deals
Page 1585 of 3826
April 12, 2011

By Jeff Horwitz
The first time Luis Juarez heard of force-placed insurance was when he received a $25,000 bill for it in
the mail.
A Florida doctor and homeowner, Juarez had been dropped by his previous insurer over a roofing
issue. Though that lapse violated his obligation under the mortgage to maintain coverage on the
property, he was current on his loan payments and heard nothing from the servicer Wells Fargo & Co.
for more than a year.
Then on May 10, 2010, Juarez got a note from QBE Specialty Insurance, a partner of Wells. It said that
QBE was retroactively charging him $25,000 for a policy that had expired two months earlier, according
to court filings.
Neither the price tag nearly quadruple his original policy's rate, according to court papers nor the
expired status of the QBE policy were a mistake.
The use of carriers like QBE adds another public wrinkle to the controversy over banks' imposition of
homeowners coverage, because the carriers are unregulated in major states such as Florida. Wells
Fargo, SunTrust Banks Inc. and others are buying what is called "surplus-line" insurance, which is
neither governed by state premium caps nor guaranteed by state funds. That leaves the insurer free to
charge whatever rates it pleases and to share some of the proceeds with banks through payments to
their affiliates.
Force-placed insurance is already under fire from a coalition of state attorneys general because it
burdens troubled borrowers with expensive premiums, provides inferior coverage and often dumps the
cost on mortgage investors at the time of foreclosure if borrowers failed to pay the premiums. In the
process, banks reap lucrative commissions from insurers.
Though there is no evidence that the banks sought surplus-line coverage because of its potential to
carry higher prices, borrower advocates say that the companies' use of unregulated carriers exposes
homeowners and mortgage investors to higher costs and greater risk in the event of a catastrophe.
Moreover, some question whether banks' agents are making the mandatory effort to seek coverage
from regulated insurers first.
QBE is "more aggressive in placement, and their pricing is worse," said Jeffrey Golant, a Florida
attorney who recently filed a lawsuit on behalf of Juarez and others alleging that Wells Fargo and QBE
Page 1586 of 3826
engaged in self-dealing and charged unreasonable premiums. "There is no regulation of their rates at
all, and they appear to believe that being surplus lines allows them to do anything they want."
According to the lawsuit, which seeks class-action status, the premiums were nearly four times those
for the policy Juarez had bought through a state-run company that normally charges Florida's maximum
legal rate. Wells Fargo said that the Juarez case was "unique" in that the lapse in voluntary coverage
was not detected for well over a year.
"Wells Fargo wants to assure that our customers have continuous hazard insurance coverage," a
spokeswoman said. "In rare instances, when there is a failure of notification from a prior carrier, it can
take some time to recognize the lack of coverage."
Representatives of QBE declined to answer questions about why it has chosen to sell force-placed
insurance as a surplus-line provider, and refused to say in which states it operates on a surplus-line
basis. Wells and SunTrust defend the propriety of their practices.
Force-placed insurance is lucrative for mortgage servicers. An American Banker story published in
November found that banks often collect sizable force-placed commissions from insurers even when
servicers do not perform significant work in the production of the policy. Mortgage bond analysts and
borrower advocates have flagged this relationship as a potential conflict of interest.
Out of concern that banks were unfairly profiting from struggling homeowners, state attorneys general
are now seeking to restrict the practice. The terms of a proposed mortgage servicing settlement would
prohibit servicers from accepting "commissions," "referral fees," or "kickbacks" in relation to the policies,
and prevent banks from force-placing policies when voluntary coverage could simply be extended.
Those terms would drastically alter an industry that until recently received little attention from regulators
or the public.
"Generally, we have concerns about consumers being compelled to pay substantially overpriced
insurance premiums, particularly in cases where consumers are already under financial stress," a
spokesman for Iowa State Attorney General Tom Miller wrote in an email to American Banker in March.
"People in default are an easy mark," said Margery Golant, Jeffrey Golant's mother and an attorney who
was among the first to draw attention to the widespread use of force-placed insurance in the wake of
the housing collapse. "Practically every single person who is in default has one of these, and most of
the time [borrowers] don't even tell us about it unless we ask. And I have seen instances where
borrowers who were performing were pushed into default by force-placement."
Page 1587 of 3826
NO LIMITS
Though QBE maintains regulated and unregulated arms in many jurisdictions, it appears to sell forceplaced insurance solely as a surplus-line product in Florida, Texas and perhaps other states.
It is not possible to evaluate how QBE's rates stack up against other insurers in Florida because its
surplus-line status means it does not have to disclose such data. Given that servicers regularly receive
a percentage commission on the policies, there is little financial incentive for banks to press for low
prices or show restraint when issuing policies.
A review of a handful of QBE cases being litigated in Florida supports this view. In a second case
involving Wells, documents show the bank imposed retroactive coverage on a borrower of $1,743 a
month more than the borrower's monthly principal and interest payment. Annualized, the premiums
amounted to more than a quarter of the borrower's outstanding mortgage principal, a lawsuit filed by
Jeffrey Golant, the Miami law firm Kozyak Tropin & Throckmorton and two other plaintiffs law firms
alleges.
"We are confident that all of our vendors are operating in accord with applicable laws in each state," a
spokeswoman for Wells told American Banker. The company said it buys force-placed policies from
QBE only on the minority of loans it has purchased from correspondents, meaning that only borrowers
whose mortgages were originated by other lenders can be force-placed with a carrier whose rates are
not regulated. For the rest of Wells' portfolio, it partners with Assurant Specialty Property, which is
subject to rate limits in all states.
In other instances, banks partnering with QBE have forced borrowers to pay for insurance in excess of
their property's value. In one example, insurance notices show QBE forced a SunTrust Mortgage Inc.
borrower to buy a $230,000 insurance policy on a house that the Broward County, Fla., property
appraiser lists as worth less than $82,000. Should the borrower eventually fail to pay QBE the $10,000
annual premium, the government will, in the form of losses to Fannie Mae, which guarantees the
mortgage.
Margery Golant said the QBE insurance wasn't the first force-placed policy levied on the home in the
above example, just the most expensive.
"She had force-placed coverage prior to QBE," Margery Golant said of the borrower. "But QBE was the
most outrageous by a mile."
SunTrust declined to discuss its relationship with QBE or the cost of its insurance. Generally, "SunTrust
takes appropriate steps necessary to protect the value of collateral consistent with our responsibilities
Page 1588 of 3826
to our shareholders and as required by our investor agreements," a spokesman said by email.
Others in the industry cautioned against jumping to the conclusion that all high prices were abusive.
Reinsurance is not always available in hurricane-prone states, meaning that the insurer must charge
high premiums to compensate for the exposure.
"You get on the coast, you can't find reinsurance. It does get kind of crazy," said Skip Davis, a senior
vice president of Plateau Group, a firm that helps community banks acquire force-placed insurance for
their portfolios. Most players in the market are judicious about imposing policies, he said, and the price
of the insurance is rightly higher than for voluntary coverage, given the extra risks involved.
But Davis said that some of the QBE rates appeared to be remarkable, even for Florida. Regarding the
$25,000 in retroactive premiums, "any halfway smart banker is going to say, [the borrower] can't afford
that," he said.
QBE'S ADVANTAGE
QBE's sale of unregulated insurance in Florida is something of an oddity. State laws generally give
preferential status to admitted carriers with regulated rates, and Florida statutes mandate that surplus
coverage should only be purchased when coverage is "not procurable from authorized insurers."
Insurance agents must document multiple "diligent efforts" to find a regulated carrier before venturing
into the surplus-line market.
To someone outside the Florida industry, finding an admitted force-placed insurer wouldn't seem like a
problem. Two large insurers, Assurant Specialty Property and Balboa Insurance Co., sell such
coverage. Balboa, formerly owned by Bank of America Corp., is in the process of being purchased by
QBE, a unit of QBE Insurance Group Ltd. of Australia, and declined to comment. But while Assurant is
the largest operator in the Florida market, agents doing business with QBE aren't seeking Assurant out
before placing new coverage, the company said.
"No, this does not happen," Assurant spokeswoman Shawn Kahle wrote to American Banker when
asked if the company was regularly contacted by insurance agents making a diligent effort to find
regulated insurance. "While we don't speculate or comment on competitors, at Assurant Specialty
Property we believe being an 'admitted carrier' is the right approach to take if possible."
Wells said that it always buys rate regulated coverage when it is available, though QBE does not offer it
in every state.
Page 1589 of 3826
One possible reason why the agents buying QBE insurance might not be checking with QBE's
competitors is that they appear to work for QBE.
Several notices of coverage viewed by American Banker all listed an employee for Sterling National
Insurance Agency Inc., a QBE subsidiary, as both the basic "producing" agent and the surplus-line
agent for the coverage. The agent, Michael Seminario, declined to speak with American Banker.
Because state limits on Assurant's pricing restrict the commissions it pays to bank clients, a case can
be made that Assurant's regulated status is a competitive disadvantage.
"If there's the ability to write coverage on a nonadmitted basis, then definitely there's an advantage to a
company like QBE," said David Blades, an insurance analyst for A.M. Best.
QBE's deal for Balboa, which generated $1.5 billion of gross premiums last year, would make it one the
biggest force-placed insurers in the U.S. It's unclear how the company will manage its future forceplaced sales in Florida and elsewhere once the purchase is complete. Belinda Miller, a deputy
commissioner of the Florida Office of Insurance Regulation, said she doubted QBE would switch
Balboa's existing force-placed portfolio over to surplus lines, though she said the company has not
indicated its plans.
Neither QBE nor Bank of America, which will distribute its insurance, offered any comment. But
insurance industry analysts said they believed QBE was in the middle of a big push to expand its
market share.
"I think when the Balboa deal closes we'll get a better sense of how they're looking at this short and
long term, of how they're going to attack the market," Blades said.
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American Banker
Whats Behind the Comeback in Private Deeds
April 12, 2011
Page 1590 of 3826
By Paul Muolo
Never underestimate the creativity of mortgage and real estate professionals, especially players that
are privately held and hate dealing with multiple levels of regulation.
A case in point is the re-emergence of "contracts for deed," in which a home is sold by a private entity
to a buyer that doesn't take out a "real" mortgage but instead contracts to buy the property
eventually.
Generally, the "buyer" makes a small down payment and the seller retains legal title. Usually the deed
cannot be executed for at least the first year.
The play is this: Someone looking to buy a home or investment property doesn't have to hassle with the
homebuying process, credit checks, and all the new rules and regulations driving the mortgage process.
Gordon Albrecht, executive vice president of FCI Lender Services in Anaheim Hills, Calif., said private
contracts for deed "have been scorching the past four months." Albrecht should know. FCI is the
nation's largest private-money servicer of real estate-backed loans.
The foreclosure crisis is the catalyst in the increased use of private deeds, Albrecht said. "With a
contract for deed you don't need to foreclose. It's an eviction. The use of these is being driven by the
long foreclosure time lines we're seeing."
Though Albrecht would not identify any of the investors he is working with in the private-deeds market,
he hinted that some of the money behind these deals is coming from developers and former home
builders. (Some are mortgage bankers, too.) "These are guys with 15, 17 years of experience. The
have money they want to put to work," he said.
Just how much the use of private deeds has shot up is hard to say. Government agencies and even
private data collectors either don't track the business or have no easy way to count volume. Howard
Lax, a real estate and mortgage attorney in Bloomfield Hills, Mich., pointed out that no mortgage, per
se, is filed in a county courthouse. "What you do with these is file a memorandum on the land contract,"
he said.
For the lender the beauty of these deals is simple: Some of the paper on such contracts yields up to
11%. "Those are the numbers we see in Michigan," Lax said. But he noted that factored into the yield
Page 1591 of 3826
are an array of fees that might include appraisals and title insurance.
It also appears that the private deed market is being driven by investors whose goal is to buy homes on
the cheap and rent them out. (Owner-occupants appear to be a small portion of the business.)
Traditional mortgage lenders (mortgage bankers, commercial banks and thrifts) have tightened their
investor loan standards, so much so that many would-be landlords don't even consider going to a bank
anymore.
"I know one guy who has 200 houses he rents out," Albrecht said. "I know another who has 335
houses. Over the next five to eight years we are going to have tons of renters."
Ben Ramos, a loan broker in Southern California, says the beauty of these deals is the ability of the
borrower to purchase a house (although at a high note rate) because a Realtor may not be involved.
"Most people do not realize that in real estate, just about anything can be negotiated and agreed upon
by two parties," he said.
Players in the market aren't blind to the risks. Usury laws on how much interest they can charge apply.
(Usually it's tied to a certain amount of basis points over the prime rate but only for lenders that make
more than five loans a year.)
Also, the "buyer" entering into the private deed has little in the way of property rights. Perry Hamilton, a
private-money lender in Hilton Head, S.C., said such arrangements are "predatory in nature." A default
on a contract "cancels the deal and gives the seller back the real estate with no equity" or equity of
redemption for the buyer."
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Housing Wire
Illinois Supreme Court forms committee to deal with foreclosure mess
Page 1592 of 3826
April 11, 2011

By Kerri Panchuk
The Illinois Supreme Court is addressing the foreclosure crisis by forming a special committee to
formulate a streamlined judicial foreclosure process for the state.
The catalyst for the study is the 70,000 mortgage foreclosure actions pending in Cook County, Ill.,
where Chicago is located, at the end of 2010. According to judges and lawyers involved in the
committee, the problem is far from going away.
"The Supreme Court has a keen interest in programs with the strong promise of achieving timely and
lasting resolution to tough problems, and we believe this select committee can come up with specific
solutions to help families cope with the emotional and financial burdens of those facing such a
devastating loss, said Illinois Supreme Court Chief Justice Thomas Kilbride Monday in a statement.
The new committee's 14 members include judges, bankers, lawyers, a law professor and at least one
official from the Illinois Attorney General's office. The goal is to make foreclosure proceedings in Illinois
"fair, efficient and final."
The goal is to make sure homeowners understand the legal proceedings and have access to
information to ensure they know if their lenders have taken all the necessary steps to foreclose.
The committee will focus on developing procedures for handling foreclosure inventory, while also
studying effective procedures in other states. The committee will recommend to the Supreme Court
judicial foreclosure rules that will be proposed for adoptions statewide.
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Housing Wire
Foreclosure note enough for trustee standing: Florida appellate court
Page 1593 of 3826
April 11, 2011

By Kerri Panchuk
A trustee that holds a homeowner's original note and mortgage has enough evidence to establish
standing to foreclose even if the homeowner believes the trustee failed to provide documents showing
an official assignment of the mortgage note, a Florida appellate court ruled.
That's the decision the Fourth District Court of Appeal of the State of Florida wrote in the Isaac v.
Deutsche Bank National Trust case.
The homeowners, who filed the complaint, appealed a lower court's grant of summary judgment for
Deutsche Bank National Trust on the grounds that the lower court failed to consider their argument that
Deutsche Bank lacked standing to foreclose.
The plaintiffs argued on appeal that "Deutsche Bank failed to provide sufficient documentation reflecting
how it obtained ownership of the mortgage and note from the original assignee, an entity called Option
One." On the other hand, court records say "Deutsche Bank argues that it established its standing to
foreclose based upon its possession of the original note and mortgage, combined with the affidavit of a
representative of Option Ones successor in interest affirming Deutsche Banks ownership."
The court agreed with Deutsche and held that the trustee has legal standing to foreclose.
The trustee proved its case by providing the court with the original mortgage, the note and a piece of
paper annexed to the promissory note from Option One Mortgage, the original assignee.
Court records say the annexed paper, which was signed by the assistant secretary of Option One, "did
not state a payee." Because it did not include a payee, the note became payable to the bearer. The
court added that in this situation, the instrument is negotiated by transfer of possession. "Deutsche
Bank, by virtue of its possession of an instrument payable to bearer, is a valid holder of the note and,
therefore, is entitled to enforce it," the court held in a decision entered April 6.
The case is similar to a series of cases that have surfaced in Alabama, where three courts have
reached differing opinions on the issue of whether a trustee holding securitized notes has the standing
to foreclose.
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Page 1594 of 3826
Housing Wire
Housing advocacy groups investigate lenders, asset managers
April 11, 2011
By Kerri Panchuk
The National Fair Housing Alliance may bring suit against a number of mortgage lenders, following an
investigation into maintenance of bank-owned properties in minority neighborhoods.
The Washington-based trade group and three partnering agencies said lawsuits against eight lenders
and asset managers could be filed if the investigation into the upkeep of REO homes in minority
neighborhoods suggests those properties are receiving inadequate care when compared to REOs in
predominantly white neighborhoods.
Shanna Smith, president and CEO of the alliance, didn't identify the lenders and asset managers under
investigation, during a media phone conference Monday, but said the probe continues and any legal
action would hinge on who is responsible if they find disparate treatment.
Steve Dane, an attorney with Relman, Dane & Colfax, joined a press conference held by the NFHA, the
Miami Valley Fair Housing Center, the Connecticut Fair Housing Center and Housing Opportunities
Made Equal (HOME), saying inadequate care of REO properties can turn into a legal issue ripe for
inclusion in a lawsuit under the Fair Housing Act.
"HUD has issued regulations saying the failure and delay of maintenance or repairs on REO properties
because of racial composition of a neighborhood" is an actionable offense under the Federal Housing
Act, Dane said.
As part of their study, the agencies compared REO properties in predominantly minority and
predominantly white neighborhoods in parts of Connecticut, Maryland, Ohio and Virginia. The
organizations created a scoring system that rated REO properties on upkeep, maintenance and general
curb appeal. Jim McCarthy, president and CEO of the Miami Valley Fair Housing Center in Ohio said a
Page 1595 of 3826
letter grade was assigned to REO properties in minority and white neighborhoods. "The overwhelming
number of D's and F's are identified in the primarily African-American areas of Dayton," he said.
Erin Kemple, executive director of the Connecticut Fair Housing Center, reported similar disparate
results, saying the average score for REO properties in white neighborhoods was 89 out of 100,
compared to an average score of 78 in minority communities.
Amy Nelson, director of Systemic Investigations and Enforcement for HOME in Richmond, Va., did not
find substantial differences in servicing scoring. She did add that when it came to maintenance, the
properties in minority areas received a "somewhat average rating, not an excellent rating."
Shanna Smith with NFHA said in the Maryland counties of Montgomery and Prince George, she
recorded no "F" grades for REOs in the all white neighborhoods. But when she reviewed data from
African-American communities the scores went lower.
Thus far, no legal action has been filed against lenders, servicers or asset managers, but the agency
heads say they've met with the Federal Housing Administration and HUD officials.
"I think it would be premature to say what the government agencies are doing," Smith said. "HUD has
encouraged us to continue with these investigations."
She added that if a lawsuit is filed, it's still unknown who would be named a defendant. If the lender or
servicer is solely responsible then they may be named, but if they can show an asset manager was in
charge of the property maintenance and they relied on them to do that, then asset management firms
would likely become default defendants in lawsuits.
When asked if crime in certain neighborhoods and realistic turn around times on maintenance work
were considered in the findings, the housing officials said most contracts with asset managers require
home visits or drive-bys at least one a week or once every two weeks.
"We have been told by numerous people we spoke to that they require a drive-by each week or every
two weeks," said Jim McCarthy with Miami Valley Fair Housing. "That is clearly not occurring."
The team included several recommendations for lenders and servicers, including their belief that the
selection of REO brokers and asset managers should be handled efficiently to ensure the parties
chosen to handle the properties know how to maintain the assets.
Page 1596 of 3826
"When pricing the values of REO homes that they bring into the inventory, they need to do that in a
nondiscriminatory way not basing it on the racial compensation of the neighborhood," said Smith.
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Wall Street Journal (Real Time Economics blog)

Real Estate Bust Hasnt Dimmed Americans Faith in Real Estate
April 12, 2011
By Conor Dougherty
Despite an extended slump in real-estate prices, most Americans still believe homes are the best
investment, according to a survey released today by the Pew Research Center.
According to the results of a telephone survey conducted in March, Pew found eight-in-ten adults
believed a home was the best long-term investment a person could make.
This isnt to say that Americans faith in real estate is unflappable. The intensity of the publics faith has
fallen off, according to the survey, with 37% of respondents saying they strongly agree that
homeownership is the best investment, compared with 49% from a CBS News/New York Times survey
conducted two decades ago, Pew said.
There is also some evidence that the next generation views real estate with a more pessimistic eye.
According to Pew: Adults ages 65 and older are more sold on the investment value of homeownership
than any other age group. Some 48% of this older cohort agree that homeownership is the best longterm investment a person can make, compared with 39% of those ages 50 to 64; 32% of those ages 30
to 49; and 35% of those ages 18 to 29.
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Page 1597 of 3826

Commentary: Right-to-Rent Would Ease Foreclosure Mess
April 11, 2011
By Dean Baker
Developments asked Dean Baker, co-director of the left-leaning Center for Economic and Policy
Research in Washington, D.C., to weigh in on the housing market. Mr. Baker first proposed the right-torent idea in 2007.
While the rate of foreclosures may have finally peaked, it is not going to come down quickly. We are
virtually certain to see at least a million foreclosures in 2011 and comparable numbers in 2012 and
2013. Many more homeowners will lose their homes through distressed sales.
This is a crisis for both the homeowners themselves and also for the communities where these
foreclosures are concentrated. There is considerable research showing that foreclosed properties are a
blight on neighborhoods, bringing down property values and creating eyesores and safety risks. For
these reasons, there is a strong argument for taking measures to reduce the pace of foreclosures.
However, few would argue for yet another round of the federal Home Affordable Modification Program.
HAMP has proven bureaucratic and ineffective. Only a small share of threatened homeowners have
received permanent modifications and a large portion of this select group is expected to re-default.
Ive said it before, and Ill say it again: There is a simple alternative that involves no government money
and no new bureaucracy. We could temporarily change the rules on foreclosure to allow homeowners
the right to stay in their home as renters for a substantial period of time (e.g., 5 years) following a
foreclosure.
During this period, they would pay the market rent as determined by an independent appraiser. They
would have the same rights and responsibilities as other tenants, with the exception that they could not
be evicted without cause. The lender would own the property and would be free to sell it, although the
former homeowner would still have the right to remain as a tenant even if the home is sold.
Page 1598 of 3826
This policy accomplishes several important goals. First and foremost it provides housing security for
homeowners who got caught up in the middle of the bubble. These people can be blamed for having
made a mistake by buying homes at bubble-inflated prices. But this mistake is small compared with the
mistakes made by the banks that made hundreds of billions of dollars of bad and often deceptive loans.
We were willing to give these banks trillions of dollars of loans at below market rates. Allowing
foreclosed homeowners to stay in their homes as renters seems a rather small concession in
comparison. This right-to-rent provision can also be narrowly structured so that it only applies to owneroccupied homes of less than the median value that were bought during the bubble years. This will
ensure that it is not exploited by wealthy homeowners or investors.
By changing the balance of power between lenders and homeowners, the right to rent provision would
give lenders more incentive to voluntarily arrange modifications that allow homeowners to stay in their
house as owners. This would be the best possible outcome.
The fact that foreclosed homes remain occupied will prevent the sort of neighborhood blight that has
devastated many communities across the country. Tenants with security in their home will have an
incentive to keep the property looking respectable.
Finally, the right to rent could free up money that is currently going to mortgage payments on homes
where owners never accrue any equity. In some of the former bubble markets the difference between
mortgage payments on a house purchased near the peak of the bubble and the market rent can be
more than $1,000 a month. The money saved by former homeowners is money they will spend in the
communities where they live.
So there you have it: A simple policy that requires no taxpayer dollars and no new bureaucracy.
Back to Top
Page 1599 of 3826
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Warren, Elizabeth (CFPB)

(fydibohf23spdlt)/cn=recipients/cn=warrene>
_DL_CFPB_AllHands
Welcome to Our Newest Family Members

Tue Apr 12 2011 10:47:52 EDT
image003.jpg
image002.jpg
image001.jpg
Colleagues,
As we grow, its important that we connect early. To help us, the Human Capital team will send out
introductions of our new team members after each Orientation session. So, please join me in
welcoming the following new team members to our family at CFPB! If you have not already met our
newest additions, please stop by and introduce yourself.
ew
On March 28, we welcomed:
2011_PP07_New_Hires_032811_phixr
Left to Right:
Thomas Kearney, Attorney-Advisor, Regulations, 7521
Katie Cronin, Management & Program Analyst, Human Capital, 554
Erie Meyer, IT Specialist, CIO, 1st Floor
Rebecca Gelfond, Attorney-Advisor, Fair Lending, 7114
Angelique Reese, Consumer Response Analyst, Response Center, 7312
Cordelia Holmes, Consumer Response Analyst, Response Center, 7312
Michael Botelho, IT Specialist, CIO, 1st Floor
Cara Petersen, Attorney-Advisor, Enforcement, 7114
Page 1600 of 3826
Shou (Eric) Wang, Attorney-Advisor, Fair Lending, 7704

Not Pictured:
Julie Vanderslice, Consumer Protection Analyst, Non-Bank Supervision, 513
On April 11th, we welcomed:

2011 PP08 New Hires B 041111
Left to Right after Wally:

Rebecca Deutsch, Attorney-Advisor, General Counsel, 523
Neeraj Gupta, IT Specialist, Chief Information Officer, 1st Floor
Kwadwo Boateng, Policy Analyst, Non-Bank Supervision, 573
Eric Grover, Consumer Education Communications Specialist, Response Center, 7312
Brett Kitt, Attorney-Advisor, General Counsel, 527
Stephanie Basham, Realty Officer, Operations & Facilities, 7513
Courtney Scala, Presidential Management Fellow (Rotation), Mortgage Markets, 569
Stephen Hannah, IT Specialist, Chief Information Officer, 1st Floor
Angie Scurlock, Administrative Officer, General Counsel, 513
Wesley Fravel, Management & Program Analyst, Privacy, Information Disclosure, Records &
Transparency, 7120
We also welcomed Gail Hillebrand, Associate Director of Consumer Education & Engagement. You can
find her in 7706!
2011 PP08 New Hires D 041111
Page 1601 of 3826
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_DL_CFPB_AllHands
FW: CFPB Vacancy Announcements on USAJOBS

Mon Apr 11 2011 17:36:12 EDT
Fyi team Dennis
Dennis Slagter
HR Specialist CN-201-5B/5C
Office: Human Capital Office
11-CFPB-130
Thanks
Felicia Royster
Human Capital Team
202-435-7193 (1801 L Street Room 554)
202-435-7329 (Fax)
(b) (6)
Page 1608 of 3826
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Date:
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Hart, Maria (CFPB)

Plunkett, Alexander (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=alexanderp>; Glaser,
Elizabeth (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user
(fydibohf23spdlt)/cn=recipients/cn=lowndsk>; Herchen, Emily
(fydibohf23spdlt)/cn=recipients/cn=wanderera>; Tamberrino, Mary
(fydibohf23spdlt)/cn=recipients/cn=tamberrinom>; Mann, Seth
(fydibohf23spdlt)/cn=recipients/cn=manns>; Royster, Felicia
accounts/cn=standard users/cn=roysterf>; Tingwald, James (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=tingwaldj>; Sensiba, Vicki
(fydibohf23spdlt)/cn=recipients/cn=sensibav>; Megee, Christine
accounts/cn=standard users/cn=megeec>; Dickman, Marilyn (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=dickmanm>; Darling, Eben
(fydibohf23spdlt)/cn=recipients/cn=darlinge>; Gorski, Stephanie
accounts/cn=standard users/cn=gorskis>; Cronin, Katherine
(fydibohf23spdlt)/cn=recipients/cn=cronink>
Lev, Ori (CFPB)
users/cn=levo>; Slagter, Dennis (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=slagterd>; Reilly, Elizabeth
(fydibohf23spdlt)/cn=recipients/cn=ericksone>
Memo-Crediting Accrued Leave (Transferring FED Bank employees)
Mon Apr 11 2011 16:47:49 EDT
Crediting Accrued Leave - Federal Reserve Bank 1064 Transferees.pdf
Good Evening,
Attached you will find a copy of the signed memo in regards to the process of Crediting Accrued Leave
for Federal Reserve Bank employees Transferring to the Bureau Under 1064.
Page 1610 of 3826
Maria
Maria Hart
Human Capital Implementation Team
202-435-7337 Office
(b) (6)
Page 1611 of 3826
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Harvey, Imani </o=ustreasury/ou=exchange

_DL_CFPB_AllHands
Smith, Robin </o=ustreasury/ou=exchange
(fydibohf23spdlt)/cn=recipients/cn=smithro>; Kennedy, Curtis
accounts/cn=standard users/cn=kennedycu>
Conference Room Etiquette
Mon Apr 11 2011 15:58:26 EDT
Conference Room Etiquette.doc
CFPB All hands,
Due to our growing need for meeting space and recent procedural changes, the Office of Operations
asks that everyone adhere to the attached guidance when securing conference rooms.
Thanks,
Imani Harvey
Special Assistant to the Chief Operating Officer
Phone: 202-435-7513
Page 1615 of 3826
Conference Room Etiquette.doc (Attachment 1 of 1)
Conference Room Etiquette for CFPB

1. Please request conference rooms through your administrative staff contact
with 2 hours or more hours notice if possible.
2. Please have specially requested conference room equipment returned to the
helpdesk (ext. 21111 or [email protected]).
3. Please reserve a conference room that is the appropriate size for your group.
4. Please do not use the conference rooms if you do not have a reservation.
5. If a conference room is no longer needed please cancel your reservation.
6. Please do not surpass your meeting time.
7. Please clean up behind yourselves and return conference rooms to their
original setup.
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Outline of 1024
Mon Apr 11 2011 15:27:47 EDT
Outline of 1024.doc
Kevin K. Lownds
Review Analyst
(202) 435-7399
Page 1617 of 3826
Outline of 1024.doc (Attachment 1 of 1)
Outline of 1024: Supervision of Nondepository Covered Persons

I. Scope
a. Applies to:
i. loan providers
ii.
larger participants in markets for consumer financial products and
services
iii.
covered persons engaging in conduct that is risky to consumers;
iv.
private education loan providers
v.
payday loan providers; and
vi.
service providers to nondepository covered persons
b. Does not apply to:
i. banks
ii.
savings associations
iii.
credit unions
II. Supervision
a. Reports and examinations for:
i. assessing compliance (including tax law noncompliance)
ii.
obtaining information about activities and compliance procedures
iii.
detecting and assessing risks to consumers
b. Supervision program must be risk-based on:
i. asset size
ii.
volume of transactions
iii.
risks to consumers
iv.
oversight by state authorities
v.
other factors the Bureau views as relevant
c. Limits
i. Coordinate supervisory activities with prudential regulators and State bank
regulatory authorities
ii.
Use existing reports that have already been provided
d. Other Requirements
i. Prescribe rules to facilitate supervision and detection of risks, as well as
that persons are legitimate entities
ii.
May require generating, providing, or retaining records
III. Enforcement
a. Exclusive authority if co-extensive with another federal agency
i. Exceptions: FTC and 1061
b. Other federal agencies may recommend referral
c. Required to negotiate an agreement with FTC
IV. Rulemaking and Examination
a. Exclusive authority if co-extensive with another federal agency
i. Exception: 1061(a)
V. Special Cases: Farm Credit Administration
a. Nothing modifies, limits, or otherwise affects the authority of the FCA.
Page 1618 of 3826
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GLOBAL
</o=ustreasury/ou=do/cn=recipients/cn=global>
Global_All
</o=ustreasury/ou=do/cn=recipients/cn=global_all>
Presidential Message to Federal Employees

Mon Apr 11 2011 13:45:32 EDT
Message to Federal Employees (4-11-2011).pdf
Dear Colleagues,
On Saturday afternoon, the President signed a Continuing Resolution (CR) that will keep the
Government running through Friday, April 15. By the time that CR expires, we expect that the
President will have signed into law an appropriations bill to fund operations through the remainder of the
fiscal year. Thank you for your tremendous efforts over the past few weeks to prepare for the possibility
of a Government shutdown. Such an outcome would have been highly unfortunate, not just for the
Federal workforce but for our nation as a whole. Throughout the planning process, your agencies and
departments acted with utmost professionalism in an atmosphere of understandable uncertainty and
apprehension. Please distribute the attached memorandum from the President to all Federal
employees, which conveys the President's gratitude for their efforts.
Sincerely,
Jack Lew
Page 1619 of 3826
Message to Federal Employees (4-11-2011).pdf (Attachment 1 of 1)
Page 1620 of 3826
From:

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Adamske, Steven
To:
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Mon Apr 11 2011 11:42:55 EDT
Index

SABEW Speech
CNNMoney Elizabeth Warren defends consumer protection bureau
Dow Jones Newswires Warren Criticizes Efforts To Rework Consumer Bureau
Bloomberg Warren Says Proposed Consumer Bureau Changes Would Benefit Banks
Page 1621 of 3826
Associated Press Chief of new consumer agency defends goals
Santa Cruz Sentinel New cop on the beat working for consumers
The Hill (blog) Warren blasts GOP attempts to alter Consumer Bureau
Reuters Warren calls for accountability in consumer agency
Housing Wire Elizabeth Warren maintains CFPB is not without oversight
Housing Wire CFPB will work with mortgage industry, Warren says
Reynolds Center for Business Journalism Elizabeth Warren defends new consumer protection
bureau, asks for help
Southern Methodist University Daily Mustang Elizabeth Warren, Advisor to the White House
and Treasury, Speaks at SABEW
Fort Worth Star-Telegram Revenues, spending must be aligned, Dallas Fed chief says
Politico Morning Money Warren talks to state prosecutors
Wall Street Journal Last-Minute Deal Averts Shutdown
White House Blog Details of the Bipartisan Budget Deal
National Journal Just for Show?
Washington Post (blog) Military pay faces uncertain future; troubling for financially strapped
families
Huffington Post Shackling the Cop on the Beat
CNBC Jim Cramers Mad Money No Huddle Offense
Huffington Post The Zero Transparency Policy in Our Financial Reform Process and What it
Means for Your Investments
Lexington Herald-Leader (Kentucky) Elizabeth Warren to deliver UKs Chellgren Lecture
New York Post The weeks winners and losers
Charlotte Observer AGs, new consumer watchdog to meet
New York Times Banks Are Off the Hook Again
New York Times New Rules for Mortgage Servicers Face Early Criticism
Page 1622 of 3826
American Banker Fees Could Be Servicers Brake on Foreclosures
Consumer Credit
SmartMoney Credit Score Confusion Leads to Controversy
American Banker Boston Fed: Cash Use Rose in 2009
Wall Street Journal How to Wreck Your Credit Score
Housing
Washington Post Down payment proposal could make a mountain out of a mortgage
Columbus Dispatch Justices uphold foreclosure rule
New York Times New York Subpoenas 2 Foreclosure-Related Firms
New York Times A Niche in the Wreckage of Florida Real Estate
Florida Times-Union Bank gives man foreclosed Jacksonville house for free

Warren talks to state prosecutors
April 11, 2011
By Ben White
WARREN TALKS TO STATE PROSECUTORS - From CFPB czar Elizabeth Warrens remarks
prepared for delivery at todays National Association of Attorneys General Summit in Charlotte, N.C.:
Collaboration between the CFPB and the attorneys general offers tremendous promise. ... While the
value of shared law enforcement goals between federal and state officials is obvious to many of us in
this room, we also know that federal banking regulators often have acted at cross-purposes with the
attorneys general and state regulators in the past.
Page 1623 of 3826
Back to Top
Wall Street Journal

Last-Minute Deal Averts Shutdown
April 9, 2011
By Naftali Bendavid and Janet Hook
Congressional leaders reached a last-gasp agreement Friday to avert a shutdown of the federal
government, after days of haggling and tense hours of brinksmanship.
Just an hour before a midnight deadline, House Speaker John Boehner (R., Ohio) announced that he
had a deal with Senate Majority Leader Harry Reid (D., Nev.) and President Barack Obama.
Congress quickly passed a short-term funding measure to keep the government running for a few days
while details of the broader agreement were settled, with a vote on the final package coming by
midweek.
Under the deal, according to Republican lawmakers, the GOP won budget cuts of $38.5 billion for the
remaining six months of the fiscal year, far more than either party had expected a few months ago.
Republicans also won an agreement to bar the District of Columbia from using locally raised Medicaid
funds for abortion.
Democrats managed to hold off Republican demands to strip funding for the health-care law and the
group Planned Parenthood of America. Both matters would instead be subject to separate Senate
votes.
Page 1624 of 3826
Also in the deal is a provision requiring an annual audit of the new Consumer Financial Protection
Bureau, which had been created by last year's Dodd-Frank financial overhaul law. Republicans have
been widely critical of the law.
Back to Top
White House Blog

Details of the Bipartisan Budget Deal
April 9, 2011
By Dan Pfeiffer
Last night, President Obama announced that the federal government will remain open for business
because Americans from different beliefs came together, put politics aside, and met the expectations of
the American people. Today, small businesses will no longer worry or have to wait on a loan to open or
expand their business, families will receive the mortgages they applied for, and hundreds of thousands
of government workers, including our brave men and women in uniform, will continue to receive
paychecks on time.
This deal cuts spending by $78.5 billion from the Presidents FY 2011 Budget request -- the largest
annual spending cut in our history. These are real cuts that will save taxpayers money and have a real
impact. Many will be painful, and are to programs that we support, but the fiscal situation is such that
we have to act.
We were able to stop Republican efforts to defund the Affordable Care Act as well as Planned
Parenthood and international family planning programs. They also wanted to limit funding for the
establishment of the new Consumer Financial Protection Bureau and block the Environmental
Protection Agency from enforcing clean air and water rules. While we made significant cuts, we just
Page 1625 of 3826
couldnt afford to cut these important programs that are critical to our nation.
Last night was a perfect example of Democrats and Republicans coming together, working tirelessly to
hammer out a deal and making the tough choices to live within our means. We all know that we face
tough challenges ahead, from job creating and growing our economy, to educating our children and
reducing our deficit, and we must continue to work together to achieve those goals and deliver for the
American people.
Back to Top
CNNMoney
Elizabeth Warren defends consumer protection bureau
April 8, 2011
By Annalyn Censky
DALLAS -- Elizabeth Warren is not standing down as she fights for her pet project, the new Consumer
Financial Protection Bureau, to live on as a fledgling governmental agency.
One of the most popular parts of Wall Street reform passed last year, the new consumer bureau has
recently come under fire from Republicans in Congress, who want to repeal, or at least limit its powers.
"There are proposals in both chambers of Congress for Dodd-Frank repeal, which would eliminate the
consumer agency before it's born," Warren told reporters at a financial journalism conference in Dallas.
"In other words, we would stick with a failed system."
The bureau was originally intended to be an independent agency, funded by fees that banks pay to the
Federal Reserve. Beginning on July 21, it will be charged with regulating credit cards, mortgages and
other financial products like payday loans.
Page 1626 of 3826
Republicans recently introduced a bill to increase checks and balances on the bureau. One measure
proposes the agency be headed by a five-member board with Democrats and Republicans, instead of a
single director.
A Harvard University professor and adviser to the White House and Treasury, Warren is the agency's
loudest cheerleader and is currently charged with getting it off the ground. She's thought to be the main
contender for the future director spot, although political controversy has surrounded Warren's
candidacy.
On Friday, she spoke against the limitations already on the bureau, including a rule that makes it easier
for other agencies to overrule and veto the bureau's decisions.
"The CFPB is the only bank regulator -- and perhaps the only agency anywhere in government -- whose
rules can be overruled by a group of other agencies," Warren said in prepared remarks. "This is an
extraordinary restraint, another assurance that we can be held to account for our actions."
She also asked the press to help her fight to keep financial services companies accountable to their
customers.
"At the consumer agency, we will do our best to keep them honest, but we need the press to do the
same," she said.
Back to Top
Dow Jones Newswires

Warren Criticizes Efforts To Rework Consumer Bureau
April 8, 2011
Page 1627 of 3826
White House adviser Elizabeth Warren on Friday pushed back against legislative proposals that would
restructure the consumer watchdog agency she's setting up, suggesting that such legislation is aimed at
weakening the bureau's power to stand up to financial firms.
She highlighted one U.S. House bill in particular that would subject the Consumer Financial Protection
Bureau to the congressional appropriations process, which Warren says would make the bureau less
accountable. Currently, the bureau has an independent funding stream that comes directly from the
Federal Reserve.
Other banking regulators are not subject to the yearly budget-review process, Warren said.
"The real-world risk of breaking from this historical practice is that the consumer agency could be forced
to kowtow in the face of powerful banking opposition--in other words, to become less accountable to the
American people," Warren said in a speech at a business journalism conference in Dallas. "I fear, of
course, that this is precisely the goal of the forces at work to politicize the CFPB's funding."
Warren also was critical of House Financial Services Committee Chairman Spencer Bachus's (R, Ala.)
bill to replace the agency's director position with a five person, bipartisan panel, suggesting that it would
hamstring the agency.
Bachus responded in a statement by email.
"The truth is it is virtually unheard of for an independent agency to be governed by one single director,"
he said. "Almost all independent agencies are governed by a commission rather than a single person
because commissions provide for greater checks and balances."
He added that a bipartisan commission "would help take the partisan politics" out of the bureau.
Warren, whom President Barack Obama tapped in September to prepare the consumer bureau for a
July launch, suggested that banks and other financial firms would most benefit from many of the
changes House Republicans have proposed.
In addition, the moves would undercut the bureau's effectiveness, she said.
"Political independence is critical for a bank supervisor to be strong enough to be truly accountable to
the American people," said Warren.
Page 1628 of 3826
Warren has been steadily defending the consumer bureau as U.S. House Republicans seek to make
significant changes to the agency's structure. The bureau is a centerpiece of the Dodd-Frank financial
overhaul Congress passed last summer. But GOP lawmakers have stood opposed to the bureau,
arguing that it was given too much power over financial products without much congressional oversight.
However, Warren, Democrats and consumer advocates defend the fledgling bureau as an important
cop on the beat for consumers of credit cards, mortgages, payday loans and other financial products.
In her speech, Warren said consumer protection powers were scattered among various agencies before
the financial crisis and that left ineffective rules and holes in oversight.
"That system did not work well for the rest of us," she said. "A single regulator with a clear mission is a
more accountable regulator."
Back to Top
Bloomberg
Warren Says Proposed Consumer Bureau Changes Would Benefit Banks
April 8, 2011
By Carter Dougherty and Phil Mattingly
Republican lawmakers are doing Wall Streets bidding by trying to restructure the Consumer Financial
Protection Bureaus funding and leadership, Obama administration adviser Elizabeth Warren said
today.
This is precisely the goal of the forces at work to politicize the CFPBs funding, said Warren, the
special adviser in charge of setting up the bureau, in remarks at the Society of American Business
Editors and Writers conference in Dallas. If they succeed, the beneficiaries will be some of the same
Page 1629 of 3826
institutions that precipitated the financial crisis.
Representative Spencer Bachus, the Alabama Republican who leads the House Financial Services
Committee, has introduced legislation to replace the CFPB director position created by the Dodd-Frank
Act with a five-person commission. Representative Randy Neugebauer, a Texas Republican on the
Financial Services panel, has proposed making the bureaus budget subject to congressional
appropriations.
Without independent funding, the bureau would have to kowtow to powerful banking opposition,
making it less accountable to the American people, Warren said, rejecting the lawmakers contention
that the changes would make the consumer agency more accountable.
In the guise of greater accountability, it would be possible to restructure the new consumer agency to
make it less -- not more -- likely to achieve its stated goals, Warren said.
Back to Top
Associated Press
Chief of new consumer agency defends goals
April 8, 2011
DALLAS The White House official designing a government bureau to help consumers deal with
financial institutions protested Republican efforts to kill or hobble the agency.
Elizabeth Warren said Friday that killing the agency would be going back to "a failed system" of
financial regulation leading up to the 2008 market crisis.
Warren said institutions that sell mortgages and credit cards have an obligation to make prices and
risks clear, and that if banks are selling products honestly, they should welcome the July 21 launch of
the Consumer Financial Protection Bureau.
Page 1630 of 3826
Congress approved the bureau last year as part of a bill to increase oversight of financial markets after
the 2008 crisis. Some Republicans say the agency would have too much power. Senate Financial
Services Committee Chairman Spencer Bachus, R-Ala., has said it will be the most powerful agency in
Washington but with very little accountability.
Republican lawmakers have proposed to repeal the entire financial bill, cut the bureau's budget or curb
its power in other ways.
Warren argued that the bureau's power is already too limited because its rules can be blocked by other
regulatory agencies.
The bureau was set up as an independent agency, funded by fees on banks. That means preparations
for the agency's launch won't stop even if there's a government shutdown, said Warren, a Harvard law
professor and adviser to the White House and Treasury Department. She spoke at a conference of
business-news reporters and editors in Dallas.
The consumer bureau will regulate mortgages, credit cards, student loans and other financial products.
Warren said it will also get involved in educating consumers about financial services.
Back to Top
Santa Cruz Sentinel

New cop on the beat working for consumers
April 8, 2011
By Jondi Gumz
DALLAS - Elizabeth Warren, who heads the Consumer Financial Protection Bureau, said Friday that
her first initiative at the new federal agency is to make the costs of home mortgages understandable to
Page 1631 of 3826
prospective borrowers.
She envisions a one-page form to tell consumers what they need to know before they decide whether to
make the biggest financial investment of their life.
Warren spoke about her goals for consumer protection to journalists at the annual conference of the
Society for American Business Editors and Writers hosted by Southern Methodist University.
Many of the mortgages issued during the housing boom from 2005 to 2007 called for adjustable rates
and payments that covered only interest, not principal, but the provisions were often buried deep in the
document and not written in plain English.
Warren said putting key information "on page 51 of a 52-page document" is "like screaming 'Don't read
me.'"
Two laws require lenders to disclose the cost of borrowing: the Truth in Lending Act, enacted in 1968,
and the 1974 Real Estate Settlement Procedures Act. The latter requires the consumer get a "good
faith estimate" of the costs of a mortgage or a refinance one day before the loan closes.
Warren said the documents consumers have gotten "come too late in the process" and are "too hard to
read."
Rather than starting her reform effort by revising existing documents, Warren wants the new document
to answer two basic questions for consumers: Can I afford this? Can I get a better deal somewhere
else?
She recalled how lenders promised borrowers "low up-front costs knowing they could make up the
money on the back end with fees."
The idea of combining the requirements of the two laws is not new. It was proposed 15 years ago,
according to Warren.
Yet Warren, many years a professor at Harvard Law School and the chairwoman of a Congressional
Oversight Panel investigate the bank bailout, is undaunted.
Page 1632 of 3826
She sees her mindset moving things in the right direction, at least in terms of an understandable
mortgage document for consumers.
"All of the prototypes are one page," she said.
Warren anticipates allocating half her budget for enforcement with the rest split between rule-writing
and financial education. Her agency, created as part of the Dodd-Frank Wall Street reform legislation,
has launched a website that describes its mission as being "the cop on the beat" supervising banks,
credit unions and financial companies.
"Make your readers know what we're up to," said Warren.
A firm believer in transparency, she has put her own calendar on the website. On Feb. 3, the day of the
website site launch, she met with the Office of the First Lady, then met with her rule-writing team the
next morning and talked with community bankers in the afternoon.
To check on Elizabeth Warren, go online to www.consumerfinance.gov/
Back to Top

Warren blasts GOP attempts to alter Consumer Bureau
April 8, 2011
By Peter Schroeder
Elizabeth Warren, the architect of the Consumer Financial Protection Bureau (CFPB), on Friday
dismissed Republican bills to alter the new agency as attempts to kill it.
Page 1633 of 3826
House Republicans are pushing a handful of bills that would tweak the consumer agency authorized by
the Wall Street reform law. The most noteworthy would change the top of the agency so it is run by a
bipartisan commission instead of a single director, while other Republicans have called for the CFPB's
funding to be brought under the appropriations process.
But Warren said in a speech that these proposals would "eliminate the consumer agency before it's
born."
Republicans say a bipartisan commission is the right way to go because the CFPB, when it begins work
in July, will be too powerful for a single director.
But Warren said such an idea would "make it less not more likely to achieve its stated goals."
Democrats have also argued the bill would limit the CFPB, especially at the outset, since it would
require five nominees instead of one to be confirmed by the Senate.
As she has in the past, Warren also adamantly opposed bringing the CFPB's budget within the reach of
congressional appropriators. Republicans complain the CFPB lacks oversight since Congress cannot
set its budget, but Warren said such a move would force the CFPB to "kowtow in the face of powerful
banking opposition."
"I fear, of course, that this is precisely the goal of the forces at work to politicize the CFPB's funding,"
she said.
"If they succeed, the beneficiaries will be some of the same institutions that precipitated the financial
crisis, not the American public."
House Financial Services Committee Chairman Spencer Bachus (R-Ala.), who co-sponsored the
commission bill, responded to Warren's comments Friday, saying the CFPB was sorely in need of
multiple voices at the top.
"Cheerleaders for the CFPB have been very successful at spinning the press, diverting attention away
from important and substantive concerns over its leadership structure, powers and accountability," he
said. The truth is it is virtually unheard of for an independent agency to be governed by one single
director. Almost all independent agencies are governed by a commission rather than a single person
because commissions provide for greater checks and balances.
Page 1634 of 3826
"A bipartisan commission and oversight of its spending will give the CFPB some much needed
accountability.
Back to Top
Reuters
Warren calls for accountability in consumer agency
April 8, 2011
By Lauren Young
Elizabeth Warren, a Harvard law professor and the engineer behind the new Consumer Financial
Protection Bureau (CFPB), laid out her blueprint for making the new consumer agency accountable to
consumers during a speech on Friday.
Prior to the financial crisis that began in 2008, oversight for consumers was scattered among seven
tangled government agencies with gaping holes in oversight, Warren told attendees at the Society of
American Business Editors and Writers 48th Annual Conference at Southern Methodist University in
Dallas. A single regulator with a clear mission is more accountable, she said.
Warren used the words account accountable and accountability at least 20 times in her prepared
remarks and during the question and answer session with reporters. Accountability means someone
can be held responsible to failure, she said.
The role of the agency is to police mortgages and credit cards and try to curb predatory lending and
abusive card accounts. While the consumer agency will fix some basic structural problems in those
areas, the CFPB cannot block other government agencies from doing their jobs.
While we cannot interfere with other agencies rulemaking efforts, no matter how much we think
Page 1635 of 3826
consumers will be harmed by their rules, other agencies can veto our rules, said Warren. This is an
extraordinary restraint, another assurance that we can be held to account for our actions.
Politics got in the way of launching the CFPB, which is a well thought out agency, Warren said. She
said she fears the debate around the CFPBs funding will prolong the problem. Politicizing the funding
of a banking agency can undercut its effectiveness, Warren said. Political independence is critical for
a bank supervisor to be strong enough to be truly accountable to the American people.
To increase accountability, Warren said it is crucial to set goals for the CFPB and make them known to
the public. We dont need one more agency that kinda, half-pretends to do something but doesnt do
anything, she said.
The CFPB has launched a website, five months before the agency is officially live. In addition, Warren
noted that she publishes her calendar on the website every month along with the bureaus
organizational chart and the data from the first consumer survey it conducted. Once we are fully
operational, we will do even more, she said. With your help, this agency has the opportunity to make
accountability its hallmark. More than half the money we spend will be on enforcement.
The agency is also focused on helping consumers understand complex financial information. A first step
of the agency is to simplify two key documents used in real estate transactions. Financial documents
might as well have a sheet of concrete on top, Warren said. They say, Dont read me.
Because the agency is independently funded through the Federal Reserve system, it will not be
furloughed in a government shutdown.
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Housing Wire
Elizabeth Warren maintains CFPB is not without oversight
April 8, 2011
By Kerri Panchuk
Page 1636 of 3826
Elizabeth Warren, architect of the Consumer Financial Protection Bureau, defended the fledgling
agency from allegations that it lacks appropriate oversight while speaking to journalists at the Society of
American Business Editors and Writers Conference in Dallas on Friday.
"The consumer agency will be subject to the administrative procedures act," Warren said. She added
that the CFPB also is subject to judicial review to ensure it stays within the constraints of lawmakers
and can be overruled by Congress.
"The consumer protection agency is the only bank regulator whose rules can be overruled by another
group of agencies," she said. "We cannot interfere with other agencies' rulemaking efforts, but other
agencies can veto our rules. This is another assurance that we can be held accountable for our
actions."
Warren said the CFPB also is subject to procedural and funding issues, although under its current
funding model, the bureau is one of a few agencies that will not be impacted by the possibility of a
government shutdown.
"The amount of money we get is a portion of the Federal Reserve's budget as it exists in 2012," she
said. "If we need more than that, we have to go back to Congress and ask for more money."
Warren acknowledged the political infighting surrounding the agency and its role in overseeing
consumer issues tied to home mortgages, student loans and other lines of consumer credit.
"There are proposals to repeal the consumer agency and Dodd-Frank, which would eliminate the
agency before it's born," she said.
Warren said quashing the agency would benefit some of the parties responsible for causing the crisis.
"Political independence is important for a bank regulator to be strong enough for the agency to help the
consumer public," she said. "Many regulators began with good intentions but were captured by the very
group they were employed to regulate."
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Page 1637 of 3826
Housing Wire
CFPB will work with mortgage industry, Warren says
April 8, 2011
By Jacob Gaffney
Despite taking a consumer approach to regulation, Elizabeth Warren, special assistant to President
Obama and likely director of the Consumer Financial Protection Bureau, said oversight will not block the
ability of financial institutions to do business.
That is, of course, as long as the financial institution is in full compliance with the law.
Speaking to journalists at the 2011 Society of American Business Editors and Writers conference in
Dallas, Warren said mortgages written years ago were not as "out of control" as those in the years
leading up to the bust in housing.
"Back then a customer could ask two questions: Can I afford this thing and can I get it somewhere else,
at a better deal?" she said. "Consumers should be able to figure out costs and risks effectively."
The path forward is wrought with frustration as the agency prepares to open its doors July 21, according
to Warren. For one, the CFPB cannot interfere with other regulators, but other regulators may overrule
the CFPB, she said.
Potential increased layers of regulation from the CFPB have many financial institutions worried.
At a House Financial Services Subcommittee Wednesday, Lynette Smith, president and chief executive
of Washington Gas Light Federal Credit Union in Springfield, Va., said the new federal agency needs to
focus on "regulating the unregulated in the financial services arena, and not adding new regulatory
burdens to those entities that already fall under a functional regulator."
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Speaking on behalf of National Association of Federal Credit Unions, Smith expressed concern about
the broad authority granted to the CFPB to ridealong on examinations with current regulators before the
designated transfer date.
Warren added a simplification of the mortgage underwriting process for the consumer is a key concern.
"Mortgage documents scream 'do not read me,' " she said. "Those documents may as well have a slab
of concrete on them."
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Reynolds Center for Business Journalism

Elizabeth Warren defends new consumer protection bureau, asks for help
April 8, 2011
By Robin J. Phillips
Before Elizabeth Warren, assistant to President Obama and woman setting up the new Consumer
Financial Protection Bureau finished answering questions, CNNMoneys Annalyn Censky had filed this
report:
Elizabeth Warren defends consumer protection bureau
Thats one of the great things about SABEW conventions. The organizers gather some heavy-hitters as
speakers and the audience is full of no-nonsense business reporters and editors. News is spoken.
News is reported.
Warren was amusing and casual as she talked about the bureau she is building which is charged with
regulating credit cards, mortgages and other financial products like payday loans.
Page 1639 of 3826
She outlined attacks on the bureau before it even begins and asked business journalists to please stay
engaged .. and hold regulators accountable.
She pointed out limitations on the bureau and efforts to close it down before its launched.
But, Im not going down with this agency without a fight, she said.
Warren, who has not been named to lead the bureau, that is up to the President, said her job now is in
setting up a body that will be effective.
How do you make sure this agency does what it was designed to do. this year, 30 years from now,
50 years from now? she asked.
The Bureau has launched new Website: New consumer protection bureau is open for suggestions
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Southern Methodist University Daily Mustang

Elizabeth Warren, Advisor to the White House and Treasury, Speaks at SABEW
April 8, 2011
By Nicole Jacobsen
Elizabeth Warren, an advisor to the White House and Treasury, continues to fight to protect her newest
project, the new Consumer Financial Protection Bureau, as Republicans in Congress wrestle for a
repeal that would at the least limit the agencys powers.
Page 1640 of 3826
As the agencys watchdog, Warren is responsible for regulating banks, mortgage companies and other
financial institutions in the best interest of the consumer and ensuring the American middle class is able
to clearly understand credit card and mortgage contracts and recognize what they are signing.
In the years preceding 2008 financial crisis, credit terms became longer and more complicated and
lenders made staggering profits promising low costs up front only to make it up with other costs on the
back end, Warren said.
Today, Warren, 61, remains more concerned with how she can keep the bureau accountable in the long
run and restore consumers faith in government agencies. With one agency responsible for consumer
consumption rather than seven (as was formerly the case), bureaus will be forced to step up to
monitoring consumer products and fine print articles.
Congress can only call out one agency now when things go wrong, Warren said. Its a structural
accountability matter. A single regulator with a clear mission is a more accountable regulator.
But despite her constant push against Congress to get the project off the ground, Warrens ideas have
faced several grievances from a group of Republicans.
Of the several complaints filed by Republicans, one recently introduced bill would increase the checks
and balances placed on the bureau; a move that Warren says would keep the country stuck with the
current failed financial system.
One of the more extreme measures suggests a five-member board of Republicans and Democrats
instead of a single director leading the agency. Warren, 61, is believed to be the frontrunner for the
position.
The keynote speaker at Fridays Society of American Business Editors and Writers (SABEW)
conference at the Collins Executive Center, Warren spoke in front of dozens of financial reporters and
urged them to stay engaged with the consumer agency in hopes of passing knowledge about the
accountability crisis on to other consumers.
By making the bureaus goals clear, we expect to be held accountable every day, Warren said. We
are setting out a clear goal and that gives everyone a clear metric against which to measure us. By
announcing where we are going, we make it easier for other people to keep us on course.
Warren is also a professor at Harvard Law School and the chair of the Congressional Oversight Panel
that was created to investigate the Troubled Assets Relief Program (TARP).
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Fort Worth Star-Telegram

Revenues, spending must be aligned, Dallas Fed chief says
Page 1641 of 3826
April 8, 2011
By Scott Nishimura
DALLAS -- Richard Fisher, the Dallas Federal Reserve Bank president, compared Congress on Friday
to troubled actress Lindsay Lohan, saying, "They're addicted to debt and spending and they keep piling
it on."
With the nation's "nascent" recovery "past the tipping point," Fisher said, it is time for Congress and
President Barack Obama to bring spending and revenue into line. He also maintained that he's worried
about inflationary pressures and said the Fed should stop looking for ways to pump more cash into the
economy.
"There is now plenty of fuel in the tanks of American businesses to finance expansion and put
unemployed and underemployed Americans back to work," Fisher said during a speech to business
journalists at a Society of American Business Editors and Writers conference at Southern Methodist
University. Congress has created a "fiscal sinkhole so deep and so wide, it threatens to swallow up our
prosperity as a nation," said Fisher, who has been consistently more hawkish on inflation than other
Fed policymakers.
"They have forsaken the most sacred responsibility of our nation," Fisher said. "Instead of passing the
torch to the next generation, they have passed them the bill."
He added, "Permanent jobs are created by the private sector."
Fisher also said he believes that "we have turned the corner" in the fiscal debate.
Fisher noted three current inflationary pressures: gasoline, food and clothing. "For the first time in 20
years, we're seeing inflation in female apparel," he said.
Elizabeth Warren, the controversial Obama administration official responsible for helping set up the
Consumer Financial Protection Bureau, defended her agency's mission. Beginning this summer, the
bureau, created as part of Congress' financial overhaul bill, will become responsible for regulating
mortgages, credit cards, student loans, payday lending and other consumer financial products.
Warren said the agency will be the only one whose rules can be overruled by other agencies, calling it
"an extraordinary restraint."
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The agency's rules can also be overturned by Congress. And the agency, funded by fees that banks
pay to the Fed, is "the only bank regulator expressly limited in its ability to determine its own funding
levels," Warren said.
Warren, a longtime consumer advocate, said the proliferation of debt products and related risk,
complexity of fees and terms, and industry's search for favorable regulators drove the need for a single
credit agency.
The agency will focus on ensuring that loan products are clear on two questions consumers should ask
as they compare credit offerings, Warren said, "Can I afford this thing, and can I get it somewhere else
at a better deal?"
Banks argue that new rules will penalize ethical operators and drive up costs, leading to an end of
products like free checking. Republicans tried to block Warren's appointment.
Asked about her prospects to head the agency permanently, Warren said, "The intent here is to slow
down the implementation of this agency. What we're trying to do here is make the price clear, make the
risk clear, and make it easy for consumers to compare products."
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National Journal
Just for Show?
Taking care to seem angry at Wall Street, the GOP is attacking the Dodd-Frank financial-reform law
April 9, 2011
By Stacy Kaper
Page 1643 of 3826
Although Republicans see a lot to dislike in the Dodd-Frank financial-regulation act and want to change
it, they are moving cautiously. Wall Street has few friends on Main Street, and the new law is popular
with voters, insofar as they understand it. The GOP is worried about stifling the economy and is
instinctively opposed to stricter regulation, but it cannot fight the regulations as directly as it fights, say,
health care reform. Republicans know they must not be seen as coming to the banks' rescue.
Nevertheless, they have the law in their sights.
Last August, after Congress passed the sweeping reform, it was seen as President Obama's most
popular initiative, and by a wide margin. A USA Today/Gallup poll that month found that 61 percent of
respondents supported the "financial reform." The point is not lost on Republicans. When Sen. Jim
DeMint, R-S.C., promoted his bill to repeal Dodd-Frank a few weeks ago, he said he was not aiming to
defend the financial elite but to strike a blow against it. "We must repeal the Democrats' takeover of the
financial markets that favors Wall Street corporations," he declared.
DeMint's bill is just one of several lines of attack. Rep. Spencer Bachus of Alabama, chairman of the
House Financial Services Committee, is pushing bills that would weaken the fledgling Consumer
Financial Protection Bureau even before it proposes its first regulation. Likewise, Bachus and other
Republicans have attacked the bureau's unofficial director, Elizabeth Warren, as a shadowy and
unaccountable figure bent on exceeding her authority.
The House GOP budget for this year calls for steep cuts in funding for the Securities and Exchange
Commission and the Commodity Futures Trading Commission, which are supposed to rein in the huge
and unregulated market in financial derivatives. Republicans on the House Agriculture Committee are
also railing against CFTC proposals that would force companies trading in derivatives to have bigger
capital buffers.
Some GOP lawmakers believe that opposition to Big Government is as strong as resentment toward
Wall Street and that voters are concerned about creating jobs above all else. In this view, Dodd-Frank
might not be so risky a target after all. "I always felt, and still feel, that the notions of popularity about the
financial-reform bill were really way overstated," said Tony Fratto, a White House spokesman in the
George W. Bush administration and now a partner at Hamilton Place Strategies. "Americans
understood that there was a financial crisis; they blamed Wall Street, so doing something was important
over the alternative of doing nothing. But the understanding of what was in Dodd-Frank, and what it
would do, was really, really low."
Still, most Republican lawmakers are approaching the issue carefully. A few tea party favorites, such as
DeMint and Rep. Michele Bachmann, R-Minn., have proposed using the blunderbuss of outright repeal.
Bachmann denounced Dodd-Frank as a "job-killing" law that "grossly expanded the federal
government." But Bachus and other key lawmakers have insisted that they support some aspects of the
law and have been taking rifle shots instead.
They couch their effort to cut funding for such agencies as the SEC, for example, as part of their
broader mission to reduce government spending. That is a popular cause, even though the SEC might
be unable to carry out its new responsibilities without the extra resources. Instead of trying to abolish
Page 1644 of 3826
the Consumer Financial Protection Bureau, Bachus has concentrated on reducing its authority and
putting Congress, rather than the Federal Reserve Board, in charge of its funding. Rather than throw
out regulations on financial derivatives, Republicans are aiming to expand the "end-user exemption" for
ordinary companies that use derivatives to hedge against normal business risks.
"If you notice, on the consumer bureau, it's more about the management structure and accountability,
so it's a good-government argument," said Brian Gardner, an analyst with Keefe, Bruyette & Woods.
"The message is that the criticism is not about protecting Wall Street; it's targeted at non-Wall Street or
good-government types of issues. If [Republicans] get too far away from that, there is a danger."
Jon McHenry, a Republican strategist and a partner with Ayres, McHenry & Associates, said that the
key for GOP lawmakers is to keep the conversation focused on narrow aspects of financial regulation
and to tie their efforts to overall economic concerns. "The key is to go after the specifics rather than say,
'We are going to roll back financial regulation,' " he said. "When people hear 'financial regulation,' they
think you are going after the big Wall Street banks that caused all of this.... In reality, the bill is very
different in a lot of ways than what the image was last year."
Rep. Barney Frank, D-Mass., coauthor of the law, said that House Republicans could have voted to
repeal the entire law. They decided otherwise, he said, proving that GOP lawmakers are more nervous
about attacking financial regulation than about taking on the health care law or the Environmental
Protection Agency's effort to restrict greenhouse-gas emissions. "The public is on one side and their
most ardent constituencies are on the other," Frank said in an interview. "They are aware of [the law's]
popularity, and they are putting on a show for their constituents.... The House and Senate voted on
[repealing] health care, and they are doing that with the EPA. They control the agenda, and they haven't
done that to financial reform."
It could be more than just a show, however. Repealing the law might be too difficult, but hindering its
application, perhaps even crippling it, is a different matter. Despite Wall Street's unpopularity, DoddFrank looks no more like a done deal than health care reform.
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Washington Post (blog)

Military pay faces uncertain future; troubling for financially strapped families
Page 1645 of 3826
April 8, 2011
By Melissa Bell
As federal workers around the country worry about the impending payday that may not come, one
group has reason to worry. Military families are particularly susceptible to financial strain and predatory
payday lenders. With the government shutdown threatening an end to paychecks, military families have
taken to social media sites to protest what could have a devastating financial effect.
I am an army wife. We have a three year old and an almost five year old. We are living paycheck to
paycheck like most American families, writes one woman on a Facebook page Ensuring Pay for Our
Military Act of 2011.More than 650,000 people have signed the Facebook petition on the page.
There are thousands of husbands and wives (daughters, sons, mothers, fathers, etc.) who are putting
their lives on the line every day to protect our country. Call your representative today!
In 2008, Defense Department reports found many military personnel suffer from great financial burdens,
particularly due to high-interest lenders that target service members. This past January, Holly Petraeus,
the wife of Gen. David Petraeus, was nominated to Office of Servicemembers' Affairs in the Consumer
Financial Protection Bureau. Her nomination brought renewed attention to the difficulties faced by
service members. The thing with the military is the paychecks aren't large, but they're absolutely
guaranteed twice a month, Holly Petraeus told the Huffington Post in January, leading to good targets
for credit lenders. If those paychecks do not come, and the loans go unpaid, it could not just lead to
financial ruin, but also outstanding debts or bad credit can lead to a revocation of security clearances,
because a service member could be viewed as susceptible to bribes from foreign government, the
Huffington Post reports.
Military pay has become the talking point in the battle of the budget deal, with the submission of a troop
funding bill Thursday. A Republican bill introduced Thursday would provide a stopgap, funding the
Defense budget for the rest of the fiscal year, but it includes as series of riders the White House said it
could not accept. The House Democrats have submitted their own series of troop funding bills, but all
three bills have been voted down.
In a speech Friday, House Speaker John A. Boehner (R-Ohio) emphasized the need to pass a troop
funding bill, but said little about what that bill would entail.
There is some hope for support for active duty members. Navy Federal Member Bank said it would offer
a pay advance to its members who have direct deposit, giving active service members a week of wiggle
room.
Page 1646 of 3826
Also stirring up anger is the news that while federal employees will not be paid during the shutdown,
elected officials will still be paid.
Im already sacrificing time away from my family here in Afghanistan. I dont need to be sacrificing my
money, too, another woman writes on Facebook. Congress will be getting paid. Their money wont be
touched. They dont know the hardship we go through as soldiers.
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Huffington Post
Shackling the Cop on the Beat
April 9, 2011
By Preeti Vissa
While attention in Washington, D.C. has understandably been focused on the fight over the budget and
a possible government shutdown, forces who want to return to the laissez-faire policies that brought
about the financial meltdown and Great Recession have been waging a quiet war against protection for
consumers of financial services. Disturbingly, there are indications that they're gaining ground.
The time to start fighting back -- and for President Obama to start firmly and forcefully defending one of
his administration's most important accomplishments -- is now.
Opponents of financial regulation have zeroed in on one of the best, most important provisions of the
Dodd-Frank Wall Street Reform and Consumer Protection Act, the section that created a new
Consumer Financial Protection Bureau. This bureau, now being set up under the direction of White
House aide Professor Elizabeth Warren, is designed to be a "cop on the beat," making sure that the
sort of rip-offs and predatory practices that hurt millions of consumers and tanked the economy don't
happen again.
CFPB's opponents, championed by a group of Republicans in the House and Senate, have tried to
portray the new bureau as a rogue agency with way too much power. For example, Sen. Jerry Moran
Page 1647 of 3826
(R-Kan.), author of one Senate bill to restrict the bureau, said recently, "The CFPB has more power and
authority than almost any independent agency in history," and needs to be reined in. That's nonsense,
but word on Capitol Hill is that such arguments are starting to gain traction.
Moran's bill, which has a matching counterpart in the House, would have the CFPB run by a 5-member
commission rather than a single director. On the surface, that sounds innocuous enough, and
supporters point to other federal regulatory agencies such as the Securities and Exchange Commission
and Federal Communications Commission which have similar structures. It's clever marketing, but
deceptive.
The one result that running a regulatory agency by committee can guarantee is that it will be slower and
less efficient. And the SEC and FCC, while they've done some useful work, are not exactly known as
fearless, energetic protectors of the public. CFPB is supposed to be a cop on the beat, and there's a
reason beat cops don't work by committee.
The FCC, for example, has for the most part rolled over in the face of large-scale media consolidation
and mergers among broadcast giants. My colleagues at The Greenlining Institute saw this first-hand
when they advocated for provisions aimed at preserving at least a bit of media diversity in the recentlyapproved Comcast/NBC Universal merger. A couple commission members were responsive to public
concerns, but others not so much. It's almost always a struggle.
And that is precisely what CFPB's opponents want.
Let's be clear: The claims being made by anti-consumer forces are trumped-up nonsense. Not only is
CFPB not unusually powerful as regulatory agencies go, it has restraints on it that no other agency has
-- the result of congressional compromises needed to get the law passed.
In addition to being subject to normal congressional oversight, CFPB -- unlike any other bank regulator
-- can have its decisions overruled under some circumstances by a committee of the other regulators,
called the Financial Stability Oversight Council. And its budget is capped, while budgets of other bank
regulators are not. There is simply no real justification for the pending set of bills that would restrict the
new bureau in additional ways or delay its opening, except to give the speculators and predators free
rein to continue to profit on the misery of ordinary consumers.
By and large, the public gets it. But so far the anti-regulatory voices, backed by the full weight of
conservative think-tanks like the Heritage Foundation, have been the most vocal in the political
dialogue. That needs to change, and quickly, before efforts to strangle CFPB in its crib gain too much
strength.
That means that we as advocates and concerned citizens have to speak up loudly and forcefully. So
Page 1648 of 3826
does President Obama, who has been disturbingly quiet (and yes, I'm well aware that the president has
a few other things on his plate right now, but if ever there was a moment for multitasking, this is it).
Lots of folks worried that the Dodd-Frank Act wasn't strong enough, and some of those worries were
justified. But the best part of the law is now in danger. If we don't want to see another crash like the one
that drove our economy into the ditch, the time to stand up for it is now.
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CNBC Jim Cramers Mad Money

No Huddle Offense
April 8, 2011
By Jim Cramer
You've got to be kidding me. That was my immediate reaction when I saw the New York Post's
exclusive story this morning that Elizabeth Warren is about to become Obama's banking czar in name
and not just deed.
Thats right, the Post says she's about to win, she's going to win the position as the czar of the
consumer protection bureau. And all I can say, it's going to crush the bank stocks again. It's the
definitive price to earnings multiple shrinkage event. You simply cannot pay as much for banks, not that
anyone's paying up for them anyway if Elizabeth Warren gets this overseer job.
I can tell you two things. One, she is brilliant at what she does, brilliant. And two, what she does is favor
less profitability for banks.
That team winds its way through everything she's ever done. Her entire documented body of work, I
think, when looked through the prism of the impact on earnings of banks assumes a strictly zero sum
relationship between banks and their customers. The banks are making a lot of money. And warren
believes a consumer must be losing. I think in her mind, it's her job to make sure the balance tips
toward the consumer. Perhaps wildly toward the consumer.
Page 1649 of 3826
She is feared and regarded as reckless by the bankers. And they're right to be afraid. Be very afraid.
The truth is, if she gets this job, you really do need to cut the earnings estimates for the entire group.
I did not expect this to happen. Warren had originally been ruled to be unconfirmable. With her in
charge, though, it's a fact of life you can't be as bullish on the banks. Earlier this week, I postulated that
Jamie Dimon's attack on the bank -- the judgment will turn out to be dead wrong if Warren is made the
director of the consumer protection bureau. And indeed, alas, the banks will go still lower.
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Huffington Post
The Zero Transparency Policy in Our Financial Reform Process and What it Means for Your
Investments
April 11, 2011
By Lawrence G. McDonals
I recently delivered a keynote speech in New York city focused on valuable risk management and
corporate governance lessons, as well as the future of Financial Reform and its impact on the economy,
the capital markets and investors.
Over two dozen institutional investors came up to me after the presentation and were shocked at how
little transparency there is coming out of Washington on Financial Reform. The questions were; almost
three years after Lehman Brothers what's been accomplished? Do "too big to fail banks" still have the
Federal Reserve and US Treasury held hostage? After all of the stimulus, quantitative easing and
experimental drugs, would another Lehman Brothers bankrupt America?
In the last several weeks, I've met with two US Senators and two US Congressmen and I don't like what
I'm hearing. These 4 members of Congress are all very high ranking members of the House Financial
Services Committee and the Senate Banking Committee. Here's my color on what's really happening.
Page 1650 of 3826
"Way out there" Warren?
In my opinion we have a serious constitutional challenge developing. On September 10th, 2010

President Obama named Elizabeth Warren as his "assistant" and "special advisor" to the Secretary of
the Treasury on the Consumer Financial Protection Bureau CFPB. Why these odd roles? Because
many Washington Policy experts believe Ms. Warren was "borkable." A colorful tribute to Robert Heron
Bork. In 1987 he was nominated to the Supreme Court of the United States by President Ronald
Reagan, but the Senate rejected his nomination. So instead of putting her up for official nomination and
a potentially nasty Congressional approval process the President punted and created a role for her.
Some would say he skirted a crucially important intent of the law?
"Way out there" Warren has been operating in limbo land for months now and from what I understand
taking aggressive liberties with her job duties. The speculated $20 billion settlement between the banks
and the State Attorneys Generals is a classic case of the ever encroaching "Warren waltz."
Ms. Warren is an unelected, unappointed power player who has not been approved by Congress. We're
coming up on the one year anniversary of Dodd Frank and we have no Congressionally approved head
of the CFPB. The legislation mandates an "approved" head of the bureau must be filled by the one year
anniversary. With the latest budget battle and and a busy legislative agenda, I'm hearing Congress will
not be able to approve a head of the CFPB on time.
This leaves a $400 million budget for the CFPB and all its power in murky hands. According to my
friends at DC Tripwire, unlike the Securities Exchange Commission SEC and the Commodity Futures
Trading Commission, the funds supporting the CFPB don't need congressional approval. Congress can
slow down Dodd Frank's progression by holding back funding for the SEC and CFTC. The CFPB is
another animal and the Federal Reserve has control their funding.
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Page 1651 of 3826
Lexington Herald-Leader (Kentucky)

Elizabeth Warren to deliver UKs Chellgren Lecture
April 8, 2011
Nationally renowned scholar Elizabeth Warren will deliver the University of Kentucky's annual businessthemed Chellgren Lecture on April 18.
Her lecture is titled "Debt, Credit and the Middle Class."
Warren, a Harvard University professor and an assistant to President Obama, was chairwoman of the
Congressional Oversight Panel for the Troubled Asset Relief Program for two years. One of her
colleagues on that five-member panel was Ken Troske, director of the Center for Business and
Economic Research at UK.
The free lecture will be held at 7 p.m. in Memorial Hall and is open to the public.
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New York Post

The weeks winners and losers
April 10, 2011
WINNERS
ELIZABETH WARREN
Page 1652 of 3826
Professor revives her chance to head the Bureau of Consumer Financial Protection.
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Charlotte Observer
AGs, new consumer watchdog to meet
N.C.s Cooper to lead forum in Charlotte on states role in enforcing financial reform
April 9, 2011
By Rick Rothacker
A gathering next week in Charlotte of big names in banking and law enforcement could result in closer
coordination between state and federal officials policing new financial reform laws.
N.C. Attorney General Roy Cooper told the Observer he expects cooperative agreements between
state attorneys general and the new Consumer Financial Protection Bureau to emerge from the
conference he's hosting Monday and Tuesday.
"I would expect at the symposium or after the symposium some agreement on how we tackle the
problem," Cooper said. "If the CFPB can work with 50 cops on the beat, consumers and businesses
can be better protected from unfair financial products and scams."
In his one-year role as president of the National Association of Attorneys General, Cooper is convening
a forum on the new financial reform law and its role in protecting consumers. The conference will draw
fellow attorneys general, CFPB architect Elizabeth Warren and Bank of America Corp. chief executive
Brian Moynihan.
Page 1653 of 3826
The Dodd-Frank law requires the CFPB to coordinate its activities with state officials and other
agencies. It also offers state attorneys general the ability to bring civil actions against alleged
wrongdoers under the new law.
A summary on the national attorneys general website says that giving state attorneys general the ability
to enforce federal consumer financial protection laws can be beneficial to consumers, but notes it also
could create confusion and duplication of effort.
Cooper said attorneys general and the bureau are already laying the groundwork for agreements.
"Right now there is an unprecedented level of state and federal cooperation in this area," he said.
A CFPB spokeswoman declined to comment.
One realm that is not expected to produce any announcements next week is the ongoing talks between
attorneys general and mortgage servicers to settle claims of mishandled foreclosures and loan
modifications.
Major lenders are reportedly signing accords with federal banking regulators such as the Office of the
Comptroller of the Currency and the Federal Reserve, even as attorneys general and other federal
officials pursue their own pact. Those talks with servicers could lead to civil penalties and requirements
that loan balances be reduced for struggling borrowers.
The accords with the bank regulators reportedly require servicers to improve their foreclosure
processes, communication with borrowers and risk-management practices. The "consent decrees" don't
include fines, Bloomberg News reported this week.
Cooper said the pacts with banking regulators will in "no way" affect the ongoing efforts of the state
attorneys general, the U.S. Justice Department, the Department of Housing and Urban Development,
the U.S. Treasury and the Federal Trade Commission.
"We consider such agreements to be a floor and not a ceiling," he said.
Cooper said he had had low expectations for the federal comptroller's office from the beginning, saying
the national bank regulator has historically been more lenient than state officials in supervising banks.
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The attorneys general and five major servicers, including Bank of America and Wells Fargo & Co., held
their first face-to-face meeting last week. Cooper said he was optimistic the two sides could reach an
agreement but that any settlement needs to be fair to consumers.
Next week's conference will gather many of the key players in the mortgage talks, but the issue isn't
part of the public agenda. Cooper acknowledged there may be private conversations, but he didn't
expect any breakthrough moment.
"It's too complicated," he said. "There are too many parties."
Cooper's term as president of the national AG group ends in June. He said he expects to reach
cooperative agreements with the CFPB by then, but was less sure of a mortgage servicer agreement.
"That I don't know," he said. "I hope by then."
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New York Times

Banks Are Off the Hook Again
April 9, 2011
Editorial
Americans know that banks have mistreated borrowers in many ways in foreclosure cases. Among
other things, they habitually filed false court documents. There were investigations. Weve been waiting
for federal and state regulators to crack down.
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Prepare for a disappointment. As early as this week, federal bank regulators and the nations big banks
are expected to close a deal that is supposed to address and correct the scandalous abuses. If these
agreements are anything like the draft agreement recently published by the American Banker and we
believe they will be they will be a wrist slap, at best. At worst, they are an attempt to preclude other
efforts to hold banks accountable. They are unlikely to ease the foreclosure crisis.
All homeowners will suffer as a result. Some 6.7 million homes have already been lost in the housing
bust, and another 3.3 million will be lost through 2012. The plunge in home equity $5.6 trillion so far
hits everyone because foreclosures are a drag on all house prices.
The deals grew out of last years investigation into robo-signing when banks were found to have filed
false documents in foreclosure cases. The report of the investigation has not been released, but we
know that robo-signing was not an isolated problem. Many other abuses are well documented: late fees
that are so high that borrowers cant catch up on late payments; conflicts of interest that lead banks to
favor foreclosures over loan modifications.
The draft does not call for tough new rules to end those abuses. Or for ramped-up loan modifications.
Or for penalties for past violations. Instead, it requires banks to improve the management of their
foreclosure processes, including such reforms as measures to ensure that staff are trained specifically
for their jobs. The banks will also have to adhere to a few new common-sense rules like halting
foreclosures while borrowers seek loan modifications and establishing a phone number at which a
person will take questions from delinquent borrowers. Some regulators have reportedly said that fines
may be imposed later.
But the gist of the terms is that from now on, banks without admitting or denying wrongdoing must
abide by existing laws and current contracts. To clear up past violations, they are required to hire
independent consultants to check a sample of recent foreclosures for evidence of improper evictions
and impermissible fees.
The consultants will be chosen and paid by the banks, which will decide how the reviews are
conducted. Regulators will only approve the banks self-imposed practices. It is hard to imagine rigorous
reviews, but if the consultants turn up problems, the banks are required to reimburse affected borrowers
and investors as appropriate. It is apparently up to the banks to decide what is appropriate.
It gets worse. Consumer advocates have warned that banks may try to assert that these legal
agreements pre-empt actions by the states to correct and punish foreclosure abuses. Banks may also
try to argue that any additional rules by the new Consumer Financial Protection Bureau to help
borrowers would be excessive regulation.
The least federal regulators could do is to stress that the agreements are not intended to pre-empt the
states or undermine the consumer bureau. If they dont, you can add foreclosure abuses to other bank
outrages, like bailout-financed bonuses and taxpayer-subsidized profits.
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New York Times

New Rules for Mortgage Servicers Face Early Criticism
April 10, 2011
By David Streitfeld
Federal banking regulators have not officially imposed their new rules for the top mortgage servicers,
but criticism is already being heard. A wide coalition of consumer and housing groups is denouncing the
legal agreements, which are likely to be published within a few days.
The new rules require the servicers to improve their processing systems, to stop foreclosing while
negotiating to modify the loan and to give borrowers a single direct means of contact.
Servicers will be required to bring in a consultant to investigate complaints by homeowners who lost
money because of foreclosure processing errors in 2009 and 2010. In some cases the homeowners
could be compensated.
The problem, said Alys Cohen of the National Consumer Law Center, is the agreements do not in any
way require the servicers to stop avoidable foreclosures, and that is what we need.
At the heart of the complaints by Ms. Cohen and others is whether the servicers, which are arms of the
biggest banks, may be compelled to give households fighting foreclosure a better shot at renegotiating
their loans and staying in their properties.
The servicers argue that whatever mistakes they made in handling foreclosures errors that will be
amply on view in a regulatory report accompanying the agreements they never foreclosed on anyone
not in severe default. They are strongly resisting proposals to cut the debt of homeowners in default to
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help them stay put.
The issue has wide repercussions for an ailing housing market. About four million people are either in
foreclosure or near it. Some housing analysts argue that adding those houses to the abundant inventory
already on the market will further reduce values for all owners and prolong the downturn.
To some critics, the pending fixes are all but useless. Adam Levitin, an associate professor of law at
Georgetown University who has closely monitored efforts to more tightly regulate foreclosure practices,
calls it a sham settlement that is worse than none at all.
It gives the banks political cover, undermines attempts at a real and just resolution, and could be the
basis for the regulators to claim that state actions are pre-empted, Mr. Levitin said. Allowing federal
regulators to pre-empt or elbow aside potentially stronger state actions during the housing boom has
been widely seen as contributing to the collapse.
Representatives of the regulators, including the Office of the Comptroller of the Currency and the
Federal Reserve, declined to comment.
The legal agreements, which take the form of consent orders, will be signed by the 14 largest servicers,
including Bank of America, Wells Fargo and JPMorgan Chase. They are being published on the heels
of new evidence that foreclosures are still being conducted improperly.
The Washington attorney general, Rob McKenna, sent a letter last week to a group of trustees. The
trustees work with the servicers in states like Washington where the courts do not oversee foreclosures.
Washington law requires trustees to have a local office so borrowers in default can submit
documentation or last-minute payments. In a continuing foreclosure investigation, Mr. McKenna found
that many trustees were effectively invisible. In his letter, Mr. McKenna called their absence
widespread, illegal and contrary to an effective and just foreclosure process.
Among the groups protesting the consent orders are the Center for Responsible Lending, the
Consumer Federation of America and dozens of local and regional housing groups. In a letter to the
regulators, the groups are asking for the withdrawal of the agreements in favor of specific and
protective measures regarding loss mitigation, account management and documentation.
Efforts to get the servicers to change their practices have a long and not particularly successful track
record. During the boom the servicers needed to do little more than deposit the checks of borrowers.
That changed when defaults began to swell and borrowers called to try to work out new loan
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arrangements.
Servicers were ill-equipped to deal with something so complicated. Nor did they have much incentive,
because in most cases the loans had long ago been sold to investors. Borrowers complained that
servicers were sloppy, that they lost paperwork and then lost it again, that they reshuffled borrowers
among endless personnel to no effect and that they foreclosed on the property even while supposedly
negotiating to save it.
These assertions were brought into sharp focus last fall after revelations by servicers that in their haste
and sloppiness they had broken local laws and regulations. They imposed moratoriums while saying
they were clearing up the problem, but by then a range of federal and state investigations were under
way.
A coalition of all 50 state attorneys general joined by the Obama administration set out to change the
process of foreclosure so more borrowers could remain in their homes. The goal of the regulators was
more limited.
The efforts by the attorneys general to impose a broader settlement with a multibillion-dollar penalty and
some provision to restructure mortgages by cutting debt are continuing, however slowly.
Attorney General Tom Miller of Iowa, who is leading the effort, said a settlement with regulators neither
pre-empts nor impacts our efforts. The attorneys general are striving to pursue their negotiations out of
the public eye so every incremental step is not open to commentary and criticism.
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American Banker
Fees Could Be Servicers Brake on Foreclosures
April 11, 2011
By Kate Berry
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The only bank that has been penalized for mortgage servicing lapses got slapped for doing the opposite
of what state attorneys general have been demanding.
Bank of America Corp. was penalized in the fourth quarter for delaying foreclosures not for moving
too quickly. B of A expects to pay an estimated $230 million of "compensatory fees" to Fannie Mae and
Freddie Mac for the lag.
Now, experts are wondering whether the absence of any regulatory fines amounts to a green light to
speed up the processing of foreclosures as long as the paperwork is in better order.
"It's ironic that servicers are being fined for not foreclosing fast enough but have faced no penalties for
their poor performance on loan modifications and not helping borrowers," said Steven Gillan, the
executive director of the American Alliance of Home Modification Professionals, an Astoria, N.Y.,
company that helps servicers with the government's loan modification program.
Regulators have failed to punish servicers for noncompliance with the Home Affordable Modification
Program because, they say, they lack the authority to assess penalties.
Fannie has assessed similar fees against other servicers for dragging their feet in completing
foreclosures within its prescribed deadlines, said Maureen Davenport, a Fannie spokeswoman, but it
has not disclosed the names of the other servicers or the amount of fees assessed.
In August, Fannie said it would start monitoring servicers to determine why there are delays in moving
delinquent loans into foreclosure. If servicers did not properly account for the holdups, Fannie said it
would perform on-site reviews and assess fees to give servicers "a financial incentive to comply with
Fannie Mae policies and improve the overall quality of their performance."
A Freddie spokesman said the government-sponsored enterprises could not disclose such information
because it involved "proprietary communications" with GSE customers. The Federal Housing Finance
Agency, the GSE's conservator, did not return calls seeking comment.
Whether servicers should pay fines and how much for lapses is a focal point of settlement talks
with state attorneys general and federal banking regulators.
Cease-and-desist orders are expected early this week from federal regulators against the top 14
mortgage servicers, but they are not expected to include any monetary penalties.
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Instead, the regulators likely will demand servicers hire more staff or slow down the foreclosure
process.
Though consumer groups have been pressing for a pound of flesh, arguing that borrowers have been
improperly foreclosed upon, banks have long claimed that robo-signing affidavits amounted to little
more than paperwork errors.
Banks say borrowers were not improperly foreclosed on but rather were all in default and had been
living in their homes rent-free for an average of 18 months.
Some industry experts said the compensatory fees assessed by the GSEs are not fines at all, but
simply adjustments the servicers are required to make when they fail to meet appropriate guidelines
and timetables.
"The backlogs in courts in many jurisdictions added to the delays and may have been out of the control
of the mortgage servicers," said Dave Stephens, the chief financial officer of United Capital Markets.
Back to Top
SmartMoney
Credit Score Confusion Leads to Controversy
April 8, 2011
By AnnaMaria Andriotis
For a key to your financial future, $7 to $20 doesn't seem like much to pay which is why consumers
regularly pony up for a peek at their credit scores. Now a new lawsuit suggests that what they're getting
may not be worth it.
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Consumers can now order their credit scores from more than 20 web sites, up from around five just a
few years ago. But while consumers tend to think of one, uniform credit score, there are actually seven
different scores for sale, each of which relies on its own magic mix of payment history, credit
applications, debt and other factors. In at least one instance, whether consumers understand the
difference between credit scores is now a matter for the courts: A new class-action lawsuit alleges one
company is deliberately trying to confuse consumers about which score they're buying.
Filed in the southern district of California about two weeks ago, the suit accuses Consumerinfo.com , a
subsidiary of credit-reporting bureau Experian, of deceptive advertisements to consumers, according to
the complaint. At issue is the PLUS score often sold for $14.95 with an Experian credit report -- which
the lawsuit says is advertised as a credit score used by lenders to determine a consumer's
creditworthiness. The lawsuit claims that the company's fine print states the score "is not currently sold
to lenders." "This is a proprietary scoring system sold to consumers that has no value in the
marketplace," says Jason Hartley, a partner at Stueve Siegel Hanson LLP who's representing the
plaintiff.
An Experian spokeswoman says the company's policy prohibits it from sharing "any information
regarding threatened or ongoing litigation, if any." (The company has several more weeks to respond to
the lawsuit, says Hartley, but has not yet.)
Other credit bureaus, which market other scores, say lenders don't rely on only one scoring model to
determine a borrower's creditworthiness. "There are hundreds of scoring models in use in the market
today by a variety of financial institutions and credit providers," says a spokesman for TransUnion, a
credit bureau that sells a credit score called VantageScore. "No one credit score [is] used to make
decisions about one's creditworthiness," says a spokeswoman for Equifax ( EFX ) , which also sells its
proprietary score as well as the FICO score.
According to the lawsuit, there's more to it. While banks and other lenders may subscribe to or access
many different scores, the FICO score, created by Fair Isaac Corp. ( FICO ) , is by far the most widelyused, by more than 90% of lenders, according to the lawsuit. Its popularity is in part due to the fact that
Fair Isaac developed the first general risk credit score in the late 1980s, says John Ulzheimer, president
of consumer education at SmartCredit.com , a credit monitoring site. "It's really your FICO score that
matters."
Given the increased marketing of credit scores, analysts say they expect to see more lawsuits like the
one filed in California. "There's no question there will be people pursuing cases against other
companies we wanted to start off going after the big guy," says Hartley.
While many of the scores currently for sale rely on similar sets of data, there can be significant
differences. For example, VantageScore, which is sold to consumers by Experian and TransUnion,
ranges from 501 to 990, while a credit score sold by Equifax's credit ranges from 280 to 850, and FICO
scores range from 300 to 850. Others add extra information. For example, in December, Experian
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started factoring in data about on-time rental payments in some renters' credit reports, data that would
impact a VantageScore from that bureau, although a VantageScore from another bureau would not take
that into account.
But even a small difference between two credit scores can be enough to confuse a consumer, says
Odysseas Papadimitriou, chief executive at CardHub.com . Like the FICO score, the Experian PLUS
score maxes out at 850, and it's often quite close to the FICO score; the difference could be around 40
points, says Ulzheimer. That's enough for lenders, who consider a 40-point differential enough to offer
better terms to higher scorers. If a bank is relying primarily on the FICO score, a consumer with a high
PLUS score but a lower FICO score could find himself disappointed by the bank.
Many companies simply say their scores are meant for educational purposes and that they often give
the consumer a ballpark range of where they'll stand with the lender. "It gives a great representation of
how your credit is doing," says Catherine Buzzitta, director of marketing at Quizzle.com , which offers its
CE Score to consumers with a credit report for free every six months and charges $7 for more frequent
access.
For consumers who are satisfied with a ballpark estimate of their credit scores, there are also free
options. Bankrate.com features a credit score estimator where consumers plug in information about
their credit lines and debt load to get a free estimate of their FICO score; iPhone users have a similar
option via the free myFICO app . Sites like CreditSesame.com , CreditKarma.com and Quizzle also
offer credit scores for free.
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American Banker
Boston Fed: Cash Use Rose in 2009
April 11, 2011
By Andrew Johnson
Consumers' use of cash to make payments grew in 2009, a Federal Reserve Bank of Boston study
released April 7 found.
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While debit cards were still the most commonly used payment method, cash use increased. Consumers
made an average of 19 debit card payments a month, compared with 18.4 for cash. In 2008, consumers
reported making 21.2 debit card transactions a month and 14.5 cash transactions.
The Boston Fed's Consumer Payments Research Center attributed the shift to the economic downturn
and card regulation, which it said may have affected card use in general.
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Wall Street Journal

How to Wreck Your Credit Score
April 9, 2011
By Karen Blumenthal
Don't underestimate the harm that even one missed mortgage payment can do to your credit score
especially if you had good credit to begin with.
The severe consequences underscore that you shouldn't shrug off even an accidentally missed
payment. Instead, you should pay it and call the lender right away, begging for forgiveness before it
mars your credit record.
In an unusually specific commentary to lenders, Fair Isaac, the creator of the FICO score, recently
spelled out the severe consequences to the credit scores of borrowers who are 30 days late on their
mortgagesas well as the long-term impact of failing to repay the whole mortgage.
It isn't a pretty picture.
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Being 30 days late on a house paymenteven if it is an accidentcan knock 100 points off a pristine
780 credit score, moving you from qualifying for the very best interest rates to the edge of subprime
territory.
The actual numerical drop is less severe if your starting credit score is 720 or 680, but the impact is
greater, since your new score is likely to sink to a level where new credit is hard to get and very
expensive.
The FICO score ranges from a low of 300 to 850, with scores of about 750 or higher generally qualifying
for the best loan terms.
The details provide a warning for anyone whose home is way underwater and is tempted to simply walk
away, or considering a "short sale." That is when the sale price is less than the amount you owe and
the borrower doesn't make up the difference. More than 350,000 homes have been sold this way since
2008, according to the Office of the Comptroller of the Currency.
FICO officials usually dodge questions about the specific impact of actions on scores. But Joanne
Gaskin, director of FICO mortgage markets, compiled the data partly to counter incorrect information,
such as recommendations that people stop paying their mortgages so they can negotiate with a lender,
she says.
FICO says a foreclosure or short sale where the size of the unpaid balance is reported are equally
devastating to a good or excellent credit score, reducing it by as much as 150 points, to the high 500s
or low 600s. A rarer "deed in lieu of foreclosure"in which the borrower voluntarily transfers ownership
of the home to the lendermay have less impact on an excellent score.
Recovering your original score takes about seven years. That also is how long the information stays on
your credit report, where insurers and potential employers can see it. Returning to a mediocre 680
score may take only three years.
Here are some other lessons from the data:
Your past behavior counts, but your current behavior matters more.
Credit scores are intended to measure the risk that you won't repay a current or future debt. So your
careful payments over many years translate into a higher starting score.
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But your score takes the biggest hit of all when you are 30 days late on a payment, falling 70 to 100
points in the FICO example. It drops less when you are 90 days late and if you default. The reason?
The first missed payment "captures a good deal of the risk of the consumer," Ms. Gaskin says.
The best way to rebuild a damaged credit score, ironically, is to use credit.
Avoiding borrowing altogether means "you've frozen your credit history in a negative state," says
Maxine Sweet, vice president of public education for credit bureau Experian. You will be better off using
a credit card judiciously and paying it off promptly, adding good-behavior points to your record.
A rotten score hurts more than you think.
A person with a 620 score would pay almost 12% interest on a four-year $25,000 car loan, compared
with less than 5% for someone with a 780 scorea difference of almost $4,000 over the life of the loan.
On a 30-year fixed-rate $250,000 mortgage, a person with a 620 score might qualify for a 6% rate, but
probably wouldn't be able to get mortgage insurance, which is required if your down payment less than
20%. A person with excellent credit might land a rate less than 5% and pay about $3,000 a year less.
Back to Top
Washington Post
Down payment proposal could make a mountain out of a mortgage
April 9, 2011
By Dina ElBoghdady and Zachary A. Goldfarb
Most home buyers put down less than 20 percent when they take out a mortgage, a sign of how hard it
has become to scrape together enough cash to purchase a home. Its especially tough in the pricey
Washington area, where more than half of borrowers put down less than 10 percent.
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Prospective home buyers may soon face a rude awakening.
Seeking to avoid a repeat of the foreclosure crisis, the Obama administration and regulators have
proposed rules that are all but certain to boost the interest rates and fees on many low-down-payment
loans. Only borrowers putting down 20 percent could get the best deals.
To buy a home for $170,000, the median national price, the borrower would have to come up with
$34,000 in cash.
It takes the average middle-class family 14 years to save that much money and closing costs, according
to the Center for Responsible Lending. Thats a steep hurdle even though 20 percent down was a
common standard for most of an earlier generation.
Even with help from her parents, Julia Ziegler, 29, a social media specialist for a local company, would
have to put down less than 20 percent on the $250,000 condominium she wants to buy in the District.
Coming up with $25,000 plus closing costs is tough, and Im buying in the lower end of the market,
Ziegler said. If I had to put down 20 percent, if I needed $50,000, forget it. I would have to save for a
long, long time.
Repeat buyers worried
The federal proposals impact would extend beyond first-timers such as Ziegler to repeat buyers, who
generally have counted on equity built up in one home to provide the down payment for the next. For
people such as Gina Pecoraro, who saw the equity in her Sterling home erode, the housing bust has
left little cash to put toward a new house.
Pecoraro and her husband were looking to move closer to the District. But they had to kick in $27,000
just to sell the house they were in, and then they had to stretch to come up with a 3.5 percent down
payment on the home they want in Alexandria. Although they could have waited longer to save up
more, Pecoraro said she didnt want to take a chance on mortgage costs going up.
We just thought: Lets do it. Lets cut our losses and hope for the best in the future, Pecoraro said.
Last year, about six of 10 Washington area home buyers put down less than 20 percent, reflecting the
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national trend, according to research firm LPS Applied Analytics. The percentages were considerably
larger in Prince Georges and Prince William counties 86 percent and 79 percent, respectively.
Consumer activists and housing industry executives warn that the proposed rules would make
homeownership much harder to achieve, particularly for first-time buyers and minorities, who have
relied in great numbers on low-down-payments loans.
Renters, by and large, have very little cash on hand, and minority renters have even less, said Barry
Zigas, housing policy director at the Consumer Federation of America. Raising down payment barriers
to a level that history tells us is neither necessary nor appropriate will foreclose homeownership
opportunities for millions of families.
In a recent report to Congress on the future of housing finance, the Obama administration said it was
still committed to ensuring that Americans of modest means can buy homes. Although officials say they
support some form of down payment assistance, they have yet to offer many specifics.
Ownership boom
Before the Great Depression, home buyers were often required to put down 50 percent or more on a
home. But after the Depression and World War II, the government sought to stimulate the housing
market and make it easy for returning veterans and later all Americans to buy homes by
dramatically lowering down payment requirements. Buyers could put down 5 percent or less on loans
offered through the Federal Housing Administration or other government agencies.
Then the nations homeownership rate soared, from 43.6 percent in 1940 to 64 percent in 1980, where
it stayed for many years. America was transformed from a nation of urban renters to suburban
homeowners, Richard Green of the University of Southern California and Susan Wachter of the
University of Pennsylvania wrote in a study of the history of the American mortgage.
About 1980, the norm for down payments settled at 20 percent, but low-down-payment loans continued
to be available for borrowers who met relatively strict criteria.
Then, as home prices soared at the start of the past decade, banks began to offer a new breed of lowdown-payment or no-down-payment loans to a far wider range of borrowers, including many who
were poor credit risks. Those mortgages were often linked to other risky lending practices, which
contributed to the housing crisis.
If people had put 20 percent down in 2005, if the law required it, the crisis would have been a lot milder
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than it turned out to be, said Paul Willen, a senior economist at the Federal Reserve Bank of Boston.
So government officials now see raising down payments as a way to curtail shoddy and dishonest
lending and to limit foreclosures if home prices decline. Under the standards proposed last month, a
mortgage with a 20 percent down payment is deemed safe. In the case of mortgages with smaller down
payments, banks would have to hold a stake in those loans rather than sell them off, a costly
requirement that banks say would be passed on to borrowers in the form of higher interest rates and
fees.
How high? Industry estimates range from a quarter-percentage point to two percentage points.
Some low-down-payment loans would still be available without the higher rates and fees through
federal programs such as those offered by Fannie Mae, Freddie Mac and the FHA. But the
administration has said it wants to eliminate Fannie and Freddie eventually and to shrink the FHAs role.
Any changes could take several years before the impact is fully felt.
The drawbacks
Critics of a 20 percent standard say regulators are shooting at the wrong target.
Because of the low-down-payment loans, millions of low-to-moderate income families became

successful homeowners, Susanna Montezemolo, vice president of federal affairs at the Center for
Responsible Lending, said in a recent analysis. Mortgages generally performed well ... while expanding
the middle class.
Cameron Findlay, chief economist at the online brokerage Lending Tree, said that setting 20 percent as
the standard would encourage lenders to chase after borrowers who have cash and to put less energy
into offering services to those who dont.
The lower-income will be underserved, Findlay said. I would expect a heavy geographic influence to
occur so that more lenders concentrate on the areas where there is higher wealth.
Even federal officials proposing the standard acknowledge that many creditworthy borrowers will have
trouble coming up with 20 percent. In seeking public comment, regulators asked whether the level
should be set at 10 percent instead.
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Some critics of the federal proposal say the size of a down payment is not by itself a good predictor of
whether a borrower will pay off a mortgage. Some economists say low-down-payment loans carry
relatively little risk if borrowers have enough income to cover their monthly mortgage costs, have a
history of paying bills on time and take out a long-term mortgage with a fixed rate.
According to government data on loans made from 1997-2009, borrowers who met strong underwriting
standards but made small down payments defaulted at a rate of 2.3 percent, about twice the rate of
borrowers who met the same standards but put down 20 percent.
But the size of the down payment was a less-significant factor than credit history. The default rate rate
on loans made to people with a poor history of paying bills on time even if they put down 20 percent
was 4.7 percent.
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Columbus Dispatch
Justices uphold foreclosure rule
Its fine for judges to require lawyers to verify details, court ruling says
April 7, 2011
By John Futty
The Ohio Supreme Court has dismissed a complaint against three Franklin County judges who are
requiring lawyers to verify the authenticity of the documents they file in home foreclosures.
Six lawyers challenged the action in December, asking the Supreme Court to prohibit the judges from
ordering them to sign "certifications" on behalf of their clients.
The Franklin County prosecutor's office filed a motion in January to have the complaint dismissed,
which the Supreme Court granted yesterday without comment.
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John C. Greiner, a Cincinnati attorney for the lawyers, said the lack of comment made it difficult to react
to the ruling.
"We're disappointed in the decision, and we're disappointed that there's no guidance with it," he said.
Prosecutor Ron O'Brien said the decision means the lawyers "have to follow the requirements imposed
by the judges."
Common Pleas Judges John F. Bender, Kimberly Cocroft and Guy Reece took the action in response
to a national outcry over fraudulent foreclosure filings.
State attorneys general across the nation, including then-Ohio Attorney General Richard Cordray,
announced in October that they were investigating fraudulent foreclosure filings. Some law firms and
major lenders were using so-called "robo-signers" to complete affidavits on foreclosures without reading
the documents or verifying ownership of the mortgage notes.
In late November, the three Franklin County judges began telling all lawyers who file residential
foreclosure cases in their courtrooms that they must "personally certify the authenticity and accuracy of
all documents" in support of the filings. If a lawyer doesn't, the judge will not grant a motion for default
or summary judgment, but will instead schedule the case for trial.
Setting a foreclosure for trial can delay the case for a year or more. However, in its motion to dismiss
the lawyers' complaint, the prosecutor's office argued that a trial date provides a "remedy" for those who
object to verifying their clients' documents.
"The fact that the trial will delay matters does not change the fact that it is an adequate remedy," wrote
Assistant Prosecutor Patrick Piccininni. "Any issues of authentication of documents and proof can be
settled at that stage."
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Page 1671 of 3826
New York Times

New York Subpoenas 2 Foreclosure-Related Firms
April 8, 2011
By Gretchen Morgenson
Eric T. Schneiderman, the New York attorney general, has issued subpoenas to the states largest
foreclosure law firm and a related company, indicating that his office has some doubts about the effort
by state attorneys general to resolve questionable foreclosure practices among the nations top banks.
The New York investigation appears to center on two of the states foreclosure industry giants: the
Steven J. Baum firm, headquartered in Amherst, N.Y., and Pillar Processing, a default servicing firm set
up by Mr. Baum that was spun off in 2007. Representing JPMorgan Chase, Wells Fargo and other large
banks, the Baum firm has handled an estimated 40 percent of foreclosure cases in the state. Pillar
Processing provides extensive services to the firm.
A spokesman for Mr. Schneiderman declined to comment. Mr. Baum said in an e-mail: The firm will
cooperate with the attorney general in this matter. We are confident that after a full review by the
attorney general they will find no wrongdoing.
Attorneys general across the country have been working on ways to rectify foreclosure improprieties by
the nations biggest banks and have entered into negotiations in recent weeks with these institutions
about a national settlement. Tom Miller of Iowa is leading that effort. While Mr. Schneiderman has been
participating, his new investigation points to the possibility that he will take a different path.
Large foreclosure law firms have come under scrutiny in states outside New York. Last year, the Florida
attorney general began investigating the David J. Stern firm, the largest in that state. That investigation
is continuing, but the law firm stopped bringing foreclosure cases last month.
Like the Stern firm, Mr. Baums operation flourished as the mortgage crisis deepened. Since the end of
2007, it has filed more than 50,000 new foreclosure cases in New York, according to data compiled by
the New York State Unified Court System. The firm employs approximately 70 lawyers.
Along with the attorney general, federal prosecutors in Manhattan have requested information about the
Baum firms practices, according to a lawyer who has represented borrowers against the firm. The
lawyer spoke on condition of anonymity because the communications with the prosecutors were private.
A spokesman for the Department of Justice declined to comment.
Page 1672 of 3826
Scrutiny of the Baum firm has increased in recent months after significant errors surfaced nationwide in
legal paperwork used by banks to seize delinquent borrowers homes. For example, documents
detailing how much borrowers owe have been signed by bank representatives who say they have not
verified the information. Other problems involve the questionable notarization of documents, or
paperwork indicating that the foreclosure process was begun without providing proof that the entities
involved had the legal right to foreclose.
The Baum firm has drawn rebukes on its legal practices from judges in several New York jurisdictions.
Judges in courts across the state have rejected scores of cases filed by the Baum firm, saying it has
failed to provide the documentation necessary to commence foreclosure.
Last November, Judge Scott Fairgrieve in Nassau County district court imposed sanctions of $5,000 on
the Baum firm in a foreclosure case and required it to pay more than $14,000 in fees to the borrowers
lawyers. When awarding the sanctions, the judge wrote: Bringing legal proceedings when there is no
legal right to do so, due to lack of standing, stalls the efficient administration of justice in the system.
Paul D. Stone, a lawyer in Tarrytown, N.Y., has been defending a foreclosure case against the Baum
firm since 2009. Ive never seen any firm file such ill-conceived, ill-researched, nonfactual materials
with a court, Mr. Stone said. The judge overseeing his case recently ordered Mr. Baums firm to pay
some of the borrowers legal costs.
Hoping to eliminate defective filings, last fall New York courts began requiring lawyers bringing
foreclosure cases to attest to the accuracy of their papers.
The Baum firm was founded in 1972 by Marvin R. Baum and has been overseen by Steven J. Baum,
his son, since the elder man died in 1999.
Steven Baum created Pillar Processing in 2007, a provider of real estate default services, and it is
located in the same office complex in Amherst as the law firm. Pillar was purchased in 2007 by Tailwind
Capital, a New York hedge fund; some of Pillars debt and equity is also held by Ares Capital, a publicly
traded investment company in New York City. Representatives of Tailwind did not respond to an e-mail
seeking comment. An Ares spokesman declined to comment.
Pillar Processings default servicing practices have attracted criticism from Cecelia G. Morris,
bankruptcy judge in the Southern District of New York. In a court hearing on Feb. 5, 2008, Judge Morris
said she would no longer accept any material from Pillar Processing in her court and added that if more
paperwork from Pillar came in, she would deny the motions associated with it.
Page 1673 of 3826
Linda M. Tirelli, a lawyer in White Plains who represents homeowners, discussed three current
foreclosure cases in which she faces the Baum firm. The documents dont make sense in any of them,
she said. In another foreclosure being defended by Ms. Tirelli, a lawyer for the bank told the court that
the Baum firm had filed inaccurate documents as it sought to take over a borrowers property. After
trying unsuccessfully to find every link in the chain of title on the property, the Baum firm prepared
inaccurate papers to fill in what was missing, according to court documents.
Speaking generally and not specifically about the Baum firm, Raymond H. Brescia, assistant professor
of law at Albany Law School, said: Were seeing a disproportionate number of cases in the foreclosure
context where questionable filings have been made. I think its easy to say this is the largest and most
wide-ranging fraud against the courts in the United States. Lawyers have to have a good-faith basis for
the factual assertions they make to the court; they are responsible if they file pleadings that are
baseless.
Back to Top
New York Times

A Niche in the Wreckage of Florida Real Estate
April 7, 2011
By Andrew Martin
NORTH PORT, Fla. One recent morning, Shannon Moore raced through a musty pink house
three bedrooms, two baths that was advertised as having good bones and primed for renovation.
As in many recently foreclosed homes in Florida, the appliances and air-conditioner were missing from
this one, either taken by the previous residents or stolen.
Its not as bad as I thought, Ms. Moore said. You could probably get this place fixed up for $8,000.
You could get a refrigerator on Craigslist for $200.
$70,000? she asks aloud, referring to the list price. What the heck? Ms. Moore, a real estate broker,
has found a profitable niche in the wreckage of Floridas real estate market, where a glut of vacant
homes continues to depress prices. She scouts out deals for several groups of investors, including one
Page 1674 of 3826
that counts a professional poker player as a member and a group of Macedonians from Toronto.
Just a few years back, real estate investors were considered pariahs for fomenting a buying frenzy that
drove home prices to stratospheric levels. This time around, housing experts say investors are
desperately needed because there are so many vacant homes and homebuyers are having such
trouble obtaining credit.
If Florida is going to have a comeback anytime soon, investors are going to have to play a role, said
Rick Sharga, a senior vice president at RealtyTrac. There are just too many properties for traditional
home buyers to absorb.
Of course, speculators have been picking through the rubble of Americas real estate collapse for
several years now, and the housing industry remains deeply troubled across the country, suggesting
that it would be far worse were it not for investors. Data released by the National Association of
Realtors recently shows that investors represented 17 percent of all home sales in 2010 nationwide, the
same as the previous year. But in recent months, investment activity has picked up, according to Walter
Molony, an association spokesman, who attributed the increase to relatively cheap prices and the lack
of available credit for homebuyers.
There is no shortage of deals in Florida. The Census Bureau recently reported that 17 percent of the
homes in Florida were vacant. Even though the figure includes vacation homes that were unoccupied at
the time of the survey, the underlying rate within the state reflects a sustained downturn.
The median house price in Florida, meanwhile, had dropped to $121,900 in February, from $257,800 in
June 2006, a decline of 53 percent, according to Metrostudy, a housing research firm. Indeed, some
houses and condominiums in Florida are selling for roughly the price of a practical family sedan, new or
used.
For instance, a two-bedroom house in Port Charlotte, just south of North Port on the gulf coast of the
state, recently sold for $8,000, and listings for $25,000 homes are not uncommon. Many experts expect
prices to drop even further.
Nationally we are expecting prices to stabilize by the end of this year, said Celia Chen, senior director
at Moodys Analytics. We dont expect it to stabilize in Florida until sometime in 2012, and thats a
direct overhang of the excess inventory.
Despite the risks, several investors expressed optimism about their chances of making money, if not a
killing.
Page 1675 of 3826
A wise man told me that the best time to enter a business is during a recession, said Peter Ide, a
British builder who was transferred by his company to Florida to buy up homes, fix them up and resell
them. The potential here is phenomenal.
Steve Barnhardt, a friend of Ms. Moores, said he began buying up houses to stay afloat until the
market revived. On this morning, he was installing inexpensive carpet in a three-bedroom house that he
purchased for $76,000 and had just sold for $103,000; he estimates his profit was $9,000 after paying
$5,000 in back taxes and closing costs. (He says he could have made more if not for low-life
neighbors.)
The things I used to do are no longer out there, said Mr. Barnhardt, who had previously made a
comfortable living investing in commercial real estate and operating heavy equipment. Right now, this
is what is paying my property taxes and keeping me alive.
Not everyone views real estate investors as that benign, or savvy. April Charney, a public aid lawyer
who lives in nearby Venice, questioned why investors would fix up houses with so few eligible buyers.
Besides, she said the new owners were likely to end up with a vacant home next door with squatters,
mold or filthy pools.
They are dreaming, she said. Thats just a pipe dream in North Port.
As for investors, there is the occasional reminder that they are benefitting from the misfortunes of
others. A few weeks ago, a painter found a letter addressed to the next occupant of this fine home in
one of the houses Ms. Moores investors had purchased.
This house was my dream but like life sometimes dreams dont work out, the letter read. Now Im just
surrounded with boxes of memories and dashed intentions of what may have been. So do me a favor.
Make your own good memories here.
About 35 miles southeast of Sarasota, North Port was carved out of shrub land in the 1950s by the
General Development Corporation, which sold the plots to buyers up north. It remained a relatively quiet
community until the last decade, when developers erected one subdivision after the next.
North Ports population doubled in less than four years, city officials say. There are now about 55,000
residents.
In those high-flying days of Florida real estate, Ms. Moore said she would buy up vacant shrub land and
Page 1676 of 3826
sell seven or eight lots on a good day, for $50,000 apiece, making as much as 40 percent in profits.
Those days are long gone, and North Port has fallen hard. Ms. Moore, a Florida native, is stuck with
four plots that cost her $38,000 each (each is worth $5,000 or less) and a duplex she bought for
$140,000 (its now worth $30,000, she says).
She is also $100,000 under water on her house and living on a street, Mistleto Lane, in which a third of
the houses are vacant, including one just across the street.
Nonetheless, Ms. Moore reinvented herself as an intelligence agent of sorts, alerting her clients, for
instance, to details like whether a house has undesirable neighbors, Chinese drywall or an unsavory
past. (She steered her clients away from a three-bedroom house that appeared to be a steal, but was
tied to a grisly rape and murder.)
One investor, a Florida businessman, exclusively buys duplexes. Ms. Moores Macedonian clients want
three-bedroom, two-bathroom houses that cost about $100,000, which they buy and rent. Mr. Ides
group, which includes a retired Maryland developer and the poker player, buys homes at foreclosure
auctions, fixes them up and resells them.
Since investors cant inspect the inside of a foreclosed house before auction, Mr. Ides group is
particularly reliant on Ms. Moores local knowledge. If she isnt familiar with a house, she drives by and
often brings along two of her three daughters, who are home-schooled. (Her 13-year-old, Willow, has
made as much as $400 a week on Craigslist, selling belongings left behind in vacant homes.)
During a recent auction, Ms. Moore sat in front of a computer screen in her office, with Mr. Ides partner,
Jon Breen, the retired developer, on the speaker phone. Thirteen properties were being auctioned by
the county this morning, though Mr. Breen focused his attention on a half dozen or so.
Ms. Moore pulled up comparable sales and back taxes, while Mr. Breen calculated his costs aloud.
Barcelona has $8,367 in back taxes, she says, referring to a house on Barcelona Avenue in Sarasota.
Remember the house next door had an odd color.
I think its a junky piece of property, Mr. Breen said, before bidding $59,000.
Later, when the house sells for $64,001, she says, Who is the dummy today? They are paying way too
Page 1677 of 3826
much.
Mr. Breen ended up buying two houses in North Port, one for $111,001 and another for $77,002.
Later that day, when Ms. Moore met the investors to change the locks and inspect the houses, they
were pleasantly surprised. Both houses were in relatively good condition and would require only some
paint and minor repairs.
This is about as good as it gets, Mr. Ide said, as he inspected the $111,001 house, a four-bedroom
where some water damage around the Jacuzzi was the only apparent problem. But it did get better.
A week later, after $4,500 was spent on new appliances and repairs, an offer was made on the house
for $152,000.
Ms. Moore, meanwhile, has plowed her earnings into her own deals, recently purchasing a second
duplex for $30,000 in cash. Im getting $650 a side in rent, a lot better than the stock market, she said.
My plan is to buy up as much multifamily as I can while the market is down.
Back to Top
Florida Times-Union
Bank gives man foreclosed Jacksonville house for free
April 10, 2011
By Roger Bull
Perry Laspina was in the middle of foreclosure with the possibility of losing the house he owned in
Jacksonville. Then the mail came one day in late January telling him that the house was his.
Page 1678 of 3826
Despite the $72,000 mortgage that he barely paid anything on, despite the foreclosure ... the house was
his.
In the middle of foreclosures gone wild, of a system overloaded by sheer volume, judicial investigations
and allegations of corners cut, Laspina ended up with the house.
Despite the fact that he didn't have an attorney in the foreclosure proceedings, the mortgage holder
simply gave up and walked away.
"I've never seen anything like this in my life," he said.
It's a tale populated with many of the major players in the national foreclosure drama: The law firm of
David Stern, the Mortgage Electronic Registration Systems (better known as MERS) and a mortgage
packaged with others and sold into a securitized trust.
Here's how it happened.
Back in 2006, Laspina, a used-car dealer based in South Florida, had some extra money and decided
to buy some real estate that he could resell quickly at a profit. It was, after all, the height of the housing
boom with prices skyrocketing and mortgage money easily available.
"Since everyone else was making money flipping houses, I figured I would, too," he said.
He wasn't familiar with Jacksonville, but his brother owned a house in Fernandina Beach and found the
house on Oakwood Street in the Panama Gardens neighborhood of Jacksonville off North Main Street.
It's an old neighborhood where most of the houses are still well-maintained.
Laspina bought the house for $80,000, putting $8,000 down and taking out an adjustable rate mortgage
with EquiFirst for the remaining $72,000 with an interest rate of 9.5 percent.
EquiFirst, based in Charlotte, N.C., was one of the nation's leading sub-prime lenders in 2006. But it
soon fell victim to the housing and mortgage industry collapse and it closed in 2009.
Page 1679 of 3826
EquiFirst kept few of the mortgages it wrote; most were packaged and sold to securitized trusts which
were owned by investors.
Laspina wasn't worried about the interest rate.
"It didn't matter," he said. "I figured I'm going to flip this house within six months, maybe three months."
He also figured he'd get about $120,000 for it after he did a bit of work on it, mostly tearing up the
carpet and stripping the paint that covered the hardwood floors.
"But right after I put it on the market, the crash came," he said. "I couldn't sell it, I couldn't rent it."
By 2008, the increases on his payments kicked in, going from an initial payment of $605 to $894 and
then $1,058 in less than a year. He quit making payments, and in September of that year, a foreclosure
notice was filed against him. The plaintiff was the U.S. Bank National Association, which was simply
acting as the trustee for an unnamed trust that now owned the mortgage.
The court file says that Laspina lost his foreclosure case in February 2009. A sale date was set, then
postponed and then cancelled, all at the plaintiff's request, later that year.
But the next year, the plaintiff requested that it all be vacated - the suit, the judgment, all of it. In
October, Circuit Judge Waddell Wallace signed the order.
In December, officials for MERS, which acted as the mortgage holder, signed and filed the documents
saying it "has received full payment and satisfaction ... and does hereby cancel and discharge said
mortgage."
Laspina had paid less than $1,000 toward the principal on his $72,000 loan.
That's what happened. But there are questions about why.
"This is crazy," attorney David Goldman said as he looked over the files at the Times-Union's request.
Page 1680 of 3826
"They won," he said referring to the mortgage holder. "They're standing at the goal line, and they just
need to sell the house."
"One possibility is that they did it by mistake," said Chip Parker, an attorney who specializes in
foreclosure defense. "There are just so many cases out there."
One issue possibly complicating the case is that the plaintiff's attorney was David Stern, whose
Southeast Florida law firm became the poster child for foreclosure mills. In 2009 alone, it handled
70,000 foreclosure cases, according to news reports, and employed more than 1,000 people.
But after questions were raised about the practice, the Florida attorney general announced an
investigation of possibly fraudulent paperwork at Stern and two other firms. Fannie Mae and Freddie
Mac, along with many banks, dropped him as their primary foreclosure attorney.
Stern's firm quit its foreclosure work at the end of March.
MERS itself has been the subject of plenty of controversy. The electronic registration and tracking
system helps banks package, buy and sell mortgages without the time and money that used to be
required to record each transaction.
MERS is named the nominee on these loans, but it now faces lawsuits across the country seeking
unpaid recording fees that normally go to local governments, and several courts have rejected MERS'
role in bringing foreclosures.
Parker also theorized that the mortgage owner simply made a business decision.
"The lender was faced with retaining new counsel," Parker said. "Maybe it looked at the value of the
property, realized it's way, way underwater and simply not worth it."
That appears to be the case, though the mortgage holder provided few details when contacted.
The loan was being serviced by America's Servicing Co., a subsidiary of Wells Fargo.
Page 1681 of 3826
"The investor on the loan, the bondholder on the trust, decided to write off the loan balance," said a
Wells Fargo spokesman, "because of the significant decreased value of the property."
He declined to give more details or further explanation.
The home two bedrooms, one bath and 1,120 square feet is structurally solid, Laspina said. But
many of the interior walls are covered with mold ever since the coils were stolen from the air
conditioner.
It's appraised at $46,000 by the Duval County appraiser's office in a neighborhood that has inconsistent
values.
The house next door sold for $65,000 in January after selling for $91,000 in 2003. A house across the
street sold for $153,500 in 2008. But another a couple of houses away was purchased from a bank for
$23,000 a year ago after selling for $140,000 in 2006.
"It's a good neighborhood," said Jackie Painter, whose family first moved to Panama Gardens in 1958.
She spent most of the past decade in Michigan, but when she wanted to move back south, she moved
to the neighborhood where her younger sister and 99-year-old mother still live.
"Some of the houses were in really bad shape for awhile," she said. "But people have come in and fixed
them up. They're good neighbors. We get a little riff raff, a few prostitutes will walk down the street, but
when they see us watching, they scatter."
Goldman cautioned about anyone expecting to duplicate Laspina's good luck.
"I don't think it's representative," he said. "Someone won the lottery here. There's a lot of people out
there saying they can get you your house free, but they're just selling you something. It's a one-in-amillion thing."
As for Laspina, he plans to clean the mold, mow the lawn and try to sell the house.
"I could certainly use the money," he said.
Page 1682 of 3826
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Page 1683 of 3826
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How to back up files and recover data

Mon Apr 11 2011 00:00:00 EDT
Even computer novices know that file backups are important protection in case of hard drive crashes,
but many people wonder exactly how to back up their files and recover their data. Learn how!
View article...
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_DL_CFPB_AllHands
Fri Apr 08 2011 18:22:06 EDT

EW keynote National Asso of Attorneys General (NAAG) Presidential Initiative
HP remarks at NAAG Presidential Initiative
RCordray at NAAG Presidential Initiative
EW Meeting w North Carolina Community Bankers
SAntonakes Meeting w TD BankNorth
SAnotonakes Meeting w JP Morgan Chase
EVale Meeting w American Bankers Asso
EVale Meeting w National Credit Union Asso
PMcCoy Meeting w National Asso of Realtors
Page 1691 of 3826

EW Call time w CA & AR Community Bankers
SAntonakes Meeting w ABA Compliance Committee

EW & HPetraeus Town Hall at Joint Base Fort Myer (w Secretary Geithner)
SAntonakes & ZQM Meeting w California Reinvestment Coalition (CRC)
DSilberman Meeting w Natl Consumer Law Center (NCLC)
EVale Meeting W American Bankers Asso
National Community Reinvestment Coalition (NCRC) Reception

RCordray remarks at American Council on Consumer Interests
RCordray remarks at NCRC conference
KCochran remarks at Amer Bar Asso Consumer Financial Services Committee
PTwohig Meeting w Natl Asso of Retail Collection Attorneys (NARCA)
EW Call time w MA & KY Community Bankers
Page 1692 of 3826

Hold re PTwohig, DSilberman & ZQM Meeting w Chicago Consumer Groups
Saturday, April 16, 2011

HPetraeus Workshop w Oklahoma Natl Guard
Zixta Q. Martinez
202.435.7204
Page 1693 of 3826
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Kern, Shaun (CFPB)

Fri Apr 08 2011 17:28:08 EDT

Wyeth v. Levine.pdf
Hi Kevin
Nice talk, much appreciated. Check out Fn. 9, when you can.
Shaun
Page 1724 of 3826
Wyeth v. Levine.pdf (Attachment 1 of 1)
129 S.Ct. 1187

FOR EDUCATIONAL USE ONLY
Page 1
555 U.S. 555, 129 S.Ct. 1187, 173 L.Ed.2d 51, 77 USLW 4165, Prod.Liab.Rep. (CCH) P 18,176, 09 Cal. Daily Op.
Serv. 2644, 2009 Daily Journal D.A.R. 3199, 21 Fla. L. Weekly Fed. S 675
(Cite as: 555 U.S. 555, 129 S.Ct. 1187)
Supreme Court of the United States

WYETH, Petitioner,
v.
Diana LEVINE.
No. 06-1249.
Argued Nov. 3, 2008.
Decided March 4, 2009.
Justice Thomas concurred in judgment and filed

opinion.
Justice Alito dissented and filed opinion, in which
Chief Justice Roberts and Justice Scalia joined.
West Headnotes
[1] States 360
18.11
Background: Patient brought action against drug manufacturer for failure to warn of dangers of administration of nausea medication directly into patient's vein,
which resulted in onset of gangrene and amputation of
patient's arm. The Washington Superior Court, Geoffrey
W. Crawford, J., entered judgment on jury's verdict in
patient's favor, and manufacturer appealed. The Vermont Supreme Court, Johnson, J., 183 Vt. 76, 944 A.2d
179, affirmed. Certiorari was granted.
360 States
360I Political Status and Relations
360I(B) Federal Supremacy; Preemption
360k18.11 k. Congressional Intent. Most Cited
Cases
Purpose of Congress is ultimate touchstone in every
pre-emption case. U.S.C.A. Const. Art. 6, cl. 2.
Holding: The United States Supreme Court, Justice

Stevens, held that state law failure-to-warn claims
against manufacturer of antihistamine that was used to
treat nausea, for failing to adequately warn of dangers
of administering drug intravenously using an IV-push,
rather than IV-drip, methodology, were not preempted
by federal law, either on theory that manufacturer could
not have modified warning label placed on drug once it
had been approved by the Food and Drug Administration (FDA), and that it was impossible for manufacturer
to comply with both state law duties underlying failureto-warn claims and its federal labeling duties, or on theory that requiring manufacturer to comply with state
law duty to provide stronger warning about IV-push administration, after the Food and Drug Administration
(FDA) had previously approved warning label placed on
drug, would obstruct purposes and objectives of federal
drug labeling regulation.
360 States
360k18.13 k. State Police Power. Most Cited
Cases
In all pre-emption cases, and particularly in those in
which Congress has legislated in field which the states
have traditionally occupied, court starts with assumption that historic police powers of states were not to be
superseded by federal act, unless that was clear and
manifest purpose of Congress. U.S.C.A. Const. Art. 6,
cl. 2.
Affirmed.
Justice Breyer concurred and filed opinion.
[2] States 360
[3] States 360
18.13
18.13
360 States
Cases
Presumption, in all pre-emption cases, that historic
police powers of states are not to be superseded by federal act is not dependent on absence of federal regula-

Page 1725 of 3826
129 S.Ct. 1187

Page 2
(Cite as: 555 U.S. 555, 129 S.Ct. 1187)
tion, but upon historic presence of state law. U.S.C.A.

Const. Art. 6, cl. 2.
without waiting for FDA approval. U.S.C.A. Const. Art.

6, cl. 2; 21 C.F.R. 314.70(c)(6)(iii)(A, C).
[4] States 360
[6] Health 198H
18.13
360 States
Cases
Presumption that historic police powers of states
are not to be superseded by federal act also applies to
claims of implied conflict pre-emption. U.S.C.A. Const.
Art. 6, cl. 2.
[5] Products Liability 313A
225
313A Products Liability

313AIII Particular Products
313Ak223 Health Care and Medical Products
313Ak225 k. Drugs in General. Most Cited
Cases
States 360
310
198H Health
198HI Regulation in General
198HI(E) Drugs; Medical Devices and Instruments
198Hk309 Labeling Requirements
198Hk310 k. In General. Most Cited Cases
Through the many amendments to the Federal
Food, Drug, and Cosmetic Act (FDCA) and to the Food
and Drug Administration (FDA) regulations, it has remained central premise of federal drug regulation that
drug manufacturer bears responsibility for content of its
label at all times; the drug manufacturer is charged both
with crafting an adequate label and with ensuring that
its warnings remain adequate as long as drug is on the
market. Federal Food, Drug, and Cosmetic Act, 1 et
seq., 21 U.S.C.A. 301 et seq.; 21 C.F.R. 201.80(e).
18.65
360 States
360k18.65 k. Product Safety; Food and Drug
Laws. Most Cited Cases
Drug user's state law failure-to-warn claims against
manufacturer of antihistamine that was used to treat
nausea, for failing to adequately warn of dangers of administering drug intravenously using an IV-push, rather
than IV-drip, methodology, were not preempted by federal law on theory that manufacturer could not have
modified warning label placed on drug once it had been
approved by the Food and Drug Administration (FDA)
and that it was impossible for manufacturer to comply
with both state law duties underlying failure-to-warn
claims and its federal labeling duties; pursuant to FDA
regulation, manufacturer could have modified label to
add or strengthen a contraindication, warning, precaution, or adverse reaction or to add or strengthen an instruction about dosage and administration that is intended to increase the safe use of the drug product,
225

Cases
States 360
18.65
360 States
Drug user's state law failure-to-warn claims against
manufacturer of antihistamine that was used to treat
nausea, for failing to adequately warn of dangers of administering drug intravenously using an IV-push, rather
than IV-drip, methodology, were not preempted by federal law on theory that requiring manufacturer to comply with state law duty to provide stronger warning
about IV-push administration, after the Food and Drug
Administration (FDA) had previously approved warning

Page 1726 of 3826
129 S.Ct. 1187

Page 3
(Cite as: 555 U.S. 555, 129 S.Ct. 1187)
label placed on drug, would obstruct purposes and objectives of federal drug labeling regulation; if Congress
thought state-law suits posed an obstacle to its objectives, it surely would have enacted express pre-emption
provision at some point during the 70-year history of
the Federal Food, Drug, and Cosmetic Act (FDCA).
U.S.C.A. Const. Art. 6, cl. 2; Federal Food, Drug, and
Cosmetic Act, 1 et seq., 21 U.S.C.A. 301 et seq.
[8] States 360
18.11
360 States
360k18.11 k. Congressional Intent. Most Cited
Cases
Case for federal pre-emption is particularly weak
where Congress has indicated its awareness of operation
of state law in field of federal interest and has nonetheless decided to stand by both concepts and to tolerate
whatever tension there is between them. U.S.C.A.
225

Cases
States 360
18.65
360 States
In deciding whether federal drug labeling law preempted the failure-to-warn claims asserted by musician
who developed gangrene and ultimately needed to have
her forearm amputated as alleged result of drug manufacturer's failure to adequately warn of dangers posed
by intravenous administration of drug, court would not
defer to statement made by the Food and Drug Administration (FDA) in preamble to regulation, that the Federal
Food, Drug, and Cosmetic Act (FDCA) establishes

both a floor and a ceiling, such that FDA approval of labeling preempts conflicting or contrary State
law, where the FDA had finalized regulation without
offering states or other interested parties notice or opportunity for comment, and where statements made in
preamble reversed the FDA's own longstanding position
without providing any reasoned explanation, including
any discussion of how state law had interfered with the
FDA's regulation of drug labeling during decades of coexistence. U.S.C.A. Const. Art. 6, cl. 2.
[10] States 360
18.9
360 States
360k18.9 k. Federal Administrative Regulations. Most Cited Cases
While agencies have no special authority to pronounce on pre-emption issues absent delegation by Congress, they do have unique understanding of statutes
that they administer and an attendant ability to make informed determinations about how state requirements
may pose an obstacle to accomplishment and execution
of full purposes and objectives of Congress. U.S.C.A.
[11] States 360
18.9
360 States
360k18.9 k. Federal Administrative Regulations. Most Cited Cases
Weight that court accords to agency's explanation
of state law's impact on federal scheme, for purpose of
deciding whether state law is pre-empted, depends on
its thoroughness, consistency, and persuasiveness.
U.S.C.A. Const. Art. 6, cl. 2.
*1189 Syllabus
FN*
FN* The syllabus constitutes no part of the

opinion of the Court but has been prepared by
the Reporter of Decisions for the convenience

Page 1727 of 3826
129 S.Ct. 1187

Page 4
(Cite as: 555 U.S. 555, 129 S.Ct. 1187)
of the reader. See United States v. Detroit Timber & Lumber Co., 200 U.S. 321, 337, 26 S.Ct.
282, 50 L.Ed. 499.
Petitioner Wyeth manufactures the antinausea drug
Phenergan. After a clinician injected respondent Levine
with Phenergan by the IV-push method, whereby a
drug is injected directly into a patient's vein, the drug
entered Levine's artery, she developed gangrene, and
doctors amputated her forearm. Levine brought a statelaw damages action, alleging, inter alia, that Wyeth had
failed to provide an adequate warning about the significant risks of administering Phenergan by the IV-push
method. The Vermont jury determined that Levine's injury would not have occurred if Phenergan's label included an adequate warning, and it awarded damages
for her pain and suffering, substantial medical expenses,
and loss of her livelihood as a professional musician.
Declining to overturn the verdict, the trial court rejected
Wyeth's argument that Levine's failure-to-warn claims
were pre-empted by federal law because Phenergan's labeling had been approved by the federal Food and Drug
Administration (FDA). The Vermont Supreme Court affirmed.
Held: Federal law does not pre-empt Levine's claim
that Phenergan's label did not contain an adequate warning about the IV-push method of administration. Pp.
1193 - 1204.
(a) The argument that Levine's state-law claims are
pre-empted because it is impossible for Wyeth to comply with both the state-law duties underlying those
claims and its federal labeling duties is rejected. Although a manufacturer generally may change a drug label only after the FDA approves a supplemental application, the agency's changes being effected (CBE) regulation permits certain preapproval labeling changes
that add or strengthen a warning to improve drug safety.
Pursuant to the CBE regulation, Wyeth could have unilaterally added a stronger warning about IV-push administration, and there is no evidence that the FDA
would ultimately have rejected such a labeling change.
Wyeth's cramped reading of the CBE regulation and its
broad assertion that unilaterally changing the Phenergan
label would have violated federal law governing unau-
thorized distribution and misbranding of drugs are

based on the fundamental misunderstanding that the
FDA, rather than the manufacturer, bears primary responsibility for drug labeling. It is a central premise of
the Food, Drug, and Cosmetic Act (FDCA) and the
FDA's regulations that the manufacturer bears responsibility for the content of its label at all times. Pp. 1196 1199.
*1190 (b) Wyeth's argument that requiring it to
comply with a state-law duty to provide a stronger
warning would interfere with Congress' purpose of entrusting an expert agency with drug labeling decisions is
meritless because it relies on an untenable interpretation
of congressional intent and an overbroad view of an
agency's power to pre-empt state law. The history of the
FDCA shows that Congress did not intend to pre-empt
state-law failure-to-warn actions. In advancing the argument that the FDA must be presumed to have established a specific labeling standard that leaves no room
for different state-law judgments, Wyeth relies not on
any statement by Congress but on the preamble to a
2006 FDA regulation declaring that state-law failureto-warn claims threaten the FDA's statutorily prescribed
role. Although an agency regulation with the force of
law can pre-empt conflicting state requirements, this
case involves no such regulation but merely an agency's
assertion that state law is an obstacle to achieving its
statutory objectives. Where, as here, Congress has not
authorized a federal agency to pre-empt state law directly, the weight this Court accords the agency's explanation of state law's impact on the federal scheme depends on its thoroughness, consistency, and persuasiveness. Cf., e.g., Skidmore v. Swift & Co., 323 U.S. 134,
65 S.Ct. 161, 89 L.Ed. 124. Under this standard, the
FDA's 2006 preamble does not merit deference: It is inherently suspect in light of the FDA's failure to offer interested parties notice or opportunity for comment on
the pre-emption question; it is at odds with the available
evidence of Congress' purposes; and it reverses the
FDA's own longstanding position that state law is a
complementary form of drug regulation without providing a reasoned explanation. Geier v. American Honda
Motor Co., 529 U.S. 861, 120 S.Ct. 1913, 146 L.Ed.2d
914, is distinguished. Pp. 1199 - 1204.

Page 1728 of 3826
129 S.Ct. 1187

Page 5
(Cite as: 555 U.S. 555, 129 S.Ct. 1187)
183 Vt. 76, 944 A.2d 179, affirmed.

STEVENS, J., delivered the opinion of the Court,
in which KENNEDY, SOUTER, GINSBURG, and
BREYER, JJ., joined. BREYER, J., filed a concurring
opinion. THOMAS, J., filed an opinion concurring in
the judgment. ALITO, J., filed a dissenting opinion, in
which ROBERTS, C.J., and SCALIA, J., joined.
Edwin S. Kneedler for the United States as amicus curiae, by special leave of the Court, supporting petitioner.
David C. Frederick, for respondent.
Bert W. Rein, Karyn K. Ablin, Brendan J. Morrissey,
Wiley Rein LLP, Washington, DC, Allan R. Keyes, R.
Joseph O'Rourke, Ryan, Smith, Carbine, Ltd., Rutland,
VT, Seth P. Waxman, Counsel of Record, Paul R.Q.
Wolfson, Catherine M.A. Carroll, Margaret Williams,
Smith Wilmer Cutler Pickering Hale and Dorr LLP,
Washington, DC, William J. Ruane, Wyeth, Madison,
NJ, for petitioner.
Richard I. Rubin, Rubin, Kidney, Myer & DeWolfe,
Barre, Vermont, David C. Frederick, Counsel of Record, Scott H. Angstreich, Scott K. Attaway, Brendan J.
Crimmins, Kellogg, Huber, Hansen, Todd, Evans &
Figel, P.L.L.C., Washington, D.C., for respondent.
For U.S. Supreme Court Briefs, see:2008 WL 2273067
(Pet.Brief)2008 WL 3285388 (Resp.Brief)2008 WL
4264481 (Reply.Brief)
Justice STEVENS delivered the opinion of the Court.
Directly injecting the drug Phenergan into a patient's vein creates a significant risk of catastrophic consequences. A Vermont*1191 jury found that petitioner
Wyeth, the manufacturer of the drug, had failed to
provide an adequate warning of that risk and awarded
damages to respondent Diana Levine to compensate her
for the amputation of her arm. The warnings on Phenergan's label had been deemed sufficient by the federal
Food and Drug Administration (FDA) when it approved
Wyeth's new drug application in 1955 and when it later
approved changes in the drug's labeling. The question
we must decide is whether the FDA's approvals provide
Wyeth with a complete defense to Levine's tort claims.
We conclude that they do not.

I
Phenergan is Wyeth's brand name for promethazine
hydrochloride, an antihistamine used to treat nausea.
The injectable form of Phenergan can be administered
intramuscularly or intravenously, and it can be administered intravenously through either the IV-push
method, whereby the drug is injected directly into a patient's vein, or the IV-drip method, whereby the drug
is introduced into a saline solution in a hanging intravenous bag and slowly descends through a catheter inserted in a patient's vein. The drug is corrosive and
causes irreversible gangrene if it enters a patient's
artery.
Levine's injury resulted from an IV-push injection
of Phenergan. On April 7, 2000, as on previous visits to
her local clinic for treatment of a migraine headache,
she received an intramuscular injection of Demerol for
her headache and Phenergan for her nausea. Because the
combination did not provide relief, she returned later
that day and received a second injection of both drugs.
This time, the physician assistant administered the
drugs by the IV-push method, and Phenergan entered
Levine's artery, either because the needle penetrated an
artery directly or because the drug escaped from the
vein into surrounding tissue (a phenomenon called
perivascular extravasation) where it came in contact
with arterial blood. As a result, Levine developed gangrene, and doctors amputated first her right hand and
then her entire forearm. In addition to her pain and suffering, Levine incurred substantial medical expenses
and the loss of her livelihood as a professional musician.
After settling claims against the health center and
clinician, Levine brought an action for damages against
Wyeth, relying on common-law negligence and strictliability theories. Although Phenergan's labeling warned
of the danger of gangrene and amputation following inFN1
advertent intra-arterial injection,
Levine alleged
that *1192 the labeling was defective because it failed
to instruct clinicians to use the IV-drip method of intravenous administration instead of the higher risk IV-push
method. More broadly, she alleged that Phenergan is not

Page 1729 of 3826
129 S.Ct. 1187

Page 6
(Cite as: 555 U.S. 555, 129 S.Ct. 1187)
reasonably safe for intravenous administration because

the foreseeable risks of gangrene and loss of limb are
great in relation to the drug's therapeutic benefits. App.
14-15.
FN1. The warning for Inadvertent Intra-arterial Injection stated: Due to the close proximity of arteries and veins in the areas most
commonly used for intravenous injection, extreme care should be exercised to avoid perivascular extravasation or inadvertent intraarterial injection. Reports compatible with inadvertent intra-arterial injection of Phenergan
Injection, usually in conjunction with other
drugs intended for intravenous use, suggest that
pain, severe chemical irritation, severe spasm
of distal vessels, and resultant gangrene requiring amputation are likely under such circumstances. Intravenous injection was intended in
all the cases reported but perivascular extravasation or arterial placement of the needle is now
suspect. There is no proven successful management of this condition after it occurs.... Aspiration of dark blood does not preclude intra-arterial needle placement, because blood is discolored upon contact with Phenergan Injection.
Use of syringes with rigid plungers or of small
bore needles might obscure typical arterial
backflow if this is relied upon alone. When
used intravenously, Phenergan Injection should
be given in a concentration no greater than 25
mg per mL and at a rate not to exceed 25 mg
per minute. When administering any irritant
drug intravenously, it is usually preferable to
inject it through the tubing of an intravenous
infusion set that is known to be functioning satisfactorily. In the event that a patient complains
of pain during intended intravenous injection of
Phenergan Injection, the injection should be
stopped immediately to provide for evaluation
of possible arterial placement or perivascular
extravasation. App. 390.
Wyeth filed a motion for summary judgment, arguing that Levine's failure-to-warn claims were pre-
empted by federal law. The court found no merit in

either Wyeth's field pre-emption argument, which it has
since abandoned, or its conflict pre-emption argument.
With respect to the contention that there was an actual
conflict between a specific FDA order, id., at 21, and
Levine's failure-to-warn action, the court reviewed the
sparse correspondence between Wyeth and the FDA
about Phenergan's labeling and found no evidence that
Wyeth had earnestly attempted to strengthen the intra-arterial injection warning or that the FDA had
specifically disallowed stronger language, id., at 23.
The record, as then developed, lack[ed] any evidence
that the FDA set a ceiling on this matter. Ibid.
The evidence presented during the 5-day jury trial
showed that the risk of intra-arterial injection or perivascular extravasation can be almost entirely eliminated through the use of IV-drip, rather than IV-push, administration. An IV drip is started with saline, which
will not flow properly if the catheter is not in the vein
and fluid is entering an artery or surrounding tissue. See
id., at 50-51, 60, 66-68, 75. By contrast, even a careful
and experienced clinician using the IV-push method
will occasionally expose an artery to Phenergan. See id.,
at 73, 75-76. While Phenergan's labeling warned against
intra-arterial injection and perivascular extravasation
and advised that [w]hen administering any irritant drug
intravenously it is usually preferable to inject it through
the tubing of an intravenous infusion set that is known
to be functioning satisfactorily, id., at 390, the labeling
did not contain a specific warning about the risks of IVpush administration.
The trial record also contains correspondence
between Wyeth and the FDA discussing Phenergan's label. The FDA first approved injectable Phenergan in
1955. In 1973 and 1976, Wyeth submitted supplemental
new drug applications, which the agency approved after
proposing labeling changes. Wyeth submitted a third
supplemental application in 1981 in response to a new
FDA rule governing drug labels. Over the next 17 years,
Wyeth and the FDA intermittently corresponded about
Phenergan's label. The most notable activity occurred in
1987, when the FDA suggested different warnings
about the risk of arterial exposure, and in 1988, when

Page 1730 of 3826
129 S.Ct. 1187

Page 7
(Cite as: 555 U.S. 555, 129 S.Ct. 1187)
Wyeth submitted revised labeling incorporating the proposed changes. The FDA did not respond. Instead, in
1996, it requested from Wyeth the labeling then in use
and, without addressing Wyeth's 1988 submission, instructed it to [r]etain verbiage in current label regarding intra-arterial injection. Id., at 359. After a few further changes to the labeling not related to intra-arterial
injection, the FDA approved Wyeth's 1981 application
in 1998, instructing that Phenergan's final printed label
must be identical to the approved package insert. Id.,
at 382.
Based on this regulatory history, the trial judge instructed the jury that it could *1193 consider evidence
of Wyeth's compliance with FDA requirements but that
such compliance did not establish that the warnings
were adequate. He also instructed, without objection
from Wyeth, that FDA regulations permit a drug manufacturer to change a product label to add or strengthen
a warning about its product without prior FDA approval
so long as it later submits the revised warning for review and approval. Id., at 228.
Answering questions on a special verdict form, the
jury found that Wyeth was negligent, that Phenergan
was a defective product as a result of inadequate warnings and instructions, and that no intervening cause had
broken the causal connection between the product defects and the plaintiff's injury. Id., at 233-235. It awarded total damages of $7,400,000, which the court reduced to account for Levine's earlier settlement with the
health center and clinician. Id., at 235-236.
On August 3, 2004, the trial court filed a comprehensive opinion denying Wyeth's motion for judgment
as a matter of law. After making findings of fact based
on the trial record (supplemented by one letter that
Wyeth found after the trial), the court rejected Wyeth's
pre-emption arguments. It determined that there was no
direct conflict between FDA regulations and Levine's
state-law claims because those regulations permit
strengthened warnings without FDA approval on an interim basis and the record contained evidence of at least
20 reports of amputations similar to Levine's since the
1960's. The court also found that state tort liability in
this case would not obstruct the FDA's work because
the agency had paid no more than passing attention to

the question whether to warn against IV-push administration of Phenergan. In addition, the court noted that
state law serves a compensatory function distinct from
federal regulation. Id., at 249-252.
The Vermont Supreme Court affirmed. It held that
the jury's verdict did not conflict with FDA's labeling
requirements for Phenergan because [Wyeth] could
have warned against IV-push administration without
prior FDA approval, and because federal labeling requirements create a floor, not a ceiling, for state regulation. 183 Vt. 76, ----, 944 A.2d 179, 184 (2006). In dissent, Chief Justice Reiber argued that the jury's verdict
conflicted with federal law because it was inconsistent
with the FDA's conclusion that intravenous administration of Phenergan was safe and effective.
The importance of the pre-emption issue, coupled
with the fact that the FDA has changed its position on
state tort law and now endorses the views expressed in
Chief Justice Reiber's dissent, persuaded us to grant
Wyeth's petition for certiorari. 552 U.S. ----, 128 S.Ct.
1118, 169 L.Ed.2d 845 (2008). The question presented
by the petition is whether the FDA's drug labeling judgments preempt state law product liability claims
premised on the theory that different labeling judgments
were necessary to make drugs reasonably safe for use.
Pet. for Cert. i.
II
Wyeth makes two separate pre-emption arguments:
first, that it would have been impossible for it to comply
with the state-law duty to modify Phenergan's labeling
without violating federal law, see Fidelity Fed. Sav. &
Loan Assn. v. de la Cuesta, 458 U.S. 141, 153, 102
S.Ct. 3014, 73 L.Ed.2d 664 (1982), and second, that recognition of Levine's state tort action creates an unacceptable obstacle to the accomplishment and execution
of the full purposes and objectives of Congress, *1194
Hines v. Davidowitz, 312 U.S. 52, 67, 61 S.Ct. 399, 85
L.Ed. 581 (1941), because it substitutes a lay jury's decision about drug labeling for the expert judgment of
the FDA. As a preface to our evaluation of these arguments, we identify two factual propositions decided during the trial court proceedings, emphasize two legal

Page 1731 of 3826
129 S.Ct. 1187

Page 8
(Cite as: 555 U.S. 555, 129 S.Ct. 1187)
principles that guide our analysis, and review the history of the controlling federal statute.
The trial court proceedings established that Levine's
injury would not have occurred if Phenergan's label had
included an adequate warning about the risks of the IVpush method of administering the drug. The record contains evidence that the physician assistant administered
a greater dose than the label prescribed, that she may
have inadvertently injected the drug into an artery rather
than a vein, and that she continued to inject the drug
after Levine complained of pain. Nevertheless, the jury
rejected Wyeth's argument that the clinician's conduct
was an intervening cause that absolved it of liability.
See App. 234 (jury verdict), 252-254. In finding Wyeth
negligent as well as strictly liable, the jury also determined that Levine's injury was foreseeable. That the inadequate label was both a but-for and proximate cause of
Levine's injury is supported by the record and no longer
FN2
challenged by Wyeth.
FN2. The dissent nonetheless suggests that
physician malpractice was the exclusive cause
of Levine's injury. See, e.g., post, at 1217
(opinion of ALITO, J.) ([I]t is unclear how a
stronger warning could have helped respondent); post, at 1225 - 1227 (suggesting that the
physician assistant's conduct was the sole cause
of the injury). The dissent's frustration with the
jury's verdict does not put the merits of Levine's tort claim before us, nor does it change
the question we must decide-whether federal
law pre-empts Levine's state-law claims.
The trial court proceedings further established that
the critical defect in Phenergan's label was the lack of
an adequate warning about the risks of IV-push administration. Levine also offered evidence that the IV-push
method should be contraindicated and that Phenergan
should never be administered intravenously, even by the
IV-drip method. Perhaps for this reason, the dissent incorrectly assumes that the state-law duty at issue is the
duty to contraindicate the IV-push method. See, e.g.,
post, at 1221, 1230 - 1231. But, as the Vermont Supreme Court explained, the jury verdict established only
that Phenergan's warning was insufficient. It did not
mandate a particular replacement warning, nor did it require contraindicating IV-push administration: There
may have been any number of ways for [Wyeth] to
strengthen the Phenergan warning without completely
eliminating IV-push administration. 183 Vt., at ----, n.
2, 944 A.2d, at 189, n. 2. We therefore need not decide
whether a state rule proscribing intravenous administration would be pre-empted. The narrower question
presented is whether federal law pre-empts Levine's
claim that Phenergan's label did not contain an adequate
warning about using the IV-push method of administration.
[1][2][3][4] Our answer to that question must be
guided by two cornerstones of our pre-emption jurisprudence. First, the purpose of Congress is the ultimate
touchstone in every pre-emption case. Medtronic, Inc.
v. Lohr, 518 U.S. 470, 485, 116 S.Ct. 2240, 135
L.Ed.2d 700 (1996) (internal quotation marks omitted);
see Retail Clerks v. Schermerhorn, 375 U.S. 96, 103, 84
S.Ct. 219, 11 L.Ed.2d 179 (1963). Second, [i]n all preemption cases, and particularly in those in which Congress has legislated ... in a field which the States have
traditionally occupied, ... we start with the assumption
that the historic police *1195 powers of the States were
not to be superseded by the Federal Act unless that was
the clear and manifest purpose of Congress. Lohr,
518 U.S., at 485, 116 S.Ct. 2240 (quoting Rice v. Santa
Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 91
FN3
L.Ed. 1447 (1947)).
FN3. Wyeth argues that the presumption
against pre-emption should not apply to this
case because the Federal Government has regulated drug labeling for more than a century.
That argument misunderstands the principle:
We rely on the presumption because respect for
the States as independent sovereigns in our
federal system leads us to assume that
Congress does not cavalierly pre-empt statelaw causes of action. Medtronic, Inc. v. Lohr,
518 U.S. 470, 485, 116 S.Ct. 2240, 135
L.Ed.2d 700 (1996). The presumption thus accounts for the historic presence of state law but
does not rely on the absence of federal regula-

Page 1732 of 3826
129 S.Ct. 1187

Page 9
(Cite as: 555 U.S. 555, 129 S.Ct. 1187)
tion.
For its part, the dissent argues that the presumption against pre-emption should not apply to claims of implied conflict pre-emption
at all, post, at 1228, but this Court has long
held to the contrary. See, e.g., California v.
ARC America Corp., 490 U.S. 93, 101-102,
109 S.Ct. 1661, 104 L.Ed.2d 86 (1989);
Hillsborough County v. Automated Medical
Laboratories, Inc., 471 U.S. 707, 716, 105
S.Ct. 2371, 85 L.Ed.2d 714 (1985); see also
Rush Prudential HMO, Inc. v. Moran, 536
U.S. 355, 387, 122 S.Ct. 2151, 153 L.Ed.2d
375 (2002). The dissent's reliance on Buckman Co. v. Plaintiffs' Legal Comm., 531 U.S.
341, 121 S.Ct. 1012, 148 L.Ed.2d 854 (2001)
, see post, at 1229, and n. 14, is especially
curious, as that case involved state-law
fraud-on-the-agency claims, and the Court
distinguished state regulation of health and
safety as matters to which the presumption
does apply. See 531 U.S., at 347-348, 121
S.Ct. 1012.
In order to identify the purpose of Congress, it is
appropriate to briefly review the history of federal regulation of drugs and drug labeling. In 1906, Congress enacted its first significant public health law, the Federal
Food and Drugs Act, ch. 3915, 34 Stat. 768. The Act,
which prohibited the manufacture or interstate shipment
of adulterated or misbranded drugs, supplemented the
protection for consumers already provided by state regulation and common-law liability. In the 1930's, Congress became increasingly concerned about unsafe
drugs and fraudulent marketing, and it enacted the Federal Food, Drug, and Cosmetic Act (FDCA), ch. 675, 52
Stat. 1040, as amended, 21 U.S.C. 301 et seq. The
Act's most substantial innovation was its provision for
premarket approval of new drugs. It required every
manufacturer to submit a new drug application, including reports of investigations and specimens of proposed
labeling, to the FDA for review. Until its application became effective, a manufacturer was prohibited from distributing a drug. The FDA could reject an application if
it determined that the drug was not safe for use as

labeled, though if the agency failed to act, an application became effective 60 days after the filing. FDCA,
505(c), 52 Stat. 1052.
In 1962, Congress amended the FDCA and shifted
the burden of proof from the FDA to the manufacturer.
Before 1962, the agency had to prove harm to keep a
drug out of the market, but the amendments required the
manufacturer to demonstrate that its drug was safe for
use under the conditions prescribed, recommended, or
suggested in the proposed labeling before it could distribute the drug. 102(d), 104(b), 76 Stat. 781, 784. In
addition, the amendments required the manufacturer to
prove the drug's effectiveness by introducing
substantial evidence that the drug will have the effect
it purports or is represented to have under the conditions
of use prescribed, recommended, or suggested in the
proposed labeling. 102(d), id., at 781.
As it enlarged the FDA's powers to protect the
public health and assure the safety, effectiveness, and
reliability of *1196 drugs, id., at 780, Congress took
care to preserve state law. The 1962 amendments added
a saving clause, indicating that a provision of state law
would only be invalidated upon a direct and positive
conflict with the FDCA. 202, id., at 793. Consistent
with that provision, state common-law suits continued
unabated despite ... FDA regulation. Riegel v.
Medtronic, Inc., 552 U.S. ----, ----, 128 S.Ct. 999, 1017,
169 L.Ed.2d 892 (2008) (GINSBURG, J., dissenting);
see ibid., n. 11 (collecting state cases). And when Congress enacted an express pre-emption provision for
medical devices in 1976, see 521, 90 Stat. 574
(codified at 21 U.S.C. 360k(a)), it declined to enact
such a provision for prescription drugs.
In 2007, after Levine's injury and lawsuit, Congress
again amended the FDCA. 121 Stat. 823. For the first
time, it granted the FDA statutory authority to require a
manufacturer to change its drug label based on safety
information that becomes available after a drug's initial
approval. 901(a), id., at 924-926. In doing so,
however, Congress did not enact a provision in the Senate bill that would have required the FDA to preapprove
all changes to drug labels. See S. 1082, 110th Cong., 1st

Page 1733 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Scanlon, Thomas
RE: Revised List (discussion draft)

Fri Apr 08 2011 15:42:11 EDT
Youre right. It should not take long at all for me to incorporate these changes though, so Ill send along
shortly. Sorry about the confusion and version control issues!
-K

Subject: RE: Revised List (discussion draft)
Hi,
Please call me: 2-8170
Thanks
T

To: Scanlon, Thomas; Glaser, Elizabeth (CFPB)
Subject: RE: Revised List (discussion draft)
Hi all,
Page 1763 of 3826
Attached is an updated version of this list to reflect the additions and changes from our conversation. I
put (b) (5)
next
week. Please let me know if you have any questionsthanks!
-K

To: Glaser, Elizabeth (CFPB); Lownds, Kevin (CFPB)
Subject: Revised List (discussion draft)
Hi,
Attached is the most recent Working Draft of the List for discussion with agency staff.
From Kellys helpful comments and suggestions this morning, I believe we still need to address the
following items (highlighted below). Of course, would be good to review this draft to determine whether
I correctly revised the draft to address the other items, too.
Once both of you are satisfied with this document, I am. Please feel free to send it along to our
counterparts at the other agencies.
Thanks for your great work, especially for us to get this moving along today.
Tom
Thomas E. Scanlon
tel. (202) 622-8170
(b) (5)
Page 1764 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Boomer Sooner Conference Room 501
(fydibohf23spdlt)/cn=recipients/cn=1801conferenceroom501>
Accepted: Elizabeth Glaser

Fri Apr 08 2011 15:36:59 EDT
Page 1777 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

I made you a one pager!

Fri Apr 08 2011 15:36:26 EDT
Nondepository Covered Persons Summary.doc
Attached is a one page summary of 1024. Hope its helpful.
-K
Kevin K. Lownds
Review Analyst
(202) 435-7399
Page 1778 of 3826
Nondepository Covered Persons Summary.doc (Attachment 1 of 1)
Nondepository Covered Persons Summary: 1024 of Dodd/Frank

Who is covered?
The main category of covered person under 1024 is someone who offers or provides origination,
brokerage, or servicing of loans secured by real estate for use by consumers primarily for personal,
family, or household purposes, or loan modification or foreclosure relief services in connection with such
loans. 1024(a)(1)(A). In addition, private education loan providers and payday lenders are covered by
1024(a)(1)(D)-(E).
Finally, a covered person can be someone who is a larger participant of a market for other consumer
financial products or servicesor who is engaging in conduct that poses risks to consumers with
regard to the offering or provision of consumer financial products or services, as defined by regulations
or determined through reasonable cause by the Bureau. 1024(a)(1)(B)-(C).
What authority does the Bureau have over these institutions?
The Bureaus powers under 1024 seem to fall into three categories: supervision, enforcement, and
rulemaking and examination. Those authorities are addressed in turn.
What are the Bureaus supervision powers?
The Bureau has the power to require reports and conduct examinations over nondepository institutions for
three purposes: (1) assessing compliance with the requirements of Federal consumer financial law; (2)
obtaining information about the activities and compliance systems or procedures of such person; and (3)
detecting and assessing risks to consumers and to markets for consumer financial products and services.
1024(b)(1)(A)-(C).
The Bureau is required to exercise its supervision authority in a manner that is based on the risks posed to
consumers in relevant product markets and geographical markets, and is also required to coordinate with
prudential regulators and State bank regulatory authorities. 1024(b)(2)-(3). The Bureau also can
require nondepository institutions to generate or retain records for the purposes of facilitating supervision,
and can prescribe rules to ensure that the financial institutions are legitimate entities,including
requiring background checks or appropriate financial requirements. 1024(b)(7).
What are the Bureaus enforcement powers?
The Bureau has exclusive authority to enforce Federal consumer financial law over these institutions, to
the extent that Federal law authorizes the Bureau and another federal agency to enforce the law with two
exceptions: the transfer provisions of 1061 and the authority of the Federal Trade Commission (FTC).
1024(c)(1).
As such, other federal agencies may recommend in writing that the Bureau initiate enforcement
proceedings. 1024(c)(2). With respect to the FTC, the Bureau is responsible for negotiating an
agreement for coordinating enforcement action, which must be reached no later than 6 months after the
designated transfer date. 1024(c)(3)(A)-(D).
What are the Bureaus rulemaking and examination powers?
Notwithstanding any other Federal law and except as provided in the transfer provisions of 1061, to the
extent that Federal law authorizes rulemaking and examination by the Bureau and another Federal
agency, the Bureau shall have exclusive authority to prescribe rules, issue guidance, conduct
examinations, require reports, or issue exemptionswith respect to a nondepository institution.
Page 1779 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

(fydibohf23spdlt)/cn=recipients/cn=1801conferenceroom501>
(fydibohf23spdlt)/cn=recipients/cn=1801conferenceroom501>;
Glaser, Elizabeth (CFPB) </o=ustreasury/ou=do/cn=do
resources/cn=user accounts/cn=standard users/cn=glasere>;
Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative
group (fydibohf23spdlt)/cn=recipients/cn=lowndsk>
Elizabeth Glaser
Fri Apr 08 2011 15:35:30 EDT
StartTime: Mon Apr 11 11:30:00 Eastern Daylight Time 2011

EndTime: Mon Apr 11 12:45:00 Eastern Daylight Time 2011
Location:
Invitees:
Recurring: No
ShowReminder: No
Accepted: Yes
AcceptedTime: Fri Apr 08 15:36:00 Eastern Daylight Time 2011
When: Monday, April 11, 2011 11:30 AM-12:45 PM (UTC-05:00) Eastern Time (US & Canada).
Where: Boomer Sooner Confernce Room-501
*~*~*~*~*~*~*~*~*~*
Page 1780 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:
Bailey, Veris
</o=ustreasury/ou=do/cn=recipients/cn=baileyv>
RE: Interns
Fri Apr 08 2011 13:43:17 EDT
Thanks.

To: Bailey, Veris
Subject: RE: Interns
Hi Veris,
I will be at Treasury until May 11, 2011. Thank you very much.
-Kevin
From: Bailey, Veris

To: Alumeyri, AnwarDisabled; Ferguson, McCarlas; Kaplan, Samantha; Kociuruba, Alysa; Lownds,
Kevin (CFPB); Lowry, Sean; McCorvey, Tiyi; Miralrio, Amanda; Reid, Otis; Tang, Ryan; Scott, Derek
Subject: Interns
Please let me know, how long will you be working here at Treasury
Thanks.
Veris
Page 1811 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:
Bailey, Veris
</o=ustreasury/ou=do/cn=recipients/cn=baileyv>
Alumeyri, AnwarDisabled
(fydibohf23spdlt)/cn=recipients/cn=alumeyria>; Ferguson,
McCarlas </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=fergusonmc>; Kaplan,
Samantha </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=kaplans>; Kociuruba, Alysa
(fydibohf23spdlt)/cn=recipients/cn=kociurubaa>; Lownds, Kevin
(fydibohf23spdlt)/cn=recipients/cn=lowndsk>; Lowry, Sean
(fydibohf23spdlt)/cn=recipients/cn=lowrys>; McCorvey, Tiyi
(fydibohf23spdlt)/cn=recipients/cn=mccorveyt>; Miralrio, Amanda
</o=ustreasury/ou=do/cn=recipients/cn=miralrioa>; Reid, Otis
(fydibohf23spdlt)/cn=recipients/cn=reido>; Tang, Ryan
(fydibohf23spdlt)/cn=recipients/cn=tangr>; Scott, Derek
(fydibohf23spdlt)/cn=recipients/cn=scottde>
Interns
Fri Apr 08 2011 13:42:16 EDT
Please let me know, how long will you be working here at Treasury
Thanks.
Veris
Page 1814 of 3826
From:
To:
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Subject:
Date:
Attachments:
Hart, Maria (CFPB)

Osborn, Meredith (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=osbornm>
Conference room 501 on 4/11
Fri Apr 08 2011 13:28:19 EDT
Hi Meredith,
You have 501 scheduled from 12-1 on Monday, April 11th . We have a very important meeting with the
FED and would like to use the room from 11:30-12:30. Is there any way we can use this room? Again
this meeting is to discuss the issues within the transfer process and several FED employees are
coming over. Due to the lack of conference room space, it is very hard to find a room. Thanks in
advance if you can help.
Maria
Maria Hart
Human Capital Implementation Team
202-435-7337 Office
(b) (6)
Page 1815 of 3826
From:
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Subject:
Date:
Attachments:
Cumpiano, Flavio (CFPB)

(fydibohf23spdlt)/cn=recipients/cn=cumpianof>
_DL_CFPB_AllHands
CRS Reports on Dodd-Frank and the CFPB

Fri Apr 08 2011 11:35:40 EDT
The two (2) reports below by the Congressional Research Service (CRS) on Title X of the Dodd-Frank
Act and the CFPB, and on Rulemaking and Authorities under the Dodd-Frank Act, may be of interest.
They provide useful primers on the bureau.
Thank you,
Flavio
Flavio Cumpiano
Congressional Liaison
Phone: 202-435-7044
CFPB Website: http://www.consumerfinance.gov/
CRS Report on The Dodd-Frank Wall Street Reform and Consumer Protection Act: Title X, The
Consumer Financial Protection Bureau (July 21, 2010):
http://assets.opencrs.com/rpts/R41338_20100721.pdf
CRS Report on Rulemaking and Authorities in The Dodd-Frank Wall Street Reform and Consumer
Protection Act (November 3, 2010):
Page 1845 of 3826
http://assets.opencrs.com/rpts/R41472_20101103.pdf
Page 1846 of 3826
From:

_DL_CFPB_AllHands
Adamske, Steven
To:
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Fri Apr 08 2011 11:33:27 EDT
Index

New York Post Warren wonder: Street foe may win consumer post by default
Reuters Gaps on U.S. risk council seen empowering Geithner
Daily Kos GOPs war on the rest of us: The consumer protection front
Page 1847 of 3826

Heritage Foundation Reforming Consumer Financial Protection Bureau Necessary to Protect
Consumers
VentureBeat How to build meaningful financial services companies
Housing Wire Panel: Mortgage servicers should prep for Dodd-Frank fair lending regs
New York Review of Books The Wall Street Leviathan
Wall Street Journal Obama Administration Faces a Host of Senior Finance Openings to Fill
Washington Post The Financial Stability Oversight Council: A deficit killer?
Reuters Banks signing foreclosure deals with US regulators
Housing Wire OCC to announce foreclosure settlement early next week
Housing Wire AG mortgage servicer investigation proceeding despite proposed settlement
Consumer Credit
MSNBC Red Tape Chronicles Lawsuit: Credit score sites mislead consumers
The Nation Bad Credit: How Payday Lenders Evade Regulation
New York Times (blog) Citis New Policy May Mean Fewer Bounced Checks
American Banker FDIC Softens Its Position on Overdraft Program Guidance
American Banker Frank Optimistic on Bill to Delay Interchange Fee Limits
American Banker Use of Prepaid for Government Benefits Expands
USA Today New credit card offers up the ante for globetrotters
Reuters H&R Block loses refund loan clients, to take Q4 charge
Wall Street Journal (blog) Credit Union to Advance Pay for Military Customers
Housing
Bloomberg Bank of America Asks Court to Throw Out Mortgage Modification Litigation
American Banker HUD Reverses on Reverse Mortgages
New York Times (blog) Good News for Spouses of Reverse Mortgage Holders
Housing Wire Washington AG says some trustees may break foreclosure laws
Page 1848 of 3826
Other
Wall Street Journal Dodd-Frank Foes Adopt New Tactics
New York Post

Warren wonder: Street foe may win consumer post by default
April 8, 2011
By Mark DeCambre
Look who's shooting to the top of the list of likely nominees to head Washington's new consumer
financial watchdog agency -- Elizabeth Warren.
Warren, who was shot down for the position last year after a lawmaker called her "unconfirmable" and
who has run into a wave of resistance from Wall Street bankers, is nonetheless re-emerging as a
leading candidate to be nominated to lead the Consumer Financial Protection Bureau, The Post has
learned.
In September, President Obama put her in charge of helping create the bureau as a special adviser but
stopped short of naming her as the official director because of the politically contentious confirmation
process in the Senate.
After months of ginning up support, Warren remains eager to officially lead the CFPB and is hoping to
get the nod in the coming weeks. She needs a 60-vote majority in order for her nomination to pass the
Senate or a special appointment by the president.
At this point, Warren may end up as the default director after at least five people approached to run the
CFPB turned down the job.
Just yesterday, former Michigan Gov. Jennifer Granholm shot down reports that she was in the running
for the position and endorsed Warren.
Page 1849 of 3826
A number of other candidates, including former assistant Treasury Secretary and University of Michigan
law professor Michael Barr, Massachusetts Attorney General Martha Coakley, Iowa Attorney General
Tom Miller, Rep. Melissa Bean (D-Ill.), have declined to be considered for the job.
Sources also suggested that another potential candidate, Sarah Bloom Raskin, who was appointed to
the Federal Reserve's Board of Governors in October, appears unlikely to make a switch.
Another factor working in Warren's favor is time.
Without a director in place by July 21, the CFPB won't be able to wield authority over many non-bank
entities, including mortgage brokers and non-bank affiliated mortgage servicers.
If the 61-year-old Warren gets the nomination, it would mark a major comeback for the law professor
who just last summer was deemed "unconfirmable" by then-Sen. Chris Dodd.
She was later named as assistant to President Obama and a special adviser to the Treasury on the
CFPB -- a move that many viewed as backdoor nomination.
Over the past several months, Warren has been working to build bridges among bankers, policy makers
and lobbyists in an effort to dispel the perception she is a hard-charging opponent who is quick to pick a
fight.
Big banks have been some of her harshest critics, and bank officials and politicians alike took her to
task in March for what they perceived as meddling in settlement talks over the national foreclosure
fiasco.
Back to Top
Page 1850 of 3826
Reuters
Gaps on U.S. risk council seen empowering Geithner
April 8, 2011
By Margaret Chadbourn and Rachelle Younglai
A lack of leadership at major financial supervisors is consolidating Treasury Secretary Timothy

Geithner's power to regulate Wall Street.
Sheila Bair, the outspoken banking regulator who has regularly clashed with Geithner, is finishing up
her term, and the top spot on the industry-detested consumer protection bureau has yet to be filled.
The leadership vacuum could give the Treasury secretary unprecedented authority over the shape of
financial regulation for months if the Obama administration is not able to put forth nominees who can
win support from the Senate.
Geithner already saw his regulatory power grow after the Dodd-Frank Wall Street reform bill broadened
Treasury's mandate to supervise and tinker with financial markets.
His heft is being felt at the Financial Stability Oversight Council, the group of regulators charged with
stopping threats to the financial system and set up to give major financial supervisors a voice at the
table.
As chairman of the council, Geithner holds considerable sway in drafting some of the most contentious
parts of Dodd-Frank.
"Dodd-Frank is still in the process of being interpreted, and one of the unintended consequences is the
Treasury secretary has become more powerful," said Michael Holland, chairman of Holland & Co, which
oversees $4 billion in assets. "Geithner is at a very pivotal point."
The U.S. risk council will soon start labelling certain non-banks, such as hedge funds and insurers, as
"systemically important," thus forcing them under the purview of the Federal Reserve .
But two of the risk council's 10 voting positions are still vacant and Bair's term as chairman of the
Federal Deposit Insurance Corp ends in June, potentially giving Geithner more influence on key
Page 1851 of 3826
regulatory decisions.
Geithner has knocked heads with regulators in the past. When he was the president of the Federal
Reserve Bank of New York, Geithner was concerned that Bair placed higher importance on keeping the
FDIC's insurance chest safe versus protecting the entire financial system during the 2007-09 credit
crisis.
Some industries are already concerned that the balance of power is out of whack on the council.
"With respect to insurance, the rule-making process should be put on hold until the voting member
position is filled," said Blain Rethmeier, spokesman for the American Insurance Association, which
represents about 300 property-casualty insurers such as Hartford Financial Services Group.
NOMINEES
With Congress focused on a head-spinning budget debate, the White House has failed to secure
nominations it has already pitched. There's a backlog of key positions that need Senate approval. And
even some of the least controversial nominees such as spots on the Council of Economic Advisers
have yet to be teed up for a vote.
That does not bode well for the White House , which is searching for a viable candidate to head the
Consumer Financial Protection Bureau, whose power Republicans are trying to restrain even before it is
up and running.
The bureau is being set up by Elizabeth Warren, a lightning rod for criticism from Republicans and from
those who say her role as adviser to the Treasury secretary and as assistant to Obama has created a
partial regulator.
With Treasury's broadened mandate over financial markets, Geithner, for example, has the authority to
decide whether the trillions of dollars foreign exchange swaps and forwards market should be
regulated. He has not issued a decision but has said the foreign exchange derivatives market does not
present the same sort of risk as other areas.
Geithner also has a hand in establishing two new all-encompassing federal bureaus: The Office of
Financial Research, which will be able to subpoena banks for information, and the consumer bureau,
which will set rules for all types of consumer products such as mortgages and credit cards.
Page 1852 of 3826
Some observers say Geithner's power will not run amok.
"This is never going to be just the 'Tim show,'" said Douglas Elliott, an economic studies fellow at the
Brookings Institution and a former J.P Morgan investment banker.
But the changes are creating a dramatic new power structure filled with unknowns.
"The Treasury has gone from an agency that had very little regulatory control over financial institutions
to one that has more regulatory power and authority as a result of Dodd-Frank," said Chip MacDonald,
a banking attorney with Jones Day.
"The jury is still out on how Treasury will effectively regulate. It is an ongoing process to see how they
will adapt to these changes."
Back to Top
Daily Kos
GOPs war on the rest of us: The consumer protection front
April 7, 2011
By Joan McCarter
If the GOP could be more baldly pro-Wall Street, pro-Chamber of Commerce, pro-Koch brothers it's
hard to imagine how. They're the party of, by, and for the privileged and are making no effort
whatsoever to conceal that now. They don't even want you to have more understandable agreements
with your bank for your credit card or your mortgage. They want you to be at the mercy of their wellheeled cronies. How else to explain their unrelenting war on the relatively toothless Consumer Financial
Protection Bureau?
Page 1853 of 3826
WASHINGTON (CNNMoney) -- House Republicans on Wednesday detailed a new barrage of

legislative measures they plan to pursue that would dilute, delay and curtail powers of the new
Consumer Financial Protection Bureau (CFPB).
"This is just the beginning of what will be an ongoing dialogue of how to better reform the CFPB," said
Rep. Shelley Moore Capito, a West Virginia Republican during a hearing on Wednesday. "The current
structure simply puts too much power in the hands of one individual and does not allow for sufficient
oversight of the regulations put forth by the bureau."
....
Among the latest legislative efforts, Republicans say they want to:
Replace the job of director of the bureau with a five-member committee.
Make it easier to overturn and veto consumer bureau rules.
Prevent the bureau from flexing any new powers until the Senate confirms a director.
Stop consumer bureau financial examiners from going on ride-along banking examinations with
other regulatory agencies until the bureau is up and running.
It must be bemusing for Elizabeth Warren to strike such terror in the hearts of so many Republicans,
who continue to insist that it's really not about her. "'This is not about Elizabeth Warren, it's about giving
one person total, unbridled authority,' said Bachus, an Alabama Republican." It's about her as an
effective leader, which they absolutely do not want for the CFPB, because they are fundamentally
opposed to consumer protection.
They want you to be ripped off, and will fight to the death for the right of Wall Street to screw you.
Back to Top
The Heritage Foundation
Page 1854 of 3826
Reforming Consumer Financial Protection Bureau Necessary to Protect Consumers

April 7, 2011
By Diane Katz
Creation of the Consumer Financial Protection Bureau (CFPB) ranks among the most contentious
provisions of the vast DoddFrank financial regulation statute.[1] Largely unaccountable to Congress
and imbued with sweeping powers, the agency is the epitome of regulatory excess.
Legislation introduced last month by Representative Spencer Bachus (RAL) seeks to tame the CFPB
by replacing its directorship with a bipartisan commission.[2] Although well-intended, the proposal falls
short of the reforms necessary to rein in the bureau.
Running the CFPB
Under current law, the CFPB is to be run by a single director, nominated by the President and
confirmed by the Senate, with a term of five years.[3] (The director may be removed by the President
for cause.) While more than 100 employees have been hired during the past five months,[4] the White
House has not formally named a director. Instead, President Obama appointed Harvard law professor
Elizabeth Warren to manage start-up of the bureau as his special advisor (read czar) given the long
odds of her winning confirmation.[5]
Whether Warren or someone else takes the helm when the agency officially opens on July 21, the
director will exert enormous power: consolidated and expanded regulatory authority over credit cards,
mortgages, and a host of other consumer financial products previously wielded by seven federal
agencies.[6]
In place of a lone director, H.R.1121 would establish a five-member commission, also nominated by the
President and confirmed by the Senate, for staggered five-year terms.[7] No more than three
commissioners could represent a single political party, and a commission chairman would be appointed
by the President. A similar structure exists at the Federal Trade Commission, the Federal Deposit
Insurance Corporation, and the Securities and Exchange Commission.
Introducing the bill on March 16, Representative Spencer Bachus (RAL), chairman of the House
Financial Services Committee, characterized the bureau as likely the most powerful agency ever
created.[8] Consequently, the change in management is necessary, he said, to ensure that a nonpartisan, balanced approach to consumer protection prevails.
A bipartisan commission may seem less autocratic than a single director vested with bureau control.
Page 1855 of 3826
Arguably, group decision making could slow the regulatory gears, as could partisan bickering. But the
rulemaking process is not the fundamental problem with the CFPB, and tinkering with organizational
structure will not reduce the harm of regulatory overkill to consumers and the economy. The real
problem is the bureaus lack of accountability and the virtually unconstrained power bestowed upon it
under the DoddFrank statute.
CFPB Set Apart with Little Accountability
Because the bureau is ensconced within the Federal Reserve, its budget is not subject to congressional
control. Instead, CFPB funding is set by law at a fixed percentage of the Feds 2009 operating budget
increasing from 10 percent in 2011 to 12 percent in 2013.[9] (The bureau may also request up to $200
million in additional funds from Congress.) This budgetary independence limits congressional oversight
of the agency. The CFPBs status within the Fed also effectively precludes presidential oversight, while
the Federal Reserve is statutorily prohibited from intervening in bureau affairs.[10]
The Bureaus accountability is also minimized by the vague language of its statutory mandate. It is
empowered to punish unfair, deceptive and abusive business practices. While unfair and deceptive
have been defined in other regulatory contexts, the term abusive is largely undefined, granting the
CFPB officials inordinate discretion.
Warren and other bureau proponents deny any lack of accountability,[11] claiming the CFPB can be
overruled by the Financial Stability Oversight Council, composed of representatives from eight other
financial regulatory agencies.[12] However, the councils oversight authority is narrow, confined by
statute to cases in which CFPB actions would endanger the safety and soundness of the United States
banking system or the stability of the financial system of the United States.[13] Any veto of bureau
action would also require the approval of two-thirds of the councils 10-member board.
Excessive Regulatory Reach
Whether headed by a director or a commission, the bureaus regulatory reach will remain dangerously
uninhibited. The statutory definition of financial products or services within bureau purview is as vague
as it is broad: (A)ny financial product or service that isoffered or provided for use by consumers
primarily for personal, family, or household purposesand is delivered, offered, or provided in
connection with a consumer financial product or service referred to [as above].[14]
As cited in the DoddFrank Act, these products and services include, but are not limited to:
Extending credit and servicing loans, including acquiring, purchasing, selling, brokering, or other
extensions of credit;
Page 1856 of 3826

Extending or brokering leases of personal or real property that are the functional equivalent of
purchase finance arrangements;
Real estate settlement services;
Deposit-taking activities, transmitting or exchanging funds, or otherwise acting as a custodian of

funds or any financial instrument for use by or on behalf of a consumer;
Selling, providing, or issuing stored value or payment instruments;
Providing check cashing, check collection, or check guaranty services;
Providing payments or other financial data processing products or services to a consumer by any
technological means, including processing or storing financial or banking data for any payment
instrument, or through any payments systems or network used for processing payments data, including
payments made through an online banking system or mobile telecommunications network;
Providing financial advisory services to consumers on individual financial matters or relating to

proprietary financial products or services, including: providing credit counseling to any consumer and to
assist a consumer with debt management or debt settlement, modifying the terms of any extension of
credit, or avoiding foreclosure;
Collecting, analyzing, maintaining, or providing consumer report information or other account

information, including information relating to the credit history of consumers, used or expected to be
used in connection with any decision regarding the offering or provision of a consumer financial product
or service;
Collecting debt related to any consumer financial product or service; and
Such other financial product or service as may be defined by the Bureau, by regulation if the
Bureau finds that such financial product or service is entered into or conducted as a subterfuge or with
a purpose to evade any Federal consumer financial law, or permissible for a bank or for a financial
holding company to offer or to provide under any provision of a Federal law or regulation applicable to a
bank or a financial holding company, and has, or likely will have, a material impact on consumers.
Urgent Need for Repeal or Reform
Change is obviously needed, and eliminating the bureau outright would be the best option. Short of
repealing Title X of the DoddFrank financial regulation statute, the following reforms are urgent:
1. Abolish the bureaus current funding mechanism (a fixed percentage of the Federal Reserves
operating budget) and subject it instead to congressional control. Although some financial regulatory
agencies, such as the Federal Deposit Insurance Corporation and the Fed itself, also fall outside the
congressional appropriations process, they are the exceptions rather than the rule among government
agencies. An exception is typically justified by the sensitive nature of the agencys work in ensuring the
safety and soundness of financial institutions. The CFPB, however, does not share that mission and
instead is charged with a broad policymaking role. There is no justification for allowing the agency to
escape congressional oversight.
Page 1857 of 3826
2. Strike the undefined term abusive from the list of practices under CFPB purview. There is no
regulatory precedent or jurisprudence that interprets the term in the context of consumer financial
services, and the bureau should not have discretion to define its own powers.
3. The bureau should be explicitly required to apply definitions of unfair and deceptive practices in a
manner consistent with regulatory convention and case law. The agency is widely expected to adopt
such an interpretation, but that should be made certain. Otherwise, regulatory uncertainty will inhibit the
availability of financial products and services.
Demanding Lawmakers Attention
Although the Bachus bill would not impose meaningful restraint or accountability on the Consumer
Financial Protection Bureau, there is a measure of comfort in the fact that it has drawn bipartisan
support. At least lawmakers on both sides of the aisle evidently are concerned that the CFPB as
currently fashioned could unleash unwarranted regulations that would raise the costs of financial
products and services and make them harder to obtain. Doing so would further stymie economic growth
and job creation. Representative Bachus would do well to build on this support for more extensive
reforms.
Diane Katz is Research Fellow in Regulatory Policy in the Thomas A. Roe Institute for Economic Policy
Studies at The Heritage Foundation.
Back to Top
VentureBeat
How to build meaningful financial services companies
April 8, 2011
By Rod Ebrahimi
Even though financial services is among the most profitable industries in the world, the existing
Page 1858 of 3826
regulatory systems, technical infrastructure and deep-rooted incumbents make it difficult for new
entrants to innovate.
Whether you are moving money in new ways like mobile payments company OboPay or disrupting long
-standing business models like peer-to-peer lender Lending Club, there are technical and regulatory
roadblocks. Unlike the open APIs supporting consumer Internet products like Facebook, financial
services infrastructure isnt easy to build upon or extend.
Fortunately, though, there is a lot of excitement surrounding new opportunities within financial services.
So what does the future of money look like and what is driving innovation?
The changing regulatory environment will continue to be challenging to navigate.
We recently had the opportunity to meet with the new Consumer Financial Protection Bureau to learn
more about whats coming with respect to legal provisions. This government agency will initially focus
on predatory marketing tactics that mislead consumers into signing up or paying for services that dont
deliver on their promises. The team is working with the Google Adwords Team for example, to prevent
specific companies from advertising directly to consumers and instead delivering informative news and
information. Financial services companies must work hard to protect their companies and customers
interests. Early innovators often incur serious setbacks before making a new model work. Visionary
companies, like peer-to-peer lender Lending Club, spend millions to meet the demands of regulators
before launching.
Back to Top
Page 1859 of 3826
Housing Wire
Panel: Mortgage servicers should prep for Dodd-Frank fair lending regs
April 7, 2011
By Kerry Curry
Fair lending issues will apply "on the back end" to mortgage servicers under the Dodd-Frank Act, so
they need to get prepared, a panel of attorneys said Thursday.
Dodd-Frank describes fair lending as "fair, equitable and nondiscriminatory access to credit for
consumers," and that could be applied to access to loan modifications by servicers, said Patrice
Alexander Ficklin, counsel with Relman, Dane & Colfax.
Ficklin spoke on a panel Thursday during a mortgage servicing conference in Dallas hosted by
SourceMedia.
"It remains to be seen how that might be applied to your industry," she said.
Dodd-Frank's Consumer Finance Protection Bureau, which goes live on July 21, oversees two aspects
of fair lending: the Equal Credit Opportunity Act and the Home Mortgage Disclosure Act. The Housing
and Urban Development Department, however, will retain authority over the Fair Housing Act, and other
federal regulators will retain some enforcement authority, she said.
"It's really going to be an alphabet soup" in terms of fair lending oversight, Ficklin said.
"Servicers should start looking at their own procedures, policies and data so that you are ready in case
you've got a state AG coming after you, in case you've got the CFPB" or a another litigator coming after
you, she said.
Servicers should look to see, for example, if there are any disparities in approval of loan modifications
for racial or ethnic minorities in comparison to whites, Ficklin said. They can use geocoding of census
tracks to analyze their data. Servicers will also want to look to see whether certain ethnic groups are
getting larger interest rate reductions than others, she said.
Kirsten Thomas, vice president and assistant general counsel with American Home Mortgage Servicing,
said the servicer has already started gathering data in preparation for the changes under
Page 1860 of 3826
Dodd-Frank. One place it is making changes is to reduce the discretion customer service agents use in
applying fees to borrowers.
Mortgage servicers should consider a more "hardline" policy on fees as a preventative measure against
any allegations of disparate application, panelists said.
Lisa Crowley DeLessio, a partner with Hudson Cook, said servicers also need to become aware of a
host of new notice requirements and reduced timelines for those notices. Servicers, for example, will
need to notify borrowers seven months in advance of an interest rate reset on hybrid adjustable-rate
mortgages under the Truth in Lending Act, she said.
Servicers will also have to acknowledge the receipt of a written request from a borrower within five
days, instead of the current 20. The time to respond to the request drops from 60 days to 30, but
includes an additional 15-day window to gather additional data if the servicer lets the borrower know
that there will be a delay in responding.
Requirements on force-placed insurance also change in respect to providing notification and

reimbursements to borrowers, DeLessio said.
Notification changes will take effect on Jan. 1, 2012, if no new regulations are issued, or on Jan. 1,
2013, if new regulations are issued, the panel said.
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New York Review of Books

The Wall Street Leviathan
April 28, 2011
By Jeff Madrick
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The Financial Crisis Inquiry Report: Final Report of the National Commission on the Causes of the
Financial and Economic Crisis in the United States
PublicAffairs, 545 pp., $14.99 (paper)
Inside Job
a film directed by Charles Ferguson
Regulating Wall Street: The Dodd-Frank Act and the New Architecture of Global Finance
edited by Viral V. Acharya, Thomas F. Cooley, Matthew P. Richardson, and Ingo Walter
Wiley, 573 pp., $49.95
Reforming US Financial Markets: Reflections Before and Beyond Dodd-Frank

by Randall S. Kroszner and Robert J. Shiller, edited and with an introduction by Benjamin M. Friedman
MIT Press, 152 pp., $19.95
With its revealing accounts of the Wall Street practices that led to the recession of 2008 and 2009, the
recent report of the Financial Crisis Inquiry Commission (FCIC) is the most comprehensive indictment
of the American financial failure that has yet been made. During two years of investigations, the
commission accumulated evidence of many hundreds of irresponsible, self-serving, and unethical
practices by Wall Street bankers and systematic tolerance of them by regulators.
Written by the six members appointed by congressional Democrats, the FCIC report concludes, The
crisis was the result of human action and inaction, not of Mother Nature or computer models gone
haywire. Many readers would think the conclusion obvious. But Wall Street professionals repeatedly
claimed that similar crises occurred frequently in the history of modern capitalism, that they are merely
the price paid for a dynamic and innovative economic system, and that individuals were not to blame.
They thus minimized their own responsibility for the events and cast doubt on the need for significantly
more intense regulation of their activities. The FCIC majority dismisses such arguments.
Can we then infer that future crises may be avoided by intelligent and unbiased financial regulators and
a chastened Wall Street? A 2,300-page set of regulationsknown as the Dodd-Frank Act after its
congressional sponsors, Senator Chris Dodd and Representative Barney Frankwas passed last year
to accomplish just that. In a television interview with Charlie Rose this March, Frank said he got better
than 90 percent of what he wanted. The act has some bite. It proposes ways to deal with many of the
practices that contributed to the crisis, including inadequate capital requirements, excessive Wall Street
compensation, and damaging conflicts of interest in credit ratings agencies that readily assigned their
highest ratings to risky debt. It tries to regulate trading of speculative securities like derivatives, which
enabled bankers to wage huge bets with little capital on the movement of securities prices.
Page 1862 of 3826
Under Dodd-Frank, a new oversight board, composed of members of regulatory agencies led by the
Federal Reserve, will now be charged with assessing the level of so-called systemic risk of major
financial institutions and imposing stricter capital rules or even shutting institutions down if they are
deemed to put the financial system at riskthat is, if their failure might bring down many other
institutions with them and endanger the American economy. Now there will be regulation not only of
traditional commercial banks, which always fell under the purview of the Federal Reserve, but also
investment banks, money market funds, and perhaps even hedge funds, which had been hardly
regulated at all.
The Consumer Financial Protection Bureau has also been established inside the Federal Reserve to
write new requirements for mortgages, consumer loans, and the other consumer credit products that
were so badly abused. Of particular concern, people with poor credit and low incomes were sold socalled subprime mortgages that were deceptively cheap at the outset, sometimes requiring no down
payments, but whose annual interest charges skyrocketed in later years. The availability of mortgage
finance drove housing prices ever higher, and when they collapsed, beginning in roughly 2006, the
growing amount of bad debt that resulted caused a collapse of Wall Street and then the global
economy.
But the Dodd-Frank Act has largely pushed responsibility for writing and implementing the new rules
onto existing regulators, including the Federal Reserve, the Securities and Exchange Commission, the
Commodities Futures Trading Commission, the Federal Deposit Insurance Corporation, and the Office
of the Comptroller of the Currency. This will likely prove a damaging flaw. These regulators are by and
large the same agencies that tolerated the excessively risky behavior in the first place. Even if they
write effective rules they will face pressure from Wall Street lobbyists and mostly Republican legislators
to soften restrictions and eliminate some of the critical ones. If the restrictions remain intact, which is
likely in view of the Democratic majority in the Senate, the question remains whether the regulators will
enforce them vigorously once the economy recovers and the crisis fades in memory. Several agencies
have already missed the deadlines to write new rules. Some are worried that the Consumer Financial
Protection Bureau will be neutralized by Congress. Wall Street spent $2.7 billion on lobbying between
1999 and 2008 and is lobbying vigorously again.
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Wall Street Journal
Page 1863 of 3826
Obama Administration Faces a Host of Senior Finance Openings to Fill

April 8, 2011
By Victoria McGrane
Democratic Rep. Barney Frank of Massachusetts said Thursday he expects the White House to
nominate the Federal Deposit Insurance Corp.'s No. 2 official, Martin Gruenberg, to succeed Sheila Bair
as chairman of the agency when her term expires at the end of June.
The White House declined to comment on Mr. Frank's remarks. But by tapping Mr. Gruenberg,
President Barack Obama would fill one vacancy and create another among many openings at top
government financial posts.
More than a dozen senior positions spread across seven regulatory bodies and the Treasury
Department lack permanent occupants. Among them are the post of insurance expert at the Financial
Stability Oversight Council, two openings on the Federal Reserve Board, the director of the new
Consumer Financial Protection Bureau, and five Treasury posts.
These vacancies exist as regulators make their way through the crucial first year of implementing the
biggest financial-overhaul legislation since the Great Depression, crafting rules that will have farreaching effects on consumers, investors, businesses and the economy.
The list of open seats is troubling many with a stake in the financial overhaul. Finance-industry
executives have started to press the White House privately to put names forward. It can take months for
a nominee to get through the Senate confirmation process even when the chamber isn't as bitterly
divided as it is now. The closer Washington gets to the 2012 campaign season, the more likely those
jobs will stay vacant until after the election.
All these leadership posts require Senate confirmation. In most of these cases, Mr. Obama hasn't yet
made a nomination. Several slots are occupied by individuals serving on an interim or acting basis,
without Senate confirmation. This basis generally conveys less influence internally and less respect
from Congress, insiders say. Acting heads tend to be very cautious.
"The agencies need to have appointees in them who are confirmed to function at peak level," said
Camden Fine, president and chief executive of the Independent Community Bankers of America. The
appointee is the one who sets "top policy direction and which way the culture of an agency is going to
go."
Mr. Gruenberg, a Democrat, has been the FDIC's vice chairman since 2005. He served briefly as acting
Page 1864 of 3826
chairman before Ms. Bair, a Republican, took the helm in 2006.
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Washington Post
The Financial Stability Oversight Council: A deficit killer?
April 7, 2011
By Neel Kashkari
The Dodd-Frank reform legislation had multiple goals: among them, preventing a repeat of the financial
crisis by closing regulatory gaps and, through the Financial Stability Oversight Council (FSOC) it
created, identifying and addressing systemic risks before they damage our economy.
Spotting the next big issue is critical but it is both extremely hard to do in itself and, even when
threats are identified, it can be difficult to achieve necessary change.
Consider, for example, the nations debt problem. Its widely known that the United States has large
deficits and spiraling entitlement obligations and is spending at an unsustainable rate. Yet many in
Washington continue to kick the can down the road, and the discussion focuses on short-term spending
deals merely to avoid a government shutdown. Meanwhile, growing federal deficits threaten price
stability, the dollar and, ultimately, economic competitiveness.
Despite the real risk of fiscal insolvency, Republicans and Democrats have been competing over who
can cut more non-defense discretionary spending in an exercise of messaging rather than substance.
With his new budget proposal, Rep. Paul Ryan appears to be one of the few leaders willing to risk their
careers by tackling entitlement and defense spending, political third rails that must be addressed.
In such an environment, can the panel created by Dodd-Frank even play a role in addressing systemic
risks?
Page 1865 of 3826
The FSOC is chaired by the Treasury secretary, and its 15 members 10 voting and five nonvoting
include an insurance expert and the heads of the major independent federal regulators: the Federal
Reserve, the Securities and Exchange Commission, the Comptroller of the Currency, the Federal
Deposit Insurance Corp., the Commodity Futures Trading Commission and the Consumer Financial
Protection Bureau.
Over the past century Congress has recognized the importance of keeping financial regulators
independent of politics. Most agree that election results and polls shouldnt affect, say, the Federal
Reserves stance on monetary policy or the FDICs assessment of a banks safety and soundness.
Regulators have fought hard to strengthen their independence.
So the FSOC already has a conflict. The Treasury secretary is not an independent regulator: He is a
member of the presidents Cabinet and the chief economic spokesman for the executive branch. In the
Banking Act of 1935, Congress decided that the Federal Reserves independence needed to be
strengthened and restructured its governance; actions included removing the Treasury secretary from
the board, on which he had served as chairman. As a former regulator, Treasury Secretary Tim
Geithner understands the importance of regulatory independence. As he establishes the nascent
council as the watchdog for U.S. financial stability, Geithner has an opportunity to institutionalize its
independence from administration politics by enabling the FSOC to tackle important issues even if they
are politically inconvenient for the president. Each member of the FSOC should be empowered to
identify and direct the staff to analyze potential systemic risks.
An FSOC that is independent of political considerations could provide important cover for frightened
politicians by dispassionately assessing and reporting the risks we face from out-of-control deficit
spending. Regarding the deficit, the council could do this without recommending a specific budget
proposal, neither endorsing nor challenging the presidents budget. And given the councils origin,
lawmakers should pay attention to its assessments and recommendations.
The FSOC should immediately analyze and report to the American people the systemic implications of
out-of-control deficit spending and the economic consequences of a U.S. default. Such a scenario is the
largest threat to U.S. financial and economic stability, and the FSOC should call on the legislative and
executive branches to act urgently certainly before the next election. Congress passed the extremely
unpopular TARP legislation in the fall of 2008 just two weeks after then-Treasury Secretary Henry
Paulson and Fed Chairman Ben Bernanke explained the risks of a financial collapse and called on
Congress to act. The FSOC could be a catalyst for action on the deficit.
Geithner has an opportunity to establish the FSOCs independence and scope and, in doing so,
increase its effectiveness as a systemic risk regulator. Defining the systemic risks from growing deficits
could bolster public support for making hard fiscal choices while strengthening the FSOCs credibility as
a serious, independent watchdog for U.S. economic stability.
The writer, a managing director of the investment management firm PIMCO, served as an assistant
Treasury secretary during the George W. Bush administration. He led the Office of Financial Stability
Page 1866 of 3826
and ran the Troubled Assets Relief Program until May 2009.
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Reuters
Banks signing foreclosure deals with US regulators
April 7, 2011
By Dave Clarke
* Announcement of final deal could come in next few days
* State AGs still negotiating with banks
Most of the 14 lenders involved in a probe over mortgage servicing abuses have signed agreements
with U.S. bank regulators to clean up how they deal with troubled borrowers, according to a source with
knowledge of the agreements.
Banking regulators still have to sign the agreements and an announcement that a final deal has been
reached could be made in the next few days.
The regulators involved in the agreements with lenders, which include some of the largest U.S. banks,
are the Office of the Comptroller of the Currency, the Federal Reserve and the Office of Thrift
Supervision.
A group of 50 state attorneys general and about a dozen federal agencies are probing bank mortgage
practices that came to light last year, including the use of "robo-signers" to sign hundreds of unread
foreclosure documents a day.
Page 1867 of 3826
On Feb. 17 John Walsh, acting head of the Office of the Comptroller of the Currency, told the Senate
Banking Committee that banking regulators were investigating the servicing practices at 14 lenders
including Bank of America (BAC.N), Wells Fargo (WFC.N) and JP Morgan Chase (JPM.N).
The agreement includes offering restitution to borrowers who were wrongly foreclosed upon and this
process would be reviewed by an outside auditor, according to the source who asked not to be named
because the negotiations are ongoing.
Banking regulators have not reached a decision on financial penalties the lenders may have to pay.
The state attorneys general along with the Justice Department, the Department of Housing and Urban
Development, the Federal Trade Commission, and Treasury officials are separately negotiating with
banks over mortgage servicing abuses.
Those negotiations have gone more slowly as the states and some federal agencies pursue heftier
fines, in the range of $20 billion, and a more dramatic overhaul of mortgage servicing standards,
including reducing the principal of some loans in an effort to keep borrowers in their homes.
All the agencies involved had said earlier this year that they wanted to announce a deal with the lenders
at the same time but the banking regulators are now moving ahead with their piece while the other
discussions continue.
On March 24 when Reuters reported a deal with banking regulators was near Iowa Attorney General
Tom Miller, who is heading up the states' probe, issued a statement saying it was "unfortunate" that
banking agencies were pursuing a settlement on their own but that it would not derail the AG's
negotiations.
The states are not united on what settlement they should seek with banks. Some Republican AGs have
complained a proposal sent to banks last month goes too far while Democratic AGs like New York's Eric
Schneiderman have warned a deal should not preclude states from individually pursuing actions against
lenders.
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Page 1868 of 3826
Housing Wire
OCC to announce foreclosure settlement early next week
April 7, 2011
By Jon Prior
The Office of the Comptroller of the Currency will announce a settlement it struck with major mortgage
servicers over recent foreclosure problems early next week, a spokesman said.
Reports vary widely over what the settlement will entail from multi-billion dollar fines to forced principal
reduction and stricter emphasis on pursuing modifications.
The OCC has pursued its own settlement outside of the national investigation between the 50 state
attorneys general and a coalition of other federal agencies, namely the Treasury Department, the
Department of Housing and Urban Development and the Federal Trade Commission.
A spokesman for the lead investigator in for the AGs, Iowa AG Tom Miller, said Thursday that their
separate mortgage servicer settlement would likely take months of negotiations.
All of the agencies jumped on the news that major servicers were processing foreclosures with faulty
affidavits, signed en masse by employees and without proper notarization. The servicers since said
they've resubmitted or are in the final stages of resubmitting corrected affidavits.
But the penalty for such a practice is approaching.
Going forward, Federal Deposit Insurance Corp. Chairwoman Sheila Bair said in January she wanted to
see a foreclosure fund, similar to the one set up for the BP Gulf Oil spill, that would be supported by the
servicers and would pay out to homeowners victimized by wrongful foreclosures.
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Page 1869 of 3826
Housing Wire
AG mortgage servicer investigation proceeding despite proposed settlement
April 7, 2011
By Christine Ricciardi
Iowa Attorney General Tom Miller said the reported side settlement between mortgage servicers and
federal regulators will in no way affect the ongoing investigation he is leading along with 49 other state
attorneys general.
Several media outlets are reporting that the Federal Deposit Insurance Corp., the Office of the
Comptroller of the Currency, the Office of Thrift Supervision and the Federal Reserve are engaging in
talks with mortgage servicers and that agreements could be signed as early as next week.
"A separate settlement by the Office of the Comptroller of the Currency will not affect our investigation,"
Miller said in a statement. "The settlement neither preempts, nor impacts our efforts. State attorneys
general will continue to work together unabated with a broad coalition of federal partners."
Bloomberg reported Tuesday that the first of as many as 14 mortgage servicers signed accords to
improve internal controls with these agencies. The OCC tells HousingWire specifics will be announced
next week.
Bank of America (BAC: 13.5382 -0.53%), Wells Fargo & Co. (WFC: 32.01 -0.50%) and JPMorgan
Chase & Co. (JPM: 47.19 -0.44%) were a few servicers named in the reports, which also claimed the
firms could skirt a potential $20 billion fine for their actions concerning servicing practices.
Both the FDIC and the OTS deferred comment on the subject. Still, one federal representative claimed
rumors of a consent order between mortgage servicers and regulators is untrue.
Miller and the other state AGs, who began their investigation after the robo-signing crisis broke in
October, are working with the Justice Department, the Treasury Department, the Federal Trade
Commission and the Department of Housing and Urban Development in their investigation.
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Regardless of what deals are signed with regulators outside that, the investigation will persist, although
it is likely to take months of negotiations, according to the Iowa AG.
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MSNBC Red Tape Chronicles

Lawsuit: Credit score sites mislead consumers
April 8, 2011
By Bob Sullivan
Confused about your credit score and where to get it? Thats intentional, according to a new lawsuit
filed in a California federal court.
Many consumers who think they are buying a peek at their credit scores are being defrauded, according
to a lawsuit against credit bureau giant Experian. The case, which seeks class action status, claims that
Experian is intentionally confusing customers, engaging in false advertising and not giving consumers
what they pay for when they sign up for services at the firms popular FreeCreditReport.com and
FreeCreditScore.com Web sites.
"It's a classic consumer fraud case," said David Woodward, one of the lawyers who filed the case. "The
law is designed to prohibit exactly this kind of egregious advertising practice. ... The defendant is
profiting from deception."
Experian, through its ConsumerInfo brand, aggressively markets access to credit scores as a benefit of
subscribing to its credit monitoring service. Knowing your credit score, ads suggest, is essential before
borrowing money and could save consumers thousands of dollars.
The vast majority of lenders use a three-digit number called a FICO score to make lending decisions.
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Developed by Fair Isaac and Co., the FICO score takes data from credit reports maintained by the
nation's three credit bureaus -- Equifax, Trans Union and Experian -- and boils it down into one threedigit number for each bureau report to provide a quick assessment of a consumers creditworthiness.
All consumers in the system have an Equifax FICO score, an Experian FICO score and a Trans Union
FICO score.
The credit scores that Experian sells to consumers, however, are not the Experian FICO scores, the
lawsuit contends. Instead, subscribers who sign up for a $14.95 per month service at FreeCreditReport.
com get access to a similar three-digit number developed by Experian using its so-called PLUS Score
model. While the value is meant to give consumers a sense of their creditworthiness, Plus Score ratings
are not sold to lenders, and are not used in lending decisions, the lawsuit alleges.
It's unclear how much the Experian FICO score and the PLUS score can vary. But that is immaterial to
Woodward, who says Experian intentionally blurs this distinction in its advertisements.
"Its simple. ConsumerInfo doesn't sell PLUS Scores to lenders," he said. "Fraud is inherent in the
advertising."
Experian currently has 3.1 million credit monitoring subscribers through its ConsumerInfo group, which
has also doled out 20 million credit reports, the company says.
An Experian spokeswoman said the firm would not comment on the accusations because they stem
from ongoing litigation.
The plaintiff in the case is David Waring, a California consumer who signed up at FreeCreditReport.com
and now says he was duped.
In one advertisement cited by the lawsuit, a notice on Experian site FreeCreditScore.com says, "Only
One Number Matters! Your CREDIT SCORE." Later in the text, the site says that membership includes
"credit score alerts," which allow consumers to "find out when your score changes. This could help you
qualify for better interest rates."
Text on FreeCreditReport.com uses similar language: "Lenders use credit scores to help them
determine the 'credit worthiness' of consumers applying for credit cards, lines of credit, or loans."
In each case, the sites suggest that consumers will receive access to the score lenders use when
making credit decisions, and thats misleading, said attorney Woodward.
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"The defendants represent that they are selling a credit score, a number to determine credit worthiness.
But it's not that. It's a score based on an in-house model that lenders do not use," he said.
Experian sites do indicate in various places that the score they are selling is not a FICO score.
Accessed this week, FreeCreditReport.com indicates towards the bottom of its home page that the
"Experian Credit Score indicates your relative credit risk level for educational purposes and is not the
score used by lenders."
But Woodward says Experians disclosures are not "clear and conspicuous," and many consumers who
view the marketing materials are left with the impression that they are buying a score used by lenders.
Experians FreeCreditReport.com has been the target of many legal actions and accusations of
deception, including several run-ins with the Federal Trade Commission. Accusing the firm of tricking
consumers into paying for credit reports that they could obtain for free, the FTC last year forced
Experian to add a link atop FreeCreditReport.com that sent consumers to AnnualCreditReport.com, the
congressionally-mandated website where consumers can obtain their credit reports for free. In turn,
Experian changed its business model for the site and began focusing on selling credit scores and credit
monitoring services.
For years, credit experts (and this blog) have warned consumers that not all credit scores are created
equal, and that many outlets selling credit scores aren't selling the real thing. In 2006, Fair Isaac sued
the nation's three credit bureaus over the creation and sale of such alternative scores. In 2009, a jury
ruled against Fair Isaac, in what became essentially a trademark violation case.
Still, consumers could buy their three FICO scores using a Fair Isaac Web site named MyFico.com -until February 2009, when Experian stopped letting Fair Isaac sell Experian FICO scores at the site.
That means today, there is no way for consumers to obtain this number, unless they receive it as part of
a mandatory disclosure from a lender following a negative credit action.
Purchase of Experian's PLUS Score is a poor substitute, Woodward said. More important, the resulting
marketing blitz for Experian's score has led to great consumer confusion, he said.
"Accurate credit scores are critically important to consumers, especially now, in a down economy," he
said. "Consumers have a right to receive truthful advertising about them."
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Page 1873 of 3826
The Nation
Bad Credit: How Payday Lenders Evade Regulation
April 25, 2011
By Kai Wright
Sam Black woke up one morning not long after retiring to Charleston, South Carolina, with chest pains
he didnt realize would change his life. He took a shower and ate breakfast before his wife, Elsie, got
him out the door to see his heart doctor. Within hours, the doctor cracked Sams chest open to do a
triple bypass.
They had the surgery early that morning, Elsie recalls, piecing together the fragmented memory of
someone who has survived a sudden trauma. Sam made it through the first operation all right, but later
that night the hospital called Elsie. We gonna have to take your husband back to surgery, she says
they told her. Something went wrong.
For the next seven weeks, Sam lay in a coma in the intensive care unit. Elsie says the doctor told her
that when Sam comes to, he might not know nobody. He aint gonna be able to drive.
Today, roughly a decade later, Sam still labors over his words, speaking with a slow, gravelly slur. He
sleeps with an oxygen mask and walks with more of a shuffle than a stride. But he walks and drives and
lives independently. They call him the walking miracle, says Elsie. He also shells out more than $400
a month for prescriptions and owes his heart doctor what he estimates to be about $1,000 in co-pays.
Elsie says she owes the same physician another $1,000. Theyre both in the doctors office every few
months for what feels like endless testing.
See, our biggest thing is these co-payments, Elsie fusses. Its like $35. And then when you go to
these specialists, and you have tests done, the insurance pays a portion, and then they send you a
portionand you have all these bills coming in. You cant really keep up with them.
The Blacks are the first to admit theyve never been good with money, but Sams heart attack began a
remarkable financial tailspin that illustrates a deeper problem than their personal failings. Theyve been
through a bankruptcy, gotten caught in a subprime refinance and narrowly avoided a foreclosure. But
Page 1874 of 3826
for years their most debilitating financial burden has been the weight of hundreds of small-dollar loans
with triple-digit interest ratesshort-term, wildly expensive credit that they took in order to keep the
lights on and afford occasional luxuries like Christmas presents while paying those medical bills.
The Blacks are not unusual. Like millions of Americans with stagnant or shrinking incomes and
considered too risky by mainstream banks, they have managed to pay for unexpected expenses by
relying on an ever-changing catalog of expensive, shady consumer loans. This subprime lending
industry exploded in the past decade and now stretches from Wall Street banks to strip-mall stores in
working-class neighborhoods all over the country. It includes the infamous subprime mortgages sliced
and diced into securities by the financial sector but also short-term loans against car titles, rent-to-own
shops, personal finance companies, rapid-refund tax preparers and, perhaps most ubiquitous, payday
lenders. These products are interdependentoften deliberately sowith one high-cost loan feeding
into another, as struggling borrowers like the Blacks churn through fees and finance charges.
Payday lenders alone have turned millions of small loans, most for $500 or less, into a $30 billion-ayear industry, according to an analysis of SEC filings by consumer advocate National Peoples Action.
The payday industrys lobby group, Community Financial Services Association (CFSA), boasts that its
members lend to more than 19 million households. Researchers estimate that there are more than
22,300 payday lending shops nationwide, a scale that rivals the number of Starbucks and McDonalds
franchises. Stores are concentrated in the South, where consumer lending laws remain loose, but they
crop up across the Midwest and West as well. Its a sprawling industry that ranges from small mom-and
-pop stores to a handful of national chains like Advance America, the nations largest payday lender; in
2010 it issued almost $4 billion in loans averaging less than $400.
Between 2000 and 2004, the payday industry more than doubled in size. Like the subprime mortgage
bubble, which blew up during the same period, the payday lenders boom was enabled by two factors
deregulation and Wall Street money. For much of the twentieth century, most states imposed interest
rate caps of 2442 percent on consumer loans. But Reagan-era deregulation witnessed a steady
erosion of state lending laws, opening the door for a range of nonbank lenders. In the late 90s a
handful of entrepreneurs stepped in to build national payday lending companies, exploiting the new
ethos of deregulation to win exemptions from existing rate caps.
The relaxation of state laws made usurious lending legal, but easy credit from Wall Streets more
reputable players made it possibleand profitable. As Advance Americas co-founder, William Webster,
recounts to journalist Gary Rivlin in Broke, USA, it was Websters Wall Street connectionshe was in
the Clinton administration, in the Education Department and then the White Housethat allowed his
company to quickly dominate the market, growing from 300 stores in 1997 to more than 2,300 today. In
2010 Advance America operated with $270 million in revolving creditsort of the business equivalent of
a credit cardprimarily from Bank of America.
All told, banks offered more than $1.5 billion in credit to publicly traded payday lenders in 2010,
according to National Peoples Action. The group identified Wells Fargo as the largest payday lending
financier; it backs five of the six largest firms. Consumer advocates also worry that mainstream banks
are losing their skittishness about entering the market. At least three banksWells Fargo, US Bank and
Fifth Thirdhave explored checking account products that operate much like payday loans.
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In some ways, however, the industry is in retreat. Of all the types of subprime lenders, it has drawn the
most scrutiny from lawmakers over the past decade. Congress outlawed payday loans for active-duty
service members in 2006, and at least seventeen states have passed interest rate caps for cash
advance loans.
But the industry is moving fast to adapt to the changing regulatory climateand watchdogs warn that
state lawmakers and regulators may be surprised to see the same payday products under different
names. Pretty much any state that tries to get at the bottom line of payday lenders, we see some
attempt at subterfuge, says Sara Weed, co-author of a Center for Responsible Lending report on how
payday firms evade state regulations.
The problem is that most states narrowly regulate specific payday lending activitiessay, on how many
loans a borrower can take in a given time periodrather than putting broad boundaries on the range of
high-cost lending that dominates poor neighborhoods. So lenders have skirted new regulations by
making surface changes to their businesses that dont alter their core products: high-cost, small-dollar
loans for people who arent able to pay them back.
Our approach is to continue to work with policymakers and grassroots organizations to provide a
predictable and favorable legislative environment, Advance Americas latest investor report explains.
The industrys growth era is over, the report predicts, so the company is focused on growing its market
share in the thirty states where payday lenders operate freely or where there is a regulatory framework
that balances consumer interests while allowing profitable cash advance operations.
South Carolina is among those thirty states. The Blacks didnt know it then, but when they retired to
South Carolina in 1999, they stepped into the middle of what is perhaps the most highly charged
battleground in the war between regulators and payday lenders. As home to Advance Americas
headquarters, the state has long been one of the industrys most active markets. Payday lenders made
more than 4.3 million loans in South Carolina between 2006 and 2007the equivalent of nearly one
loan per state resident. Had the Blacks stayed in New York, one of the states with interest rate caps for
consumer loans, they might have avoided the predatory lending traps that have mired them in constant
anxiety. But Charleston is where Sam and Elsie Black grew up, and in their later years the city
beckoned them back.
Sam left home two days after high school graduation in search of the job opportunities black folks
couldnt get in the Jim Crow South. He and Elsie met and fell in love upstate, then moved to Queens
and raised four sons on their own physical laborElsie walked nursing home floors for twenty-seven
years while Sam hauled bags at Kennedy and Newark international airports.
But by the turn of the millennium, Sams battered body had reached its limit, and circulation problems in
Elsies legs had almost forced an amputation. They both went on disability, but even bundling that
income with Elsies union pension, they found that New York was too expensive a city for their
retirement. So they sold their house and bought the two things they needed for their golden years in
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Charleston: a used Ford Windstar and a small ranch house north of the city.
Unfortunately, that meager wealth made the Blacks lucrative customers for the subprime lenders who
have come to dominate their lives. It started with a small loan against the Ford in 2005. Theyd gotten
behind on the mortgage, which theyd already refinanced, and credit card statements were piling high
alongside healthcare bills. So they pulled into one of the title loan shops that saturate South Carolina.
At that time the car was in halfway good shape, so we got $1,400, says Sam. Instead of that helping,
it put us further back. Theyd have to pay roughly $250 a month for ten months, or $2,500 total.
Within a year, they were in foreclosure. Elsie says she realized it only when a cousin called to say shed
seen a listing for the Blacks house in the newspaper. That cousin directed them to a bankruptcy lawyer,
who sent them to a credit counseling service and got them a $487-a-month bankruptcy plan. But
mortgages are exempt from bankruptcy, and the judgment did nothing to alter the underlying problem:
the Blacks basic expenses add up to more than their fixed income. They live permanently in the red.
So even though they clawed out of foreclosure, it wasnt long before they fell behind again on
everything else. When a friend showed Sam and Elsie a local Check Into Cash store, they easily slid
into the payday lending routine. They borrowed against their disability checks from a ballooning number
of lenders every two weeks for the next two to three years, paying out thousands in finance charges for
the privilege. They estimate they had at least five loans each at any given time.
The payday lending business model is straightforward. A customer signs over a personal check and in
return collects a small loan, usually less than $500 (state laws vary on the maximum allowed). The loan
is due when a borrowers next paycheck comes. As Advance Americas website assures customers, the
process takes just ten or fifteen minutes. Lenders charge varying fees for the loans, but when
calculated as an annual percentage rate, as mandated by federal law, they are often as high as 400
percent. In South Carolina a $500 loan from Advance America costs $75.40, a 393 percent APR.
Lenders prefer the term fee to interest rate, because the loan is for just two weeks.
But the vast majority of their business comes from loans that flip repeatedly, generating a new fee each
time. The average payday borrower takes nine consecutive loans in a year, according to an analysis by
the Center for Responsible Lending. In Michigan, state regulators found that 94 percent of payday
transactions over a thirteen-month period involved borrowers who had taken five or more loans. In
Florida borrowers with five or more loans a year accounted for 89 percent of the market.
It used to burn me up, Elsie says, describing the ritual of driving between payday shops to pay off one
loan and take out another. Wed pull up there to pay that money, and we know we gotta borrow it right
back.
The proximity of subprime lenders to one anotherand to discount retailers like Wal-Martis part of
the plan. Drive around Charleston or any urban area in South Carolina and youll eventually stumble
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into a payday valley. A title loan shop sits next door to a rapid tax refunder next to a payday lender and
wire transfer station. A garish strip mall near the Blacks house is entirely dedicated to half a dozen
variations on subprime consumer lending. Just in case customers miss the mall, a billboard in front
screams, Well Pay Off Your Current Title Loan at a Lower Rate!
As a result of this agglomeration, payday lending saturates black and Latino neighborhoods. A recent
National Peoples Action report looked at payday lending in five large Midwestern cities. It found that
neighborhoods with high concentrations of black and Latino residents had an average of twelve payday
lenders inside a three-mile radius, compared with just 4.6 payday lenders for neighborhoods with low
concentrations of blacks and Latinos.
As is typical for payday borrowers, at one point in 2008 the Blacks owed four payday shops more than
$3,800 in two-week loansthats more than 130 percent of their monthly income. At the time, they had
twelve simultaneous loans, including four from Advance America.
Now what company in their right mind would lend that kind of money to someone in that situation?
asks Michaele Pena, the Blacks credit counselor. When she met them, Pena estimated their monthly
expenses to be about $3,000. Their income, however, is fixed at $2,966. The Blacks are like the poster
child for what we see, she complains.
Advance America in particular has worked hard to challenge the idea that payday loans take advantage
of low-income customers who borrow beyond their means. Our customers fill important roles in our
communities, serving as teachers, bus drivers, nurses and first responders, wrote now-outgoing CEO
Ken Compton in the companys triumphant 2009 annual report. The reality is that we all experience
financial ups and downs, explained Compton, who collected a $1.1 million bonus this year, and we are
proud that we have helped so many people get the financial assistance they need.
***
Republican John Hawkins represented Spartanburg, home to Advance Americas headquarters, in the
states House and Senate for more than a decade before retiring in 2008. He is among the companys
most unforgiving critics. What these vultures do is nothing but highway robbery, he says bluntly. In
2007 Hawkins sponsored a bill to ban payday lending in the state, setting off a two-year pitched battle.
He still reels from the lobbying blitz Advance America and the CFSA launched against his bill. It was
really taking on one of the most established interests in South Carolina, he says.
Indeed, CFSA lobbyists have included former State Senator Tommy Moore, a 2006 Democratic
gubernatorial candidate, who resigned his seat and became CFSAs executive vice president in 2007;
longtime Democratic operative and 2010 gubernatorial candidate Dwight Drake; and the law firm of
former Democratic Governor Robert McNair. Steve Benjamin, Columbias first black mayor, once sat on
Advance Americas board.
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In fighting new regulations, the industry has tried to position itself as a champion of the working class
and people of color in particular. It commissioned a study arguing that payday lending benefits both
populations, which Representative Harold Mitchell, a black member who also represents Spartanburg,
presented to the legislature. Objective data that payday lenders practices lure consumers into
predatory debt cycles does not exist, the Mitchell report declared, contradicting sources ranging from
the Pentagon to the FDIC. Isolated cases are often presented in the public media as evidence, but
there has been no systematic examination of the extent to which these individual cases are
representative.
One State Senate staffer, speaking on background, talks about getting calls from consumers opposed
to regulation who, when questioned, turned out to be in line at a payday shop waiting for a loan. They
knew nothing about the legislation when asked.
Hawkins and consumer advocates countered with everything they could, including a class-action
lawsuit arguing that Advance America had violated existing unconscionable lending laws by making
loans it knew borrowers couldnt repay. As of December 2010 Advance America was fighting or in the
process of settling at least eleven suits, according to its SEC reports.
As Advance America brags to investors, industry lobbyists worked with South Carolina legislators to
craft a set of reforms that fall shy of capping rates and ending the business entirely. The most stringent
of these reforms, which has appeared in states around the country, is a rule declaring that a borrower
may have only one payday loan at a time. To enforce the rule, the state created a database of
borrowers that lenders must consult before making a new loan. In return, lawmakers raised the states
ceiling for payday loans from $300 to $550, essentially doubling the amount borrowers may take in one
loan.
Weve tried to put some speed bumps on it, but its an unruly problem, says State Senator Robert
Hayes Jr., a Republican who sits on the Senate Banking and Insurance Committee and who helped
shepherd the reform law through. Hayess district borders North Carolina and is home to an infamous
payday valley, which popped up after the districts northern neighbor passed a rate cap.
As in other states, the loan-limit rule appears to be slowing the overall volume of loans made. Between
February 2010, when the law fully took effect, and January 2011, the number of loans dropped to 1.1
million from about 4 million annually. Given that the ceiling for each loan nearly doubled, that means the
loan volume was just about cut in half. Its still unclear whether the law cut down on repeated flipping or
just chased away more casual borrowers. But research from states that have tried loan-limit rules has
shown they do not end flipping, and Advance America reports to investors that it doesnt believe loanlimit rules will affect its profitability in the way that rate caps can.
These reforms came too late to prevent the Blacks from falling into a payday loan morass. But Michaele
Penas savvy, patient counseling did help them get out. Pena doesnt even bother negotiating with
subprime consumer lenders; it never works. Instead, she makes a budget for her clients, figures out a
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reasonable repayment plan and starts sending payments until the original debts are cleared. Thats how
she got the Blacks out of their payday debt trap.
With the cycle of fees broken, the Blacks were able to catch up on the actual loan principals, one loan
at a time. In two and a half years, they paid off nearly $5,000 in debt, including the bankruptcy
settlement. They negotiated away another $2,000, and as of September 2010 they were finally debt
free.
Or, they would have been. The nearby garish strip mall has a more subdued but equally treacherous
neighbor, anchored by a personal finance company called Regional Finance. Offering loans on slightly
longer terms secured by household items rather than paychecks, personal finance companies are not
subject to South Carolinas new payday loan rules. In fact, the payday reforms appear to have spurred
their growth. Advance America consolidated the states payday loan market in the wake of the new
regulations, and industry watchdogs suspect that rivals, like Check n Go, have relicensed themselves
as personal finance companies.
Like its competitors, Regional sends mailers to area households with checks for pre-approved loans. In
July 2010 Elsie accepted one for $446; shell pay $143 in finance charges over the life of the loan. Sam
took one out too, in December 2009, to buy Christmas presents. Elsie cant recall why she took hers,
but when pressed both of them mumble about being too generous and fret that everything just seems
more expensive these days. Both were shocked when told that they got the same deal from Regional
that they did from the payday lenders they despise.
They have gone through this cycle over and over again, says a frustrated Pena. Ive tried to educate
them, and theyre the sweetest people, but they just dont get it. I dont know what to do other than to be
there to intercept their mail.
In some ways, the finance companies are an improvement. The loans flip less often because they tend
to be for three to eighteen months, not two weeks. But the idea remains the same: a loan for less than
$1,000 with fees that translate into extremely high interest rates that can be flipped when it comes due.
For Hawkins, these loans prove a simple point about subprime consumer lenders of all stripes. Theres
only one way to get rid of them, he says. And thats to pull it out root and branch.
Indeed, states that have tried to regulate high-cost consumer lending have found it a full-time job. In
state after state, payday lenders who faced new rules simply tweaked their businesses without
changing the core model. Since 2005, for instance, Advance America and others have recast
themselves as credit repair organizations in states that maintained interest rate caps on nonbank
lending. Notably, this began after the FDIC barred payday lenders from partnering with out-of-state
banks to evade rate caps. They charge a borrower a standard payday lending fee, then connect the
borrower with a third-party lender who finances the small-dollar loan at a legal rate. According to Weed,
this is legal in twenty-six states.
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Variations on this theme are myriad. When Ohio capped interest rates in 2008, Advance America began
offering cash advances under a mortgage lender license. When Virginia tightened payday lending rules
in 2009, the company started offering loans as open-ended lines of credit, until the state regulator
stepped in. In New Mexico, after the state passed a seemingly strict set of regulations, lenders created
longer-term installment loans similar to those of South Carolinas finance companies and, according to
a study by University of New Mexico legal scholar Nathalie Martin, transferred customers directly into
the new regulation-free loans without informing them. Others offered payday loans without taking a
check as security, a modification that put them outside regulatory bounds.
Lenders have also simply ignored the law. After North Carolina passed its 36 percent interest rate cap
in 2003, a consumer group filed a class-action lawsuit, based on an investigation by the attorney
generals office, charging that Advance America went right on lending at triple-digit rates. In September
2010 Advance America settled the suit for $18.75 million, the largest payday settlement in history.
Advance America also assures its Wall Street investors that its keeping up with the changing regulatory
climate by exploring new products. It began offering prepaid debit cards, and by 2009 it had more than
167,000 cards loaded with $374 million. In 2007 it partnered with MoneyGram to offer wire transfers in
its stores. In late 2008 it launched a web-based payday application that logged 95,000 new loans in its
first year.
Consumer advocates say all this suggests one solution: a federal cap on nonbank consumer lending
like the one that went into effect for service members in 2007. President Obama promised to do so
during his 2008 campaign, and Senator Dick Durbin introduced bills in 2008 and 2009 that would have
created a 36 percent cap, a return to earlier usury laws. Advance America is blunt about how that would
affect its business. A federal law that imposes a national cap on our fees and interest would likely
eliminate our ability to continue our current operations, declares its 2010 annual report.
The Congressional rate cap discussion was displaced, however, by the heated debate over the 2010
financial reform law, which dealt with the question by creating a new consumer-protection watchdog.
Congress granted the new Consumer Financial Protection Bureau (CFPB) oversight of the previously
unregulated nonbank lenders, including payday lenders. But that was largely directed at the mortgage
brokers that had pushed subprime home refinances, and the bureau is primarily embroiled in a debate
over how much authority it will have over Wall Street banks. With every financial industry player
lobbying hard to limit the bureaus authority, CFPB will be able to police only so many products, and
early reports suggest it will concentrate on mortgages. When it comes to payday lenders, the bureau is
expected to focus on consumer education and enforcing disclosure rules. In state efforts, neither has
proven an effective counterweight to the industrys saturation of working-class neighborhoods with
predatory products.
Disclosing payday lenders APR has done little to help borrowers like the Blacks because, says Pena,
the math of their financial lives doesnt add up. When people are desperate to pay someone else, and
these people are calling me and harassing me and they want $300 today and, whoops, look what I got
in the mail today She throws up her hands at what happens next.
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For the Blacks, Pena has a sinking feeling about whats next. Neither of them is healthy, and Sam
worries what will happen if one of them ends up in a nursing home, or worse. Hes asked Pena to look
into a reverse mortgage for their house, which would ensure they can stay in it until they both die. Pena
s not optimistic that it will work out, given how little equity they have. They are one health crisis away
from homelessness.
Im winding down my career, Pena says. And I thought when I got into this industry twenty-something
years ago that things would be better by now. But they are in fact worse, because of the different
products that have come out. It used to just be credit cards, which was something she understood.
Now, she says, she barely recognizes the personal finance world. I dont knowthe financial world just
got greedy and went cuckoo.
Back to Top

Citis New Policy May Mean Fewer Bounced Checks
April 7, 2011
By Ann Carrns
Citibank says it will change the way it processes customers checks, a move that could result in fewer
fees for bounced checks for account holders.
Customers are being notified this week in their bank statement mailings that as of July 25, the bank will
process checks in order of low to highthat is, it will pay checks in order of smallest dollar amount to
the largest. Currently, Citibank as do most banks pays checks in order of highest dollar amount to
the lowest. The thinking has been that big checks are often covering important bills like mortgage or car
payments.
The method, though, tends to maximize fees for bounced checks and has long been criticized by
consumer advocates. Cece Stewart, Citibanks president of consumer and commercial banking, writing
in a company memo this week, gave the example of a customer with $100 in a checking account who
wrote three checks, for $90, $35 and $25. Currently, the bank would pay the $90 check first, leaving
insufficient funds to cover the second two, resulting in two fees of $34 each $68 total.
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Under the new system, the bank will process the $25 and $35 checks first. The $90 check would still
bounce, but the customer would face just one $34 fee.
We think this is the right thing to do and we believe we are the first major bank to do it, Ms. Stewart
wrote.
The Center for Responsible Lending says on its Web site that the change makes Citibank unusually
active among our nations largest banks in voluntarily reforming its overdraft practices. We think its a
really big deal, says Rebecca Borne, a senior policy analyst at the center. Finally, a large bank has
acknowledged what we think is the reality, that low to high is best for customers.
Citibank has never charged overdraft fees for debit card transactions or A.T.M. withdrawals, according
to Ms. Stewart. Rather, the bank simply declines those transactions if an account balance is too low.
Wells Fargo and Bank of America currently pay checks from high to low, but have bowed to consumer
concerns by reducing the maximum number of overdraft fees to four a day from 10. Both banks charge
$35 for each overdraft, so thats still a potentially hefty $140 a day.
Since customers write fewer checks these days, however, paper checks are often less of a concern
than fees charged when debit card purchases push accounts past their limits. Someone sitting in a
coffee shop for a few hours, paying for snacks and refills, could potentially do some real damage if the
balance dips too low. Last summer, Bank of America began declining debit card transactions if they
exceeded the accounts funds, instead of letting them go through and then charging a fee.
Wells Fargo currently gives customers the option required by federal regulators of having debit
transactions declined or having them go through, with a fee, if their balance is too low. (Even if the
customer has given permission to be charged overdraft fees, thought, the bank still wont impose more
than four.)
Wells Fargo says it will make changes later this spring to the way it processes some payments.
Currently, all categories of deductions are processed at the end of the day and paid in high-to-low
order.
But as of May 16, the bank will take a hybrid approach. Paper checks and automatic deductions like
preauthorized monthly student loan payments will still be paid from high to low. But the bank will
process A.T.M. withdrawals, debit card purchases and online bills chronologically, in the order received.
(JPMorgan Chase has followed a similar approach for about a year, a spokesman said). If for some
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reason a specific transaction time isnt available, a Wells Fargo spokeswoman, Richele Messick, said,
the bank will process such debits in order of low to high. These changes are going to help simplify
processes and benefit customers, Ms. Messick said.
What do you think? Would you rather see one standard for charging overdraft fees, or do you prefer
letting banks set their own policies?
Back to Top
American Banker
FDIC Softens Its Position on Overdraft Program Guidance
April 8, 2011
By Joe Adler
WASHINGTON Cynthia Blankenship was likely not the first banker to discuss the Federal Deposit
Insurance Corp.'s overdraft guidance a significant cause of worry for industry executives with
FDIC Chairman Sheila Bair.
But their exchange during the recent Independent Community Bankers of America convention in San
Diego may have helped allay industry fears about it.
Blankenship recommended that, rather than requiring in-person or telephone contact to try to reach
customers that repeatedly incur overdraft charges, why not let banks take the less costly route of
communicating with them through periodic statements.
"I was very pleased that she said, 'I think that could work,' " said Blankenship, the vice chairman and
chief operating officer of the $290 million-asset Bank of the West in Grapevine, Texas.
Since then, the FDIC has validated the approach in a banker conference call with more than 4,000
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attendees and a "frequently asked questions" release on the guidance, and many industry insiders
appear to be warming to the idea.
"To my mind, it was a dramatic liberalization of the FDIC's attitudes on overdraft," said Jeremy
Rosenblum, a partner at Ballard Spahr.
To be sure, the guidelines are still strict, and FDIC officials say efforts to contact customers with high
overdraft usage cannot be halfhearted. But bankers had raised objections with the suggestion in the
original guidance, issued in November, that they must directly contact customers through face-to-face
meetings or telephone calls.
"Originally, it was so undefined that it was creating an ominous challenge for us that would be both
costly and cumbersome," Blankenship said. "Honestly, a lot of banks just didn't have cellphone
numbers or email addresses, and as I explained to [Bair], a lot of customers aren't going to come into
the bank just because you called them and said, 'You need to come in for counseling.' "
The guidance only applies to institutions supervised by the FDIC, and is focused on automated
rather than "ad hoc" overdraft programs. It requires banks to take "meaningful" steps in advising
customers those with more than six overdrafts in a 12-month period about less costly alternatives
to overdraft protection.
In addition, the guidance calls on institutions to develop strong board oversight of overdraft programs,
establish daily fee limits and waive fees for particularly small or "de minimis" overdrafts. It also
urges institutions to provide customers with a chance to "opt out" of overdraft coverage for
nonelectronic transactions.
While the original guidance only mentioned telephone or in-person contact as examples of reaching out
to chronic overdraft users, the FDIC clarified in the conference call and the FAQ that banks have other
options. One approach would be "targeted outreach," the agency said in the FAQ, involving a telephone
call or in-person meeting. But under a second "enhanced periodic statement" approach, a bank could
simply expand on information it is already required to include in a customer's normal statement.
Blankenship, who is a former ICBA chairman, said taking the approach of more direct contact with a
customer would have involved reprogramming data processing systems for many banks.
"I'm not sure that the FDIC initially realized how many challenges that the initial guidance created," she
said.
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"Generally, what we find is when we do have that opportunity to sit down face to face and say, 'This
doesn't work because,' or 'We already do this, so why are we having to issue another notice' that
there's a true willingness to be flexible.
"I don't think the intention ever was to create more burden. In the FDIC's defense, they're just looking
for a spirit of communication with the customer so that abusive practices don't exist. But, as I explained
to the chairman, I'm from a small community, my bank sits on Main Street. If I abuse my customers, I'm
not going to have customers."
Currently, Truth in Savings Act regulations compel institutions to disclose on a customer's statement the
overdraft fees accumulated in the statement cycle and in the previous 12 months. But under the
guidance, the FDIC said, that section could also include a message for repeated overdraft users
advising them on how to find alternatives. It would include the name and phone number of a bank
employee with whom to discuss other credit options.
"For example, the following statement could be used: 'You have been paying multiple overdraft fees
and there may be cheaper alternative products that may be better suited for your needs. Please call
[name of employee] at xxx-xxx-xxxx to discuss other options with a customer service representative or
visit us at your local branch,' " the FDIC said in its FAQ.
Paul Nash, Bair's deputy for external affairs, acknowledged the original guidance had sparked a strong
reaction, but he said the further clarification resulted from constructive feedback from the industry.
"To hear, 'This is terrible and is going to end banking as we know it,' that's not helpful," Nash said. "But
when we talk about, 'What exactly concerns you?' 'How can we do it differently?' and 'What ideas do
you have?' this idea came out of one of those types of meetings.
"We want banks to understand what we're trying to accomplish here, and take some of the heat and the
passion out of it and come together in a constructive way. This is not an effort to undermine overdraft,
which is an important function that banks offer. On the other hand, there are a relatively small
percentage of customers that are hit very hard by this."
The FDIC has also addressed concerns the guidance would make banks feel like they had to force
customers with high overdraft usage to stop utilizing the coverage. Instead, the agency now says that
decision falls to the customer.
"The big news out of the [conference] call too was they said if the customer tells you, 'Look, this is none
of your business, this is the way I manage my accounts, so leave me alone,' you can leave the
customer alone," said Christopher Leonard, the chief operating officer of Velocity Solutions Inc., a
Wilmington, N.C., company providing account services to mostly community banks.
Page 1886 of 3826
While the original guidance had prompted concerns that the agency was "overreaching," Leonard said,
the conference "call was definitely coming down from that." The FDIC "was trying to be more
accommodating," he said.
Industry representatives said although they still consider the guidance strict, the clarifications have
helped.
"To a great extent, banks will find" using periodic statements "to be a more realistic way of contacting"
customers, "but it is still a fairly prescriptive process where six fees in 12 months trigger the contact,"
said Richard Riese, the director of the American Bankers Association's Center for Regulatory
Compliance.
Elizabeth Eurgubian, a vice president and regulatory counsel for the ICBA, agreed, saying the
conference "call and subsequent FAQs were a step in the right direction."
Rosenblum said that while "the guidelines still impose substantial burdens on the industry under the
Q and A consumers are allowed to make informed choices.
"It's much less paternalistic than the apparent attitude the FDIC previously took," he said.
Rosenblum said that most banks will choose the periodic-statement option.
"Most banks will end up doing that," he said. "It is less burdensome, assuming that you have the
program that can accomplish it. It's less offensive to consumers."
Still, not everyone was won over, and most agree the guidance still prompts concern, including over
fears examiners will perceive the guidance as formal law, the waiver for de minimis overdrafts which
the agency recommended be used for transactions below $10 and that the guidance only applies to
banks regulated by the FDIC.
"There is a thought among community banks that we should all be on the same regulatory playing field,"
said Bill Grant, the chief executive of the $1.7 billion-asset First United Bank and Trust in Oakland, Md.
"It's not quite the same rules for everybody."
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Back to Top
American Banker
Frank Optimistic on Bill to Delay Interchange Fee Limits
April 8, 2011
By Cheyenne Hopkins
WASHINGTON Rep. Barney Frank, the top Democrat on the House Financial Services Committee,
denied Thursday that he and Chairman Spencer Bachus were at work on a corrections bill to the DoddFrank Act enacted last year, saying only two parts of the law need to be addressed: executive
compensation disclosure requirements and debit interchange fee restrictions.
The Massachusetts Democrat said last year during the final hours of the conference committee that
tweaks to regulatory reform would have to be made, but told reporters on Thursday he now only sees
the need for alterations in those two areas.
Speaking at a press conference on Capitol Hill, Frank said he was optimistic the Senate would soon act
on a bill from Sen. Jon Tester, D-Mont., that would delay for two years a rule that would restrict
interchange fees on debit cards. He said the critical moment came in February when Federal Deposit
Insurance Corp. Chairman Sheila Bair and Federal Reserve Board Chairman Ben Bernanke warned the
rule could hurt small banks despite an exemption in the law for institutions with less than $10 billion of
assets.
"In the Senate, I think it's very much in play," Frank said. "I think what happened was when the
regulators said Sheila Bair and Ben Bernanke in particular said they did not think the exemption
for small banks and credit unions would work, the political landscape changed."
Frank said the House would wait to see if the Senate would act, but if it does, a bill could be enacted
quickly.
"If something passes the Senate I believe it will move in the House very quickly," he said. "I think it's
unlikely that the House will act before the Senate does I think this is one of those things that really
Page 1888 of 3826
depends on the Senate."
Like many other lawmakers, Frank said the Fed's December proposal to cap debit interchange fees at
12 cents went too far.
"Some restriction on the fee would be good but not the extent to which we narrowed them," Frank said.
Frank said he would also like to revisit a provision of Dodd-Frank that would force companies and
issuers to disclose the median of the annual total compensation of all employees except the chief
executive officer. The provision was added by an amendment from Sen. Robert Menendez, D-N.J.
"The problem is now multinationals go across national lines If it was defined country by country, I'd be
fine," Frank said. "We need to revisit the swipe fees and I think the Menendez amendment should be
refined."
For the past two days, Frank and Bachus have traded press releases on whether a corrections bill was
in the works. Bachus told Congressional Quarterly that the two lawmakers have discussed a corrections
bill, but Frank issued a statement in response saying that was not true. Bachus office responded by
posting video of Frank last year saying a corrections bill was needed.
"I don't know what Spencer was thinking about," Frank said. "Apparently Spencer Bachus has been
discussing with my Avatar whether there would or not there would be one."
During the press conference, Frank also responded to Republican attacks on the Consumer Financial
Protection Bureau. Bachus has introduced a bill that would replace the CFPB's director with a five
member commission. The Alabama Republican also supports moving its funding through the
appropriations process.
But Frank said a committee structure did not make sense considering the difficulty in confirming any
new positions in the Senate.
"For those who say 'oh we need to have a commission,' you can imagine where we would be with a
commission, getting five confirmations to the Senate," Frank said. "Regardless of the statute, if we had
to take five of those nominations, we could have massive excruciation because they couldn't get 60
votes."
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Further, he said the Republican position on placing the new agency on the appropriations process
conflicted with their previous support for making other financial regulators independently funded.
"When the issue was the Office of Federal Housing Enterprise Oversight that supervised Fannie Mae
and Freddie Mac they wanted to remove it from the appropriations process," Frank said. "Basically if
you decide you like the agency, you don't want it subject to restraints."
Back to Top
American Banker
Use of Prepaid for Government Benefits Expands
April 8, 2011
By Will Hernandez
More state and federal agencies are expanding the types of benefits distributed using prepaid cards,
including unemployment and Social Security, to reduce costs.
Roughly 30 states use prepaid cards to distribute unemployment benefits, and each touts the economic
and practical reasons to make the switch from distributing checks. Printing checks and buying postage
can costs millions of dollars, they said.
But while states slash expenses, many consumers who have their benefits deposited directly into
prepaid accounts say fees applied to card use are eating away at their funds as issuers profit. Program
managers and issuers insist, however, that benefit cards are a public service, not a revenue generator,
as agencies have pressed them to keep fees as low as possible or avoid them altogether.
JPMorgan Chase & Co., which issues prepaid cards to distribute unemployment benefits and manages
the disbursement programs for 12 states, said it has faced unwarranted scrutiny from the mainstream
media and consumers over the unemployment cards it issues.
"We're unfortunately an easy target in that space because we're a big bank and it's unemployment,"
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said Tracy Dangott, JPMorgan Chase's vice president of public-sector card solutions. "Anytime you get
charged any fee it becomes about the big bank going after your money."
Dangott said the criticism partly stems from being grouped into the same category as general-purpose
reloadable debit card providers. "We look at [prepaid] very differently than they do," Dangott said.
States deliver a request for proposals to issuers that documents the requirements a vendor must meet,
according to Jeff Hentschel, a spokesman for the Tennessee Department of Labor and Workforce
Development. Chase issues the state's prepaid unemployment-benefits card.
"Vendors will then bid on the contract, and the state selects the vendor based upon the bid and being
able to meet all requirements," Hentschel said. Tennessee and other states do not pay JPMorgan
Chase, but the issuer does incur costs to operate the program. It charges some fees to make up for
those expenses.
There are not many differences between the fees JPMorgan Chase applies to unemployment benefit
cards and those prepaid card providers apply to general-purpose reloadable prepaid cards.
Unemployment cards are free and there is no reload fee because benefits are directly deposited into
the card account.
JPMorgan Chase would prefer that recipients of unemployment benefits receive their funds by direct
deposit into a demand-deposit account, Dangott said. "We advocate direct deposit, because when you
already have a retail banking relationship with someone else, you don't want our card," he said.
JPMorgan Chase regards unemployment prepaid cards as tools that meet a public need, not as
marketing vehicles, Dangott said.
"People tend to forget these kind of programs cost money," said Adil Moussa, an analyst with Aite
Group LLC. "You have to pay for the cost of the plastic, customer service centers and workers and
other expenses."
The states make the final decision on the card's fee schedule, which is why fees vary, Dangott said.
Chase provides recommendations and options for cardholders to access funds at no cost. "We pride
ourselves on it; we make sure of it, and we then educate the cardholders on how to do it," Dangott said.
Page 1891 of 3826
The Treasury Department is taking a similar approach with a pilot program that involves distributing
2010 tax refunds to reloadable prepaid card accounts.
Bonneville Bank, a subsidiary of Bonneville Bancorp of Provo, Utah, is issuing the cards. Green Dot
Corp., which has an application to buy Bonneville Bancorp pending regulatory approval, will help
manage the pilot program, which already is under way.
As states do, the Treasury sets the fee schedule for its cards and is testing cards with no or few fees.
The monthly maintenance fee for some cardholders is $4.95. Some cards have an interest-bearing
savings account feature in addition to the prepaid account.
The Treasury will determine which combination of fees and features cardholders prefer before
proceeding with a full rollout, said Josh Wright, the director of financial access innovation in the
agency's Office of Domestic Finance.
"The Treasury Department is definitely not trying to make a profit off the cards," Wright said. "We're
viewing this simply as another choice to provide people with a way to get their tax return and then have
ongoing access to a basic financial account."
Wright said he is unsure whether the pilot program will expand. If it does, the department would solicit
bids from issuers to manage the program.
Fees have been a central issue in prepaid cards. Various legislative attempts have been made to rein
them in.
Proposed and recently enacted state and federal regulations for debit and reloadable prepaid cards
have put card programs used for disbursing unemployment, Social Security and other benefits in
serious jeopardy, Dangott said.
"I would say within two years, prepaid's interchange potentially will be eliminated if not by regulation
then by market practice," he said.
Reloadable debit cards are exempt from the Durbin amendment to the Dodd-Frank Act. But Dangott
said prepaid card interchange may soon come under attack much the way traditional debit card
interchange did.
Page 1892 of 3826
If that happens, it essentially would eliminate prepaid card programs that issuers manage for
government benefit disbursement, he said.
Sen. Robert Menendez, D-N.J., introduced a bill in December that would prohibit prepaid card providers
from charging fees for card inactivity, balance inquiries, overdrafts and other activities.
It also would require disclosure of fees issuers would charge customers.
The bill did not come to vote last year, but Dangott expects it to pass this year.
"We will have to abide by that law, and that means we'll go back to every one of our clients and ask,
What do we do now?" he said. "We'll have to ask the states, Do we charge you, or do we charge the
cardholder?"
The Menendez bill is asking prepaid card providers to charge a single, flat and fair fee for all
transactions instead of multiple fees for what are considered "everyday activities," according to
Suzanne Martindale, Consumers Union associate policy analyst.
Consumers Union, publisher of Consumer Reports, is an independent nonprofit organization based in

Yonkers, N.Y. The organization worked closely with Menendez on the bill.
"If you have a flat, monthly fee up front, it gives consumers a chance to decide if they want the card,"
Martindale said.
Martindale said Consumers Union views the Menendez bill as a blueprint for the Consumer Financial
Protection Bureau, which Congress created under the Dodd-Frank Act.
The bureau will have the authority to regulate a wide variety of consumer financial products, and that
may include reloadable prepaid cards.
Prepaid provider support for the Menendez bill appears mixed.
Page 1893 of 3826
Martindale claims Green Dot is in favor of the bill to bring others in line with its low fees. "Green Dot has
said what they don't like is that they're the good actors and get lumped in with the bad actors," she said.
Green Dot said executives were unavailable to comment.
Dangott said the government benefits market has regulated itself with regard to fees. "I can't go in and
gouge and just market my way through it," as opposed to what general-purpose reloadable prepaid
card marketers can offer, he said.
Back to Top
USA Today
New credit card offers up the ante for globetrotters
April 7, 2011
By Laura Bly
As competition among credit card companies continues to heat up, the benefits for frequent travelers
do, too - from elimination of foreign transaction fees to lucrative bonus mile offers.
Two notable examples launched this week: A reprise of a British Airways Visa offer from Chase that
features a sign-up bonus of up to 100,000 miles ( enough for two trans-Atlantic flights in coach) and
increased travel benefits on the American Express Platinum Card, including free access to more than
600 airport lounges in more than 100 countries through Priority Pass Select.
The Chase/BA deal, which costs $95 a year, gives 50,000 bonus miles after your first purchase and
another 50,000 miles if you spend $2,500 on the card within three months. You'll also earn a free
companion ticket if you spend $30,000 the first year, and there are no foreign transaction fees, which
can add an additional 3% to your overseas purchase.
Page 1894 of 3826
"The British Airways program is really good, provided you're willing to swallow the fuel surcharges they
add onto award tickets. For a US to Europe award, assume about $450 per person. Flying via London
to Africa it can be double that. Still, when you're getting a $10,000 or $20,000 airline ticket it can be
worthwhile (and) British Airways award availability, especially in premium cabins, is outstanding. If you
want first class awards from the West Coast of the US to Europe, or from London to South Africa or
Kenya, BA is among the most likely to deliver." notes mileage maven Gary Leff.
The American Express Platinum Card costs a hefty $450 a year. But, points out Wendy Perrin of
Concierge.com, new perks include the airport lounge access and reimbursed membership in Global
Entry, a U.S. Customs and Border Protection membership program that lets pre-approved, low-risk
travelers returning to the U.S. bypass the immigration line. Other recently added benefits: No foreign
transaction fee, and $200 in credits toward the cost of checked bag or other fees you spend with a
designated airline.
"If you were to pay Priority Pass directly for access to more than 600 lounges worldwide, it would cost
you either $249/year (for 10 lounge visits in a year) or $399/year (for unlimited visits). Add together a
$249 Priority Pass membership, a $100 Global Entry fee, and $200 in airline-fee credits, and you get
$549 worth of benefits. Not bad for a card that costs $450 and comes with a slew of additional perks,"
writes Perrin.
So, travelers, what's in your wallet - and why?
Back to Top
Bloomberg
Bank of America Asks Court to Throw Out Mortgage Modification Litigation
April 8, 2011
By David McLaughlin
Bank of America Corp. (BAC), accused in a lawsuit of violating obligations to homeowners seeking to
modify mortgage loans and avoid foreclosure, asked a federal judge to throw the case out.
Page 1895 of 3826
Borrowers say the bank systematically failed to comply with a U.S. government program aimed at
stemming foreclosures and violated contracts for modifying loans, according to a complaint in federal
court in Boston that consolidates cases from across the country.
Bank of America, the biggest U.S. lender by assets, asked U.S. District Judge Rya Zobel at a hearing
yesterday to dismiss the complaint. The bank argues that not all homeowners are eligible for inclusion
in the governments Home Affordable Modification Program, or HAMP, and that it isnt required to
permanently modify all loans that are eligible.
The bank is constantly working on the process, and the Treasury is breathing down its neck to make
the process better, said James McGarry, a lawyer for the bank.
The complaint consolidates 26 lawsuits from around the country with another 10 to be added, Gary
Klein, a lawyer for the plaintiffs, said in an interview. If Zobel dismisses the complaint, all the lawsuits
would be thrown out, Klein said after the hearing.
Evaluating Borrowers
Bank of America isnt complying with obligations for evaluating borrowers and modifying loans, the
plaintiffs said in court papers. Citing unidentified former employees as for some of its allegations, the
complaint accuses the Charlotte, North Carolina-based bank of breaching HAMP requirements,
misleading homeowners and putting processes in place to avoid modifying loans because it has
financial incentives to do so.
They have no rights? Zobel asked Bank of Americas lawyer during the hearing, referring to
homeowners. How long can the bank decide whether or not to give it to them? she said about loan
modifications.
McGarry declined comment after the hearing about allegations in the complaint. Jumana Bauwens, a
Bank of America spokesman, didnt respond to an e-mail seeking comment.
Theres more here than a simple breach of contract claim, Klein told Zobel. It goes to real
malfeasance.
A majority of the plaintiffs received trial modification plans, known as trial period plans, or TPPs,
according to court papers the bank filed. Those are part of the application process and not enforceable
Page 1896 of 3826
contracts, the bank said. They also dont guarantee a permanent modification unless many conditions
are met.
Basic Eligibility Requirements
Not one of the plaintiffs seeking to recover under the TPPs has alleged that he or she met the basic
eligibility requirements and/or qualified for the offer of a permanent modification, the bank said in court
papers.
The plaintiffs say customer service workers regularly tell homeowners that modification documents
werent received by the bank when in fact they were. The bank also encourages borrowers to default
and fails to properly credit payments under trial modifications, treating homeowners as delinquent,
according to the plaintiffs. One former employee who isnt named recalled seeing homeowners
financial records manipulated in the banks computer system, according to the complaint.
BOAs general practice and culture is to string homeowners along with no intention of providing actual
and permanent modifications, the complaint says. Instead, BOA has put processes in place that are
designed to foster delay, mislead homeowners and avoid modifying mortgage loans.
The case is In re Bank of America Home Affordable Modification Program (HAMP) Contract Litigation,
10-md-02193, U.S. District Court, District of Massachusetts (Boston).
Back to Top
American Banker
HUD Reverses on Reverse Mortgages
April 8, 2011
By Brad Finkelstein
Page 1897 of 3826
The Department of Housing and Urban Development has rescinded a controversial letter to lenders that
held homeowners or their heirs responsible for repaying, in full, a government-insured reverse
mortgage if they wished to keep the property.
By nature, Home Equity Conversion Mortgages (the name for reverse mortgages guaranteed by HUD's
Federal Housing Administration) are nonrecourse. The 2008 letter gave a different interpretation of the
HECM's nonrecourse provision than what had been previously understood.
With the nonrecourse provision in place, the borrower would never owe more than the value of the
property.
But the letter said if the borrower wanted to retain the property and pay off the loan early, or if the
borrower or any heirs wanted to keep the property when the loan became due, they needed to repay
the full amount given.
The letter also had a provision regarding arm's-length transactions, where the lender agreed to accept
less than the full balance due.
The department sent a notice rescinding the 2008 letter on Tuesday. A HUD spokesman said: "This
guidance was intended to make certain that the sale of the property is a legitimate market driven sales
transaction and based on the property's real value. Since there has been some uncertainty in
interpreting the guidance in that mortgagee letter, new guidance will be issued in the future."
In the meantime, lenders should rely on other published guidelines, the spokesman said.
In March, AARP filed a suit in the U.S. District Court for the District of Columbia seeking an injunction to
stop enforcement of the 2008 mortgagee letter.
AARP says not only did that mortgagee letter violate HUD rules, it also violated existing contracts
between reverse mortgage borrowers and lenders.
The HUD spokesman said the agency does not comment on pending litigation. A call to AARP was not
returned by press time.
Back to Top
Page 1898 of 3826

Good News for Spouses of Reverse Mortgage Holders
April 7, 2011
By Ron Lieber
In the face of a lawsuit from the AARP Foundation, the Department of Housing and Urban Development
has backed off an apparent policy change that was putting some widows and widowers on the brink of
foreclosure.
The dust-up involves reverse mortgages, financial products that allow older Americans with a decent
amount of home equity to tap some of that equity if they are at least 62 years old. Unlike a home equity
loan, where you have to pay the money back, with a reverse mortgage the bank pays you, say in a
lump sum or in monthly payments. Once you no longer live in the home, you or your executor (if youre
dead) sells it and pays the bank back.
The foundation and Mehri & Skalet, a law firm, sued HUD in the wake of a policy letter in 2008 that
seemed to state that widows or widowers who were not listed on a spouses reverse mortgage would
have to repay the full amount of the deceased spouses mortgage. Theyd have to do so even if the
home was worth less than the outstanding loan.
Not long after, some surviving spouses found themselves unable to pay off the loans or get a new
mortgage for the outstanding balance on the old reverse mortgage. As a result, they ended up in
foreclosure proceedings. The foundation had sued on behalf of three of them.
In a letter it released this week, HUD rescinded the 2008 letter. And while this weeks letter didnt say so
specifically, Jean Constantine-Davis, a senior attorney for AARP Foundation Litigation, reports that the
lenders will now halt foreclosure proceedings against its three plaintiffs for the time being. A HUD
spokesman did not return a call seeking comment.
The lawsuit is not over, though. The foundation hopes that a judge will confirm that HUD cannot ever
force a widow, widower or heir to pay a reverse mortgage lender more than a home is actually worth,
Page 1899 of 3826
whatever the balance may be on the mortgage.
It also wants to establish surviving spouses right to stay in the home if they so choose, even if they
werent party to the original reverse mortgage. That might mean that the lender is on the hook for the
reverse mortgage loan longer than it expected to be. But Ms. Constantine-Davis said she thought that
as the guarantor, HUD ought to buy the loans from the lender if this became a problem for the lender.
If that becomes too burdensome, HUD might make new rules that could, say, require that both spouses
always be listed on the mortgage, while making some kind of provision for people who get married after
one of them has gotten the reverse mortgage loan and wants to add a spouse to the mortgage.
Meanwhile, Ms. Constantine-Davis notes that HUD does not currently require both spouses to undergo
counseling when only one of them applies for a reverse mortgage. (One spouse may apply alone
because the monthly payout from the lender is usually higher if just the older spouse applies.) Without
explicit counseling, spouses who are not on the mortgage may not know that they could end up in a
situation like those of the plaintiffs in this case.
One easy fix might be for HUD to make both spouses come for counseling no matter what. Another, as
I mentioned in a column a few weeks ago, is much simpler and doesnt require more regulation: Dont
ever take yourself off the loan, even if it does mean that the payout is lower.
Back to Top
Housing Wire
Washington AG says some trustees may break foreclosure laws
April 7, 2011
By Kerri Panchuk
Washington Attorney General Rob McKenna said a handful of trustees may be breaking the law by not
having offices up and running in the state.
Page 1900 of 3826
McKenna sent a letter to a number of mortgage trustee firms reminding them the Washington Deed of
Trust statute requires an office presence in the state, so homeowners have a place to deliver lastminute payments to stave off foreclosure.
"Having an agent in Washington State isn't sufficient; the law also requires that the trustee itself
maintain an office with a phone where homeowners can go to resolve their foreclosure issues,"
McKenna said in a written statement.
The AG's office discovered the possible violations while investigating unlawful foreclosures across the
Northwest state.
"Washington law requires that foreclosure trustees maintain actual offices in our state and local phone
numbers for this reason," McKenna said. "But our investigation shows that some of the largest trustees
are not in compliance and borrowers who have a legitimate reason to stop a foreclosure are having
trouble reaching trustees."
About 52 Trustees received letters from McKenna back in October, announcing the AG's concerns
about document handling, conflicts-of-interest and faulty chains of title. Attorneys at the Washington
Attorney General's office are now reviewing documents tied to that probe.
Back to Top
Wall Street Journal

Dodd-Frank Foes Adopt New Tactics
April 7, 2011
By Maya Jackson Randall and Jessica Holzer
Republicans and business groups concede they lack the votes to repeal the Dodd-Frank financialoverhaul law, so they are attacking it piece by piece.
Page 1901 of 3826
Moreover, key Senate Democrats have given them the green light to try to modify some aspects of the
law.
House Republican lawmakers have announced a slew of bills aimed at making targeted, incremental
changes, often described as "corrections" or "technical fixes," to the law.
One bill would exempt private-equity fund advisers from a new requirement that they register with the
Securities and Exchange Commission. One would shield certain types of financial-derivative
instruments from new regulations. Another would delay caps on the fees banks charge retailers for
debit-card transactions.
But "corrections" sometimes lie in the eye of the beholder. One side's fix can be the other side's
substantive and unacceptable change. Thus, it remains unclear whether any of the current proposals
will garner enough support to pass the Democratic-controlled Senate and survive President Barack
Obama's veto pen.
Sen. Tim Johnson (D., S.D.), the new chairman of the Senate Banking Committee, told The Wall Street
Journal he would consider proposing measures to modify parts of Dodd-Frank this year if they have
broad support.
"I am open to the idea of improving Wall Street Reform by making technical corrections and fixing
unintended consequences, but in today's political environment it is clear there will need to be broad
bipartisan support to get anything approved," he said in a written response to questions from The Wall
Street Journal.
Sen. Jack Reed (D., R.I.), chairman of a Senate banking capital-markets subcommittee, said at an
insurance-industry conference last month the Dodd-Frank law wasn't immune to changes.
Defenders of Dodd-Frank, however, are wary of measures purporting to tweak the law.
"Fixing what seems to be a technicality could end up being a magnet for larger changes," said Amy
Friend, who served as top counsel to former Senate Banking Committee Chairman Christopher Dodd
during the drafting of the law last year. Ms. Friend, now a managing director at the consultancy
Promontory Financial Group, said if she were still on Capitol Hill she would caution the chairman about
opening up the act.
Page 1902 of 3826
Mr. Johnson said he wouldn't allow technical fixes "to open up the door to mischievous proposals aimed
at tearing apart this important new law."
Republican opponents of Dodd-Frank also have introduced bills in both houses to repeal the law, but
lawmakers don't expect the proposals to go any farther while Democrats control the Senate and White
House.
"In the current political climate, repealing it would be difficult, so we're left with taking the surgical
approach," said Rep. Randy Neugebauer (R., Texas).
The Dodd-Frank law set out many general guidelines, but left it to numerous federal regulatory
agencies to write the specific rules needed to implement them. The draft rules issued so far have raised
a variety of concerns among companies, financial institutions and consumer-advocacy groups. Some of
these parties-many of which would be directly affected by the rulescomplain the proposed
regulations are too onerous, or too broad, or could have unintended effects, in some cases contrary to
Congress's intent.
Lawmakers have responded by offering remedies, some of which have bipartisan support. Among
these is the bill to exempt private-equity fund advisers from the new SEC registration rule. Rep. Robert
Hurt (R., Va.) and Rep. Jim Cooper (D., Tenn) back the measure. However, no companion bill has been
introduced in the Senate.
The push to delay limits on debit-card fees has made the most progress. Bills have been introduced in
both the House and Senate. And the Senate bill was written by a DemocratJon Tester of Montana.
His bill has more than a dozen co-sponsors.
This effort gained momentum Tuesday when Rep. Barney Frank (D., Mass.), co-author of the financialoverhaul law, said he would support bills to delay the Federal Reserve's April deadline for writing the
fee-cap rule.
The American Bankers Association and the U.S. Chamber of Commerce are among the business
groups lobbying for targeted changes in the Dodd-Frank law.
"Nobody's trying to re-litigate the bill," said David Hirschmann, president of the chamber's capitalmarkets arm. But it's important to every business in this country that Congress "fix things that just don't
work in the legislation."
Page 1903 of 3826
Back to Top
Reuters
H&R Block loses refund loan clients, to take Q4 charge
April 7, 2011
By Jochelle Mendonca
* To take Q4 charge of $0.05/shr
* Charge related to loss of some clients due to lack of RALs
* Shares down 2 percent after the bell (Follows Alerts) April 7 (Reuters) - H&R Block Inc said it would
take a charge in the fourth quarter, as it lost some clients due to its inability to offer refund anticipation
loans, sending its shares down 2 percent in extended trade.
The top U.S. tax preparer will incur a charge of about 5 cents a share in the quarter ending April 30.
Tax preparers have been hit by the U.S. government's clampdown on the highly profitable refund
anticipation loans (RALs), which are funded by various banks and are repaid by the borrowers annual
tax refund.
Regulators, like the Federal Deposit Insurance Corp and the Office of the Comptroller of the Currency,
have said the loans are risky and have asked banks to cease funding them.
Despite the loss of some clients, the company continued to grow the number of returns prepared at its
stores. Total retail returns prepared through March 31 rose 2.6 percent.
Page 1904 of 3826
Shares of Kansas City, Missouri-based H&R Block were down 2 percent at $17.65 in trading after the
bell. They closed at $17.97 Thursday on the New York Stock Exchange.
Back to Top

Credit Union to Advance Pay for Military Customers
April 7, 2011
By Damian Paletta
The Navy Federal Credit Union, the countrys largest credit union, said Thursday it would cover the April
15 direct-deposit paychecks of its military customers even if theres a government shutdown because of
an impasse over spending between Democrats and Republicans.
By covering the mid-month pay, come April 15 our active duty members will not see a difference in
their direct deposit amount, as if there were no shutdown, said Cutler Dawson, chief executive of Navy
Federal.
Its unclear how much such a move would cost the giant credit union, or even if it would be necessary.
How and when members of the military are paid has become a major flashpoint in the budget debate.
Both Democrats and Republicans have blamed the other party for potentially forcing a shutdown after
midnight Friday, possibly leaving service members and their families to miss paychecks.
Unlike many civilian employees, who would be furloughed and might not ever receive back pay, military
service members would remain working but could see a lapse in their pay until Congress reaches a
deal. But even having a delayed paycheck could create major headaches.
Defense Secretary Robert Gates, on a trip to Iraq, Thursday assured troops they will be paid. Troops
Page 1905 of 3826
are typically paid twice a month, and Mr. Gates said that if a government shutdown began after Friday,
troops would receive half a paycheck for the first two weeks of April. After that, troops wouldnt be paid
until a deal is reached in Washington to fund the government, although they would receive any back
pay owed, he added.
Back to Top
Page 1906 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

FW: revised draft FR notice

Fri Apr 08 2011 09:45:26 EDT
List Federal Register Notice 4-7-11 (3).docx

Subject: revised draft FR notice
Hi,
Here is a revised (but perhaps still rough?!) draft of the Federal Register notice. yikes.
T
Thomas E. Scanlon
tel. (202) 622-8170
Page 1965 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Mann, Seth (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=manns>
RE: Content for Transfer Site

Fri Apr 08 2011 09:30:02 EDT
Transfer Site_Content_KL redlines 4-8-11.docx
FAQs_Transfer site_KL redlines 4-8-11.docx
Hey Seth,
Attached please find my redlined versions of this. I tried to make the language more general, suggested
some additions based on the text of Dodd/Frank, and made some minor nits too. Hope this is helpful...
let me know if you have any questions.
-K
-----Original Message----From: Mann, Seth (CFPB)
Subject: FW: Content for Transfer Site
Hi Kevin,
This is what we are putting forward for now for the Transfer site. This was materials originally used for
the FRS materials - we sweeped it once for applicability across all populations. We want to keep info on
site general and don't want to call out the specific solicitations. At the same time we want it to be
informative and "attract" those who have a choice to come to CFPB. If you can still take a quick look
then that would be great. Essentially crossing out anything we really shouldn't put or doesn't apply
and/or looking out for things we might be missing. Thanks. Appreciate your help.
Seth J. Mann
Management Analyst
(P) 202-435-7518
(F) 202-435-7329
for guidance.
-----Original Message----From: Angela Beatty (b) (6)

Page 1982 of 3826
To: Mann, Seth (CFPB)

Cc: Kate Keesey; Laura Brochet; Claudia A Ellis
Subject: Content for Transfer Site
Importance: High
Seth,
Attached please find draft content as fodder for the transfer site. This may include more than they want
to use. I believe most everything included is applicable across transfer populations, with the exception
of the information on the transfer process. If this process varies widely, we could eliminate including it
on the site.
Please let me know if we can be of further assistance.
Thanks,
Angela
Angela Beatty
Towers Watson
901 North Glebe Road
Arlington, VA 22203
(P) 703-258-8057; (F) 703-258-8585
(b) (6)
www.towerswatson.com
NOTICE: This communication may contain confidential, proprietary or legally privileged information. It
is intended only for the person(s) to whom it is addressed. If you are not an intended recipient, you may
not use, read, retransmit, disseminate or take any action in reliance upon it.
Please notify the sender that you have received it in error and immediately delete the entire
communication, including any attachments.
Towers Watson does not encrypt and cannot ensure the confidentiality or integrity of external e-mail
communications and, therefore, cannot be responsible for any unauthorized access, disclosure, use or
tampering that may occur during transmission. This communication is not intended to create or modify
any obligation, contract or warranty of Towers Watson, unless the firm clearly expresses such an intent.
Page 1983 of 3826
From:
To:
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Bcc:
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Date:
Attachments:

(fydibohf23spdlt)/cn=recipients/cn=harveyi> on belhaf of West,
group (fydibohf23spdlt)/cn=recipients/cn=westca>
_DL_CFPB_AllHands
CFPB and Federal Government Shutdown

Thu Apr 07 2011 15:32:57 EDT
CFPB Colleagues,
Below are key things you should know regarding CFPB and the potential federal government shutdown.
Human Capital - We will remain operational in the event of a government shutdown and will keep you
informed as the situation develops throughout the next few days. Additionally, for our detailed
colleagues, we are reaching out to your agencies to confirm your continued availability to us if there is a
furlough as well. Our POC for this coordination is the CHCO team, Dennis Slagter or Marilyn Dickman.
Contracts - Since our budget pays for all our contracts we will have no disruption in the work performed
under these contracts, whether the contracts were executed through Treasury DO or not. The vendors
will be here with us, and will be performing their duties normally regardless of whether the Department
of the Treasury is open. These contracts have assigned contract administrators from DO (we call them
Contracting Officers Technical Representatives, or COTRs). But, since the work is done here at 1801,
we can and will informally administer the contracts. Our POC for this is David Gragan or Josh Galicki.
Facilities This building will remain open as usual, including garage.
Note that we receive some services from Treasury and they will be posting the details of their shutdown
plan on their website this afternoon. We have received confirmation that core services such as the
computers and telephones will remain operational.
Thanks,
Catherine West
Page 2005 of 3826
From:

_DL_CFPB_AllHands
Adamske, Steven
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Thu Apr 07 2011 12:57:15 EDT
Index

American Banker Political Sniping Dominates House CFPB Hearing
The Hill (blog) Republicans look to check absurd Consumer Bureau powers
Politico Morning Money Chamber Backs Moran
Page 2007 of 3826

Bloomberg Large Banks Gain Over Smaller Rivals in New Overdraft Rules (no external
hyperlink available)
The Hill (blog) Dems: GOP trying to kill Wall Street reform with Ryan budget
The Atlantic (blog) Should the Consumer Financial Protection Bureau Be an Autocracy?
BNET Behold the GOPs Latest Plan to Crush the Consumer Financial Watchdog
The Hill (blog) Granholm says she isnt candidate to lead consumer bureau
CNNMoney Republicans aim to weaken consumer bureau
Reuters GOP lawmakers hit US watchdog amid director search
Housing Wire ABA wants more oversight, accountability for CFPB
The Hill (blog) Frank: Im not talking Dodd-Frank fixes
The Hill (blog) Bachus jabs back over Dodd-Frank fixes
Care2 Obama Looks To Women For New Consumer Protection Agency
Politico Morning Money First Look: Pressure On Regulators
American Banker Servicers Sign Watered Down Consent Agreements
American Banker Bite the Bullet: Waiting and Hoping Wont Cure What Ails Housing
Bloomberg Mortgage Deals With Banks Backed by Virginias Cuccinelli
Consumer Credit
Associated Press The new rules for getting your credit score
American Banker Durbin Exhibit A in Case to Revamp Dodd-Frank
Baseline Scenario Big Banks Have A Powerful New Opponent
American Banker Checking a Better Deal than Prepaid
American Banker Experian Glitch Sinks Scores
The Consumerist Zombie Wells Fargo Account Rises From Dead, Collects Overdraft Fees
New York Times (blog) Yes, That Really Was an Ad for a Bachelor Party Loan
Forbes (blog) Is It Time To Switch To A Credit Union?
Page 2008 of 3826
Housing
American Banker Freddie Wants an End to Side Deals Between Lenders and Mortgage
Insurers
Housing Wire MBA asks for more time on servicing fee structure rules
Housing Wire Undercover investigation reveals mortgage scammer tactics
Housing Wire The Obama administrations regulatory capture
Wall Street Journal (blog) Obama Official Very Concerned About Mortgage Lending in
Shutdown
Associated Press ACLU challenges Fla. foreclosure courts as biased
American Banker
Political Sniping Dominates House CFPB Hearing
April 7, 2011
By Cheyenne Hopkins
WASHINGTON Although lawmakers were ostensibly supposed to debate ways to overhaul the
structure and authority of the Consumer Financial Protection Bureau, a hearing Wednesday in a House
Financial Services subcommittee was sidetracked by questions over whether the agency should exist at
all.
Republicans have introduced four bills that would, among other things, replace the CFPB director with a
five-member board, give other regulators more power to overrule the consumer bureau, and delay
implementation of its powers until a Senate-confirmed leader is in place.
But lawmakers spent less time discussing those issues, instead focusing on the political and ideological
gulf between the two political parties over the bureau's existence.
"I take issue with the title of today's hearing, 'Legislative Proposals to Improve the Consumer Financial
Protection Bureau,' because I disagree that these proposals are to improve," said Rep. Carolyn
Maloney of New York, the top Democrat on the financial institutions subcommittee. "These proposals
Page 2009 of 3826
we are considering today come from some of the members who last year voted against the Dodd-Frank
Financial Protection and Consumer Protection Act, which created the CFPB. Taken together, these
proposals will only serve to delay, disrupt the CFPB from being able to fully do its job before it's even
opened for business on July 21st."
Adam Levitin, a Georgetown University Law Center professor who testified at the hearing, agreed.
"Let's not escape what this hearing is really about," Levitin said. "The issue presented at this hearing is
whether Congress cares more about increasing the profits of the banks or protecting the financial
security of American families. If you want to understand what this hearing is about, look at who is
here at this witness table. There are three bankers and me."
But House Financial Services Committee Chairman Spencer Bachus said it wasn't about trying to
undercut the new agency.
"Nothing could be further from the truth," he said. "In fact, my bill is for a commission, which is what this
House passed. This is what we passed in Dodd-Frank. It was changed in conference to allow one
person to run the agency with total discretion. And what we're advancing is not politics, it's the way
government has always functioned, and that's not one person with unbridled authority."
Despite his intentions, however, most of the hearing was about whether the CFPB is burdensome and
will cut off credit.
Rep. Patrick McHenry, R-N.C., echoed the Republicans' argument, saying that the CFPB is creating too
much government.
"Last November, the voters sent a clear message to Washington," he said. "Massive new regulations
are creating uncertainty and crippling job creation. With that in mind, I believe the legislation before us
today goes is extremely necessary in order to protect consumers while also making certain that small
businesses and individuals aren't limited from accessing the credit that they need."
Industry witnesses said they were being punished with CFPB regulation.
"I remain at a loss as to why my credit union has been placed under a new regulatory regime," Lynette
Smith, president and CEO of the Washington Gas Light Federal Credit Union, said on behalf of the
National Association of Federal Credit Unions.
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Leslie Andersen, president and CEO of Bank of Bennington in Nebraska, speaking on behalf of the
American Bankers Association, agreed.
"The new bureau will certainly impose new obligations on all banks, large and small, banks that had
nothing to do with the financial crisis and already have a long history of serving consumers fairly in a
competitive environment," she said.
Hilary Shelton, director of the NAACP, was one of the few witnesses to defend the bureau and fight
efforts to curtail it.
"I would like to state unequivocally for the record that the NAACP staunchly opposes any moves which
may weaken or undermine the CFPB or otherwise impede it from reaching its full potential," he said.
"Any proposals which would weaken the missions of CFPB would mean fewer protections for American
consumers in general and racial and ethnic minorities in particular, as they attempt to manage the often
confusing world of finances, mortgages and credit."
Rep. Carolyn McCarthy, D-N.Y., said those opposed to the CFPB are missing a key lesson from the
financial crisis.
"We are forgetting why we are putting this together," she said. "Everybody forgot about the consumer.
And everybody can blame everybody else, but nobody was there to protect the consumer. No one."
Republicans likely will try to pass their CFPB bills soon. A bill from Reps. Shelley Moore Capito and
Spencer Bachus would replace the CFPB director with a five-member board, while another from Rep.
Sean Duffy, R-Wis., would give regulators more power to override the bureau. Under the Dodd-Frank
Act, which created the CFPB, the Financial Stability Oversight Council may override a CFPB regulation
if two-thirds of its members agree the rule would threaten the safety and soundness of the banking
system or financial stability. Duffy's bill would lower the standard to a simple majority vote and whether
the rule is inconsistent with safe and sound operations of institutions.
Capito has also released two draft bills that would bar the CFPB from participating in bank exams
before the July 21 transfer date and prevent that transfer until a CFPB director has been nominated by
President Obama and confirmed by the Senate.
Also on Wednesday, Sen. Jerry Moran, R-Kan., ranking member of the Senate Committee on
Appropriations Financial Services and General Government Subcommittee, introduced legislation that
would replace the CFPB director with a five-person board.
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To the extent they discussed the bills directly, lawmakers focused mainly on changing the structure of
the CFPB.
"This is a critical change to the structure of the bureau. This is not unprecedented for a regulatory
agency," Capito said. The "Securities and Exchange Commission, the Commodities Futures Trading
Commission and the Federal Trade Commission are examples of regulatory agencies led by a
commission. Most notably, the Consumer Products Safety Commission, which regulates the safety of
thousands of nonconsumer products, is led by a five-member commission. The powers of the bureau
are simply too broad for a single director, and the move to put the commission in place, I think, puts an
important check on power."
Brad Miller, D-N.C., said the existing director structure at the Office of Comptroller of the Currency has
served the industry well.
The CFPB is "certainly not unique in that they have a single director," Miller said. "The OCC, for
instance, has a single director, and that has made that a very powerful agency, which has worked
greatly to the benefit of the banking interest and greatly to the disadvantage of consumers."
Maloney said moving to a five-member board could be problematic.
"President Obama is having difficulty finding a director that he can get confirmed by the Senate," she
said. "One senator can hold up a confirmation. If you had five, you would have more difficulty in moving
forward."
The industry backed the Republican efforts. "I think having a commission or a board makes a lot more
sense," Andersen said. "They are able to have a broader view."
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Page 2012 of 3826
Republicans look to check absurd Consumer Bureau powers

April 6, 2011
By Peter Schroeder
Republicans are painting the new Consumer Financial Protection Bureau (CFPB) as sorely lacking in
sufficient checks to its fledgling authority, as conservative lawmakers push bills that would curb the new
agency.
Conservative lawmakers have repeatedly said they believe that the CFPB, as authorized in the DoddFrank financial reform law, is given too broad of an authority with too few checks on it. But Democrats
maintain it will provide key protections for consumers, and contend Republican attempts to limit it will
lead to problems similar to those that drove the financial crisis.
During a hearing on several legislative proposals to remake the CFPB, GOP members of the House
Financial Services Committee said the current arrangement was "absurd," and granted the agency
virtually unchecked authority to regulate the banking industry.
Republicans are offering bills that would change the top of the CFPB from having a single director to a
bipartisan commission, which would ensure Republican input on its work.
"The powers of the bureau are simply too broad for a single director," said Rep. Shelley Moore Capito
(R-W.Va.).
Sen. Jerry Moran (R-Kan.) introduced similar legislation in the Senate Wednesday, which would also
subject the CFPB's budget to the congressional appropriations process. Currently, the CFPB is slated
to receive its budget from the Federal Reserve without having to earn lawmakers' approval.
Another bill, introduced by Rep. Sean Duffy (R-Wis.) would make it easier for other regulators to
overturn rules made by the bureau.
Under current law, the Financial Stability Oversight Council (FSOC), which includes the heads of all top
financial regulators, can overturn a CFPB rule if a two-thirds super-majority of the panel believes it
would prove harmful to the entire financial system. The eventual director of the CFPB will be one of 10
voting FSOC members.
Republicans argue that arrangement makes it too difficult for other regulators to block CFPB rules, and
Page 2013 of 3826
are pushing a bill that would allow the FSOC to overturn rules by a simple majority, as long as the rules
are inconsistent with the safe and sound operations of financial institutions.
"It's absurd, it's unheard of," complained Finance Chairman Spencer Bachus (R-Ala.) about the current
set-up. He singled out CFPB architect and Harvard law professor Elizabeth Warren for particular
scrutiny.
"Professor Warren has done a great job of really fooling the national media into thinking, 'Oh, this could
easily be appealed,' " he said. "No one has gone past this crazy story [...] that we're just attacking Miss
Warren or that we don't want consumer protection."
"If they're able to hoodwink the American people, they've pulled a real sham here," he added.
However, Democrats painted those attempts as an effort to return to the same environment that created
the financial crisis.
"Any attempt to delay or weaken the CFPB could leave American families, their communities, and the
economy as a whole exposed to many of the same risks that brought our financial system to the brink of
collapse," said Rep. Carolyn Maloney (D-N.Y.).
Democrats maintain that the CFPB will be subject to a number of limits. Rep. Brad Miller (D-N.C.) said it
"probably has more checks on its authority and more accountability than any agency in government."
Rep. Patrick McHenry (R-N.C.) dismissed that claim as "absolutely absurd," suggesting that Democrats
were downplaying the strength of the bureau.
"They were bragging about how powerful this agency was until after the election," he said.
For its part, the CFPB also is pushing back against Republican attempts to curtail the agency before it
begins its work.
"We are hard at work building the Consumer Financial Protection Bureau, which was created in
response to the worst financial crisis since the Great Depression, said Jen Howard, senior
spokesperson for the CFPB in advance of the hearing. Any attempt to delay or undermine the stand up
of the CFPB could leave American families and the economy exposed to many of the same risks that
brought our financial system to the brink of collapse.
Page 2014 of 3826
Back to Top

Chamber Backs Moran
April 7, 2011
By Ben White
CHAMBER BACKS MORAN - Jess Sharp, U.S. Chamber executive director of the Center for Capital
Markets Competitiveness, on the bill introduced by Sen. Jerry Moran (R-Kan.) that would replace the
CFPB director with a five-person commission: Replacing the single bureau director position with a
bipartisan five-person commission and subjecting the CFPB to the regular appropriations process are
two key steps in building an effective agency that will protect consumers while preserving individual and
small business access to credit.
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Bloomberg
Large Banks Gain Over Smaller Rivals in New Overdraft Rules
March 29, 2011
By Carter Dougherty
Page 2015 of 3826
The Federal Deposit Insurance Corporation is set to begin enforcing rules this summer aimed at
reducing overdraft fees, a move that may cut into retail banking revenue at companies such as BB&T
Corp., Synovus Financial Corp.
and Ameriana Bancorp.
The new rules may increase pressure on other U.S. banking regulators, including the new Consumer
Financial Protection Bureau, to impose industrywide overdraft rules, said Jeremy Rosenblum, vice
chairman of the consumer financial services group at the law firm Ballard Spahr in Philadelphia.
If you dont comply by July 1, you are really asking for problems in the examination process,
Rosenblum said. The guidelines are going to really cut into overdraft revenues.
Banks and credit unions were set to earn about $38 billion from overdraft fees in 2011, according to a
Sept. 15 estimate by Moebs Services, a Lake Bluff, Illinois-based economic research firm. About 90
percent of the revenue was expected to come from customers with 10 or more overdrafts per year.
Additional rules imposed by the consumer bureau would hit nationally chartered institutions such as
JPMorgan Chase & Co. and Wells Fargo & Co.
The FDIC rules come atop industry-wide regulation approved by the Federal Reserve last year requiring
banks to obtain customers permission to enroll them in overdraft programs.
Since the FDIC rules do not apply to nationally chartered banks, FDIC-regulated banks argue the
guidance will skew competition.
Community Banks
Greg Pruitt, the attorney general of Oklahoma, said he has complained to Bair that the new rules are
putting community banks -- a politically influential group -- at a disadvantage since they typically have
the FDIC as their primary regulator.
CFPB action would be more equitable for all banks, Pruitt said in an interview. That would be a better
approach.
FDIC Chairman Sheila Bair, who criticized overdraft fees in a 2005 paper she wrote as a professor at
Page 2016 of 3826
the University of Massachusetts-Amherst, said interest rates on overdrafts can be a lot higher than a
payday loan.
If you have a product that is not sustainable, or hurts your reputation or is going to lead to customer
dissatisfaction later on, that is a problem from the safety and soundness perspective, Bair said in a
March 16 speech.
Michael Moebs, an economist and chief executive of Moebs Services, faulted the FDIC for moving
ahead of other regulators.
He said the Dodd-Frank financial-regulatory overhaul signed by President Barack Obama in July aimed
to consolidate consumer regulation of the entire industry under the CFPB.
Competitive Distortion
I take the competitive distortion issue very seriously, Moebs said. This is going to hurt the industry,
and it seems it is because Sheila Bair wants to step out ahead of the CFPB on this issue.
Consumers incur overdraft fees when they debit sums beyond what they have in an account and their
balance dips below zero. At that point, they also pay interest on the overdraft, meaning they have
effectively taken out a loan.
Fed rules were intended to end automatic enrollment in overdraft programs, and the unintentional fees
incurred even by small debits.
Some consumer groups want the consumer bureau to regulate overdrafts as actual credit agreements,
which would make them subject to the Truth in Lending Act.
Better Disclosures
That would mean you would get better disclosures if you overdraw your account, and you would sign a
credit agreement before anything happens, Rebecca Borne, a senior policy counsel at the Center for
Responsible Lending, a Durham, North Carolina-based consumer advocacy group, said in an interview.
Page 2017 of 3826
Consumer groups also want to see federal regulators stamp out high-low debiting, Borne said. This
practice allows banks to maximize overdraft fees by debiting the largest purchases first to maximize the
number of transactions on an overdrawn account.
Richard Hunt, president of the Consumer Bankers Association, a Washington-based lobbying group for
retail finance, said that uncertainty surrounding the future of the consumer bureau makes banks
reluctant to endorse new rules on overdraft.
The agency is scheduled to start work officially on July 21 even though the Obama administration has
not yet nominated a director. Elizabeth Warren, a Harvard professor, has been charged with setting it
up, and the White House hasnt publicly ruled her out as a nominee.
CFPB Director
You tell me who the director of CFPB is going to be and Ill tell you whether we will support that agency
doing something instead of the FDIC, Hunt said in an interview.
So far, Warren has said that the agencys priorities are mortgage and credit card regulation. Jen
Howard, a CFPB spokeswoman, declined to comment.
The Fed rule that went into effect July 1, 2010 allows all banks to charge overdraft fees only if a
customer enrolls in the program. Otherwise, the bank is required to reject transactions that would
overdraw the account.
The FDIC rules go further. They require banks to monitor customer use of the programs and to take
meaningful action to move customers into lower-cost credit programs if they overdraw their accounts
more than six times in a rolling 12- month period.
Camden Fine, the head of the Independent Community Bankers of America, told Bair in a Jan. 25 letter
that the higher administrative costs resulting from the new rules would lead banks to discontinue
overdraft programs.
More Unbanked
This lack of customer service will lead more consumers to become unbanked or to rely on products,
such as prepaid debit cards or check-cashing services, both of which have higher fees, Fine wrote.
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The FDIC issued the rules as guidance, which is enforced when agency examiners look over bank
books and practices. Ann Graham, a professor of law at Hamline University and a former FDIC official,
said failure to comply would lead to higher deposit insurance premiums, and even legal action.
This is styled as guidance, but the language says If you dont do it, youre going to be in trouble,
Graham said in an interview.
Unlevel Field
State-chartered banks argue the FDIC is creating an unlevel playing field that favors banks with national
charters, which are regulated by the Office of the Comptroller of the Currency.
In 2005, major regulators, including the FDIC, OCC, the Fed and the National Credit Union
Administration passed general joint guidance on overdrafts.
John Walsh, the acting comptroller, said in an interview his agency was staying with the 2005 rules.
NCUA has no plans to change its overdraft rules, spokesman Todd Harper said. Fed spokeswoman
Susan Stawick declined to comment.
Banks have responded to the regulatory push on overdraft fees in different ways. Bank of America
Corp. quit charging overdraft fees last year after losing a lawsuit. Citigroup Corp. has never imposed
them. JPMorgan Chase & Co. does, as does Wells Fargo, which is facing a court judgment to pay $203
million to customers hit with overdraft fees. All have the OCC as their primary regulator.
Chris Williston, head of the Independent Bankers Association of Texas, said banks not facing FDIC
rules will use the overdraft issue to attract customers. They see this as a marketing opportunity to grow
a bit in the retail space,
Williston said in an interview.
Pruitt, the Oklahoma attorney general, predicted the CFPB would eventually tackle the issue. But
without a director, they cant do anything, Pruitt said.
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Page 2019 of 3826

Dems: GOP trying to kill Wall Street reform with Ryan budget
April 7, 2011
By Peter Schroeder
Democratic lawmakers blasted Rep. Paul Ryan's (R-Wis.) budget proposal Thursday, arguing it is a
backdoor way to "kill" Wall Street reform by starving regulators.
Ryan's budget proposal would return the budgets of the Securities and Exchange Commission (SEC)
and Commodity Futures Trading Commission (CFTC) to fiscal 2008 levels, while the Obama
administration is pushing for hundreds of millions more as they work to implement major parts of the
Dodd-Frank financial reform law.
The White House's fiscal 2012 budget request would provide the CFTC with $308 million, while Ryan's
budget offers $112 million. Likewise, the administration calls for $1.258 billion for the SEC in 2012,
while Ryan's budget for the agency would be $906 million.
Rep. Barney Frank (D-Mass.), the ranking member of the House Financial Services Committee,
accused Republicans of using the budget to stifle Wall Street reform.
While Congress sets the SEC's budget, the funds come from fees it assesses on financial firms, and
Frank said the CFTC's budget is too small to play a major role in the nation's fiscal picture.
The budgets for the two agencies combined amount of "less than a week's munitions in Libya,"
according to Frank.
"There is no budget justification," he said. "This is an effort to do, under the guise of deficit reduction...
what they can't do directly, and that's re-deregulate much of the country."
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"This is cutting the ability of government to enforce reforms that we put in place in the financial
regulatory reform bill," added Rep. Carolyn Maloney (D-N.Y.).
Republicans have argued that the agencies do not deserve larger budgets, given their inability to
protect against the financial crisis. Frank dismissed that line of thinking as "wholly illogical."
"If police failed to do a good job of catching criminals, the response is not to have fewer police," he said.
He also contended that a recent Republican push to modify the new Consumer Financial Protection
Bureau (CFPB) to be run by a bipartisan commission rather than a single director is simply an effort to
stifle it.
Under the bill backed by House Financial Services Committee Chairman Spencer Bachus (R-Ala.), the
five members of the commission would have to be confirmed by the Senate. Republicans have argued
the CFPB is too powerful a bureau to be run by a single person, but Frank painted filling the
commission as a gargantuan task.
"Getting five confirmations through the Senate?" he asked. "If a fire broke out in the Senate, we would
have mass asphyxiation because you could not get 60 votes to adjourn."
However, he did say that if the Senate can pass legislation delaying new limits on debit card fees, the
House would promptly send it to the president.
"If something passes the Senate, I believe it will go through the House very quickly," he said. "It really
depends on the Senate."
Sen. Jon Tester (D-Mont.) said Wednesday he believes he has the needed 60 votes to pass his bill
delaying the new caps for two years, but the timing of a vote is not yet known.
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Page 2021 of 3826
The Atlantic (blog)

Should the Consumer Financial Protection Bureau Be an Autocracy?
April 6, 2011
By Daniel Indiviglio
The creation of a Consumer Financial Protection Bureau stirred more controversy than any other part of
last summer's financial regulation bill. Consumer advocates loved the idea, while banks found it an
excessive measure that would constrain their ability to respond fully and swiftly to what their customers
wanted. But one aspect of the bureau that makes it even more controversial is its leadership structure.
Rather than create a board or commission that would approve new rules, it would focus the new
agency's power in a director. Republicans held a hearing on Capitol Hill today to discuss legislation to
create a commission instead.
The legislation was offered by House Financial Services Chairman Spencer Bachus (R-AL). It seeks to
establish a bipartisan commission of five members at the Consumer Financial Protection Bureau. There
would still be a leader -- a chair of the commission -- but a group would be in place to discuss, debate,
and vote on rulemaking.
In fact, the House's original financial reform proposal (.pdf), authored by then Chair Barney Frank (DMA), included precisely this sort of commission. But the final regulatory package mostly accepted the
Senate's version of the legislation, which included only a director.
Rep. Carolyn Maloney (D-NY) doesn't like the new Republican bill. At one point, she railed against it,
saying that other regulators provide similar power to directors. She named the Federal Reserve,
Commodity Futures Trading Comission (CFTC), and Office of the Comptroller of Currency (OCC) as
examples. But this isn't really true.
First, the Fed does have a chair. But its monetary policy is conducted by its Federal Open Market
Committee. Other decisions are agreed upon by its Board of Governors. In fact, its chair does not have
rulemaking authority. Similarly the CFTC has a commission, so it's a little unclear why Maloney uses it
as an example. Finally, the Comptroller of Currency does have the ability to make rules, but when it
does so, it generally coordinates with the Federal Deposit Insurance Corporation, Federal Reserve, and
OTS. Other regulators also have a commission structure. Some more examples include the Securities
and Exchange Commission Federal Trade Commission. So it actually looks like having a commission is
the status quo.
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This contrasts with the framework for new consumer bureau. It will create rules to govern consumer
financial protection without the help or consent of other regulators. If just a director is in place to
approve rules, then that's an awful lot of power for one person to have. But Rep. Maloney prefers this,
saying:
A commission would only lead to gridlock, and in my opinion inaction, that would only make it more
difficult to react to the regulatory disparity between banks, credit unions, and their less regulated
competitors.
The fear of "gridlock" might also be what an authoritarian regime worries about. In fact, having leaders
with different opinions who decide on laws is at the very heart of democracy. The theory goes that the
diversity of ideas leads to finding the best solutions to problems, and reasonable people will see past
partisan politics. If one person can approve rules, then those regulations could heavily reflect his or her
opinions, which may sometimes disregard compelling arguments that provide an alterative view.
But there's also a practical point here that it's a little surprising Democrats won't embrace: what
happens when Republicans rule again? For now, it's easy for them to imagine a very left-leaning
director providing the sorts of new regulations that Democrats would embrace. But if they were to lose
the White House and Senate in 2012, then Republicans could put a far right-leaning director in place,
who could effectively nullify those rules and create new regulations that favor free market views.
Having a commission in place would be a guard against all of the problems above. It would ensure that
one person did not attain too much regulator power. It would also provide the requirement that minority
views are heard and considered. Maloney is right about regulations being a little harder to pass with a
comission. But that's the way it should be. New rules should not be easily adopted, but the result of
vigorous, thoughtful debate.
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BNET
Behold the GOPs Latest Plan to Crush the Consumer Financial Watchdog
April 6, 2011
By Alain Sherter
Page 2023 of 3826
A GOP lynch mob is still trying to string up the fledgling Consumer Financial Protection Bureau.
Members of the House Financial Services Committee met today to discuss four bills, all sponsored by
Republicans and backed by the banking industry, aimed at subduing the agency even before it officially
launches this summer.
One measure proposed by panel chairman Spencer Bachus, R.-Ala., a longtime ally of Wall Street,
would replace the bureaus single director with a five-person bipartisan commission. The others would
make it easier for other financial regulators to override the CFPBs rules; delay when the bureau can
begin regulating banks; and block it from working until the Senate has confirmed a director.
The goal isnt only to destroy the CFPBs independence its to subordinate the bureaus mission of
protecting consumers from financial abuse to other financial regulators mandate to ensure that banks
stay profitable. These are very different objectives. For instance, preventing a financial crisis might
occasionally require telling banks that they cant peddle millions of crummy loans, CDOs and other
products even if they are making money for the moment. This is not something banking agencies have
excelled at over the years.
Georgetown University law professor Adam Levitin, who testified at the hearing, remarked on the irony
of Republicans wanting to run the CFPB by commission, noting wryly that this is exactly the kind of
bloated, big government structure favored by Progressives and New Dealers.
By contrast, a single agency head can move more decisively and is easier to hold accountable. Thats
because a CFPB director who overstepped her authority or failed to protect consumers would find it
harder to deflect blame. Levitin also said the bureau will have more constraints on its power than any
other federal agency, adding:
When viewed against this backdrop of multiple safeguards against arbitrary and capricious agency
action, it becomes apparent that changing the CFPB from a unitary directorship to a five-member panel
would add little. Instead, switching to a five-member panel would tilt the balance at the agency to
gridlock and inaction, would add unnecessary big government bloat, and would reduce accountability.
Countervailing force
Another reason we need a strong, independent commission is to counter the OCC the Office of the
Comptroller of the Currency, for those playing along at home. The lead regulator for national banks
which is led by a single director has consistently sided with the banks over the years and generally
done a terrible job of looking out for the interests of consumers. Said Levitin:
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The overpowering logic for creating a CFPB was that a counterweight was necessary to the OCC in
order to protect consumers interests; the OCC has amply proven that when tasked with both bank
safety-and-soundness that is profitability and consumer protection, it will always favor banks over
consumers. If CFPB is to be an effective counterweight to the OCC, it needs a parallel structure that will
allow it to act quickly and forcefully when necessary. The CFPBs current single-director structure is
necessary to ensure that it can protect the interests of consumers and the overall economy.
Even if Republicans succeed in throwing a rope around the CFPB in the House, theyre likely to fail in
the Senate, where Banking Committee chairman Tim Johnson, D-S.D., has said he opposes the
Bachus bill.
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Granholm says she isnt candidate to lead consumer bureau
April 6, 2011
By Peter Schroeder
Former Michigan Gov. Jennifer Granholm on Wednesday shot down reports that she could be the first
director of the new Consumer Financial Protection Bureau (CFPB).
The White House is reportedly drafting a list of potential candidates to serve as head of the CFPB.
Citing a source who is "aware of the process," Reuters reported that President Obama was considering
both Federal Reserve Governor Sarah Raskin and Granholm for the job.
Granholm denied the report Wednesday on her Facebook page, saying she had already opted out of
consideration for the post. She also threw her support to another controversial candidate.
"This story says I'm under consideration for the CFPB job. I have declined to be considered for this
post," Granholm said in the post. "And by the way, while I don't know Raskin and she may be great, I
Page 2025 of 3826
think nominating Elizabeth Warren is a fight worth waging."
Warren, the Harvard law professor who currently is assisting the president in building the CFPB before
it goes live in July, has served as the public face of the bureau for the last several months, but has not
been nominated by the president to be its official director.
A longtime favorite of liberal and consumer groups, Warren would likely face a tough confirmation battle
in the Senate if nominated.
Treasury Secretary Timothy Geithner, who is working with Warren to set up the CFPB, told lawmakers
Tuesday that the administration has not nominated someone for the position yet because they are
looking for someone who can be confirmed.
"We're consulting with Congress," he said before a Senate Appropriations subcommittee. "We want to
nominate somebody who can be confirmed, and so that's why it's taking us a little bit of time."
Back to Top
CNNMoney
Republicans aim to weaken consumer bureau
April 6, 2011
By Jennifer Liberto
House Republicans on Wednesday detailed a new barrage of legislative measures they plan to pursue
that would dilute, delay and curtail powers of the new Consumer Financial Protection Bureau (CFPB).
"This is just the beginning of what will be an ongoing dialogue of how to better reform the CFPB," said
Rep. Shelley Moore Capito, a West Virginia Republican during a hearing on Wednesday. "The current
structure simply puts too much power in the hands of one individual and does not allow for sufficient
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oversight of the regulations put forth by the bureau."
The new consumer bureau was the most popular part of the Wall Street reforms passed into law last
year. But it was also the most politically controversial, barely emerging after more than a year's worth of
legislative wrangling.
The bureau is an independent agency, funded by fees that banks pay to the Federal Reserve.
Beginning on July 21, it will be charged with regulating credit cards, mortgages and other financial
products like payday loans.
Elizabeth Warren is currently working as the Obama administration's point person to set up the bureau
and get it ready for its launch this summer. The White House has yet to nominate a director to run the
bureau, who would be confirmed by the Senate. Warren is reportedly in the running.
Among the latest legislative efforts, Republicans say they want to:
* Replace the job of director of the bureau with a five-member committee.
* Make it easier to overturn and veto consumer bureau rules.
* Prevent the bureau from flexing any new powers until the Senate confirms a director.
* Stop consumer bureau financial examiners from going on ride-along banking examinations with other
regulatory agencies until the bureau is up and running.
Warren, a consumer advocate and Harvard University professor working as an adviser to both the
White House and Treasury, has defended the bureau against efforts to chip away at its powers and
independence before it's up and running.
"Any attempt to delay or undermine the CFPB could leave American families and the economy exposed
to many of the same risks that brought our financial system to the brink of collapse," said Jennifer
Howard, bureau spokesman.
House Financial Services chairman Spencer Bachus said the new legislative moves aren't about
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watering down consumer protections or advancing politics. He said Republicans aren't out to attack
Warren.
"This is not about Elizabeth Warren, it's about giving one person total, unbridled authority," said Bachus,
an Alabama Republican.
During the hearing, nearly all the banks and banking groups invited to testify, including those
representing small banks and credit unions, said they support Republican efforts to whittle the
consumer bureau's powers.
"The current veto authority (to overturn consumer bureau rules) doesn't go far enough," said Lynette
Smith, president of the Washington Gas Light Federal Credit Union, speaking on behalf of the National
Association of Federal Credit Unions. She said they'd support efforts to make it easier to veto consumer
bureau rules.
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Reuters
GOP lawmakers hit US watchdog amid director search
April 6, 2011
By Kevin Drawbaugh, Alister Bull, and Mark Felsenthal
* Rep Capito backs 5-member board for director-led CFPB
* Two more names surface as possible director nominee
* Sen Johnson slams House GOP on Dodd-Frank attacks (Adds Capito, Johnson comments)
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WASHINGTON, April 6 (Reuters) - Republicans carried on their attack on a new U.S. financial
consumer watchdog agency on Wednesday, while two more names surfaced as possible Obama
administration nominees to head the agency.
President Barack Obama has not yet recommended a director for the U.S. Consumer Financial
Protection Bureau being set up under last year's Dodd-Frank Wall Street and banking reforms, the
White House said.
A source aware of the process told Reuters on Tuesday the White House is considering Federal
Reserve Governor Sarah Raskin and former Michigan Governor Jennifer Granholm to run the CFPB,
set to open in July.
The source did not say whether other candidates in addition to Raskin and Granholm were under
consideration.
"The president is considering a number of candidates for the position of director, but no decisions have
been made," said White House spokeswoman Amy Brundage.
Harvard Law Professor Elizabeth Warren, an outspoken consumer advocate, is serving as an adviser to
Obama and the U.S. Treasury Department to help set up the new agency.
She has long been considered a potential nominee to be director, but she has also been controversial
and might have trouble winning Senate confirmation.
The agency will police mortgages and credit cards and try to curb predatory lending and abusive card
accounts.
Republicans and bank lobbyists who opposed the creation of the CFPB last year have been pushing
recently on several fronts to restrain its power since they won control of the House of Representatives
in November.
At a House committee hearing on Wednesday, Republican Representative Shelley Moore Capito

endorsed legislation to change the CFPB's leadership from a director to a five-member commission.
"The powers of the bureau are simply too broad for a single director," she said.
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Republicans also want to put the bureau's funding through the politically charged congressional
appropriations process, instead of keeping its funding independent.
"Let's be clear, the House Republicans' attacks on the Wall Street Reform law have nothing to do with
cutting the budget ... and everything to do with gutting consumer and investor protections," said
Democratic Senator Tim Johnson, who chairs the Senate Banking Committee, in a statement on DoddFrank and criticisms of it from House budget hawks.
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Housing Wire
ABA wants more oversight, accountability for CFPB
April 6, 2011
The American Bankers Association testified Wednesday before the House Financial Services
Committee, emphasizing the need for oversight of the Consumer Financial Protection Bureau.
Leslie Andersen who is president and chief executive officer of Bank of Bennington in Bennington,
Neb., spoke on behalf of the trade group. She claimed the CFPB divided the concepts of consumer
protection from safety and soundness supervision, which should be one single focus.
"My banks philosophy shared by banks everywhere has always been to treat our customers right
and do whatever we can to make sure that they understand the terms of the loans they are taking on
and their obligations to us," Andersen said. "It is an inescapable fact that fair service to our banking
customers is inseparable from sound management of our banking business."
According to Andersen's testimony, structural improvements and oversight to the CFPB must be
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conceived to ensure the regulator is accountable to the fundamentals of safe and sound operation, to
the gaps in regulatory oversight of non-banks, and to the principle of consistent regulation.
Elizabeth Warren, the special adviser to the Treasury Department who is setting up the CFPB,
appeared on Bloomberg News last week to defend the transparency and accountability of the
organization. She said that the CFPB is just like any other government organization subject to the
authority of the Treasury and other regulatory entities.
Warren argued that the CFPB was actually one of the most overseen regulating bodies.
Andersen and the ABA suggested replacing a director for the organization with a commission, so the
voting standard would be a majority vote instead of in the hands of one person.
Rep. Spencer Bachus (R-Ala.) introduced a bill in March that would accomplish this very goal, and
establish a five-member bipartisan commission to carry out the duties of a director at the CFPB.
The CFPB is scheduled to open July 21, and under the Dodd-Frank Act, it would oversee the
transparency and fairness of financial instruments for consumers. It would become the de facto
overseer for the entire mortgage market, including mortgage servicers. Warren is likely to get the
nomination as director of the bureau.
But both Bachus and Andersen said these powers would be in better hands with a commission, not a
director.
"A commission structure would broaden the perspective on any rulemaking and enforcement activity of
the Bureau, and would provide needed balance and appropriate checks in the exercise of the Bureaus
authority," Andersen said.
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Frank: Im not talking Dodd-Frank fixes
April 6, 2011
By Peter Schroeder
Rep. Barney Frank (D-Mass.) vehemently squashed rumors Wednesday that he was working with his
Republican counterparts on a technical corrections bill to the Dodd-Frank financial reform law, and
quipped that someone must be impersonating him to fellow lawmakers.
CQ Today reported Tuesday that House Financial Services Committee Chairman Spencer Bachus (RAla.) said he was in talks with Frank, the ranking member of the committee, about legislation that would
make several fixes to the Wall Street reform package.
But Frank insisted that was not the case, suggesting it could be mistaken identity.
"I would like to investigate the individual who is apparently impersonating me in the Capitol and has
fooled Spencer Bachus into thinking he has been dealing with me," he said in a statement.
Ive read in the media that Chairman Bachus and I were discussing technical fixes to the financial
reform law, including to a provision regarding rating agencies. In fact, several weeks ago I had one
conversation with him about changes I would like to make to the provision on interchange fees," he
added. "I am not aware of any other conversations going on, either about the rating agency provisions
in the law or any other section."
Republicans have been pushing to limit the reach of Dodd-Frank, pushing legislation that would alter or
repeal several portions of the law. And broad repeal bills have been introduced in both the House and
Senate. The Senate version has been co-sponsored by the entire Republican leadership in that
chamber.
House Republicans are also pushing bills that would modify the Consumer Financial Protection Bureau
created by the law, and have proposed cutting the budgets of federal regulators charged with
implementing its many provisions.
Frank announced Tuesday that he would support legislation that would delay the implementation of
limits on debit card fees in Dodd-Frank, but indicated he was not willing to weigh further alterations.
In a separate statement announcing his support for the delay, Frank declared that provision to be "the
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only part of the financial reform bill that needs to be amended."
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Bachus jabs back over Dodd-Frank fixes
April 6, 2011
By Peter Schroeder
House Financial Services Committee Chairman Spencer Bachus (R-Ala.) swung back Wednesday at
Democratic counterpart Rep. Barney Frank (D-Mass.), accusing him of being inconsistent on whether
technical fixes to the financial reform law are needed.
In response to a report that Frank was talking with Bachus about a technical corrections bill to the Dodd
-Frank law, the ranking member of the committee quipped that an impostor must be roaming Capitol
Hill, because he has been doing no such thing.
"I would like to investigate the individual who is apparently impersonating me in the Capitol and has
fooled Spencer Bachus into thinking he has been dealing with me," he said in a statement.
Bachus issued his own statement later in the day, in which he agreed that an impostor might be loose,
because he has heard conflicting things from Frank on whether Dodd-Frank needs some minor fixes.
"There certainly does need to be an investigation into who is impersonating Barney Frank because
someone who looks and sounds exactly like him said on June 29, 2010, and this is verbatim: I believe
we will need a technical corrections bill that goes beyond minor things,'" he said in his own statement.
Frank made that comment at a meeting of a House-Senate conference committee, before Dodd-Frank
had been enacted.
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He also indicated at a Sept. 24 hearing on executive compensation provisions in the law that one of the
measures, which would require public companies to disclose the median income of its employees and
compare it with the pay of its CEO, was "imprecisely worded" and indicated he "would be very much
open to try to fix that legislatively."
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Care2
Obama Looks To Women For New Consumer Protection Agency
April 6, 2011
By Jessica Pieklo
While the GOP schemes on how to shut down the federal government, the Obama administration is
forging ahead with the duties of actually governing, including looking for a candidate to lead the new
consumer protection agency.
According to reports the administration is considering Federal Reserve Governor Sarah Raskin and
former Michigan Gov. Jennifer Granholm. Of the two women Raskin is seen as the one most able to
win Senate approval--a key consideration given that the first and natural choice to chair the agency,
Elizabeth Warren, instead ended up in an advisory role because Senate Republicans promised to block
her nomination.
The Consumer Financial Protection Bureau is set to open in July and has become an immediate target
for Congressional Republicans who hope to dismantle the agency before it even gets off the ground.
The agency is charged with reigning in abusive practices by banks and other lenders, including credit
card companies and mortgage brokers.
Given its mission it is easy to see why Congressional Republicans have made the agency such a
target.
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But back to the candidates for a moment. It is significant that those names floated, and the brains (and
brawn) behind the new agency are all women. Warren in particular was warning of the problems and
outright fraud in the largely male-dominated world of Wall Street banking well before those practices
drove the economy off a cliff. The fact that the Obama administration has chosen women to lead the
agency charged with equalizing the playing field between consumers and lenders shows, even
implicitly, an acceptance that a little estrogen could go a long way in remedying the previous
catastrophe and preventing the next.
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First Look: Pressure On Regulators
April 7, 2011
By Ben White
FIRST LOOK: PRESSURE ON REGULATORS - A long list of leading progressive groups last night
wrote a letter to federal regulators pushing for them to join state AGs in negotiating a tough settlement
with mortgage servicers rather than issuing weaker consent orders: While homeowners and
communities continue to face breached contracts, obstruction and misrepresentations from servicers,
the proposed consent orders provide no new directions or standards to the financial institutions subject
to your supervision. Rather, the proposal permits the perpetrators of these abuses to design a plan to
comply with existing laws and contracts. This is insufficient to halt the abuses. Full letter (to be
released today): http://politi.co/hzzLDU
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American Banker
Servicers Sign Watered Down Consent Agreements
April 7, 2011
By Brian Collins
Many of the nation's largest residential servicers the subject of an intense federal audit that
commenced last fall have signed consent agreements to take corrective actions with regard to the
processing of foreclosures and loan modifications, according to sources familiar with the matter.
Although no names were mentioned, the nation's "big four" servicers Bank of America, Wells Fargo,
JPMorgan Chase and Citigroup control 60% of the receivables in the servicing market.
The consent agreements were signed on Wednesday, according to a Washington official familiar with
the matter, but he noted that any enforcement actions will not be finalized until next week.
A consent agreement draft circulated in February was deemed too tough by servicers. One provision of
that draft required servicers to obtain an independent contractor to review every foreclosure action
between 2009 - 2010 to determine if borrowers were harmed or treated unfairly during the foreclosure
or loss mitigation process.
Sources told National Mortgage News that some of the requirements in that initial draft have since been
watered down as a result of negotiations with the industry. The review by the independent contractor
will now involve a sampling of foreclosure actions, not every foreclosure.
Observers said federal regulators grew tired of waiting for the state attorneys general to conclude a
global settlement with servicers and moved ahead with their own enforcement actions.
Regulators are expected to levy penalties for various violations they uncovered during the audits. No
dollar number has been mentioned yet.
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American Banker
Bite the Bullet: Waiting and Hoping Wont Cure What Ails Housing
April 7, 2011
By Barbara A. Rehm
The negotiations between mortgage servicers and state and federal officials are a distracting sideshow
to the serious debate we should be having about how to solve the nation's chronic housing problems.
Endless meetings, drafts of dueling documents, hand-wringing, finger-pointing solve nothing.
The sad fact is millions of people have mortgages they can't afford, no matter how much their monthly
payment is reduced. It may sound harsh, but the national interest is not served by policymakers'
hatching yet another bad idea for how to keep those people in their homes.
"Everybody has been obsessed since the crisis began on preventing foreclosures. Everyone keeps
coming up with these magic bullets, some scheme that is going to prevent 1 million foreclosures at little
or no cost to anyone," said Paul Willen, a senior economist and policy adviser in the Federal Reserve
Bank of Boston's research department. "But there is no cheap, easy way to fix this."
Policymakers don't want to admit that.
Most government officials have adopted a wait-and-hope approach, and those who do talk about
housing make earnest statements about keeping hardworking people in their homes. That's a worthy
goal, for sure, but it's ignoring reality: from 2007 to 2010 there were 8.6 million foreclosures. Another 2
million foreclosures are in the works now, according to William R. Emmons, an assistant vice president
and economist at the Federal Reserve Bank of St. Louis, and another 4 million mortgages are so
underwater that they are headed toward foreclosure.
"And if house prices keep falling, then you just keep replenishing the pipeline," Emmons said in an
interview Monday.
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But rather than own up to that, the federal government is, once again, standing by while the states step
in.
Innovation at the state level would be nice, and that's exactly what the billions pledged to the Hardest
Hit funds more than a year ago were supposed to accomplish. But the state AG settlement has hijacked
center stage, commanding more than its fair share of everyone's attention.
The AGs started out with an admirable goal: establish mortgage servicing standards so we never have
another mess like this. But then they pivoted to the more controversial idea of reducing borrowers'
principal. Rather than being a silver-bullet solution, principal reductions have derailed the settlement.
Lenders balked because they consider principal reductions an invitation to anyone who has ever
considered walking on their mortgage to grab their running shoes.
It doesn't matter which side is right.
Say the servicers agreed to cough up the $20 billion that's been suggested, and say that leads to
$20,000 being written off the mortgages held by 1 million people. That would hardly make a dent in the
problem.
The other big "solution" is a hodgepodge of loan modification programs that haven't worked. Redefault
rates are high and no one wins when a modified loan goes into default again. All that does is postpone
pain and weigh down the market and the economy.
The government's wait-and-hope strategy hinges on an upswing in home prices, and that's not
happening.
The S&P Case Shiller home price index reversed its upward trajectory and has been slumping for six
months now.
"The housing market recession is not yet over, and none of the statistics are indicating any form of
sustained recovery," David M. Blitzer, the chairman of the Index Committee at Standard & Poor's, said
last week in a statement. "At most, we have seen all statistics bounce along their troughs; at worst, the
feared double-dip recession may be materializing."
Plenty of smart people think the mortgage mess could drag on for decades. Some even wonder, given
how protracted the foreclosure process is, why we haven't seen a surge of strategic defaults. "More
people are going to say, 'I am not going to try to solve this. It's going to be in my best interest, with the
average time for foreclosures being 525 days, I am just not going to pay,' " said Ricardo Byrd, executive
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director of the National Association of Neighborhoods. "We are getting close to the tipping point where
the stigma of not paying is being reduced."
Asked what he thinks should be done, Byrd said, "The president needs to bring everybody in a room
and say we are going to figure this out today."
At a minimum, someone in the federal government I nominate HUD Secretary Shaun Donovan
needs to get to work on a comprehensive strategy.
Stop trying to not offend anyone and impose some pain on all sides. Servicers, investors and borrowers
all have varying interests in seeing the foreclosure mess cleaned up. But only the federal government
has the incentive and the capacity to craft a comprehensive solution that can work.
The government should shift its focus from trying to keep current borrowers in homes at all costs to
figuring out how to get people who can afford it to live there.
"We have to come to the realization and stop fooling ourselves that for some people there is no
solution," said Cliff Rossi, who has worked in both government and the industry and is currently an
executive-in-residence of the Center for Financial Policy at the University of Maryland's business
school. "There are borrowers who are so underwater and have no capacity to repay, and as unfortunate
as it is, we are just going to have to move those people through the foreclosure pipeline fast."
Willen, who holds a PhD from Yale and has intensively studied the mortgage market for years, agrees
the federal government has to find a way to make the foreclosure process easier and faster.
"We need to get these properties back into the hands of long-term, sustainable owners," he said.
Short sales and some sort of cash-for-keys plan are two more essentials to clearing the backlog of
troubled mortgages.
Say you took that $20 billion and you gave 2 million people who can't pay their mortgages $10,000 to
walk away. Seems smarter than the principal-reduction alternative outlined above. The borrower would
have enough money to rent a new place and the lender would have the title without the hassle or cost
of foreclosure.
The Obama administration is going to have to bite some political bullets. Borrowers who don't deserve
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help are going to get it. Speculators will cash in. Lenders with lousy underwriting standards may avoid
some losses (though they will still absorb plenty). Servicers with lax controls may be left off some
hooks. Taxpayers will get stuck with some of the bill.
It won't be politically popular, but the alternative is another decade or more of a real estate market
strangled by foreclosures.
Barb Rehm is American Banker's editor at large. She welcomes feedback to her weekly column at
[email protected].
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Bloomberg
Mortgage Deals With Banks Backed by Virginias Cuccinelli
April 6, 2011
By David McLaughlin
Virginia Attorney GeneralKenneth Cuccinelli, a critic of a proposal by other states to settle a probe of
mortgage practices, approves of separate settlements between U.S. banks and federal regulators, his
spokesman said.
The largest U.S. mortgage servicers began signing agreements with federal regulators, including the
Office of the Comptroller of the Currency, to improve procedures after investigations found the
companies conducted foreclosures without proper review or complete documentation, two people with
direct knowledge of the negotiations said.
The settlements come as the attorneys general of the 50 states were growing divided over what to seek
from the banks. Cuccinelli and six other Republican attorneys general had criticized settlement terms
put forth last month by some their counterparts as overstepping state authority.
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The AG is in favor of the federal regulators such as OCC reaching separate settlements with mortgage
lenders regarding federal regulatory matters, Brian J. Gottstein, a spokesman for Cuccinelli, said today
in an e-mail. We do not have to wait for some joint federal-state settlement. The quicker all this gets
resolved, the better for consumers and the economy.
The states can reach their own agreements with the banks on matters that fall under state authority, he
said.
Idea Outlined
In a March 22 letter to Iowa Attorney General Tom Miller, a Democrat who has taken the lead in the 50state probe, Cuccinelli and the attorneys general of Texas, Florida and South Carolina opposed a
proposal to reduce principal balances. That idea was outlined in the terms Miller submitted to the top U.
S. mortgage-servicing companies on March 3.
Miller, in an e-mailed statement from his office, said state attorneys general will continue to work with
other federal agencies, including the Justice Department and the Treasury Department, and that an
OCC settlement will not affect our investigation.
The settlement neither preempts, nor impacts our efforts, Miller said.
Scott Pruitt, Oklahomas attorney general, last month wrote Miller his own letter, co-signed by
counterparts in Nebraska and Alabama, criticizing principal reductions.
The National Association of Attorneys General is set to meet in North Carolina next week to discuss
financial fraud protections. Pruitt will attend the meeting, according to his office. Cuccinelli wont,
Gottstein said.
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Associated Press
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The new rules for getting your credit score

Regulations mean a free score may actually be free, but only in certain circumstances
April 6, 2011
By Candice Choi
NEW YORK The promise of a free credit score may no longer be a bait-and-switch marketing ploy.
A couple of changes should have an impact. A new rule that went into effect in January requires lenders
to inform you if a poor credit score resulted in less favorable terms for your loan, such as a higher
interest rate.
Another rule to become effective this summer will tighten the disclosure requirements so that lenders
will have to give more borrowers free copies of their scores.
The regulations are intended to inject some transparency into the decision-making process lenders use
to determine interest rates for specific borrowers. But the changes are also creating confusion about the
availability of free credit scores, which is a subject that already generates plenty of misinformation.
One reason for the confusion is that consumers often incorrectly use the terms "credit report" and
"credit score" interchangeably, notes John Ulzheimer, president of consumer education at SmartCredit.
com. And most consumers know they can get credit reports for free. "That results in a lot people
thinking they're entitled to a free score."
Here's the latest on credit scores:
Know your rights
It's been hammered into most consumers that credit reports are free. Now in some cases, credit scores
are free as well.
Under the rule that went into effect Jan. 1, lenders have two ways to meet new disclosure requirements.
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One option is to furnish the borrower with a copy of the credit score that was used to make the decision.
Consumers should also be provided with the range of possible scores so they understand where they
rank nationally.
Additionally, the lender must disclose which of the three credit bureaus Equifax, Experian or
TransUnion provided the score.
However, lenders have another option that doesn't include the disclosure of the applicant's score. The
alternative is to provide a letter stating the borrower was given a less-than-favorable rate because of his
or her credit risk. This notice must also disclose which credit bureau provided information to the lender.
But on July 21, another regulation will shut that loophole. That's when lenders will no longer have a
choice in the type of notice they provide. If a credit score is used to deny a loan or give unfavorable
terms, the lender must disclose that score to the consumer.
The requirement was part of the financial overhaul known as the Dodd-Frank Act last year.
Shop smart
Keep in mind that the new rules don't guarantee everyone a copy of their credit score.
"The rules affect people who've either been denied credit or applied for credit," said Tom Quinn, credit
scoring expert at Credit.com.
So consumers who aren't actively seeking a loan but want to keep tabs on their credit still need to
be careful when shopping for a credit score.
Experian's homepage, for example, features the eye-catching deal of a credit score for just $1. But read
the fine print, and it turns out the offer is a teaser for a subscription that costs $14.95 a month unless it's
canceled within a week. Experian also runs the catchy TV ads for its FreeCreditScore.com, which offers
a similar "free" deal.
All three credit bureaus sell a report and score package for a one-time cost of about $15. But you need
to click around a bit on the sites to find the option.
Credit scores are also available for $19.95 directly from FICO, the company that develops the most
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widely used scores.
As for credit reports, remember that everyone is still entitled to one free copy a year from each of the
credit bureaus. To request free copies of your report from any of the three bureaus, go to www.
annualcreditreport.com.
Understand scores
Before shelling out for a credit score, note that there's more than one version on the market.
As background, lenders rely on two types of scores to gauge a borrower's risk. FICO scores, which
range from 300 to 850, are still the predominantly used scores. But VantageScores, which were
developed by the three credit bureaus and range from 501 to 990, have gained popularity in recent
years too.
The type of score you'll get depends on where you buy it.
TransUnion sells both versions to consumers. Equifax only sells FICO scores and Experian markets the
PLUS score on its homepage. This is an educational score designed to give consumers a sense of
where they stand and isn't used by lenders, however.
Experian also sells the VantageScore to consumers here. But there is no link to that page from the
company's homepage.
Remember that FICO develops a specific formula for each credit bureau, so even the FICO scores you
get may differ slightly. Scores can also differ if there are discrepancies in the information provided to
each credit bureau.
Finally, there are several smaller operations that sell scores based on independent formulas that aren't
used by lenders. So if you see an offer for a credit score, be sure you understand exactly what version
you're buying.
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American Banker
Durbin Exhibit A in Case to Revamp Dodd-Frank
April 7, 2011
By Donna Borak
WASHINGTON In the battle over the potential negative effects for community banks from the DoddFrank Act, it all comes down to the Durbin amendment.
The provision to limit debit interchange fees has become the go-to example of how the regulatory
reform law will hurt smaller institutions and is one of the only measures most major players agree on
with the notable exception of Sen. Richard Durbin, D-Ill., the amendment's author. At a Senate Banking
Committee hearing Wednesday on the state of community banking, the provision once again took
center stage.
Officials from the Federal Reserve Board, Federal Deposit Insurance Corp. and the Office of the
Comptroller of the Currency acknowledged the provision may damage small banks, while bankers
repeatedly urged Congress to step in to help them.
Despite a statutory exemption from the limit for banks with assets of less than $10 billion, regulators
said institutions are right to be worried.
"We are extremely concerned that, under proposed regulations, community banks may not actually
receive the benefit of the interchange fee limit exemption explicitly provided for in the law," said Sandra
Thompson, director of risk management supervision of the FDIC.
Other regulators emphasized it was one of bankers' biggest problems with the Dodd-Frank law.
"Bankers have brought several provisions of the Dodd-Frank Act to our attention as particular areas of
concern for community banks," said Maryann Hunter, deputy director of division of banking supervision
and regulation for the Fed. "One such provision is the requirement that the Federal Reserve issue a rule
to limit debit card interchange fees and to prohibit network exclusivity arrangements and merchant
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routing restrictions."
Under Dodd-Frank, the Fed is required to ensure debit interchange fees are "reasonable and
proportional." The Fed issued a proposal in December to limit such fees to 12 cents, arguing that would
cover all of an institution's costs for setting up and using a debit system.
The rule has caused community bankers, credit unions, lawmakers and regulators to complain that the
Fed has gone too far in its plan.
Even FDIC Chairman Sheila Bair, who has steadfastly defended Dodd-Frank, has acknowledged the
Durbin amendment could have a negative impact, and sent a letter to the Fed raising several concerns
with its proposal. Acting Comptroller of the Currency John Walsh has also weighed in, arguing the
central bank's plan is too narrowly focused and excludes legitimate bank costs in setting up a debit
system.
Lawmakers at the hearing noted the unusual accord between regulators and the industry. "Typically, we
here try to rail against regulatory overreach," said Sen. Bob Corker, R-Tenn. "In this case, the
regulators are even concerned about what they have been tasked to do. Certainly, the Fed has been
expressed concerns about the criteria. The FDIC and the OCC have strong concerns what it's going to
do to community banks."
In late March, Fed Chairman Ben Bernanke sent a letter to both leaders of the Senate and House
banking committees saying the central bank would miss its April 21 deadline to finalize the rule given
the volume of comment letters received on the issue. He said the Fed would still ensure a final rule is in
place before the regulation goes into effect July 21.
Lawmakers have offered two measures to delay the rule. Sen. Jon Tester, D-Mont., a member of the
Banking Committee, has proposed a bill that would delay the Durbin amendment for two years and
require a study of the costs of creating a debit system. Speaking to reporters after the hearing, Tester
said he had the 60 votes necessary to prevail.
"Now that was last week. Hopefully we still have them this week," said Tester, according to Dow Jones
Newswires.
Rep. Shelley Moore Capito, R-W.Va., has introduced a bill that would delay the interchange rules for a
year and force the Fed to make changes if two of the four financial institution regulators the Fed, the
FDIC, the OCC and the National Credit Union Administration argue the central bank needs to include
other costs in the proposal.
Page 2046 of 3826
To be sure, interchange was not the only area of concern regulators acknowledged.
Community banks, they said, are worried about the ultimate cost of the newly created Consumer
Financial Protection Bureau or a requirement by federal agencies to modify their regulations to remove
references to credit ratings.
But the regulators said it was too early to say how those parts of the law would play out.
"The immediate effects will be different for different banks, depending on their current mix of activities,
so it is not possible to quantify those impacts with accuracy," Jennifer Kelly, senior deputy comptroller
for midsize and community bank supervision for the OCC, said in prepared testimony.
She was seconded by John Ducrest, commissioner of the Louisiana Office of Financial Institutions, on
behalf of the Conference of State Bank Supervisors.
"We are still unaware of the full scope of the impact of Dodd-Frank will have upon the industry as a
whole, and community banks specifically," Ducrest said.
Still, Thompson said that with the exception of the Durbin amendment, community banks would not be
harmed and received some benefits, including a change to deposit insurance assessments that lowered
many small banks' premiums and a permanent increase in the coverage limit to $250,000.
"Much of the Dodd-Frank Act should have no direct impact on community banks, while certain changes
in the Act provide real benefits," said Thompson.
Thompson also suggested that regulations to address "too big to fail" would help to return competitive
balance by imposing additional capital standards and enhanced prudential regulation on the largest
banks.
"Much of the regulatory cost of the Dodd-Frank Act will fall, as it should, directly on the large institutions
that create systemic risk," Thompson said. "The leveling of the competitive playing field will help
preserve the essential diversity of our financial system, and prevent any institution from taking undue
risks at the expense of the public."
Not all regulators agreed that "too big to fail" had been fixed, however, and the OCC's Kelly suggested
Page 2047 of 3826
community banks may be burdened by all the new regulations that result from the reform law. For
example, she said, costs related to small-business lending will increase when new HMDA-style
reporting requirements take effect.
"Regardless of how well community banks adapt to Dodd-Frank Act reforms in the long term, in the
near-to-medium term these new requirements will raise costs and possibly reduce revenue for
community institutions," Kelly said.
Back to Top
Baseline Scenario
Big Banks Have A Powerful New Opponent
April 7, 2011
By Simon Johnson
As a lobby group, the largest U.S. banks have been dominant throughout the latest boom-bust-bailout
cycle capturing the hearts and minds of the Bush and Obama administrations, as well as the support
of most elected representatives on Capitol Hill. Their reign, however, is finally being seriously
challenged by another potentially powerful group an alliance of retailers, big and small now running
TV ads (http://youtu.be/9IUt-lY-XgM, by Americans for Job Security), web content (http://www.youtube.
com/watch?v=DiKoFzS_lXs, by American Family Voices), and this very effective powerful radio spot
directly attacking too big to fail banks: http://www.savejobs.org/audio18.html.
The immediate issue is the so-called Durbin Amendment a requirement in the Dodd-Frank financial
reform legislation that would lower the interchange fees that banks collect when anyone buys anything
with a debit card. Retailers pay the fees but these are then reflected in the prices faced by consumers.
The US has very high debit card swipe fees 44 cents on average but up to 98 cents for some kinds
of cards. These fees are per transaction representing a significant percent of many purchases but
posing a particular problem for smaller merchants. This is estimated to be around $16-17 billion in
annual revenue.
Page 2048 of 3826
Other countries, such as Australia and members of the European Union, have already taken action to
reduce interchange fees because the cost of such transactions is actually quite low (think about it: the
interchange fee for checks, which also draw directly on bank deposits, is exactly zero). The United
States severely lags behind comparable countries in terms of how consumers are treated by banks in
this regard.
The legislative intent behind Senator Dick Durbins Amendment was quite clear: Fees should be
lowered to a level commensurate with the costs of that particular transaction and it attracted
bipartisan support on this basis (the vote was 64-33 in the Senate, of whom 17 were Republican.) The
Federal Reserve was mandated with determining the reasonable fees through a regulatory rule-making
process. There has been some foot-dragging by the Fed but ultimately the proposal is that interchange
fees be capped at 12 cents.
The big banks formidable lobbying machinery naturally sprang into action, arguing the fee cap would
hurt small banks and credit unions. Senators Jon Tester (D., Montana) and Bob Corker (R., TN) are
offering legislation as is Representative Capita that would postpone implementation of the fee
reduction for two years pending further study. The best way to kill something in Washington is to
study it further.
This is an issue that cuts across party line witness the eclectic Dick Morris weighing in for Durbin but
there are unfortunately supporters of the big banks on both sides of the aisle. Tea party-inclined
congressional conservatives are arguing that the Fed should not get involved with the Market. But this
is already a badly broken market, as argued by Jim Miller, budget director under Ronald Reagan. Too
big to fail banks are not a market they are a government subsidy scheme because they are backed
by implicit government bailout support (to be provided at below market cost whenever needed). These
subsidies enable megabanks to borrow more cheaply and grab market share relative to smaller banks
(e.g., those with less than $10 billion of assets.) On top of this, and working closely with the biggest
banks, Visa and MasterCard have around 90 percent market share for debit cards hardly conducive to
reasonable competitive outcomes.
At the same time, some on the political left are confused (or captured) by the claim that lower
interchange fees will hurt small banks and credit unions. This is pure smokescreen banks with less
than $10 billion in total assets are specifically exempt from the provisions of the Durbin Amendment.
This exemption was a smart political move but it also makes economic sense given the disproportionate
size and power of our largest banks. Adam Levitin, writing on the Credit Slips blog, makes a strong
case that small banks will actually win under the proposed cap, as this can level the playing field with
larger banks to some degree:
if they [small banks] end up with higher interchange revenue than big banks as a result of Durbin, that
is a step toward undoing the troubling consolidation of financial services around too-big-to-fail
institutions.
See also Levitins paper on credit unions, showing that they may also benefit again as most have less
Page 2049 of 3826
than $10 billion in total assets.
Of course the big banks are threatening to punish customers in other ways if debit fees are capped, for
example by ending free checking. But this makes no sense given that these banks have to compete
with smaller institutions for retail business that will not be impacted by caps on debit fees.
The big bank vs. nonfinancial sector dispute has just started to get interesting.
Back to Top
American Banker
Checking a Better Deal than Prepaid
April 7, 2011
By Will Hernandez
Despite banks' recent moves to change the terms of their checking accounts, in most cases checking
accounts today are a better value than accounts tied to prepaid cards, a report concluded.
Since checking accounts tend to impose fewer fees than prepaid debit cards and provide more options
to avoid charges, they "turn out to be the better deal," said Suzanne Martindale, associate policy
analyst at Consumers Union, which issued the report.
Consumers Union, the publisher of Consumer Reports, is an independent nonprofit organization. It

based its research on a hypothetical consumer's transaction tendencies, which included paying three
bills (two online and one by check or money order) and conducting eight point of sale transactions and
two deposits per month.
Though at least one analyst said the testing method was flawed, Martindale contends the study was fair
in its evaluation of both checking and prepaid accounts.
Page 2050 of 3826
"We wanted to assume that a typical consumer might be living paycheck to paycheck," she said. "We
didn't want to assume this was a person sitting around with a reserve of cash in the bank."
Consumers Union, of Yonkers, N.Y., examined low-balance, no-interest checking accounts from Bank
of America Corp., Citigroup Inc., JPMorgan Chase & Co., U.S. Bancorp, Wells Fargo & Co., Golden 1
Credit Union and Alliant Credit Union. It then compared the costs of those with fees applied to 12
different prepaid cards, including those offered by two major prepaid marketers, NetSpend Holdings Inc.
and Green Dot Corp.
"Assuming minimum fees for both checking account and prepaid consumers, all the checking accounts
offer a cheaper deal than 10 of the 12 prepaid card programs," according to Consumers Union's report.
The report noted that the checking accounts from Wells Fargo and Bank of America are cheaper than
all 12 prepaid card accounts when consumers take all necessary steps to avoid fees.
But Madeline Aufseeser, a senior analyst with Aite Group LLC, said the hypothetical consumer
transaction tendencies and characteristics on which Consumers Union based its report do not represent
the typical prepaid debit card user, who most likely is financially underserved.
"You're comparing two different target audiences and two different demographics" for these products,
Aufseeser said. "For them to do the comparison that they have, I don't think it does justice to the
prepaid industry."
Aufseeser said Consumers Union is misinterpreting prepaid products designed to serve consumers who
cannot have a checking account for various reasons.
"If you don't have money to put in a checking account" to keep a minimum balance and avoid monthly
fees, then prepaid "is not more expensive," she said.
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Page 2051 of 3826
American Banker
Experian Glitch Sinks Scores
April 7, 2011
By Daniel Wolfe
A glitch at Experian PLC truncated the credit limits of some consumers, leading to their receiving lower
credit scores after it being erroneously reported that they had exceeded their limits, msnbc.com
reported Wednesday.
The error affected users of HSBC Holdings PLC credit cards, according to Bob Sullivans column The
Red Tape Chronicles on msnbc.com.
Experian said in an email that the incident stemmed from an isolated administrative error in coding this
data on Friday, April 1. It was detected and corrected on Monday.
Even so, at least one HSBC customer, David Schott, told Sullivan that his credit monitoring service still
reflected the error as of Wednesday. The error caused Experians system to ignore the final two digits
of a cards credit limit, so that a card with a $1,500 limit would appear to have just a $15 limit.
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The Consumerist
Zombie Wells Fargo Account Rises From Dead, Collects Overdraft Fees
March 29, 2011
By Laura Northrup
Page 2052 of 3826
Leigh thought that she had laid her Wells Fargo checking account to rest. It was closed, gone, out of
her life forever. When some forgotten auto-payments hit the account, though, instead of rejecting the
payments, the bank zombified the account, brought it back to life, and charged Leigh and her husband
a $35 overdraft fee for each item that hit their account. Wells Fargo put them on a payment plan to
repay their balance, then turned around and sent the account to collections less than a month into the
agreed-upon payment plan. Now they've been flagged as overdrafters in the Chexsystems database,
and are still watching the account to make sure that no erroneous auto-payments hit it and trigger more
overdrafts.
I don't even know what to do right now. We closed our long-standing Wells Fargo account a few months
ago. A couple of "auto payment" items went through and opened it back up. We didn't realize it soon
enough and over drafted. We got a letter in the mail and my husband called them over the phone and
set up a payment plan with the rep on the phone. He said he could go make a deposit of $100 in cash
in the nearest branch just to get the problem taken care of.
Just like a lot of people, we don't have a ton of spare change in the budget to pay everything off right
away, but we obviously wanted to take care of the debt that we owed (that happened because of their
$35 overdraft fees that helps keep accounts negative, but that's a letter for a different day!). That
brought the amount owed down to $185. Well, my husband received a letter yesterday that Wells Fargo
had sent our checking account to collections because we hadn't paid the whole thing off and it was less
than a month after our first payment. The amount was also significantly more even though my husband
has been checking on it almost daily to make sure nothing else "goes through" that account (we had
two companies try to take money from there months after we had switched payment information).
We called today and my husband is a calm man and when he told the rep on the phone that we couldn't
pay today [Saturday] (strict budget, we get paid on Thursday), the woman said she couldn't do anything
until we paid the whole debt amount off. When my husband asked why, she talked back to him in a rude
tone. My husband asked to speak to a supervisor. She curtly told him "No." and hung up on him.
I'm not one to go down without a fight and called right back. I gave them the whole story over again and
the rep on the phone told me that the government regulations made it to where they had to close an
overdrawn account. The bank had no choice. My husband was never informed of this while setting up
the payment plan. I was sent to a supervisor who didn't answer the phone and couldn't leave a
message because their inbox was too full.
While on the phone our mail came and we received a letter from our Credit Union saying that we were
being put on Chex Systems because of this whole ordeal with Wells Fargo. We are desperately trying to
fix this knowing that we did the right thing and were doing what Wells Fargo told us to do (what they put
"in their notes") so that we could take care the debt that we are willing to pay back. Can you help us in
anyway? At the very least point us in the right direction. I've seen horror stories on the consumerist
before and I never thought it would be us.
Page 2053 of 3826
I know that I'm not just "accepting" what Wells Fargo has done to us. I wouldn't have written to the
website if I had even the tiniest thought that we did something wrong.
We don't have current executive contact info for Wells Fargo on file, but this post from 2008 is be a
good starting place.
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Yes, That Really Was an Ad for a Bachelor Party Loan
April 6, 2011
By Andrew Martin
Given the havoc that easy credit wreaked on our economy, you might think that lenders would be a little
more judicious these days in how they promote their loans.
Not so with Payday.Pro.
The payday lender recently posted an advertisement suggesting that men take out a payday loan for a
bachelor party. After all, the ad says, You dont want to be the only guy at the bachelor party without
any dollar bills to toss around.
Seems to be a not-so-subtle suggestion that their loans might cover tips for the strippers, too. Heres
the link to their Web site.
But bachelor parties are just one of Payday.Pros offerings.
Page 2054 of 3826
They also suggest using loans for cosmetic surgery, shopping sprees, vacations and, bizarrely, potbellied pet pigs.
If youre dying to be ahead of the times and be as trendy as celebrities like Paris Hilton you might want
to consider getting a fast cash advance to help you get your new adorably Pot Bellied Pig, another ad
reads. Dont wait until the prices of the precious animals fly through the roof because too many tabloids
spot your favorite celebrity with their new Pig. Get a loan today have your new family member
tomorrow!
While the ads may be entertaining, consumer advocates warn that payday loans are generally a bad
way to borrow money. The Center for Responsible Lending, for one, says that the loan terms often
include fees and triple-digit interest rates. Most payday borrowers have nine repeat loans per year and
400 percent interest, the center says.
Phone calls to the Florida offices of Payday.Pro were not returned. Perhaps they were out at a bachelor
party.
Have you come across similarly ridiculous pitches? If you have been enticed by these appeals, tell us
your experience? Do you have any advice for others?
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American Banker
Freddie Wants an End to Side Deals Between Lenders and Mortgage Insurers
April 7, 2011
By Alex Ulam
To maintain an important inducement for mortgage putbacks, Freddie Mac has warned its sellerservicers to stop cutting side deals with mortgage insurers.
Page 2055 of 3826
Under the settlement agreements at issue, mortgage insurers have been agreeing not to rescind letters
to seller-servicers for mortgages owned by Freddie Mac.
The reason Freddie Mac is upset about the settlement agreements is that it had been depending on
insurers to help spot mortgages that did not meet the government-sponsored enterprise's underwriting
guidelines when they were written. When a mortgage insurer rescinded coverage it gave the GSE a red
flag for a putback to the servicer or the originator of the loan.
"These arrangements are neither authorized or contemplated in the Freddie Mac seller-servicer guide
and go beyond the authority the guide does provide," said Brad German, a spokesman for Freddie Mac.
"This does not do anything new, the letter reminds and reinforces to servicers the importance of those
requirements."
The Federal Housing Finance Agency, Freddie Mac's conservator, says the settlement agreements are
serious violations.
"FHFA is aware of this issue," Corinne Russell, an agency spokeswoman, said in an email. "Freddie
Mac's industry letter clarifies and reaffirms existing policy that lenders cannot make side agreements
with mortgage insurers to resolve coverage and claims disputes."
Some say that the settlement agreements that Freddie Mac is objecting to in its industry letter ultimately
may not have that much of an impact on mortgage putbacks. "They [Freddie] are still going to be able to
put back the mortgages to the lenders," said David Reiss, a professor at Brooklyn Law School. "What
they are really saying is that they are losing some free due diligence. But it doesn't seem like a fatal
blow to Fannie and Freddie because they have been doing a pretty good job of identifying loans they
could put back to lenders."
However, for the private mortgage insurers such settlement agreements can be a way to avoid costly
court battles, and the cash payments help defray the expense of having to make a full payout on claims.
Private mortgage insurance can cover anywhere from 20% to 50% of the loan and souring loans have
left insurers on the hook for billions of dollars in losses.
"They{the settlement agreements} are good for the insurers," Reiss said. "Instead of catastrophic
losses, you are able to reduce it to a certain amount and that is a good thing. The uncertainty of the
losses is potentially worse than the amount that you are paying."
Page 2056 of 3826
Mortgage insurers certainly have been feeling the pinch. In its 10-K filings Genworth Financial said it
had to increase reserves to account for higher levels of paid claims on mortgages gone bad an
approximately $85 million increase in reserves in the third quarter of 2010 and a $350 million increase
in the fourth quarter of 2010.
However, the company also said that it reached an agreement with a servicer that reduced its risk inforce exposure. Genworth didn't respond by deadline.
Although the insurers might be able to find material misrepresentation in representations and warranties
to use as a reason to deny coverage, such attempts often result in costly court battles with banks, said
Glen Corso, managing director of the Community Mortgage Banking Project, a trade group. "By
entering into an agreement with the seller-servicer, they are certainly avoiding the possibility that the
seller-servicer would contest the recision in court."
The mortgage industry has been certainly facing major challenges in instances where they have
attempted to deny coverage on mortgages that allegedly did not meet underwriting guidelines.
For example, Bank of America Corp.'s Countrywide unit has sued MGIC Investment Corp. alleging that
the insurer has denied valid mortgage insurance claims.
In other instances, MGIC has gone the settlement route. According to the company's most recent
annual report, in the second quarter of 2010, it entered into a settlement that affected fewer than 10% of
its existing policies as well as delinquent inventory. Under the accord MGIC agreed to waive recision
rights on matters related to mortgage origination and the unidentified customer agreed to contribute to
the cost of the claims the insurer paid on the loans. MGIC did not identify the lender it settled with.
MGIC spokeswoman Katie Monfre would not comment on the settlement.
MGIC also is exploring the possibility of further settlement agreements."We continue to discuss with
other lenders their objections to material rescissions and/or the possibility of entering into a settlement
agreement," MGIC said in its annual report. "In addition to the proceedings involving Countrywide, we
are involved in legal proceedings with respect to rescissions that we do not consider to be collectively
material in amount. Although it is reasonably possible that, when these discussions or proceedings are
completed, there will be a conclusion or determination that we were not entitled to rescind, we are
unable to make a reasonable estimate or range of estimates of the potential liability."
However, while MGIC appears to be splitting the cost of any claims on loans covered by the settlement
agreement, if Freddie Mac owned any of those loans it would lose out on the ability to track them and to
subsequently exercise their putback option.
Page 2057 of 3826
"I am not sure that Freddie Mac would be aware of which loans they own that are referenced in the
settlement," Corso said. "So if they are not aware, Freddie Mac would receive the claims but it would
not know which loans were covered."
Corso, a former mortgage insurance executive, said that in court cases over rescissions, "the legal
costs can be pretty intense for both sides." From the insurer's perspective, "they realize that with some
mortgages they have a good case and other ones they might not have a good case. It might make more
sense [to settle] than going to court and losing completely."
"Many of these situations are not black and white," Corso said. "It is not a question of 'I meant to buy 50
cars and this one is white.' "
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Housing Wire
MBA asks for more time on servicing fee structure rules
April 7, 2011
By Jon Prior
The Mortgage Bankers Association sent a letter to federal agencies this week, asking to delay new
rules due in the summer governing how servicers are paid.
John Courson, CEO of the MBA, sent the letter to Federal Housing Finance Agency Acting Director
Edward DeMarco, Treasury Department Secretary Timothy Geithner and Department of Housing and
Urban Development Secretary Shaun Donovan. In January, the three agencies announced they would
be working with Fannie Mae and Freddie Mac to restructure mortgage-servicing fees and better align
them with heightened loss mitigation needs.
"MBA understands that the GSEs and other regulatory agencies are seeking to make a final decision on
the servicing fee structure by mid-summer. MBA is concerned with a rush to judgment on this critical
and complex issue," Courson wrote.
Page 2058 of 3826
The FHFA responded Thursday in a statement sent to HousingWire.
"FHFA understands that any change to mortgage compensation could impact a number of participants
in the mortgage market. The Joint Servicing Compensation Initiative has undertaken a deliberative
process through the release of discussion documents and meetings with interested parties. We are
continuing that process to ensure that relevant issues receive full consideration," FHFA spokesperson
Corrinne Russell said.
The current servicing fee has remained at 25 basis points since the 1980's. But as foreclosure levels
continue to break records in 2011, working more closely with the borrower to prevent these foreclosures
has turned profits into losses. By changing the structure, federal agencies believe these companies will
have more incentive to push modifications and other workouts higher.
But questions remain. Early indications are that the servicer fee will change once a loan hits a certain
stage of delinquency. Courson asked for more clarification on when in the process that would be, at 30,
60 or 90 days delinquent. Whether the "default servicing fee" will be a flat fee or structured to specific
service is still to be determined, as is whether or not defaulted loans will be required to transfer to a
third party or stay with the original servicer.
At the Source Media Mortgage Servicing Conference Wednesday, Eric Green, the CEO of Real Time
Resolutions, a specialty servicer, said he expects even securitization to be affected by the upcoming
fee changes.
"You're going to have two servicers on the securitization paperwork," Green said. "You would have the
original servicer who will under a lot of pressure to get the loan performing again before the loan moves
to the special servicer."
Courson asked the agencies to ensure the industry receives answers to his questions before a rule is
passed and allow them enough time to make give their input.
"Servicing is the predominate asset of most mortgage companies," Courson said. "Thus, it is critical that
changes to the current servicing fee structure be done with extreme caution, research, and input from
stakeholders."
The agencies could not immediately reply to requests for comment.
Page 2059 of 3826
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Housing Wire
Undercover investigation reveals mortgage scammer tactics
April 6, 2011
By Shaina Zucker
Four fair housing organizations released findings Wednesday from a yearlong undercover investigation
uncovering loan modification scammer-tactics victimizing homeowners.
The report, issued by The National Fair Housing Alliance, The Connecticut Fair Housing Center,
Housing Opportunities Made Equal of Virginia, and the Miami Valley Fair Housing Center, was compiled
after 80 loan modification companies were investigated.
"This is shameful abuse by loan modification scammers to take advantage of desperate homeowners,"
said Shanna Smith, NFHA president and CEO. "We and our partner organizations will work to see to it
that these companies are prosecuted by the Federal Trade Commission and other federal and state
enforcement agencies."
With one in nine homeowners nationwide more than 90 days behind on their mortgage payments,
mortgage modification and foreclosure prevention is a lucrative industry, according to the release.
According to the report, investigators working on behalf of the fair housing organizations captured
scammers saying, "Id be breaking the law if I told you to stop paying your mortgage, but friend-tofriend, you wont get a loan modification until you are behind on your mortgage."
Another scammer was caught saying if the buyer doesnt qualify, they would modify expenses for them.
Page 2060 of 3826
"They [the lenders] dont check it," one scammer said. "No one knows what you spend on groceries.
We make you qualify by playing with the numbers."
Some of the common scammer tactics revealed in the report include:

55% required an upfront fee to start work or required a low initial fee to conduct minimal work on
behalf of distressed homeowners, such as reviewing loan documents;
43% guaranteed or promised they could secure a loan modification even before learning about the
homeowners financial limitations;
24% advised or encouraged homeowners to stop making their mortgage payments or to stop
contacting their lenders;
16% guaranteed a new, much lower interest rate ranging between two and 6 percent on modified
loans;
12% discouraged homeowners from seeking free help from government-approved housing counseling
agencies;
8% encouraged homeowners to provide fraudulent information to their lenders.
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Housing Wire
The Obama administrations regulatory capture
April 6, 2011
By Joseph Mason
As an economist, I know one simple truth: every legislative and regulatory decision has implications for
jobs and output. Hence, policies like mandating mortgage modifications and forgoing access to energy
resources in the Outer Continental Shelf and the Gulf of Mexico have inextricable economic
consequences.
During the Gulf Moratorium, the courts acknowledged such views. In response to the Administrations
Page 2061 of 3826
policy, a federal judge in New Orleans blocked enforcement of the moratorium, writing that [t]he
blanket moratorium, with no parameters, seems to assume that because one rig failed, all companies
and rigs drilling new wells over 500 feet also universally present an imminent danger, which was not in the courts opinion - sufficient justification for taking economic value from private sector jobs and
firms.
But the situation is worse than you might think. In the field of economics, such value-destroying
economic takings are not as rare as one might think. Previous research gives a worrying indication of
what can be expected from the regulatory responses to events like Fukashima, Deepwater Horizon, and
the mortgage crisis. The results show that regulatory decisions are influenced by many factors beyond
the dispassionate evaluation of the economic costs and benefits.
For instance, a recent study by Mian, Sufi, and Trebbi (2010) found that congressional representatives
whose constituents had higher rates of mortgage defaults were more likely to be in favor of the
Foreclosure Prevention Act, despite economic evidence that foreclosure prevention has unavoidable
economic costs, including depressed home prices, decreased construction activity, and higher
unemployment, even while it is clear that the vast majority of foreclosures involve borrowers who have
made a single payment in months and, often, no longer even reside in the home.
Before that, research by Moran and Weingast (1982) showed that politicians influenced the activities of
the Federal Trade Commission, skewing the work of a supposedly independent regulatory agency.
Grabowski and Vernon (1978) showed that the nascent Consumer Products Safety Commission
(CPSC) tended to focus on products where risks were well understood, ostensibly to better justify their
creation to lay outsiders. Moreover, only five of the CPSCs top 21 priority products for regulation had
measurable economic benefits that exceeded proposed regulatory costs.
What we can observe from a large body of research on the political economy of regulation, therefore, is
that both elected officials and regulatory agencies are influenced by political factors, which may lead to
suboptimal solutions to complicated problems such as energy policy and the mortgage crisis.
In recent years, regulatory agencies have continued to impose costly policies upon the economy
without congressional approval. For instance, while the EPA ruling that carbon should treated as a
pollutant was ultimately supported by the Supreme Court, many in Congress still maintain that the
agency overstepped its bounds in such a dramatic and potentially costly reinterpretation of its rules.
The carbon ruling, however, is somewhat less problematic than the EPAs December 2009 back-door
regulation of phthalates (used to soften plastics). Although the EPA did not have sound scientific
evidence upon which to ban phthalates, the agency imposed the precautionary principle to
temporarily halt their production.
Page 2062 of 3826
The Bureau of Ocean Energy Management, Regulation, and Enforcements recent Gulf of Mexico
drilling policy seems to have been based on similar policy reasoning. While specific companies, a
specific type of platform design, and BP, itself, have been blamed for the Deepwater Horizon blowout,
BOEMRA continued to severely restrict not only deep water but also shallow water drilling in the Gulf of
Mexico, despite ongoing economic damage to the Gulf region. Then, blatantly disregarding the Spill
Commissions findings and even the dissenting report of the Chair of that Commission, BOEMRAs first
deep water drilling permit went to BP.
In looking at the political economy of new regulatory arrangements, therefore, we must look with
skepticism and concern upon both the political motivations of the regulatory officials charged with
enforcing the rules, and the economic power that will be concentrated in those regulatory officials as a
result of their influence over the implementation costs and economic redistribution. Without restraint, a
potentially toxic mix of politics and power may damage both the industry and the environment.
When new agencies like BOEMRA and CFPB are created, they have a strong incentive to prove their
worth to their creators and flex their muscle with regard to their related industries. As such, new
agencies regularly undergo dramatic power shifts before settling into anything that could be considered
a stable role in the U.S. regulatory framework. Recently proposed legislation can help that evolution by
setting clear accountability standards for new regulatory agencies like BOEMRA and the Consumer
Financial Protection Bureau so that they are captured neither by corporations or politicians.
Balancing regulatory accountability and economic growth as envisioned in proposed legislation can
therefore be a useful lens that sharpens our focus on regulatory rent-seeking and helps build regulatory
framework that can balance the safe use of energy resources and social goals of housing policy with
jobs and economic growth.
Joseph Mason is a Professor of Finance, Louisiana State University. he is also a guest speaker at
HousingWire's upcoming REthink Symposium.
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Obama Official Very Concerned About Mortgage Lending in Shutdown
Page 2063 of 3826
April 7, 2011
By Alan Zibel
An Obama administration official on Thursday stepped up warnings that the U.S. housing market could
be dealt a blow if the federal government shuts down, seeking to build pressure on lawmakers to reach
a budget agreement.
Housing and Urban Development Secretary Shaun Donovan told Senate lawmakers that he is very
concerned that a government shutdown could force lenders to stop making loans backed by the
Federal Housing Administration, a government agency that insures home mortgages.
This is the worst time that we could introduce that uncertainty into this fragile housing market,
Donovan told a Senate subcommittee.
The FHA, part of the Department of Housing and Urban Development, doesnt issue loans directly but
provides a federal guarantee against default. It has been a key source of funding since the housing
market went bust, particularly for first-time buyers. The agency backed about 20% of new loans last
year, including about 40% of those made for purchases.
If the federal government shuts down, the FHA wont be insuring any new loans. Banks will still be able
to make FHA loans, but some will hold onto those loans until the government re-opens for business.
While large lenders are likely to be able to take this risk, others may not be able to do so and could be
forced to cancel pending loans.
I am very concerned that a significant number of lenders would not choose to close on those loans,
Donovan said.
Outside of the FHA, most loans are being backed by Fannie Mae and Freddie Mac, which wouldnt be
affected by a shutdown. Fannie and Freddie generally require down payments of 20% unless borrowers
have mortgage insurance. The two companies, which have been under federal control since September
2008, would not be subject to a shutdown as they remain legally separate from the federal government.
The FHA is popular with first-time home buyers because it requires minimum down payments of just
3.5%.
After a late-night meeting Wednesday with House Speaker John Boehner and Senate Majority Leader
Harry Reid, President Barack Obama said the two parties had moved closer to a spending agreement
Page 2064 of 3826
to avoid a government shutdown Friday, but no deal had been struck.
Back to Top
Associated Press
ACLU challenges Fla. foreclosure courts as biased
April 7, 2011
By Mike Schneider
ORLANDO, Fla. -- The ACLU challenged foreclosure courts in southwest Florida Thursday, claiming
they are biased against homeowners and don't provide the same rights as regular civil courts.
The American Civil Liberties Union filed court papers in state appellate court in Lakeland asking for a
review of the procedures used in foreclosure courts covering southwest Florida.
The lawsuit was filed on behalf of Georgi Merrigan, a Lee County homeowner in the middle of a
foreclosure fight who wants her case taken out of foreclosure court and heard in regular civil court.
Merrigan was unable to continue payments on a $335,000 loan in 2008 after she left her job as a
paramedic to care for her husband, who had suffered a heart attack and was in a car accident.
The foreclosure courts were set up all over Florida last year to prevent foreclosure hearings from
clogging up the regular circuit court system. They usually are run by retired judges and involve cases
between homeowners who have defaulted on their mortgage payments and banks trying to claim the
properties.
The ACLU claimed in court papers that procedures in foreclosure courts are set up to push through
cases as quickly as possible, despite the fact that many cases have troubled paperwork. The emphasis
on clearing cases puts homeowners at a disadvantage because it limits their opportunity to develop
their cases or present a defense, the court papers said.
Page 2065 of 3826
The ACLU said the foreclosure courts use a quota on the number of cases that should be cleared each
month.
A spokeswoman for the 20th judicial circuit, which covers southwest Florida, said there were no set
quotas but there always was a goal to clear up as many backlogged case as possible.
"They are given due process," said Sheila Mann, a spokeswoman for the courts.
But Mann said there isn't a lot of "wiggle room" in foreclosure cases since the courts are constrained by
the law. If there is a problematic foreclosure where the banks' documentation of who owns the loan is
suspect, it is up to the homeowner to bring it to the court's attention she said.
"People are trying to say it's the court's responsibility to ferret this information out," Mann said. "But if it's
not brought to the court's attention, we're not investigators ... The courts can't give out legal advice."
Back to Top
Forbes (MoneyBuilder blog)

Is It Time To Switch To A Credit Union?
April 6, 2011
By Tim Chen
Times are good for credit card divisions at most major banks right now. Credit card APRs have
remained stubbornly high, only slightly off the peak reached in February of 2010, while banks
borrowing rates are still at historic lows, fueling great profit margins at credit card companies.
Its actually pretty amazing that despite ultra-low interest rates across most financial sectors and
products, the average banks credit card still carries a 13.5% minimum APR, based on the average of
Page 2066 of 3826
500+ bank credit cards in our database.
Not all credit unions are created equal
For those fed up with unnecessarily high interest rates, credit unions provide a viable option. And just
like searching for a bank, it pays to do some comparison shopping. Many credit unions are really no
different from banks, and they offer similar rates, while others offer credit card APRs well under 10%,
even for people with middle of the road credit.
For example, anyone in the country can join Associated Credit Union, which offers a card with a 9.9%
APR, for members with a FICO score above 680. It takes a 600 FICO to qualify for their 12% Visa Card,
though according to Glenn Miller, SVP of Marketing at Associated, those with scores below 600 are
reviewed individually to see if there is a way we can help them get the card.
Look locally for the best deals
Coastal Federal Credit Union, based in North Carolina, offers a 7.25% APR on their Community Visa.
And this low rate isnt just reserved for top-tier clients, its within reach for many of their customers.
According to Joseph Mecca of Coastal Federal, over 33% of the credit unions members with active
loans currently qualify for the card.
And while rates at most financial institutions can vary by 10-15% depending on your credit score, Coast
Central Credit Union, which serves the area around Eureka, California, doesnt bother. Instead, they
only offer one rate for their Visa Classic and Visa Gold cards. If you have adequate credit to qualify for
the cards, you will get a 6.5% APR on Gold, and a 7.45% APR on Classic. The credit union even offers
a card targeted at young adults with no credit history, with the same 7.45% rate, called the First Visa.
We try to help members become more financially successful. The First Visa card has a lower line of
credit, but we offer this card to young adults with no credit at all, says Dennis Hunter, VP of Marketing
at Coast Central. This seems generous compared to the high teens percentage rates typically marketed
towards college students by for-profit banks.
Space Age Federal Credit Union, which serves the Lowry community in Denver, as well as over 100
employer groups in the Denver area, stands out by offering some of the lowest interest rates Ive ever
come across on a credit card. Their standard card charges a 6.5% APR to members with a credit score
of 700 or above, and their premium offering has an astoundingly low 3.25% APR for those with a credit
score above 740.
Page 2067 of 3826
Offering a low rate card with rewards attached has increased our credit card volume significantly. If
you, as a member, have a 13+% card, its probably not the front card in your wallet, says John Faries,
the credit unions VP of Finance, in explaining the credit unions rationale for offering such a low rate.
Lower average rates at credit unions across the country
If youre still paying 14% or more on your bank credit card, now is as good a time as ever to make the
switch, and join one of the countrys nearly 7,000 not-for-profit credit unions. The average APR across
the 1,000+ credit union cards that we track is 11.1%, a full 2.4% lower than the average bank credit
card.
With a little bit of detective work, you can seek out the best credit unions in your area, and easily find a
deal with a rate below 8%; with great credit, youll likely even find a rate below 7%, and cut your interest
payments in half.
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Page 2068 of 3826
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Lepley, Richard (CFPB)

accounts/cn=standard users/cn=lepleyr>
_DL_CFPB_AllHands
Hatch Act ethics restrictions on political activity

Thu Apr 07 2011 11:54:53 EDT
Quick Reference for Hatch Act.doc
Memo on Hatch Act Restrictions.doc
CFPB Employees;
With the onset of the 2012 Presidential campaign, it is important to remember our duty as federal
Executive Branch employees to refrain from activities in certain circumstances directed toward the
success or failure of a political party, candidate for partisan political office, or partisan political group.
For your convenience, a summary of the political activities prohibited by the Hatch Act and
implementing regulations is attached along with a quick reference guide. If you have questions or
believe you may wish to engage in political activities of a similar nature, please contact any of the CFPB
ethics officials identified in the attachment for further information.
Thank you for your continued assistance in ensuring CFPB activities conform to the highest ethical
standards of integrity and impartiality.
Richard Lepley
Senior CFPB Ethics Official
Page 2069 of 3826
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Carpenter, Daniel
(fydibohf23spdlt)/cn=recipients/cn=carpenterd>
cfpb
Thu Apr 07 2011 10:03:04 EDT
Lets say, hypothetically, that someone asks me what type of work Id want to do at CFPB. Whats the
right answer?
Page 2074 of 3826
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List Federal Register Notice 4-6-11

Wed Apr 06 2011 18:52:54 EDT
List Federal Register Notice 4-6-11.docx
This should be in good shape to send to Tom. I made some technical edits, reworked a few sentences,
but nothing substantive or major.
-K
Page 2075 of 3826
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Updated HUD Documents

Wed Apr 06 2011 18:32:22 EDT
HUD Transfer Data 4-6-11 530 pm.xlsx
Updated HUD documents reflecting the changes from last nights meeting. The data does not yet reflect
(b) (5), (b) (2)
-K
Kevin K. Lownds
Review Analyst
(202) 435-7399
Page 2084 of 3826
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Hart, Maria (CFPB)
RE: Timesheet for Pay Period 7
Wed Apr 06 2011 18:09:57 EDT
Timesheet Pay Period 7.xlsx
Hi Maria,
Attached is my time sheet. Thanks!
-K
From: Hart, Maria (CFPB)

To: Alag, Sartaj; Bach, Mary (Stacey)(CFPB); Botelho, Michael (CFPB); Brown, Amy (CFPB); Coyle,
Raymond (CFPB); Cronin, Katherine (CFPB); Cumpiano, Flavio (CFPB); Duncan, Timothy (CFPB);
Frotman, Seth (CFPB); Gelfond, Rebecca (CFPB); Gordon, Michael (CFPB); Hart, Maria (CFPB);
Harvey, Imani; Healey, Jean (CFPB); Herchen, Emily (CFPB); Holmes, Cordelia (CFPB; Horan,
Kathleen (CFPB); Horn, Richard (CFPB); Howard, Jennifer (CFPB); Hrdy, Alice (CFPB); Huang,
Eugene (CFPB); Hupp, James (CFPB); Jackson, Monica (CFPB); Jackson, Peter (CFPB); Johnson,
Christopher; Keane, Micheal (CFPB); Kearney, Thomas; Kennedy, Leonard (CFPB); Krafft, Nicholas
(CFPB); Kunin, Noah (CFPB); Ladd, Christine; Lepley, Richard (CFPB); Lev, Ori (CFPB); Logan,
Amanda (CFPB); Lopez-Fernandini, Alejandra (CFPB); Lownds, Kevin (CFPB); Mann, Seth (CFPB);
Markus, Kent; Martin, Alyssa (CFPB); Martinez, Zixta (CFPB); Megee, Christine (CFPB); Meyer, Erie
(CFPB); Michalosky, Martin (CFPB); Miller, Kimberly (CFPB); Morris, Lucy (CFPB); Mosena, Lea
(CFPB); Osborn, Meredith (CFPB); Pearl, Joanna (CFPB); Perry, Vanessa (CFPB); Petersen, Cara
(CFPB); Petraeus, Holly (CFPB); Pluta, Scott (CFPB); Prince, Victor (CFPB); Puri, Angela (CFPB);
Reeder, Garry (CFPB); Reese, Angelique (CFPB); Reilly, Deb (CFPB); Riley, Jeffrey (CFPB); Royster,
Felicia (CFPB); Ruihley, Joshua (CFPB); Sealy, William; Selden, R. Colgate (CFPB); Sena, Theresa
(CFPB); Sensiba, Vicki (CFPB); Shue, Jeffrey (CFPB); Silberman, David (CFPB); Skinner, Cathaleen;
Slagter, Dennis (CFPB); Smullin, Rebecca (CFPB); Smyth, Nick (CFPB); Sokolov, Dan; Stapleton,
Claire (CFPB); Stark, Paula-Rose (CFPB); Sterken, Nathan (CFPB); Stone, Bayard (Corey) (CFPB);
Taiwo, Ebunoluwa (CFPB); Tamberrino, Mary (CFPB); Tierney, Patrick (CFPB); Tingwald, James
(CFPB); Trueblood, Andrew (CFPB); Tucker, Kevin (CFPB); Turenne, Jeannine (CFPB); Twohig, Peggy
(CFPB); Vail, Amber (CFPB); Vale, Elizabeth (CFPB); Van Loo, Rory (CFPB); Vinton, Merici (CFPB);
Wanderer, Agnes (CFPB); Wang, Shou (CFPB); West, Catherine (CFPB); Williams, Anya (CFPB);
Williams, Kevin (CFPB); Young, Christopher; Yuda, John (CFPB); Zapanta, Victor (CFPB)
Cc: Hart, Maria (CFPB)
Subject: Timesheet for Pay Period 7
Importance: High
Page 2120 of 3826
Good Morning,
Please complete the attached time and attendance form (annual/sick leave usage or projected usage).
The form will reflect Pay Period #7 (March 27th - April 9th ).
It is important that all timecards be submitted on time so that we can ensure accurate and timely salary
payment.
Forward your completed timecard to [email protected] and to your supervisor, no later than
noon on Thursday, April 7th .
**Reminder: Timecards will not be processed unless your supervisor is copied on the email.
Thank You,
Maria
5-7337
Page 2121 of 3826
Timesheet Pay Period 7.xlsx (Attachment 1 of 1)
Period
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
2010
Week 1
01/03/09
01/17/09
01/31/09
02/14/09
02/28/09
03/14/09
03/28/09
04/11/09
04/25/09
05/09/09
05/23/09
06/06/09
06/20/09
07/04/09
07/18/09
08/01/09
08/15/09
08/29/09
09/12/09
09/26/09
10/10/09
10/24/09
11/07/09
11/21/09
12/05/09
12/19/09
Week2
01/10/09
01/24/09
02/07/09
02/21/09
03/07/09
03/21/09
04/04/09
04/18/09
05/02/09
05/16/09
05/30/09
06/13/09
06/27/09
07/11/09
07/25/09
08/08/09
08/22/09
09/05/09
09/19/09
10/03/09
10/17/09
10/31/09
11/14/09
11/28/09
12/12/09
12/26/09
Page 2123 of 3826
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Scanlon, Thomas
Summaries of Redlines
Wed Apr 06 2011 17:56:30 EDT
Summaries of Changes to Enumerated Consumer Laws 4-6-11.doc
Hi Tom,
Attached is a draft version of three summaries for ILSA, RESPA, and SAFEs regulations. Would you
mind taking a quick look and confirming that this is what youd like for the regulations weve redlined? If
so, Ill get to work on the others on Friday. Thanks so much!
-Kevin
Kevin K. Lownds
Review Analyst
(202) 435-7399
Page 2124 of 3826
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RE: Happy Hour Friday at Mackey's - 6 pm

Wed Apr 06 2011 17:15:12 EDT
Thanks, Klein!

Subject: FW: Happy Hour Friday at Mackey's - 6 pm
From: Smyth, Nick (CFPB)

To: Trueblood, Andrew (CFPB); Brown, Charles (CFPB); Smullin, Rebecca (CFPB); Vinton, Merici
(CFPB); Hupp, James (CFPB); Zapanta, Victor (CFPB); Lopez-Fernandini, Alejandra (CFPB); Goldfarb,
Rachael (CFPB); Reeder, Garry (CFPB); Pluta, Scott (CFPB); Riley, Jeffrey (CFPB); Huang, Eugene
(CFPB); Martin, Alyssa (CFPB); Mann, Benjamin; Canfield, Anna (CFPB); English, Leandra (CFPB);
Dorsey, Darian (CFPB); Galicki, Joshua (CFPB); Darling, Eben (CFPB); Chopra, Rohit (CFPB); Krafft,
Nicholas (CFPB); Tierney, Patrick (CFPB); Vanderslice, Julie (CFPB); Stark, Paula-Rose (CFPB);
English, Jared; Adeyemo, Adewale (Wally) (CFPB); Twohig, Peggy (CFPB); Blenkinsopp, Alexander
(CFPB)
Cc: Osborn, Meredith (CFPB); Pearl, Joanna (CFPB); Taiwo, Ebunoluwa (CFPB); Glaser, Elizabeth
(CFPB); Van Loo, Rory (CFPB); Scanlon, Thomas; Blumenthal, Pamela (CFPB); Gorski, Stephanie
(CFPB); Hrdy, Alice (CFPB); Munz, Daniel (CFPB); '[email protected]'; Logan, Amanda (CFPB);
Jackson, Peter (CFPB); Callan, Nicole (CFPB); Williams, Anya (CFPB); Hammonds, Jamice (CFPB);
Middlebrook, Jack (CFPB); Bateman, Jon; Cochran, John; Patross, Whitney (CFPB); Sobczak, Greg;
Kern, Shaun (CFPB); Klein, Heather (CFPB)
Subject: Happy Hour Friday at Mackey's - 6 pm
Please join us for a happy hour Friday at Mackeys at 6 pm! Please forward widely (especially to folks
whove joined us recently).
Nick
Page 2126 of 3826
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III.
A.
Wed Apr 06 2011 15:32:57 EDT
Procedural Requirements
Administrative Procedure Act
This rule is an interpretive rule and therefore exempt from public notice and comment requirements
under the Administrative Procedure Act (APA) (5 U.S.C. 551 et seq.). 5 U.S.C. 553(b)(A). The APA
provides an exception to the notice-and-comment requirements for interpretive rules, general
statements of policy, or rules of agency organization, procedure, or practice. Id. Interpretive rules are
those which merely clarify or explain existing law or regulations. Alcaraz v. Block, 746 F.2d 593, 613
(9th Cir. 1984) (quoting Powderly v. Schweiker, 704 F.2d 1092, 1098 (9th Cir. 1983)). By publishing the
list of rule and orders that will be enforced by the Bureau, pursuant to 1063(i) of the Act, the
Bureau is issuing a rule that only reflects the (i) current rules and orders issued by the transferor
agencies under the enumerated consumer laws and (ii) the Bureaus jurisdiction to enforce such rules
and orders under the Act. Because this rule merely interprets subtitles B, E and F of the Act with
respect to the Bureaus enforcement authority over rules and orders, and does not create any new
obligations, this is an interpretive rule. 1053(a), 1054(a) and 1061(b). Notwithstanding this
determination, the Bureau invites the public to provide comments.
Page 2137 of 3826
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_DL_CFPB_AllHands
Adamske, Steven
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Wed Apr 06 2011 13:08:40 EDT
Index

Dow Jones Newswires US Rep Capito Expects Vote In May On Consumer-Bureau Bills
Dow Jones Newswires Banks, Reps To Discuss Reining In US Consumer Bureau Powers
MarketWatch GOP, Democrats clash over consumer protection
Page 2139 of 3826
Bloomberg Senate Banking Chief Says He Opposes Change to Consumer Bureau
Politico Morning Money CFPB Prebuttal
Credit Slips Elizabeth Warren (TM)
The Hill (blog) Geithner reiterates need for Congress to raise debt ceiling
Reuters Obama reviews names to run consumer agency
Detroit News Granholm wont head new consumer agency
AOL Daily Finance Predatory Payday Lenders Put Military Families in the Crosshairs
Reverse Mortgage Daily CFPB Adds Senior Leadership Positions With New Hires
Rutgers University (press release) Rutgers University Will Honor Alumna Elizabeth Warren,
One Of 100 Most Influential People In World
American Banker Seize the Moment: Use Settlement Talks to Halt Abuse of Homeowners
Housing Wire Bank superintendent Neiman stresses national mortgage servicing standard
New York Times Servicers Said to Agree to Revamped Foreclosures
Bloomberg Banks Get Edge in Talks on Foreclosure Penalties as Feds Settle
Naked Capitalism Banks Win Again: Weak Mortgage Settlement Proposal Undermined by
Phony Consent Decrees
Consumer Credit
Wall Street Journal (blog) Frank Seeks to Amend Dodd-Frank
American Banker Citi Ups the Ante with Reversal of High-to-Low Check Processing
American Banker JPMorgan Vows to Restore Debit Perks if Congress Delays Interchange Fee
Limits
Wall Street Journal Frank Flops on Processing Fees
American Banker TCFs Debit Interchange Lawsuit Moving Forward
Housing
American Banker Appeals Court Rules Against Mortgage Brokers
American Banker New York Bank Superintendent: MERS Regulations Possible
Page 2140 of 3826

American Banker Massachusetts Land Recorder Wants to Close Account at B of A to Protest
MERS
Dow Jones Newswires

US Rep Capito Expects Vote In May On Consumer-Bureau Bills
April 6, 2011
Rep. Shelley Moore Capito (R., W.V.) said Wednesday that she expects the House in May will vote on
her proposals to limit the Consumer Financial Protection Bureau's powers until the agency has a
Senate- approved director in place.
A plan authored by Capito and backed by banking groups would block the bureau from inheriting its
consumer-protection powers on July 21 as scheduled if there is no permanent director. Another draft bill
by Capito would restrict the bureau's ability to work with other regulators to examine banks.
The bills will be up for discussion at a hearing Wednesday held by a House Financial Services
subcommittee that Capito leads. The panel will also consider legislation that would rework the structure
of the bureau so that it is run by a five-member, bipartisan commission and a plan to make it easier for
the bureau's rules to be overturned.
"I think there will be a vote," Capito told Dow Jones Newswires on the sidelines of a conference, adding
that the vote could come in May.
In her speech, Capito noted that House Republicans have "some significant questions" about the
consumer bureau's governance structure.
She also voiced concern that the White House hasn't yet nominated a director for the agency.
"What is going to happen if there is no director?," she asked. "I can't believe the president hasn't gotten
Page 2141 of 3826
a name out there."
She added that there is some question about whether the president could make a "recess
appointment," which would enable the president to appoint someone to the top director post while
skipping a potentially complicated Senate approval process.
Still, Capito said there is uncertainty about whether such an appointment is legal. She argued that the
move is supposed to be used to fill vacant positions, not newly created positions such as the agency's
director seat.
Technically, "you're not filling a vacancy because a position was not there," she said. "There are just a
lot of unanswered questions."
Capito suggested she would like to repeal the Dodd-Frank financial-overhaul law, which created the
consumer bureau. But that would be difficult to achieve, given that Democrats who advanced the law
control the Senate and the White House.
"Maybe I'd like to do that" but "that's too high a hill to climb," she said, regarding efforts to undue DoddFrank. With that, House Republicans are focused on reshaping areas where the overhaul overreached
or is too broad, she said.
Meanwhile, Capito has introduced a bill that would delay the Federal Reserve's upcoming rule to limit
what are known as interchange fees that banks charge merchants when consumers use their debit
cards. On Tuesday, Rep. Barney Frank ( D., Mass.), a key author of Dodd-Frank, said he supports
efforts to delay the regulations.
Capito said Frank hasn't signed on to her bill but his comments are helpful.
"Any bipartisan support is helpful, but I still think that the real play will have to come from the Senate,"
she said.
Back to Top
Page 2142 of 3826
Dow Jones Newswires

Banks, Reps To Discuss Reining In US Consumer Bureau Powers
April 6, 2011
Republican lawmakers and financial firms at a congressional hearing Wednesday plan to outline a
laundry list of concerns they have with the way the new U.S. consumer watchdog agency is structured,
part of their uphill battle to rein in the bureau's powers over banks and other companies.
"It's fair to say that the bureau's current structure places more unreviewable power in the hands of a
single unelected official than any other federal regulatory law," the Chamber of Commerce said in a
statement prepared for the House Financial Services subcommittee hearing. "The time to act is now."
The Chamber and groups such as the American Bankers Association and the Independent Community
Bankers of America plan to endorse new House GOP proposals to water down the bureau, including a
proposal to make it easier for the Consumer Financial Protection Bureau's rules to be overturned and
another that would prevent the bureau from examining banks before the agency officially launches this
summer.
Rep. Shelley Moore Capito, the West Virginia Republican who leads the subcommittee, says the
bureau's "current framework does not allow for necessary and proper oversight."
Meanwhile, the hearing will make clear that an unanswered question continues to make banks anxious:
who will run the bureau?
"The absence of an appointed director, confirmed by the Senate, is a major concern to our members,"
said Consumer Bankers Association President Richard Hunt in his written testimony. "We urge the
appointment and confirmation of someone with a comprehensive understanding of the banking industry
and consumer financial services regulation, as well as the management skills and experience needed to
lead a $500 million federal agency."
White House adviser Elizabeth Warren has been the face of the agency for several months now. But
the Harvard Law professor is tasked with preparing the bureau for its launch this summer and is not the
agency's permanent director. Instead of nominating Warren to spearhead the bureau, Obama
Page 2143 of 3826
sidestepped a likely contentious Senate approval process by making Warren, a vocal banking industry
critic, a key architect of the agency.
With the bureau set to launch in about three months, industry officials worry that Obama could appoint
Warren to the post while the Senate is on one of its breaks, skipping the Senate-confirmation process
again.
However, a plan authored by Capito and backed by banking groups would block the bureau from
inheriting its consumer protection powers until the bureau has a Senate-confirmed director in place.
Witnesses will discuss the proposal at the hearing, as well as a bill introduced by House Financial
Services Committee Chairman Spencer Bachus (R., Ala.) that would rework the bureau's structure so
that it's run by a five-member bipartisan commission instead of a single director.
Noah Wilcox, president of Grand Rapids State Bank in Minnesota, says the commission model would
work well for the consumer bureau.
It "would help ensure that the actions of the CFPB are measured, non-partisan and result in balanced,
high quality rules and effective consumer protection," says Wilcox, who will testify on behalf of the
Independent Community Bankers of America.
However, Democrats, who made the consumer bureau a centerpiece of the Dodd- Frank financial
overhaul Congress passed last year, oppose efforts to modify the bureau.
"This issue of a 5-member commission instead of a single director was already considered during the
thorough Wall Street reform debate last year, and agreement was reached that consumers would be
protected best with a strong and independent director in place at the CFPB," said Senate Banking
Committee Chairman Tim Johnson (D., S.D.) in a recent written response to questions.
Also, Georgetown University Law Center Associate Professor Adam Levitin, who will testify at the
hearing, said a five-person panel would "render the CFPB less effective and less accountable." He
urged the subcommittee not to adopt the measure. He also said concerns about the agency's powers
are "misplaced" because the agency "has more limitations on its power than any other federal agency."
Still, Sen. Johnson said he'd like for the White House to nominate someone for the top consumer
bureau post.
Page 2144 of 3826
"Elizabeth Warren is one of a number of excellent potential candidates, and I am eager for the White
House to send a nominee so the committee can move forward with the confirmation process," he said
by email.
Meanwhile, the hearing Wednesday will give the financial industry, which largely opposed the agency's
creation, another chance to air their concerns.
"Dodd-Frank gave the bureau expansive quasi-legislative powers and discretion to re-write the rules of
the consumer financial services industry," says Bank of Bennington President Leslie Andersen in written
testimony. He'll speak on behalf of the American Bankers Association.
Lynette Smith, president of Washington Gas Light Company Federal Credit Union, will tell the
lawmakers that it's hard for her 17 staffers to keep up with the " never ending changes" to federal
regulations.
"I cannot emphasize enough how burdensome and expensive unnecessary Dodd-Frank Act related
compliance costs will be for credit unions," says Smith, who will testify on behalf of the National
Association of Federal Credit Unions.
She and other financial industry officials also will back a bill proposed by Rep. Sean Duffy (R., Wisc.)
that would make it easier for a council of regulators known as the Financial Stability Oversight Council
to veto the bureau's rules. "The current veto authority does not go far enough," Smith says.
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MarketWatch
GOP, Democrats clash over consumer protection
At issue: Would five-person panel be better than one-person bureau?
April 6, 2011
Page 2145 of 3826
By Ronald D. Orol
House Republicans and Democrats sparred Wednesday over the structure of a controversial consumerprotection bureau that would police financial services.
At issue is the soon-to-be-formed Consumer Financial Protection Bureau, or CFPB. Its charged with
writing rules for mortgages and other credit products.
The bureau was a key component of the Dodd-Frank Act, the financial-reform legislation signed by
President Barack Obama last year.
Republicans on the House Financial Services Committee are opposed to the bureau, which would be
housed within the Federal Reserve, and have introduced a package of bills seeking to impose more
oversight and greater checks and balances. One bill would set up the CFPB as a bipartisan commission
made up of five members, instead of with a one-person chief as currently stipulated.
A key focal point in the debate has been Elizabeth Warren, an assistant to Obama and a special
advisor to the Treasury Department on the CFPB.
Warren, a Harvard law professor, has been charged with setting up the agency but hasnt been formally
nominated to head it. Many Democrats have been pushing Warren for the job, while GOP lawmakers
bristle at the idea.
This is not about Elizabeth Warren, said Rep. Spencer Bachus, the panels chairman, during
Wednesdays hearing on the bureau.
This is about giving one person total unbridled authority and power, the Alabama Republican said.
Democrats insisted that the bureau, which is set to take over enforcement of consumer-protection laws
on July 21, has significant checks and balances.
Rep. Carolyn Maloney (D., N.Y.) defended the agencys structure, insisting it has significant oversight
protocols, including a requirement that it follow the standard Administrative Procedures Act procedures
for writing rules that other agencies employ.
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Republicans also cited the bureaus funding stream, saying its set up to receive funds without the
oversight of a congressional appropriations committee. Under Dodd-Frank, its funded via transfers from
the Fed, the U.S. central bank.
We will soon be left with an agency unlike any other, said said Rep. Ed Royce (R., Calif.).
It would have access to hundreds of millions of dollars outside of the appropriations process, he said
of the CFPB.
However, Rep. Brad Miller (D., N.C.) countered that other bank regulators, including the Federal
Reserve itself, are funded without the approval of congressional appropriators.
The Fed is structured to be self-sufficient, funding its operating expenses mostly from interest earned
on its portfolio of securities. It returns excess earnings beyond expenses to the Treasury.
Miller also argued that the Office of the Comptroller of the Currency, a bureau within the Treasury that
charters, regulates and supervises national banks, has one director, not a bipartisan panel.
The OCC is a very powerful agency that has been working more for banking interests and not for the
interests of consumers, Miller said.
By the same token, many other regulators have five-person panels, including the Securities and
Exchange Commission and the Commodity Futures Trading Commission.
Panelists testifying before the committee also sparred over the bureau.
Jess Sharp, executive director of the Center for Capital Markets Competitiveness at the U.S. Chamber
of Commerce, lauded the GOP legislation to create a five-person CFPB, arguing it will lead to a better
debate over consumer rules.
Decisions are more likely to be sound if they are the product of collaborative deliberation among
individuals with diverse views, expertise, and backgrounds, said Sharp.
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Too high a threshold?

Republicans raised concerns as well about how Dodd-Frank provisions would make it extremely difficult
for a newly formed Financial Stability Oversight Council, an umbrella group composed of bank and
securities regulators, to overturn the bureaus rules.
The Dodd-Frank Act gives the council authority to void rules promulgated by the consumer agency by a
2/3 vote if such rules were to put the safety and soundness of the banking system or the stability of the
financial system at risk.
Most regulatory observers argue that it is very unlikely the council would ever use this authority
because of the high threshold for action, however
You cannot even appeal a ruling unless that rule can bring down the financial system, Bachus said.
And, someone has to file the appeal within 10 days of the CFPB issuing a rule.
A bill introduced by Rep. Sean Duffy (R., Wis.) would authorize the oversight council to overrule CFPB
rules by a majority rather than two-thirds vote and would revise the standard to inconsistent with the
safe and sound operations of United States financial institutions.
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Bloomberg
Senate Banking Chief Says He Opposes Change to Consumer Bureau
April 5, 2011
By Carter Dougherty
U.S. Senator Tim Johnson, chairman of the Banking Committee, said he opposes House Republican
legislation that would supplant the director of the Consumer Financial Protection Bureau with a
commission -- making it unlikely that such legislation could pass.
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This issue was already considered during the thorough Wall Street reform debate we had last year and
agreement was reached that consumers would be protected best with a director in place at the CFPB,
Johnson, a South Dakota Democrat, said in an e-mail.
Representative Spencer Bachus, the Alabama Republican who is chairman of the House Financial
Services Committee, introduced a bill last month that would replace the post of director with a fivemember bipartisan commission. To become law, the legislation would likely have to be approved by
Johnsons committee and passed by a majority in the Senate, which is controlled by the Democrats.
The consumer bureau, which was created by the Dodd-Frank regulatory overhaul that President Barack
Obama signed last year, is scheduled to begin work on July 21.
Senator Jerry Moran, a Kansas Republican, today said at a hearing of the Senate Appropriations
Committees subcommittee on financial services, that he is preparing legislation similar to the Bachus
bill. Treasury Secretary Timothy F. Geithner said at the same hearing he opposes the idea of a
commission.
Congress considered a range of options and came up with a model that combines very strong authority
and independence, the necessary independence, with a set of powerful checks and balances, Geithner
said.
Elizabeth Warren, the Obama administration adviser in charge of setting up the bureau, hasnt been
publicly ruled out as possible nominee. Johnson called Warren one of a number of excellent potential
candidates.
Winning Confirmation
Warren got her current job in September after Senator Chris Dodd, the former banking committee
chairman, said she couldnt be confirmed as director. Johnson declined to speculate on whether she or
anyone else could win Senate confirmation.
I am eager for the White House to send us a nominee so we can quickly move forward with the
conformation process, but I am not going to do a nose count until the administration signals to me who
they are going to nominate, Johnson said.
At the hearing, Geithner said he couldnt answer when Obama would nominate someone, but said the
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administration was consulting with Congress.
We want to nominate somebody who can be confirmed, Geithner said. And so thats why its taking
us a little bit of time.
The Obama administration has sounded out the former Democratic governor of Michigan, Jennifer
Granholm, and the former Democratic senator from Delaware, Ted Kaufman, about the consumer
bureau job, Bloomberg News has reported, citing two people with knowledge of the discussions. Both
officials declined.
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CFPB Prebuttal
April 6, 2011
By Ben White
CFPB PREBUTTAL - A House Financial Services subcommittee holds a hearing this morning to
discuss bills that would subject the CFPB to oversight by FSOC and install a multi-member commission
to run the agency rather than a single director.
CFPB spokeswoman Jen Howard emailed last night in advance of the hearing: We are hard at work
building the [CFPB], which was created in response to the worst financial crisis since the Great
Depression ... Any attempt to delay or undermine the stand up of the CFPB could leave American
families and the economy exposed to many of the same risks that brought our financial system to the
brink of collapse.
Page 2150 of 3826
CHAMBER SUPPORTS COMMISSION - From prepared remarks to be delivered at the hearing by Jess
Sharp of the U.S. Chamber of Commerce: Even if Congress replaces the current single-director
structure with a multi-member Commission, it is still essential for the prudential regulators to have an
effective mechanism for ensuring that Bureau regulations do not put at risk the safety and soundness of
U.S. financial institutions. Full testimony for all panelists: http://1.usa.gov/ho13dg
BUT SEN. JOHNSON OPPOSES IT- Bloombergs Carter Dougherty: U.S. Senator Tim Johnson,
chairman of the Banking Committee, said he opposes House Republican legislation that would supplant
the director of the [CFPB] with a commission -- making it unlikely that such legislation could pass. This
issue was already considered during the thorough Wall Street reform debate we had last year and
agreement was reached that consumers would be protected best with a director in place at the CFPB
http://bloom.bg/f5y82y
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Credit Slips
Elizabeth Warren (TM)
April 6, 2011
By Katie Porter
I recently read Professor William Sage's essay, "Brand New Law! The Need to Market Health Care
Reform," which discusses the idea of "legal brand equity" as analogous to commercial brand equity in
"describing the functional, emotional, and expressive relationship between the law and its intended
beneficiaries." Professor Sage argues that the branding of major American social legislation is critical to
its success and offers ideas for healthcare (e.g. AmeriCare instead of ObamaCare). How is the
Consumer Financial Protection Bureau ("Bureau") doing on creating a brand among Americans?
I think there is a strong branding effort underway at the Bureau. Consider the logo displayed on the
website, which is a far cry from the typical government-as-usual circle shape with tiny lettering around it.
In its place at the Bureau is a shield shape that resonates very much with Elizabeth Warren's analogy of
the Bureau as providing a "cop on the beat" and with descriptions of Warren and like-minded regulators
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as "The New Sheriffs of Wall Street." The Bureau, whether consciously or not, also has been following
marketing professionals' advice of making functional, emotional, and expressive statements about itself
to develop a brand in the public, making statements like "What I hope to do is give -- literally -- millions
of American families better tools to be able to tell what the financial products that they deal with cost,
what the risks are associated with them, and to be able to compare one product to another." These
statements explain the Bureau and help people connect to the purpose and work of the Bureau. Warren
herself is a master of these messages, and therein may ultimately be the challenge. In some ways,
Elizabeth Warren herself is the brand equity of the Bureau, and she is an effective brand--memorable,
clear, and capable of making consumers feel good about themselves and about government. Warren is
assembling an impressive group of people at the Bureau and increasingly those people are doing brand
-building work, such as video interviews about issues or themselves on the Bureau website. But at this
point, it is very much Elizabeth Warren () that is the Bureau's brand equity. This means that the the
biggest problem with any other candidate for Director is likely to be the loss of Elizabeth Warren () in
the minds of the public. The federal government currently has little brand equity overall and what it does
have is under attack by the anti-government branding efforts. The Administration should not risk
diminishing the brand equity of the Bureau, and by extension, the administration's efforts at social
legislation with a director other than Warren. No successful business would ever fail to seize brand
equity on the magnitude of Warren's popularity; this is one instance where I'll advocate that government
look to private industry as a model and build up its brand by leveraging Elizabeth Warren to its
advantage.
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Geithner reiterates need for Congress to raise debt ceiling
April 5, 2011
By Bernie Becker
Treasury Secretary Timothy Geithner stressed Tuesday that there would be grave consequences if
Congress does not raise the debt limit.
In a Tuesday appearance before a Senate Appropriations subcommittee, Geithner spoke even more
forcefully on what would happen if Congress did not raise the debt ceiling than he did in a Monday letter
to lawmakers.
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In the letter, Geithner had said that not raising the $14.3 trillion debt ceiling, which the federal
government is expected to hit by May 16, would cause the U.S. to default its debt and possibly cause
an economic crisis more severe than the one the country is now recovering from.
But on Tuesday, the secretary said the aftermath of a default would make the crisis we went through
look modest in comparison.
As I said in my recent letters and as all my predecessors have said, the consequences of that would be
catastrophic to the United States, Geithner said. Default by the United States would precipitate a crisis
worse than the one we just went through.
In wide-ranging testimony, Geithner also reiterated that he thought it unthinkable that Congress would
not raise the ceiling and also touched on issues including the Consumer Financial Protection Bureau
created by the Dodd-Frank Wall Street reform measure and how the economy would be affected by a
government shutdown.
With the federal government currently only funded through Friday, Geithner said that a shutdown could
further hinder confidence in the economy, which has already taken a hit because it's only been funded
this year through short-term measures.
I think our first obligation to the American people, given the trauma still caused by this crisis and the
depth of the damage we still face, is to make sure that we've done everything we can to make sure that
we're re-enforcing business confidence, helping get more Americans back to work, Geithner said,
adding that a shutdown would get in the way of those efforts.
As for the CFPB, Geithner under questioning from Sen. Jerry Moran (R-Kan.), the ranking member of
the Appropriations subcommittee dealing with financial services defended the current setup that
allows the bureau to receive funds directly from the Federal Reserve.
Moran announced during his opening statement that he was planning on introducing legislation
Tuesday that would force the CFPB to be funded through the congressional appropriations process and
would install a five-member commission to head up the bureau.
Rep. Spencer Bachus (R-Ala.), the chairman of the House Financial Services Committee, has
introduced legislation in the House that would also place the bureau under a five-member commission.
But Geithner pushed back on that idea, saying that Congress had created an agency both independent
and with strong authority. Elizabeth Warren, the special assistant to the president and Treasury
Page 2153 of 3826
secretary for the CFPB, has also pushed back on the idea.
Geithner told the subcommittee that the decisions of this bureau are subject to review and approval by
the council of financial supervisors and regulators that Congress established.
That creates, in some ways, a stronger set of checks and balances than, I think, exists for many other
financial regulators, he added.
For his part, Sen. Dick Durbin (D-Ill.), the chairman of the subcommittee, indicated in his opening
statement that he would fight what he called efforts by Wall Street and House Republicans to
undermine the CFPB.
We're going to work to make sure this agency has what it needs to start working for consumers from
the start, Durbin said.
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Reuters
Obama reviews names to run consumer agency
April 6, 2011
By Alister Bull
President Barack Obama has not yet selected the head of a new consumer financial protection agency,
the White House said.
A source aware of the process told Reuters on Tuesday that the White House is considering Federal
Reserve Governor Sarah Raskin and former Michigan Governor Jennifer Granholm to run the
Consumer Financial Protection Bureau, set to open in July.
Page 2154 of 3826
"The President is considering a number of candidates for the position of director, but no decisions have
been made and we will not comment on speculation about potential candidates before the President
makes his decision," said White House spokeswoman Amy Brundage.
The source did not say whether other candidates in addition to Raskin and Granholm were under
consideration.
The agency would be charged with reining in abuses in the financial industry, including shoddy
mortgage practices and excessive credit card fees. It would also play a role in regulating the so-called
shadow financial industry, including pay day lenders.
Harvard Professor Elizabeth Warren, an outspoken consumer advocate who had championed the new
agency, has been serving as an adviser to Obama and the U.S. Treasury to help set it up for formal
launch.
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Detroit News
Granholm wont head new consumer agency
April 6, 2011
By David Shepardson
Washington Former Michigan Gov. Jennifer Granholm said today she has no plans to head a new
federal agency charged with protecting consumers of financial products such as mortgages and bank
accounts.
Reuters reported that Federal Reserve board member Sarah Raskin also is under consideration to
head the new consumer protection body called the Consumer Financial Protection Board.
Page 2155 of 3826
This story says I'm under consideration for the CFPB job. I have declined to be considered for this
post. I'm happy in my new roles at Pew, Berkeley and Dow," Granholm said in a web posting today.
"And, by the way, while I don't know Raskin, and she may be great, I think nominating Elizabeth Warren
is a fight worth waging."
Warren is the former head of a congressional oversight panel that reviewed the $700 billion Wall Street,
auto and insurance bailout. She was named by President Barack Obama to help get the agency
running, but the White House has been reluctant to nominate her to head the agency because of
opposition.
Granholm told The News last month she had asked the White House not to consider her for the
consumer financial job or to head the Democratic National Committee.
Granholm was recently elected to Dow Chemical's board of directors, is teaching at the University of
California, Berkeley, and is writing a book with her husband.
The Senate will have to approve whoever heads the agency.
Granholm last month was also named as a senior advisor on the Pew Charitable Trust. She served as
Michigan's Attorney General before serving two terms as governor.
Raskin is a former state banking regulator.
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AOL Daily Finance

Predatory Payday Lenders Put Military Families in the Crosshairs
April 5, 2011
Page 2156 of 3826
By Bruce Watson
Members of America's military face threats to life and limb around the world every day, but it's a
domestic threat that has recently put the top brass on the offensive on the home front -- predatory
lenders.
In 2006, the Department of Defense researched the problem, interviewing soldiers who had been
devastated by payday loans. While each story is unique, they all include the same basic series of
events: A soldier takes out a seemingly simple loan and soon finds him or herself drowning in an everdeepening morass of debt. Take, for example, the case of an Air Force sergeant who got behind on her
car payments and rent. To catch up, she took out a $500 payday loan, agreeing to pay back $600 in
two weeks. Things spiraled downhill from there:
"Unable to repay, she took out other payday loans ... to pay off these loans, she contacted an
installment loan company who provided her with a $10,000 loan at 50 percent APR. Total cost to pay off
the payday loans was $12,750 and her total obligation to the installment loan company was $15,000.
Her financial problems were a contributing factor to her pending divorce."
It isn't hard to see why so many members of the military borrow from payday lenders. Across the
country, the areas around military installations are almost always cluttered with payday lenders, rent-toown stores and other companies that offer fast cash for desperate borrowers. This is no accident:
Military personnel and their families are ideal targets for unethical lenders. Many enlisted personnel are
poorly paid, and the seemingly simple credit terms offer what appears to be an easy solution to a
temporary problem. These factors, combined with haphazard regulation, have made the cash-to-payday
industry one of the biggest threats facing military families. Military leaders have identified debt as a
"threat to military readiness," and service members overwhelmingly rate finances the second-most
stressful part of the military lifestyle, outpacing family separations and deployments.
The Perfect Target
In 2005, the Center for Responsible Lending determined that 20% of active-duty military members had
taken out a payday loan. In fact, members of the military were three times more likely than civilians to
go to a payday lender. In 2007, Congress passed legislation making it illegal to charge service
members more than 36% interest on a loan. Since then, the Consumer Financial Protection Bureau has
targeted lenders who prey on military personnel. Even so, usurious lending continues to be a problem
for many members of the military.
Part of the problem is that military personnel remain nearly perfect victims for predatory lenders. The
vast majority -- more than 84% -- are under 25 years old, and are stationed far from home, which
means that they cannot easily call on families or friends for help when they get into debt. While the
military offers financial support resources, military culture strongly discourages indebtedness: Soldiers
Page 2157 of 3826
who get in over their head can be punished, stripped of their security clearances, and even discharged.
For many young servicemen and women, the fear of disciplinary action keeps them from taking
advantage of low-interest military loans and free debt counseling.
Low salaries also make military personnel into promising targets: 74% of soldiers are in the six lowest
ranks, and most make less than $31,000 per year. On the other hand, it's hard to imagine a more stable
group of borrowers: Unlikely to be fired and unable to quit, there is little question that military borrowers
will continue to have consistent income for the duration of a loan, especially if -- as is the case with
payday borrowing -- the loan only extends for a couple of weeks. Soldiers also are required to have
checking accounts for direct deposit, which makes it easy for lenders to access their money.
Exploding Loans
Discussing the problem, Navy Capt. Bill Kennedy noted that, even under the best of circumstances,
enlisted members of the military skirt the edges of poverty: "An E-3 [one of the lower ranks, variously a
seaman, an airman first class, a Marine lance corporal, and Army private first class], married with one
child, after base pay and other allowances has no money left at the end of the month. Zero ... A car
repair or even a little mismanagement can wreck 'em." Under these circumstances, it's easy to
understand how this California-based Army private got into trouble through a simple car loan:
"...he received a car loan for $42,000 at 24.1% APR. In addition he had an installment loan for $2,500.
As an E-1, his take home pay is approximately $2,340, and with a 60 month pay back, his monthly
payment on the car would be $1,211...After 60 payments, he will have paid the equivalent of a year's
salary ($30,292) in interest."
The private in this case got in over his head with interest payments that were comparatively low. Most
military service members who take out predatory loans pay rates that are much higher. In its 2005
report, the Department of Defense determined that -- factoring in the steep fees than many lenders tack
on to already-high interest rates -- the APR on payday loans ranged between 390% and 780%. At these
rates, borrowers often found themselves unable to pay off their loans in the required time. To keep their
heads above water, many borrowers took out loans from multiple lenders, "flipping" their payday loans.
Caught in a debt trap, the average borrower took out nine loans per year, paying back $834 for a $339
loan. A large part of the problem was a legal loophole: Many states only regulate loans that are made to
permanent residents. Since most military personnel are not posted to their home states, lenders who
targeted them were able to operate under the radar, free of regulation.
Attacking the Problem
The 2006 passage of the John Warner National Defense Authorization Act closed many of the
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loopholes that enabled exploitative lenders to do business. To begin with, the law made it illegal for
lenders to charge more than 36% APR on loans to military members or their families. Additionally, a
variety of rules made it impossible for lenders to roll over loans, access borrower savings accounts,
conceal annual percentage rates, and use other tricks that they commonly employed to deceive
borrowers. Perhaps most notably, the law put some weight behind its words, classifying many forms of
exploitation as misdemeanors, punishable by up to one year in prison.
In spite of the Warner act, however, soldiers still get in trouble, as the Huffington Post's Chris Kirkham
reported in January. In response, the military has redoubled its efforts to educate its members and
protect them against predatory lenders. In January, Holly Petraeus agreed to head up the Office of
Servicemembers' Affairs in Elizabeth Warren's Consumer Financial Protection Bureau (CFPB). The wife
of general David Petraeus and daughter of the former commandant of West Point, Holly Petraeus' has
long focused on the financial problems facing military families. Prior to working with the CFPB, she was
director of Military Line, a partnership with the Better Business Bureau that provides financial education
for military families. In her new position, she plans to take a more active role in directly fighting
predatory lenders and other companies that exploit military families.
Additionally, debt-counseling services and low-interest loans are available to military families that find
themselves in desperate need of money. Among other groups, the Navy-Marine Corps Relief Society,
Army Emergency Relief, and the Air Force Aid Society all provide emergency loans, and Military Line
continues to provide financial education and dispute resolution for service members and their families.
Additionally, the military has recently taken a more active role in the financial lives of its members with
Military Saves, a program that helps units and individual soldiers to set up -- and use -- savings
accounts. In spite of all of this, however, strictures against indebtedness still encourage soldiers to keep
their finances private. It remains to be seen if these changes in programs can create a change in
military culture that will protect our troops and their families from financial ruin.
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American Banker
Seize the Moment: Use Settlement Talks to Halt Abuse of Homeowners
April 6, 2011
By Orson Aguilar and Tunua Thrash
State attorneys general and federal financial regulators are locked in settlement negotiations with U.S.
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banks that engaged in abusive, often fraudulent, mortgage and foreclosure practices. These
negotiations may be the last, best chance to help struggling homeowners, stabilize neighborhoods and
strengthen the economy.
It shouldn't come as a surprise that before it's even finalized the settlement is under attack by some in
Congress who don't want banks held to account for their actions. But banks should be held
accountable, and if anything the proposed terms should be strengthened.
While the deal is still being negotiated, some elements have been leaked. If these proposed terms get
more detail, time frames and teeth, they could go far to prevent future abuses. Just as important, they
would give loan servicers an incentive to give real help to hard-hit homeowners, something that the
Obama administration's current effort, Home Affordable Modification Program, has mostly been unable
to achieve.
First, the settlement could encourage servicers to offer more principal reduction for underwater
homeowners. With such a steep drop in home values, especially in states like California, Hamp's heavy
emphasis on reducing interest payments while the principal balance remains out of reach has led too
many to walk away from their homes. When walking away from your mortgage is the most sensible
option as it is for many homeowners right now something is very wrong.
Elements in the potential settlement could help. Provisions such as eliminating the dual-track process
that now allows modification and foreclosure to proceed simultaneously will create a path toward
principal reduction for more distressed homeowners.
Second, while the actual dollar amount of the monetary settlement remains unclear, a sizable sum
could be used to support not only principal reduction, but vital aid for borrowers struggling to keep their
homes.
For example, it could bolster support for the understaffed and overwhelmed HUD-approved, nonprofit
housing counselors who often expend $1,000 to $1,500 to help each distressed homeowner.
It could also be used to prevent the neighborhood blight that results from foreclosures and is too often
concentrated in low-income communities and communities of color. When foreclosures are rampant,
entire neighborhoods suffer. The Center for Responsible Lending estimates that between 2009 and
2012, homeowners who keep their homes will lose $273 billion in home value from the impact of
foreclosures in their neighborhoods. That's a staggering loss of assets for families that often started with
little in the first place.
All of this, of course, argues for a larger monetary settlement than the $20 billion that has been floated.
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Third, the settlement could make the Consumer Financial Protection Bureau the main federal player in
addressing mortgage abuses and the foreclosure crisis. In the leaked terms, the CFPB is mentioned
frequently, along with state regulators and attorneys general.
This settlement will make a difference if enforcement is energetic, and it is smart to trust the CFPB
under Elizabeth Warren's leadership, rather than other agencies that let us down before.
Still, the final settlement needs to create stronger incentives for loan servicers to opt for mortgage
modification rather than foreclosure.
A bill being debated in California, AB 935, offers a good model: When initiating a foreclosure
proceeding, loan servicers would have to place a large foreclosure fee in escrow.
That fee would be returned in full to the servicer if foreclosure is successfully avoided; if the foreclosure
is executed, the money would go into a homeowner relief fund.
If set at $20,000 per proceeding, such a fee would create a significant disincentive to foreclose and
wouldn't cost taxpayers a dime.
The settlement talks between the AGs, federal regulators and the banks offer an irreplaceable
opportunity. Officials should make the most of it.
Orson Aguilar is executive director of the Greenlining Institute. Tunua Thrash is executive director of
West Angeles Community Development Corp.
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Housing Wire
Page 2161 of 3826
Bank superintendent Neiman stresses national mortgage servicing standard

April 5, 2011
Superintendent of Banks for the New York State Banking Department Richard Neiman made a
resounding and familiar call for a national servicing standard Tuesday at the Mortgage Servicing
Conference in Dallas, Texas.
As the overseer of all bank and nonbank lenders in his state, as well as a member of the Congressional
Oversight Panel and chairman New York's task force to deal with predatory foreclosure practices,
Neiman said he has been in a unique position to see where the problems lie.
Neiman stressed that it is not only important to set a national servicing standard, but absolutely
necessary.
"This is doable. There are enough models out there and we know the areas we need to address,"
Neiman said in response to HousingWire inquiry about the actuality of a national standard being put in
place.
A successful standard would be beneficial for consumers and the mortgage industry alike, Neiman
claimed, because it will close gaps in the system for arbitrage as well as level the competition playing
field.
According to Neiman, provisional standards nationwide regarding data reporting must become a
comprehensive requirement and follow the mortgage throughout the life of the loan. Other issues that
need to be addressed include how to sustain loan modifications and responsibly handle unavoidable
foreclosures, according to the New York official.
Neiman believes the Consumer Financial Protection Bureau will be the organization to lead the national
initiative to solve these problems.
"The rules that they are going to issue will go toward banks and nonbanks," Neiman said. "Finally we
have an entity that crosses those boundaries."
Neiman said the servicer settlement being drafted by the 50 state attorneys general is not the basis for
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this national servicing standard; however, he agrees that it is a step in the right direction.
Ultimately, he said, it's going to come down to a renewed level of cooperation between all moving
parties at all levels between states, state and federal financial supervisors, and federal agencies.
"This type of Cooperative Federalism makes the highest use of the resources and expertise available,
while minimizing any potential gaps in regulation," Neiman said. "By working together to set these best
practices, we can restore the confidence of the public and investors."
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New York Times

Servicers Said to Agree to Revamped Foreclosures
April 5, 2011
By David Streitfeld
The nations top mortgage servicers are expected to sign legal agreements by the end of this week
compelling them to change their foreclosure procedures, regulatory officials said Tuesday.
The servicers, which violated state and local laws and regulations governing foreclosures, are agreeing
to improve their methods in numerous ways. They will be required to have more layers of oversight and
proper training of their foreclosure staff. The oversight will extend to third party groups, including the law
firms that do much of the actual work of eviction.
Under the new rules, every homeowner in default will have a single point of contact with the servicer.
The servicers will end their practice of foreclosing while borrowers are pursuing loan modifications that
might allow them to stay in their homes.
One of the most significant measures in the consent agreement will require servicers to hire an
Page 2163 of 3826
independent consultant to review foreclosures done over the last two years. If owners were improperly
foreclosed on or paid excessive fees, they will be compensated.
The reforms were described by individuals who spoke on condition of anonymity because the consent
agreements were not yet public. The banks either could not be reached or declined to comment.
Bringing in a consultant to establish the amount of damages will give individuals who feel they were
abused by their servicer some means of redress. While the servicers have acknowledged violating the
laws they maintain that very few if any people lost their house who were not in severe default.
Jamie Dimon, chief executive of JPMorgan Chase, addressed the issue Tuesday at a banking
conference in Washington. Some of the mistakes were egregious, and theyre embarrassing, he said,
according to Bloomberg News. But we made a mistake, and were going to pay for that mistake.
Many of the reforms that the servicers are agreeing to were also being sought by the state attorneys
general, who began their own search for reform last fall. For several weeks in January, the regulators
and the attorneys general attempted to work with officials from the Justice Department and the
Department of Housing and Urban Development to produce one comprehensive settlement, but the
attempt proved unwieldy.
The attorneys general met face to face with the servicers for the first time last week at the Justice
Department. A spokesman for Iowa Attorney General Tom Miller, who is leading the effort, said more
meetings are planned but declined to be specific.
The attorneys general have larger goals than the regulators. They are seeking to make the banks to cut
the debt of delinquent owners. The servicers are balking at this.
As a result of the changes being imposed by the banking regulators, servicers will have two options:
either hire more employees to give the millions of households in default closer attention, or slow the
pace of foreclosures.
Foreclosure is already a ponderous process, and has grown more so since the controversy over the
servicers procedures erupted last fall. The average household in foreclosure has been delinquent for
more than 500 days.
Regulators expect to issue their report on foreclosure practices at the top 14 servicers within the next
few weeks. Preliminary consent agreements were sent to the servicers in February.
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The report, whose conclusions have been foreshadowed by regulators in Congressional testimony,
derives from an investigation this winter by the Office of Comptroller of the Currency, the Federal
Reserve Board, the Office of Thrift Supervision and the Federal Deposit Insurance Corporation. It will
not name individual banks but rather describe their aggregate behavior.
The investigators reviewed the policies and procedures, structure and staffing of the top servicers, as
well as their use of law firms and other third parties. They examined 2,800 foreclosures in various
stages.
The banks examined were Bank of America, Citibank, GMAC, JPMorgan Chase, Wells Fargo and nine
others. The examination found critical deficiencies and shortcomings in foreclosure preparation and
oversight, resulting in violations of state and local foreclosure laws, regulations and rules.
The servicers will probably be assessed fines at a later point.
Back to Top
Bloomberg
Banks Get Edge in Talks on Foreclosure Penalties as Feds Settle
April 6, 2011
By Dakin Campbell
Bank of America Corp. (BAC), Wells Fargo & Co. (WFC) and fellow mortgage servicers are more likely
to dodge a threatened $20 billion in penalties for faulty foreclosures after U.S. agencies cut ahead of
the states by signing deals without fines.
A task force of 50 state attorneys general already was arguing internally over proposed sanctions when
people familiar with the talks said the Federal Reserve, Office of the Comptroller of the Currency, Office
of Thrift Supervision and Federal Deposit Insurance Corp. began making the deals. While the U.S.
Page 2165 of 3826
watchdogs may yet seek fines, the pacts ease pressure on the banks and erode states leverage, said
Gilbert Schwartz, a former Fed attorney.
This puts the attorneys general in an uncomfortable position, because it reduces the list of outstanding
demands and helps firms show progress in fixing lapses, said Schwartz, a partner at law firm Schwartz
& Ballen LLP in Washington who is not involved in negotiations. By settling with the banking agencies,
it sets the upper limit on what the banks would be willing to do. This seems to have drawn a line in the
sand.
The first of as many as 14 mortgage servicers signed accords this week agreeing to improve internal
controls, communications with borrowers and other processes, said two people familiar with the matter.
They are the first sanctions to arise from last years probe into so-called robo-signing, in which
mortgage firms and their contractors vouched for thousands of foreclosure documents without verifying
their accuracy.
Financial Penalties
The U.S. agreements proceeded without the backing of the attorneys general, led by Iowas Thomas J.
Miller, who undertook joint probe last year and have sought to change servicers behavior and extract
financial penalties. In early March, the group circulated a 27-page settlement term sheet outlining
future rules on mortgage servicing and conditions for possible mortgage modifications.
Miller, in an April 4 statement, said hes disappointed to see reports that some U.S. watchdogs may
pursue their own accords. Miller said he had hoped the agencies would cooperate because to work
closely with all of us would protect the public interest to the fullest.
Geoff Greenwood, a spokesman for Miller, said yesterday that the actions of U.S. regulators wont
affect the efforts of the attorneys general.
We see any settlement they may reach as a floor, not a ceiling, Greenwood said. We still dont know
what their agreement would say because we havent been notified.
$20 Billion
The attorneys general previously suggested a $20 billion penalty as part of any deal, a figure cited by
Elizabeth Warrens Consumer Financial Protection Bureau, which said in a Feb. 14 presentation that
banks had saved more than that amount by cutting corners during foreclosures. A $5 billion penalty
would be too low, and banks can afford more, the agency wrote in the document.
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Lenders countered with a March 28 draft proposal that didnt include principal reductions or fines, and
after a March 30 meeting with servicers, state officials and federal agencies, Miller said theres a long
way to go to reach an agreement.
Spokesmen for the FDIC, Fed, OCC and OTS declined to comment, as did representatives of San
Francisco-based Wells Fargo and Bank of America, based in Charlotte, North Carolina.
Writing down principal and imposing fines has been more of a sticking point with the AGs, and its
going to be more difficult to come to a resolution with that constituency than it would be with the banking
regulators, said Jason Goldberg, an analyst with Barclays Capital in New York.
Short Sales
The states and the Obama administration are trying to help the almost 25 percent of U.S. mortgage
holders who are underwater, meaning the debt is more than the home is worth. Banks have been
reluctant to write down principal, and so-called short sales, where a home is sold for less than the loan
balance, have lagged home seizures as a lengthy consent process by loan holders deters potential
buyers.
Foreclosure filings reached a record 2.9 million in 2010, according to RealtyTrac Inc., an Irvine,
California-based data company. After a rebound in the second half of last year, home sales have
resumed their decline as foreclosures expand the inventory of unsold properties and push values lower.
Good Outcome
There appears to be a divergence between the federal agencies and the state attorneys general as to
what they consider to be a good outcome, said Patrick McManemin, a Dallas-based partner at Patton
Boggs LLP, a law firm that represents banks, loan servicers and financial institutions.
Theres also a split among the states, with the attorneys general of Oklahoma, Nebraska, Alabama,
Virginia, Texas, Florida and South Carolina writing letters to Miller last month voicing their displeasure.
Republican lawmakers complained about the proposed settlement and questioned whether the
Consumer Financial Protection Bureau has authority to take part in the talks.
In that initial draft it really did seem like the state AGs were overstepping, said Stephen F.J. Ornstein,
a Washington partner of the law firm SNR Denton LLP. The scope of the original proposal may have
delayed any settlement the AGs could have reached, he said.
Page 2167 of 3826
Acting Comptroller of the Currency John Walsh said in February that the OCC and other U.S. bank
regulators were in the process of finalizing actions to impose remedial requirements and sanctions
on mortgage servicers. The OCC sent cease-and-desist orders to servicers that month, according to a
person familiar with the matter.
Imposing Penalties
This weeks agreements dont prevent federal regulators from imposing financial penalties later, and are
simply an effort to give near-term relief to borrowers trying to work out loan modifications or avoid
foreclosures, said one person familiar with the process.
Regulators continue to be part of negotiations with attorneys general, the Justice Department and
banks, and are expected to be a party to any global settlement if one is reached, said three people with
knowledge of the process who did not want to be named because the negotiations arent public.
Issues such as principal reduction, treatment of second mortgages, state and federal fines all continue
to be in play, McManemin said.
Banks likely will try to use the agreements with regulators as leverage to undermine the efforts by state
attorneys general to reach a universal settlement, Alan White, a law professor at Valparaiso University
in Indiana, said in a telephone interview.
Turf Protection
The banks might argue that any state investigation is preempted by the actions of their federal banking
regulator, and may be backed in that claim by the OCC, which has taken a very aggressive position in
the past arguing that federal banking laws preempt state laws, White said.
This settlement is turf protection, but its also a way of supplanting the attorneys general as the people
s representative who can speak and act, said Ellen Marshall, a partner at Manatt, Phelps & Phillips
LLP in Costa Mesa, California. Regulators have the sweep of the whole nation and so they can reach
an agreement.
One interpretation of the financial penalties imposed by the attorneys general was that it would
undermine safety and soundness at a critical time for the banks, Ornstein said.
Page 2168 of 3826
Capital Levels
That was countered by Brian Foran, an analyst with Nomura Holdings Inc. in New York, who said any
principal reductions wouldnt have a large impact on banks capital levels. The CFPB presentation
showed that a penalty based on the billions of dollars in servicing costs avoided by the banks would
reduce Tier 1 capital by 47 basis points at Wells Fargo and 30 basis points for Bank of America. A basis
point is one one-hundredth of a percentage point.
The problem is that a lot of the rhetoric is The banks can afford this, therefore it must be fine to do,
Foran said in a phone interview. People would become very worried about whats next, the banks will
probably continue to tighten their mortgage underwriting standards, which is counterproductive, and it
leads down a slippery slope.
Back to Top
Naked Capitalism
Banks Win Again: Weak Mortgage Settlement Proposal Undermined by Phony Consent Decrees
April 6, 2011
By Yves Smith
Wow, the Obama administration has openly negotiated against itself on behalf of the banks. I dont think
Ive ever seen anything so craven heretofore.
As readers may recall, we werent terribly impressed with the so-called mortgage settlement talks. It
started out as a 50 state action in the wake of the robosigning scandal, and was problematic from the
outset. Some state AGs who were philosophically opposed to the entire exercise joined at the last
minute, presumably to undermine it. Not that they needed to expend much effort in that direction, since
plenty of Quislings have signed up for the job.
Page 2169 of 3826
The supposed leader of the effort, Tom MIller of Iowa, promised criminal prosecutions, then promptly
reneged. His next move was to get cozy with the Treasury, presumably out of his interest in heading the
Consumer Financial Protection Bureau. Federal regulators, such as the OCC and the Fed, who do not
like being upstaged by states, were similarly keen to exert leadership, which really meant lead a
hasty retreat from anything that might inconvenience the banks. So Miller, who was supposed to be
representing the interests of the states, was instead working with the Treasury et al. to beat the state
AGs into line (and separately, since the state and Federal legal issues are very different, the idea of
having a joint effort was questionable from the outset). Not only have some Republicans (predictably)
rebelled, but so to have the more aggressive Democrats, such as Eric Schneiderman of New York, Lisa
Madigan of Illinois, and Catherine Masto of Nevada.
The first sighting of what this group might come up with was a bizarre 27 page proposal. It was bizarre
because it represented an incomplete set of demands. You never do that in a negotiating context, you
make a complete offer and see what other sides counter.
The proposal was incomplete because it failed to describe the sort of release the banks would get
(would they be released from claims by the state AGs on robosigning, or broader areas of liability?) and
there was no section for penalties, despite press rumors and Congressional tooth gnashing about $20
billion and up sanctions. We dissed it not only for those reasons but also because it was largely a
recitation of existing law, with only two new provisions: one was the end of dual track (in which servicers
keep the foreclosure process moving ahead even as mod evaluation and approvals are also in
progress) and single point of contact, in which the borrower has a dedicated person to deal with on his
case. We deemed single point of contact to be undoable and unnecessary (as in if servicers
straightened out their procedures and trained their staff adequately, they wouldnt have the screw-ups
that led to demands for single point of contact). Yet despite the obvious shortcomings of this deal, the
bank lobbyist masquerading as a bank regulator known as the Office of the Comptroller of the Currency
has absented itself from this effort in an apparent show of pique.
Given how underwhelming the 27 page leaked proposal was, it was predictable that the banks
counteroffer verged on being a joke. As we noted last week:
It should really be no surprise that the banksters have the temerity to take a weak mortgage fraud
settlement proposal, advanced by the 50 state attorneys general and various Federal agencies, and
water it down to drivel. Since March 2009, when the Obama administration cast its lot with them, major
financial firms have become increasingly intransigent. And this has proven to be a winning strategy,
since Obamas pattern over his entire political career has been to offer proposals that dont live up to
their billing, then eagerly trade away what little substance was there in the interest of having bragging
rights for yet another achievement.
Whats striking is the utter lack of any teeth or any procedural requirements. The banks position is that
they are to be trusted after having demonstrated again and again that theyll take anything that is not
nailed down. It is drafted wherever possible to make current practices fall within the settlement, which
means the settlement is a total whitewash.
Page 2170 of 3826
We then had wild card enter the picture. American Banker reported that federal regulators were about
to issue cease and desist orders to force the servicers to take the negotiations seriously. Normally, that
would be a potent threat. But the leaked version that American Banker posted didnt even qualify as a
slap on the wrist. As Adam Levitin explained:
The C&D order basically tells banks to set up lots of internal procedures and controls within the next
few months and then to tell their regulators what they have done. The result, I suspect, is that in a few
months the bank regulators will declare that everything is fine.
(Even if the regulators think the internal controls are inadequate, its not clear what the consequence
would be. My guess is that it just results in the bank regulator telling the bank to revise and resubmit.)
(I was struck in some places by the linguistic similarities between the proposed C&D order and the
banks counterproposal to the AGs. Its impossible to know who was cribbing from whom, but the similar
language is revealing.)
Tonight, a story in the New York Times lends credence to the American Banker account:
The nations top mortgage servicers are expected to sign legal agreements by the end of this week
compelling them to change their foreclosure procedures, regulatory officials said Tuesday.
The servicers, which violated state and local laws and regulations governing foreclosures, are agreeing
to improve their methods in numerous ways. They will be required to have more layers of oversight and
proper training of their foreclosure staff. The oversight will extend to third party groups, including the law
firms that do much of the actual work of eviction.
The New York Times, however, seems to be buying bank/Adminisration PR hook, line and sinker. For
instance:
Page 2171 of 3826
Under the new rules, every homeowner in default will have a single point of contact with the servicer.
Single point of contact does NOT mean a dedicated person. A phone number with a live person
answering it would do. This is basically the same level of service as provided with credit cards, minus
the prompts to, say, get to the lost or stolen card person versus the balance transfer person. So its
better than what servicers provide now, but it is an Orwellian defining down of what single point of
contact originally meant.
Another Times misconstruction:
One of the most significant measures in the consent agreement will require servicers to hire an
independent consultant to review foreclosures done over the last two years. If owners were improperly
foreclosed on or paid excessive fees, they will be compensated.
If you read the consent decree the review is NOT comprehensive, as the Times erroneously implies.
And as Levitin noted:
By far the most interesting bit in the draft C&D order is the bit requiring the banks to engage
independent foreclosure review consultants to review certain foreclosures that took place in 20092010. There is no specification as to which foreclosures are to be reviewed or precisely what the
standards for review are. But thats all kind of irrelevant. Who do you think the banks are going to
engage to do these reviews? Someone like me? Not a chance. Theyre going to find firms that signal
loud and clear that if they get the job, they wont find anything wrong. Its just recreating the auditor
selection problem, but without even the possibility of liability for a crony audit.
Frankly, this sort of regulatory outsourcing is pretty astoundingthe OCC has resident examiner teams
at the major servicer banks. Shouldnt they be the ones auditing the internal controls and performance,
not a third-party compensated by the bank? (Oh wait, I forgot that the OCC is paid by the banksits
budget comes from chartering fees and assessments on the banks is regulates.)
However, the Times does confirm what I suspected last week, that this move was to end the Federal
push for monetary damages which would be used for principal reductions:
The attorneys general have larger goals than the regulators. They are seeking to make the banks to cut
the debt of delinquent owners. The servicers are balking at this.
The part I am puzzled by is who is behind this rearguard action. It clearly guts the Federal part of the
settlement negotiations. If you pull out your supposed big gun (ex having done a real exam to find real
problems, and its weaker than your negotiating demands, youve just demonstrated you have no threat.
Now obviously, a much more aggressive cease and desist order could have been presented; its
Page 2172 of 3826
blindingly obvious that the only reason for putting this one forward was not to pressure the banks, as
American Banker incorrectly argued, but to undermine the AGs and whatever banking/housing
regulators stood with them (HUD and the DoJ were parties to the first face to face talks).
So the only part that Id still love to know was who exactly is behind the C&D order? Is it just the OCC? I
have a sneaking suspicion that Treasury has been playing both sides of the street on this one, and that
the Fed either aligned with the OCC or pretending to sit it out, which has the effect of supporting the
OCC. The only regulator certain to have been keen to take action against the banks was the FDIC
(despite the Administration having put a target on Elizabeth Warrens back, she is a mere advisor and
the CFPB is merely a regulator in waiting).
But on another level, having the talks come to naught is a good outcome. It makes it easier for the AGs
that believe in the rule of law to build and launch cases against servicers, and for the courts to continue
to pile up examples of miscreant servicing and botched chain of title (these Potemkin reforms are going
to change virtually nothing on the ground). So once a new set of abuses generates more lawsuits (fee
pyramiding? force placed insurance? or just plain old cant find the note/chain of title) the Federal
banking regulators will again be scrambling to try to get ahead of a mob and call it a parade.
Back to Top

Frank Seeks to Amend Dodd-Frank
April 5, 2011
Rep. Barney Frank announced Tuesday that hed like to amend a provision of his sweeping Dodd-Frank
financial law the one that limits banks processing fees.
And he made it clear thats all he wants to change. The debit card fee provision, he said, is the only
part of the financial reform bill that needs to be amended.
Page 2173 of 3826
Just how it would be amended isnt certain. The Massachusetts Democrat said he supported delaying
implementation of the Federal Reserves forthcoming rule that would put the fee limits into practice. I
support legislative action to postpone the deadline so that we can revisit it, Mr. Frank said in a
statement.
Lawmakers in both the House and Senate have introduced bills that would delay the rule, arguing more
time is needed to study the impact on small banks and consumers.
Its unclear if Mr. Franks endorsement will increase the odds of congressional passage because the big
battle will take place in the Senate. The provision to rein in the debit card processing fees has a
powerful supporter in Sen. Richard Durbin of Illinois, the Senates No. 2 Democrat who spearheaded
efforts to include the provision in the Dodd-Frank bill. He has vowed to try to fend off any efforts to delay
the rules, which he says would help small retailers and add transparency to the broken interchange fee
system.
Mr. Franks announcement came after the Federal Reserve said last week that it wouldnt be able to
meet its April 21 deadline to issue a final rule on the fee limits, known as interchange fees or swipe
fees.
The Federal Reserves announcement that they cannot meet the deadline on interchange fees
confirms my view that this is the only part of the financial reform bill that needs to be amended, Mr.
Frank said. For this reason, I support legislative action to postpone the deadline so that we can revisit
it.
The provision requires the Federal Reserve to rein in the debit card processing fees banks and credit
unions charge retailers, marking a victory for merchants that have fought hard to limit the fees, which
they pay financial firms each time a consumer swipes a debit card at the cash register. But the financial
industry has aggressively attacked the provision as government price-fixing. Banks warn that the
regulation will prompt them to hike various banking fees to recoup billions of dollars of lost fee revenue.
Back to Top
American Banker
Page 2174 of 3826
Citi Ups the Ante with Reversal of High-to-Low Check Processing

April 6, 2011
By Jeff Horwitz
The top banks once uniformly processed large payments before small ones. Now they're processing
high to low, low to high and everything in between.
In a move hailed by consumer advocates, Citigroup Inc. plans to process consumers' smallest checks
first, resulting in fewer overdraft fees. The company will still process other payment types high-to-low,
however.
Wells Fargo & Co. is preparing to drop high-to-low processing of debit, ATM, and other "must-pay"
transactions in favor of chronologically ordering payments, though it will continue to process checks and
ACH payments from high to low.
JPMorgan Chase & Co. switched to chronologically processing payments last year. Bank of America
Corp., meanwhile, still charges high to low on some payments but was the first major bank to wholly
eliminate debit overdraft fees.
The splintering policies suggest the industry is still grappling with how to answer public and regulatory
criticisms of overdraft fees.
Those concerns led to the requirement, beginning last year, that banks get consumers to opt in for
overdraft coverage. In response to a query from American Banker, a Bank of America spokeswoman
said the company wished to see common processing methods put in place industrywide.
"We have been advocating for a standard, legislated solution that would ensure a consistent posting
order approach across the industry," she wrote.
Consumer advocates have long assailed high-to-low processing as manipulative and predatory.
"Processing the smallest transactions first should lessen the number of transactions that incur an
overdraft fee," said Jean Anne Fox of the Consumer Federation of America. "That's real progress."
Page 2175 of 3826
The move, first reported by the Associated Press, will almost certainly cost Citigroup revenue, though
the company's modest retail presence in 13 states means the dollar impact will be smaller than it would
have been for the bank's competitors.
In a memo to staff, CeCe Stewart, the head of Citi's North American retail bank, claimed nonfinancial
motivations drove the decision. "We think this is the right thing to do and we believe we are the first
major bank to do it," she wrote in the note, which outlined how Citi would limit a hypothetical customer's
overdraft losses. Citi will start using its new processing methods in July.
On Tuesday, Wells Fargo told American Banker that it too is changing its methods. Among customer
payments that the bank cannot refuse to cover such as ATM withdrawals, debit payments and
automatic bill payments Wells will order payments chronologically, or from low to high when a
transaction has no time stamp.
Wells prior high-to-low practices were the subject of a California class action case that it lost last year.
The company is appealing.
When handling checks or ACH payments for overdrafted accounts, however, Wells will still process
them from high to low. Given that must-pay transactions will be paid regardless of overdraft issues,
Wells spokeswoman Richelle Messick said, ordering bills from small to large will save customers
money. But when it comes to payments that Wells might decline, she said, the bank believes it is in a
customer's interest to have the largest bills paid first. "Processing customers' transactions high to low
gives priority to larger transactions, which tend to be customers' high-priority payments," she said.
Because bounced checks on major items can result in numerous other fees and inconveniences,
"paying these transactions into overdraft is often a lower cost option than returning these transactions
unpaid," Messick said.
While it would be possible to order approved payments in a way that would reduce overdraft fees, Wells
said doing so would overburden its processing systems.
Wells' new policy, which will take effect May 16, will resemble JPMorgan Chase's in that chronology will
primarily determine payments. B of A, meanwhile, stopped permitting debit overdrafts at all last year, a
decision it took after concluding that doing so would be better for consumers.
Given the sheer volume of debit payments, "what really set Citi and Bank of America apart are their
debit practices," said Rebecca Borne of the Center for Responsible Lending. But she hailed Citi's new
policy as providing both additional protection for consumers and a template for customer-friendly
processing. "That's why I think Citi's move was really big: They came out and said, 'This is what's best
for our customers.' "
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Back to Top
American Banker
JPMorgan Vows to Restore Debit Perks if Congress Delays Interchange Fee Limits
April 6, 2011
By Cheyenne Hopkins
WASHINGTON Bankers, lawmakers and other opponents of a rule to limit interchange fees on debit
cards are making the most of the opportunity after the Federal Reserve Board acknowledged last week
that it could not comply with an April 21 statutory deadline to finalize the regulation.
A top JPMorgan Chase & Co. official said Tuesday the bank would not move forward with plans to
change its debit card program if Congress acted to delay the regulation.
His comments came as Rep. Barney Frank, the top Democrat on the House Financial Services
Committee, said he was willing to support a bill that would push back the implementation date.
In an interview, Ryan McInerney, the chief executive officer of consumer finance for JPMorgan Chase,
said the bank is willing to hold off on planned cutbacks to its debit rewards program if Congress acts.
"We don't want to make the changes," said McInerney. "But we have to make the changes as a result of
the economic impact of the law. If the regulations are delayed, we wouldn't make the changes."
His comments came the same day that Jamie Dimon, the bank's chairman and CEO, criticized the
Durbin amendment.
Page 2177 of 3826
"There are 400 rules being made now," Dimon said at a Council of Institutional Investors conference in
Washington. "There are things in there that are idiotic the Durbin amendment was passed in the
middle of the night with no facts, no analysis and Congress had to vote on it, and it had nothing to do
with the crisis."
The industry has mounted an aggressive campaign to delay or scrap the interchange limit, which was
added by an amendment from Sen. Richard Durbin, D-Ill., to the regulatory reform law enacted last
year.
Their efforts received a major boost on Tuesday when Frank said he would support a delay.
"The Federal Reserve's announcement that they cannot meet the deadline on interchange fees
confirms my view that this is the only part of the financial reform bill that needs to be amended," Frank
said in a press release. "For this reason, I support legislative action to postpone the deadline so that we
can revisit it."
The Federal Reserve in December proposed limiting debit interchange fees to 12 cents a transaction.
Since then, several banks, including JPMorgan Chase, Wells Fargo & Co. and Regions Financial Corp.,
have announced changes that they would be forced to make as a result of the Durbin amendment.
JPMorgan Chase has already taken some actions, including saying it would no longer waive monthly
checking account service fees for customers who actively use their debit cards and eliminating its
rewards program for new debit card customers.
It also began sending letters to existing debit card customers saying it would eliminate its reward
program as of July 19 two days before the cap is to take effect. The bank specifically blamed the
Durbin amendment for the change.
"Congress recently enacted a new law known as the Durbin Amendment that significantly impacts debit
cards," the bank said to its customers. "As a result of this law, we will be changing our debit rewards
program."
McInerney said the bank received feedback from customers protesting the changes. The bank has 8
million rewards customers. According to a report from Moody's Investors Service released March 28,
cutting debit rewards would result in a savings of less than $200 million a year for JPMorgan Chase.
The bank has said it expects to lose $1.3 billion a year from debit regulation.
"We have received feedback on both of those issues," he said. "Customers, of course, prefer to not pay
Page 2178 of 3826
a monthly fee on a checking account and value the ability to get that fee waived if they use their debit
account. Customers also value the debit rewards program and were concerned the program was being
eliminated."
But he said the bank wants to be able to keep these programs for customers. "If the Durbin amendment
is delayed by Congress, there are two things we would do," McInerney said. "We will waive monthly
checking account service fees for customers who actively use their debit cards. That's something we
did previously and stopped in February in anticipation of the Durbin amendment going into effect. The
second thing we will do is keep our debit rewards program in place. We had told customers we would
be ending that program soon. If Congress delays the amendment for further study, we would absolutely
keep this benefit in place."
While some have argued that JPMorgan and other banks are just trying to scare customers in order to
force Congress to take action, McInerney said the bank has to make cuts as a result of the Durbin
amendment. "As it is currently written, the Durbin amendment prevents banks from recovering the full
cost for the debit product. We do not want to raise prices or eliminate benefits for our customers, but we
can't offer products where we lose money on every transaction," he said. "It is not a sustainable
business model."
The sole factor in cutting those benefits was the new law, McInerney said. "We had to make these
changes as a result of the economic impact of the law," he said. "We absolutely want our customers to
have these programs and to waive these fees. If Congress delays the amendment, we want our
customers to have these benefits."
Lawmakers have offered two measures to delay the rule. Sen. Jon Tester, D-Mont., has proposed a bill
that would delay the Durbin amendment for two years and require a study of the costs of creating a
debit system.
Rep. Shelley Moore Capito, R-W.Va., has introduced a bill that would delay the interchange rules for
one year and force the Fed to make changes if two of the four financial institution regulators the Fed,
the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the National
Credit Union Administration argue the central bank needs to include other costs in the proposal.
Tester filed his bill as an amendment to a small-business bill but it is still unclear if it has enough
support to be added to that legislation. Still, momentum for a delay has continued to build. Fed
Chairman Ben Bernanke acknowledged last week that the central bank could not finalize the rule by the
April 21 deadline set by Dodd-Frank as a result of all the comments it has received. He said the Fed
would still ensure a final rule is in place before the rule goes into effect on July 21, however.
On late Monday, a judge denied the government's motion to dismiss TCF Financial Corp.'s lawsuit over
the Durbin amendment.
Page 2179 of 3826
The American Bankers Association took the court ruling as a sign Congress should act.
"The Court's decision on Monday to deny a preliminary injunction did not find that the Durbin
amendment is good public policy," ABA President Frank Keating said in a press release. "All the more
reason for the Congress to quickly act to suspend these rules before consumers, communities and the
local banks that serve them are gravely harmed."
Last week, 33 conservative groups sent a letter to Congress urging a delay and study of the
amendment.
"Consumers and seniors on fixed incomes will likely bear the brunt of these regulations directly, as card
issuers struggle to cover the cost of artificially low price controls on interchange fees," the groups wrote.
"For card holders, this means higher fees, fewer card rewards, the elimination of banking services such
as 'free checking,' or otherwise. Simultaneously, banks and particularly smaller card issuers will
be forced to determine whether offering some consumer services is more costly than it is worthwhile."
Back to Top
Wall Street Journal

Frank Flops on Processing Fees
April 5, 2011
WASHINGTON U.S. Rep. Barney Frank (D., Mass.), co-author of the financial-overhaul legislation
enacted last year, announced Tuesday he would support amending a controversial provision that would
limit banks' processing fees.
Mr. Frank said he would endorse bills to postpone the deadline for the Federal Reserve to issue a final
rule on the fee caps. However, he made clear that he intends to keep the rest of the Dodd-Frank law
Page 2180 of 3826
intact, calling the debit card fee provision "the only part of the financial reform bill that needs to be
amended."
Lawmakers in the U.S. House and Senate have introduced bills to delay the fee limits, arguing that
more time is needed to study the regulation's impact on small banks and consumers. Proponents of the
bill have a high hurdle to overcome in the Senate, where they would need at least 60 votes.
The fee caps also have a powerful supporter in Sen. Richard Durbin (D., Ill.), the second-highest
ranking Democrat in the Senate. He authored the provision in the law mandating them, saying they
would help small retailers and add transparency to the broken interchange-fee system. He said
Tuesday that a delay would be "a serious mistake for consumers and businesses" across the country.
Still, the delay effort has progressed farther than any other attempts so far to change parts of the DoddFrank law.
Merchants lobbied for the Dodd-Frank provision, which directs the Fed to cap the fees paid by retailers
to banks and credit unions each time a consumer swipes a debit card. But the financial industry has
aggressively attacked it as government price-fixing. Banks warn that the regulation will prompt them to
raise various other banking fees to recoup billions of dollars of lost fee revenue.
After the Fed said last week it wouldn't be able to meet its April 21 deadline to issue a final rule, Frank
said Congress should grant an extension.
"The Federal Reserve's announcement that they cannot meet the deadline on interchange fees
confirms my view that this is the only part of the financial reform bill that needs to be amended," Frank
said in a statement. "For this reason, I support legislative action to postpone the deadline so that we
can revisit it."
Bankers welcomed Frank's statement. "It is encouraging to see bipartisan support for a delay," said
Richard Hunt, president of the Consumer Bankers Association.
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Page 2181 of 3826
American Banker
TCFs Debit Interchange Lawsuit Moving Forward
April 6, 2011
By Sara Lepro and Daniel Wolfe
A judge has denied the government's motion to dismiss TCF Financial Corp.'s lawsuit over debit fee
regulation.
Judge Lawrence Piersol of the U.S. District Court for South Dakota also denied TCF's motion for a
preliminary injunction against the regulation, according to a court filing after a hearing held on Monday.
The Federal Reserve Board proposed in December to limit debit interchange fees to 12 cents a
transaction, compared to the current average of 44 cents. The Fed's rule, prompted by the Durbin
amendment to the Dodd-Frank Act, would lead TCF's interchange revenue to drop from $102 million a
year to $20 million, the bank has said.
The court has planned a further hearing after the Fed issues its final ruling. However, when that will be
is unclear as the Fed has said it would miss its April 21 deadline for issuing final rules. The rule is
scheduled to take effect July 21.
Piersol said it was too early to grant the motions since the rules are not finished.
"Question before the court is whether Durbin Amendment legislation and regulations promulgated from
it are going to be found constitutional or not. Nothing will be answered with regard to the regulations at
this point as we don't know what they are," the court filing said.
In a press release, the Wayzata, Minn., bank noted that the judge raised concerns over the
constitutionality of the amendment's exemption of banks with assets of less than $10 billion, and
questioned the government's stance that a two-tiered pricing system will eventually lead to a single rate.
Eileen Rooney, an analyst at KBW Inc.'s Keefe, Bruyette & Woods Inc., wrote in a research note
Tuesday that "these comments in isolation may omit valid arguments for the defendant's case."
Page 2182 of 3826
Jeffrey Naimon, a partner at BuckleySandler LLP, said it's too soon to tell if this is a win for the bank.
Back to Top

CFPB Adds Senior Leadership Positions With New Hires
April 5, 2011
By John Yedinak
The US Department of the Treasury announced the hiring of new senior leadership positions for the
Consumer Financial Protection Bureau (CFPB) on Thursday.
Elizabeth Warren, Assistant to the President and Special Advisor to the Secretary of the Treasury on
the CFPB, highlighted the selection of Catherine West to serve as Chief Operating Officer and Gail
Hillebrand to serve as Associate Director of Consumer Education and Engagement.
In addition, Dennis Slagter will serve as Chief Human Capital Officer and David Gragan will serve as
Assistant Director of Procurement.
With these hires, the CFPB has filled two of its most senior positions with people who have a proven
track record of leadership, said Warren. Catherine Wests experience in the private sector will inform
her work heading the division that will build and sustain the CFPBs entire organization. Gail Hillebrand
s years as a prominent consumer advocate will be valuable as she heads the division that will provide,
through a variety of initiatives and methods, information to consumers that allows them to make the
decisions that are best for them.
Hilebrand will oversee oversee several offices, including Community Affairs, Consumer Engagement,
Service member Affairs, Financial Education, Older Americans, and Students. Prior to joining the
CFPB, she worked as a Senior Attorney at Consumers Unions West Coast Office, where she managed
the credit and finance advocacy team and led the organizations financial services campaign. She is the
Page 2183 of 3826
former founding chair and board member of the California Reinvestment Committee, a statewide
coalition working to encourage financial institutions to serve low-income consumers and neighborhoods.
For more information on the new hires, see here.
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American Banker
Appeals Court Rules Against Mortgage Brokers
Trade group chief predicts loan officers will make substantially less
April 6, 2011
By Paul Muolo
A U.S. Appeals Court in Washington late Tuesday night lifted a stay halting the Federal Reserve's
controversial loan officer compensation rule, saying the plaintiffs in the case two broker trade groups
did not "satisfy the stringent" requirements required to continue that stay.
As of Wednesday night, new loan officer compensation rules promulgated by the Federal Reserve
Board became the law of the land, putting restrictions on how independent loan brokers and bank loan
officers can earn a living.
Marc Savitt, president of National Association of Independent Housing Professionals told National
Mortgage News Wednesday morning that he will not give up fighting the rule, but also predicted that "A
lot of brokers will go out of business because of this." He added that, "A lot of loan officers working for
brokers and bankers will make substantially less."
However, NAIHP plans to lobby the new Consumer Financial Protection Bureau to change the rule
once that new agency opens for business in late July. (NAIHP and the National Association of Mortgage
Brokers sued the Fed last month, seeking to block the rule. They lost the first round in court
Page 2184 of 3826
but were granted a temporary stay on March 31, a day before the rule was set to go into effect.)
One of Savitt's biggest problems with the pay restrictions is the ban on brokers cutting their fees and
passing on that cost savings to the consumer as an enticement for the consumer to close with them.
Under the rule, brokers cannot be compensated by both lenders and the consumer in the same
transaction and cannot be paid based on the loan's terms and interest rate.
In their court filings the trade groups claimed the Fed lacked the statutory authority to promulgate some
of the rules; that the rules do not have a "rational basis"; and that the central bank failed to conduct a
proper analysis on how the brokerage industry would be affected under the Regulatory Flexibility Act.
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American Banker
New York Bank Superintendent: MERS Regulations Possible
April 6, 2011
By Austin Kilgore
Richard Neiman believes regulators may step in and provide guidance to mortgage servicers on their
use of the Mortgage Electronic Registration Systems.
Neiman, the superintendent of banks at the New York State Banking Department, made the remark in
response to a question following his speech Tuesday at the SourceMedia Mortgage Servicing
Conference ongoing this week in Dallas.
"The issues that have been raised are real and will require guidance in light of diverse judicial opinions,"
Neiman said.
Page 2185 of 3826
In New York State alone, two judges have issued seemingly conflicting rulings about the role of MERS
in the Empire State. In February, a federal bankruptcy judge ruling in a New York case judged that the
agreement between MERS and its members do not meet the state's strict agency laws, requiring
servicers wishing to foreclose to prove legal standing in his court.
One month later, a county judge in Bronx, NY ruled that Bank of New York Mellon sufficiently proved its
standing as rightful owner of both the mortgage and promissory note, despite the use of the MERS
System to track ownership changes of the promissory note.
Neiman declined to specify what guidance regulators might give on the use of MERS, adding that the
issue is "not on our priority list," and a long way from coming to fruition.
Already, Fannie Mae and Freddie Mac have directed their servicers to stop the practice of leaving
mortgage assignments in the name of MERS when filing foreclosure lawsuits. And MERS itself has
proposed a rule change to require its members to file a mortgage assignment transfer from MERS to
the name of the note holder prior to filing a foreclosure lawsuit.
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Rutgers University
Rutgers University Will Honor Alumna Elizabeth Warren, One Of 100 Most Influential People In World
Will Receive Honorary Degree May 27 in Newark
April 5, 2011
Press release
Elizabeth Warren, who chaired the Congressional Oversight Panel for the Troubled Asset Relief
Program (TARP), and served as chief adviser to the National Bankruptcy Review Commission, will
receive an honorary Doctor of Laws degree from Rutgers University, her alma mater, on May 27, the
Rutgers Board of Governors has announced. Warren, one of the nation's leading legal scholars, also
will deliver the commencement address to the 250 members of the Class of 2011 of the Rutgers School
Page 2186 of 3826
of Law-Newark in the New Jersey Performing Arts Center, Newark, at 10 a.m.
It was a wonderful law school, recalls Warren, who earned her Juris Doctor degree from the Rutgers
School of Law-Newark in 1976. The law school took a little kid from Oklahoma and kicked open a
thousand doors for me, Warren has said. During her student years at the law school, Warren served as
editor of the Rutgers Law Review. She began her teaching career at Rutgers law school, in 1977. She
lived in New Jersey for nearly a decade while her husband worked for Bell Labs.
In 2009 and 2010, Warren was listed by Time magazine as one of the 100 most influential people in the
world, and by the National Law Journal as one of the 50 most influential women attorneys in America.
A renowned authority in the field of bankruptcy, contract, and commercial law and a leading academic
consumer advocate on banking issues, Warren is the Leo Gottlieb Professor of Law at Harvard
University. She currently serves as Assistant to the President of the United States and Special Advisor
to the Secretary of the Treasury on the Consumer Financial Protection Bureau.
Warren, who has testified before Congress on behalf of American families, was named chair the
Congressional Oversight Panel for the $700 billion TARP in 2008. She also served as chief adviser to
the National Bankruptcy Review Commission.
Born and raised in Oklahoma, Warren attended George Washington University and the University of
Houston, where she graduated with a B.S. in 1970. After earning her J.D. and subsequently teaching at
Rutgers, she held positions at the University of Houston Law School, the University of Texas School of
Law, and the University of Pennsylvania School of Law. Honored for her dynamic teaching style and
dedication to her students, she is a member of the American Academy of Arts and Sciences and has
been principal investigator on many studies funded by the National Science Foundation and more than
a dozen private foundations.
Warren has written nine books, including national best-sellers, and more than a hundred scholarly
articles dealing with credit and economic stress. Her academic books on bankruptcy and
debtor/creditor law are widely used in American law schools.
Warren's work as a consumer advocate on behalf of victims of abusive financial services company
practices and unfair restrictions on consumer bankruptcy relief has drawn attention to the plight of
women, the elderly, and the working poor in bankruptcy. Warren was the Chief Adviser to the National
Bankruptcy Review Commission, and she was appointed as the first academic member of the Federal
Judicial Education Committee. A former second vice-president of the American Law Institute, she also
served as a member of the FDICs Advisory Committee on Economic Inclusion. Warren has long
advocated for the creation of a new Consumer Financial
Protection Bureau which was established by the Dodd-Frank Wall Street Reform and Consumer
Protection Act signed into law last year.
Page 2187 of 3826
Widely honored for her work, Warren is interviewed frequently by the media had has appeared on many
television news programs and in films such as Maxed Out and Capitalism: A Love Story.
Back to Top
American Banker
Massachusetts Land Recorder Wants to Close Account at B of A to Protest MERS
April 6, 2011
By Austin Kilgore
The head of a county land registry in Massachusetts is requesting his office close its deposit account
with Bank of America in protest of the bank's affiliation MERSCorp Inc., which runs the Mortgage
Electronic Registry System.
John O'Brien Jr., register of deeds for the Southern Essex District Registry of Deeds in northeastern
Massachusetts, publicly requested state Treasurer Steven Grossman remove his department's funds
out of Bank of America accounts and deposit them in a "local, non-MERS bank that follows the
Massachusetts Land recordation rules."
The Southern Essex District Registry claims it is owed $22 million in lost revenue from mortgage
assignment transfers that were not recorded because MERS was listed as the mortgagee in public land
records. By not using B of A for its depository business, the registry hopes to impact the bank's
nonmortgage business to force a change in business practices, Kevin Harvey, the first assistant register
for the office, told National Mortgage News.
"We believe and we feel very strongly about this, that in Massachusetts, the law is very specific: If you
sell a property, if you sell a mortgage note to another entity, you're required to file an assignment,"
Harvey said. "We believe very strongly that MERS has violated that and the banks, the shareholders of
MERS, have violated that."
Page 2188 of 3826
Harvey said the registry's account typically holds approximately $25 million, but has been as high as
$40-$45 million.
The MERS System tracks changes in promissory note ownership, allowing mortgage investors to
bypass the county-level land recordation process. While possession of the note may changes hands,
MERS remains the listed as the holder of the mortgage document that serves as proof of the borrower's
home as collateral in the public record.
MERS proponents claim this process saves time and alleviates workload for county land recording
offices burdened by a paper-intensive process. Critics claim the process lets mortgage investors avoid
paying fees when promissory notes and mortgages change hands.
"We look forward to discussing the issue with Mr. O'Brien and explaining to him Bank of America's
process for recording mortgages and the use of MERS," a spokesperson for Bank of America said in an
e-mail to National Mortgage News.
"Mr. O'Brien's premise is unfounded," said Janis Smith, MERS vice president of corporate
communications, in a prepared statement. "As we have said before, all MERS mortgages are recorded
in the public land records, and MERS members pay recording fees when the mortgage is recorded."
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Page 2189 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

_DL_CFPB_AllHands
CFPB Vacancy Announcements on USAJOB 4/5/11

Tue Apr 05 2011 19:07:32 EDT
Colleagues,
The CFPB Human Capital Team has posted new vacancy announcement(s) on the USAJOBS website.
At the end of this message you will find the job title, grade level, and link for the new announcement(s).
If you know great candidates who might be interested in joining our team, please share this information
with them.
Paralegal Specialist CN-0950-3C

Who May Apply: Applications will be accepted from U.S. citizens.
Link: 11-CFPB-123P
Contract Specialist CN-1102-4B/5C

Office: Procurement
11-CFPB-140P
Contract Specialist CN-1102-3C/5C

Office: Procurement
Page 2191 of 3826

11-CFPB-141
Consumer Response Specialist CN-0301-4B

Office: Procurement
11-CFPB-149
Consumer Response Specialist CN-0301-4B

Office: Procurement
11-CFPB-150P
Consumer Response Specialist CN-0301-5A

Office: Procurement
11-CFPB-148P
Consumer Response Specialist CN-0301-5A
Page 2192 of 3826
Office: Procurement
11-CFPB-147
Thanks
Felicia Royster
Human Capital Team
202-435-7193 (1801 L Street Room 554)
202-435-7329 (Fax)
(b) (6)
for guidance.
Page 2193 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:
CFPB.culturerocks
(fydibohf23spdlt)/cn=recipients/cn=cfpbculturerocks>
CFPB.culturerocks
(fydibohf23spdlt)/cn=recipients/cn=cfpbculturerocks>; Alag,
Sartaj </o=ustreasury/ou=exchange administrative group
(fydibohf23spdlt)/cn=recipients/cn=alags>; Hrdy, Alice (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=hrdya>; _DL_CFPB_AllHands
CFPB Lunch & Learn: CFPB's Mission and Vision

Tue Apr 05 2011 18:59:31 EDT
StartTime: Fri Apr 08 12:00:00 Eastern Daylight Time 2011

EndTime: Fri Apr 08 13:00:00 Eastern Daylight Time 2011
Location:
Invitees:
Recurring: No
ShowReminder: No
Accepted: No
*~*~*~*~*~*~*~*~*~*
You are Invited to a CFPB Lunch & Learn!
Topic: CFPB's Mission & Vision
Date: Friday, April 8, 2011
Time: 12:00 pm - 1:00 pm
Place: Room 503 1801 L St.
Facilitator: Sartaj Alag, Alice Hrdy, and Stephanie Gorski
Purpose: This is a perfect opportunity to discuss CFPB's mission and vision with colleagues.
Page 2194 of 3826
From:

To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Tue Apr 05 2011 13:01:14 EDT
From: Blenkinsopp, Alexander (CFPB)

Sent: Tuesday, April 05, 2011 12:58 PM
Cc: Adamske, Steven; Moore, Megan; Hunt, Anita Maria; Wallace, Kim; Wolin, Neal; Warren, Elizabeth
(CFPB); Fitzpayne, Alastair; LeCompte, Jenni; Murray, Colleen; Coloretti, Nani
Subject: CFPB Press Clips 4/5
Index

Baltimore Sun New federal consumer agency wants to hear from you
Politico Morning Money CFPB Hearing Prep
Dow Jones Newswires Geithner: Consumer Bureau Cuts Would Starve Regulatory Agency
The Hill (blog) House Republicans to consider bills clipping Consumer Bureau
Pymnts.com CFPB Reveals Spending from Q1 of Fiscal Year 2011
New York Times (blog) Wall Street Lobbies Treasury on Dodd-Frank
Page 2195 of 3826

Huffington Post Congress Still Demonizing Elizabeth Warren, Meanwhile, Chase Rolls Out the
$5 ATM Fee
The American End It, Dont Mend It
American Banker Washington People
MarketWatch Super-Rich CEOs are killing your retirement
Fortune (blog) How to lose friends in Washington: Be TARP cop
USA Today Dual system: Minorities lose financial ground, critics say
Dow Jones Newswires Warren Defends Consumer Bureaus Role In Mortgage Deal Talks
Wall Street Journal (blog) Elizabeth Warren Defends Role in Mortgage Talks
American Banker Warren Again Defends Role in Servicer Settlement Talks
The Hill (blog) Elizabeth Warren defends Consumer Bureaus role in settlement talks
Wall Street Journal U.S. Lenders Near Pacts in Foreclosure Probe
Consumer Credit
Reuters Delinquency rate on bank-issued credit cards falls
American Banker TCFs Debit Interchange Lawsuit Moving Forward
American Banker Online Payment Services Boost 2010 ACH Volume
USA Today Our view: In swipe fees fight, retailers make better case
USA Today Opposing view: New rules mean new fees
Housing
Reuters US mortgage servicers have done poor job Geithner
Washington Post Wells Fargo, NAACP open financial literacy center
American Banker Solution for Underwater Borrowers: Keep the Mortgage, Switch the House
Wall Street Journal (blog) How Many Borrowers Qualify for New Safe Mortgage Rules?
Other
Page 2196 of 3826
Wall Street Journal White House Orders Agencies to Prepare for Shutdown
American Banker Banks Weigh the Benefits of Converting Their Charters
Baltimore Sun
New federal consumer agency wants to hear from you
Consumer Financial Protection Bureau uses social media to connect with consumers
April 4, 2011
By Eileen Ambrose
Corinne Cooper wants something done about insurers raising homeowners' premiums based on credit
scores. Robert Kane advocates for more protections when consumers deal with cellphone and Internet
providers. And Shane Algarin recommends making it harder for thieves to use stolen credit cards.
These are some of the hundreds of suggestions pouring into the new Consumer Financial Protection
Bureau. The federal agency is still setting up. But it launched a website in early February to gather
consumers' input and is reaching out to them on Twitter, Facebook and YouTube, too.
"The site is not like any other government site I have seen," says Eric Jones, a vice president with
R2Integrated, a digital marketing and Web technology firm in Baltimore. "I'll admit that's nice."
The Consumer Financial Protection Bureau was created by last year's Wall Street reform law. It will
take over consumer protection duties from seven government agencies, including the Federal Reserve
and Office of Thrift Supervision, on July 21.
For too long, consumer protection has been split among many agencies, and it wasn't always their
prime concern. Sometimes consumer protection even could be in conflict with an agency's role. If your
mission is maintaining the safety and soundness of banks, can you truly advocate for pro-consumer
practices that could erode lenders' profits?
The bureau will have the power to write regulations and enforce federal consumer laws. This is scary to
Page 2197 of 3826
many businesses, whose supporters in Congress are trying to weaken the agency before it gets started.
But if you have ever been burned by unfair credit terms or deceived by a lender, this is your agency.
And one of the best ways to support it is to make useful recommendations on problems it should tackle.
And the bureau is encouraging consumers to engage via social media.
"The CFPB's initial online efforts are focused on engaging the American people early in the process of
building the consumer bureau and setting its first priorities," says Jen Howard, the bureau's
spokeswoman.
As of March 1, the bureau had received 300 complaints, about half of them about mortgages and home
loans. Additionally, consumers have made nearly 1,000 suggestions.
Some issues raised by consumers, such as legalese in credit card agreements, are addressed by
bureau staffers via YouTube videos.
"It looks to me [like] they are connecting with people and are being responsive," says J.D. Roth, editor
of GetRichSlowly.org, a personal finance blog.
Roth also gives the bureau kudos for letting critics weigh in.
Some critics object to the fact that Elizabeth Warren, the Harvard law professor setting up the bureau,
didn't go through a Senate confirmation to become the director. President Barack Obama sidestepped a
confirmation battle by appointing Warren as an assistant to the president and adviser to the Treasury
secretary.
Lori Hoeksema, a mortgage originator from Michigan, has frequently commented on the bureau's
Facebook posts to criticize the $60 million spent so far to launch the bureau.
"I'm not a fan of the bureau," Hoeksema said in a telephone interview. "It will end up costing a lot of
money and it's not going to have a lot of impact on consumers."
Page 2198 of 3826
But even Hoeksema concedes that she doesn't know of any other government agency that opens itself
up to consumers like this.
"It's great we can air our concerns," she says.
One of the most popular features on the site is a calendar of Warren's schedule. That's understandable,
given the high interest in reality TV shows, says Jones of R2Integrated.
"They want to see inside someone else's life," he says. "They think it's more interesting than their own."
The calendar is updated monthly, and you can click on an entry to get a few details. On March 28, for
instance, Warren met with Jill Biden the vice president's wife about the office of servicemembers
affairs at 4:15 p.m., met with ING Direct's president at 5:15 p.m. and then attended a financial literacy
dinner at the Treasury with nearly a dozen CEOs.
Jones says other government agencies are trying to figure out how to use social media but are
constrained by privacy or homeland security issues. That makes the bureau's embrace of social media
unusual for a government agency, he says.
"There is a personality to the site, which is unlike most government sites," Jones says. "They are using
it conversationally, and that's what it's meant for."
But this effort will be successful in the long run only if the bureau can keep the conversation going,
Jones says.
So, get in on the conversation. And help the Consumer Financial Protection Bureau do its job.
Back to Top
Page 2199 of 3826

CFPB Hearing Prep
April 5, 2011
By Ben White
CFPB HEARING PREP - From memo to House Financial Services Committee members from Chairman
Spencer Bachus (R-Ala.) ahead of Wednesdays hearing on changing the structure of the CFPB: This
hearing will examine four bills ... that are designed to promote greater accountability and transparency
at the ... CFPB and to ensure that the CFPBs consumer protection mandate is carried out in a way that
does not undermine the safety and soundness of the financial system. Full memo: http://politi.
co/dJfNYo
Back to Top
Dow Jones Newswires

Geithner: Consumer Bureau Cuts Would Starve Regulatory Agency
April 5, 2011
By Jeffrey Sparshott
Treasury Secretary Timothy Geithner Tuesday said proposed cuts to the Consumer Financial
Protection Bureau's budget would " starve" the new agency of funds necessary to get up and running.
"The most important part of this bureau from day one is to simplify and improve disclosure for people
Page 2200 of 3826
who want to get a loan to buy a house or borrow against their credit card," Geithner said at a Senate
Appropriations subcommittee hearing.
House lawmakers in February approved a budget that would significantly slash the bureau's funding.
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Dow Jones Newswires

Warren Defends Consumer Bureaus Role In Mortgage Deal Talks
April 4, 2011
Responding to a query from U.S. lawmakers, White House adviser Elizabeth Warren on Monday again
defended the Consumer Financial Protection Bureau's role in ongoing mortgage settlement talks.
She emphasized that the bureau is simply providing advice and recommendations to federal officials
and said the fledgling consumer watchdog agency is not actively negotiating with some of the nation's
largest banks. The ongoing negotiations involve Obama administration officials, state attorneys general
and banks seeking to address alleged mortgage servicing abuses revealed last year.
"We have provided advice to federal and state officials regarding a potential servicing settlement,"
Warren said in her letter. "In doing so, we have been an active participant in inter-agency discussions,
sharing our analysis and recommendations in support of a resolution that would hold accountable any
servicers that violated the law."
Reps. Spencer Bachus (R., Ala.) and Shelley Moore Capito (R., W.V.), leaders on the House Financial
Services Committee, had suggested in a letter to Warren last week that the consumer bureau was too
involved in the negotiations and that the agency was overstepping its authority. The bureau, a
centerpiece of the Dodd-Frank financial overhaul, does not yet have authority over mortgage servicing
issues. The bureau doesn't officially launch until July 21.
Page 2201 of 3826
Back to Top

Elizabeth Warren Defends Role in Mortgage Talks
April 5, 2011
The back-and-forth between White House adviser Elizabeth Warren and top Republicans on the House
Financial Services Committee is intensifying.
Ms. Warren, who has been busy setting up the Consumer Financial Protection Bureau, defended the
new agencys role in the ongoing mortgage settlement talks and said she was proud to offer advice on
the matter. In a letter Monday responding to the Republicans, Ms. Warren wrote: To the extent that we
can be helpful in holding to account servicers that have violated the law and in repairing the damage
they caused, we are proud to do so.
The letter to Financial Services Chairman Spencer Bachus (R., Ala.) and Rep. Shelley Moore Capito
(R., W.V.), countered the lawmakers assertions last week that the new agency has overstepped its
authority by getting deeply involved in the efforts to address banks alleged shoddy mortgage
practices. GOP lawmakers have said the agency, established under last years Dodd-Frank financial
overhaul law, is too powerful, and ave pushed to slash its funding.
It is plain that the CFPB has done more than provide advice on the proposed mortgage settlement,
Reps. Bachus and Capito s said in a letter last week that also asked Ms. Warren to review the transcript
of her March 16 congressional testimony and clarify or correct any misstatements. They pointed to a
draft of a confidential document from the consumer bureau in which the bureau seems to suggest that
the settlement require the largest mortgage servicers to modify a specific number of mortgages and
provide borrowers some relief.
Mr. Bachus seemed to take that to be confirmation that Ms. Warren has overstepped her authority. The
Financial Services Committee, he said in a statement, will be examining the mortgage servicing
Page 2202 of 3826
sanctions issue in an upcoming hearing, and Im certain her [Warrens] participation in these talks will
be a part of that hearing.
The ongoing mortgage settlement talks involve Obama administration officials, state attorneys general
and banks seeking to address the alleged mortgage servicing abuses revealed last year.
While the consumer bureau will eventually have authority over mortgage servicing issues, it doesnt yet
have enforcement powers. The bureau will receive much of its powers when it officially launches as a
new consumer watchdog agency on July 21.
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American Banker
Warren Again Defends Role in Servicer Settlement Talks
April 5, 2011
By Cheyenne Hopkins
Elizabeth Warren, the Obama administration official in charge of setting up the Consumer Financial
Protection Bureau, again defended her role in a pending settlement between several state and federal
agencies and the top 5 mortgage servicers.
Warren sent a letter to House Financial Services Committee Chairman Spencer Bachus on Monday
responding to complaints he made that she went further than simply providing advice. In the letter,
Warren maintained that she has only provided advice.
"We have provided advice to federal and state officials regarding potential servicing settlement," Warren
wrote. "In doing so, we have been an active participant in inter-agency discussions, sharing our analysis
and recommendations in support of a resolution that would hold accountable any servicers that violated
the law. As I explained during the recent hearing, because this is an ongoing law enforcement matter, it
would be inappropriate for me to disclose the contents of these inter-agency discussions. While we
have provided advice to government officials, it bears emphasizing that the consumer agency
Page 2203 of 3826
is not conducting settlement negotiations with mortgage servicers."
At a March 16 hearing of the House Financial Services financial institutions subcommittee, Republican
lawmakers blasted Warren for her involvement in the settlement process. At the hearing, Warren
argued that her role was simply to provide advice when asked.
But disclosures of meetings between Warren and settlement officials and the leak of a document titled,
"Perspectives on Settlement Alternatives in Mortgage Servicing," in which CFPB lobbied Iowa Attorney
General Tom Miller for a $20 billion fine against the banks have led Republicans to contend that
Warren's role has been too extensive.
In Monday's letter, Warren said CFPB was asked by Treasury Secretary Tim Geithner, the Justice
Department and other federal officials to provide assistance to the settlement process.
"To the extent that we can be helpful in holding to account servicers that have violated the law and in
repairing the damage they caused, we are proud to do so," Warren wrote. "The consumer agency was
designed to be a voice for American families, and we are willing to speak on their behalf."
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Elizabeth Warren defends Consumer Bureaus role in settlement talks
April 4, 2011
By Peter Schroeder
The architect of the new Consumer Financial Protection Bureau (CFPB) defended the agency's role in
ongoing settlement negotiations from Republican critiques that it has overreached.
Elizabeth Warren, the assistant to the president in charge of setting up the CFPB, said in a letter
Page 2204 of 3826
Monday that the CFPB has offered advice to other government officials regarding ongoing settlement
negotiations with banks over widespread mortgage documentation problems.
However, she rejected claims from some House Republicans that she or anyone at the agency
overreached in offering that advice, noting that the agency is not involved in any direct negotiations with
mortgage servicers.
The letter comes in response to accusations from Republicans that Warren downplayed the role the
CFPB had played in settlement talks when she testified before the House Financial Services Committee
on March 16.
There, she told lawmakers that the CFPB had offered advice and expertise to other officials when
asked. Republicans pressed Warren on the issue, arguing it would be inappropriate for the CFPB to
play a role in settlement talks, since the agency does not officially begin work until July and Warren is a
political adviser an appointed director.
In a March 30 letter, Finance Chairman Spencer Bachus (R-Ala.) and Rep. Shelley Moore Capito (R-W.
Va.) pointed to a previously confidential presentation put together by CFPB staff regarding mortgage
documentation problems and settlement talks as proof the agency had "extensive involvement" in the
negotiations. They invited her to revise her testimony before the committee.
In her response, however, Warren did no such thing, defending the agency's role as an "active
participant" in inter-agency discussions about the settlement. She declined to detail those talks, citing
the ongoing law enforcement matter, and emphasized that the Department of Justice, other federal
agencies, and state attorneys general are the ones negotiating directly with servicers, not the CFPB.
When the CFPB begins official work in July, it will be authorized to regulate mortgage servicing. As a
result, the agency has brought on staff with relevant expertise, which Warren argued made the bureau
a valid resource to tap for the Treasury Department and other officials involved in settlement talks.
"Let me make it clear that every step we have taken has been mindful of the impact of these
deficiencies on countless American families, their neighbors, their communities, and the economy as a
whole," she wrote. "To the extent that we can be helpful in holding to account servicers that have
violated the law and in repairing the damage they caused, we are proud to do so."
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Page 2205 of 3826

House Republicans to consider bills clipping Consumer Bureau
April 4, 2011
By Peter Schroeder
House Republicans are looking to limit the reach of the new Consumer Financial Protection Bureau
(CFPB) as they consider a number of bills that would curb the fledgling agency.
Rep. Shelley Moore Capito (R-W.Va.) announced Monday that the financial institutions subcommittee of
the House Financial Services Committee will devote an upcoming hearing to legislation that would rein
in the CFPB, which remains a contentious part of the Dodd-Frank financial reform law.
"I believe, as do many of my colleagues, that the current framework does not allow for necessary and
proper oversight of such a massive agency," she said.
The bills slated for consideration at Wednesday's hearing would ensure GOP input into the CFPB's
dealings, make it easier for its rules to be overturned and ensure the bureau is limited in its reach until it
officially opens its doors in July.
One bill on tap would change the head of the CFPB to a bipartisan five-member commission instead of
single director. That legislation, introduced by Capito and committee Chairman Spencer Bachus (RAla.) would ensure Republicans a seat in running the new bureau, as only three of the presidentially
appointed members could be from the same political party.
Another bill, introduced Friday by freshman Rep. Sean Duffy (R-Wis.), would make it easier for the new
Financial Stability Oversight Council (FSOC) to overturn rules made by the CFPB. The FSOC is an inter
-agency government working group charged with protecting the stability of the financial system as a
whole.
Under current law, the FSOC can reject CFPB rules by a two-thirds majority, and only if it deems the
rules would endanger the entire financial system. It also only has 90 days to review the CFPB's
proposed rule and must file a review petition within 10 days of when the proposal is published.
Page 2206 of 3826
Under Duffy's bill, the FSOC could reject CFPB rules by a simple majority, and just as long as it runs
counter to safe and sound operations of U.S. financial institutions. It also would give the FSOC more
time to review the proposals.
Two discussion drafts will also be topics of discussion. One would prevent regulators from allowing the
CFPB to participate in bank examinations before July 21. Another would prevent the CFPB from
receiving its new authority on that date, as mandated by Dodd-Frank, if a CFPB director has not been
appointed and confirmed by the Senate.
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Pyments.com
CFPB Reveals Spending from Q1 of Fiscal Year 2011
April 5, 2011
The Consumer Financial Protection Bureau as of Dec. 31 had spent a total of $18 million, including $2
million in outlays and $16 million in gross obligations, according to a report released April 1 on the
organizations website.
The report shows the biggest expenditure was for staff detailed from and administrative services
provided by other federal agencies, including the Department of the Treasury. Contracts for IT ($2
million) and human resource services ($1 million) ranked as the largest obligations. Meanwhile, the
Federal Reserve provided the CFPB with $32.77 million in support during the first quarter, according to
the report.
The CFPB acknowledged in a blog post there would be difficulty in bureaus first few years as far as
predicting spending totals. The bureau continued that they hoped the expense reports would allow
Americans to better gauge our impact and hold us accountable for results.
Page 2207 of 3826
Click here for a detailed breakdown of the CFBPs Q1 spending report in 2011.
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Wall Street Lobbies Treasury on Dodd-Frank
April 5, 2011
By Ben Protess
Wall Street has plenty to say about the Dodd-Frank Act, and the Treasury Department is listening.
The financial regulatory law has been the topic of conversation at dozens of meetings over the last
several months between top government officials and titans of finance.
In February, Treasury officials met with finance industry executives and lobbyists from about three
dozen banks, asset management companies and trade groups, according to government records.
Executives from Wall Streets biggest names Goldman Sachs, JPMorgan Chase, Morgan Stanley
and Citigroup each huddled with Treasury officials to discuss Dodd-Franks rules for derivatives,
proprietary trading and capital levels.
In contrast, Treasury officials heard little in February from consumer advocates and lobbyists who favor
financial regulation, the records show.
Wall Street lobbied hard to destroy or delay some regulations when Congress was considering the
Dodd-Frank Act. Now the industry is aiming to influence regulators who are implementing the law at the
Treasury Department and other agencies.
Page 2208 of 3826
Goldman Sachs executives alone attended four separate meetings with Treasury officials in February.
Gary D. Cohn, the banks president and chief operating officer, met on Feb. 24 with Jeffrey Goldstein,
the Treasurys under secretary for domestic finance, to discuss Dodd-Franks new rules for derivatives
trading, among other things. Mr. Cohn, an expert in that corner of the finance world, was joined at the
meeting by Faryar Shirzad, one of the banks top lobbyists and a deputy national security adviser in the
Bush administration.
Goldman officials also sat in on meetings about the Volcker Rule, the provision in Dodd-Frank that
perhaps poses the greatest threat to banks. Named after Paul A. Volcker, a former Federal Reserve
chairman who proposed it, the rule prohibits federally insured banks from trading for their own benefit
rather than for clients, a tactic known as proprietary trading.
Goldman was among the first Wall Street banks to wind down its proprietary trading desks after
President Obama signed the Dodd-Frank Act into law in July.
Executives of Citigroup, JPMorgan, Deutsche Bank and several smaller regional banks also gathered
with Treasury officials to debate the Volcker Rule. The Treasury Department disclosed the gatherings in
its monthly calendar of meetings.
Consumer groups made few appearances on the agenda, except on the calendar of Elizabeth Warren,
who is serving as a temporary Treasury employee while she sets up the governments new Consumer
Financial Protection Bureau.
Otherwise, Treasury held only two meetings with consumer advocates, according to its records. Mr.
Goldstein met with John Taylor, president and chief executive of the National Community Reinvestment
Coalition, on Feb. 17, and Barry Zigas, director of housing policy for the Consumer Federation of
America, on Feb. 18.
The topic of conversation was the future of Fannie Mae and Freddie Mac, the government-controlled
mortgage finance giants.
That same week, Mr. Goldstein and his colleague Mary Miller, the T. Rowe Price director turned
assistant treasury secretary, held meetings about Fannie and Freddie with two leading industry groups,
the National Association of Realtors and the National Association of Homebuilders
On Feb. 2, Treasury Secretary Timothy F. Geithner met with John G. Stumpf, the chief executive of
Wells Fargo, to discuss Fannie and Freddie. As the nations largest consumer lender and a leading
player in the mortgage industry, Wells Fargo has a huge financial stake in the governments mortgage
policies.
Page 2209 of 3826
A week after the Wells Fargo meeting, Mr. Geithner took up foreign exchange swaps another thorny
issue with executives from HSBC. Under the Dodd-Frank Act, Mr. Geithner has the authority to
exempt foreign exchange swaps from new rules for the derivatives industry. His decision is expected
soon.
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Huffington Post
Congress Still Demonizing Elizabeth Warren, Meanwhile, Chase Rolls Out the $5 ATM Fee
April 5, 2011
By Ed Mierzwinski
This was written on April Fool's Day, but sadly all of it is true.
Incredibly, last week, in a letter to Professor Elizabeth Warren, House Financial Services Committee
chairman Spencer Bachus (R-AL), along with key subcommittee chair Shelley Moore Capito (R-WV), all
but accused Professor Elizabeth Warren of lying to Congress in her recent, excellent testimony on the
work of the Consumer Financial Protection Bureau Implementation team. The letter alleges that the
existence of draft CFPB materials offering advice to the state attorneys general about the negotiation of
a settlement with the large mortgage servicers (4 of the 5 biggest are owned by the biggest banks)
somehow means that the CFPB is providing more than advice. Professor Warren, through her press
office, stands by her testimony (New York Times). So do we.
Such political tactics can only be characterized as demonization -- or what Professor Adam Levitin calls
a witch-hunt. They do not contribute to legitimate committee oversight, but serve only to cast unfair
aspersions on a dedicated public servant, and add to an orchestrated special interest campaign to
weaken the CFPB, as well as the entire Wall Street Reform and Consumer Protection Act passed last
year after years of predatory consumer practices and reckless investment deals by the same Wall
Street banks destroyed our economy. Washington should be implementing Wall Street reform, not
tearing it down.
Page 2210 of 3826
Next week, the committee holds a hearing on a Bachus proposal to weaken the bureau by taking its
director (not yet nominated) and converting the position a 5-member commission. Would Chairman
Bachus support a similar change to the leadership of the bank-friendly Office of the Comptroller of the
Currency (OCC), the chief national bank regulator? OCC aided and abetted the financial collapse by
issuing a rule taking state attorneys general off the bank crime beat while standing idly by itself while
national banks ruined lives. Why doesn't OCC need a commission instead of its director?
We expect other proposals to pander to industry lobbyists, who have circled the Capitol. Their demands
include: place the CFPB under the notoriously political appropriations process, strengthen the veto
authority already granted an oversight panel over its rules, and grant more industry exceptions to its
authority. The House has already wrongly asserted authority over the CFPB's budget, which is a
transfer from the Fed, not an appropriation, by voting to reduce its budget by 40%.
Of course, the attacks on Professor Warren and the CFPB - the first federal financial agency with only
one job, protecting consumers - are only part of a series of attacks on Wall Street reform. This week,
the PIRG-backed Americans for Financial Reform issued a statement rejecting the peculiar preconceived notions of the House Financial Services oversight subcommittee that the cost of cleaning up
Wall Street is "too high a price to pay."
But, powerful special interests are seizing the moment to make ludicrous claims that the U.S. House of
Representatives is buying. This week Chase Bank kingpin Jamie Dimon even said derivatives didn't
cause our financial crisis and that regulation of derivatives "would damage America." And the lack of
regulation of derivatives didn't?
Meanwhile, Dimon's Chase Bank is about to start charging consumers an unprecedented

"experimental" $5 double-dipping ATM surcharge to non-customers. Chase Bank is perhaps best
known for foreclosing on military families in violation of the law, or is it for evading the new overdraft
rules, or perhaps for Dimon's palatial salary and bonus? It now likely has the highest ATM fees outside
a casino.
We hope consumers will reject that ATM fee by voting with their feet. And we can only hope that the U.
S. Senate will reject all the ideas coming out of the House to weaken Wall Street reform. Has the House
forgotten that just three years ago dangerous Wall Street practices led to the greatest economic
collapse since the Great Crash of 1929? Has the House forgotten that the reckless conduct of the Wall
Street banks cost Americans more than 8 million jobs, hundreds of billions in taxpayer funded bailouts,
more than $8 trillion lost in home values and retirement savings, and millions of foreclosures and that
the 2008 financial meltdown is also responsible for about $400 billion of our current government deficit?
It's no April Fool's joke. In Washington, you don't have to make this stuff up, it writes itself.
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Page 2211 of 3826
The American (Journal of the American Enterprise Institute)

End It, Dont Mend It
April 5, 2011
By Peter J. Wallison
Last week, 18 Republican Senators, led by Jim DeMint of South Carolina, introduced legislation to
repeal the Dodd-Frank Act. Its surprising that it took so long. The evidence against the act continues to
pile up.
Where to begin? Here are a few of the major features of the Dodd-Frank Act that raise questions about
whether it should remain in force:
It strips the banking industry of the ability to engage in proprietary trading (the trading of fixedincome securities for the banks own accounts), a profitable activity that no one ever claimed had any
role in the financial crisis. Removing the entire U.S. banking community from this market will reduce
liquidity and widen spreads for all buyers and sellers of these instruments. Ultimately, it will move this
business offshore, where foreign banks and other institutions will gain the benefits. No other country
has moved to impose such a restriction on its own banks.
It authorizes a group of regulators, the Financial Stability Oversight Council, to designate certain
large financial institutionsinsurance companies, insurance holding companies, securities firms, banks,
bank holding companies, hedge funds, finance companies, and othersas potential causes of financial
stability and thus too big to fail. This would give these companies major competitive advantages over
smaller companies, particularly in funding costs, and forever change the competitive nature of our
financial system.
It could ultimately give the Fed the authority to regulate and supervise all these too-big-to-fail firms
including their capital, leverage, liquidity, and activitiesand thus control the major financial institutions
in the U.S. economy. This extraordinary power makes possible something that has never before existed
in the United Statesa partnership between the government and the nations largest financial firms, in
which the government protects them from failure and they support the governments policies.
Page 2212 of 3826
It imposes new and costly regulations on derivatives, which many financial institutions and others
use to hedge their risks. Jamie Dimonthe chairman of JP Morgan Chase and a former supporter of
the administrationprobably had these restrictions on a key risk management tool in mind when he
called the act one of the most irrational pieces of legislation I've ever seen, and predicted it would
drive users of derivatives to Singapore to make their derivatives arrangements.
It creates the Consumer Financial Protection Bureau (CFPB), which has the power to regulate and
control all relationships between financial firms and consumers, from the biggest banks to the smallest
local check-cashing store. This agency has the broadest mandate and longest reach of any agency in
Washington, yet it has been placed completely beyond Congresss ability to control it through the power
of the purse (the CFPB does not require appropriations; it is entirely funded by the Fed). The CFPB is
also beyond the control of the president (who appoints the head of the agency for a five-year term,
removable only for cause); and although the CFPB is housed in the Fed, the Fed is statutorily forbidden
to interfere with its work. So one of the most powerful agencies ever created is wholly independent of
the elected branches of government, seeming to violate the constitutional scheme for the separation
and balancing of powers.
It requires the regulatory agencies to produce well over 200 regulations, which will take years.
Meanwhile, the uncertainties created by the absence of regulations interpreting the broad language of
the act are likely to be the principal reason for the agonizingly slow recovery of employment from the
recent recession. As former Fed Chairman Alan Greenspan showed in a recent paper, businesses are
not investing cash flows in long-term assets at anything like the rate they had invested in other
recoveries since World War II.
Finally, although the act was sold as necessary to prevent another financial crisis, there is little
evidence that the 2008 crisis was caused by a lack of regulation, or by the absence of the draconian
restrictions on U.S. financial institutions outlined above. Instead, government housing policies, which
the act did not even address, fostered the growth of 27 million subprime and other low-quality
mortgageshalf of all mortgages in the U.S. financial system that year. When these mortgages began
to default, the losses weakened financial institutions around the world and caused the financial crisis.
Accordingly, it is reasonable to view the Dodd-Frank Act (like ObamaCare) as an ideological effort to
put government in control of another sector of the U.S. economy, rather than as a valid attempt to
prevent another crisis. If so, this raises questions about the acts legitimacy, making it easy to
understand why Republicansvirtually none of whom voted for the actnow want to repeal it.
Peter J. Wallison is the Arthur F. Burns Fellow in Financial Policy Studies at the American Enterprise
Institute.
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Page 2213 of 3826
American Banker
Washington People
April 4, 2011
By Donna Borak and Joe Adler
Charles in Charge?
The director's job at the Consumer Financial Protection Bureau continues to go unfilled, but maybe the
administration just isn't casting a wide enough net.
In an April Fool's Day gag, the payments website PYMNTS.com reported that the job had in fact gone
to a certain canceled sitcom star, who coincidentally is between jobs.
The joke story, which enjoyed a healthy Twitter following on Friday, said Charlie Sheen had
"unanimously" been chosen to lead the new agency.
The story quoted Elizabeth Warren, who in the real world is serving as CFPB's de facto leader while
she advises the White House on its formation, as saying that appointing the former "Two and a Half
Men" star was a brilliant idea.
"'Charlie Sheen's 'winning' ways and tiger blood are just what this organization needs to get started on
the right foot,' said Warren. 'Unlike myself, he is a uniting force for lawmakers.'"
According to the website, Sheen said his first act in the new job is to rename "the CFPB to be called
Charlie's Financial Protection Bureau." And President Obama said in the story Sheen was "just the
change this country needs to get financial reform back on track."
Page 2214 of 3826
More Hires at CFPB
The CFPB announced the hiring of more senior staff last week, including Catherine West as its chief
operating officer. West, a former banker as well as COO at J.C. Penney, has been named among
Fortune magazine's 50 most powerful women in business, and Washingtonian Magazine's 100 most
powerful women. At the bureau, she will also hold the title of associate director. West will oversee
offices related to personnel, information technology, finance, facilities and privacy, among others.
Before coming to J.C. Penney, West held senior positions at Capital One, including that of president,
and president of the bank's U.S. card business.
The CFPB announced three other appointments. Dennis Slagter was named assistant director and
chief human capital officer. Slagter previously worked at the Millenium Challenge Corp., where he ran
administrative services and human resources. David Gragan was hired as the CFPB's assistant director
for procurement. He previously was the chief procurement officer for the District of Columbia, under
former D.C. Mayor Adrian Fenty. Finally, Gail Hillebrand, a former senior attorney in the West Coast
office of the Consumers Union, was named associate director for consumer education and
engagement.
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MarketWatch
Super-Rich CEOs are killing your retirement
Commentary: 11 reasons bankrupt Reaganomics ideas are leading to collapse
April 5, 2011
By Paul B. Farrell
Page 2215 of 3826
Headlines race across the web: Jamie Dimon Worries That Financial Regulation Will Doom Banks,
Forever. Doom? Forever? Settle down Dimon, this sounds like an over-the-top B-movie promo for
Vampire Chronicles.
Suddenly the boss of $2 trillion J. P. Morgan Chase is our newest Dr. Doom. Last week he was
preaching his mantra to the U.S. Chamber of Commerce choir, warning that financial reforms would be
a nail in the coffin for big American banks.
Nail in the coffin? Yes, and thats exactly what the American public wants. Stuff Wall Streets Vampire
Squids back in their coffins, nail the lids shut, bury them forever.
Seriously, nationalize our incompetent Super-Rich Banks. We made a historic mistake not doing it in
2008. Should have let the vampires go bankrupt, reinstated Glass-Steagall. Instead we sat passively
letting our double-dealing Treasury Secretary, former Goldman boss Hank Paulson, protect his Wall
Street cronies as he conned Congress and taxpayers into making the worst economic blunder in
American history, bailing out Wall Streets too-greedy-to-fail banks.
Warning: Soon our Super-Rich Vampires will sink the economy deeper than 2008. Worse, they even
believe well bail them out again. We blinked in 2008, so theyll try sucking out more bail-out blood next
time.
The scenes pathetic: Heres one of Americas Super-Rich CEOs, a guy worth $260 million, coming
across like a crybaby, whining because a tough-as-nails gal like Harvard law professor Elizabeth
Warren and her Consumer Financial Agency just might take away his toys for being a bad boy might
try to limit his ability to rip off cardholders might limit his high-risk gambling with depositors cash,
limit him playing in the $700 trillion global derivatives casino might force his bank to put up more
reserves to prevent the next meltdown might even awaken his lost moral consciousness and get him
to think about the public welfare instead of the tens of millions he makes squeezing the public.
Wall Streets Super-Rich CEOs killing financial reforms
But will Wall Street have an epiphany? Change? Never. No, wont happen. Why? Americas Super-Rich
Vampire CEOs are already doomed, forever. Our too-greedy-to-fail banks are back to their old pre-2008
tricks, bankrolling a billion dollar kill reform drive. J. P. Morgan Chase, Goldman Sachs, Citigroup,
Bank of America and Morgan Stanley have invested megabucks in lobbyists and politicians to water
down, defund and effectively kill Warrens CFA, the SEC, Dodd-Frank and every other attempt to
protect the public.
Page 2216 of 3826
These guys love running the Fed and Treasury as their own little piggy banks. As Spencer Bachus, the
GOP chairman of the House Financial Services committee put it, government regulators exist to serve
banks.
So, unfortunately, for a while you will have to listen to Dimons incessant whining as he keeps replaying
his overly dramatic Dr. Doom story. Until Wall Street pounds all their nails in the coffin of financial
reform, while resurrecting their self-destructive Reaganomics vampire that sank its fangs and triggered
the 2008 meltdown.
But watch out Wall Street: Next time, American taxpayers wont support bailouts and trillions more debt.
We will sink into the Great Depression 2 and a new American Revolution next time. No bailout, well just
nationalize all banks.
Then, poor little Jamie and his Super-Rich buddies will lose their jobs, having destroyed American
capitalism. Unfortunately, the great irony is that these insatiable greedy, incompetent CEOs will
personally survive well after the collapse, living off the millions theyve stashed away while sabotaging
America with their bankrupt Reaganomics ideas.
Dimon becomes our newest Dr. Doom
Dimon really loves his new role as a Dr. Doom. Plays a tragic drama queen very well. That nail in the
coffin speech fits perfectly with the Chambers kill-reform strategies.
Some may say Wall Streets short-term thinking CEOs are too myopic to be on the same stage as our
long-term thinking Dr. Dooms. But you decide: Heres a criteria from Barrons, offered by legendary
money manager Jeremy Grantham, referring to the 2008 crash: Why is it that several dozen people
saw this crisis coming for years. Several dozen Over four years. But the bosses of Merrill Lynch and
Citi and even Treasury Secretary Paulson and Fed Chairman Bernanke, none of them seemed to see it
coming.
Why? Granthams answer is simple: Wall Street and Washingtons leaders are management types who
focus on what they are doing this quarter or this annual budget. Their myopia guarantees that every
time we get an outlying, obscure event that has never happened before in history, they are always
going to miss it.
Yes, and theyll miss the next crash. Guaranteed. Heres what other long-term thinking Dr. Dooms
predict:
Page 2217 of 3826
1. This time is never, never different with insatiable greed

In This Time Is Different: Eight Centuries of Financial Folly economists Carmen Reinhart and Kenneth
Rogoff warn that as economies improve there will always be a temptation to stretch the limits. A
financial system can collapse under the pressure of greed, politics and profits ... Technology has
changed ... but the ability of governments and investors to delude themselves seems to have
remained a constant.
2. Feds new easy money is fueling new bubble, new meltdown

In the 400-year history of the stock market there has been a long succession of financial bubbles,
says financial historian Niall Ferguson. The culprit? The Fed: Without easy credit creation a true bubble
cannot occur. That is why so many bubbles have their origins in the sins of omission and commission of
central banks. And with the rate near zero, Bernanke is becoming the biggest bubble-blower in
American history.
3. American Empire has peaked, is on a rapid downward spiral

Savvy Hong Kong economist Marc Faber says the average life span of the worlds greatest civilizations
has been 200 years Once a society becomes successful it becomes arrogant, righteous,
overconfident, corrupt, and decadent ... overspends ... costly wars ... wealth inequity and social
tensions increase; and society enters a secular decline.
4. Wall Street has created a very short respite before new crash
Nobel economist Joseph Stiglitz warned that unless Wall Streets incentive system is drastically
reformed, the financial sector will only try to circumvent whatever new regulations we put in place. We
will simply have a short respite before the next crisis.
5. First dot-coms, then subprimes; third episode dead ahead

Remember a decade ago in Irrational Exuberance Yales Robert Shiller predicted the dot-com crash.
More recently he warned: Bubbles are primarily a social phenomena. Until we understand and address
the psychology that fuels them, theyre going to keep forming. We recently lived through two epidemics
of excessive financial optimism, we are close to a third episode. And everything since 2008 guaranteed
the third episode.
6. Americas running out of time before the Great Depression 2

Former IMF chief economist Simon Johnson waned: Were running out of time to prevent a true
depression the financial industry has effectively captured our government and is blocking essential
reform, and unless we break Wall Streets stranglehold we will be unable prevent another Great
Depression. Failure to reform Wall Street guarantees a depression. Unfortunately, Dimon just doesnt
get it.
Page 2218 of 3826
7. Feds haunted by ghost of Greenspans failed Reaganomics

When Obama reappointed Bernanke, Black Swans Nicholas Taleb warned that Bernanke was an
economist who doesnt even know he doesnt understand how things work. Now the Feds Greenspan
clone is feeding the GOPs self-destructive Reaganomics ideology, blindly focused on saving a dying
banking system by flooding the world with inflated dollars guaranteed to trigger another meltdown.
8. Hedgers made billions shorting dumb politicians, dumber bankers

Hedge funds make fortunes betting on the utter stupidity of Washington politicians and Wall Street
CEOs gambling with the Feds self-destructive cheap-money policies. In fact, AR Magazine just
reported that the top hedge fund manager made $4.9 billion shorting our clueless leaders, after making
$3.4 billion in 2008, the year of the crash.
9. Dollars dead as reserve currency, killing our retirement system

In George Soross New Paradigm: Americas 25-year superboom led to massive deregulation ...
blindly chasing free markets ... unleashed excessive greed ... created the dot-com and credit
meltdowns and a shadow banking system of derivatives. The system is broken the end of an era
of credit expansion based on the dollar as the international reserve currency. Warns Soros: Were now
in a period of wealth destruction.
10. Sell everything, hide in the hills with seed, fertilizer, drugs, guns
Barton Biggs 2008 bestseller, Wealth, War and Wisdom warns us to prepare for a breakdown of
civilization Your safe haven must be self-sufficient and capable of growing some kind of food ... wellstocked with seed, fertilizer, canned food, wine, medicine, clothes, etc. a few rounds over the
approaching brigands heads would probably be a compelling persuader that there are easier farms to
pillage. Biggs is no anarchist militiaman; hes a former Morgan Stanley research guru, now a top hedge
fund manager.
11. Nations ignore obvious till too late, then collapse rapidly
Yes, the end will be swift. Why? Few can take the warnings of geniuses like evolutionary anthropologist
Jared Diamond. In Collapse: How Societies Choose to Fail or Succeed, Diamond warns that societies
fail because theyre unprepared, in denial till its too late: Civilizations share a sharp curve of decline.
Indeed, a societys demise may begin only a decade or two after it reaches its peak population, wealth
and power. Just two decades. America hit its peak in 2000, with Bushs election. Our two-decade
reprieve will soon be up.
Obvious warnings were everywhere long before the 2008 meltdown. But a tragic Reaganomics dogma
created a blind spot in Greenspan, Bernanke and Paulson. Today that blind spot is even stronger with a
new crop of Reaganomics ideologues.
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And again, the warnings are everywhere. Again ignored. Tragic figures like Dimon, Bernanke, Geithner
as well as Bachus, Bachman, Palin, Trump, Koch Brothers and even Obama have that blind spot. They
simply cannot hear any warnings wont till its too late.
Back to Top
Fortune (blog)
How to lose friends in Washington: Be TARP cop
April 5, 2011
By Duff McDonald
Neil Barofsky has been chasing bad guys for much of his professional career. Whether it was as an
assistant US Attorney in the Southern District of New York or in his most recent gig as the man trying to
make sure hundreds of billions of government money doesn't get stolen by scheming bankers, he is
naturally prone to suspicion, if not outright distrust.
"My view of financial institutions is colored by my years as a prosecutor," Barofsky says. "None of this
surprises me. They are profit-driven corporations that seek to maximize profitability without much regard
to social gain."
This squinty-eyed attitude made him an effective special investigator general overseeing the Troubled
Asset Relief Program, or TARP -- which is to say, the guy policing the banks and auto companies that
received $411 billion from taxpayers. But as the mood in Washington has shifted away from
confrontation toward accommodation, Barofsky has become a lonely voice of dissent.
After more than two years as the SIGTARP -- an acronym of off-putting proportion -- Barofsky resigned
on March 30. "When I first started this job in 2008, I felt like there was a collaborative effort with the
Treasury Department," he says. "We were in the trenches together. Then my job turned into blunting
the effects of their bad decisions. And then it just devolved into battling with Treasury itself. I used to
have a weekly meeting with them, but I didn't have one after late September."
The cooled ardor from the Treasury doesn't really surprise Barofsky. In quarterly reports and more than
a dozen TARP audits, his office often showed the Treasury in a dim light. His resignation not only ends
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that unusually open bureaucratic drama, but, more significantly, also shrinks the tiny activist, take-onthe-banks wing of government insiders.
It will shrink further soon. Federal Deposit Insurance Corp. chief Sheila Bair is stepping down in June at
the end of her five-year term. Even Elizabeth Warren, a near-holy warrior on behalf of consumers,
remains in limbo at the temporary head of the Consumer Financial Protection Bureau, as congressional
Republicans have dug in against her as a nominee for the permanent position. The moment of
maximum anger toward the financial industry has passed.
"The tolerance of the executive branch for the kind of truth-telling that Barofsky, Bair and Warren bring
is actually pretty limited," says Simon Johnson, an economics professor at MIT and a critic, from the
left, of the Obama administration. "These people are trying to find practical, responsible solutions to the
issues, but the White House never really wanted to get into that kind of fight."
.
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Wall Street Journal

U.S. Lenders Near Pacts in Foreclosure Probe
April 4, 2011
By Alan Zibel
WASHINGTONFourteen U.S. lenders are on the verge of agreements with federal bank regulators to
overhaul their handling of foreclosures and treatment of delinquent borrowers in response to allegations
of abuses that emerged last fall.
Regulators including the Office of the Comptroller of the Currency, Federal Reserve and Office of Thrift
Supervision could announce the agreements with the banks and thrifts as early as next week, though a
date wasn't final, according to people familiar with the matter.
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The regulators are likely to act ahead of state attorneys general, who are also in talks with the banks.
Those discussions are moving at a slower pace amid disputes among several state officials.
Bank of America Corp., J.P. Morgan Chase & Co., Wells Fargo & Co. and 11 other home-loan servicers
have been under investigation by their regulators and state officials over breakdowns in procedures for
handling foreclosures and requests for loan assistance. Several have acknowledged using so-called
robo-signers who filed documents to foreclose on homeowners without personally verifying their
contents.
Federal regulators are likely to fine the companies, but those penalties are unlikely to be announced at
the same time as the agreements to change bank practices, according to people familiar with the
regulators' plans. Any fines, however, could still be coordinated with the state attorneys general.
The Federal Deposit Insurance Corp. is not issuing any of the orders because it is not the main
regulator for any of the bank holding companies in the settlement. But FDIC officials have been
participating in the talks in a limited way, arguing in favor of requiring banks to provide consumers with
a name and phone number of a bank employee they can contact for help.
John Walsh, acting head of the Office of the Comptroller of the Currency, which oversees most of the
nation's biggest banks, told Senate lawmakers in February that the regulators have found "critical
deficiencies and shortcomings" in banks' document procedures, oversight of outside law firms and other
areas.
The banks, Mr. Walsh said, emphasized "timeliness and cost efficiency over quality and accuracy" and
fostered an environment "that is not consistent with conducting foreclosure processes in a safe and
sound manner."
The forthcoming move by federal regulators highlights the difficulty of reaching an agreement on a
"global" settlement with multiple federal and state agencies of the mortgage-servicing abuses. Last
week, federal and state officials met at the Justice Department with several banks, but an agreement
appears far away.
After the seven-hour meeting, Iowa Attorney General Tom Miller told reporters, "We have a long way to
go."
One reason for the delay has been a dispute between state attorneys general about the severity of any
penalties. Some attorneys general and federal agencies have pushed to mandate that banks lower loan
balances for some troubled homeowners. Several Republicans attorneys general oppose that idea,
however, calling it unrelated to the abuses being investigated.
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Another contentious issue has been the role of the fledgling Consumer Financial Protection Bureau in
the talks with state officials.
Two House Republicans, Reps. Spencer Bachus (R., Ala.) and Shelley Moore Capito (R., W.Va.),
argued in a letter last week that the bureau overstepped its authority by getting "deeply involved" in the
talks.
They pointed to a draft of a confidential document from the consumer bureau in which the bureau
seems to suggest that the settlement require the largest mortgage servicers to modify a specific number
of mortgages and provide borrowers relief.
On Monday, Elizabeth Warren, the Obama administration official charged with setting up the consumer
bureau, defended the bureau's role in the ongoing mortgage settlement talks and added that she's
"proud" to offer advice on the matter.
"To the extent that we can be helpful in holding to account servicers that have violated the law and in
repairing the damage they caused, we are proud to do so," Ms. Warren wrote in a letter to the
lawmakers.
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USA Today
Dual system: Minorities lose financial ground, critics say
April 4, 2011
By Christine Dugas
After making big financial gains in recent decades, African Americans and Hispanics are again losing
ground, critics say.
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Rather than blaming the lingering effects of the recession, a growing number of reports point to financial
discrimination as a major cause.
"Communities of color have received the worst treatment at a very high cost," says Michael Calhoun,
president of the Center for Responsible Lending (CRL). "We estimate 20% of African-American and
Hispanic homeowners will lose their homes in this housing crisis," more than twice as high as white
households.
Homeownership is the primary engine of wealth, but the housing slump only partly explains the growing
gap affecting minority families, says John Taylor, CEO of National Community Reinvestment Coalition
(NCRC).
"It's about a dual system of finance," he says. "People of color do not have the same access that most
American citizens enjoy."
While most consumers are able to go to a full-service bank branch that offers an array of competitively
priced products and services, minorities are disproportionately forced to go to payday lenders,
pawnshops and high-cost mortgage lenders, Taylor says.
Those who live in minority neighborhoods even middle-income families whose high credit scores
could qualify them for a prime loan are likely to be steered into a subprime loan, says Hilary Shelton,
NAACP's senior vice president for advocacy and policy.
Josephine Wiles-Warner didn't think that she would become a subprime casualty statistic when she
bought a home in Herndon, Va., in 2000 as she sought to provide security and good schools for her
family.
"That is what this nation is about," says Warner, 57, a single working mother who is raising five adopted
children while she pursued dual graduate degrees in project management and information systems.
She had needed to refinance her mortgage when she took time off from work in 2006 to go to Liberia for
her mother's funeral. Countrywide Financial offered her a subprime loan that Warner later found out she
couldn't afford.
When Countrywide was close to filing for bankruptcy protection, another lender took over her loan, and
her payments continued to spiral out of control until she got a foreclosure notice.
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Getting pushed back
"She had faith in the process, but she was qualified for a loan that she could not afford," says Mani
Fierro, a real estate and bankruptcy attorney in Herndon who assisted Warner but does not represent
her. Many minorities have become victims of mortgage lenders who are interested only in getting the
biggest commission, he says.
Fierro suggested Warner find a buyer for a short sale, where the home is sold for less than the
mortgage balance and prevents a foreclosure. He put her in touch with Robert Chavez, a Realtor, who
purchased the home and now rents it to Warner and her family.
"They were my guardian angels," says Warner, who hopes to eventually buy back the home.
Cases like that show how minority communities are being pushed back to where they were 25 or 30
years ago, Calhoun says.
It is a reminder of redlining, a practice that grabbed much attention in the 1990s, where whole minority
neighborhoods were excluded from banking and insurance services, as though the financial community
had drawn a red line around areas where it didn't want to do business.
Regulators tried to stamp out redlining by using the Community Reinvestment Act and public access of
mortgage data through the Home Mortgage Disclosure Act to help more minorities become
homeowners.
Those "were major and effective tools in helping to open the doors of opportunities," says Shelton, but
over time, regulatory oversight has loosened.
Now, minorities face what is sometimes called reverse redlining, Taylor says. Instead of financial
services companies avoiding minority neighborhoods, the industry targets them with more-expensive
and more-abusive products.
Other signs that minorities are losing financial ground:
Page 2225 of 3826
In December, the NCRC said that too many of the largest lenders in the FHA loan program refused to
provide conventional loans to consumers with credit scores between 580 and 640, even though that
violated FHA policy. It said that has had a disparate impact on communities of color.
Last May, a study compiled by seven non-profit groups including the Chicago-based Woodstock
Institute, also found that from 2006 to 2008, the overall share of conventional prime mortgage lending in
communities of color fell 35%, while the share of loans to predominantly white neighborhoods increased
11%.
Minorities are much more likely to be unbanked and underbanked, which are households that have a
checking or savings account but rely on alternative financial services, such as payday loans. In January
2009, 54% of black households and 43.3% of Hispanics were either unbanked or underbanked,
compared with 25.6% of U.S. households, according to a survey by the Federal Deposit Insurance
Corp.
Only 16% of people who overdraw their accounts paid 71% of all overdraft fees, but they were more
likely to be minorities and low-income consumers, according to a 2006 and 2008 study by the CRL.
Excessive overdraft fees are a major reason why consumers close bank accounts and leave the
banking system, according to a 2008 Harvard study.
People of color are more likely to be payday borrowers, and a typical borrower pays back $800 for a
$300 loan, says the CRL. In California, minorities represent 56% of payday borrowers but make up just
35% of the population, a 2008 CRL report said.
Marginal profitabilty
Many financial experts say that African Americans and Hispanics tend to get subprime loans or rely on
check-cashing businesses, payday lenders and pawnshops because of job loss and low income.
They also say that banks do not ignore minority neighborhoods.
"The penetration of banks throughout the communities has continued to grow," says Wayne Abernathy,
executive vice president at the American Bankers Association. "Many bank branches are very marginal
in terms of profitability, but we maintain them anyway to reach out to populations."
Page 2226 of 3826
Meanwhile, regulators are taking steps:
The FDIC tried to address payday lending by creating a two-year, small-dollar loan pilot program with
28 volunteer banks. When it ended last summer, the banks had made more than 34,400 loans with a
principal balance of $40.2 million, the FDIC said.
The Department of Justice created a fair lending unit in January 2010. In March 2010, it reached a $6.1
million settlement with two AIG subsidiaries after a lawsuit alleged AIG charged African-American
borrowers higher fees.
The Consumer Financial Protection Bureau opens its doors in July.
The agency's Elizabeth Warren has said it will target one type of fee that has hit minorities so hard.
"Warren has indicated that overdraft fees are a major problem that she wants to address," says the
CRL's Calhoun.
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Reuters
Delinquency rate on bank-issued credit cards falls
April 5, 2011
By Dave Clarke
U.S. bank credit card delinquencies fell to their lowest levels in almost 10 years, according to a report
released on Tuesday by the American Bankers Association.
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Consumers did a better job overall in meeting their debt obligations in the fourth quarter of 2010 as the
economy continues to slowly improve.
In March the jobless rate hit a two-year low of 8.8 percent, the Labor Department announced on April 1,
and nonfarm payrolls rose 216,000, the largest increase since last May.
"Household wealth is up, hiring is up and unemployment is down," ABA chief economist James
Chessen said in a statement. "When people have jobs, they can spend more and pay their bills on
time."
The delinquency rate on credit cards issued by banks fell to 3.28 percent in the fourth quarter from 3.64
percent in the previous three months.
This was the lowest rate since the first quarter of 2001 and below the 15-year average of 3.92 percent,
according to the ABA.
The ABA defines a delinquency as a payment that is 30 days or more overdue.
The ABA tracks late payments for bank-provided credit cards, auto loans, home equity lines of credit,
and other consumer loans.
The overall delinquency rate improved in the fourth quarter to 2.68 percent from 3.01 percent after
ticking up the previous two quarters. It stood at 3.19 percent in the fourth quarter of 2009.
One area where delinquencies rose was in home improvement loans. In the fourth quarter this
delinquency rate rose slightly to 1.26 percent from 1.23 percent.
Although consumers appear to be getting back on track with more timely loan payments, the ABA
warned that rising food and energy costs could impact consumers ability to pay their bills on time in the
coming quarters.
"The 2 percent reduction in federal payroll taxes that began in January was intended to boost
discretionary income," Chessen said. "Unfortunately, rising prices have dashed any chance of that."
Page 2228 of 3826
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American Banker
TCFs Debit Interchange Lawsuit Moving Forward
April 5, 2011
By Daniel Wolfe
A judge has denied the government's motion to dismiss TCF Financial Corp.'s lawsuit over debit fee
regulation.
Judge Lawrence Piersol of the U.S. District Court for South Dakota also denied TCF's motion for
preliminary injunction against the regulation, the Wayzata, Minn., banking company announced
Monday.
The Federal Reserve Board proposed in December to limit debit interchange fees to 12 cents a
transaction, compared to the current average of 44 cents. The Fed's rule, prompted by the Durbin
amendment to the Dodd-Frank Act, would lead TCF's interchange revenue to drop from $102 million a
year to $20 million, the bank has said.
The court has planned a further hearing after the rule takes effect; it is scheduled to take effect July 21.
However, the Fed has said it would miss its April 21 deadline for issuing final rules.
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Page 2229 of 3826
American Banker
Online Payment Services Boost 2010 ACH Volume
April 5, 2011
By Andrew Johnson
AUSTIN Though still in the nascent stages of adoption, some new online payment services aimed at
driving transaction volume over the automated clearing house network are starting to have an effect.
The number of ACH transactions that were conducted in 2010 rose 3.4%, to 19.4 billion, Nacha, the
electronic payments association, reported Monday. That compares with a 2.6% increase in volume in
2009. The dollar volume that was moved over the network last year was $31.7 trillion.
Though Nacha expected transaction volume in 2010 to surpass that of 2009, this increase reinforces
the idea that the ACH network is continuing to find new avenues for growth, Janet Estep, the president
and chief executive of Nacha, said in an interview here Sunday before the start of the Herndon, Va.,
group's Payments 2011 conference.
"The ACH network is there for any player to use, and that means that it is there for financial institutions
to use to make services available to their customers, both consumers as well as businesses,"
Estep said.
Programs like Secure Vault Payments, the Electronic Billing Information Delivery Service and other
initiatives by Nacha, which oversees ACH operating rules, could continue mitigating declines in
transaction categories that once were major sources of growth, such as check conversion.
The proliferation of mobile payment services, including those that allow a consumer to make purchases
and schedule payments on a mobile device and those that use the device as a card replacement, could
also be a boon for the network.
To position the ACH network to play a role in mobile payments, Nacha's members in May approved a
rule expanding the definition of the WEB transaction category, which pertains to consumer payments
authorized over the Internet, to include debits initiated over a wireless network. The rule change, meant
to give banks more clarity over how to classify transactions originated on a mobile Web browser or
dedicated application, took effect in January.
That change is just one of several that Nacha has introduced or is planning to introduce in an effort to
Page 2230 of 3826
give banks more flexibility in how they can offer ACH services to customers, said Mike Herd, the
managing director of ACH network rules at Nacha, in an interview Sunday.
For example, in September new rules will take effect that allow businesses to set up recurring ACH
payments using the TEL entry code, for payments that consumers initiate by telephone. Currently the
TEL category can only be used for one-time payments.
Improved economic conditions and rising comfort levels with electronic transactions among consumers
helped ACH volume rise last year, Estep said. Increases in individual categories provided further insight
into spending trends, she said.
Nacha reported a 15.6% jump in the number of consumer-initiated entry, or CIE, transactions, which
reached 137.8 million, in 2010.
Estep ties this increase to the expansion of Electronic Billing Information Delivery Service, or EBIDS.
The service, which is commercially available after a multi-year pilot, lets companies, such as utilities
and carriers, send bills directly to their customers' bank websites over the ACH network. Consumers
receive the bills as a message on their bank's website.
That is "just too much of an increase to say there isn't a direct correlation," she said.
Such services have also helped contribute to more "native electronic payments," or those that are
initiated as an ACH transaction from the start rather than being converted from a check, Estep said.
Electronic billing services have helped contribute to Wells Fargo & Co.'s ACH volume, said Laura Lee
Orcutt, a senior vice president and electronic payments group product manager at the San Francisco
bank.
Wells Fargo was both the second largest originator and receiver of ACH transactions in 2010, according
to lists Nacha also released on Monday. The bank's origination volume increased by 2.7%, to 3.03
billion and receive volume declined by 1.7% to 1.46 billion.
The lists exclude "on-us" transactions, or those in which the originating and receiving bank are the
same.
Experts say while initiatives like Secure Vault Payments and EBIDS may help wring more volume out of
Page 2231 of 3826
the network, the bigger opportunity for Nacha lies in driving business-to-business payment volume.
"That's really where they need to do the work to get that moving," said George Thomas, a principal who
works on commercial payments issues with Radix Consulting Corp. in Oakdale, N.Y., in an interview on
Sunday.
Banks are looking to help commercial clients automate more of their invoice and transaction processing
by eliminating the paper that often goes with those transactions. But many businesses have struggled
to eliminate paper checks from their purchasing transactions because of the need to match up invoice
data from their suppliers.
Nacha's corporate trade exchange, or CTX, category allows a business to send up to 800,000
characters of information with a payment. The transaction code saw an 11.1% increase in transactions,
to 67.03 million, in 2010.
While 11% growth is good, the total number of transactions completed shows there is still significant
room to get more businesses to adopt use of the category, Thomas said.
This requires significant work on the businesses' part, but "I still don't think the banks have the right
tools in place on the front end and the back end" to entice commercial clients still dealing with paper to
make investments necessary to shift to electronic payments, Thomas said.
Many businesses and their banks and software vendors are working on ways to automate the receiving
and management of that information, Estep said.
"It requires the supplier as well as the purchasers in a B-to-B transaction to have their systems
aligned," Estep said, adding the same is true for banks and software vendors.
Timothy Schmidt, the vice president of electronic payments in the global treasury management division
at U.S. Bancorp, said he expects use of the CTX category to continue growing at a steady pace.
While historically there has been some resistance among businesses using the category because of the
strong hold checks still have in the B-to-B world, that has been dissipating, Schmidt said.
"We definitely still encounter that but I think the fact that some of the largest buyers are moving toward
full electronic solutions, that is helping to bring the supply side along as well, which I think has been a
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bit slower in the past," Schmidt said in an interview on Friday.
For small businesses, the issue is still one of resources.
"You have a lot of small and medium-sized businesses who perhaps cannot throw the types of
resources [needed] at aligning their systems," Herd said.
While native transactions are on the rise because of increased consumer and business use, transaction
categories stemming from check conversion are continuing to show declines or slower growth.
For example, accounts receivable, or ARC entries, declined 8.5% in 2010, to 2.2 billion transactions.
The entry typically involves the conversion of consumer checks that are received by a business in the
mail to ACH transactions.
As check volumes in general continue to decline, that category and related ones, like back-office
conversion, or BOC, and point-of-purchase conversions, or POP, entries will also decline or experience
slower growth.
How that affects individual banks depends on their mix of services.
Schmidt said U.S. Bancorp still sees growth from ARC.
"We're a strong lock-box bank on the paper side," Schmidt said, adding it has seen a "lot of growth" in
its ARC volume.
"You might say we've seen that wave kind of pass by us [as an industry]," Schmidt added. U.S.
Bancorp's lock-box operations allow it "to kind of ride that wave a bit longer."
The Minneapolis bank was the sixth-largest originator of ACH transactions in 2010, with its volume
increasing 12.8%, to 585.7 million.
It received 402.6 million transactions, up 8.1% from 2009, making it the fifth-largest receiver.
Page 2233 of 3826
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Reuters
US mortgage servicers have done poor job Geithner
April 5, 2011
By David Lawder and Rachelle Younglai
U.S. Treasury Secretary Timothy Geithner said on Tuesday mortgage servicers have done a poor job of
helping borrowers through the housing crisis.
Geithner said Treasury and regulators were working to get a rapid resolution to some of the problems at
the mortgage servicers.
Back to Top
Washington Post
Wells Fargo, NAACP open financial literacy center
April 4, 2011
By Danielle Douglas
The NAACP and Wells Fargo opened a financial literacy center in the District on Monday, a project that
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stemmed from the settlement of a lawsuit that accused the lending giant of steering black borrowers
into subprime mortgages.
The NAACP withdrew its lawsuit last April, after the bank agreed to help develop programs to improve
African Americans access to high-quality loans and protect minorities against predatory loans. The San
Francisco-based Wells Fargo will also donate $2.5 million annually for the next five years to fund the
NAACP Financial Freedom Center in the District and similar initiatives.
Wells Fargo has stepped forward and said, We can go further, frankly, than any court can force us to
go, Benjamin Todd Jealous, NAACP president and chief executive, said at the opening ceremony.
We intend to make history together, ensuring that this country . . . moves beyond the century of
injustice in the mortgage industry.
Other major lenders could follow suit within weeks, Jealous said.
The center, which has offices in the Thurgood Marshall Center in Northwest Washington, will be the
headquarters and proving ground for a national campaign focused on financial literacy and improving
the strained relationship between lenders and minorities.
In the settlement, Wells Fargo did not admit to preying on minorities, but a senior bank executive
acknowledged that the lending industry has engaged in practices that have been detrimental to minority
communities.
The mortgage industry, as a whole, probably did not behave very well, and certainly was a contributor
to the recession and the loss of many homes, said Jon R. Campbell, executive vice president of social
responsibility at Wells Fargo. We want to rebuild trust that Wells Fargo is doing everything possible to
keep people who can afford their homes to stay in them.
According to a 2006 study conducted by the Federal Reserve, about 55 percent of the mortgages
extended to blacks were subprime. Separate data from the agency show that financial institutions made
1.1. million subprime loans from 2004 to 2007, about 13 percent of the national total.
A major portion of the loans offered to blacks ended in foreclosure, which the lenders often initiated
using shoddy or fraudulent paperwork, critics said.
Consumer advocates and civil rights groups said that lenders encouraged loan officers to sell
mortgages with higher interest rates and fees than warranted, while slapping borrowers who paid off
their loans early with hefty penalties. During the boom, lenders often made money by packaging the
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loans into securities and selling them to investors around the world.
With about $1.3 trillion in assets, Wells Fargo said it is the largest mortgage lender to African
Americans, to whom the bank made more than 40,000 home loans in 2009, the most recent data
available. Wells Fargo would not disclose what percentage of those loans were subprime. The bank
said the Home Mortgage Disclosure Act data doesnt require lenders to report that information.
Wells Fargo says it will supply the NAACP with aggregated data the bank uses to originate mortgages.
It will also team with community nonprofit groups to offer workshops on such matters as home
preservation, money management and credit repair across the country.
Wells Fargo became the first bank to endorse nine principles devised by the NAACP to encourage
transparency and equity, including monitoring policies for their racial effects and approving borrowers
for loans only if they have the ability to repay at the time of origination.
We got a lot of people into their homes, but unfortunately we have a lot of people leaving their homes,
Campbell said at the unveiling of the center.
Wells Fargo, he said, has enacted a number of measures in the past 18 months, including adding more
than 10,000 home-preservation specialists, assigning an independent group to review foreclosure
decisions before initiation and ensuring that at least two people review denied modifications. The bank
said it has modified more than 649,000 mortgages so far and forgiven $3.8 billion in principal.
Wells Fargo is one of 15 lenders, including HSBC and JPMorgan Chase, that the NAACP has sued
since 2007, when the first wave of foreclosures hit subprime borrowers. The civil rights group said it
was never seeking monetary damages but rather a change in mortgage lending behavior. Jealous
would not disclose the names of institutions that were close to settling.
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American Banker
Page 2236 of 3826
Solution for Underwater Borrowers: Keep the Mortgage, Switch the House
April 4, 2011
By Andrew Kahr
Our financial system is tested by its ability to resolve contradictions. For instance, banks hold loans and
other illiquid assets against short-term liabilities such as deposits. But, after many highly destructive
crises, that contradiction was resolved by legislation creating the Federal Reserve System, to provide
liquidity for good bank assets. It's profitable.
Another contradiction is "Your home is your biggest investment." Purchase of a home is not an
investment decision, it is a means of obtaining and controlling your family's housing. If you reach this
goal by putting 0% or even 10% down, then you're primarily investing someone else's money in the
world's largest accumulation of illiquid assets.
We can't much change the preference of households to own their homes. And ownership is the obvious
way to vindicate individual choices about maintenance and enhancement of residences choices that
can substantially affect their value and are not consistent with rental.
However, the consequence of this is that with home prices declining from 2006 onward, over 20% of
homes are now estimated to have a lower liquidating value than the balance on the mortgages they
secure. In some areas, as many as a third of the homes are "underwater."
Who's going to wind up holding this wet bag and for how long?
But first does it actually matter how or whether these underwater mortgages are resolved?
For every house that is foreclosed (and therefore virtually certain to generate loss to the mortgage
holder), there are 10 others on which payments continue to be made by the owner, though the
mortgages are underwater. Despite incessant publicity about strategic default and delays and legal
vulnerabilities of the foreclosure process, an overwhelming majority of these homeowners still want to
retain their homes and credit. So, they will go on, for now, making payments if they can afford to do so.
In theory, these people can't sell their homes without making up the deficiency of sales proceeds versus
mortgage balances. Even if they could cover this gap with accumulated savings, where would they find
the higher down payment now needed to buy another home?
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If you can't sell your home, then you can't move to one that is better suited to your needs or which is
nearer the job you should take. This partial freeze on moves, like any restriction on changes in assets
and employment, has negative consequences both for household welfare and for the growth of the
economy.
If 20% of homeowners are affected and in any one year 12% of these would have moved were they
not underwater then 2.4% of households are frozen. That's a modest percentage. But as years pass
and increasing numbers of people wish to move but can't, the cumulative adverse impact multiplies and
can become very substantial.
Can the market resolve this contradiction? It cannot do so unaided.
To see the obstacle, consider the simplest case. Suppose the bank that originated the mortgage
continues to hold it in portfolio. The loan is current on its books. But, for every $100 of book value, there
is now only $75 in collateral value, so the loan is partially secured. (That's not bad, compared to a loan
on an expensive new car! But no one proposes to write down those car loans.)
The bank can't and shouldn't let the borrower off the hook for the remaining $25, any more than if he
had bought stock on margin or invested in commercial real estate and then suffered a large loss. But,
suppose the borrower now wants to move to a different house of comparable value.
In that case, the bank could simply substitute the new collateral for the old and charge a fee.
Payments would be adjusted for any change in interest rate. If the new home sold for less than the old,
the difference would be applied to the old mortgage balance. If it sold for more, the homeowner would
need to pay the difference in cash.
If the owner wanted to sell the old house before or without buying a new one, the proceeds of the sale
would be held by the bank. The owner would remain responsible for the portion of his original home
payments not covered by the liquidated collateral (in our example, approximately 25% of the monthly
payment amount).
The market cannot accomplish all this unaided because in fact the mortgage is typically owned by a
trust. The servicer, as agent for the trust, typically is not permitted to carry out transactions such as I
described.
Let's change the laws to facilitate (but not compel) such transactions, when they are in fact in the
interests of the mortgage owners.
Page 2238 of 3826
Any lawyer who insists that the note and the mortgage are merely differing manifestations of the same
underlying essence should be sent back to school divinity school.
[email protected].
Back to Top

How Many Borrowers Qualify for New Safe Mortgage Rules?
April 5, 2011
By Nick Timiraos
About one in five mortgages purchased by Fannie Mae or Freddie Mac over the 1997-2009 period
would meet the proposed standard of safe mortgages that would be exempted from costly new
lending rules, according to a federal report published last week.
Consumer advocates and the real-estate industry are preparing an all-out effort to soften new rules that
they say create an overly conservative definition of safe mortgages that are exempted from costly new
lending rules.
To recap: The Dodd-Frank Act requires banks to hold 5% of the credit risk of mortgages that are
bundled together and sold off as securities. The idea is that banks and other issuers of securitized loans
wont make poisonous mortgages if they have to eat some of their own cooking.
But regulators also defined certain gold-standard loans that will be exempt from those rules, which were
put out for public comment last week. The current debate is focusing on just where those lines should
be drawn.
Page 2239 of 3826
Qualified loans would need to meet the following standards:
Buyers must make a minimum 20% down payment. Refinances and cash-out refinances would
need loan-to-value ratios of 75% and 70%, respectively.
Mortgage-related debt could be no more than 28% of income and total debt couldnt exceed 36%
of income.
Loans must be fully amortizing, which would bar interest-only and other more exotic products.
While theres no credit score cut-off, borrowers couldnt have missed two consecutive payments
on any consumer debt in the past two years.
How conservative are these standards? Consider: About 62% of first mortgages taken out to purchase
a home last year wouldnt have qualified because they had down payments of less than 20%, according
to LPS Applied Analytics, a mortgage data firm.
A report by the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac,
showed that around 31% of all mortgages that the firms bought in 2009 would have met the proposed
standard for a qualified residential mortgage. Prior to the housing boom, the years with the highest
share of eligible safe mortgages were in 1998 (23%) and 2003 (25%).
The research only covers loans purchased by Fannie and Freddie, and the share of qualified loans that
arent backed by the agencies is even smaller because they generally had less conservative income
standards.
The analysis shows the effect that removing any of the individual standards would have both on
mortgage volume and on delinquency rates during the past decade. For example, removing the loan-tovalue requirement for loans made in 2009 would have allowed 15% more loans to qualify while
increasing the delinquency rate by 0.1 percentage points.
For now, these standards arent expected to have a big pinch because they dont apply to federal
agencies and because loan giants Fannie Mae and Freddie Mac will meet the risk-retention rules by
virtue of their federal backstop.
But consumer groups and the housing industry are worried that the standards, which are tighter than
those used by Fannie and Freddie, could eventually become the new definition of a prime, conforming
mortgage. Loans that dont meet the new standards would be slightly more expensive because banks
would have to hold more capital in reserve. The rules wouldnt apply to loans that banks hold on their
balance sheets.
Page 2240 of 3826
A report published Monday by analysts at Moodys Investors Service highlighted the risk that loans that
dont conform to the standards are labeled as second tier, requiring higher rates. On a $160,000
mortgage, an increase in the mortgage rate by 0.5 percentage points would represent just a 6%
increase in monthly payments. But an increase in the rate by 2 percentage points would translate to a
24% jump in monthly payments.
Back to Top
Wall Street Journal

White House Orders Agencies to Prepare for Shutdown
April 5, 2011
By Damian Paletta
WASHINGTONThe White House has ordered top officials at multiple federal agencies to ensure
contingency plans are ready for the partial federal shutdown that could take place if lawmakers don't
reach a deal on spending levels by midnight Friday.
Jeff Zients, the White House's chief performance officer, sent an email to deputy secretaries and chiefs
of staff throughout the government on Monday asking them "to communicate with senior managers
throughout your organizations as appropriate to ensure you have their feedback and input on plans to
date."
The email said that White House and congressional leaders were working to avoid a shutdown. But it
said "given the realities of the calendar, good management requires that we continue contingency
planning for an orderly shutdown." Mr. Zients promised another update for government leaders by
Tuesday. Current spending authority for the federal government expires Friday, April 8, at midnight.
Democrats and Republicans are still at odds over how much spending should be cut to fund the
government for the next six months. Congressional leaders met at the White House Tuesday to discuss
the matter. The White House, Democrats and Republicans have said they want to avoid a shutdown,
but they continue to fight over where spending should be cut.
Page 2241 of 3826
Treasury Secretary Timothy Geithner on Tuesday referenced the letter from Mr. Zients in response to a
question about what Treasury was doing to prepare for a shutdown.
He said a shutdown would have a "very material" impact on the Treasury Department's ability to
function, and said it would damage the country's economic recovery.
"If we force the government to live week by week now, more than six months into the fiscal year, you
will risk undermining the recovery now underway," Mr. Geithner told a Senate Appropriations
subcommittee.
Kenneth Baer, a spokesman for the Office of Management and Budget, said "as the week progresses,
we will continue to take necessary steps to prepare for the possibility that Congress is unable to come
to agreement and a lapse in government funding ensues."
Back to Top
American Banker
Banks Weigh the Benefits of Converting Their Charters
April 5, 2011
By Robert Barba
For thrifts that have long harbored ambitions of converting to commercial banks, an upcoming
regulatory merger is forcing hard decisions.
Home Federal Bank, for example, will soon go from being one of roughly 670 thrifts nationwide to the
biggest state-chartered bank in Idaho. The $1.4 billion-asset unit of Home Federal Bancorp Inc. in
Nampa applied late last month to convert to a state banking charter.
Page 2242 of 3826
Len Williams, the company's chief executive, said it has long planned such a conversion as the thrift's
focus shifted to commercial lending. This summer's merger of the Office of Thrift Supervision into the
Office of the Comptroller of the Currency prompted management to expedite matters.
"We figured that if we are going to have to go to a new regulator anyway it would be a good time to
consider our options," Williams said last week. "It seemed like a natural time to examine our business
and figure out what would be the best way for us to accomplish our goals."
Lawrence Kaplan, a partner at the law firm of Paul Hastings, said thrifts with commercial bank
operations "have to ask themselves, what do they want to be doing in the future? Will having a national
charter benefit them or would a state charter be just fine? That is something they should consider every
year as they are planning, anyway. Are we operating with the best charter for us?"
The board of the $90 million-asset Sykesville Federal Savings Association in Maryland had that
discussion last year, and in July decided to switch to a state-chartered mutual bank and rename itself
Carroll Community Bank. The bank is now converting to a stock company.
"We believed that consolidation of the regulators was not something that was necessarily going to be
beneficial to us," said Russell Grimes, Carroll Community's chief executive. "We are a small bank. We
have no need or desire to go out of state. A state charter is more than flexible enough for what we
need."
Like banks that look to capitalize on market disruption following major bank mergers, it seems that state
banking commissioners see this as an chance to gain some banks. While none have launched
aggressive poaching campaigns, commissioners are touting the benefits of being local regulators.
"Community banks get a lot of focus here because that is all we regulate. We're not trying to be all
things to all people," said Mark Kaufman, Maryland's commissioner of financial regulation. "As a general
matter, it is not usually a good thing to be anyone's smallest client."
Jennifer Kelly, the OCC's senior deputy comptroller for midsize and community banks, said the agency
is just as committed to community banks.
"My full-time job is overseeing community banks and some of the smaller regionals. Seventy-five
percent of the agency's examiners oversee community banks," Kelly said. "It is a big part of our
business. Our examiners live and work in the same communities as our banks."
Page 2243 of 3826
However, the OCC is a big place. It regulates 1,200 community and regional banks and, by the end of
July, will add 670 thrifts. In comparison, should Home Federal's conversion gain approval it will be one
of 16 banks overseen by Idaho's banking agency.
"Our attention isn't divided," Gavin Gee, Idaho's director of finance, said.
Lawyers said that while thrifts weigh their options, they should not use fear of the unknown as a reason
to switch. "We are getting a lot of questions, but we are telling our clients to wait it out and see what life
is going to be like. Why do it now when you can't really evaluate what it is going to be like?" said Kip
Weissman, a partner at Luse Gorman.
Kelly said the OCC is advising thrifts that are seeking a national bank charter to do the same thing.
"When they ask, we say there is no reason to rush a decision. Get one exam under the OCC," she said.
"That way everyone will know each other a little bit more."
For Home Federal, Williams said that fear was not a part of the discussion. Besides the local
advantage, going with the state charter was just a little cheaper.
"I'm not afraid of the OCC. I have spent my career working with them," Williams said. "It is not materially
less expensive, but at the end of the day every little bit helps."
Back to Top
USA Today
Our view: In swipe fees fight, retailers make better case
April 4, 2011
Editorial
Page 2244 of 3826
Every time you use a debit or credit card, you shell out an invisible sales tax in the range of 1% to 3%.
That's how much retailers have to pay the banks that issue the plastic.
These anticompetitive charges known as interchange, or swipe, fees add up. In 2008 retailers
paid $48 billion, which they passed on in form of higher prices. That's an average of $427 per
household.
For many years, retailers have argued that these fees are too high but, for the most part, their pleas fell
on deaf ears. Then, the 2008 financial crisis soured Washington on banks, giving retailers an opening to
win a provision in the financial reform law that limits fees on debit cards and allows stores to rebate the
savings to their customers. The Federal Reserve has tentatively set the fees at 7 cents to 12 cents per
transaction, down from the current average of 44 cents.
Now the banks, facing billions in lost revenue, are fighting back. They are prodding Congress to delay,
and ultimately kill, the measure, set to go into effect in July. A two-year delay, championed by Sen.
John Tester, D-Mont., is circulating in the Senate.
This might all look like a typical inside-the-Beltway donnybrook, pitting big banks against big-box
retailers. But contained in it are important issues of how much consumers are forced to pay on what
they buy. In our view, Congress was right to go after debit card swipe fees, even if it went about it in the
wrong way.
The obvious, and counter-intuitively pro-consumer, solution would have been to allow retailers to pass
on the swipe fees to their customers directly as line items on their bills. Once consumers saw the fees,
instead of having them hidden in the cost of what they buy, they would rebel against them.
They would demand a cheap and efficient way to spend their money without having to support a $48
billion industry of middlemen. In so doing, they would both drive down prices and create what doesn't
exist now an actual marketplace for credit and debit card branding.
Instead, Congress chose to limit debit card swipe fees on the grounds that these transactions,
particularly if completed with the entry of a pin number, cost banks virtually nothing. The politics here
are simple. What lawmaker wants to be in favor higher fees?
It's true that the benefits of lower swipe fees slightly lower prices at the register are likely to be
less visible than the higher charges banks will impose on other services in a bid to recoup their losses.
And Congress' approach of limiting debit card fees does raise the question of whether government
should be setting prices.
Page 2245 of 3826
If a vibrant market for card services existed, the answer would be no. But the competition is limited.
Visa and MasterCard, which set the swipe fees, were owned by the banking industry until they were
spun off as free-standing companies. As a debit-card duopoly, they have leverage over retailers.
Congress is not so much regulating an industry as it is policing a cartel. Though there might be better
ways of addressing swipe fees, it should not abandon the effort.
Back to Top
USA Today
Opposing view: New rules mean new fees
April 4, 2011
By Bill Cheney
Some of the rhetoric favoring the new law limiting debit interchange cites "bank bailouts," "lining the
pockets of Wall Street" and "pro-consumer" as justification.
Those flashy phrases, however, mask the real issue about this law facing small institutions, including
community banks and credit unions: We are Main Street; nobody is lining our pockets.
But the new law will have a profound impact on how members are served by their credit unions, likely
forcing them to charge new and unwanted fees for debit cards.
That's not "pro-consumer."
The rules proposed by the Federal Reserve will harshly curb what credit unions earn to cover the costs
of debit cards to their members. The Fed could not consider "all costs," including those related to fraud
a significant component of debit-related costs, as I found in running a credit union for nine years.
Page 2246 of 3826
For big banks, recovering all the true costs might not be a big deal; they already charge very high fees,
and some have said that free checking is a thing of the past.
Member-owned, not-for-profit credit unions might also have to pass the costs on to their members as
lower return on savings or as fees on debit cards or other transactions. It's the last thing credit unions
want to do, but they might have no choice.
None of this was considered when the law was debated last year, primarily because of the proposed
exemption for small institutions. We don't expect this exemption to work, due to market forces and the
absence of any enforcement mechanism.
Before the law and rules take effect, the impact on consumers including 92 million credit union
members should be properly explored.
Proposed legislation to delay the rules, and study the real impact of the law, gives credit union
members a ray of hope that seamlessly accepted debit cards will continue to be available to them at the
lowest cost and highest efficiency.
Why not take time to ensure this new law and rules really could be pro-consumer? Yes, merchants
stand to rake in a multibillion dollar windfall from this new law, but why does it have to be on the backs
of credit union members and consumers?
Bill Cheney is president and CEO of the Credit Union National Association.
Back to Top
Page 2247 of 3826
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_DL_CFPB_AllHands
SharePoint Changes
Tue Apr 05 2011 10:59:08 EDT
Treasury has changed the location of our SharePoint instance to:
http://thegreen.treas.gov/bureau/cfpb
Any SharePoint shortcuts or bookmarks you created before yesterday are now broken. We are working
with Treasury to make the old address auto-redirect you to the new one, but for now, you can reach
your content by replacing the beginning of the old address (http://treas.treasecm.gov/do/cfpb/) with the
one above. For instance, if you previously visited:
http://treas.treasecm.gov/do/cfpb/promgt/hc/Lists/Calendar/calendar.aspx
you will now visit:
http://thegreen.treas.gov/bureau/cfpb/promgt/hc/Lists/Calendar/calendar.aspx
Page 2248 of 3826
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(fydibohf23spdlt)/cn=recipients/cn=darlinge>; Lownds, Kevin
Fw: Transfer Process Timeline DRAFT 4-4-11.xlsx

Tue Apr 05 2011 08:18:26 EDT
Transfer Process Timeline DRAFT 4-4-11.xlsx
_____
To: Slagter, Dennis (CFPB)
Sent: Mon Apr 04 18:02:26 2011
Subject: Transfer Process Timeline DRAFT 4-4-11.xlsx
Page 2249 of 3826
Transfer Process Timeline DRAFT 4-4-11.xlsx (Attachment 1 of 1)
CONSUMER FINANCIAL PROTECTION BUREAU TRANSFER PROCESS CALENDAR (DRAFT: MARCH 23, 2011)
DRAFT
OTS (Examiners)
OTS (Others)
MARCH 21 - 27 MARCH 28- APRIL 3
APRIL 3-10
APRIL 11-17
APRIL 18-24
APRIL 25-MAY 1
MAY 2-8
Interview
Interview
Interview
Select/Offer
Select/Offer
Select/Offer
Select/Offer
Interview
Interview
Select/Offer
Select/Offer
Select/Offer
Select/Offer
Solicitation
Solicitation
Review App
Interview
Offers by 5/6
MAY 23-29
MAY 30-JUNE 5
JUNE 6-12
JUNE 13-19
Decisions by 5/16
Interview
Decisions by 5/16
Interview
Select/Offer
Select/Offer
Select/Offer
Offers by 6/3
Solicitation
Solicitation
Placement
Placement
Placement
Solicitation
Solicitation
OCC
FED
MAY 16-22
Select/Offer
Offers by 5/6
FDIC
HUD
MAY 9-15
Review App
Review App
Review App
Review App
Interview
Offer
Offer
Interview
Interview
Interview
Interview
Select/Offer
Select/Offer
Select/Offer
Select/Offer
Interview
Select/Offer
Select/Offer
Select/Offer
Select/Offer
Select/Offer
Town Hall 4/4
Page 2250 of 3826
From:
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Transfer Process Chicklet Chart & Production Report Needed ASAP

Tue Apr 05 2011 08:16:36 EDT
Good morning Liz and Kevin,
Can you provide me with a soft copy of the most current version of the transfer process Chicklet chart
no later than 10 AM?
Seth, I will also need the same for the CHCO production report as well (most recent/current version).
I will make like FedEx Office and getting everything printed etc. but Dennis needs these for a meeting
with COO this morning.
Thanks very much everyone!
Best,
Eben P. Darling
Department of Treasury
CFPB Implementation Team
202.435.7272 (P)
[email protected]
Page 2251 of 3826
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_DL_CFPB_AllHands
Weekly Report 4/4

Mon Apr 04 2011 19:56:33 EDT
CFPB Weekly Report

4/4/2011
Overview
Elizabeth Warren will travel to Dallas for the Society of American Business Editors and Writers annual
meeting, where she will deliver a keynote address on the role of journalism in fostering accountability.
During the trip, she will also meet with Texas and Oklahoma community bankers, and hold a roundtable
with faith groups.
On Wednesday, the CFPB will host a Transparency Roundtable discussion with open government
groups, and Steve Antonakes and Peggy Twohig will appear on a panel at the Women in Housing &
Finance summit.
Antonakes, Len Kennedy, and Elizabeth Vale will meet with community and mid-sized banks in a
meeting held by the American Bankers Association.
Policy
Credit Cards
We are continuing to work on simplification and transparency initiatives. Data from the major issuers
with respect to their first repricing are now being aggregated and should be available shortly. We are
meeting this week with American Express to review its repricing results.
After meeting with the leading researchers who follow the prepaid marketplace, the largest providers,
and several consumer groups, we are formulating policy recommendations regarding products in the
Page 2253 of 3826
prepaid space.
To prepare to assume responsibility for a broader set of payment and deposit products, we continue to
study emerging payment systems and are beginning to research the market for checking and savings
accounts.
Mortgages
This week, the TILA/RESPA mortgage disclosure team will complete its OMB filing for qualitative testing
of disclosure prototypes, started reviewing content of forms, and sought feedback on the timing of
mortgage quotes. The mortgage servicing team held a training session organized by Emory University
law school faculty. We evaluated the proposed qualified residential mortgage rule for its effect on
default risk, financing channels, access to credit, and mortgage servicing. CFPB staff met with
consumer and industry groups on mortgage policy.
We will meet with representatives from the Office of the Comptroller of the Currency to coordinate the
transfer of responsibilities for oversight of mortgage originators.
The CFPB is finalizing an MOU with the Financial Crimes Enforcement Network (FinCEN) to permit the
sharing of FinCEN data with the CFPB.
Outreach
This week, Warren will meet with Arizona community bankers and speak with California community
bankers. Elizabeth Vale is meeting in Columbus, Ohio with the Ohio credit unions. CFPB staff is
speaking with Walmart, with Gov. Elizabeth Duke at the Federal Reserve, with the State Department
Credit Union, and with the Pentagon Federal Credit Union.
On Wednesday, Holly Petraeus will visit Capitol Hill to meet with the following members of Congress:
Congressman Joe Wilson (R-SC) (Chairman of the Military Personal Subcommittee, House Armed
Services Committee); Congressman Joe Donnelly (D-IN) (Financial Services Committee and Ranking
Member of the Oversight and Investigations Subcommittee, House Veteran Affairs Committee);
Congressman Joe Baca (D-CA) (Financial Services Committee); Congressman Bruce Braley (D-IA)
(Ranking Member of the Subcommittee on Economic Opportunity, House Veteran Affairs Committee);
Senator Mark Kirk (R-IL) (Banking and Appropriations Committee); Senator Jerry Moran (R-KS)
(Banking, Appropriations, and Veteran Affairs Committee); and Congressman Buck McKeon (R-CA)
(Chairman House Armed Services Committee).
Petraeus will also be meeting with the Credit Union National Association to discuss the needs of
servicemembers and their families. She will also be doing an interview with the Fayetteville Observer to
Page 2254 of 3826
discuss her work at OSA and to preview her town hall with Senator Kay Hagan at Fort Bragg.
Management
On Monday, we will conduct a town hall for Federal Reserve employees considering transferring to the
CFPB.
We will provide additional budget and spending information to the Treasury Inspector General.
Several FOIA requests were received this week. They request documents including (1) Elizabeth
Warrens communications with Members of Congress or their staffs; the consumer advocates,
stakeholders, CEOs, bankers and others she stated in a speech she has been conferring with; and the
State Attorneys General; (2) agendas for meetings with the State AGs, notes from meetings with them,
and presentations made; (3) travel logs and itineraries for all of Ms. Warrens travel; (4) information on
all CFPB employees, job offers made, consultants retained, and planned regional offices; and (5)
calendars for Elizabeth Warren and two CFPB executives along with communications between them
and State attorneys general regarding mortgage servicing settlement discussions.
Tuesday, April 5
-
Meeting with Shaun Donovan (HUD)
Meeting with Rep. Sarbanes
Meeting with Rep. Frank
Meeting with Sen. Schumer
Meeting with Chairman Tim Johnson
Meeting with Sen. Coburn
Wednesday, April 6
-
Media: Interview with Ben Protess (NYT); Interview with Yves Smith (Naked Capitalism)
Call with Leslie Dach (Wal-Mart) (No financial interest, past work, gifts, or AARA/EESA)
Meeting with Gov. Duke (Federal Reserve)
Page 2255 of 3826
Thursday, April 7
-
WH Business Council
EW to Dallas
Friday, April 8
-
EW in Dallas
Keynote to Society of American Business Editors and Writers
Roundtable with Texas Faith Leaders
Meeting with Texas Community Bankers (No financial interest, past work, gifts, or AARA/EESA)
Page 2256 of 3826
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List Federal Register Notice 4-4-11

Mon Apr 04 2011 19:13:40 EDT
List Federal Register Notice 4-4-11.docx
Updated with our discussion and changes. Things to do:

-insert new citations to the statutory codifications (KL)
-strengthen interpretive rules analysis (EG)
-insert enumerated laws footnote (KL)
-review and add new/alternative language (EG)
Page 2257 of 3826
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Mon Apr 04 2011 18:19:21 EDT
Colleagues,
In advance of tomorrows 5:30 HUD placement meeting, attached please find the following documents:
1.
A brief summary chart of the HUD proposed placements and outstanding issues
2.
A more comprehensive chart of the HUD proposed placements with relevant background
information
3.
The resumes for each HUD employee that has not been placed in a particular division
Agenda:
Discuss each employee who has not been placed and come to a resolution with respect
Please:
1.
Affirm these recommendations or,
2.
Let me or Elizabeth Glaser know if you have any questions, concerns, or requested changes by
noon Thursday, March 17.
3.
If you need any of the employees as a detailee prior to the DTD (7/21), indicate your proposed
start date on the table (last column) or send an email to Liz Glaser. We should limit these as much as
possible.
We appreciate your help with this ongoing effort to transfer the affected HUD employees.
Thanks,
Dennis
Page 2295 of 3826
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_DL_CFPB_AllHands
IMPORTANT INFORMATION - Federal Long Term Care Open Season

Mon Apr 04 2011 17:33:50 EDT
Colleagues,
Important information about an open season to enroll in Federal Long Term Care Insurance benefits.
The open season will run from April 4 through June 24. Below is a brief summary. Much more
comprehensive information, to assist in your decision, is available at www.ltcfeds.com, by calling 1-800LTC-FEDS, or by directing questions to BPD ARC Benefits Staff at 1-304-480-8275 or at Benefits@bpd
.treas.gov.
Regards
Dennis
Apply for Federal Long Term Care Insurance

with Abbreviated Underwriting
April 4, 2011 June 24, 2011
The Federal Long Term Care Insurance Program (FLTCIP) Open Season is from April 4 through
June 24, 2011. This is the first abbreviated underwriting opportunity for non-enrolled applicants since
2002.
Eligibility
Abbreviated underwriting (applicants answer fewer health questions) is available for actively at work
Federal employees who are otherwise eligible for Federal Employee Health benefits coverage and for
their spouses/same-sex domestic partners. Non-enrolled annuitants and other qualified relatives can
apply for coverage at any time, but must complete a full underwriting application.
Important Considerations
Long term care is the care you need if you cannot perform activities of daily living (such as
Page 2299 of 3826
bathing or dressing) on your own. It is expensive and is generally not covered by health insurance,
including FEHB or Medicare.
The FLTCIP can help protect you from the high costs of this type of care.
FLTCIP insurance is comprehensive. It covers care provided in a variety of settings, such as your
home, an assisted-living facility, or a nursing home.
Learn More Now
Visit www.LTCFEDS.com or call 1-800-LTC-FEDS (1-800-582-3337)

(TTY 1-800-843-3557)
Request an abbreviated application form now (by phone or the website) or apply online using
the abbreviated application on or after April 4th.*
If you have questions about this special FLTCIP Open Season, contact the Benefits Staff at 304480-8275, or [email protected].
*Note: Premiums are based on your age when LTC Partners receives your application. Certain
medical conditions, or combinations of conditions, will prevent some people from being approved for
coverage. You need to apply to find out if you qualify for coverage under this program.
for guidance.
Page 2300 of 3826
(b) (2), (b) (6)
In today's fast-paced culture, creating an environment in which employees feel valued is an increasingly
critical component of success. More than ever, Human Resources professionals must help
organizations strike a balance between employees' work lives and personal lives, while maintaining
organizational efficiency. I am uniquely prepared to join the Human Resources team at the CFPB to
establish work/life balance initiatives and create a more positive workforce. My experience and
educational background have prepared me to examine situations from legal, organizational, and cultural
perspectives to improve organizational efficiency.
(b) (2), (b) (6)
(b) (2), (b) (6)
The SMART Performance Standards

represents an important tool to help HUD ensure that its mission is accomplished. The SMART
methodology, performance standards are written to be Specific, Measurable, Attainable, Relevant, and
Time-bound. I have participated in HUD's efforts to actively implement a Result-Oriented Performance
Management System using the SMART Standards Methodology as (b) (2), (b) (6)
. I
have been committed to supporting HUD's Strategic Plan FY2010-2015 which sets forth a roadmap to
achieve its mission to create strong, sustainable, inclusive communities and quality, affordable homes
for all with specific, measurable goals to which we will be held accountable.
(b) (2), (b) (6)
I provide counseling to consumers. I conduct

comprehensive investigations of mortgage lending, financing, and loan servicing practices of mortgage
brokers, lenders, title insurance companies and real estate developers to detect statutory violations,
improper referral fees and predatory lending practices. I direct enforcement actions as part of a team
including the Office of General Counsel, the Inspector General, and state regulatory agencies against
real estate settlement service providers who harmed consumers through the use of kickbacks, referral
fees, and sham title insurance arrangements. In addition, I advise industry, state regulatory agencies
and consumers on regulatory compliance issues. I am an experienced analyst in the development of
strategy for and business process for receiving and responding to consumer complaints, including
intake, response to consumer inquiries, response to consumer complaints, referral to agencies
including analysis of consumer complaints.(b) (6), (b) (2)
As a law office administrator, I identified and analyzed complex issues and problems in human resource
management area and recommended and implemented solutions. I provided operational support and
advisory services regarding human resource laws, regulations, and policies. I provided consultative
service involving human resource issues by researching and developing solutions to substantive human
resource problems. I wrote the Personnel and Policy Procedures Manual for the law firm. The Society
of Human Resource Management represented then and now a significant resource for me.
In my work as a Social Worker, I provided research and clinical services to employees and research
participants at the U.S. Health and Human Services, National Institute of Health. I was appointed by
the Director of the NIH to serve on the NIH Bio-Ethics Panel. As a member of this Panel, we revised
the Informed Consent Policy and then provided educational seminars on the topic of Informed Consent
to the NIH Staff.
I am including a copy of my resume for your review.
Thank you.
Geri Hansen, MSW, Paralegal
Consumer Protection Compliance Specialist Office of RESPA and Interstate Land Sales
Tel: 202/402-2159
Page 2302 of 3826
Fax: 202/708-4559
____________________________________
US Department of Housing and Urban Development Office of Risk Management and Regulatory Affairs
451 Seventh Street SW
Room 9155
Washington, DC 20410
http://www.hud.gov/respa
please delete the original and all copies and notify the sender immediately. Federal law prohibits the
disclosure or other use of this information. Please note that Office of RESPA and ILS staff cannot offer
advisory opinions and that this is an unofficial staff interpretation of RESPA's regulations and policy
statements. This unofficial staff interpretation does not provide any protection under Section 19(b) of
RESPA (12 U.S.C. 2617(b)).
P Please consider the environment before printing this email.
Page 2303 of 3826
From:
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Date:
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Scanlon, Thomas
ILSA and SAFE
Mon Apr 04 2011 15:40:47 EDT
SAFE Act Consolidated Rule 4-1-11.docx
ILSA Regulations 24 CFR 1710 1715 1720 3-25-11.doc
Hi Tom,
Per our conversation, attached please find the redlined rules from ILSA and the redlined coordinated
rule from SAFE (incorporating all of the Federal banking agencies who were responsible for the
mortgage loan originator processes). Let me know if you have any questions during the review
processthanks!
-Kevin
Kevin K. Lownds
Review Analyst
(202) 435-7399
Page 2420 of 3826
From:
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Attachments:

Transfer Documents
Mon Apr 04 2011 15:14:21 EDT
Classes of Transferees 4-4-11.doc
OTS Wide Solicitation Process 3-1-11.docx
OCC Solicitation for Potential Transferees - 3-22-11.docx
FRS Solicitation Process 3-23-11.docx
FDIC Solicitation for Potential Transferees - 3-18-11.docx
Mary,
Here are five documents for your reference:

-Four of them are the more specific timelines with respect to FRS, OTS, OCC, and FDIC transfers.
They are pretty nitty gritty, but should give you a sense of what youre looking to discuss.
-Some language that I drafted with respect to the scope of the transferee pool. Note that because of the
broad coverage of the language, we have solicited widely to several agencies. But, it gives you a sense
of who generally will be more likely to transfer. I tried to make it as concise as possible, but I am
studying to be a lawyer, after all
Hope this helps!
-K
Kevin K. Lownds
Review Analyst
(202) 435-7399
Page 2495 of 3826
Classes of Transferees 4-4-11.doc (Attachment 1 of 5)
Two classes of employees are eligible for transfer to the Bureau: (1) individuals who are
necessary to perform or support th[e] consumer financial protection functionsof the
transferring agency; and (2) individuals who are necessary to perform the functions of the
Bureau under subtitle A.
Consumer financial protection functions are defined as the authority to prescribe rules or issue
orders or guidelines pursuant to any Federal consumer financial lawand examination authority
with respect to [insured depository institutions or credit unions with total assets of more than
$10,000,000,000 and any affiliate thereof].
Subtitle A functions are defined to include consumer education, financial literacy, policy
analysis, responses to consumer complaints and inquiries, research, and similar functions.
Page 2496 of 3826
OCC Solicitation for Potential Transferees - 3-22-11.docx (Attachment 3 of 5)
Solicitation for Potential Transferees

To:
All OCC Staff
From: Consumer Financial Protection Bureau

Date: March __, 2011
Re:
Solicitation for Potential Transferees to the CFPB
The Consumer Financial Protection Act of 2010 (Title X of the Dodd-Frank Wall Street
Reform and Consumer Protection Act) provides for the transfer of certain employees of the
Office of the Comptroller of the Currency (OCC) to the Consumer Financial Protection Bureau
(CFPB). Given OCC employeessignificant talent, experience and skills, which are critical to
the achievement of CFPBs mission, CFPB is excited to move ahead with the transfer process
intended to allow interested and qualified OCC candidates to join the growing CFPB team. This
memorandum addresses transfer opportunities for OCC staff, and seeks transfer applications
from interested individuals who perform, or have recently performed the following transferprocess functions:
compliance examination functions;
enforcement or interpretation of consumer financial law;
consumer education and financial literacy;
responses to consumer complaints and inquiries;
prescribing or issuing orders or guidelines pursuant to any Federal consumer financial
law (including performing any functions to promulgate or review any such rules, orders,
and guidelines).
The CFPB
Congress established the CFPB to protect consumers by carrying out Federal consumer
financial laws. Among other things, the CFPB will:
Conduct rule-making under Federal consumer financial protection laws;
Have supervisory authority for the purpose of assessing compliance with Federal
consumer financial laws over all depository institutions with total assets of more than
$10 billion and their affiliates, specified non-depository institutions (including
mortgage lenders, brokers, and servicers; private student lenders; and payday
lenders), larger participants in the markets for other consumer financial products and
services, and service providers to all of the above;
Be authorized to restrict unfair, deceptive, or abusive acts or practices;
Create a center to take consumer complaints;
Page 2498 of 3826
Promote financial education;

Research consumer behavior;
Monitor financial markets for new risks to consumers; and
Enforce Federal consumer financial protection laws, including those that outlaw
discrimination in consumer finance.
The CFPB expects to have three regional hubslocated in the New York/New Jersey
metropolitan area; the San Francisco/Oakland metropolitan area; and the Chicago metropolitan
area, in addition to its Washington, D.C. offices.
Solicitation of Potential Transferees
The CFPB is currently soliciting transfer applications for the types of positions listed
below. Interested individuals should identify their top three choices using these categories.
Supervision and Examination Positions
Regional Directors
Supervisory Examiners (Assistant Regional Director)
Supervisory Examiners (Field Managers)
Examiners at all levels
Consumer Financial Protection Analysts (to work on supervision and examination-related
policies and procedures, subject matter expert guidance, training, monitoring, research &
analysis, regional/national program coordination & oversight, and examination support)
Consumer Financial Protection Policy and Program Managers and Executives (for
supervision and examination units in Washington, D.C.)
The CFPB expects that OCC Assistant National Bank Examiners, Associate National
Bank Examiners, National Bank Examiners/Bank Examiners, Compliance Lead Experts,
Compliance Team Leaders and Assistant Deputy Comptrollers who perform or have recently
performed transfer-processfunctions would be candidates for these positions. These positions
will be located in CFPBs Directorate of Supervision, Fair Lending and Enforcement, which will
be responsible for conducting consumer protection supervision and examinations at a wide
variety of large and/or complex depository financial institutions and non-depository consumer
financial services companies. CFPB supervision and examination personnel will report to one of
the regional hubs or to Washington, D.C. Work will primarily be conducted on-site at
supervised companies. When not on-site, work will primarily be conducted under a telework
arrangement. Travel to the Regional Office will be required when necessary. All examiners will
be required to perform extensive overnight travel. It is expected that examiners may travel
outside of their regular duty location for 50% or more of their regular work schedule.
The CFPB will not require transferred examiners who are currently commissioned to be
re-commissioned. Examiners will conduct complex examination work, and develop, present,
and discuss examination findings, recommendations, and required corrective actions with senior
management of depository financial institutions and non-depository consumer financial services
companies.
2
Page 2499 of 3826
Other Positions
Attorneys (consumer law interpretation, enforcement and rulewriting)
Consumer complaints (i.e., customer assistance) staff, including intake staff,
specialists, analysts and managers*
Consumer education and financial literacy specialists
Economists, financial analysts and statisticians
Policy analysts (consumer financial law and compliance)
Researchers in household finance and behavior
These positions will be primarily located in Washington, D.C., although there will be
some positions in the regional hubs and possibly other office locations. Telework may also be
available for certain positions.
* For consumer complaints positions, the possible availability of office and telework
locations outside of Washington, D.C. and CFPBs regional hubs, including in Houston, is still
being determined. CAG employees located in Houston who are interested in transferring into
one of the positions listed above should follow the instructions below for submitting transfer
applications. CFPB will notify OCC as soon as possible as to whether consumer complaints
positions are available in Houston.
CFPB is recruiting for all levels of personnel. Term employees will also be considered
for transfer.
The Application and Transfer Process
OCC employees interested in transferring into one of the positions listed above should
submit the following information to [email protected]: (1) a completed Solicitation of
Potential Transferee form (attached) with up to your top three areas of interest (identified above)
in the field called Position(s) interested in at CFPB; and (2) a resume. All applications must
contain both documents listed above and must be submitted no later than midnight, March XX,
2011 to be considered. Submission of a transfer application does not bind the submitting
employee to accept a transfer to the CFPB.
Upon receipt of completed transfer applications, CFPB will review the applications and
identify potential transferees it wishes to interview. CFPB will endeavor to notify all applicants
as to whether or not they have been selected for an interview within one month of the closing
date for submission of transfer applications. Those selected for an interview may be interviewed
in person or by phone. Employees given a transfer offer will be provided with at least two
weeks in which to decide whether to accept such an offer. Those employees accepting a transfer
offer will be transferred to the CFPB no sooner than July 21, 2011, but may be detailed to the
CFPB prior to that date.
Compensation, Benefits and Transfer Protections
As set forth in the CFP Act, transferred employees will continue to receive at least their
same salary for two years after the designated transfer date. CFPBs pay band structure is being
finalized but will be consistent with the FIRREA agencies and will be closely aligned with the
3
Page 2500 of 3826
OCC and FRB. The CFPB will endeavor to provide additional information concerning pay as
soon as possible. Applicants who are made an offer for a position with the CFPB will be
provided pay band and salary information no later than the time of the offer.
As set forth in the CFP Act, transferred employees may continue their enrollment in the
OCC employee health and welfare benefits programs for one year after the designated transfer
date, and will continue to participate in their existing retirement and thrift plans for as long as
they remain employed at CFPB (unless they elect into the Federal Reserve System retirement
and thrift plans within 18 months after the designated transfer date). Please see Section 1064 of
the Act for greater detail.
Working at CFPB
As a new organization, CFPB has a unique opportunity to redefine how the American
public thinks of a government agency. By placing a focus on innovation and high performance
with the core purpose of serving the American consumer CFPB can set a high standard for
quality, service and results. By investing in the latest technology, training and resources, CFPB
will provide every opportunity to maximize the potential of each team member and the Bureau at
large. CFPBs goal is to create an environment where employees can achieve professional
growth and fulfillment and take pride in the work they do.
Questions
Questions concerning the CFPB or its transfer policies should be directed to the CFPB at
[email protected] with the Subject heading: Transfer Question. Questions
concerning OCC transfer policies should be directed to [].
Page 2501 of 3826
From:

To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Mon Apr 04 2011 12:44:33 EDT

Cc: Adamske, Steven; Moore, Megan; Hunt, Anita Maria; Wallace, Kim; Wolin, Neal; Warren, Elizabeth
(CFPB); Fitzpayne, Alastair; LeCompte, Jenni; Murray, Colleen; Coloretti, Nani
Subject: CFPB Press Clips 4/4
Index

New York Times (Week in Review) Talking the Talk
Fort Worth Star-Telegram If Texas wont act on payday loans, maybe feds will
Reuters (blog) NYT vs HuffPo, cont.
The Hill Opinion: Congress caused financial crisis
Financial Times Greenspan is wrong: we can reform finance
Virginian-Pilot (Norfolk) Virginia exports usury and abuse
American Banker ICBAs New Chairman Has a Unique Reg Perspective
Page 2534 of 3826
Times-Reporter (Dover, Ohio) Bankers: Federal law may increase your fees
Nader.org Open Letter to President Obama on the Nomination of Elizabeth Warren
Journal News (New York) The American house is on fire
Slate (blog) Rove Group Creates Anti-Obama Wiki
Daily Kos A nation thats fixed is always broken
The Hill (blog) Elizabeth Warren defends Consumer Bureaus role in settlement talks
CBS News (60 Minutes) Mortgage paperwork mess: the next housing shock?
Huffington Post 60 Minutes Investigates Cutting Corners On Foreclosures (with video)
The Hill (blog) FDIC chair pushes for bank fund to settle foreclosure disputes
Roosevelt Institute (blog) Breaking News! The Bankster Offer to the AGs
Credit Slips Banks to AGs on Servicing Fraud: Drop Dead
Naked Capitalism Banksters Mortgage Counteroffer Makes a Further Mockery of Fraudclosure

Settlement Negotiations
Naked Capitalism Cease and Desist Orders as Regulatory Theater in Mortgage Settlement
Negotiations
Consumer Credit
Baltimore Sun Credit card protection: Is it worth it?
American Banker Facebook and Google Encroach on Banks Turf
Washington Post Wachovia jumps into the swipe fee fight
Housing
American Banker Small Win Aside, Court Challenge to Mortgage Broker Pay Rule Still a Long
Shot
Palm Beach Post Foreclosure crisis: Fed-up judges crack down on disorder in the courts
Wall Street Journal Foreclosure-Prevention Plans Show Limited Impact
Page 2535 of 3826
New York Times (Week in Review)

Talking the Talk
April 2, 2011
Entering the Lions Den
The News Elizabeth Warren, named by President Obama to set up the new Consumer Finance
Protection Bureau, spoke at a conference run by the United States Chamber of Commerce, a lobby that
loudly opposes her and her agency.
Behind the News I do not consider myself in hostile territory right now because I believe we share a
point of principle: competitive markets are good for consumers and for businesses, said Ms. Warren,
adding that they dont function unless there are some well-enforced rules. Conservatives complain
that the bureau has too much say over financial industry practices.The News Elizabeth Warren, named
by President Obama to set up the new Consumer Finance Protection Bureau, spoke at a conference
run by the United States Chamber of Commerce, a lobby that loudly opposes her and her agency.
Behind the News I do not consider myself in hostile territory right now because I believe we share a
point of principle: competitive markets are good for consumers and for businesses, said Ms. Warren,
adding that they dont function unless there are some well-enforced rules. Conservatives complain
that the bureau has too much say over financial industry practices.
Back to Top
Page 2536 of 3826

Elizabeth Warren defends Consumer Bureaus role in settlement talks
April 4, 2011
By Peter Schroeder
The architect of the new Consumer Financial Protection Bureau (CFPB) defended the agency's role in
ongoing settlement negotiations from Republican critiques that it had overreached.
Elizabeth Warren, the assistant to the president in charge of setting up the CFPB, said in a letter
Monday that the CFPB has offered advice to other government officials regarding ongoing settlement
negotiations with banks over widespread mortgage documentation problems.
However, she rejected claims from some House Republicans that she or anyone at the agency
overreached in offering that advice, noting that the agency is not involved in any direct negotiations with
mortgage servicers.
The letter comes in response to accusations from Republicans that Warren downplayed the role the
CFPB had played in settlement talks when she testified before the House Financial Services Committee
March 16.
There, she told lawmakers that the CFPB had offered advice and expertise to other officials when
asked. Republicans pressed Warren on the issue, arguing it would be inappropriate for the CFPB to
play a role in settlement talks, since the agency does not officially begin work until July and Warren is a
political adviser, not the bureau's appointed director.
In a March 30 letter, committee chairman Spencer Bachus (R-Ala.) and Rep. Shelley Moore Capito (RW.Va.) pointed to a previously confidential presentation put together by CFPB staff regarding mortgage
documentation problems and settlement talks as proof the agency had "extensive involvement" in the
negotiations. They invited her to revise her testimony before the committee.
However, in her response, Warren did no such thing, defending the agency's role as an "active
participant" in inter-agency discussions about the settlement. She declined to detail those talks, citing
the ongoing law enforcement matter, and emphasized that the Department of Justice, other federal
agencies, and state Attorneys General are the ones negotiating directly with servicers, not the CFPB.
Page 2537 of 3826
When the CFPB begins official work in July, it will be authorized to regulate mortgage servicing. As a
result, the agency has brought on staff with relevant expertise, which Warren argued made the bureau
a valid resource to tap for the Treasury Department and other officials involved in settlement talks.
"Let me make it clear that every step we have taken has been mindful of the impact of these
deficiencies on countless American families, their neighbors, their communities, and the economy as a
whole," she wrote. "To the extent that we can be helpful in holding to account servicers that have
violated the law and in repairing the damage they caused, we are proud to do so."
Back to Top

If Texas wont act on payday loans, maybe feds will
April 1, 2011
By Mitchell Schnurman
Elizabeth Warren is often called the nation's consumer czar, and she spooks bankers, mortgage
brokers, debt collectors -- even The Wall Street Journal.
Maybe she can scare some action out of lawmakers in Austin and payday lenders in Texas. If they take
care of their own house now, they're less likely to invite her intervention later.
Warren, a Harvard law professor best known for her research on the causes of consumer bankruptcy,
was recruited to Washington in 2008. Congress asked her to oversee the Troubled Asset Relief
Program, created to save big banks and prevent a global financial meltdown. That year, she also
published a paper that called for a new federal agency to monitor credit products in the same way that
government regulates the safety of toasters, lawn mowers, food and drugs.
"No one asks if such items should be regulated," Warren wrote in the 100-page paper, Making Credit
Safer. "Policy discussions center instead on whether such regulation is adequate."
Page 2538 of 3826
After subprime mortgages helped trigger the worst downturn since the Great Depression, her idea took
root. More than 200 organizations supported the creation of an independent agency, and the Consumer
Financial Protection Bureau became a key piece of the Dodd-Frank reform law enacted last summer.
Most assumed that Warren would direct the bureau. But her outspoken criticism of lenders made her a
lightning rod for the financial services industry, big business and many Republicans. Rather than risk a
lengthy confirmation fight, President Barack Obama named her a special adviser to the Treasury, a role
that permits her to start up the agency in preparation for its official launch in July.
Because she has the nerve and credibility to challenge powerful players, many see Warren as the ideal
public face of a watchdog bureau -- and she may eventually be the president's nominee. Opponents
say that she has bashed the industry for too long to be an evenhanded regulator.
In her research, books and media appearances, she has been a harsh critic of abusive lending
practices, explaining how consumers get sucked into a debt spiral.
"The best way to maximize profits for the credit card company is lend to everyone at 9.9 percent," she
told the PBS show Frontline in 2004. "And as soon as you think you've got someone who won't be able
to go somewhere else to borrow the money, change the price, and move that price way, way up, hit
them with $29 late fees and $35 fees and $50 fees, and collect, collect, collect.
"That's how it is that credit card profits have been rising every year over the past 20 years at the very
same time that bankruptcy losses and bad-debt defaults have also been rising."
Banks make out "because those people who are going into bankruptcy and the people who look just
like them ... are little golden profit centers for the credit card companies."
During a House committee hearing last month, Warren didn't back down when lawmakers repeatedly
challenged the bureau's mission and power. She said that if the agency had been in place years earlier,
subprime-mortgage problems would have been fixed while they were small.
When lawmakers complained that the agency was too independent and had limited accountability, she
said, "I hope that every time we talk about accountability that we're also talking about the accountability
of financial institutions."
Page 2539 of 3826
Amen, sister.
The new bureau is prohibited from setting interest rates or capping fees. But it will rewrite rules that
govern financial services and enforce them. With payday loans, for instance, some speculate that the
agency could require lenders to offer products with longer terms, accept installment payments or set
minimum debt-income ratios.
Warren's rhetoric has softened recently, and she has been meeting with industry CEOs. Last week, she
addressed the U.S. Chamber of Commerce, a frequent critic. And on Friday, she is scheduled to visit
Dallas and speak to journalists at the Society of American Business Editors and Writers convention.
Her Texas visit should serve as a reminder to state lawmakers and the payday loan industry, in
particular. Before the new federal bureau gets off the ground in July, it would be wise for the Legislature
to notch some gains on payday lending, which will fall under the agency's oversight.
In deciding where to act, the law requires the new consumer finance bureau to evaluate costs and
benefits, including how much state oversight is already provided for consumer protection.
On that score, Texas is a laggard. Payday lenders fall outside the usual oversight for banks, operating
as credit service organizations. They face no limits on interest rates and enjoy other regulatory
advantages, which may be one reason that so many payday lenders are based here.
About one-third of states have enacted tough reforms on the loans, and Congress passed a law in 2006
to protect the military and their families from the practices.
Payday lending doesn't appear to be at the top of Warren's current to-do list. In outlining the agency's
priorities, she starts with mortgage products and credit cards. That's natural, because they affect so
many people.
But many consumer advocates are pushing for action on payday loans. In Austin, religious leaders
recently testified that a good chunk of their aid goes to working families struggling with debts. Fees can
tally annual interest rates of 400 percent. Worse, the loans are frequently rolled over with new fees,
trapping borrowers in a cycle of debt.
The industry says that it provides a vital product to people who can't get money from banks, credit
unions or credit cards. In effect, they say, payday lenders serve as the bank for the working poor.
Page 2540 of 3826
In her 2008 paper, Warren wrote that "the payday loan product is arguably designed to take advantage
of consumers" who believe they'll pay it off and consistently underestimate the risks. But in a January
interview, she acknowledged the industry's role.
"Access to small-dollar loans is critical to many families," Warren told The Associated Press "The notion
that we somehow try to eliminate that, it's just not going to happen. It can force people into unregulated
markets, including 'Jimmy the Leg Breaker,' which is not where we want people to be."
Warren emphasizes simple, clear disclosure, arguing that well-informed consumers will make smart
decisions -- if they're not fooled by product-makers. Payday lenders say their customers analyze their
choices and pick them, because they're convenient and cheaper than other options.
Could this work out well for all sides? Texas should do more to regulate payday lending, simply
because it's the right thing to do. But if that's not motive enough, Warren's agency is waiting in the
wings.
Back to Top
Reuters (blog)
NYT vs HuffPo, cont.
April 2, 2011
By Felix Salmon
The NYTs declared war on the Huffington Post shows no sign of dissipating, and as ever the new-look
NYT Magazine is at the front lines of the attack. Andrew Goldmans interview with Arianna Huffington is
quite astonishing, but first its worth looking at other news of the week.
On Monday evening, HuffPos Shahien Nasiripour got his hands on a photocopied internal document
from within the Consumer Financial Protection Bureau. Marked confidential for AG Miller, it shows that
the CFPB is deeply involved in putting together the AGs settlement with mortgage servicers. Nasiripour
Page 2541 of 3826
wrote:
Perhaps most important to some lawmakers in Washington, the mere existence of the report suggests a
much deeper link between the Bureau of Consumer Financial Protection, led by Harvard professor
Elizabeth Warren, and the 50 state attorneys general who are leading the nationwide probe into the five
firms improper foreclosure practices, a development sure to anger Republicans in Congress and a
banking industry intent on diminishing the fledgling CFPBs legitimacy by questioning its authority to act
before its officially launched in July.
Earlier this month, Warren told the House Financial Services Committee, under intense questioning,
that her agency has provided limited assistance to the various state and federal agencies involved in
the industry probes. At one point, she was asked whether she made any recommendations regarding
proposed penalties. She replied that her agency has only provided advice.
The Republicans in Congress reacted exactly as Nasiripour said they would. Spencer Bachus
immediately posted Nasiripours document on his website (the exact same photocopy, not any other
version), and came out fighting:
Financial Services Committee Chairman Spencer Bachus and Financial Institutions and Consumer
Credit Subcommittee Chairman Shelley Moore Capito are asking Elizabeth Warren, the Obama
Administration official charged with setting up the Consumer Financial Protection Bureau, if she wants
to clarify or correct her recent testimony regarding the Bureaus role in the ongoing mortgage servicing
settlement negotiations. Recent reports indicate that the CFPBs role in these negotiations has been
more extensive than Professor Warren suggested during her testimony before the Subcommittee earlier
this month.
The Huffington Posts document caused so much of a stir in Washington that even the NYT felt
compelled to report on the developments:
Last week, Ms. Warren told the committee that she provided advice to the Treasury secretary and
others about a possible settlement but was not involved in the negotiations. State attorneys general and
federal officials are discussing a settlement with mortgage service companies in response to
questionable foreclosure practices.
On Wednesday afternoon, Mr. Bachus released a seven-page document titled Perspectives on

Settlement Alternatives in Mortgage Servicing, which, in a letter to Ms. Warren, he said demonstrated
that she had a larger role than she had indicated to the committee.
Nowhere in the NYT story, which was written by Edward Wyatt, was there any indication that the
document had been ferreted out by an assiduous reporter at the Huffington Post. And of course his link
Page 2542 of 3826
to the document was to house.gov rather than anything with HuffPo branding. In hindsight, Nasiripour
would probably have been smart to put some kind of HuffPo watermark on the front page of the
document, because both Wyatt and Bachus (with his vague reference to recent reports) seemed
determined to ensure that Nasiripour got no credit for finding it at all.
And so to Goldmans interview, which includes this jaw-dropping exchange:
I think that hiring a slew of traditional journalists seems counter to the model that made buying you
appealing to AOL.
We already had 148 journalists on payroll at The Huffington Post. I dont know how you can say that.
I look at your writers much less than I find myself clicking on stuff thats been aggregated or the more
salacious, boob-related posts.
Nasiripours scoop was hugely popular on the HuffPo site: wonky news and grainy photocopies can still
generate 1,173 Facebook shares, 1,627 comments, and 2,760 Facebook likes. Total pageviews were
surely much higher than on the NYT piece in which Wyatt aggregated Nasiripours information without
crediting him. But Andrew Goldman doesnt seem to be drawn to that stuff: instead he finds himself
clicking on boobs. Which surely says more about Andrew Goldman than it does about the Huffington
Post.
Whats certain is that Goldman is taking his cues from his boss. Heres Keller:
The queen of aggregation is, of course, Arianna Huffington, who has discovered that if you take
celebrity gossip, adorable kitten videos, posts from unpaid bloggers and news reports from other
publications, array them on your Web site and add a left-wing soundtrack, millions of people will come.
Goldman, before he starts talking about aggregation and boobs, asks the same question arent you
left-wing four different times before finally letting it drop. Which of course was the whole subject of
Kellers second attack on Huffington.
The big picture here is that the NYT is obviously feeling very threatened by the Huffington Post, and is
reacting by lashing out blindly in a fit of name-calling, rather than actually trying to learn from what the
HuffPo does well.
Page 2543 of 3826
So long as the NYT continues to consider the Huffington Post to be boobs and kittens set to a left-wing
soundtrack, Huffington has nothing to fear. If the NYT instead treated HuffPo with respect, and linked to
it when it deserved such credit, the NYTs staffers might begin to learn a bit more about what HuffPo is
doing right. And that has to be more valuable, over the long term, than criticizing it for what they think it
s doing wrong.
Update: Auros notes in the comments that the leak is not, actually, particularly damaging to Warren,
calling it a total non-event. Which again redounds to HuffPos favor. The NYT covered the leak only in
the context of political horse-race news as a stick which one party was using to bash the other party.
HuffPo, on the other hand, concentrated on the substance of the report. The headline was Big Banks
Save Billions As Homeowners Suffer, Internal Federal Report By CFPB Finds; the stuff about angering
Republicans came reasonably far down in the 1,300-word story.
Back to Top
The Hill
Opinion: Congress caused financial crisis
April 4, 2011
By Judd Gregg
The primary driver of the fiscal disruption we experienced at the end of 2008 was not greed or
excessive speculation or even fraud in the lending markets. It was not the explosion of syndications of
mortgage loans or the use of derivatives to try and insure inherently unstable assets. It was not
regulatory somnolence.
Rather, this crisis, with its ensuing international recession and near-meltdown of our financial system,
had as its root cause the social-justice agenda of Congress.
For years this countrys political system has had as one of its basic rules the importance of promoting
and subsidizing the ownership of a home. It has not been just a party-specific goal, but the cause of
almost everyone running for office.
Page 2544 of 3826
Traditionally, it was expressed through the use of generous tax deductions for mortgages. But it was
also expressed in thousands of other ways through the promotion of all elements of the vertical supply
chain that created the products, built the homes and financed the buyer. It was, and is, a cultural fact in
America that everyone is expected to be able to own a home.
This was a good cause when done in a reasonably orderly and restrained way, when the lender knew
the borrower and his or her track record and when the buyer had to pay for a significant part of the
home and prove he or she could finance the rest. There were serious and ascertainable underwriting
standards restricting both buyer and lender exuberance.
This changed in the late 1990s. Congress embarked on a course of social justice, which said if you
wanted a home you should get it. No need to be accountable for your ability to pay for it, just go and
buy it on extraordinarily generous credit terms.
This was all expedited by Fannie Mae and Freddie Mac. They were allowed to pay little or no attention
to underwriting standards because they were going to sell the loan. The derivatives market ignored this
fundamental flaw and the failure was further accelerated by computer-driven models supported by
rating agencies that failed to note human nature.
It was a situation where Congress, in its desire to pander to the politics of the issue, demanded a
system be put in place that required water to run uphill.
Now, in a unique act of arrogance, Congress has passed Dodd-Frank, named for former Senate
Banking Chairman Christopher Dodd (D-Conn.) and former House Financial Services Chairman Barney
Frank (D-Mass.).
This bill takes the market system of home buying and overlays it with an antithetical system to meet the
social goals of the Democratic lawmakers who wrote it.
Rather than give the markets more stability and depth, Dodd-Frank has in fact made them less stable
and weaker by beginning the process of pushing offshore huge amounts of financial activity traditionally
initiated and controlled here.
This not only costs us American jobs, but it makes our credit markets significantly weaker and less
competitive. It also layers a new and even more destructive series of regulations on top of the existing
regulatory chaos with no concern for the effects they have on market forces and human nature.
Page 2545 of 3826
A good example would be the debit card fee price control language, which already has led to a
significant lessening of the average Americans access to credit and liquidity.
Along with a panoply of new regulatory initiatives from existing agencies, we have seen arise the
Consumer Financial Protection Bureau, a totally independent and rogue organization which answers to
no one.
It has its own appropriations, which are not reviewed by any elected official. Its cause is whatever its
director deems is good for our fellow Americans. It is a sort of a throwback, a super commissar of the
people.
It was structured by a group of Harvard thought police for the benefit and intellectual entertainment of
the left and is led by people who do not believe in markets, entrepreneurship and especially profit as
prime motivator of Americas success.
If it were an experiment or demonstration program, it would be dangerous. But as a free-standing,

unfettered, robustly funded agency with a cause to pursue, i.e., to end market forces as an influence in
lending, it is the most dangerous and powerful place on the federal landscape since J. Edgar Hoover
ran the FBI as a personal police force.
The outcome of all this overlay of social justice governance will not be that we avoid another financial
crisis or that we catch the next entity that is too big to fail before it does. It will be that credit on main
street America, where the jobs are created, will contract. And some will scratch their head and ask
why? to which the answer is too much Congress.
Judd Gregg is a former governor and three-term senator from New Hampshire who served as chairman
and ranking member of the Senate Budget Committee and also as ranking member of the Senate
Appropriations Foreign Operations Subcommittee.
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Financial Times
Page 2546 of 3826
Greenspan is wrong: we can reform finance

April 3, 2011
By Barney Frank
Since the passage of the Wall Street Reform and Consumer Protection Act, known as Dodd-Frank,
many commentators have suggested ways in which it might be improved. But until last week no one
had seriously suggested that we should have done nothing in response to the financial crisis. Yet,
writing in these pages, Alan Greenspan suggests that we should not even have tried. By and large, he
says, things went well over the long period of deregulation and light-touch oversight, and he argues that
the global financial system is now so unredeemably opaque that policymakers and legislators cannot
hope to address its complexity.
Mr Greenspan is wrong on both counts. His rosy view overlooks a monumental crisis that threatened
the foundations of the American economy, led to soaring unemployment, a continuing foreclosure crisis
and weakened economies in the US and Europe. It would have been a grave mistake not to address
problems of inadequate regulation and lax oversight. Indeed, both his predecessor and successor as
chairman of the Federal Reserve called for substantial changes and helped to shape the new rules.
The assertion that regulators can never get more than a glimpse of the financial system is self-fulfilling
if regulators are not given the mandate or the tools to do so, or if they fail to use the tools they have.
Economist Mark Zandi notes that one of the mistakes leading to the crisis was that, despite having
authority to set mortgage lending standards, the Fed just never acted on it. That was a clear policy
decision. When technology can track billions of transactions in real time, a failure to pierce the
opaqueness of the system is mostly a question of will, not capacity.
Tools provided in the act tackle institutions that are too big to fail with a new resolution regime that
ensures the safe dissolution of a firm where failure la Lehman Brothers threatens the system. It also
ensures that the financial sector, not taxpayers, bears the costs of that failure. The law also gives
regulators tools to act before a crisis emerges, and thus makes one less likely. Restraints can now be
placed on proprietary trading and reductions required in the size of activities that pose risks to the
system.
Regulators also have new authority to regulate the almost $600,000bn derivatives market. Where once
this market was opaque, it will soon be transparent. New stress tests; the registration of hedge funds
(and other private pools of capital); and supervision of previously unregulated non-bank financial
companies all will ensure that there will no longer be any place to hide. The law also increases
transparency through a new office of financial research, to give regulators access to information about
the entire financial system.
Institutions able to create risk and then shed it, along with the collapse of prudent underwriting,
contributed to the crisis. So we have also ensured that the originate to distribute model, which allowed
Page 2547 of 3826
banks to expand their lending businesses with little risk, will be replaced by one in which all lenders
have skin in the game.
This, combined with the new Basel III capital standards and the ability of regulators to insist on even
greater capital, will ensure more prudent and productive lending. And regulators will be aided by the
new Consumer Financial Protection Bureau, which will act to prevent the predatory, reckless lending
that was a precursor to the recent crisis.
Mr Greenspan ends his article by worrying that these tools may reduce the size of the financial sector
as a share gross domestic product. But as Adair Turner, chair of Britains financial regulator, and others
have noted, growth in the relative size of this financial sector may just divert capital from productive
activity to speculation, resulting in lower living standards and efficiency.
This financialisation of developed economies is a question that deserves thoughtful, careful attention.
Pending its outcome, however, policymakers must ensure that whatever its size, the financial sector is
operating transparently under clear rules that protect taxpayers and promote the stability and growth of
the broader economy.
The writer is a member of the US House of Representatives from Massachusetts fourth congressional
district
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Virginian-Pilot (Norfolk)
Virginia exports usury and abuse
April 2, 2011
Editorial
Greed knows no borders, but Virginia leaders have a responsibility to respect the wishes of neighboring
states that have enacted strong consumer protections against predatory lenders.
Page 2548 of 3826
Gov. Bob McDonnell ignored opposition from officials in Maryland and Washington, D.C., when he
signed a measure that allows car title lenders in Virginia to peddle loans with triple-digit interest rates to
out-of-state residents.
The governor's decision is particularly frustrating because two delegates admitted they accidentally
voted the wrong way on the bill, which squeaked out of the House 51-47. That means there is an
opportunity to reverse this terrible policy decision next winter, but in the meantime these rapacious
companies can prey on desperate men and women with the blessing of McDonnell and Senate Majority
Leader Richard Saslaw, sponsor of the legislation.
It's bad enough that Virginia's elected officials permit exploitation of their own constituents, but when
they encourage the export of predatory practices into surrounding states that have rejected it, they
underscore the need for federal oversight of such abusive financial businesses.
Last year, Congress created the Consumer Financial Protection Bureau, which is scheduled to open its
doors in July. Already, special interests have churned up opposition to the new agency, which will
regulate predatory lenders, mortgage brokers, credit card issuers and private providers of student
loans.
Harvard law professor Elizabeth Warren, who first proposed the bureau in 2007, was appointed by
President Obama as a special adviser to establish the new agency, but congressional opposition has
prevented her confirmation as its first director. Although the bureau is to be funded by fees generated
through the Federal Reserve, an effort to shield it from politically motivated attacks, House Republican
leaders are maneuvering to slash its budget by nearly half.
The nonprofit Citizens for Responsibility and Ethics in Washington reports that campaign donations
from predatory lenders and their trade associations tripled between 2004 and last year's elections, to
$1.5 million. Recipients include top members of Congress from both parties. That's a familiar pattern to
Virginians, where title and payday lenders have given $226,000 to Democratic and Republican state
officials and fundraising committees in the past year.
Opposition to the new consumer bureau is as predictable as it is disingenuous. Critics say the agency
will wield too much power and will interfere in matters best regulated by states. But Virginia has proven
that it can't be trusted to protect its own residents, and now its leaders are actively trying to undermine
lending laws in other states.
If members of Congress need a reminder of why they created the bureau in the first place, they won't
have to look far.
Page 2549 of 3826
Back to Top
American Banker
ICBAs New Chairman Has a Unique Reg Perspective
April 4, 2011
By Kate Davidson
Salvatore Marranca, the new chairman of the Independent Community Bankers of America, didn't even
know what the Federal Deposit Insurance Corp. was when he took a job there in 1968.
It was the height of the Vietnam War, and employers were reluctant to hire an able-bodied college
graduate who was certain to be drafted that is, except the federal government.
Marranca was drafted six months later, but had a job waiting when he returned home to western New
York State. He spent 12 years as a bank examiner, and when his next promotion meant uprooting his
young family and moving to Washington or New York City, he opted to become a community banker.
His experience on both ends of supervision prepared him for the task ahead: Serving as a bridge
between the two sides at a time of growing animosity among bankers over a spate of new regulations.
"I had seen many, many banks and I knew that I wanted to be part of the solution," Marranca said in
an interview Wednesday, a week after being elected ICBA chairman. "I wanted to have input and see
the results of it. I wanted to make a difference. I wanted to be part of the community."
In 1982, he joined Cattaraugus County Bank in Little Valley, N.Y., becoming the $180 million-asset
bank's president and chief executive a few years later.
Though Marranca provides a link between the worlds of bankers and examiners, much has changed
Page 2550 of 3826
since his days at the FDIC. During his tenure, 1969 to 1982, examiners had much closer ties to the
bankers they visited, he said.
They were also generalists who took a more holistic approach to bank examinations. Marranca said
examiners rarely, if ever, came in looking to play "gotcha," or review something as specific as Bank
Secrecy Act or Community Reinvestment Act compliance without looking at the whole picture. In many
cases, however, "that's the situation today with the specialist examiners," he said.
Marranca said he understands to a degree why modern-day examiners take certain stands. The
financial crisis put pressure on top regulators, which filters down to field examiners who don't want
anything bad to happen to a bank on their watch. That has inevitably changed the environment.
Marranca said he's retained many of the conservative values he picked up as an examiner. "You learn
safety and soundness is the foundation for everything not growth, not stock price, not short-term
gains, not any of that stuff," he said.
Marranca said his priorities include protecting community banks from the potentially damaging effects of
a proposal to cap interchange fees, ensuring that any rules proposed by the Consumer Financial
Protection Bureau won't burden small banks and spreading the word about the unintended
consequences of new regulation.
Bankers who know Marranca said he's the perfect choice to lead the ICBA, when regulators are
preparing to write hundreds of new rules tied to the Dodd-Frank Act.
Little Valley is a small town two of Marranca's branches have hitching posts, and four are in towns
with a single traffic light yet he's spent years focusing on policy issues, first at the Independent
Community Bankers Association of New York, where he was president, and later on with various ICBA
committees.
That, combined with his FDIC background, gives him the perspective to see the effect of regulations,
said John Buhrmaster, the president of First National Bank of Scotia in New York.
"Frequently in these meetings, you need to give responses to government leaders, regulators about
how something will affect your bank and your customers," Buhrmaster said. "Somebody like Sal, who
has the experience of being on the front line but also the experience of being a regulator, can answer
those questions uniquely."
Wayne Cottle, the president and CEO of Dean Co-operative Bank in Franklin, Mass., called Marranca
Page 2551 of 3826
the "consummate" community banker. "His mantra is to fight the good fight," he said.
"If you know anything about Sal, his definition of 'fight the good fight' is believing that community
bankers are the good guys, who always deserve a seat at the table," Cottle said. "He's going to do ...
everything he can to see that they get a seat at the table."
Most importantly, Marranca said he wants to engage members.
"In many cases bankers have done a good job for many, many years of not telling our story," Marranca
said. "Maybe it took a financial crisis for us to finally get 'mad as hell' and not want to be lumped in with
when the president of the United States says 'fat cat bankers.' "
Marranca added, "We did learn the hard way to tell our story of who and what we are, and people are
listening."
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Times-Reporter (Dover, Ohio)

Bankers: Federal law may increase your fees
April 3, 2011
By Lee Morrison
Tuscarawas Valley residents are among those nationwide who will bear the cost of national banking
reform, even though community banks did not cause the financial crisis, area banking leaders contend.
Sixty Ohio bankers recently visited lawmakers and regulators in Washington, D.C., to express the
concerns of the financial services industry on behalf of the Ohio Bankers League and the American
Bankers Association.
Page 2552 of 3826
Among them were Blair Hillyer, president and chief executive officer of First National Bank of Dennison
and, from First Federal Community Bank headquartered in Dover, Trent Troyer, president and CEO,
and Scott Finnell, executive vice president. All three have made similar trips for years.
Discussion focused on the impact of the Dodd-Frank Act, passed last July.
Troyer said people should care about whats happening.
Your local community bank had nothing to do with causing the problem, but the result is going to cost
you more to conduct your banking needs in new or increased fees, or higher interest rates on your
loans for your house, auto, home improvements or boat. It also will mean lower interest rates for
deposits.
Those on the trip met with Democratic Sen. Sherrod Brown and Republican Reps. Bob Gibbs, Jim
Renacci and Bill Johnson, as well as Richard Cordray, director of the U.S. Consumer Financial
Protection Bureau, and officials at the Federal Deposit Insurance Corp., Federal Reserve, and Office of
the Comptroller of the Currency.
Hillyer said the Dodd-Frank legislation was Congress reaction to the financial crisis worldwide, which
started with the meltdown of the subprime mortgage business.
He said that almost all of the subprime issues were caused by mortgage brokers and investment
companies instead of traditional banks. The reaction was to pass legislation to rein in Wall Street.
Hillyer, who has been in the banking industry for 32 years, said, Its one of the worst pieces of
legislation that Ive seen during my career. It was well-intentioned, but not very well thought out as far
as the long-term ramifications. Costs are gong to get passed on.
If I have to hire two new staff to handle compliance issues, that may mean having to cut someone else.
Profits are down, revenue is down and the cost of basic operations is going up through no fault of our
own.
He said the cost of complying with existing regulations is about $250,000 per year, but that its too early
to estimate a pricetag associated with new regulations.
Page 2553 of 3826
Troyer said there already are 11,000 pages of regulations aimed at protecting depositors and ensuring
a healthy and competitive banking system.
Any form of additional regulation is disproportionately a burden to community institutions, Hillyer said.
As it cuts into our revenue sources and makes us less profitable, obviously we will not be able to make
as many loans as we used to make and support the charitable and worthwhile causes as we
traditionally have.
Last year, The First National Bank of Dennison in donations alone contributed $85,000 and $108,000 in
2009. That was to up to organizations throughout the county, such as Big Brothers Big Sisters, the
YMCA, hospitals, hospice, sports leagues and athletic boosters.
First Federal Community Bank also supports many organizations and capital campaigns.
Were not asking for an automatic profit, Hillyer said. Were asking for a business environment for
banking that allows us to compete, without the undue burden of increased regulation and legislative
initiatives that are anti-business.
He said some predict that the new law will result in 2,000 to 3,000 community banks being sold to larger
financial entities because of soaring compliance costs and subsequent shrinking profit margins.
As not only a banker, but a community citizen, my fear is that when community banks go away in rural
Ohio and rural America, whos going to be responsive to our needs, Hillyer said. The big guys have
already demonstrated what they do.
Troyer said, Banking is a business and what appears to be something that may be protecting
consumers ultimately will create a higher cost of doing banking, which will be passed on to consumers.
He said that as compliance costs soar for community banks you reduce the profitability of the bank,
which reduces capital growth. Every dollar of capital you take away also takes away $10 of lending
capability. Thats a 10-to-1 ratio for the impact on the mount available for loans that we could be making
with small businesses to create or retain jobs, or to individuals to buy homes or autos.
Hillyer and Troyer said progress was made on the trip.
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Im hopeful that some common sense and reason will prevail here in a timely fashion, Hillyer said. It
seems like were on offense, but were really on defense because the bill has already passed.
He said the rules are being written, with some expected to be finalized within the next month or two, but
others will not be in place for a year or more.
Back to Top
Nader.org
Open Letter to President Obama on the Nomination of Elizabeth Warren
April 1, 2011
By Ralph Nader
Dear President Obama:
An interesting contrast is playing out at the White House these daysbetween your expressed praise
of General Electrics CEO, Jeffrey R. Immelt and the silence regarding the widely desired nomination of
Elizabeth Warren to head the new Consumer Financial Regulatory Bureau within the Federal Reserve.
On one hand, you promptly appointed Mr. Immelt to be the chairman of the Presidents Council on Jobs
and Competitive, while letting him keep his full time lucrative position as CEO of General Electric (The
Corporate State Expands). At the announcement, you said that Mr. Immelt understands what it takes
for America to compete in the global economy.
Did you mean that he understands how to avoid all federal income taxes for his companys $14.2 billion
in profits last year, while corralling a $3.2 billion benefit? Or did you mean that he understands how to
get a federal bailout for GE Capital and its reckless exposure to risky debt? Or could you have meant
that GE knows how to block unionization of its far flung workers here and abroad? Perhaps Mr. Immelt
can share with you GEs historical experience with lucrative campaign contributions, price-fixing,
pollution and those nuclear reactors that are giving people fits in Japan and worrying millions of
Americans here living or working near similar reactors.
Page 2555 of 3826
Compare, if you will, the record of Elizabeth Warren and her acutely informed knowledge about
delivering justice to those innocents harmed by injustice in the financial services industry. A stand-up
Law Professor at your alma mater, author of highly regarded articles and books connecting knowledge
to action, the probing Chair of the Congressional Oversight Panel (COP) and now in the Treasury
Department working intensively to get the CFRB underway by the statutory deadline this July with
competent, people-oriented staff.
There were many good reasons why Senate leader Harry Reid (Dem. Nevada) called Professor Warren
and asked her to be his choice for Chair of COP. Hailing from an Oklahoman blue collar family,
Professor Warren is just the working class hero needed to make the new Bureau a sober, law and
order enforcer, deterrer and empowerer of consumers vis--vis the companies whose enormous greed,
recklessness and crimes tanked our economy into a deep recession. The consequences produced 8
million unemployed workers and shattered trillions of dollars in pensions and other savings along with
the dreams which they embodied for American workers.
Much more than you perhaps realize, millions of people, who have heard and seen Elizabeth Warren,
rejoice in her brainy, heartfelt knowledge and concern over their plight. They see her as just the kind of
regulator (federal cop on the beat) for their legitimate interests in a more competitive marketplace who
you should be overjoyed in nominating.
Yet there are corporate forces from Wall Street to Washington determined to derail her nomination
forces with their avaricious hooks into the Republicans on Capitol Hill and the corporatists in the
Treasury and White House.
You have obliged these forces again and again over the last two years, most recently with the
appointment of William M. Daley, recently of Wall Street, as your chief of staff.
How about one nomination for the People? The accolades on hearing the news of Elizabeth Warrens
nomination may actually exceed the enduring indignation were she not to be nominated. Just feed the
Senate Republicans to the mass media that would cover the nomination hearings, all that calm, solid,
wisdom and humanity that she communicates without peer. See who prevails.
Selecting Elizabeth Warren and backing her fully though the nomination process will always be
remembered by Americans across the land. Not doing so will not be forgotten by those same persons.
This is another way of saying she has the enthusiastic constituency of hope and changethat is
change you can believe in!*
I look forward with many others to your response.
Page 2556 of 3826
Sincerely yours,
Ralph Nader
PO Box 19312
Washington D.C., 20036
*If you doubt this observation and would like to see one million Americans on a petition favoring her
selection, ask us and see how long that would take.
Back to Top
Journal News (New York)

The American house is on fire
April 3, 2011
By Phil Reisman
On Wednesday of last week, 750 bags of food were handed out at the HOPE Community Services
pantry in New Rochelle.
That was an all-time record, said Carole Troum, the agency's executive director.
Since the Great Recession began two years ago, HOPE has seen a 40 percent spike in demand for its
services, which include the free groceries, as well as hot meals served in the basement soup kitchen on
Washington Avenue.
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Troum said that many people who come to HOPE are the working poor. Many come with children and
babies in strollers.
Increasingly, Troum said, they don't fit the usual stereotypes associated with the impoverished. Some
are indistinguishable from the volunteers who serve them.
This is only a small snapshot of a larger crisis that plagues this country. While the rich are only getting
wealthier in the ever-expanding global economy, the poor and middle class are slipping further and
further behind.
The numbers in income inequality are alarming. Between 2002 and 2007, or just before the financial
meltdown, 65 percent of income growth went to the top 1 percent of the population. In the so-called
"recovery," the billionaires club has bounced all the way back and beyond, while average Americans
have struggled with the miseries attendant to chronic unemployment, a stubbornly depressed housing
market and stagnant pay.
All of this and much more was cited in a recent piece in The Atlantic magazine about the rise of a "new
ruling class," the mega-rich who have greatly benefited from an internationalized economy based on
technological advances and cheap, outsourced labor.
An unnamed CEO in the article said one of his hedge-fund partners believed that the decline of the
American middle class simply didn't matter.
The CEO said: "His point was that if the transformation of the world economy lifts four people in China
and India out of poverty and into the middle class, and meanwhile means one American drops out of
the middle class, that's not such a bad trade."
I thought long and hard about that quote when I first read it. Then I thought about it again when
President Obama justified our intervention in Libya partially on the grounds that he had received the
blessing of the international community though that blessing evidently did not include the military
firepower and national treasure of either China or India.
One has to question what our "interests" really are when, in the name of freedom, we get involved in
three costly wars without coherent goals or exit strategies. In the case of Libya, we can't even identify
who exactly it is we're helping.
Page 2558 of 3826
It's proper that schoolchildren learn and recite the Pledge of Allegiance, but I seriously wonder if the
Pledge is known by the greedy global elite who won't be taxed an extra dime and don't give a damn
about the ordinary Americans who buy their stuff and fight their wars for them. Do they hold patriotic
values or is their allegiance only to a world market?
A certain, well-known TV personality likes to say he's "looking out" for the average citizen. But the sad
truth is, no one is doing that at all.
Should someone have the temerity to stand up against the forces of institutional greed, they are
demonized as dangerous enemies of the free market.
Case in point is Elizabeth Warren, the creator of the new Consumer Financial Protection Bureau, who
has been fighting a battle to keep the fledging agency's funding out of the congressional appropriations
process.
Warren is hated and feared by the fans of Darwinian economics. Long before the financial collapse, she
was among the first to speak for those who fell into the black hole of predatory mortgage lending or
were victimized by the unscrupulous practices of the credit card industry.
She has been under constant attack from those who do not want her to become the agency's first
director. Among her more notable opponents is Rep. Spencer Bachus, a Republican from Alabama who
chairs the House Financial Services Committee.
Bachus has introduced a bill aimed at diluting the CFPB's power by changing the leadership from a
single director to a five-member board with no more than three members coming from the same political
party.
Bachus claims that it's nothing personal against Warren.
"If George Washington came back, or Abraham Lincoln, or if Warren Buffett signed up, I wouldn't give
that person total discretion," he said.
What a classically idiotic statement. God forbid that an honest citizen with impeccable credentials in the
area of fair play actually be given the chance to oversee an agency whose ostensible purpose is to
defend and protect people from getting ripped off by corporate flim-flammers.
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Why, we can't have that. That smacks of regulation.
And there are those who would like us all to believe that regulation caused the economic calamity in the
first place. Only it didn't.
The collapse was caused by recklessly greedy smart alecks in pinstripe suits who collectively ruined the
American Dream and then got bailed out by the taxpayers. They blew out the tires of the economy and
they're still getting rewarded with fat paychecks and bonuses.
A new outrage was last week's disclosure that over a two-year period, a total of $35.4 million was paid
to the top six executives of Fannie Mae and Freddie Mac, the disgraced mortgage lenders. During
those years, the agencies received billions of dollars in taxpayer bail-out money.
This happened under the watch of the Federal Housing Finance Agency.
So much for regulation.
So much for anybody watching out for the average citizen.
You know what this is like? It's like being in a house that's on fire.
Most Americans are trapped inside the burning house, fighting a losing battle against the all-consuming
flames while the privileged few are sneaking out the back door with the silverware.
Back to Top
CBS News 60 Minutes
Page 2560 of 3826
Mortgage paperwork mess: the next housing shock?

April 1, 2011
By Scott Pelley
If there was a question about whether we're headed for a second housing shock, that was settled last
week with news that home prices have fallen a sixth consecutive month. Values are nearly back to
levels of the Great Recession. One thing weighing on the economy is the huge number of foreclosed
houses.
Many are stuck on the market for a reason you wouldn't expect: banks can't find the ownership
documents.
It's bizarre but, it turns out, Wall Street cut corners when it created those mortgage-backed investments
that triggered the financial collapse. Now that banks want to evict people, they're unwinding these exotic
investments to find, that often, the legal documents behind the mortgages aren't there. Caught in a jam
of their own making, some companies appear to be resorting to forgery and phony paperwork to throw
people - down on their luck - out of their homes.
In the 1930s we had breadlines; venture out before dawn in America today and you'll find mortgage
lines. This past January in Los Angeles, 37,000 homeowners facing foreclosure showed up to an event
to beg their bank for lower payments on their mortgage. Some people even slept on the sidewalk to get
in line.
So many in the country are desperate now that they have to meet in convention centers coast to coast.
In February in Miami, 12,000 people showed up to a similar event. The line went down the block and
doubled back twice.
Dale DeFreitas lost her job and now fears her home is next. "It's very emotional because I just think
about it. I don't wanna lose my home. I really don't," she told "60 Minutes" correspondent Scott Pelley.
"It's your American dream," he remarked.
"It was. And still is," she replied.
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These convention center events are put on by the non-profit Neighborhood Assistance Corporation of
America, which helps people figure what they can afford, and then walks them across the hall to bank
representatives to ask for lower payments. More than half will get their mortgages adjusted, but the rest
discover that they just can't keep their home.
For many that's when the real surprise comes in: these same banks have fouled up all of their own
paperwork to a historic degree.
"In my mind this is an absolute, intentional fraud," Lynn Szymoniak, who is fighting foreclosure, told
Pelley.
While trying to save her house, she discovered something we did not know: back when Wall Street was
using algorithms and computers to engineer those disastrous mortgage-backed securities, it appears
they didn't want old fashioned paperwork slowing down the profits.
"This was back when it was a white hot fevered pitch to move as many of these as possible," Pelley
remarked.
"Exactly. When you could make a whole lotta money through securitization. And every other aspect of it
could be done electronically, you know, key strokes. This was the only piece where somebody was
supposed to actually go get documents, transfer the documents from one entity to the other. And it
looks very much like they just eliminated that stuff all together," Szymoniak said.
Szymoniak's mortgage had been bundled with thousands of others into one of those Wall Street
securities traded from investor to investor. When the bank took her to court, it first said it had lost her
documents, including the critical assignment of mortgage which transfers ownership. But then, there
was a courthouse surprise.
"They found all of your paperwork more than a year after they initially said that they had lost it?" Pelley
asked.
"Yes," she replied.
Asked if that seemed suspicious to her, Szymoniak said, "Yes, absolutely. What do you imagine? It fell
behind the file cabinet? Where was all of this? 'We had it, we own it, we lost it.' And then more recently,
everyone is coming in saying, 'Hey we found it. Isn't that wonderful?'"
Page 2562 of 3826
But what the bank may not have known is that Szymoniak is a lawyer and fraud investigator with a
specialty in forged documents. She has trained FBI agents.
She told Pelley she asked for copies of those documents.
Asked what she found, Szymoniak told Pelley, "When I looked at the assignment of my mortgage, and
this is the assignment: it looked that even the date they put in, which was 10/17/08, was several months
after they sued me for foreclosure. So, what they were saying to the court was, 'We sued her in July of
2008 and we acquired this mortgage in October of 2008.' It made absolutely no sense."
Curious, she used her legal training to go online and research 10,000 mortgages.
"I often, because of my training, look for patterns. And then I began to find the strange signatures," she
explained.
One of the strangest signatures belonged to the bank vice president who had signed Szymoniak's
newly discovered mortgage documents. The name is Linda Green. But, on thousands of other
mortgages, the style of Green's signature changed a lot.
And, even more remarkable, Szymoniak found Green was vice president of 20 banks - all at the same
time.
Where did all those documents come from? We went searching for "the" Linda Green and found her in
rural Georgia. She told us she has never been a bank vice president.
In 2003, she was a shipping clerk for auto parts when her grandson told her about a job at a company
called Docx. The company, that was once housed in Alpharetta, Ga., was a sweatshop for forged
mortgage documents.
"They were sitting in a room signing their name as fast as they possibly could to any kind of nonsense
document that was put in front of them," Szymoniak said.
Docx, and companies like it, were recreating missing mortgage assignments for the banks and
providing the legally required signatures of bank vice presidents and notaries. Linda Green says she
Page 2563 of 3826
was named a bank vice president by Docx because her name was short and easy to spell. As demand
exploded, Docx needed more Linda Greens.
"So you're Linda Green?" Pelley asked Chris Pendley.
"Yeah, can't you tell?" Pendley, who is a man, replied.
Pendley worked at Docx at the same time and signed as Linda Green.
"When you came in to Docx on your first day, what did they tell you your job was gonna be?" Pelley
asked.
"They told me that I was gonna be signing documents for using someone else's name," Pendley
remembered.
"Did you think there was something strange about that in the beginning?" Pelley asked.
"Yeah, it seemed a little strange. But they told us and they repeatedly told us that everything was above
board and it was legal," Pendley said.
Pendley told Pelley he had no previous experience in banking, in legal documents, and that there were
no requirements for the job.
"You had to be able to hold a pen?" Pelley remarked.
"Hold a pen," he agreed.
Asked if he understood what these documents were, Pendley said, "Not really."
"But you were signing these documents as if you were an officer of the bank?" Pelley pointed out.
Page 2564 of 3826
"Correct," Pendley said.
"How many banks were you vice president of in a given day?" Pelley asked.
"I would guess somewhere around five to six," Pendley said.
He was paid $10 an hour for this job.
Pendley showed us how he signed mortgage documents as "Linda Green." He told us Docx employees
had to sign at least 350 an hour. Pendley estimates that he alone did 4,000 a day.
Shawanna Crite worked at Docx and was also a "Linda Green." She says she both signed and
notarized the mortgage documents.
Asked what the role of the notary was, Crite said, "We were to make sure that everyone on the
document was who they said they were and notarize the documents."
"But the people who were signing the documents weren't who they said they were," Pelley pointed out.
"So if Chris Pendley was signing for Linda Green, you'd notarize that document."
"Yes," Crite said.
She told Pelley she was told that was okay.
"What do you know now?" Pelley asked.
"That it wasn't right," Crite said.
The real Linda Green didn't want to be interviewed. But she said that some of the bank vice presidents
at Docx were high school kids. Their signatures were entered into evidence in untold thousands of
foreclosure suits that sent families packing.
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"It was a common practice in the last few years to flood the courts with these documents," Lynn
Szymoniak told Pelley.
A look at some of the junk the courts were flooded with shows that sometimes the document mill didn't
even bother to fill in the names of the supposed owners.
To them, it seemed like a joke.
"Instead of the name of the bank here that was acquiring the loan, this one says, 'Bogus Assignee for
intervening assignments.' That's who acquired the loan," Szymoniak pointed out.
"This was an actual document that was in litigation?" Pelley asked, looking at the document.
"Yes," she said. "And what corporation assigned this loan? A corporation identified as 'A Bad Bene.'
Excuse me? When I saw that I was just absolutely amazed."
"What does that mean, 'A Bad Bene'?" Pelley asked.
"It could possibly mean a bad beneficiary. I have no idea what it meant. Here's Linda Green. And this
time, instead of being a Vice President of American Home Mortgage Servicing, she's Vice President of
A Bad Beanie," Szymoniak said.
Szymoniak says that the banks whose paperwork was handled by the Docx forgery mill include Wells
Fargo, HSBC, Deutsche Bank, Citibank, U.S. Bank and Bank of America. We contacted all of them.
Each said it farmed out its mortgage servicing work to other companies and it was those mortgage
servicing firms that hired Docx.
Docx was owned by a company called LPS, a $2 billion firm that calls itself the nation's leading provider
of mortgage processing services. LPS told us that when it found out about the phony signatures in
2009, it shut Docx down. The FBI and several states are investigating.
There were a million foreclosures last year. And there will be another million this year - those lawsuits
are forcing open those bundled, mortgage-backed securities that Wall Street cooked up in the mid
Page 2566 of 3826
2000s, and exposing a lack of ownership documents all across the country.
"It's astonishing to me that this had become as pervasive as a problem that it is," Sheila Bair, the
chairman of the Federal Deposit Insurance Corporation (FDIC) told Pelley.
"It got sloppy," he remarked.
"It got very sloppy," she agreed.
As FDIC chairman, Bair is one of the government's top banking regulators.
"You just described it as pervasive," Pelley pointed out.
"Yeah. It is pervasive. It absolutely is pervasive. It was just a matter of cutting corners, not spending
enough money and not having quality controls," she said.
Incompetent banking, back then, is causing foreclosure ghettos today. Although banks say courts have
been accepting their paperwork, now that's changing as desperate homeowners countersue banks over
the document fiasco. This leaves houses unsold indefinitely, undermining the recovery.
"I am very worried about if this starts getting out of hand the kind of impact it will have," Bair said.
"These are lawsuits by homeowners who are being foreclosed upon," Pelley remarked.
"Or have, are in the process, or have already been foreclosed on," she said.
"Saying, prove it?" Pelley asked. "Prove that you own this."
"Exactly," Bair said.
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"How big an issue is that gonna be? There are 30,000 today," Pelley asked.
"I think this litigation could easily get out of control. And we would like to get ahead of it. We're already
feeling like we're falling behind it," Bair said.
Chairman Bair thinks rotten mortgage documents are so threatening to the economy that the
government should force banks to pay into a massive fund.
"You think there needs to be a cleanup fund like for a natural disaster?" Pelley asked.
"I do. Yes, somewhat like that. Yes, this is yes this is one of human-making, but yes," Bair said.
"You don't want to give an exact dollar amount for this cleanup fund, but what are we talking about. Is it
billions?" Pelley asked.
"Yes. I would assume it would be billions. Yes," she replied.
Bair's proposed cleanup fund would pay homeowners to accept a bank's ownership claim without a
lawsuit. She says this could be cheaper for banks than trying to recreate the missing documents
legitimately - not through document mills.
"I think eventually the bank could prove who owned it. But it would take, it would take a lot of time and
expense," Bair said.
"You know none of the major banks were willing to sit down with us and talk to us about this. Not even
the American Bankers Association," Pelley pointed out.
"I'm sorry to hear that," Bair said.
Asked why she thinks that is, Bair told Pelley, "They're feeling very defensive now. And so I can only
assume that is the reason that they declined."
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Banks are defensive because all 50 state attorneys general want to punish them: the states are seeking
about $20 billion in damages for what they say is the irresponsible, perhaps criminal way, that some
mortgage companies handled what is, for most folks, the most important investment of their lives.
Back to Top
Huffington Post
60 Minutes Investigates Cutting Corners On Foreclosures (with video)
April 4, 2011
By William Alden
The mortgage crisis is far from over.
60 Minutes takes a new look at the state of the foreclosure crisis, interviewing homeowners, a regulator
and so-called robo-signers, who approved thousands of foreclosure documents daily without reading
them.
"It was just a matter of cutting corners," Sheila Bair, chair of the Federal Deposit Insurance Corporation,
tells CBS' Scott Pelley.
Home prices continue to fall, and record numbers of homeowners continue to lose their homes to
foreclosure. Worse, the crucial documentation that should help organize this mess often makes matters
more complicated, as homeowners and investors claim that banks botched or forged paperwork, raising
concerns that many homeowners have been wrongfully kicked out of their homes.
Amid revelations that banks employed these "robo-signers," major mortgage companies temporarily
halted foreclosures across the nation last fall, and all 50 state attorneys general joined together to probe
the situation.
Page 2569 of 3826
The Obama administration is working to reach an agreement with banks that would reduce mortgage
payments for 3 million borrowers, in as few as six months, HuffPost's Shahien Nasiripour reported. But
there is division among the federal agencies involved in the deal. It's unclear how much relief
homeowners would win, or whether a deal would prevent banks from engaging in abusive practices in
the future.
Home prices fell for the sixth straight month in January, according to the S&P Case-Shiller index. The
number of existing home sales plummeted nearly 10 percent in February, according to the National
Association of Realtors. About 6.9 million homeowners are either delinquent or in foreclosure
proceedings through February, according to data provider Lender Processing Services.
Back to Top

FDIC chair pushes for bank fund to settle foreclosure disputes
April 3, 2011
By Peter Schroeder
A top banking regulator believes banks may need to kick billions of dollars into a fund that would pay
homeowners to settle ownership disputes that emerge during foreclosure proceedings over
documentation issues.
Sheila Bair, the chair of the Federal Deposit Insurance Corporation (FDIC), told CBS' "60 Minutes" that
such a fund might be necessary, as widespread documentation problems continue to emerge as banks
struggle to handle a wave of foreclosures stemming from the subprime mortgage crisis.
As banks will foreclose on up to a million mortgages this year, continued widespread problems with
mismanaged paperwork could lead to a slew of lawsuits, Bair said.
"I think that this litigation could easily get out of control, said Bair in an interview that will air Sunday.
Were already feeling like were falling behind it."
Page 2570 of 3826
To stave off a flood of lawsuits, Bair suggested that banks should contribute to a fund, which would then
be used to pay homeowners if paperwork irregularities leads to a dispute over ownership.
"I would assume it would be billions [that the fund would need]," Bair said.
Her comments come as federal and state regulators are working to hammer out a broad settlement
agreement with mortgage servicers over the nationwide problem. The large number of foreclosures
spurred by the housing crisis has led to widespread problems with mortgage documents, like the "robosigning" of thousands of documents that have been called into question during foreclosure proceedings.
In the rush to originate new mortgages during the housing boom, banks did not take the proper care to
ensure all documentation was properly handled, Bair said.
"It was a matter of cutting corners, not spending enough money and not having quality control," she
said.
Back to Top
Roosevelt Institute (New Deal 2.0 blog)

Breaking News! The Bankster Offer to the AGs
March 31, 2011
By Matt Stoller
I happened to come upon the bank offer to the Attorney General (attached below), which is a response
to the original 27 page settlement offer from Iowa Attorney General Tom Miller. The banks are
obviously opposed to any real financial responsibility for fixing the foreclosure process and mortgage
servicing industry. It will cost them money. This document confirms as much, but it also unwittingly
reveals a big fear of the banks.
Page 2571 of 3826
One of the most important elements from a homeowners perspective is that the servicers often dont
tell them what they owe. This draft addresses the problem, by requiring servicers to tell borrowers every
month the total amount due, allocation of payments, unpaid principal, listing of fees and charges,
current escrow balances, and the reason for any payment changes. That sounds good, right? Well, just
read the very next part:
Monthly statements as described above are not required with respect to any fixed rate residential
mortgage loan as to which the borrower is provided a coupon book.
Thats the basic template of their offer the bankers lay out a bunch of reasonable requirements, and
then give themselves an obvious loophole.
Heres another part of the settlement.
Servicer shall implement processes reasonably designed to ensure that factual assertions made in
pleadings, declarations, affidavits, or other sworn statements filed by or on behalf of the Servicer are
accurate and complete; and that affidavits and declarations are based on personal knowledge or a
review of Servicers books and records when the affidavit or declaration so states, or in accordance with
the evidentiary requirements of applicable state law.
Processes reasonably designed to ensure that factual assertions made in pleadings, declarations,
affidavits, or other sworn statements? Im pretty sure that sworn statements are supposed to be true.
Not that there should be a process designed to ensure that blah blah blah bureaucracy babble. Sworn
statements are just supposed to be truthful statements. Saying things that arent true in sworn
documents and submitting them to the courts, even if you dont do it very often, is problematic.
And finally, this is the big fear of the servicers.
Servicer shall implement processes reasonably designed to ensure that Servicer has properly
documented an enforceable interest in the promissory note and mortgage (or deed of trust) under
applicable state law, or is otherwise a proper party to the foreclosure action (as a result of agency or
other similar status), including appropriate transfer and delivery of endorsed notes (which may be
endorsed in blank) and assigned mortgages or deeds of trust at the formation of a residential mortgagebacked security, and lawful endorsement and assignment of the note and mortgage or deed of trust to
reflect changes of ownership, all in accordance with applicable state law.
Someone is worried about the legal theories surrounding the transfers of notes and standing for
Page 2572 of 3826
foreclosures, and wants to ensure that the state Attorneys General dont pursue that line of argument.
See full text of Proposed Deal.
Back to Top
Credit Slips
Banks to AGs on Servicing Fraud: Drop Dead
March 31, 2011
By Adam Levitin
Here's the banks' counterproposal for a servicing fraud settlement. I can sum it up in two words: drop
dead. Or two letters: F.U. This proposals is so pathetically thin that it's not a good faith
counterproposal. This document only deals with servicing standards--nothing in it whatsoever about
penalties, modification quotas, etc. But even on servicing standards it is a bunch of empty promises to
have internal controls and try harder.
The first point about this counterproposal is simply to note what's absent from it:
(1) nothing about principal reductions
(2) nothing about second liens and conflicts of interest
(3) nothing about MERS (reserved for later)
(4) nothing about in-sourced vendor fees or force-placed insurance to affiliates. This makes the fees
and force-place insurance sections pretty meaningless.
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(5) nothing about pyramiding of fees.
I'm sure I'm missing a bunch of important points that aren't addressed, but these seemed to be the most
obvious ones.
Next, it's worth noting just how little it actually promises and how cagey the promises are. For many
points it does not promise results. Instead, it promises "processes reasonably designed" or
"procedures reasonably designed" to do something or another. Basically a lot of it boils down to
promises to implement internal controls, reviews, and procedures to make sure things don't happen
again.
Put differently, this is the servicers' saying "trust us." Ummm, that's the whole problem. No one trusts
the servicers--not investors, not homeowners.
Let's look at some specific terms. Orwell couldn't have drafted these any better:
(1) Loan Modifications. What do the banks propose to do in the section entitled "loan modifications"?
Principal reductions? Interest rate reductions? Forbearance? Nah. None of that stuff. Instead they
says no fees for modifications and we'll toss in a free overnight envelope. So the counterproposal to
principal reduction mods is a free Fed-Ex mailer.
(2) "Independent Review." Part of the document has a heading of "independent review." One might
have thought that was from a disinterested outside reviewer. Nope. It just means that there is an
internal review by another reporting chain within the bank. This is a worthless promise.
(3) Single point of contact.
Servicer will provide a single point of contact ("SPOC"), which may be more than one person, to any
first lien, owner occupied, borrower suffering a hardship through the loss mitigation processes...
Wait a sec. What the hell is single-point of contact if it can be multiple people? A single phone number?
A 1-800 number plus a loan ID accomplishes that. I get that SPOC is hard to do, but this sort of empty
promise is insulting. It's already the situation. Also notice how this is contingent on the "borrower
suffering a hardship through the loss mitigation processes"--what does that mean? Is that all borrowers
or just ones with some unspecified special circumstances in the bank's discretion?
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(4) End of Dual Track Process. A major complaint has been that banks simultaneously proceed with
foreclosure while negotiating loan mods. So what do the banks propose to do about that here? They
are offering that a loan will not be "referred" to foreclosure if (a) all documentation necessary for a mod
review is submitted and (b) a mod decision has not been made. That's a really small concession.
Notice what it doesn't cover. It doesn't mean that foreclosures in process will be halted, only that the
process won't be started. There's also the question of whether the referral will have magically
"happened" before the documentation is received. Oh wait, that document is an certified original, not
an original certified copy, so your documentation isn't complete. Sorry....
(5) Borrower portal for electronic document submission. I actually like this idea and had this is
something that the Congressional Oversight Panel had suggested in a foreclosure report. But there's
absolutely nothing that prevents servicers from doing this right now. This is hardly some big
concession. In fact, they've had just such a portal sitting in the garage for months via Hope Now.
(6) Forgiveness of short sale deficiencies. The banks are promising to try to forgive deficiencies
associated with short sales. Uh, isn't that what a short sale is--the bank agrees to take the sale price in
satisfaction of the debt? So what does is actually being promised here?
(7) Affidavits. The banks are promising that affidavits will be sworn out by affiants with knowledge of the
facts and in compliance with applicable state law, etc. In other words, that they'll comply with the law.
Note how that differs from the AG proposal, which would have required various affidavits not only when
required by law (as in judicial foreclosures), but also in nonjudicial foreclosures. A lto of commentators
wrongly criticized the AG proposal for simply requiring compliance with the law without recognizing that
it was expanding the affidavit requirement. The AGs were requiring something more; the banks are just
saying that they'll follow the law. Once again, "trust us."
(8) Chain of Title. I've saved my favorite for last. Here's what the proposal says:
Servicer shall implement processes reasonably designed to ensure that Servicer has properly
documented an enforceable interest in the promissory note and mortgage (or deed of trust) under
applicable state law, or is otherwise a proper party to the foreclosure action (as a result of agency or
other similar status), including appropriate transfer and delivery of endorsed notes (which may be
endorsed in blank) and assigned moretgages or deeds of trust at the formation of a residential
mortgage-backed security, and lawful endorsement and assignment of the note and mortgage or deed
of trust to reflect changes of ownership, all in accordance with applicable state law.
My initial read was, wow, they're saying that their going to make sure that chain of title is proper. But
then I started to wonder about this. So it would require a process to document an enforceable interest.
What does that mean? Does it mean that the servicer will provide the court with a statement of chain of
title? That's not what's required, here, though. This seems to be an internal control process.
Page 2575 of 3826
Then I read further. This would seem to giving a blessing to endorsement of notes in blank. As a
generic matter, as I've said before, that's fine. But if the PSA calls for something different, that's a
problem. So it looks as if the servicers are trying to use the settlement as a way to change the legal
requirements regarding the transfers of mortgages. Neither the Feds nor the AGs have the power to
grant that, however.
There is this interesting language about "appropriate transfer and delivery of endorsed notes and
assigned mortgages...at the formation of a residential mortgage-backed security." Is that a concession
that transfers that occur after the closing date are invalid? I can't imagine so, so I'm puzzled by this.
And then there's the "all in accordance with applicable state law." I might be seeing a problem where
there isn't one, but I worry that this is an attempt to change the applicable law in foreclosure litigation.
The "applicable state law" phrase is used twice in this paragraph. First it is used in reference to the
promissory note and mortgage. That would be the state law of the state where the property is located.
But the state law governing the "appropriate transfer and delivery" of the notes and mortgages is not the
state law of the property situs. It's the state law of the state governing the PSA (most likely New York).
The way this paragraph is phrased, however, one would think that "applicable state law" would refer to
the same state both times its used, and by using it first in reference to the situs state for the property, it
would prime a reader to think that the situs law governs the transfers.
There are lots of other points to criticize with this counterproposal, but it's hardly worthwhile doing so-it's such an obvious in-your-face document that it's really not worthwhile engaging with serious. This
isn't the basis for a good faith discussion of mortgage servicing reform. It's simply another part of the
banks' strategy to run the clock and thereby avoid doing principal reductions--that's what will cost them
the big bucks, not a $20B fine.
Back to Top
Naked Capitalism
Banksters Mortgage Counteroffer Makes a Further Mockery of Fraudclosure Settlement Negotiations
April 1, 2011
By Yves Smith
Page 2576 of 3826
It should really be no surprise that the banksters have the temerity to take a weak mortgage fraud
settlement proposal, advanced by the 50 state attorneys general and various Federal agencies, and
water it down to drivel. Since March 2009, when the Obama administration cast its lot with them, major
financial firms have become increasingly intransigent. And this has proven to be a winning strategy,
since Obamas pattern over his entire political career has been to offer proposals that dont live up to
their billing, then eagerly trade away what little substance was there in the interest of having bragging
rights for yet another achievement. The degree of exaggeration involved is roughly equivalent to him
claiming hed bedded every woman he had ever met for coffee.
To recap the state of play: early in March, American Banker published a leaked copy of a 27 page term
sheet presented by the 50 state attorneys general (more accurately, Iowa state AG Tom Miller
representing the Administration and negotiating against the AGs on its behalf), the Department of
Justice, and various Federal regulators. Yours truly, Karl Denninger, and various other quickly derided
it. All it did was require servicers to obey existing law plus two additional requirements: end the socalled dual track, in which banks keep the foreclosure process moving forward in parallel with the
modification process, and establish single point of contact, which means that homeowners in mod
discussion would deal with a single person at the servicer, or if that person was not available, a
supervisor. Tom Adams also pointed out that the various obey the law demands in this settlement
proposal less stringent than the terms of a 2003 consent decree with miscreant servicer Fairbanks,
which other in the industry understood to represent the new standard for conduct. So now it appears the
exercise is defining deviancy down to the bare minimum level and waiting for the industry to ignore it as
before (admittedly, after Fairbanks, the servicers cleaned up their acts for a while, but it was not very
costly in a low-delinquency/default environment).
Note we said we didnt think single point of contact was either doable or necessary; the chaotic process
many borrowers many borrowers suffered under HAMP was the result of both a servicer dog ate my
homework effort to lose documents to sabotage mods, plus real, longstanding software platform
problems. Youd have to address the operational issues as a precondition of implementing single point
of contact, and if the servicers did that, there would be no excuse for the sort of dropped balls that led to
demands for dual track in the first place.
Our recommendation to the attorneys general was to run, not walk, from this proposal. Anyone in a
state where voters were suffering as a result of foreclosures would be certain to pay a political price for
a settlement deal designed to provide adequate optics to allow the Administration declare peace with
honor while giving the banks yet another reward for criminal misconduct.
So now to the banks counteroffer (for the record, it appears Matt Stoller made it public). It isnt just
even worse, which was to be expected, its insulting:
March 28, 2011 Bank Mortgage Fraud Settlement Proposal
Whats striking is the utter lack of any teeth or any procedural requirements. The banks position is that
they are to be trusted after having demonstrated again and again that theyll take anything that is not
Page 2577 of 3826
nailed down. It is drafted wherever possible to make current practices fall within the settlement, which
means the settlement is a total whitewash. Start with the very first point under II A above. The
servicers have already done that as a result of the robosigning scandal, or at least thats what theyve
said over and over in Congressional testimony and to the media. Do we know whether these processes
go far enough? The banks position is that its not the AGs or the Federal governments business. By
contrast, the AG/Federal proposal required training, providing sworn statements supporting the
borrowers right to foreclose in non-judicial foreclosure states, clear indication on affidavits as to who
the employer was (clarifying the relationship of anyone relying on corporate authorizations), specific
requirements as to payment application (as in no holding checks, no use of undisclosed suspense
accounts). Aside from the sworn statements in non-judicial states and the training requirements, the
other items are basically recastings of current requirements. But the banks refuse to concede even that.
They are shooting for a settlement standard at or where possible BELOW that of current law (and since
that hasnt been enforced with any seriousness either, why should they worry?). A lot of belt and
suspenders reaffirmation of current law and contractual requirements is gone, such as no fee
pyramiding. For instance, get a load of this:
Servicer shall provide accurate information to borrowers relating to its loss mitigation programs.
Translation: We wont engage in consumer fraud as far as providing loss mitigation program information
is concerned.
There are some items that are noteworthy, nevertheless:
Chain of title. The original proposal set forth various requirements regarding chain of title, such
identifying the holder, custodian, location of the original note, as well as interim assignments. as
providing borrowers in non-judical foreclosure states with a certification. Again, if the banks had been
meeting their legal requirements, this should already be in place. But see this curious section in the
counterproposal:
Exactly how can the servicer .assigned mortgages or deeds of trust at the formation of the residential
mortgage backed security? Do these servicers have a time machine? And the servicer was never part
of the original conveyance chain; even if the deal was conducted within the same organization,
Countrywide as originator is not the same legal entity as Countrywide as servicer. Moreover, as many
borrowers know, servicing rights have often been assigned, further complicating any time machine
operation by putting the servicer at an even further remove from the original transaction. Or is this some
sort of weird legalese that authorizes backdating of documents? I cant imagine they are brazen enough
to try to get cover for that sort of operation, but I am also struggling to understand the intent of a
nonsensical-looking piece of drafting that was clearly reviewed by a ton of very big ticket lawyers.
Single point of contact. The banks do Orwell proud:
Page 2578 of 3826
Servicer will establish a single point of contact, which may be more than one person
Breathtaking. So what is a single point of contact? A phone number? Well, later it does say, SPOC will
remain assigned to borrowers account and available. But since SPOC can be whatever the banks
want it to be, dont hold your breath.
Dual track. The banks have cut back the AG/Administration proposal to mean very little. The bank
merely has to not foreclose (as in it can keep the process moving forward up to the final step) IF the
borrower has completed all documentation and a mod decision is pending or the borrower is in a trial
mod and current. The banks do agree to establish a third party portal..butgiven the frequency with
which my insurer rejects perfectly good medical claim form on the bogus basis that they didnt scan
correctly (!), dont think that there isnt room for abuse here.
There are some other losses in the language that I dont think would have meant much in practical
terms, such as an affirmative obligation to do loan modifications, and mention of that ugly word,
principal modifications. The controversial requirement to do pro-rata writedowns of second liens has
also been scotched.
This was Tom Adams reaction:
When I first saw the proposed settlement from the AGs a few weeks ago, I said that it looked like the
AGs had simply taken dictation of the servicers wish list for a settlement. Little did I know Now that I
ve seen this I am shocked at how similar the documents look.
In sum, this is embarrassing. The banks put in phrases like reasonable efforts which they already
argue they are taking, promise to make best efforts to do better, and chalk it all up to a big
misunderstanding and a lot of burdensome paperwork. The Administration and AGs basically agree.
They all hope that the process will help make the headlines go away after the promised quid pro quo
(Miller to head CFPB etc) occurs.
In the meantime, the issue is effectively stalled while it is investigated and studied so JPM and
others can pretend their balance sheets are fine and get approval for their dividends. Of course, having
the banks pay dividends is an important national security interest for the recovery of the economy.
This document, and its AG doppleganger, are further proof that the banks have won the engagement
the politicians were all effectively captured (and the investments in them were all successful). Perhaps
a few solo AGs can make some headway and some private litigants might draw a little blood here and
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there. But the political battle is over.
On the one hand, Tom affirms the point made in the post: when you consider the backdrop of existing
law on these topics, the substantive differences arent as great as they appear to be between the weak
proposal and the abominable counteroffer. But the flip side is the language in deals more often that not
reveals the attitude of the principals (either directly or via the sort of counsel they chose to represent
them). And this proposal says the banks are telling the public to go to hell.
Update 8:00 AM: Adam Levitin, who was more positive about the AG/Administration proposal than I
was, shreds the counteroffer. His whole post is worth reading, and I though Id extract his section on the
chain of title issues, where he puzzles over the same section that bothered me:
My initial read was, wow, theyre saying that their going to make sure that chain of title is proper. But
then I started to wonder about this. So it would require a process to document an enforceable interest.
What does that mean? Does it mean that the servicer will provide the court with a statement of chain of
title? Thats not whats required, here, though. This seems to be an internal control process.
Then I read further. This would seem to giving a blessing to endorsement of notes in blank. As a
generic matter, as Ive said before, thats fine. But if the PSA calls for something different, thats a
problem. So it looks as if the servicers are trying to use the settlement as a way to change the legal
requirements regarding the transfers of mortgages. Neither the Feds nor the AGs have the power to
grant that, however.
There is this interesting language about appropriate transfer and delivery of endorsed notes and
assigned mortgagesat the formation of a residential mortgage-backed security. Is that a concession
that transfers that occur after the closing date are invalid? I cant imagine so, so Im puzzled by this.
And then theres the all in accordance with applicable state law. I might be seeing a problem where
there isnt one, but I worry that this is an attempt to change the applicable law in foreclosure litigation.
The applicable state law phrase is used twice in this paragraph. First it is used in reference to the
promissory note and mortgage. That would be the state law of the state where the property is located.
But the state law governing the appropriate transfer and delivery of the notes and mortgages is not the
state law of the property situs. Its the state law of the state governing the PSA (most likely New York).
The way this paragraph is phrased, however, one would think that applicable state law would refer to
the same state both times its used, and by using it first in reference to the situs state for the property, it
would prime a reader to think that the situs law governs the transfers.
There are lots of other points to criticize with this counterproposal, but its hardly worthwhile doing soit
s such an obvious in-your-face document that its really not worthwhile engaging with serious. This isnt
the basis for a good faith discussion of mortgage servicing reform. Its simply another part of the banks
strategy to run the clock and thereby avoid doing principal reductionsthats what will cost them the big
bucks, not a $20B fine.
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Note the press reports I read never said the leaks to say that the principal mods would be in addition to
the $20 to $30 billion settlement figure bandied about, that instead they might be in lieu of them. But
since other reports made clear that the thinking was changing on an almost daily basis, who knows
what the plan is now.
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Naked Capitalism
Cease and Desist Orders as Regulatory Theater in Mortgage Settlement Negotiations
April 4, 2011
By Yves Smith
I must confess to being puzzled last week by an American Banker article that claimed that Federal
banking regulators were looking to send out cease and desist letters to serviers as a way to light a fire
under banks who were dragging their feet at the now somewhat infamous so called settlement
negotiations among 50 state attorneys general, various Federal regulators, the Department of Justice,
and the major banks/servicers.
Now on the surface, this sounds sensible. The banks are not cooperating, so pull out a big gun and if
needed, use it on them. But American Banker provided a link to the form of the cease and desist order
and it looks remarkably weak. Its requirements are far less demanding than those set forth in the famed
27 page settlement draft that was presented by the AGs and the Federal authorities to the banks.
Its important to stress that a threat of action that is weaker than what you are demanding in a
settlement makes no sense in a negotiating context. Its like offering to settle a lawsuit for $500,000
when the case only asks for $250,000 in damages. No one would accept the settlement, theyd either
fight in court or accept a default judgment.
Now some of my correspondents were of the view that a cease and desist order was a serious matter,
so this might create a frisson in the press if this comes to pass. But this is simply not a very serious
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cease and desist order. Adam Levitin, who replied by e-mail and then amplified his view in a post,
confirmed my instincts:
The draft C&D order is a regulatory equivalent of a Potemkin Village.On the surface it looks like a
very serious thingC&D orders are an extraordinary regulatory response in the banking world, where a
lot of regulation is done informally.But when one looks at the substance of the C&D order, one is
struck by how empty it is. All sizzle, no steak.
The C&D order basically tells banks to set up lots of internal procedures and controls within the next
few months and then to tell their regulators what they have done. The result, I suspect, is that in a few
months the bank regulators will declare that everything is fine.
(Even if the regulators think the internal controls are inadequate, its not clear what the consequence
would be. My guess is that it just results in the bank regulator telling the bank to revise and resubmit.)
By far the most interesting bit in the draft C&D order is the bit requiring the banks to engage
independent foreclosure review consultants to review certain foreclosures that took place in 20092010. There is no specification as to which foreclosures are to be reviewed or precisely what the
standards for review are. But thats all kind of irrelevant. Who do you think the banks are going to
engage to do these reviews? Someone like me? Not a chance. Theyre going to find firms that signal
loud and clear that if they get the job, they wont find anything wrong. Its just recreating the auditor
selection problem, but without even the possibility of liability for a crony audit.
Frankly, this sort of regulatory outsourcing is pretty astoundingthe OCC has resident examiner teams
at the major servicer banks. Shouldnt they be the ones auditing the internal controls and performance,
not a third-party compensated by the bank? (Oh wait, I forgot that the OCC is paid by the banksits
budget comes from chartering fees and assessments on the banks is regulates. Indeed, I was struck in
some places by the linguistic similarities between the proposed C&D order and the banks
counterproposal to the AGs. Its impossible to know who was cribbing from whom, but the similar
language is revealing.)
The interesting part here is the question of who is behind this C&D order, assuming it goes ahead. Per
the reading above, this looks designed to undermine the settlement negotiations. But the American
Banker article claims that:
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Frustrated by the lack of progress with a global settlement between the 50 state attorneys general and
the top mortgage servicers, federal banking regulators are expected to move forward with their own
enforcement actions against 14 servicers as early as next week.
That seems completely implausible. But the reports on which Federal agencies are actually supporting
the negotiations have been inconsistent, and there is clearly a split among banking regulators, which
raises the question as to who is behind this leak to American Banker.
The CSFB is clearly an active player in the settlement process, and weve been told that Sheila Bair is
too, so at least those two banking regulators are trying to move the negotiations forward. The FTC and
the DOJ were in on the session with the banks last week, as were representatives of the Treasury
(which may be CSFB designees rather than permanent Treasury staffers). And the OCC has been
reported to have gone rogue and is opposed to the talks.
If I were a betting person, Id say this is an OCC rearguard action, which might even have quiet
Treasury and Fed support, since they are also terribly bank friendly. But Im open to reader views as to
how to square this circle.
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Baltimore Sun
Credit card protection: Is it worth it?
Study says costs of product are not in line with benefits
March 28, 2011
By Eileen Ambrose
American credit cardholders are known for running up debt. Now they are also spending billions of
dollars annually to make sure their monthly bill gets paid even if they lose their jobs or some other
hardship strikes.
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But a new government report shows that the price consumers pay for this debt protection may be too
much for the benefits they receive.
The Government Accountability Office reports that consumers shelled out about $2.4 billion in 2009 to
the nine largest credit card issuers for debt protection products. For every $1 cardholders paid in fees,
they received 21 cents of benefits. Meanwhile, the card issuers earned 55 cents, before taxes, on every
dollar of fees.
Debt protection products generally promise to suspend monthly minimum payments or cancel balances
in the event of an illness, unemployment or the death of the cardholder. Fees are tied to the account
balance and can amount to hundreds of dollars a year. At that price, consumers likely are better off
paying down their balance or putting the money in an interest-bearing account that can be tapped in an
emergency.
Monthly fees among the major players, according to the GAO, range from 85 cents to $1.35 for every
$100 of debt. On a $5,000 balance, consumers could end up paying $510 to $810 a year.
The irony is that those with high card balances are more likely to be struggling financially. "Usually, the
people who can afford the least will pay the most," says Curtis Arnold, founder of the card-comparison
site CardRatings.com.
The GAO recommends that the new Consumer Financial Protection Bureau educate consumers about
debt protection products and look into the cost and benefits to the cardholder.
Credit card issuers have pitched this protection for decades.
Early on, they offered credit insurance through an insurance company. States oversee this insurance so
the regulations including caps on premiums can vary across the country.
But in the past decade, card issuers started offering their own debt protection products that come under
federal oversight. While that means the regulations are the same across all states, federal regulators
don't address the cost of the products to consumers, the GAO says. Some consumer advocates say
card issuers raised fees once they were no longer restricted by state insurance regulations.
Credit insurance and debt protection products can safeguard credit ratings when consumers go through
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tough times, and consumers have lodged few complaints, the GAO notes. Moreover, 70 percent of
benefit claims were paid in 2009, according to the GAO study. (However, nearly one in four claims were
denied, often because consumers didn't provide documentation of their hardship.)
The American Bankers Association and its affiliate, the American Bankers Insurance Association,
released a joint statement saying it's difficult to measure the peace of mind that debt-protection
products provide.
"Ultimately, customers are in the best position to determine the utility of the products for their personal
financial decisions," the groups said.
But customers are not in a position to easily make that determination before they sign up. The GAO
says it called the nine credit card issuers to get a copy of the terms and conditions and seven of
them said they wouldn't disclose that information until a consumer was enrolled in the product.
"It's a hard product to evaluate," says Birny Birnbaum, executive director for the Center for Economic
Justice, an advocacy group. "Consumers have a hard time understanding."
Cardholders could be ineligible for the benefit and not realize it. For example, they could be disqualified
for the protection even after losing a job if they worked only part time, the GAO says.
Instead of buying debt protection, consumers have other options. If you lose a job or suffer some other
financial hardship, contact the card company to work out a payment plan, says Arnold of CardRatings.
com.
Some consumers might be tempted to buy debt protection because they worry about dying and leaving
loved ones stuck with their credit card debt. But survivors won't be held accountable for the debt unless
their names are on the account, too, says Jeff Gonya, a Baltimore estate planning lawyer.
Gonya suggests that if people are worried about leaving behind bills, they should buy life insurance that
will cover more than just a credit card debt.
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Page 2585 of 3826
American Banker
Facebook and Google Encroach on Banks Turf
April 4, 2011
By Jeremy Quittner
Facebook Inc. and Google Inc. are poised to go head to head with established financial services
companies in online payments.
Both Internet companies have developed alternative payment networks that observers say could
undermine the scale of dominant payments providers like MasterCard Inc. and Visa Inc.
The Google and Facebook payments initiatives are potentially a "major disruptor to existing payment
systems that have been so established for such a long time," said Jacob Jegher, a senior analyst at the
research firm Celent.
Google has assembled pieces of a payment network through its Google Checkout and through last
year's acquisition of Jambool Inc., whose Social Gold is used by application developers as currency to
make payments within apps. Facebook is challenging the incumbents of the space with its Facebook
Credits and a new subsidiary called Facebook Payments Inc.
Industry experts say the current payment environment is reminiscent of the early days of Web
commerce, when dozens of companies emerged and quickly perished in an attempt to become
the Web equivalent of cash.
Though credit cards ultimately became the preferred method of payment online, PayPal Inc., now a unit
of eBay Inc. of San Jose, Calif., emerged as an important alternative payment provider, and it controls
one in five payments on the Web today.
Recent moves by Facebook and Google demonstrate that there is room even in today's mature Internet
for new players to snare a portion of online spending.
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Demonstrating that Facebook is serious about developing the payments market for its Credits, the
company quietly established its Facebook Payments subsidiary in Tallahassee, Fla., on Dec. 10.
Facebook would not elaborate on the purpose of the subsidiary other than to say the company planned
to use it for processing Credits, its online currency.
"As is common in many company structures, we have established a subsidiary called Facebook
Payments Inc. that helps handle payments to developers related to our Facebook Credits program," a
Facebook spokesman said.
Analysts said that Facebook Payments may also be part of a strategic plan to disintermediate the
banks, which handle the estimated hundreds of millions of dollars worth of payments that Facebook
gets from its advertisers.
"Facebook wants to monetize the potential commerce that will happen, or that it wants to have happen,
on its platform," said Ron Shevlin, a senior analyst at Aite Group LLC in Boston.
And Facebook plans to have a lot more activity on its payment platform besides advertising. Starting in
July, it will also require game developers to accept in-game payments in Credits.
That, experts said, is potentially a significant money-making opportunity because, according to

Facebook, it extracts 30% for all transactions that use Credits.
"That is a very hefty premium for a payment service; this is really Facebook providing an environment
that allows vendors to essentially bring their products to market to a ready-made group of customers
100 million strong," said Steve Ledford, a partner at the consulting firm Novantas LLC in New York.
Ledford said that while the Credits marketplace is dominated by game vendors, Facebook could easily
recruit other merchants.
The privately held Facebook does not disclose its financials, but according to one estimate from 2009, it
was generating $550 million of annual revenue, of which $75 million came from virtual payments.
Google's strategy appears more consistent than Facebook's, experts say, but no outsiders claim to fully
understand what the search engine juggernaut is planning.
Although Google froze Jambool's operations when it acquired it in August, it has announced on the inapp payment company's website that it plans to reactivate the business in September.
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"Google has been playing in the smartphone space and it is working in near-field communication and
mobile payments," said Brian Riley, a research director in the bank cards practice at TowerGroup. "This
is a logical progression."
Google said by email that it would not discuss Jambool or Social Gold at this time.
Industry analysts said Google could easily combine its Checkout function, which exists as a payment
option for hundreds of thousands of merchants, with Social Gold.
"With the purchase of Jambool, we will assume [Google] will roll this functionality with Checkout," said
David Furlonger, a fellow and vice president of industries research at Gartner Inc. in Stamford, Conn.
Google announced in late March that developers on its Android smartphone platform could begin
charging for upgrades from within the application using Google Checkout.
Celent's Jegher said the ability to pay from within an application is critical and that it would benefit
Google to have control of those payments. Without Social Gold, smartphone users might use a rival's
service, such as PayPal.
Furlonger said Google and Facebook may become a bigger threat to banks if their payment systems
develop into options at the point of sale.
In September, Target Corp. began selling Facebook Credits on gift cards. Today, these cards are
available at Wal-Mart Stores Inc., Best Buy Co. Inc., Safeway Inc., RadioShack Corp. and GameStop
Corp., Facebook said.
And in March, Warner Bros. Digital Distribution began accepting Facebook Credits for online movie
rentals.
"Banks continue to view traditional money as the only medium for exchange, and they need to think
carefully if that traditional medium is the only one that is most important to their client base," Furlonger
said. "They might want to demonstrate to their clients that they can coordinate the different financial
assets, or equivalent assets."
Facebook and Google's payments strategies have significant differences, which will determine how
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each develops alternative payments. Experts said people generally visit Google to go somewhere else.
But they visit Facebook as a destination, and more than 500 million use the site. As such, Facebook
has a huge captive audience, Ledford of Novantas said.
Five hundred million "is a lot of people," Ledford said. "It is a place in its own right where banks will want
to offer their services."
By contrast, Google might position its payments as an alternative to Facebook's, enabling smaller social
networks like Foursquare, LinkedIn and Myspace to conduct transactions without having to set up their
own payment networks.
"Google certainly has the capability and scope to be the common currency for the other social
networks," said Nicole Sturgill, a research director at TowerGroup in Needham, Mass.
"If they want to sell, they will have to have a way of moving money, and if it is going to be virtual, they
will need an organization that spans the Web," Sturgill said.
Back to Top
Washington Post
Wachovia jumps into the swipe fee fight
April 3, 2011
By Danielle Douglas
Wachovia, the Washington areas largest bank by deposits, has ended its debit rewards program for
new customers out of concern that a pending cap on interchange fees what banks charge merchants
for debit card transactions will make the discounts unaffordable.
Rewards, earned from an accumulation of points received through debit card purchases, are often
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enabled by a percentage of the revenue from so-called swipe fees. With the Federal Reserve bent on a
70 percent reduction of the current average fee of 44 cents per transaction, a growing number of banks,
including SunTrust, are terminating or their debit card rewards.
Proponents of the cap decry the move as another banking scare tactic, following ATM fee hikes and
threats to impose debit card spending limits, to sway congressional support to kill the law. Financial
institutions argue, however, that they are being forced to compensate for an anticipated loss of billions
in revenue.
Consumers used debit cards in nearly 38 billion retail transactions valued at $1.45 trillion in 2009,
according to the most recent data from the Fed. That year, banks collected roughly one percent of each
sale, raking in approximately $16 billion.
The proposal on the table for interchange rates would approximately reduce our [interchange] revenue
anywhere from 75 percent to 95 percent, said Michael Golden, Wachovias regional president for
Greater Washington. At the [proposed] cut rate, the fee is not even enough to cover the cost of
providing the service, processing the transactions and managing the fraud element.
Wachovias decision took effect March 27, with its parent company, Wells Fargo, to follow suit on April
15. Existing rewards members are unaffected, though that may change once the Fed hands down the
final rules on the cap.
The agency, tasked by the Dodd-Frank Act to reform interchange fees, was scheduled to issue rules on
April 21, with the law to take hold in July. Chairman Ben S. Bernanke said last week, however, the Fed
will likely miss the deadline as it investigates the barrage of comments elicited by the controversial plan.
The announcement comes as the banking lobby is urging politicians to do more study before enacting
the law. To that effect, Sen. Jon Tester (D-Mont.) recently introduced a bill calling for a one-year study
of the fees, claiming the cap may shift costs to consumers.
Merchants say consumers are already being burdened by prices that are driven up as a result of swipe
fees. If anything, implementing the cap, they argue, could draw down prices. Whats more, the money
merchants save could be reinvested into their businesses and used to create jobs.
The smallest retailers pay the highest fees [because] they dont have the income streams to buffer any
of those costs, argued Lyle Beckwith, senior vice president of government relations for the National
Association of Convenience Stores. Its prohibitive for small businesses.
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Back to Top
American Banker
Small Win Aside, Court Challenge to Mortgage Broker Pay Rule Still a Long Shot
April 4, 2011
By Kate Berry
Despite an 11th-hour reprieve that delayed the Federal Reserve's loan officer compensation rule from
taking effect at least until Tuesday, the mortgage industry's chances of overturning the rule are slim.
"Anytime you're suing a federal agency over a rule, it's always a long shot," said Glen Corso, managing
director of the Community Mortgage Banking Project, which represents small lenders.
In granting a stay Thursday the day before the rule was scheduled to take effect the U.S. Court of
Appeals for the District of Columbia said it needed more time to review the merits of an appeal by two
broker trade groups. The court did not schedule a hearing on the motions.
"The court said there was enough to look at and they needed a little more time, but folks shouldn't read
into it that the court will decide for the plaintiffs," said Richard Andreano, a partner at the law firm Patton
Boggs who is not involved in the case.
Lawyers said the court is likely to focus on the National Association of Mortgage Brokers' challenge of a
narrow section of the rule. (The National Association of Independent Housing Professionals, the other
plaintiff in the consolidated case, challenged the rule in its entirety.)
The section, the NAMB said, can be read as forbidding brokerages to pay their employees commissions
when a consumer pays a commission to a brokerage, while allowing banks to pay commissions in such
cases. Such a ban, the group said, would cause brokerages "irreparable harm."
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This much is clear: The rule allows a mortgage broker or loan officer to be paid by the borrower or the
lender but not both. The rule bans any compensation tied to the interest rate or any other term or
condition of the loan. It also forbids brokers to "steer" a consumer to a lender offering less-favorable
terms in order to increase the broker's pay.
"The Fed's rationale was that if the consumer is paying the originator directly and it's negotiated
between the two parties, then the originator cannot be compensated from any other sources," said
Corso, whose trade group filed a friend-of-the-court brief supporting the plaintiffs. "In such a transaction,
the brokerage firm and the employee are both originators and the rule says you can't collect from two
sources, which implies that the employee loan officer cannot be compensated."
Francis X. Riley, a partner at Saul Ewing LLP, one of three law firms representing the NAMB, said the
rule will put a majority of small mortgage brokerages a category that he said accounts for 10% of all
loan originations out of business. "This rule will leave consumers to rely primarily on loan origination
sources that the [Federal Reserve] Board has conceded many times costs the consumer more money,
with less-flexible terms," he said.
Riley said he was "upset" that the lower U.S. District Court had found that brokers would suffer
"irreparable harm" from the section in question, but chose not to issue a restraining order. The rule will
result "in the loss of tens thousands of jobs," he said.
The Fed has until noon Monday to file a response and the broker groups have until 10 a.m. Tuesday to
counter it. Lawyers expect a quick response by the court.
Back to Top
Palm Beach Post

Foreclosure crisis: Fed-up judges crack down on disorder in the courts
April 2, 2011
By Christine Stapleton and Kimberly Miller
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Angry and exasperated by faulty foreclosure documents, judges throughout Florida are hitting back by
increasingly dismissing cases and boldly accusing lawyers of "fraud upon the court."
A Palm Beach Post review of cases in state and appellate courts found judges are routinely dismissing
cases for questionable paperwork. Although in most cases the bank is allowed to refile the case with
the appropriate documents, in a growing number of cases judges are awarding homeowners their
homes free and clear after finding fraud upon the court.
Still, critics say judges are not doing enough.
"The judges are the gatekeepers to jurisprudence, to the Florida Constitution, to access to the courts
and to due process," said attorney Chip Parker, a Jacksonville foreclosure defense attorney who was
recently investigated by the Florida Bar for his critical comments about so-called "rocket dockets" during
an interview with CNN. "It's discouraging when it appears as if there is an exception being made for
foreclosure cases."
In February, Miami-Dade County Circuit Judge Maxine Cohen Lando took one of the largest foreclosure
law firms in the state to task in a public hearing meant to send a message. She called Marc A. BenEzra, founding partner of Ben-Ezra & Katz P.A., before her to explain discrepancies in a case handled
by an attorney in his Fort Lauderdale-based firm.
"This case should have never been filed," said Lando, who referred to the firm's work on the case as
"shoddy" and "grossly incompetent." She called Ben-Ezra a "robot" who filed whatever the banks sent
him, and held him in contempt of court. She then gave the homeowner the home - free and clear - and
barred the lender from refiling the foreclosure.
Attorney Maria Mussari, who represents the homeowner, said she wasn't surprised.
"She has become a voice for other judges," Mussari said. "If judges crack down on following the rules,
we'll still have foreclosures, but maybe the banks will pay attention and do it right."
Mussari said it's taken a while for the courts to wake up to the foreclosure disorder because
homeowners were largely unrepresented and judges overwhelmed.
"It's not that they don't care," she said. "They have thousands of cases on their docket and it's the same
thing over and over again."
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Ongoing scrutiny by the FBI, the Florida attorney general, the Florida Bar, the media and defense
attorneys has uncovered countless examples of forged signatures, post-dated documents, robo-signing
and lost paperwork.
As a result, defense attorneys are filing more motions challenging the documents. That means judges
must spend more time reviewing documents and holding hearings. The situation was complicated last
week when attorney David J. Stern, who operated the largest so-called foreclosure mill in Florida, sent
letters to the chief judges of Florida's 20 circuit courts announcing that he intended to violate court rules
and dump 100,000 foreclosure cases without a judge's order.
"We no longer have the financial or personnel resources to continue to file Motions to Withdraw in tens
of thousands of cases that we still remain as counsel of record," Stern wrote, suggesting that the judges
treat the pending cases "as you deem appropriate."
Last year, Florida lawmakers gave the courts $6 million to hire senior judges and case managers to
reduce the foreclosure backlog. Since the money was awarded July 1, judges have cleared nearly
140,000 cases. As of the end of February, 322,724 foreclosures were still in the system.
But clearing backlogs isn't what judges should be focused on, said University of Miami Law Professor A.
Michael Froomkin .
"Substantive justice still needs to be done, and that's very hard sometimes," Froomkin said. "When I
read stories about judges looking at things more carefully and holding attorneys accountable, to me, the
system is doing what it needs to do."
A closer inspection of cases by judges would slow down the foreclosure train, but the result may be
preferable to mere expediency.
"Justice," Froomkin said. "The outcome, I hope, is justice."
Alan White, a law professor at Valparaiso University in Indiana, who has studied the foreclosure issue
nationwide, said judges had few reasons to doubt banks in the beginning of the foreclosure avalanche.
"They had a lot of credibility," White said. "Now, when a bank says it owns a mortgage, judges are
skeptical."
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White said a smattering of "maverick" judges began poking holes in foreclosures years ago before the
media and lawmakers seized on problems in the fall. The judicial momentum has built since then.
"The combined impact will clearly be to change practices and to reduce the amount of corner-cutting the
banks and their lawyers are engaged in," White said. "It could mean foreclosures get slower. It could
also encourage banks to pursue alternatives to foreclosure."
The professors agree it's difficult for judges to pick out problems in foreclosure cases that are
undefended. Homeowner advocate is not their role.
"They don't fix things," Froomkin said. "They decide cases."
-----
Judges question the process and they let the foreclosure attorneys have it.
From a Feb. 11 hearing in Miami-Dade regarding a Homestead foreclosure. The hearing ended with
Judge Maxine Cohen Lando finding attorney Marc A. Ben-Ezra in contempt.
Lando: 'I dont care what the banks your clients are telling you. Your job is to give your clients
legal advice and youre not doing it. You are acting as a robot for a plaintiff who is not even giving you
the information you need to file a proper foreclosure.
Lando: 'This level of practice is shoddy. It is grossly negligent. It is worthy of a judge looking at, and
saying, what is going on here? How dare you file something like this.
From a May 6 hearing in Miami-Dade. The hearing ended with Judge Jennifer Bailey awarding the
home to the owner and barring the lender from attempting to foreclose again on the condo.
Bailey: 'And see, the really interesting thing to me as a judge is in no other species or kind of law would
that be remotely acceptable, or, frankly, anything short of malpractice. But somehow in Foreclosure
World everybody thinks that thats just fine, that you all can know absolutely nothing about your files
and walk in here and ask judges for things left and right without even knowing whats going on.
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From an April 7 hearing in Pinellas County. Judge Anthony Rondolino set aside his prior ruling awarding
summary judgment to the bank.
Rondolino: 'I dont have any confidence that any of the documents the courts receiving on these mass
foreclosures are valid.
Back to Top
Wall Street Journal

Foreclosure-Prevention Plans Show Limited Impact
April 2, 2011
By Andrew Ackerman
WASHINGTONTwo pieces of the Obama administration's foreclosure-prevention plan have assisted

fewer than 30,000 borrowers, according to data released for the first time Friday, adding to mounting
evidence that the program has done little to turn around the foreclosure crisis.
The Treasury Department said Friday that only 17,000 homeowners have received modifications for
second mortgages such as home-equity loans.
That compares with 557,000 borrowers that have received permanent modifications of first mortgages
through February. Treasury didn't say how many of those borrowers have second mortgages.
At the same time, about 10,000 borrowers entered into agreements with servicers in a related program
that provides banks with incentives to allow consumers to sell their homes for less than the total
mortgage amount to avoid foreclosure.
Page 2596 of 3826
Only about 4,500 homeowners have completed that program, Treasury said.
The administration's efforts to combat foreclosures have come under increasing fire on Capitol Hill, with
House lawmakers voting earlier this week to end the government's flagship Home Affordable
Modification Program.
But Treasury officials said the data on both pieces of the administration's overall plan, known as the
Making Home Affordable Program, "underscore the importance of continuing our efforts to help families
stay in their homes."
"Each month, the administration's Home Affordable Modification Program helps over 25,000 additional
families avoid foreclosure, and it has set important standards that have led to more than two million
mortgage modifications outside of the program," said Timothy Massad, Treasury's Acting Assistant
Secretary for Financial Stability.
He also said Treasury is working to implement additional programs to assist families in the hardest-hit
states.
Most first-lien home loans are held by the government-controlled mortgage companies Fannie Mae and
Freddie Mac or by other investors in mortgage securities.
By contrast, banks hold most of the seconds and other junior-lien mortgages. About $1 trillion of juniorlien home mortgages were outstanding last year, according to Federal Reserve data. The majority of
those were held by commercial banks and the rest were owned by savings banks and credit unions.
Back to Top
Slate (The Slatest blog)
Page 2597 of 3826
Rove Group Creates Anti-Obama Wiki

April 4, 2011
A Republican group backed by Karl Rove has set up a wiki-style database of freedom of information
requests to highlight the Obama administration's shortcomings, reports ABC. Crossroads GPS
launched Wikicountability.org last week to display government documents obtained via FOIA request
and to note when such requests have not been fulfilled. (So far, there are still more than six [!]
outstanding FOIA requests, some dating to August 2010. The law requires that they be addressed in 20
days.) The information already up on the site shows the government spent money promoting the new
health care law and on travel for Consumer Financial Protection Bureau head Elizabeth Warren.
Crossroads GPS hopes to crowd-source both FOIA documents and their analysis through the wiki
model. "President Obama's record on FOIA doesn't come anywhere near his lofty rhetoric," said the
president of Crossroads, referencing the president's promise to "usher in a new era of open
government."
Back to Top
Daily Kos
A nation thats fixed is always broken
April 3, 2011
By Mark Sumner
Why do financial lobbyists spread fear about the new Consumer Financial Protection Bureau? It's not
because Elizabeth Warren is a tower of moral responsibility. There are plenty of good people trying to
do the right thing in government. Ms. Warren just happens to have landed in an organization whose role
has not yet been so circumscribed as to make it easily ignored. There's no reason to believe that the
new bureau will actually be given any teeth, but it just might. For the anxious criminals and would-be
warlords, that's enough to make Elizabeth Warren into a target.
Page 2598 of 3826

Subject: Re: Reminder
Just tried your office call me in the next 5 min if you get this
----- Original Message ----From: Glaser, Elizabeth (CFPB)
Sent: Mon Apr 04 10:39:50 2011
Subject: RE: Reminder
You are the best :) do you have 5 min (or less) to chat HUD too. There has been a development. It
could be like 2 min
-----Original Message----From: Lownds, Kevin (CFPB)
Subject: Reminder
Just a reminder to send me the FR notice draft before you leave for the Town Hall...
Page 2601 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Accepted: FW: HUD prep meeting

Mon Apr 04 2011 10:52:59 EDT
Page 2617 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

RE: Reminder
Mon Apr 04 2011 10:39:50 EDT
You are the best :) do you have 5 min (or less) to chat HUD too. There has been a development. It
could be like 2 min
-----Original Message----From: Lownds, Kevin (CFPB)
Subject: Reminder
Just a reminder to send me the FR notice draft before you leave for the Town Hall...
Page 2673 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

_DL_CFPB_AllHands

Mon Apr 04 2011 10:38:57 EDT

EW Meeting w Arizona Banks
EW Call time w Community Bankers

DSilberman Meeting w Pew Safe Checking Project
Staff attending NEFE Certification Forum
EVale Meeting w NCUA in Columbus, OH

EW Transparency Roundtable
Staff Meeting w American Bankers Association Mid-Sized Coalition
SAntonakes & PTwohig remarks at WHF Finance Panel
Page 2684 of 3826
Day 2 NEFE Certification Forum
Consumers Union Reception

Staff attending HOPE NOW Alliance Fly-In
Staff Meeting w Financial Education and Counseling Alliance

EW Keynote to Society of American Business Editors and Writers
EW Roundtable w Texas Faith Leaders
EW Meeting w Texas Community Bankers
RDate Meeting w Evercore Partners
DSilberman Meeting w Pentagon Federal
D Silberman Meeting w Prepaid Card Asso
Zixta Q. Martinez
202.435.7204
Page 2685 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:
How to organize your computer to find information faster

Mon Apr 04 2011 00:00:00 EDT
It's a great time to make sure your computer is cleaned up and ready for your next big project or
assignment. This article can help you get started.
View article...
Page 2688 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:
[email protected]
<[email protected]>
EVM is unable to login to mailbox 57399

Sat Apr 02 2011 12:58:22 EDT
EVM is unable to login to your mailbox! Please update your password Here
Page 2689 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:
Brown, Charles (CFPB)

(fydibohf23spdlt)/cn=recipients/cn=brownchar>
RE: pls pls confirm/deny FTE count? and if we don't know can you tell me that?
Fri Apr 01 2011 17:36:33 EDT
Sorry was so late on this. These are accurate.
Charles Brown
(p) 202-435-7137
for guidance.

To: Brown, Charles (CFPB)
Subject: pls pls confirm/deny FTE count? and if we don't know can you tell me that?
Charles - can you confirm these FTE counts? Sorry for the hassle --- but we really to need to figure
some stuff out and that would be very helpful!
RMR (Rulemaking)
Enforcement
Page 2690 of 3826
COO/
Consumer
Response
Education & Engagement
Bank
Supervision
Nonbank Supervision
OGC
External
Affairs
Approx.
Steady
State
40
150
150
50
31 (HQ)
30 (HQ)
40
21
Thanks!
E
Page 2691 of 3826
From:
To:

Cc:
Bcc:
Subject:
Date:
Attachments:
FW: Final Versions of FRS Documents

Fri Apr 01 2011 17:19:45 EDT
Presubmitted FRS Employee Questions 4-1-11.docx
FRS Town Hall Agenda_4-1-11.docx
FRS Town Hall Talking Points_for 4 4_4-1-11.docx
CFPB Frequently Asked Questions_FRS Transfers_General Internal_4.docx
QA External General_FRS Transfers_4.docx
CFPB Recruiting Brochure_Fed Transfers_4-1-11.doc
CFPB_4 4 11 Town Hall FRS.pptx
Attached in order:
-Deck
-Recruiting Brochure
-Q & A External
-Q & A Internal
-Speaker Talking Points
-Agenda
-Pre-Submitted Questions
Kevin K. Lownds
Review Analyst
(202) 435-7399
Page 2692 of 3826
FRS Town Hall Agenda_4-1-11.docx (Attachment 2 of 7)
FRS Town Hall Agenda

April 4, 2011
2:00pm - 3:30pm
I. Mission, Vision and Organization
Professor Elizabeth Warren
II. CFPB Team Introductions
Wally Adeyemo
III. Human Capital Overview
Assistant to President and Special Advisor to the

Secretary of the Treasury
Chief of Staff
Dennis Slagter
IV. Briefing and Question & Answer Panel

a. Supervision
Steve Antonakes
b. Consumer Engagement
David Forrest
c. Research, Markets & Regulations
Dan Sokolov
d. Regulations
Kelly Cochran
e. Financial Education
Alejandra Lopez-Fernandini
V. Additional Q&A and Wrap-up
Assistant Director Large Bank Supervision
Assistant Director Consumer Engagement
Deputy Associate Director Research, Markets &

Regulations
Deputy Assistant Director Regulations
Acting Lead Financial Education
Dennis Slagter
1
Page 2705 of 3826
QA External General_FRS Transfers_4.docx (Attachment 5 of 7)
Frequently Asked Questions (For Distribution to FRS Employees)

For FRS Employees Eligible for Transfer to CFPB
About CFPB
Why was CFPB established?
Created by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Congress established the
Consumer Financial Protection Bureau (CFPB) to consolidate in one agency the responsibility for regulating
consumer financial products and services under the federal consumer financial laws.
What are the mission and the primary functions of CFPB?

CFPBs mission under the Consumer Financial Protection Act (Title X of the Dodd-Frank Act) is to protect
consumers and ensure that, with respect to consumer financial products and services:
Consumers are provided with timely and understandable information to make responsible decisions
about financial transactions
Consumers are protected from unfair, deceptive or abusive acts and practices, and from discrimination
Outdated, unnecessary, or unduly burdensome regulations are regularly identified and addressed in order
to reduce unwarranted regulatory burden
Federal consumer financial law is enforced consistently
Markets for consumer financial products and services operate transparently and efficiently to facilitate
access and innovation
CFPBs primary functionsper the Dodd-Frank Act:
Supervision and examination of entities for compliance with federal consumer financial laws, and taking
appropriate enforcement actions to address violations of federal consumer financial law
Issuing rules, orders and guidance in implementing federal consumer financial law
Conducting financial education programs
Collecting, investigating and responding to consumer complaints
Collecting, researching, monitoring and publishing information relevant to the functioning of markets for
consumer financial products and services; identifying risks to consumers; ensuring the proper functioning
of markets for consumer financial products and services
Performing support activities that may be necessary or useful to facilitate the other functions of CFPB
CFPBs specific functional units required under the Consumer Financial Protection Act:
Agency Ombudsman
Research
1
Page 2723 of 3826
Community Affairs
Collection and Tracking of Consumer Complaints
Office of Fair Lending and Equal Opportunity
Office of Financial Education
Office of Service Member Affairs
Office of Financial Protection for Older Americans
Consumer Advisory Board
2
Page 2724 of 3826
What types of entities will be regulated by CFPB?

CFPB has examination and enforcement responsibility with respect to compliance with requirements of federal
consumer financial law for all insured depositories with total assets of more than $10 billion and any affiliate
thereof. CFPB also has examination and enforcement responsibilities for the following types of non-bank persons
or entities: mortgage lenders and servicers, pay day lenders, debt collectors and other non-depository institutions
which are larger participants in offering consumer financial products or services.
Where will CFPB be located?

CFPB expects to have three regional hubs located in the New York/New Jersey metropolitan area, the San
Francisco/Oakland metropolitan area and the Chicago metropolitan area, in addition to its Washington, D.C. office.
How will CFPB be funded and how will potential change in administration affect CFPB funding?
CFPB is funded primarily through a transfer of funds from the Federal Reserve System. During the transition
period, the Secretary of the Treasury has the authority to estimate the amount needed to carry out the authorities
of CFPB. In general, the annual amount of funds which may be transferred is capped under the Consumer Financial
Protection Act at a percentage of the total operating expenses of the Federal Reserve System and may grow with
inflation. New legislation would be required to change the existing funding provisions.
Hiring CFPB Employees

When will CFPB begin hiring employees?
CFPB will have its full authority on July 21, 2011. Those employees accepting a transfer offer will be transferred to
CFPB no sooner than July 21, 2011, but may be detailed to CFPB prior to that date.
What FRS employees are eligible to transfer to CFPB?
CFPB and FRS have jointly determined a transfer process in which certain employees from the Board of Governors
of the Federal Reserve System (Board) and the Federal Reserve Banks are eligible for transfer to CFPB.
Eligible Board Employees
The following three categories of Board employees are eligible for transfer:
1. Employees who perform any rule-writing function, as described in section 1061(a)(1)(A) of the Act, that is
transferred to the Bureau under the Act, including performing any appropriate function to promulgate or
review any rule, order, or guideline which may be issued by the Board (and for which such function is
transferred to the Bureau).
2. Employees who perform any consumer examination function that is transferred to the Bureau under the
Act.
3. Employees who spend a substantial amount of time working on responding to consumer complaints and
inquiries, consumer education, consumer financial literacy, consumer policy analysis, research on
household finance and behavior, or similar function.
Eligible Federal Reserve Bank Employees
A Reserve Bank employee who spends a substantial amount of time performing a consumer examination or
complaint processing or investigation function, or research on household finance is eligible for transfer to CFPB.
3
Page 2725 of 3826
What types of transfer employees is CFPB looking to hire? Where will employees be located?
CFPB is currently soliciting transfer applications for the types of positions listed below.
Supervision and Examination Positions

Supervision and examination personnel will be located in CFPBs Directorate of Supervision, Fair Lending and
Enforcement, which will be responsible for conducting consumer protection supervision and examinations at a
wide variety of large and/or complex depository financial institutions and non-depository consumer financial
services companies.
CFPB supervision and examination personnel will report to one of the regional hubs or to Washington, D.C. and will
work closely and collaboratively with the Supervision headquarters staff. These employees will conduct most of
their work on-site at supervised companies. When not on-site, work will primarily be conducted under a tele-work
arrangement. Travel to the Regional Office will be required when necessary. All examiners will be required to
perform extensive overnight travel. It is expected that examiners may travel outside of their regular duty location
for 50% or more of their regular work schedule.
CFPB will not require transferred examiners who are currently commissioned to be re-commissioned. Examiners
will conduct complex examination work, and develop, present, and discuss examination findings,
recommendations, and required corrective actions with senior management of depository financial institutions
and non-depository consumer financial services companies. Available positions include:
Regional Directors
Supervisory Examiners (Assistant Regional Director)
Supervisory Examiners (Field Managers)
Examiners at all levels
Consumer Financial Protection Analysts (to work on supervision and examination-related policies and
procedures, subject matter expert guidance, training, monitoring, research & analysis, regional/national
program coordination & oversight and examination support)
Consumer Financial Protection Policy and Program Managers and Executives (for supervision and
examination units in Washington, D.C.)
The CFPB expects that candidates for these positions would come from a variety of positions, including those
currently serving as Directors, Assistant Directors, Supervisors, Managers, Team Leaders, or Examiners (at all
levels, including assistant, senior assistant, associate, senior, supervisory, supervising and lead examiners) in
Consumer Compliance or Consumer Affairs and those serving in the Regulations, Consumer Compliance
Supervision and Consumer Education and Research and Policy Analysis functions of the Boards Division of
Consumer and Community Affairs.
Other Positions
The following positions will be primarily located in Washington, D.C., although there will be some positions in the
regional hubs. Tele-work may also be available for certain positions. Available positions include:
Consumer complaints (i.e., consumer affairs) technicians, specialists, analysts and managers
Economists (focusing on household finance and behavior research)
Rule-writing attorneys
Rule-writing professionals (including paralegals, secretaries, etc.)
Consumer education and financial literacy specialists
Consumer Policy analysts
4
Page 2726 of 3826
What level of personnel is CFPB looking to hire?
CFPB is recruiting for all levels of personnel. Term employees will also be considered for transfer.
Transferring to CFPB
How does the transfer process work?
FRS employees interested in transferring to CFPB should submit the following information to
[email protected]:
(1) A completed Solicitation of Potential Transferee form (that was made available on March 21, and included
in this packet) with up to your top three position choices (chosen from the list provided on the form) in
the field called Position(s) interested in at CFPB; and
(2) A resume.
All applications must contain both documents listed above and must be submitted no later than midnight, April 8,
2011 to be considered. Submission of a transfer application does not bind the submitting employee to accept a
transfer to CFPB.
Upon receipt of completed transfer applications, CFPB will review the applications and identify potential
transferees it wishes to interview. CFPB will seek to notify to all applicants as to whether or not they have been
selected for an interview within one month of the closing date for submission of transfer applications.
Those selected for an interview may be interviewed in person or by phone. Employees who receive a transfer offer
will have at least two weeks to decide whether to accept the offer. Employees accepting a transfer offer will not be
transferred to CFPB earlier than July 21, 2011, but may be detailed to CFPB prior to that date.
The following is a timeline of the transferring process for potential FRS transferees to CFPB.
d for transfer, when will I actually transfer to CFPB?
I
f
I
m
s
e
l
e
c
t
e
5
Page 2727 of 3826
Federal employees who accept CFPBs offer will be transferred on the official transferdate of July 21, 2011.
However, certain transferees may be detailed to CFPB prior to that date. Submission of a transfer application does
not bind the submitting employee to accept a transfer to CFPB.
Can employees be detailed earlier than the designated transfer date? If yes, how does this work?
Employees identified for transfer may be detailed prior to July 21, 2011. FRS and CFPB will work together regarding
any possible details.
If I apply for transfer but am not selected for an interview, will CFPB notify me? If I interview and am
not selected for a position, will CFPB notify me?
CFPB will notify FRS applicants not selected for an interview. CFPB intends to provide such notice within one
month of receiving a FRS application. FRS applicants who are interviewed and not offered transfer positions at
CFPB will be informed no later than one month after their interview.
The law states that transferred employees can stay in their current locations for at least two years.
Will there be opportunities for relocation for transferees who want to relocate?
The design of CFPB will have regional implications. As the organizational structure develops, it will become clearer
whether and where people may need to relocate and travel. At that point, CFPB will have more information
concerning whether one can volunteer to relocate and the types of work-life programs that may be available, for
example.
Who will the transferred employees be working for? Treasury or the Federal Reserve?
The CFPB is an independent agency within the Federal Reserve System. Pursuant to the CFP Act, Treasury is
initially responsible for standing up CFPB until a Director is appointed.
Will CFPB employees be permitted to join a union?
The Dodd-Frank Act states that CFPB is subject to 5 USC chapter 71, which governs labor relations in the federal
government. As a result, CFPB employees will have the right to form and join a union.
6
Page 2728 of 3826
Compensation and Benefits at CFPB Specific to FRS Transferees

How will my compensation and benefits be impacted if I transfer to CFPB?
Employees transferring from designated government agencies have been provided certain protections by
the legislation that ensure the transition be smooth, as well as attractive, for potential recruits. As a
transferee:
COMPENSATION:
You would continue to receive at least your same basic rate of pay for two years after
the designated transfer date. CFPBs pay band structure is being finalized, but will be
consistent with the FIRREA agencies and will be closely aligned with the OCC and FRB.
Applicants who are made an offer for a position with CFPB will be provided pay band
and salary information no later than the time of the offer.
HEALTH &
WELFARE
BENEFITS:
CFPB is currently developing a comprehensive benefits package for all employees at

CFPB (expected to be complete by July 2011). The benefits package will be designed to
meet the diverse needs of our workforce, and will include medical, dental and vision
coverage, FSAs, life insurance, long-term care insurance, STD and LTD coverage,
domestic partner coverage, as well as 24-hour accident insurance, public transit benefits
and various other work-life benefits.
RETIREMENT
BENEFITS:
You would continue to participate in your existing Federal Reserve System retirement
and thrift plans for as long as you remain employed at CFPB unless you elect into the
Federal Employees Retirement System (FERS) and Thrift Savings Plan (TSP) plans within
18 months after the designated transfer date Please see Section 1064 of the CFP Act for
greater detail.
MORE
INFORMATION:
Over the next several months we will share additional information with potential
transferees around CFPB rewards, including: pay and benefits, performance
management, career levels and development opportunities, work-life programs, as well
as benefit offerings specific to transferring employees.
How is the CFPB salary structure designed? Is it equivalent to the FRB structure?
The CFPB salary structure has 18 levels or grades. Like FRB, CFPBs pay structure is open from minimum to
maximum, with no steps. The pay ranges have been set to be competitive with both the FRB and the OCC. Like
FRB, CFPBs pay structure is open from minimum to maximum, with no steps.
How will career ladders work at CFPB?
CFPB will have career ladders. As a new bureau, we are still in the process of determining how they will work for
the Attorney job series. Our designs will be competitive with the FIRREA marketplace.
When will our first CFPB performance review take place? Will the bureau impose caps on
promotions, merit increases or bonuses?
CFPBs performance management and performance based pay system is under construction. Our plan is to lock
in CFPB 2012 goals and objectives in September, 2011. The 2012 performance year will end in September, 2012
7
Page 2729 of 3826
and annual performance reviews will be conducted. At this time we do not know what our merit increase process
will be, nor do we know how incentive plans will work, or when promotions will occur. We are taking great care in
ensuring that our fully-developed performance management and reward programs meet our employees needs
and help us grow, thrive and succeed over the long term.
CFPB Location, Parking, etc.

What will be the interim location of the offices of CFPB?
In addition to 1801 L St, we are working to obtain space at 717 14th Street. This space is scheduled to be
ready for occupancy in July. We do not have a plan at this time as to who will move into the 717 building.
Please note, transferees will not be transferred prior to July 21, 2011; however, certain transferees may be
detailed to CFPB prior to that date.
The Bureau intends to move into the OTS building at 17th and G in 2012. Is the Bureau expected to
stay at 18th and L until then (and is there enough room for all of us there in the interim)?
Some staff will be moved into 17th and G in the fall of 2011 depending on space needs. It is projected all
employees will be in the building by the mid - end of 2012. Plans are not firm on how long will we remain
at 1801 L.
At the new location, what is the access to and cost of parking?
We have contracted with a local commercial garage to provide parking. Parking is on a first come first
serve basis. Currently, we can meet all requests. Employees pay $120 per month for the space. There are
250 parking spaces at 17 and G. We will be drafting a parking policy that will detail how spaces will be
allocated.
Will the daycare be able to stay at 17th and G? What happens to the daycare while building
renovations are going on?
We have a letter of intent with the daycare to provide them space and facility support. They will be
remaining as a tenant in the building.
There will be occupants in the building during renovations. FHFA has two floors and is expected to vacate
January 2012. CFPB will have a presence in the building (occupying one or two floors as other floors are
renovated). We will also be constructing the lobby. The day care will remain (and open) during
renovations.
Where can I go to find additional information about CFPB and benefits for transferring employees?
Please visit [email protected] for questions around transferring to CFPB, and Consumerfinance.gov for
general information about the agency.
Once information is available over the coming months, we will share additional details with potential transferees
around CFPB rewards, including: pay and benefits, performance management, career levels and development
programs, as well as benefit offerings specific to transferring employees.
8
Page 2730 of 3826
CFPB Recruiting Brochure_Fed Transfers_4-1-11.doc (Attachment 6 of 7)
Join CFPB
Its an exciting time to join this new organization, as we work to transform the marketplace for consumer
financial products and services for all Americans. Given Federal Reserve System (FRS) employees
significant talent, experience and skills, which are critical to the achievement of CFPBs mission, CFPB is
excited to move ahead with the transfer process intended to allow interested and qualified FRS candidates
to join the growing CFPB team. We want to help you get oriented to the agency by providing an overview
of what it means to work at CFPB, and what you might expect with regard to rewards that is, your pay
and benefits as well as the intangible rewards that come from being part of this new enterprise. We have
made great strides in setting up our organization over the last several months, and we continue to further
develop and refine our programs, policies and procedures.
ABOUT CFPB
Created by the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010, CFPB exists to promote fairness,
transparency and competition in mortgages, credit cards, and
other consumer financial product and service markets. To
achieve this, we will:
A PART OF SOMETHING
SPECIAL
CFPB will work to empower consumers to
Work to ensure consumers get the information they need to

make the best financial decisions for themselves and their
families, and
pick the financial products that are best for
Monitor consumer finance markets for unfair, deceptive and

abusive practices and enforce all laws under our jurisdiction.
give clear and effective information to help
them, and ensure that financial companies
consumers make informed decisions.
Whether its through a friend, family member, colleague or

even our own experience nearly all of us have been touched by the credit and financial crisis in some
way.
WORKING AT CFPB
At CFPB, we are passionate about the work we will do on behalf of millions of Americans. We believe our
workforce is our greatest asset in building a modern government organization dedicated to protecting the
interests of American consumers. So, its no coincidence that you and your colleagues, who represent some of the
brightest minds in your respective fields, and have a personal passion for our mission. Like any thriving
organization, high performance, hard work and each individuals commitment to a culture of civility where we
treat everyone with the utmost consideration and respect are what will ultimately drive our success.
By investing in the latest technology, training and resources, CFPB will provide every opportunity to maximize the
potential of each team member and the Bureau at large. We will strive to create an environment where
employees can achieve professional growth and fulfillment and take pride in the work they do. In return, we will
expect each member of our team to perform with the same drive and passion that brought them here in the first
place.
Simply put, we intend to break the mold and redefine what it means for a government agency to serve the
American public.
Page 2732 of 3826
Your Rewards
The Dodd-Frank legislation provided CFPB with the authority to develop our own pay and benefits programs
to meet the competitive demands of the markets from which our key talent must be attracted and acquired.
CFPB will offer rewards that is, a comprehensive pay and benefits offering, as well as other developmental
programs designed to grow and retain our talent competitive with the Board of Governors of the Federal
Reserve System (Board) and other financial regulatory agencies.
The Dodd-Frank statute requires that compensation and benefits for CFPB employees be at least comparable
to those offered by the Board to its employees, but they do not have to be identical. That means we can
create a program that best meets the needs of our rapidly growing, high-performance organization.
PAY AND BENEFIT OFFERINGS FOR TRANSFERRING EMPLOYEES
Employees transferring from designated government agencies have been provided certain protections by
the legislation that ensure the transition is smooth, as well as attractive, for potential recruits. As a
transferee:
COMPENSATION:
You would continue to receive at least your same basic rate of pay for two years after
the designated transfer date. CFPBs pay band structure is being finalized, but will be
consistent with the FIRREA agencies and will be closely aligned with the OCC and the
Board. Applicants who are made an offer for a position with CFPB will be provided pay
band and salary information no later than the time of the offer.
HEALTH &
WELFARE
BENEFITS:
CFPB is currently developing a comprehensive benefits package for all employees at

CFPB (expected to be complete by July 2011). The benefits package will be designed to
meet the diverse needs of our workforce, and will include medical, dental and vision
coverage, FSAs, life insurance, long-term care insurance, STD and LTD coverage,
domestic partner coverage, as well as 24-hour accident insurance, public transit benefits
and various other work-life benefits.
RETIREMENT
BENEFITS:
You would continue to participate in your existing Federal Reserve System retirement
and thrift plans for as long as you remain employed at CFPB unless you elect into the
Federal Employees Retirement System (FERS) and Thrift Savings Plan (TSP) plans within
18 months after the designated transfer date. Please see Section 1064 of the CFP Act for
greater detail.
MORE
INFORMATION:
Over the next several months we will share additional information with potential
transferees around CFPB rewards, including: pay and benefits, performance
management, career levels and development opportunities, work-life programs, as well
as benefit offerings specific to transferring employees.
Page 2733 of 3826
What to Expect
THE TRANSFERRING PROCESS
As we conduct our daily business of getting the agency up and running, we will be growing our team rapidly with
transfers like you. The CFPB and FRS have jointly determined a transfer process in which certain employees from
the Board are eligible for transfer to the CFPB. FRS employees interested in transferring to the CFPB should submit
the following information to [email protected]:
(1) A completed Solicitation of Potential Transferee form (that was made available on March 21) with up
to your top three position choices (chosen from the list provided on the form) in the field called
Position(s) interested in at CFPB; and
(2) A resume.
All applications must contain both documents listed above and must be submitted no later than
midnight, April 8, 2011 to be considered. Submission of a transfer application does not bind the
submitting employee to accept a transfer to the CFPB.
Upon receipt of completed transfer applications, CFPB will review the applications and identify potential
transferees it wishes to interview. CFPB will seek to notify all applicants as to whether or not they have been
selected for an interview within one month of the closing date for submission of transfer applications.
Those selected for an interview may be interviewed in person, via teleconference communications or by phone.
Employees given a transfer offer will be provided with at least two weeks in which to decide whether to accept
such an offer. Employees accepting a transfer offer will not be transferred to the CFPB earlier than July 21, 2011,
but may be detailed to the CFPB prior to that date.
The following is a timeline of the transferring process for potential FRS transferees to CFPB.
Page 2734 of 3826
CFPB_4 4 11 Town Hall FRS.pptx (Attachment 7 of 7)
Town Hall Meeting

FRS Transferees to CFPB
April 4, 2011
Page 2735 of 3826
Greetings from Professor Warren
Page 2737 of 3826
Our Mission
The consumer bureau is a 21st century agency that helps
consumer finance markets work by making rules more
effective (consolidating rule-making authorities), by
consistently and fairly enforcing those rules, and by
empowering consumers to take more control over their
economic lives.
We will achieve our mission through
data driven analysis
innovative use of technology
valuing the best people and great teamwork.
2
Page 2738 of 3826
Our Vision
A consumer finance marketplace
where consumers can see prices and risks up front and
where they can easily make product comparisons;
in which no one can build a business model around unfair,
deceptive, or abusive practices;
that works for American consumers,
responsible providers and the economy as a whole.
3
Page 2740 of 3826
Wally Adeyemo
Chief of Staff
Team Introductions
Page 2743 of 3826
Your Rewards Pay Setting Methodology

Based on your expertise, job duties, skills and leadership experience
you bring to CFPB
ROLE PLACEMENT
INTO JOB BANDS
INDIVIDUAL
EVALUATON
PAY SETTING WITHIN

HIRING RANGE
FY12 Implementation Plans:
Recruiting Incentives
Retention Incentives
Special Recognition Rewards Program
Performance Management Program
10
Page 2752 of 3826
Come Join Us!
Questions
&
Answers
Page 2754 of 3826
Your Contacts for Additional Information
For questions around transferring to CFPB:

[email protected]
For general information about the agency:
Consumerfinance.gov
12
Page 2755 of 3826
From:
To:
Coney, Steven (CFPB)

(fydibohf23spdlt)/cn=recipients/cn=coneys>
_DL_CFPB_AllHands
Cc:
Bcc:
Subject:
CFPB Friday Educational Email: Privacy, Information Disclosure/FOIA, Records and
Transparency
Date:
Fri Apr 01 2011 16:40:39 EDT
Attachments:
Hello CFPB!
This weeks educational email is a follow-up to understanding the Life Cycle and Media Formats of
federal records. The information will assist you in making the right decisions when managing your
records. Please, feel free to contact me with all of your records management questions.
How can understanding the Records Life Cycle and Media Formats help you Manage Records?
First, lets remember that federal records exist in many different media types or formats to include for
example: emails, paper, compact discs, digital pictures, and tweets just to name a few.
*The first stage of a records life cycle is when a record is Created, or received.
Records are created or received by Federal Agencies either to comply with a law or to conduct
public business. As a result, the records belong to the Government.
What should you do? Work with the Records Manager to identify the records you will be creating!
*The second stage is called the Maintenance and Use, and also called the active stage.
During the active stage, the storage medium selected must be secure and accessible for retrieval.
Paper and electronic/magnetic formats each have distinctive advantages and limitations.
What should you do? Keep your records secure!
Page 2913 of 3826
Paper is familiar and convenient for reference copies. However, paper records can require large
amounts of storage space and can be difficult to organize and maintain.
What should you do?

o
Print only the information you need!
Use electronic records whenever possible!
Even if records are maintained in a paper medium for the entire life-cycle, understanding the active
and inactive life cycles will help you determine when records can be sent to the authorized storage
facility.
What should you do? Think about how long you need to keep the records!
Electronic/magnetic formats provide excellent retrieval functionality for the active stage of the
records life cycle but are poorly suited for managing the retention schedule of records for long periods
of time. Developing and implementing an electronic records management system (ERMS), is the best
way to properly manage electronic records.
What should you do?
Check your email account for records weekly;
Move records from your outlook inbox to a centralized located, such as a share drive;
Make sure your records are properly named by subject, case, eventetc; and
Make sure similar records are filed together.
*The third stage is called Disposition. This is when an action taken regarding the records no longer
needed for current government business. The action include the transfer of records for long term
storage, transfer from one Federal agency to another, destruction/deletion, or the transfer of permanent
records to the National Archives.
DO NOT: Destroy any CFPB Records!
Page 2914 of 3826
The objective of records management should be to better understand the records life cycle and
retention schedule, and to manage the records in the media types and formats more effectively.
CFPB Records Tip 0012
If you have any questions regarding Privacy, Information Disclosure/FOIA, Records, and Transparency,
please contact Claire Stapleton, our Privacy supervisory specialist, 202-435-7318, Marty Michalosky,
our FOIA supervisory specialist, 202-435-7198, or Steven Coney, our Records supervisory specialist,
202-435-7495. All past CFPB Friday Educational E-Mails are saved to the RRI Shared Drive (B:\FOIA,
Transparency, Privacy & Records\CFPB Friday Educational Email FOIA Records and Privacy), please
feel free to review them at anytime!
Have a wonderful weekend,
Steven
Steven Coney
Records Manager
Department of the Treasury
202-435-7495
Page 2915 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

_DL_CFPB_AllHands
Weekly External Meetings/Events Apr 4-8, 2011
Fri Apr 01 2011 16:30:42 EDT

EW Hold for Meeting w Arizona Banks

DSilberman Meeting w Pew Safe Checking Project
Staff attending NEFE Certification Forum

EW Transparency Roundtable
Staff Meeting w American Bankers Association Mid-Sized Coalition
SAntonakes & PTwohig remarks at WHF Finance Panel
Day 2 NEFE Certification Forum
Consumers Union Reception
Page 2916 of 3826

LMorris attending HOPE NOW Alliance Fly-In

EW keynote to Society of American Business Editors and Writers
EW Roundtable w Texas Faith Leaders
EW Meeting w Texas Community Bankers
RDate Meeting w Evercore Partners
DSilberman Meeting w Pentagon Federal
D Silberman Meeting w Prepaid Card Asso
Zixta Q. Martinez
202.435.7204
Page 2917 of 3826
From:
Keesey, Kate (Washington)

(b) (6)
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Updated Documents Q&As
Fri Apr 01 2011 15:47:49 EDT
CFPB Frequently Asked Questions_FRS Transfers_General Internal_4.4_v2.doc
Q&A External General_FRS Transfers_4.4 To Print_v2.doc
___________________________________
Katy Keesey
Communication Consultant
Towers Watson
901 N. Glebe Road, Arlington, VA, 22203-1808
Tel:703-258-8158 Fax:703 -258-7496
(b) (6)
Notice of Confidentiality
This transmission contains information that may be confidential. It has been prepared for the sole and
exclusive use of the intended recipient and on the basis agreed with that person. If you are not the
intended recipient of the message (or authorized to receive it for the intended recipient), you should
notify us immediately; you should delete it from your system and may not disclose its contents to
anyone else.
This e-mail has come to you from Towers Watson Delaware Inc.
Page 2952 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:
HELPDESK (DO)
Kern, Michael (Contractor)
accounts/cn=standard users/cn=kernmi>; HELPDESK (DO)
Ticket# 390094 - Conference Call Request
Fri Apr 01 2011 14:55:59 EDT
Good Afternoon,
Per our voice conversation, this is a follow-up to ticket# 390094, regarding Conference Call Request
Please use this link below to setup any Conference Call Request you may have.
http://intranet.treas.gov/TelOps/digital_conference.asp
If you should have any questions, please do not hesitate to contact the DO-IT IMS Service Desk at
(202) 622-1111.
Derrick Lyon
DO IT IMS Service Desk
Local: (202) 622-1111
Toll Free: (866) 444-1236
Page 3068 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Question from Dennis

Fri Apr 01 2011 14:35:21 EDT
Have you set up a call-in number for the 4 pm prep meeting? He said some people are going to need to
call in.
Kevin K. Lownds
Review Analyst
(202) 435-7399
Page 3069 of 3826
From:

_DL_CFPB_AllHands
Adamske, Steven
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Fri Apr 01 2011 14:15:47 EDT
Index

Pymnts.com Charlie Sheen Keeps Winning; Named CFPB Director
Bloomberg Former U.S. Senator Kaufman Said to Pass on Consumer Bureau Job
New York Times Nonbank Lenders Staging a Comeback
Page 3070 of 3826
Center for American Progress Dont Roll Back Wall Street Reform
Fast Company How Design Thinking Can Help Prevent Another Mortgage Bubble
Credit.com Watchdog Elizabeth Warren Survives U.S. Chamber Lions Den
Wall Street Journal Letters: Elizabeth Warren and King George III
Time (blog) Obamas Business Guys
Housing Wire Appraisers sound off on customary fees
American Banker Regulators Ready Enforcement Orders Against Servicers as State AG Talks
Stall
CNBC Realty Check blog Banks Fight Mortgage Principal Reduction
Consumer Credit
Center for Responsible Lending (press release) New CRL Research: Payday Loans Are
Gateway to Long-Term Debt
American Banker Debit Rules Not Set in Stone, But Rewards Cuts May Be
SmartMoney The New Best Credit Cards
Housing
Bloomberg Mortgage Brokers Win Bid to Block Federal Reserve Loan Commissions Rule
American Banker Fed Rules Beget a (Mostly) Volume-Based Mortgage Commission Model
Bloomberg U.S. Mortgage-Relief Plan Has Fewer Delinquencies Amid Bigger Reductions
Reuters Foreclosures slow but housing market still hurting
Other
American Banker BankThink Even in Disclosure, Fed Shows Propensity to Obfuscate
American Banker Regulations Are Burying Small Banks Alive
The Hill (blog) Senate Republicans call for complete repeal of Wall Street reform
Page 3071 of 3826
Pymnts.com
Charlie Sheen Keeps Winning; Named CFPB Director
April 1, 2011
In a unanimous vote, Congress named former "Two and a Half Men" actor and self-proclaimed "Vatican
assassin warlock" Charlie Sheen the inaugural director of the Consumer Financial Protection Bureau.
"[Expletive] and [expletive] to you all!" proclaimed Sheen before a crowd of cheering lawmakers. "For
my first act as Director, I am renaming the CFPB to be called Charlie's Financial Protection Bureau.
Second, I plan to hire 1,224 goddesses as my staff and to make all consumers [expletive]."
Spotted shedding tears of joy was Special Treasury Department Adviser and consumer advocate
Elizabeth Warren, who had been working to get the CFPB up and running.
"Charlie Sheen's 'winning' ways and tiger blood are just what this organization needs to get started on
the right foot," said Warren. "Unlike myself, he is a uniting force for lawmakers."
President Obama today called Sheen "just the change this country needs to get financial reform back
on track."
"Charlie Sheen knows what the public wants," explained the President. "After all, 'Two and a Half Men'
was TV's No. 1 sitcom."
When asked earlier about how he plans to rehabilitate consumer financial protection, Sheen responded
"with my mind."
"It cured me of my addictions, and look how well I'm [expletive] doing now," Sheen asserted.
Sheen added that he plans to continue to work with Warren. The two have already been in the studio
recording a follow-up to Warren's first hit single, "Got a New Sherriff." Sheen recently Tweeted,
"Warlock + Warren = Music Awesomeville".
Page 3072 of 3826
(The views and facts in this article are 100% fabricated in honor of April Fools!)
Back to Top
Bloomberg
Former U.S. Senator Kaufman Said to Pass on Consumer Bureau Job
March 31, 2011
By Carter Dougherty
Ted Kaufman, the former Democratic senator from Delaware, turned down an approach from the
Obama administration about heading the U.S. Consumer Financial Protection Bureau, two people
briefed on the process said.
Kaufman is the second former elected official to rebuff an overture to run the new agency. Jennifer
Granholm, the former governor of Michigan, also turned it down, Bloomberg News reported on March
22, citing two people with knowledge of the discussions.
The people spoke on condition of anonymity because the discussions arent public.
Kaufman, 72, heads the Congressional Oversight Panel on the U.S. governments bank bailout
program. The panels work officially ends April 3. He did not return a phone message seeking comment.
At the congressional panel, Kaufman succeeded Elizabeth Warren, the White House and Treasury
Department adviser tasked with setting up the consumer bureau. The Obama administration has not
publicly ruled out Warren as a nominee for the directors job.
The bureau is scheduled to start work on July 21. It will not assume full authority until the Senate
Page 3073 of 3826
confirms a director.
Back to Top
New York Times

Nonbank Lenders Staging a Comeback
March 31, 2011
By Lynnley Browning
MORTGAGE lenders that are not banks acquired a bad reputation during the housing crisis, when nowdefunct players like Countrywide Financial and Ameriquest Mortgage came to light as purveyors of
risky, high-priced loans, often to subprime borrowers with less-than-stellar credit.
So-called nonbank lenders are trying to stage a comeback now, through two relatively new lobbying
groups based in Washington that are seeking to burnish the image of those nonbank lenders that
steered clear of risky lending.
While a few nonbank lenders still offer higher-risk loans with exorbitant rates, others, including stalwarts
like LendingTree and Quicken Loans, sell plain-vanilla fixed-rate or adjustable-rate loans that are
marginally cheaper than those from big banks.
Many borrowers are suspicious of the loans offered by smaller, nonbank lenders. Most consumers say,
Who are these people? but the fact is that these are mainstream loans with good pricing, said Glen
Corso, the managing director of the Community Mortgage Banking Project, a trade group of 43 nonbank
lenders.
Some nonbank lenders say they are seeing a steady increase in business from middle-income
borrowers who may be unable to get a loan elsewhere.
So far this year, were up 15 to 20 percent in the total value of loans we make, compared with last
year, said David Wind, the president of Guaranteed Home Mortgage, a nonbank lender in White Plains,
Page 3074 of 3826
N.Y.
Mr. Wind said the average loan amount in the New York City area was $240,000, compared with
$220,000 a year ago, an indication that higher-end customers were seeking out nonbank lenders amid
tighter underwriting standards at the larger banks. Because nonbank lenders tend to be smaller and
have lower operating costs, he said, they can offer rates that are 0.125 to 0.375 percentage points
below those offered by major banks.
The nonbank lenders extend money through one of two methods: the lenders have a line of credit with
big banks and funnel that money to consumers in the form of home loans, or they collect money from
private investors to lend to consumers. (The most recent data from the Federal Financial Institutions
Examination Council showed there were 914 nonbank lenders nationwide at the end of 2009.)
It is the second category that borrowers need to be wary of, said Diane Thompson, a lawyer at the
National Consumer Law Center, because the interest rates may be significantly higher.
Nonbank lenders with lines of credit from big banks often find themselves with the same tough
underwriting standards as the banks, said Stephen Adamo, the president of Weichert Financial
Services, a nonbank lender in Morris Plains, N.J.
Still, Mr. Wind admits that nonbank lenders still have a battered reputation among consumers to
overcome. Theres a tremendous image problem, he said.
And the new Consumer Financial Protection Bureau has made regulation and oversight of nonbank
lenders a priority.
Enter the Community Mortgage Banking Project and Community Mortgage Lenders of America, both
created in 2009 to promote the interest of nonbank lenders. Nonbank lenders dont have the name
recognition of a Wells Fargo or a Bank of America, so they have to compete on price, Mr. Corso said.
He said that contrary to popular belief many nonbank lenders these days do not offer subprime or other
risky loans, and instead were offering conventional mortgages or loans backed by insurance from the
Federal Housing Administration.
But Ms. Thompson advised home buyers, especially those who arent inclined to comparison shop or
read the fine print in lending disclosures, to stick with a bricks-and-mortar bank. Theres a long track
record which indicates that this is where consumers will get the best deal, she said.
Page 3075 of 3826
Back to Top
Center for American Progress

Dont Roll Back Wall Street Reform
Dodd-Frank Act Key to a Healthy Financial System
March 31, 2011
By Michael Barr
The House Financial Services Committee this week considers implementation of the Dodd-Frank Wall
Street Reform and Consumer Protection Act. Congressional oversight of implementation is critical but
theres a risk that the hearings will degenerate into yet another salvo against much-needed financial
reform. In fact, some in the financial sector and in Congress are now calling for repeal and are seeking
to defund the agencies charged with implementing consumer financial protection, investor protection,
and derivatives regulation.
Critics argue that reform will hurt jobs and stifle growth. But the opposite is truethe lack of strong
financial regulation is what nearly sent our economy over a cliff during the Great Recession. Its what
cost our country so many jobs, homes, and businesses. So lets take this opportunity instead to take a
step back and remember why reform is necessary.
Before Dodd-Frank, major financial firms were essentially regulated by what they called themselves
rather than what they did, with the legal name often determining regulation by the least stringent
supervisory agency or no supervision at all. Huge amounts of risk moved outside the more regulated
parts of the banking system into the so-called shadow banking world, leaving these firms subject to
less oversight, lower capital requirements, and weaker consumer-protection rules.
Today, Dodd-Frank provides authority for clear, strong, and consolidated supervision and regulation by
the Federal Reserve of any financial firmregardless of legal formwhose failure could pose a threat
to financial stability.
Page 3076 of 3826
Before Dodd-Frank, the government did not have the authority to unwind large, highly leveraged, and
substantially interconnected financial firms that failed. Think Bear Stearns, Lehman Brothers, and
American International Group Inc.all of which collapsed amid the 2008 financial crisis, threatening the
very stability of the broader financial system. These and other "too-big-to-fail" financial institutions
reduced market discipline, encouraged excessive risk-taking, provided an artificial incentive for financial
institutions to grow, and created an uneven playing field.
Today, Dodd-Frank ends "too big to fail." Major financial firms will now be subject to heightened
prudential standards, including higher capital requirements. By forcing firms to internalize the costs they
impose on the broader financial system, they will have strong incentives to shrink and reduce their
complexity, leverage, and interconnections. And should such a firm fail, there will be a bigger capital
buffer to cushion losses.
Moreover, our nation no longer has to make the untenable choice between taxpayer bailouts and
market chaos. Instead, Dodd-Frank provides the Federal Deposit Insurance Corporation with the
authority to wind down any firm whose failure would pose substantial risks to our financial systemin a
way that will protect the economy while ensuring that large financial firms, not taxpayers, bear any
costs.
Before Dodd-Frank, no regulator had the responsibility to look across the full sweep of the financial
system and take action when there was a threat. Today, the new Financial Stability Oversight Council
boasts clear responsibility for examining emerging threats to our financial system regardless of whence
they come.
Before Dodd-Frank, enormous risks grew up in the shadows of the over-the-counter derivatives market
for financial products such as credit default swaps, which had a notional amount of $700 trillion prior to
the financial crisis. Today, regulators are putting in place the tools to comprehensively regulate the
derivatives market for the first time. The new financial reform law provides for transparency and price
competition. It moves the market toward central clearing. It provides for strong prudential, capital, and
business conduct rules for all dealers and other major participants in the derivatives markets. And it
combats manipulation, fraud, and other abuses.
Before Dodd-Frank, consumer-protection regulation was fragmented over seven federal regulators, with
no accountability. So-called nonbanksamong them mortgage brokerages and payday lenderscould
avoid federal supervision altogether. Banks could choose the least restrictive consumer approach
among competing banking agencies. Federal regulators preempted state consumer-protection laws
without adequately replacing these safeguards. Fragmentation of rule writing, supervision, and
enforcement led to finger-pointing in place of action and made actions taken less effective.
Today, Dodd-Frank ensures there is one agency accountable for one marketplace with one mission
protecting consumers. The Consumer Financial Protection Bureau will help consumers by giving them
the tools to make their own choices and weed out bad practices.
Page 3077 of 3826
Despite outcries to the contrary, these reforms are all about restoring the necessary balance between
the incentives for innovation and competition, on the one hand, and adequate protections for
consumers and investors, on the other.
So that is where we were before the Dodd-Frank Act, why reform was necessary, and how Dodd-Frank
delivers the necessary reforms. Now is not the time to undercut Dodd-Frank and return to a financial
system that caused widespread harm to our economy, our businesses, and our people. Now is the time
to fully implement the reforms to safeguard our financial system, our economy, and American
consumers.
Michael S. Barr is a Senior Fellow at the Center for American Progress and a professor of law at the
University of Michigan Law School. He served as assistant secretary of the Treasury for Financial
Institutions and was a key architect of the Dodd-Frank Act.
Back to Top
Fast Company
How Design Thinking Can Help Prevent Another Mortgage Bubble
Continuum tackles the mortgage disclosure formand how telling the narrative of a home purchase
played a decisive role in its design.
April 1, 2011
By Monica Bueno
Three years after the financial meltdown, housing prices are still in free fall while foreclosures keep
rising. Many American homeowners, burned by the home-buying system, are defaulting on their
mortgages, taking the hit to their credit rating and walking away from homes that may have lost more
than two-thirds of their value.
So, how did we get here? No matter where you put the blame--whether its on the banks, mortgage
brokers, or buyers--part of the problem is the whole home-buying process. Its complex, confusing, and
emotionally overwhelming.
Page 3078 of 3826
But buying a home doesnt have to be so hard. Last December, the newly formed Consumer Financial
Protection Bureau (CFPB) and its new head, Elizabeth Warren, decided they would try to make things
easier.
Drawing together experts from behavioral economics, public policy, linguistics, and design, the CFPB
held a symposium focused on redesigning the mortgage disclosure form (MDF). Along with other
innovation firms, they invited Continuum, to take up the challenge of making an easier-to-use version of
the document that banks use to communicate to prospective home buyers the terms of their mortgages.
For those of us who were designers in the room, this was a dream come true: Here was a chance to
remake a tool that plays a vital role in the lives of hundreds of thousands of people every year. But what
happened that day turned out to be much more than streamlining a critical form in the home-buying
process. Even much more than the redesign of a vital touch point within the larger user experience.
What happened was that the symposiums attendees discovered just how radical a solution Design
Thinking could offer--not only to the problem of a broken mortgage process, but to public policy at its
highest levels.
Getting the Basics Right
Before showing up for the symposium, the Continuum team tackled the homework that each of the
attendees had been assigned: to design a shopping form for individuals to select the right loan.
It didnt take long for us to identify a set of design principles that would make the form significantly more
usable:
Speak the language that people understand: Translate financial units and concepts into terms that
click with the consumers mental model.
Keep vocabulary clear and consistent: Make sure your words mean the same thing in every place they
appear.
Pare down to the data that matters: Cut out the information aimed at the bank; leave in only what the
consumer needs.
Make it easy to grasp: Use engaging visual cues that can shortcut the process of understanding.
Page 3079 of 3826
But we soon realized that the look of the form was a small part of what mattered--and that a graphic
redesign would only take us so far. So we stepped back from the form itself to see better the situation
surrounding it--aiming to understand the part the form plays in the dynamic of peoples lives.
What we discovered was that people can only make a wise decision about mortgages by holding their
loan offers next to a clear view of their budget. So we incorporated this side-by-side perspective into the
form--by adding a simplified calculator with inputs for monthly income and expenses and an output that
compared the different loan offers in an easy-to-read affordability index.
Fixing the Bigger Problem
You just dont interact with the form that much; its a back-of-house document trying to become a frontof-house document; banks and lawyers understand it but regular people dont.--Ken, a real-estate
lawyer
We brought the same approach to the conference, where the challenge on the table was redesigning
the Mortgage Disclosure Form (MDF). As we moved deeper into the home-buying process, we started
thinking in terms of a more fundamental overhaul: designing not only for the actual situation in which
people use the forms information, but for the drama which surrounds that scene. We needed to design
the form for the sequence of moves that comes before and after applying for the mortgage and the
emotional trajectory that people ride as they travel through it.
In other words, we recognized that we had in front of us a service design problem posing as a graphic
design problem. A real solution would need to take account of the whole system of interactions in which
the form played just a small part.
Streamlining the Surface; Redesigning the System
To tackle this deeper level of redesign, we zoomed out to see the ecosystem of interacting pressures
and players that surrounds the MDF. We interviewed real estate brokers, lawyers and, of course, a
number of people who had recently received a mortgage or refinanced their homes.
In the language of service design, we mapped the customer journey--aiming to capture the
choreography that people travel as they move back and forth among a range of partners. As we looked
more closely, we found that the actual process of getting a mortgage looks nothing like the straight line
assumed by the step-by-step tools currently available to home buyers.
Page 3080 of 3826
People often start with house hunting instead of budgeting; they fall in love with a home and then talk to
a mortgage broker; they compare loans, put together a budget, and realize they cant afford their dream
home and start house hunting all over again with a better idea of what they can afford. And weaving
through this network is a web of high-voltage emotions: familial obligations, attitudes, and values both
explicit and deeply buried. It wasnt just a functional problem we had to solve; we needed to take into
account a mess of emotion and anxiety that rarely has anything to do with whats rational.
These undercurrents of emotions were what we had to understand if we were going to redesign the
MDF so it clicked--so that it integrated into the way people really behave and plugged into the
motivations that power them through their ordinary days. We didnt want to design a form that would be
perfect in the abstract. We wanted to make one that would actually work inside the real lives of real
people. In other words, we had to understand the shape of peoples needs in order to make the new
MDF fit them.
As we expected, the stress levels involved in home buying matched the size of the price tag, which is
several orders of magnitude bigger than any ordinary purchase. What surprised us was the discovery
that the closing is not the most stressful point in the process. In fact, stress typically plateaus while
buyers are waiting for the closing, so by the time they get to the MDF theres not much left to worry
about.
They asked for another check four days before closing....It was like being pregnant--no way to back out
now.--Bryant, a first-time homebuyer
By stepping back from the original problem we had been given--redesigning the form--we started to
understand how the moment of receiving the MDF fit within a much larger, much more complex array of
interacting elements. And the kind of solution began to look less like improving typography and color
and more like helping people make sense of all these elements in the context of their day-to-day lives.
From this perspective, a new set of design principles emerged:
1. Right Information
Focus on key information that is relevant to individuals and fits in the context of their day-to-day lives.
2. Right Timing
Make sure people get information when they can use it.
Page 3081 of 3826
Introduce key components early, so that buyers will understand what they need to know before theyre
too stressed out to make sense of new information.
Stage information delivery to fit the rhythm of their day-to-day.
3. Trusted Guides
Take some of the decision-making out of the buyers hands, and shift it to sources they can rely on.
Create the right context for human interactions.
Designing the Future
The challenge we had been given--get the look of the form right--had turned into something very
different: get the story of the home buyer right. To solve the problem at this deeper level, we would
need to remake the users experience, so that people could move smoothly, calmly, and wisely through
each of the moments that make up the home-buying process.
Seen from a service design perspective, the mortgage process reveals itself to be much more than a
simple transfer of information from bank to buyer. Its a drama--a sequence of interactions between
various players, each acting within specific scenarios and for particular reasons that gives each of these
interactions its own emotional tenor. Within this context, the mortgage disclosure form is almost like a
prop and the only way to remake it is to first understand what function its being used for. We need to
understand what happens before and after it, to give the form its correct context.
This kind of reframing, this habit of stepping back to see the human context of a problem, needs to
become a regular habit as we reimagine human systems. If were going to win the future--and take up
President Obamas challenge to out-innovate the rest of the world--well need to move beyond a use of
design to handle aesthetic problems and tap into the power of design to solve for meaning.
The symposium took place at the Treasury on December 6, 2010. Continuum participated in the second
panel Communications in Context and also facilitated a discussion in the last session around
designing a Shopping Form. The symposiums focus was to inform the creation of a new integrated
form that combines the Good Faith Estimate (from HUD) and the TIL disclosure (from the Federal
Reserve Board). However, the symposium was not solely focused on the forms, but on the wider
concepts we should consider as we approach integration of the forms and improving them so they are
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meaningful to consumers. The CFPB is currently working on the integration of the forms.
Written by Monica Bueno, who leads Continuum's Service Design Group, with help from Pedro
Sepulveda, Gianna Ericson, David Weik, Abby Bickel, Alanna Fincke, Dan Coleman.
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Credit.com
Watchdog Elizabeth Warren Survives U.S. Chamber Lions Den
March 31, 2011
By Christopher Maag
Acknowledging the perception that she was walking into hostile territory, Washingtons newest
consumer watchdog appeared at a conference sponsored by her nemesis, the U.S. Chamber of
Commerce, to argue that both sides want the same thing: competitive financial markets.
I know this wont come as a shock to you, but the chamber and I have not always seen eye-to-eye on
issues, Elizabeth Warren, President Obamas special advisor charged with setting up the Consumer
Financial Protection Bureau, said in a prepared statement.
The CFPB was created last summer by the Dodd-Frank financial reform act to perform the same
watchdog function for financial products that the U.S. Consumer Product Safety Commission serves for
toasters and toys. Since then the chamber, major banks and Republican leaders have made numerous
attempts to kill the new agency, limit its funding or restrict its regulatory power.
The chambers current push is to limit Warrens power over the agency by changing its leadership
structure from a single director to a five-member bipartisan committee.
I think this is a matter we could interest both parties in, Chamber President Tom Donohue told Fox
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Business. There are a lot of Democrats who would not like to have one Republican sitting in that seat.
In her comments to the chamber, Warren argued that both she and the bureau already have significant
limitations on their power. Under pressure from Republicans, President Obama declined to name
Warren the bureaus first director, instead giving her the more limited role of presidential advisor.
The CFPB is the only bank regulatorand perhaps the only agency anywhere in governmentwhose
rules can be overruled by a group of other agencies, Warren said in her statement, referring to the
Financial Stability Oversight Board, which can overturn the bureaus rules with a two-thirds vote. This is
an extraordinary restraint.
Warren, who has been a strident critic of Wall Street practices that caused the Great Recession, struck
a conciliatory and sometimes humorous note with the chamber.
I need to tell you that Ive had more teasing about this meeting than Ive had in a long time. You can
imagine the analogies: Nixon to China, Daniel in the Lions Den, Sen. John Kennedy speaking before
Protestant ministers, Warren said. All of thats in good fun, and although Im not here to minimize our
differences, its important to begin with common ground.
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Wall Street Journal

Letters: Elizabeth Warren and King George III
April 1, 2011
All I can to say in regard to the Journal's editorial "The Incredible Ms. Warren" (March 26) is: "You go
girl!"
Greg Pesavento
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Elmhurst, Ill.
Regarding consumer czar Elizabeth Warren, I am reminded of one of the grievances cited against King
George III of England in the Declaration of Independence: "He has erected a multitude of New Offices,
and sent hither swarms of Officers to harass our people, and eat out their substance."
Our founding fathers knew tyranny when they saw it, and I can only hope that the American people will
too.
Michael Anderson
Hoover, Ala.
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Time (Swampland blog)

Obamas Business Guys
April 1, 2011
By Joe Klein
A few days ago, I vented on the pathetic nature of the Republican Party's presidential field for 2012, as
seen from overseas. And now, again reading the US newspapers from abroad, I'm amazed by the
greed-soaked myopia of the "enlightened" business community, in the persons of two of Barack
Obama's favorite business guys, Jamie Dimon of JPMorganChase bank and Jeffrey Immelt of GE.
First, Dimon.He's predicting the utter decline and fall of American finance as a result of the milquetoast
mild financial regulatory bill that passed Congress last year. He's especially worried that, having helped
destroyed the value of middle class housing, he won't be able to suck middle America totally dry by
charging higher credit card rates.
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This is nonsense, of course. But even if it weren't, even if Dimond were right and it meant the end of the
U.S. finance as we know it, I'd say...what's so bad about that? I mean, how terrible would it be if U.S.
companies and credit-card holders had to borrow money from banks that operated with the sobriety of,
say, Canadian banks? And how terrible would it be if all those hot-shot quants from Harvard and MIT
had to find jobs where they actually contributed to creating jobs and building the economy, rather than
creating financial products, like credit-default swaps, that are (except in the rarest of cases) a form of
legalized crap-shooting with loaded dice? The American economy won't get healthy until our financial
energy is focused on creating new products (that are actual good or services, not casino games) and
getting rid of the financial speculators making obscene profits in return for the creation of smoke and
poison gas.
So, you don't like financial reform, Mr. Dimon? You're angry at Obama? That's great news! Please stay
away. (And Mr. President: please take a moment to step away from Libya and consider the impact the
bank lobbyists are currently having on the evisceration of your financial reform. I'd much prefer you'd
gone to war with them--by appointing Elizabeth Warren to chair the Consumer Finance Protection
Bureau--than with this peripheral lunatic dictator in the Middle East.)
As for Jeffrey Immelt, I was pleased, with reservations, when the President appointed him to chair a
panel to encourage manufacturing. After all, GE makes things--or so it seems, when you watch their
great commercials on Sunday morning tv. But an ever-increasing slice of GE's profits over the past few
decades has come from banking--including investments in all the housing gimmicks that led to the 2008
crash. The losses that accrued from that crash have now enabled Immelt's GE to pay no--that is, zero-taxes on $5 billion profits in 2010. This is not illegal, but it should be instructional. The system of
corporate taxation in this country is a scam, with a deceptively high marginal rate and lavish loopholes.
The President wants to close those loopholes--good for him!--but I think we're taxing the wrong things:
we should be encouraging profits (especially since profits are taxed again as income on personal
returns) and discouraging things like pollution and stock-churning. I think the corporate income tax
should be replaced by a tax on externalities (the fancy name for pollution) and another on stock
derivatives transactions. I'd be a lot less concerned if General Electric paid no taxes because it (a) had
stopped polluting and (b) stopped making money by gaming the financial markets.
Of greater concern about Immelt--hat tip Rick Perlstein--has been the mini-holocaust of GE plant
closings in recent years, with jobs shipped overseas. Some of this is the natural force of creative
destruction--the death of incandescent light bulbs, for example--but where's the creative production?
You'd hope that the head of the President's manufacturing board would, uh, figure out a way to create
some jobs (certainly, more than the 6,000 claimed by a GE spokesman in response to the ABC news
story attached).
And, once again, I know I'm part of the problem for the moment--two weeks here in the Middle East--but
isn't this foolishness what we in the press should be focusing on, rather than silly Gaddafi, and the
confusion of a tribal civil war with genocide?
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American Banker
Regulators Ready Enforcement Orders Against Servicers as State AG Talks Stall
April 1, 2011
By Cheyenne Hopkins
WASHINGTON Frustrated by the lack of progress with a global settlement between the 50 state
attorneys general and the top mortgage servicers, federal banking regulators are expected to move
forward with their own enforcement actions against 14 servicers as early as next week.
The cease and desist orders are expected to establish best practices for the servicing industry,
including new documentation verification procedures, oversight from third parties and additional legal
counsel, limitations for dual tracking foreclosures and modifications simultaneously, and a
comprehensive look back to uncover prior mistakes.
The regulators' move comes as bankers offered their own counterproposal to the state AGs that echoes
much of what the banking regulators are seeking. While bankers and enforcement officials had agreed
a single global settlement with all state and federal agencies would be optimal, the cease-and-desist
order may ultimately help the servicers by serving as a template for a final deal with the other agencies.
Some observers said it makes sense for the banking regulators to act as talks between the state AGs
and the servicers have dragged on.
"The bank regulators have responsibility for the oversight of the banks and where they have gone in
and determined there were weaknesses they have an obligation to address them," said Jeffrey Naimon,
a partner at BuckleySandler LLP. "While a comprehensive settlement is preferable, the bank regulators
can't just wait around. They have to do something and I think they are going to move forward."
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The cease-and-desist action is not expected to include a large fine as the state AGs are seeking, but
instead will order banks to offer remediations to any homeowners found harmed after they perform a
comprehensive look back at their own files. Such look backs, which are common in other enforcement
actions such as anti-money-laundering orders, require banks to closely examine previous cases in light
of flaws uncovered by regulators in their internal procedures.
Observers were split on whether a separate move from the banking regulators would help or hurt the
servicers.
"It would be better for everybody if the bank regulators, state AGs, Justice and HUD can reach closure
at the same time," said Michael Barr, a professor at the University of Michigan and a former Treasury
assistant secretary in the current administration. "It would be better for the banks to do that. It would be
harder for the banks to put this foreclosure mess behind them if they have piecemeal approaches."
But some said a separate action benefits the servicers, which will have more leverage to push back
against the state AGs. Since the AGs first issued a 27-page proposed term sheet in March, the banks
have argued it went too far and did not detail what exactly they did wrong. The cease-and-desist order
includes details on what regulators uncovered during their investigation of servicer practices and ways
they must be fixed.
"It sets the bounds for the attorneys general," said Gil Schwartz, a partner at Schwartz & Ballen LLP.
"How are the attorneys general to say the banking agencies didn't go far enough and want more? The
federal settlement seems to me establishes a ceiling that would apply to the attorney general
settlement."
Cliff Rossi, a professor at the Robert H. Smith School of Business at the University of Maryland, said
the longer a negotiation with the AGs drags out, the better off bankers will be.
"There could be years to wrangle over this," he said. "You have a number of constituents. I don't
think this thing is going to go away quietly any time soon. With the federal banking regulators [done],
what is the incentive for the banks and the state AGs to come to the table? I would certainly wait and
see how this happens and maybe we can come to an easier settlement. I would play the stall game as
long as I can get by with it."
The cease-and-desist order also appears more modest in comparison to the term sheet sought by the
state AGs and other federal agencies, including the Justice and Treasury departments. While the term
sheet sought sweeping industrywide changes, including a push for principal reductions, the cease-anddesist orders are less broad in scope.
"This is one more aspect where the more extreme aspects of the state proposal are going to look less
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compelling and be what they really are which is being overreaching," said Ellen Marshall. a partner at
Manatt, Phelps & Phillips LLP.
For their part, regulators privately say they tried to wait for the state AGs to move forward, but it is
unclear when or even if a settlement could be reached. Regulators first gave the banks a 21-page draft
cease-and-desist order in February, and have been waiting on the AGs ever since.
But talks between the AGs and the top five servicers are stalled. Officials with the attorneys general and
Justice Department met with servicers in an all-day meeting on Wednesday, but after nearly eight hours
were unable to come to any resolution. The sides agreed to keep talking, but do not appear close to a
deal.
Participants in the meeting included about 50 people, including Iowa Attorney General Tom Miller,
Associate U.S. Attorney General Thomas Perrelli and attorneys general from Virginia, Illinois, North
Carolina, Delaware and representatives of the Treasury Department and Federal Trade Commission.
"I think we have a long way to go," Miller said following the meeting. "There are a lot of differences
between us and servicers. There is no time line. We've talked about by X date, and months not
weeks, and always been proven at least somewhat wrong on that. But we're figuring out, rather shortly,
what the next step is, and when we meet again, but we haven't decided that."
But Miller's office dismissed criticism that the process was taking too long.
"We're going to move forward regardless and while we hoped to be able to do this in a broadly
coordinated manner, we will still pursue our efforts as attorneys general," said Geoff Greenwood,
Miller's spokesman. "We started this back in October and we had to take an adequate amount of time to
get a good look as to what the problems have been and needed the time to formulate our term sheet
and now we need the time to negotiate our term sheet."
Before the meeting on Wednesday, servicers offered their own conditions for an agreement. In their 16page counteroffer, the servicers agreed to several demands from the original term sheet, including time
lines for responding to and acting on modification requests, the establishment of a single point of
contact for troubled borrowers, the creation of a "portal" to help customers submit mod documents
electronically and limitations on dual tracking. They also agreed to limit the use of force-placed
insurance to certain circumstances.
But they soundly rejected the primary push from the AG proposal principal reductions.
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Speaking to reporters after a U.S. Chamber of Commerce event on Wednesday, JPMorgan Chase &
Co.'s chairman and chief executive, Jamie Dimon, put it bluntly.
"Principal writedowns for people who couldn't pay their mortgages? Yeah, that's off the table," he said.
Still, some observers said the counteroffer could be as much as state AGs could win from the banks.
"It's plenty reasonable," said Stephen Ornstein, a partner at SNR Denton. "It should cover the main
areas of concern and they are within the borrowers ability to effectuate the changes, within the servicers
ability to make these changes without violating contracts with investors. You are talking about best
practices. It doesn't include the poison pills of the AG draft. This seems much more doable."
Marshall agreed that the counteroffer seemed significant.
"There is real meat in it, real specifics that go beyond things that the servicers have been doing all
along," she said. "The terms are aspirational, too, in the sense that they call upon the servicers to follow
what we might think of as 'best practices' more consistently than they may have been followed in the
past."
But not everyone was impressed. Barr said the terms "don't blow me away," and characterized them as
just an agreement to do what they should already be doing. " 'We promise to run our shops as if we
were serious financial companies, and treat our customers as if they were our customers,' " he said.
Back to Top
CNBC Realty Check blog

Banks Fight Mortgage Principal Reduction
March 31, 2011
By Diana Olick
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At the end of a day-long negotiation session over the foreclosure paperwork mess at the Department of
Justice, Iowa Attorney General Tom Miller and Associate Attorney General Thomas Perrelli came out
for a brief chat with reporters.
They essentially said nothing.
Miller: "We had a good first meeting with the banking and servicer industry- emphasis on good and first.
It was a first meeting, it was a breaking of the ice, and that takes some time and is part of the process.
The discussion was goodI think it was on a good level, given the exchange of ideas and rationale and
principles. I think we have a long way to goagain emphasis on first meeting."
Perrelli: "Tom Miller is a fantastic partner, were lucky to be working together. Ill echo what Tom said, I
think it was a very productive first meeting, with serious discussion of a wide range of challenges and
problems in the mortgage servicing industry."
The banks weren't talking, at least the representatives in the meeting weren't talking, nor were their
spokespeople. But big bank executives have been commenting on the biggest sticking point in a
potential settlement over foreclosure practices: Principal reduction.
Some of the State AGs, including the lead on the investigation, Miller, as well as federal regulators and
administration officials appear to be looking toward principal forgiveness as the punishment the banks
should pay. But as recently as last night, JP Morgan Chase's Jamie Dimon told reporters, "Yeah, that's
off the table."
This morning the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision
(OTS) put out their quarterly "Mortgage Metrics Report" for Q4. It showed just 2.7 percent of
modification made in the quarter by national banks and federal thrifts (that includes Fannie and Freddie)
included any principal reduction. The banks did the vast majority of the reduction with Fannie and
Freddie doing none. But principal reduction fell dramatically, over 60 percent from year ago as a
modification tool, meaning banks are less and less inclined to do it.
I'm not exactly sure what will come out of these endless "negotiations" over the so-called "robo-signing"
scandal, other than the banks trying to push foreclosures through and out of the system before any
penalties come down the pike. The longer the negotiations drag on, the better for the banks and the
worse for consumers. Federal regulators may come out with something sooner, given that they are less
worried about the political ramifications of what they do than the state attorneys general.
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Housing Wire
Appraisers sound off on customary fees
March 31, 2011
By Jacob Gaffney
On April 1, the new "customary and reasonable" appraiser fees under Dodd-Frank take effect. A week
prior, HousingWire ran a Q&A with David Feldman, the vice president of government affairs at
CoreLogic Valuations in an effort to clarify the impact this will have on the appraisal industry.
Many appraisers took notice of it, and not in a good way.
In a review of letters to the editor, many expressed frustration that the interview did not go far enough.
"I have to say I am very disappointed with the lack of questioning and follow-up to his very one-sided
answers," said Tony Grubb an appraiser at Virginia-based AppraisalTech. "Not once was he asked
about or discussed the harm Corelogic's lower than average fees have done to appraisers and their
families across the country."
"Amazing what Corelogic says about fees to appraisers," wrote in another complainant who wishes to
remain anonymous. "I just spent the last week lowering our fees because all the vendor management
companies said that unless you lower your fees to compete with the other guys you will get little or no
work."
"Appraisers have become slaves to the banks and vendor management companies," she added.
CoreLogic defends Feldman's words, though declined a vigorous response. The comments were also
presented to other, similar firms. Many report the feeling that appraisers are not being flexible enough.
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In particular, one firm said it had trouble finding appraisers to do "desk-based" work. "The days of going
out to two valuations and taking the afternoon off are over," a manager at the AMC said.
Additionally, the chief appraiser of Pro Teck Valuation Services, Jeff Dickstein, did weigh in on other
nagging regulatory questions. Mainly, there is an added worry that the Consumer Financial Protection
Bureau, which officially opens on July 21, will further negatively impact the appraisal industry.
Dickstein said the intended use of an appraisal is for the lender to obtain a market value opinion to
assess risk for loan collateral, not for the buyer or seller. Most buyers and sellers are interested in
anticipated sale price, not market value.
"If a consumer-oriented regulator takes charge, you will see people filing more objections to appraisals,"
Dickstein said. "The seller for instance may object to the home price being too low and argue for a
higher valuation based on something like an above ground spa, which is not a real property feature, and
not given value on an appraisal report."
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Center for Responsible Lending

New CRL Research: Payday Loans Are Gateway to Long-Term Debt
March 31, 2011
Press release
Although payday loans are marketed as quick solutions to occasional financial shortfalls, new research
from the Center for Responsible Lending shows that these small dollar loans are far from short-term.
Payday Loans, Inc., the latest in a series of CRL payday lending research reports, found that payday
loan borrowers are indebted for more than half of the year on average, even though each individual
payday loan typically must be repaid within two weeks.
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CRLs research also shows that people who continue to take out payday loans over a two-year period
tend to increase the frequency and extent of their debt. Among these borrowers, a significant share (44
percent), ultimately have trouble paying their loan and experience a default. The default results in
borrows paying more fees from both the payday lender and their bank.
Federal banking regulators have voiced their concerns about long-term payday loan usage. For
example, the Federal Deposit Insurance Corporation (FDIC) has stated that it is inappropriate to keep
payday borrowers indebted for more than 90 days in any 12 month period. Yet CRL determined that the
average borrower with a payday loan owed 212 days in their first year of payday loan use, and an
average of 372 days over two years.
This new report finds even more disturbing lending patterns than our earlier reports, said Uriah King, a
senior vice-president with CRL. Not only is the actual length of payday borrowing longer, the amount
and frequency grows as well. The first payday loan becomes the gateway to long-term debt and robs
working families of funds available to cover everyday living expenses.
CRL tracked transactions over 24 months for 11,000 borrowers in Oklahoma who took out their first
payday loans in March, June or September of 2006. Oklahoma is one of the few states where a loan
database makes this kind of analysis possible. CRL then compared these findings with available
information from regulator data and borrower interviews in other states.
According to Christopher Peterson, a University of Utah law professor and nationally-recognized

consumer law expert, The Center for Responsible Lendings latest research on multi-year, first-use
payday loan borrowers provides conclusive evidence that payday loans are not short-term debts.
Rather, their data shows payday loans evolve into a spiral of long-term, recurrent, and escalating debt
patterns.
Rev. Dr. DeForest Soaries, pastor of First Baptist Church of Lincoln Gardens in Somerset, New Jersey
and profiled in Almighty Debt, a recent CNN documentary, also commented on the new research
findings: Reputable businesses build their loyal clientele by offering value-priced products and
services. Customers choose to return to these businesses. But payday lenders build their repeat
business by trapping borrowers into a cycle of crippling debt with triple digit interest rates and fees.
Lenders should be completely satisfied with a 36 percent interest cap.
To address the problem of long-term payday debt, CLR recommends that states end special
exemptions that allow payday loans to be offered at triple-digit rates by restoring traditional interest rate
caps at or around 36 percent annual interest. A 36 percent annual interest rate cap has proven effective
in stopping predatory payday lending across seventeen states and the District of Columbia. Active duty
service members and their families are also protected from high-cost payday loans with a 36 percent
annual cap.
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In addition, CRL notes that both states and the new Consumer Financial Protection Bureau at the
federal level can take other steps such as limiting the amount of time a borrower can remain indebted in
high-cost payday loans; and requiring sustainable terms and meaningful underwriting of small loans
generally.
Further information on the report at: http://www.responsiblelending.org/payday-lending/researchanalysis/payday-loans-inc.html.
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American Banker
Debit Rules Not Set in Stone, But Rewards Cuts May Be
April 1, 2011
By Andrew Johnson
When a number of large banks recently upset their debit card customers by announcing cuts to
rewards, they blamed the pending debit interchange cap. What, or whom, will they blame if Congress
changes or delays the cap's implementation and they don't reinstate the rewards programs?
The rules are "not yet buried and set in concrete, so there are possibilities it may be delayed or
changed," said Bill McCracken, the chief executive of Synergistics Research Corp., an Atlanta
payments research firm.
"If that happens there's not an easy way to backtrack," McCracken added. "In the mind of the
consumer, it will be messy."
The possibility of a delay became more realistic this week when Federal Reserve Board Chairman Ben
Bernanke announced that the central bank will miss its April 21 deadline, legislated by the Dodd-Frank
Act, for releasing final rules on the fees that banks earn from debit card purchases.
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The Fed said it still plans to have its finalized rules out before the July deadline for their enforcement.
JPMorgan Chase & Co., Wells Fargo & Co. and Regions Financial Corp. are among the companies that
have already announced changes to their debit products.
Ed Kadletz, an executive vice president and head of debit and prepaid cards at Wells Fargo, said in an
interview this week that it was important to get a head start on making changes to debit rewards. But he
also said the San Francisco bank was cautious about making too many changes at once.
"We thought this was the appropriate time on enrollment," Kadletz said. "This requires systems
changes. You need to be communicating to all of your bankers, so we targeted April 15 as the
appropriate time to stop enrollments."
Whether the San Francisco bank cuts the program for existing customers or reinstates it for new
customers will likely depend on the Fed's final rules, Kadletz said.
"There still is a possibility of delay or we might see something that's different in terms of the final Fed
regulations," Kadletz said. "Rather than going out and communicating with customers and saying one
thing and getting a delay or final regulations that might lead us to a different conclusion, we just think it's
appropriate to wait."
If banks change course and reinstate programs after any change to the regulation, it could strain their
relationships with consumers by highlighting the uncertainty over the terms of their accounts.
Some of the issuers that have announced cuts have not said whether they would reinstate their
programs if the caps on interchange are delayed or changed.
JPMorgan Chase was one of earliest movers on eliminating rewards. The New York bank last year
announced it would stop issuing new debit rewards cards in February. It recently began sending letters
to existing debit card customers saying that it was also eliminating the program for them as of July 19
two days before the caps are set to take effect.
JPMorgan Chase explicitly blamed the Durbin amendment to the Dodd-Frank Act, which instructed the
Fed to set reasonable and proportional interchange rates, for its change. Earned points do not expire.
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According to a Moody's Investors Service report published March 28, JPMorgan Chase should save
less than $200 million a year by cutting debit rewards. The bank has said it expects to lose $1.3 billion a
year from debit regulation.
A spokeswoman for JPMorgan Chase declined to comment on its plans.
SunTrust Banks Inc. also began notifying its customers that it will stop offering rewards on purchases
with one of its debit cards starting April 15. Customers will have until the end of the year to redeem
earned points.
Other banks, including Wells Fargo and Regions, have confined their rewards changes to new
customers.
There is an advantage to banks that blame the Durbin amendment in their customer communications,
McCracken said. Early actions could inspire consumers to protest the rules to Congress.
Two bills, one introduced in the Senate and one in the House, would delay implementation of the
interchange regulations. An analyst with KBW Inc.'s Keefe, Bruyette & Woods wrote in a research note
this week that the Senate bill introduced by Sen. Jon Tester, D-Mont., may have more support than was
originally thought.
Banks "right now are fighting a fairly complex political and public relations battle with regulators and
Congress," McCracken said. "Part of lobbying for a change in the interchange rules is to get consumers'
opinion behind them."
Bill Handel, a vice president with Raddon Financial Group, a Lombard, Ill., consulting firm owned by the
vendor Open Solutions Inc., said banks could benefit from a marketing perspective if the caps are
delayed or changed.
"If you have a repeal or delay, [you] can come back and say, 'Good news. We're able to continue to
offer this,' " Handel said. "They almost get a free marketing boost from that."
However, Handel said he doubts the caps will not go into effect in some form. And debit rewards are
also under pressure from other regulations, such as limits on overdraft charges that took effect last
year.
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That complexity creates a marketing problem in and of itself. Customers told to blame debit interchange
caps for the loss of rewards programs may expect the programs to return if the caps are changed or
delayed.
"Even if we are able to get some relief on Durbin in a temporary fashion, there are going to be other
things that will threaten" programs, Handel said. "I think that's why we are seeing Chase and others
responding the way they are responding right now."
A December report from Mercator Advisory Group was skeptical about the long-term viability of debit
rewards. In the future, it said, "the very existence of debit reward programs could be as remote as
finding life on Mars."
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SmartMoney
The New Best Credit Cards
March 31, 2011
By Kelli B. Grant
After years of shrinking credit limits, rising rates and new fees, not to mention government legislation,
credit card users have every reason to question the value of the plastic in their wallets. And now that
the dust has settled, many may find their current credit cards aren't as good as they could be.
What cards will and won't do for customers today is significantly different than it was even a year or two
ago. The new legislation, for example, which applies to existing and new accounts, prohibits issuers
from raising interest rates on an existing balance in good standing, requires them to put payments of
more than the minimum toward the highest-rate balance first, puts a cap on penalty fees and limits
credit availability to young adults. "We've seen significant changes since the CARD Act went into play,"
says Ruth Susswein, deputy director of national priorities for Consumer Action, an advocacy group.
Credit card debts have declined, and consumers are more aware of the cost of carrying a balance, she
says.
At the same time, many card companies have raised interest rates to counter the revenue-squeezing
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effects of the new rules. The average cash-back card now carries an interest rate of 16.62%, up from
13.83% in April 2009. For someone making a typical minimum payment on a $3,500 balance, that's the
difference of more than $400 in interest over the life of the loan. And interest rates have continued to
rise, despite no increase in the prime rate. "They're opportunistic rate increases," says Susswein. Card
issuers have also played with other, unregulated charges, such as adding annual fees and increasing
those for cash advances and balance transfers.
At least consumers once again have plenty of choices another stark change from the days of frozen
credit and routine denials. Banks expect to send out 3.2 billion card offers this year, up 15% from 2010,
and more than double the 1.4 billion mailed out in 2009. "Issuers are actually sending the best offers
we've ever seen in 20-plus years," says Anuj Shahani, the director of competitive tracking services for
Synovate Mail Monitor. As an aftereffect of the CARD Act, the attractive terms you see in pre-approved
offers are also more likely to be those you get, according to a study by the Center for Responsible
Lending.
Still, finding a card that offers the best of the recent changes without the costs isn't easy. Many of the
drawbacks are buried in the fine print (yes, there's still lots of that). SmartMoney and a team of experts
dug through the cards to find the best new ones that might be worth a place in your wallet.
Best Card for Managing Debt
First, some good news: consumers have less credit card debt to wrangle. The average household owes
$7,490 9% less than at the recession's onset in 2008, according to Synovate Mail Monitor. Spending
cutbacks have helped, but so have CARD Act provisions that allocate payments of more than the
minimum toward high-interest rate debt first and forbid issuers from raising rates on existing balances in
good standing, says Odysseas Papadimitriou, the chief executive of CardHub , a comparison site for
credit and prepaid cards. Of course, higher interest rates overall and rising minimum payment
requirements can cancel out those friendlier practices, making carrying a balance just as expensive, if
not more so. And balance transfer fees now range as high as 5%, up from 3% a few years ago.
Managing debt in a post-CARD Act world requires at least two different cards: one with a good balance
transfer offer and another with a low ongoing rate on purchases, just in case you can't always pay off
your monthly balance, says Papadimitriou. Right now, the most generous balance transfer deals for
consumers offer at least 18 months at 0%, and charge no more than a 3% fee. With 21-month offers
and 3% fees, both Citi Diamond Preferred and Citi Platinum Select fit the bill. (The 0% rate applies to
purchases made during the first 21 months, too.) Discover More offers more time -- up to 24 months -with a higher 5% transfer fee. But for those who need more time to pay down their debt and don't plan
to make any new purchases on the card, it could be the better deal, Papadimitriou says.
For the occasional balance-carrier, the best bet is typically the card with the lowest rate available. The
Simmons First Platinum Visa currently offers a 7.25% APR, but only for people with excellent credit. For
those with average credit, there are cards with average rates that cut interest rates for on-time
payments and offer rewards for months you pay in full. Citi Forward cardholders see their rate drop
0.25% every three months that they pay on time and stay within their credit limit, for up to a 2% total
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reduction. After 0% for 12 months on purchases, the APR ranges from 12.99% to 19.99%. Cardholders
also earn rewards points for good behavior, as well as five points per dollar spent on restaurants,
books, movies and music, and a point per dollar spent on everything else. (Points can be redeemed for
cash back, gift cards, travel and other rewards.) The higher interest rate and short introductory offers
aren't the best deal if you're carrying a big balance. But the rewards, including 6,000 points for making
$250 in purchases within three months and 2,500 for paperless billing (combined, worth $50 in cash or
$60 in gift cards), can work out better for cardholders who only occasionally don't pay off their balance
in full.
Best Card for Students
For people younger than 21, getting a credit card got harder with the CARD Act, which requires
applicants an adult co-signer or proof of income for applicants between ages 18 and 20. That narrows
the pool of available cards significantly, says Beverly Harzog, a credit expert for Credit.com . American
Express and Capital One don't allow co-signers, and any card not specifically marketed to people with
limited credit could saddle a young, inexperienced applicant with interest rates approaching 25%. More
likely, a young, credit-free applicant applying solo will be refused, which will ding the student's credit
score, more so if they immediately try elsewhere. "That makes it look like you're desperate," she says.
"No lender likes that."
Even cards specifically for students can be risky. The law doesn't prohibit lenders from counting student
loans and other financial aid as income. Susswein says that could inflate the offered credit line beyond
what a student could reasonably repay, and continue the cycle of debt that the new laws aimed to halt.
(In 2009, the average college senior graduated owing $4,100 in credit card debt, up from $2,900 in
2004, according to student lender Sallie Mae.) American Express, Bank of America, Capital One,
Chase, Citibank and Discover all say that they don't factor student loans into their calculations.
The best student credit cards offer some incentives and tools to teach users how to approach credit
wisely, and a rate of no more than 20%. "I like the cards that try to set good habits early on," Harzog
says. Citi Forward for College Students offers the same pay-on-time rewards and interest rate
reductions as the adult card (see "For managing debt") and an APR of 12.99% to 21.99%, while Citi
mtvU Platinum Select Visa Card for College Students awards points for maintaining a good GPA,
paying on time and sticking to your credit limit. Its APR ranges from 12.99% to 20.99%. Both allow -but do not require -- a co-signer. (Go with the co-signer if you want a rate on the lower end of that
spectrum.) Journey Student Rewards from Capital One has a rate on the higher end at 19.8%, because
students must apply on their own, but offers texted payment alerts, 1% cash back and an extra 25%
bonus on cash-back rewards earned each month when you pay on time. (A Capital One spokeswoman
says it has the added benefit of a fixed credit limit cardholders can't exceed.)
Best Cards for Entrepreneurs
Business cards aren't covered by the CARD Act, a loophole that merits extra attention for anyone with a
so-called corporate or business card. That means these cardholders won't receive advance notification
when interest rates rise, and payments won't be allocated to highest-interest rate debt first. Some
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issuers have voluntarily adopted some of the law's provisions on their business cards, but note that the
word "voluntarily" is key. "These protections could go away at any time," says Curtis Arnold, the founder
of CardRatings.com . And although rates on personal cards have stabilized in recent months, business
card APRs are continuing to rise, and now charge an average 16%, says Schwark Satyavolu, the
founder of comparison site BillShrink.com .
Better business cards on the market require payment in full each month, offer free extra cards for
employees and have some rewards. Cardholders of The Plum Card from American Express get a 1.5%
discount on purchases when they pay within 10 days of their statement closing date. The balance must
be paid in full each month, but cardholders can opt to defer paying the full balance for two months
without incurring the usual 1.5% to 2.99% past-due penalty. And while the $185 annual fee is more than
double what's typical, with the 1.5% discount on purchases for on-time payments, a business owner
would recoup it with $12,335 of spending. (A spokeswoman for American Express says the issuer has
adopted a number of CARD Act provisions, including 45 days' notice of term changes and a fixed
monthly due date.)
Chase Ink Bold with Ultimate Rewards offers unlimited points for spending, redeemable for cash
(including a $100 bonus with your first purchase) and requires payment in full each month. There's a
$95 fee after the first year; a different version, the Ink Cash Business Card, has no fee but charges a
rate of 13.24% to 19.24% if you carry a balance. The Ink Cash Business also offers unlimited 1% cash
back, and 3% back on up to $2,000 in monthly spending in bonus categories including office supplies
and dining. (A spokeswoman for Chase says business cards get the fixed payment dates and extended
payment times provided for under the CARD Act.)
Best Card Worth the Annual Fee
Issuers' pre-CARD Act threats to resurrect annual fees turned out to be largely bluster. A Consumer
Action survey found that only 12% of the cards surveyed carried a fee, down from 21% in 2009 -- and
only 16% of consumers said they saw a change in annual fees on their card in that time. Avoiding those
cards that do carry an annual fee is still the right strategy for most consumers, Susswein says,
especially since the average fee has increased to $65.20, up from $62.75 in 2009. Interest rates also
tend to be higher than what may be available on a no-fee card. Anyone who isn't charging more than
$10,000 a year and paying off the balance in full each month probably isn't racking up enough rewards
and other card benefits to offset that fee.
But there can be exceptions to the avoid-annual-fees rule, depending on how you spend. Because the
customers who carry cards with annual fees tend to spend a lot and don't carry a balance, card issuers
have added perks and waived fees for the first year. They're also extending offers to more consumers -you'll still need excellent credit to qualify, but if you've always wanted an American Express Centurion
card, your chances are better than ever.
Which card is best depends on your spending habits -- a frequent driver will get more out of a card with
gas spending bonuses than an elite-frequent flier, for whom an airline-specific card may be a better fit.
BillShrink.com offers a calculator to help rewards devotees figure out which card will let them rack up
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more points.
For most spenders, Papadimitriou likes Venture Rewards from Capital One: The $59 fee is relatively
low, and the company will waive the fee for the first year. Plus cardholders get unlimited two miles per
dollar spent which, if redeemed for cash, is equivalent to 2% cash back. There's also a promotion
matching up to 100,000 miles for current airline cardholders. But after the first year, you'd need to
charge at least $12,000 annually to make it a better option than fee-free cards netting a more typical
1.5% cash back (usually expressed as a 1% base rate plus bonus categories).
The $60-per-year Escape by Discover also awards unlimited double miles, plus 1,000 per month for the
first 25 months in which you make a purchase. Every 10,000 miles yields a $100 travel credit to your
account that's $5,000 less in spending than most airline cards, many of which carry higher fees of $85
to $95. Delta ( DAL: 9.82*, +0.02, +0.20% ) fliers and their travel companions get their first checked bag
free with the Gold Delta SkyMiles card from American Express, a $25-per-person benefit that erases
the $95 annual fee (waived for the first year) with two round-trip flights, or just one for a family.
Best Card for a Flexible Credit Line
Remember the old commercials in which a consumer wallowed in embarrassment after his card was
declined? Thanks to the CARD Act, those days are back: Issuers must now get a consumer's explicit
permission to spend above the limit. No permission? No approval for that transaction. Over-limit fees
are also capped at $25 ($35 if you go over twice within six months), less if you went over by just a few
dollars. In response, issuers including American Express, Bank of America and Citibank have
eliminated over-limit fees altogether. "They're not making a lot of money doing that anyway," Satyavolu
says. A Capital One spokeswoman says going over-limit generates a fee on cards that allow it, but
several, such as Journey Student Rewards from Capital One (see "For students") have a fixed credit
limit that cannot be exceeded. Good move, says Susswein: "Going over-limit can end up being a very
costly choice."
Beyond fees, the occasional over-spender must also consider penalty rates. Consumer Action's 2010
credit card survey found that the terms and conditions for some individual cards say going over a credit
limit is a factor that could trigger future rate increases. A Chase spokeswoman confirmed that over-limit
charges can trigger a penalty interest rate. Other issuers, like Citibank, relaxed their over-limit policies
when the CARD Act went into effect February 22, 2010.
Consumers whose monthly charges vary widely, including small business owners, should look first for a
card without a limit, Arnold says. Barring that, pick one where exceeding the limit won't trigger a fee or
penalty. Bank of America Accelerated Rewards American Express has rates ranging from 12.99% to
20.99% and awards 1.25 points per dollar spent. "We don't charge a penalty rate on existing balances
even if the customer is 60 days past due," a Bank of America spokeswoman says, nor do they charge
over-limit fees. And Arnold likes the no-fee Clear from American Express: "If you go over you limit,
they're not going to ding you." Every time you spend $2,500, the issuer mails a $25 reward card.
Page 3102 of 3826
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Bloomberg
Mortgage Brokers Win Bid to Block Federal Reserve Loan Commissions Rule
April 1, 2011
By Tom Schoenberg
Two trade groups representing mortgage brokers won an appeals court ruling temporarily blocking a
Federal Reserve rule that limits commissions for loan officers in mortgage transactions from taking
effect today.
The U.S. Court of Appeals in Washington granted emergency motions from the National Association of
Mortgage Brokers and the National Association of Independent Housing Professionals which argue the
rule unfairly penalize brokers, who wont be able to pay loan officers from consumer-paid fees.
The purpose of this administrative stay is to give the court sufficient opportunity to consider the merits
of the motions for emergency relief and should not be construed in any as a ruling on the merits of
those motions, the court said in its order yesterday.
U.S. District Judge Beryl Howell on March 30 rejected the groups request to stop the provision from
taking effect, finding that public policy interests outweighed harm to the mortgage-broker industry.
The board has reasonably concluded that the rule will further public policy interests, a position that is
further supported by the Dodd-Frank Act, which also includes provisions restricting certain loancompensation practices, Howell said in a 46-page opinion, referring to the law that overhauled the
financial industry last year.
The trade groups filed separate lawsuits and appeals challenging the regulation.
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Mortgage Finance Weaknesses

The Fed rule, part of the central banks effort to fix weaknesses in mortgage finance, is aimed at
preventing mortgage originators from receiving more compensation for selling home loans with higher
interest rates.
Susan Stawick, a spokeswoman for the Federal Reserve, didnt immediately respond to an e-mail
message seeking comment after regular business hours yesterday.
Marc Savitt, president of the National Association of Independent Housing Professionals, said Were
glad the judges issued the stay.
Once they have the opportunity to review the entire case, we think theyll agree with us that the Fed did
not have the authority to issue the rule, Savitt said.
Mike Anderson, government affairs chairman of the National Association of Mortgage Brokers, also
welcomed the decision.
If we win this it will be a victory for consumers, Anderson said.
The Dodd-Frank law, the most sweeping overhaul of financial regulation since the 1930s, created a new
Consumer Financial Protection Bureau that must also write regulations to prevent loan officers from
steering customers into costly loans.
The cases are National Association of Mortgage Brokers v. Board of Governors of the Federal Reserve
System, 11-5078 and National Association of Independent Housing Professionals Inc. v. Board of
Governors of the Federal Reserve System, 11-5079, U.S. Court of Appeals for the District of Columbia
(Washington).
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Page 3104 of 3826
American Banker
Fed Rules Beget a (Mostly) Volume-Based Mortgage Commission Model
April 1, 2011
By Alex Ulam
Regulations scheduled to take effect Friday have prompted the top two home lenders to overhaul loan
officer compensation by tying it to sheer volume to a greater degree than before.
Confidential documents prepared by Bank of America Corp. and Wells Fargo & Co. for their respective
sales forces and obtained by American Banker (B of A, Wells) offer a window onto the new model.
Various bonuses and incentives will be eliminated, though new ones have been added; in at least
Wells' case, they are designed to encourage good customer service and sound lending practices.
The Federal Reserve's compensation rules come on top of a regulations that the U.S. Department of
Labor issued last year that are forcing many banks to put loan officers on payroll instead of paying them
solely by commission.
"This is like Y2K for us it is a massive change to all systems," declares Brian Koss, executive vicepresident of Mortgage Network, a correspondent lender in Danvers, Mass. "You are adding a
tremendous amount of cost which comes from complying with this including the programming,
retrofitting your business to meet the Federal Reserve rules, and you have to factor in the assumption
that people are going to make mistakes."
The Fed rules are designed to protect consumers from the deceptive lending practices that were
blamed for inflating the housing bubble. The rules take aim at form of bank loan officer compensation
known as a service release premium, under which banks made payments to loan officers upon the sale
of a loan into the secondary market. Service release premiums were roughly equivalent to to the muchcriticized yield spread premiums paid to brokers (which are also prohibited under the new rules).
The amount of revenue generated through an SRP was often related to loan terms that were
disadvantageous to the borrower. One of the most controversial practices that often led to a higher SRP
was putting a borrower into a mortgage with a higher interest rate than they qualified for. So the new
Fed rules prohibit payments to a loan originator based upon the loan's interest rate or other terms.
"It is hard to argue that we" the industry "didn't incentivize our sales staff to sell products that
disadvantaged the consumer," said David Lykken, managing partner of KLS Consulting, which does
business as Mortgage Banking Solutions. "In the big scheme of things," he said, the Fed rule "could be
Page 3105 of 3826
good for our industry although it is bringing about a lot of pain, a lot of challenges."
B of A's plan says the bonuses loan officers once received for originating loans to low-income
borrowers will no longer be awarded. The additional 15 basis points that loan officers once received on
government-insured loans also are being nixed.
Under Wells Fargo's plan, loan officers will now be receiving 43 basis points, not per loan, but rather for
a monthly volume of up to $899,000. The rate rises with an increase in volume. At $1.9 million in
monthly loan volume a loan officer will receive 63 basis points.
Bank of America's loan officer compensation is on a similar scale. On a monthly volume of up to

$899,000, loan officers receive 50 basis points. And at $2 million a month, loan officers will receive 65
basis points.
Both banks also have new bonus features to replace the many rate-based incentives that they can no
longer offer. Under B of A's plan, a loan officer who sells a minimum $20 million of loans annually is
eligible for admission to a "President's Club," which comes with a bonus of 4 basis points. B of A loan
officers who sell a minimum of $32 million annually are eligible for the Chairman's Club, an honor that
comes with a bonus of 7 basis points.
B of A spokeswoman Jumana Bauwens said it is complying with the Fed's new requirements but
refused to discuss the company's new loan officer compensation plan.
Wells Fargo's compensation plan provides loan officers with the opportunity to earn bonuses according
to customer loyalty and loan file quality measures. The new bonuses offset the reduction to the base
compensation rate and should let top performers earn the same money they were making before the
rule changes, said Wells Fargo Home Mortgage spokesman Tom Goyda.
The customer loyalty bonus is awarded semiannually to loan officers who receive a high score on a
customer satisfaction survey and it is worth 3 basis points. Loan file quality, which is not defined in the
plan and which Goyda would not describe, is worth another 3 basis points annually.
To address the new labor rules, Wells Fargo also is in the midst of transitioning all of its loan officers to
an hourly wage salary, which will include overtime. Goyda said loan officers will still have an incentive to
sell more loans from the new volume-based commission. "We are going to continue to be able to pay
for performance," he said.
However, Lykken, the consultant, who reviewed the Wells Fargo and B of A compensation packages for
Page 3106 of 3826
American Banker, said the new plans will greatly reduce compensation for loan officers and he predicts
that many will decamp to independent mortgage banks where he says they can make more.
"There are mortgage companies out there offering twice the compensation that B of A and Wells Fargo
are offering," he said. "They will pay minimum wage" on the base salary, "and then they will pay a much
higher rate for volume."
Arthur Axelson, of counsel to the Washington law firm Dykema, said incentives tied to loan terms
sometimes allowed salespeople to cut a better deal for their customers by giving up a percentage of
their YSP or SRP. However, he agreed that many abused the compensation model.
"To the extent that loan originators are not able to give up their share of a yield spread premium, the
customer may lose out," he said, "but it does take the incentive out of the unscrupulous loan officers
steering customers into high cost loans so it is a double-edged sword."
Koss from Mortgage Network said the new Fed rules, in combination witht the new Labor Department
rules, are changing the composition of the loan officer workforce.
"There is a whole new world of part-time loan officers who are being forced out," he said. "Most
companies are just saying, 'We cannot afford to have you, this is now a demanding full-time job.'"
Koss said that under the new rules, some moderate-income customers will suffer. "By basing it on loan
size, you are telling the loan officer, 'I will pay you more to go qualify people for the biggest loan,'" he
said, "which normally you would expect to be wealthy people."
Under the old model, "where there was more work, you had more pay," he said. "You had more work to
do to clean up [applicants'] credit but [loan officers] cannot do it anymore even though there is a
salary involved, you are telling them, 'don't spend time with people who need help.'"
Axelson agreed that there may now be a dangerous temptation for loan officers. "Loan officers will have
to be careful that they are not discriminating on a prohibitive basis on the basis of the Equal Credit
Opportunity Act," he said. "If a loan officer refuses to take applications for smaller loan amounts, it may
have the effect of discriminating against lower income consumers who fall into minority or a protected
class."
Still, as a result of the new rules, loan officers who took advantage of low-income borrowers might also
find that there is no longer any room for them in the business.
Page 3107 of 3826
"I think that you are going to see a huge turnover," said Lykken. "The guys who made an inordinate high
amount of money in this industry, the low fruit pickers, the migrant opportunists, they are going to exit
the industry and that is a good thing."
Back to Top
Bloomberg
U.S. Mortgage-Relief Plan Has Fewer Delinquencies Amid Bigger Reductions
March 31, 2011
By John Gittelsohn
Mortgages modified through the main federal relief program fell into delinquency at about half the rate
as those in other plans because the government provides bigger payment reductions, according to U.S.
bank regulators.
Thirteen percent of loans modified through the Home Affordable Modification Program in the first half of
last year were 60 days delinquent after six months, compared with 24 percent of loans in alternative
programs, the Office of the Comptroller of the Currency and the Office of Thrift Supervision said today
in a report. After nine months, the re-default rate was 17 percent under the Obama administrations
plan, compared with 32 percent under others offered mostly by banks.
The re-default rates on these HAMP mods are encouraging, Joe Evers, deputy comptroller for large
bank supervision at the comptroller of the currencys office, said in a conference call today. If you ask
some of these homeowners who got HAMP mods, I think theyd say that it is working.
Policy makers are debating the best ways to reduce foreclosures and fix the housing market after a fiveyear decline in prices has left about one in four homeowners with loans bigger than the value of their
properties. The House of Representatives voted 252-170 on March 28 to eliminate the HAMP program,
which pays banks and mortgage servicers to modify monthly payments for delinquent borrowers.
Page 3108 of 3826
Payment Cuts
Neil Barofsky, special inspector general for the Troubled Asset Relief Program, has called HAMP a
failure, and said it pales in comparison to the record 2.9 million foreclosure filings in 2010.
About 608,000 homeowners started permanent loan modifications under the administrations program
as of Jan. 31, up from 117,000 a year earlier, the Treasury Department reported March 2. Borrowers on
about 2 million home loans received modifications through proprietary programs by banks and loan
servicers.
During the fourth quarter, HAMP modifications reduced monthly payments by an average $587, or 35.9
percent, compared with reductions of $351, or 22 percent, from other programs, according to todays
report.
About half of all trial modifications extended through HAMP are canceled, a failure rate that isnt
counted in the regulators report, said Bryan Hubbard, a spokesman for the comptroller of the currency
s office in Washington. Many borrowers canceled by HAMPs trial program later get proprietary
modifications, contributing to a higher failure rate, he said.
Risk Factor
The riskier borrowers who dont qualify for HAMP get these other modifications, Hubbard said on the
conference call. Therefore they have inherently more risk associated with them.
The number of completed foreclosures decreased almost 50 percent in the fourth quarter to 95,067, as
lenders and servicers put a moratorium on actions after accusations they used improper procedures,
such as robo-signing documents, to seize delinquent properties, the Treasury Department reported.
New and completed foreclosures are likely to increase in upcoming quarters as moratoria are lifted and
the large inventory of seriously delinquent loans and loans in process of foreclosure work through the
system, the report said.
Settlement Talks
State attorneys general and federal authorities including the Justice and Treasury departments early
this month sent a list of terms to the five largest U.S. mortgage servicers as a starting point for
negotiations to settle allegations of abusive foreclosure practices. The proposals cover almost every
aspect of servicing, from training employees to developing a single point of contact for borrowers
seeking loan modifications.
Page 3109 of 3826
Loan servicers started more than 473,415 home retention actions, such as loan modifications,
compared with 146,132 forfeiture actions, such as foreclosures and short sales, the report said.
The inventory of foreclosures in process increased by more than 7 percent to 1.29 million, or 3.9
percent of all serviced loans at the end of the fourth quarter, the report said.
The report is based on information from 32.9 million first mortgages with $5.7 trillion in principal
balances, or about 63 percent of outstanding loans as of December. The offices of Thrift Supervision
and Comptroller of the Currency are divisions of the U.S. Treasury Department.
Back to Top
Reuters
Foreclosures slow but housing market still hurting
March 31, 2011
By Dave Clarke
Home foreclosures slowed in the fourth quarter, but that is likely to be a brief reprieve once banks move
more aggressively back into this area following a review of their mortgage servicing practices, according
to a report released by U.S. banking regulators on Thursday.
A group of 50 state attorneys general and about a dozen federal agencies are probing mortgage
servicing problems that came to light last year, including the use of "robo-signers" to sign hundreds of
unread foreclosure documents a day.
In the final months of 2010 some big lenders, such as Bank of America Corp (BAC.N), briefly
suspended foreclosure proceedings as they reviewed their methods for dealing with troubled borrowers.
Page 3110 of 3826
New and completed foreclosures are expected to increase in the coming quarters with this pause
having ended, according to the report from the Office of the Comptroller of the Currency and the Office
of Thrift Supervision. The OCC regulates national banks and the OTS regulates the national thrift
industry.
In the fourth quarter, completed foreclosures dropped by almost 50 percent to 95,067, while newly
initiated foreclosures fell by almost 8 percent to 352,318.
Foreclosures in the pipeline actually increased because the number of newly initiated foreclosures was
larger than those completed in the fourth quarter.
The inventory of foreclosures being processed jumped more than 7 percent to 1.3 million in the fourth
quarter.
What to do with borrowers who can no longer afford their homes is a raging political and policy debate.
The state attorneys general are facing off with banks over changes to their mortgage servicing
processes and whether principal writedowns should become a major part of efforts to keep borrowers in
their homes.
The two groups met on March 30 to kick off negotiations that could be lengthy and contentious.
The banks at the meeting were Bank of America, JPMorgan Chase & Co (JPM.N), Citigroup Inc (C.N),
Wells Fargo & Co (WFC.N) and Ally Financial Inc (GKM.N).
Republicans want to end the Obama administration's primary foreclosure prevention program -- the
Home Affordable Modification Program (HAMP) -- arguing it has been a failure.
Earlier this week, the House of Representatives voted 252-170 to terminate HAMP. But the bill is
unlikely to clear the Democratically controlled Senate.
Thursday's report shows HAMP loans are performing better than separate industry efforts to keep
borrowers in their homes.
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OCC and OTS officials noted, however, that the report paints a limited picture of the program. The data
only includes borrowers who made it to the end of the process and had their mortgages modified, and
does not include participants who dropped out.
HAMP is also set up in such a way that it likely attracts people most able to keep making payments,
while industry programs cover a wider swath of troubled homeowners, the officials said.
In a sign of good news for the housing market, the total number of serious delinquencies, those 60 days
or more past due, fell 8.2 percent to 1.76 million in the fourth quarter, according to a report.
The OCC and OTS Mortgage Metrics Report provides performance data on first-lien residential
mortgages serviced by national banks and federally regulated thrifts. The mortgages in this portfolio
comprise about 63 percent of all mortgages outstanding in the United States.
Back to Top
American Banker BankThink

Even in Disclosure, Fed Shows Propensity to Obfuscate
March 31, 2011
By Heather Landy
Today Im especially missing my old boss Mark Pittman, the financial journalist who petitioned the
Federal Reserve to identify the financial firms that borrowed from the discount window in 2008.
The Fed denied Marks Freedom of Information Act request and then fought a lawsuit filed by his
employer, Bloomberg News. After the legal battle reached the Supreme Court, the Fed was forced to
make the disclosure, and it did so Thursday with a data dump that was at least as noteworthy for how it
was disclosed as for what it disclosed.
Page 3112 of 3826
The information was made available on computer disks wait, people still use those? that reporters
could pick up from the Feds building in Washington (or have mailed to them if they were willing to wait).
Viewable on the disks were reams of documents captured in an overwhelming number of PDF files
meant to be opened one by one.
How Mark would have delighted in all this, not because he would have looked forward to spending his
day opening PDF documents and doing the painstaking work of translating them into plain English, but
because he understood and appreciated the fact that institutions be they financial, political or
otherwise have a natural propensity to obfuscate.
Mark died in November 2009 at the age of 52. He had a history of heart trouble, an irony not easily
reconciled by anyone who knew just how much heart he had, for his work, for his family, for his
colleagues and his friends. Mark taught me nearly everything I know about the credit markets. When I
worked on the corporate finance reporting team he led for a time at Bloomberg, he warned me there
was nothing he could offer to advance my writing some editors are wordsmiths; Mark was not but
the one thing he could really teach me, he said, was how to get people to tell you sh*t.
The disclosure and accountability Mark demanded of the Fed on behalf of his fellow citizens has been
delivered now, and it will continue to be delivered, at least on a delayed basis, thanks to the portion of
the Dodd-Frank Act instructing the Fed to identify discount window borrowers some two years after the
fact. Maybe the next battle on this front will be over the manner in which the disclosures are made, so
that any curious citizen could satisfy his or her curiosity without the aid of a rocket scientist trained to
manipulate hard-to-organize data.
Back to Top
American Banker
Regulations Are Burying Small Banks Alive
April 1, 2011
By William M. Isaac and Robert H. Smith
Everyone has an interest in policies that will foster a strong economy and sustainable job growth. Some
Page 3113 of 3826
steps have been taken, but we are not getting the job done.
Over half of U.S. job growth is initiated by small businesses. In recent years many of our larger
companies have been a declining source of new jobs as a result of outsourcing of manufacturing,
assembly, customer service and technology functions to lower-cost countries.
While many factors stimulate small-business startups and growth, there are three overarching
prerequisites: confidence in the future, available capital and access to credit.
Business and investor confidence remains weak, and improvement depends on a improved regulatory
climate and sound monetary, fiscal and tax policies. New business funding is being curtailed as we
await more clarity about these critical government functions.
Washington has encouraged banks to make additional credit available for small-business growth while
routinely condemning the past actions of banks. Policymakers cite banker greed and mismanagement
as principal culprits in nearly bringing down the financial system.
We agree that banks bear some responsibility for the 2008 financial meltdown, alongside poor
government regulation and policies. But this charge is largely applicable to a comparative handful of big
commercial and investment banks, mortgage banking companies, insurance companies, rating
agencies and government-sponsored mortgage entities.
Thrown under the bus in this environment are some 7,000 community banks that are feeling the full
brunt of the Dodd-Frank financial "reform" legislation. The 2,300-page bill will heap at least 10,000
pages of new regulations on community banks while doing almost nothing to solve the problems that
brought us to financial panic in 2008.
Our government's one-size-fits-all mentality has a disproportionate effect on the smallest banks. Keep
in mind that the average community bank (with assets of $230 million) is a thousandth the size of Bank
of America. Yet that little bank is subject to the same public condemnation and regulatory backlash.
The Collins amendment to the Dodd-Frank legislation, which eliminates trust-preferred stock as a future
source of capital, has a particularly insidious impact on small banks. While elimination of trust-preferred
stock is likely a good policy for larger institutions, it cuts off one of the few alternatives for community
banks to raise new capital.
To deny access to an important source of capital almost certainly forces increased consolidation among
small banks, particularly when coupled with a heavier regulatory burden. Over the past 25 years the
Page 3114 of 3826
number of community banks has fallen at a rate of 3%-4% a year. Trends suggest the number could go
from 7,000 to 3,500 within this decade.
At a recent meeting in Washington of 1,000 bankers from all size of banks, audience members were
asked to raise a hand if they believed banks with assets of less than $100 million had a future. Virtually
no hands were raised. The same question was asked about $500 million-asset banks and there was a
50% show of hands. This does not bode well for America's smaller communities and businesses.
Community banks are the heart and soul of their communities, supporting much of the civic good while
serving as the primary source of small-business credit.
The sad truth is that many community banks are weakened and no longer able to adequately support
small business. It is past time for Washington to take note of this situation and restore the future of
community banking.
The regulatory burden on community banks must be reduced, and we must remove unnecessary
impediments to community banks' ability to raise capital. Years ago community banks were able to
obtain capital in the form of subordinated debt from large correspondent banks. This worked
exceptionally well because the correspondent banks were sophisticated creditors that imposed and
enforced operating conditions on the safety and soundness of the community banks issuing the
subordinated debt.
It is imperative that we foster stronger community banks more capable of meeting the needs of small
businesses and helping to create job growth. We are running out of time to fix the problems that bad
government policies have created for community banks and for those who depend on them.
William M. Isaac, former chairman of the Federal Deposit Insurance Corp., is the global head of
financial institutions for FTI Consulting, chairman of Fifth Third Bancorp and author of "Senseless Panic:
How Washington Failed America." Robert H. Smith, former chairman and CEO of Security Pacific
Corp., is a founder and director of Commerce National Bank in Newport Beach, Calif.
Back to Top
Page 3115 of 3826
Senate Republicans call for complete repeal of Wall Street reform

April 1, 2011
By Peter Schroeder
Senate Republicans are introducing legislation to repeal the Wall Street reform law in its entirety,
breaking with House Republicans who have opted for a go-slow approach to rolling back the regulatory
overhaul.
Sen. Jim DeMint (R-S.C.) announced Friday he will introduce legislation to repeal the Dodd-Frank
financial reform law and said the bill has 18 co-sponsors, including the entire Senate Republican
leadership.
"We must repeal the Democrats takeover of the financial markets that favors Wall Street corporations,
over-regulates small businesses with massive new bureaucracy and hurts consumers, said DeMint in a
statement. This financial takeover will strangle our economy and move jobs overseas unless it is
repealed."
The bill has attracted a variety of Republican co-sponsors, ranging from the most senior members of
the caucus to fiscally conservative freshmen.
Senate Minority Leader Mitch McConnell (R-Ky.), Minority Whip Jon Kyl (R-Ariz.), Republican
Conference Chairman Lamar Alexander (R-Tenn.) and Republican Policy Committee Chairman John
Thune (R-S.D.) are all co-sponsors on the bill, along with newcomers Sens. Mike Lee (R-Utah) and
Rand Paul (R-Ky.), according to DeMint's office.
The legislation represents newfound aggression towards the Wall Street reform law from Republicans.
While the GOP has been critical of the law, citing concerns over excessive and burdensome regulations
that they say could stifle economic growth, a big push to scrap the law completely has failed to
materialize.
Rep. Michele Bachmann (R-Minn.) introduced a similar repeal bill in the House on the first day of the
112th Congress, but it has failed to gain traction. Instead, House Republicans are pushing a package of
smaller, targeted bills that would alter or repeal certain provisions of Dodd-Frank.
But now, DeMint is calling for the entire piece of legislation to be eliminated.
Page 3116 of 3826
"If the Democrats were serious about financial reform that protects small businesses and consumers,
they would join with Republicans to curb the power of the Federal Reserve, permanently end too big to
fail and wind down Fannie Mae and Freddie Mac," he said.
The push to roll back Wall Street reform comes as several federal regulators are racing to write rules
implementing its various provisions, and as the economy and financial markets have enjoyed a run of
good news.
The Dow Jones Industrial Average closed Thursday having recorded its best first quarter since 1998,
despite turmoil in the Middle East rocking markets earlier in March.
And the Labor Department reported Friday that the unemployment rate has dropped to 8.8 percent as
the economy added 216,000 jobs, beating economist expectations. The jobless rate now stands at its
lowest point in two years.
Back to Top
Page 3117 of 3826
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West, Catherine (CFPB)

(fydibohf23spdlt)/cn=recipients/cn=westca>
_DL_CFPB_AllHands
Operations FAQs for All Hands

Fri Apr 01 2011 14:07:13 EDT
CFPB All Hands,
To help build awareness for the policies and processes within the Office of the Chief Operating Officer, I
asked my team to pull together responses to many of the most frequent questions we get from you
our clients for the services we provide. We will do this from time to time if you all find it helpful. Please
let us know if you have any further questions.
Catherine West
Chief Operating Officer, CFPB
Frequently Asked Questions for Office of the Chief Operating Officer (OCOO)
Hiring Getting New Staff
Question - I need more staff. How do I get new hires?
Answer Well provide more detailed/process information in the next update. Currently, our Human
Capital Customer Consultants are hard at work with their respective Associate and Assistant Directors
customers to develop job content (PDs), org charts and vacancy announcements as quickly as
possible. Additionally, the OHC (Office of Human Capital) has implemented a Recruitment Team
located on the 7th floor that is currently focused on the interview/selection of transfer agency
applicants. More info on this group will be provided in the next update as well.
Page 3118 of 3826
Question Other than speeches, should members of my team be visiting schools or career fairs on
behalf of CFPB?
Answer No. All career fairs, school events, and recruitment focused outreach must be coordinated
through the recruitment team. The recruitment team would be happy to work with you and your team on
any ideas you may for outreach. If you have any questions about outreach please stop by 7004 or
contact Stephanie Gorski.
Question - I need help from an administrative assistant. How do I get one?
Answer During week of March 21, we got our first set of candidates back from our administrative
assistant job posting. Imani Harvey and Anna Canfield are in the process of screening and organizing
interviews with candidates. If you have a need for an administrative assistant, let them know. There
are a few important points to keep in mind in filling your need for administrative assistants:
a.
FTEs - Each and every Administrative Assistant assigned to an organizational unit will be
counted as part of the total authorized FTE level for that unit. There is no central pool of central
Administrative Assistants and their underlying FTEs to be distributed above and beyond your approved
workforce. Because Administrative Assistants will be assigned to help multiple Assistant Directors
within a Directorate, a suggested practice is to place the Administrative Assistants within the Front
Office box of the Directorate organization chart and have the assistants report to the Executive
Assistant of the Directorate.
b.
Assignment To meet our goal of a lean and flat organization, Administrative Assistants will be a
shared and limited team resource and focused on supporting the needs of executives at the Assistant
Director and above level. Executives at the Associate Director level should have a dedicated Executive
Assistant assigned to them. Executives at the Assistant Director level are expected to share
Administrative Assistants at a standard ratio of one Administrative Assistant per three to four Assistant
Directors. If a Directorate seeks to have a different ratio of Administrative Assistants to Assistant
Directors than the standard, they should present a plan to the Chief Operating Officer for approval that
outlines the business need and the proposed allocation.
Question Can I hire an intern?
Answer First note that the process to hire interns is the same as hiring full time people same rules
apply. Human Capital is planning to have a great intern program as part of our future as a way to
attract talent and engage with students. For our first year through our stand up phase, however, we are
not going to have a full intern program for several reasons. First, we need to focus our Human Capital
resources on the large amounts of HR processing for recruiting full-time employees. Even an unpaid
intern program is not without cost. Second, we will be constrained for office space for the next several
months and will need every available seat for full-time staff. Third, we expect our management to be so
focused on our standing up activities that we could not guarantee a well-structured and rich experience
Page 3119 of 3826
for interns. Commitments that have already been made to interns have been fully shared with the
Human Capital team. No other slots (paid or unpaid) are available at this time. If you wish to pursue an
paid or unpaid intern for the fall semester, please contact your Katie Cronin, Student Programs
Coordinator, in HC. Katie will coordinate recruitment of all future interns.
Hiring - Finding Opportunities for Job Seekers
Question - I know someone who is interested in working at CFPB. Where should I send them?
Answer Great! Referrals are a great source of talent as we seek to get the word out about CFPB
hiring to as wide and diverse an audience as possible. The next step is to advise them to go to the jobs
page of our website to see the open positions we are hiring for. Not only is that the best way to get
them specific job openings, but it is also a good way for them to get a feel for different roles within
CFPB to see which ones appeal to them most. If they see one of interest and they meet the
qualifications, encourage them to apply. If they dont see one of interest, tell them to check back, as we
will continually be posting more and more over the next weeks.
Question - I know someone who is interested in working at CFPB but none of the jobs posted seemed
to fit for them. Where should I send them?
Answer - First, note that new positions will be getting posted on a regular basis over the next months,
so tell them to try again later to see if there are new ones that they are interested in and qualified for. If
you want to network around to find other roles, ask people what positions they are going to be posting
and think what your contact might fit in. However, always remember that individuals must apply against
a posted vacancy and no guarantees can ever be made regarding placement.
Question Does OCOO have job openings?

Answer Yes. In addition to the ones already posted, here are positions that may soon be posted in
OCOO. If your person has interest and qualifications for any of these roles, please forward their
resume to the hiring manager.
Administrative Ops (Diane Cantrell) will be posting these positions:
o Assistant Director, Ops and Facilities

o Manager Critical Infrastructure Protection
o Emergency Management Specialist
Page 3120 of 3826
o Health and Safety Specialist

o Facilities Engineer
o Facilities Management Specialist
Procurement (David Gragan) will be posting these positions:
o Contracting officers
o Senior procurement analyst
Privacy, Records, Open Government Team (Victor Prince) will be posting these positions:
o Assistant Director, Records and Privacy

o Records Analyst
o FOIA Analyst
o Privacy Analyst
Finance (Eli Erickson) will be posting positions in these areas:
o CFO
o Chief Risk Officer and Compliance Analyst
o Audit and Controls Chief and Support
o Budgeting Planning, Analysis, and Execution Chief and Support
o Agency-Wide Performance Planning and Evaluation Chief and Support
o Travel and Relocation Administration Chief and Support
Human Capital (Dennis Slagter) will be posting positions in these areas:
o Benefits plan specialist and counselor

o Learning & Development coordinator and analysts
o Performance management
o Staffing, Classification, and Compensation
CIO (David Forrest) will be posting positions in these areas:
o Network Infrastructure (network architect, LAN manager, analyst)

o Security (network security architect)
o Data (business analytics specialist and manager)
Consumer Response (Deb Reilly) will be posting in these areas:
Page 3121 of 3826
o Assistant Director, Consumer Response

o Consumer Response Specialist(s) - General
o Consumer Response Specialist(s) Credit Cards
o Consumer Response Specialist(s) Mortgages
o Budget Analyst (1)
o Section Chief (1)
o Consumer Response Manager Quality Control (1)
o QA Monitor Contact Center (1)
Front Office (Victor Prince) will be posting two positions:
o Administrative Assistant
o Project Manager.
Spending Money
Question How do I arrange to go on official business travel?
Answer If you need to travel for work, have your supervisor approve the trip. Please contact your
administrative assistant or Brandace Elliott to register in GovTrip and make your travel reservations at
least one week in advance. If you plan on traveling more than four times per year for the CFPB, you
will need to receive a government travel credit card.
Can I go to a conference, training, or symposium?

Answer If you need to pay to attend the event, please have your supervisor approve the cost, location,
and duration of the event. Then see any one of our purchase card holders, which is currently Maria
Hart, in order to register and pay. We can charge up to $3,000 for a single transaction on the purchase
card. Please request assistance from our purchase card holders at least one week in advance. If you
need to travel in order to attend the event, please contact your administrative assistant or Brandace
Elliott to register in GovTrip and make your travel reservations at least one week in advance.
Page 3122 of 3826
Question I need to buy something to do my job. How do I do that?
Answer Here are the steps and questions you should go through to proceed.
First, get your supervisors approvals that it is an appropriate business need (with the exception
of routine office supplies such as pens and folders).
Next, figure out who to start with:
o If the item is going to be over $3000, it must start through the Procurement team.
o If the item is office supplies, look in the shared supply cabinets on the 5th floor. If you dont see
what you need, contact Maria Hart who has access to supply catalogs and can procure other items.
o If the item is technology-centric (e.g., computers, software, phones, printers), contact the OCOOs
Office of the CIO who provide those needs centrally. Every employee gets a standard set of technology
for their role when they onboard. If they have special needs beyond that, they can contact CIO to apply
for an exception.
o If the item is office furniture related equipment (e.g., chair, desk) then contact the OCOOs
Operations and Facilities team, who provides those needs centrally. Every employee gets a standard
set of technology for their role when they onboard. If they have special needs beyond that, they can
contact CIO to apply for an exception.
o If none of the above, contact Procurement.
Question How can I get computer or phone equipment?

Answer All CFPB employees receive a standard set of computer and phone equipment relevant for
their role when they onboard.
Computer - All employees receive a laptop w/docking station, 24 monitor, mouse, keyboard,
desk phone, and a DORA Token to provide for a more flexible and productive work environment.
Monitors If their Assistant Director approves, CFPB employees may request two 19 inch
monitors instead of the standard one 24 inch monitor. Any requests for monitors other than these
options will be considered on a case by case basis by the Office of the Chief Information Officer (OCIO)
in conjunction with the employees supervisor. Contractors are not entitled to dual monitors or 24 inch
monitors.
Headsets - CFPB employees may request a standard wired headset. A request for any headset
other than that currently being supplied will be reviewed and considered by the OCIO. Contractors are
not entitled to telephone headsets.
Printers - Employees are not permitted to have a personal printer (B&W or Color). If unique
circumstances exist and a personal printer is required to satisfy a specific need, these requests will be
reviewed and considered by the OCIO in conjunction with the employees supervisor.
Page 3123 of 3826

WiFi - All WiFi device requests will be reviewed and considered by the OCIO. If a legitimate need
exists, the OCIO may permit WiFi devices for employees on a case by case basis. Contractors may not
receive WiFi devices.
Non-standard IT equipment requested to satisfy accessibility and/or ergonomic needs shall be

evaluated and provided for by the OCIO. Our equipment will exceed compliance with the Americans
with Disabilities Act.
Question Who gets Blackberries?
CFPB staff who meet these assignment guidelines are to be assigned a Blackberry device:
o Office of the DirectorIncludes CFPB Director, Chief of Staff, senior advisers and direct reports;
o Associate Directors and Assistant DirectorsIncludes Division and Office heads;
o CFPB staff assigned significant emergency preparedness responsibilities;
o CFPB essential Information Technology staff;
o Essential headquarters staff who based on the determination of their Associate Directors:
1.
Have significant program responsibilities;
2.
Whose access to a Blackberry would be of significant benefit to the organization
o Satellite location leadership;

o Headquarters and field personnel who spend over 50 percent of their workday out of the office or
away from a functional workstation.
Facilities and Security
Question I am planning to bring in many new hires over the next weeks and months. Where are we
going to put them?
Answer Short answer is we can be good through mid-April with current space in this building but need
to start moving into other areas after that. We have been promised some more space in this building to
expand in and we are working on the specific timing of when we secure that. We are likely going to
have to get some other agencies to move faster than they originally wanted to. We are working on
putting together the numbers to make that case. Stay tuned. In the mean time, we will likely begin
efforts to get more people into the space we have by converting conference rooms into bullpens and
doubling up offices.
Page 3124 of 3826
Question How can I get in the building (1801 L St.) after hours?
Answer You can sign for a Kastle card that will provide the access needed after hours. These cards
are issued by the Office of Security located in room 7517. The contact is Juan Mestre @ 202-4357045.
Question - Im having problems with the e-QIP application for the background investigation. Who do I
contact?
Answer - You can contact Kathleen Horan, Lead Personnel Security Specialist @ 202-435-7512.
Question - How long does it take to receive an HSPD-12 PIV card?
Answer - PIV card issuance may vary from 3 weeks to a month.
Page 3125 of 3826
From:
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Mann, Seth (CFPB)

accounts/cn=standard users/cn=glasere>; Darling, Eben (CFPB)
RE: pls confirm/deny FTE count? and if we don't know can you tell me that?
Fri Apr 01 2011 13:11:16 EDT
Im told by Jim that they are notional right now so I wouldnt throw too much weight behind them
depending on what its for, and to be on the safe side, Id possibly err on the side of unusable for now..
Seth J. Mann
Management Analyst
(P) 202-435-7518
(F) 202-435-7329
for guidance.

To: Mann, Seth (CFPB); Darling, Eben (CFPB)
Subject: RE: pls confirm/deny FTE count? and if we don't know can you tell me that?
Thanks, so much! Are non bank and bank approx? or unusable ?
Page 3126 of 3826
From: Mann, Seth (CFPB)

To: Darling, Eben (CFPB); Glaser, Elizabeth (CFPB)
Confirm all except Bank and non-bank supervision they are a little tricky and we dont seem to have
solid numbers on those (drilled down to HQ).. overall, though, nonbank is 208 and bank is 358 Let
me know if you need anything else.
Seth J. Mann
Management Analyst
(P) 202-435-7518
(F) 202-435-7329
for guidance.
From: Darling, Eben (CFPB)

To: Glaser, Elizabeth (CFPB); Mann, Seth (CFPB)
Thats Seths purview, but some of those numbers might be a tad off. Is that right Seth?

To: Darling, Eben (CFPB); Mann, Seth (CFPB)
Subject: pls confirm/deny FTE count? and if we don't know can you tell me that?
Can you confirm or deny these FTE counts? Still current?
Page 3127 of 3826
Thanks!
(b) (2), (b) (5)
Page 3128 of 3826
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FW: Charity Event with Caps Player Mike Green

Fri Apr 01 2011 13:10:50 EDT
-----Original Message----From: Katie Janik [mailto (b) (6)

Sent: Sunday, March 27, 2011 11:09 AM
Subject: Charity Event with Caps Player Mike Green
Hi Everyone This Friday (April 1st) is a benefit at Ireland Four Courts for
Arlington food bank with a Caps theme. Mike Green will be there! Info
is below. If you are interested in going you have to purchase a
ticket ahead of time, link is below. See you there!
-Katie
April 1st "Hunger is No Joke" Benefit with Honorary Chair Mike Green,
#52 of the Washington Capitals, sponsored by Segue Technologies
Join AFAC's Young Professionals (21-40 years of age) at their benefit
for AFAC on Friday, April 1, 8:00 p.m. at Irelands Four Courts [2051
Wilson Boulevard, Courthouse Metro Stop].
Tickets: $30 each or 2 for $50. Each ticket includes 2 drink tickets
good for draft and bottled beer, rail drinks, soft drinks, and
appetizer buffet. Live music, raffle and 50-50 drawing including
autographed CAPS gear!
http://www.brownpapertickets.com/event/159453
Page 3130 of 3826
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HELPDESK (DO)
Global_All
</o=ustreasury/ou=do/cn=recipients/cn=global_all>
Email / Exchange Maintenance

Fri Apr 01 2011 13:01:20 EDT
Scheduled Required Maintenance
Saturday, 2 April, 2011 10:00am to 6:00 PM
User Impact: During this maintenance period, customers should experience no impact. No mail will be
lost during this period and Blackberrys will not be affected.
Please notify the DO IT IMS Service Desk at 202-622-1111 of any issues during or continuing after the
above maintenance window.
Page 3137 of 3826
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5 minutes in the next hr to discuss HUD? I would be grateful.
Fri Apr 01 2011 12:32:14 EDT
Page 3140 of 3826
From:
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Angela Beatty
(b) (6)
Cc:
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FW: Monday agenda
Fri Apr 01 2011 12:25:34 EDT
-----Original Message----From: Lopez-Fernandini, Alejandra (CFPB)

Subject: Monday agenda
Liz,
Tiny suggested change, if its possible to make. Can you revise my title to add 'acting'? Since I am just
acting team lead?
Thanks much,alejandra
Page 3143 of 3826
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Fri Apr 01 2011 12:25:19 EDT

CHART FOR Dennis Brief 3-21-11 545 pm.docx
Kevin K. Lownds
Review Analyst
(202) 435-7399
Page 3144 of 3826
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FW: Quick Question

Fri Apr 01 2011 12:24:30 EDT

To: Brown, Charles (CFPB)
Subject: Quick Question
CB,
Quick question---do you have updated FTE estimates for the different CFPB divisions (e.g., OGC will
have 40 employees)? Im trying to put the final touches on the HUD transfer numbersthanks!
-K
Kevin K. Lownds
Review Analyst
(202) 435-7399
Page 3146 of 3826
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Shapiro, Barton
<[email protected]>
(fydibohf23spdlt)/cn=recipients/cn=lowndsk>; Scanlon, Thomas
1063(i) - HUD Rules and Orders
Fri Apr 01 2011 12:23:11 EDT
HUD Regulations for Transfer 4-1-11.doc
Bart,
Here is a start. However, per our discussion, we need to continue to identify and any other applicable
rules or orders (FAQs, etc.?)
As always, thanks so much for your help.
Talk soon,
Elizabeth
Page 3147 of 3826
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HUD
Fri Apr 01 2011 12:19:52 EDT
HUD Regulations for Transfer 4-1-11.doc
I made a separate document which lays out the specific provisions of HUD regulations which we think
transfer because they were in fragmented spaces.
Kevin K. Lownds
Review Analyst
(202) 435-7399
Page 3153 of 3826
From:
Goldfarb, Rachael (CFPB)

(fydibohf23spdlt)/cn=recipients/cn=goldfarbr>
_DL_CFPB_AllHands
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Update
Fri Apr 01 2011 12:17:10 EDT
Hi Everyone,
A COO-wide update is going to follow shortly around the policies for IT resources but if you have Help
Desk related-issues please refer them to Michael Botehlo, our new Help Desk Liaison. The other
information sent in the earlier e-mail remains true (see below). Apologies for any confusion this may
have caused.
Thanks, RG
Because we seem to be growing exponentially every day (thank you Human Capital Team!) I wanted to
make you aware of policies around equipment and introduce you to some new members of our staff
who can help to better serve you and respond to your Help Desk queries and concerns. We regularly
point out, to those who are brave enough to try, that you can always come down to the 1st floor bullpen
which happens to feature some of the coolest (hippest? hipster?) minds at CFPB. (See
consumerfinance.gov. That was the work of your Tech Team.) And while David Gragan might be able
to insert funnier photos into his e-mails, he readily admits that we have the most fun on the 1st floor. We
would love for you to come on down, introduce yourself, and let us know of your question or problem.
Were here to help.
You have phones at your desk that have some fairly nifty capabilities, namely: (1) you can now program
your phone so that it rings simultaneously on both your Blackberry and at your desk; (2) you can login
and logout of your desk phone, thus allowing you to take your extension with you regardless of your
physical location while you are in the building. So, if and when you move from your current desk, you
should keep your same phone number.
Simultaneous Ringing:
You will note that there is an EC500 tab on your phone screen. If you would like your BB and desk
phone to ring simultaneously, simply hit the button directly below EC500 (2nd from the left). A small
check will appear on the screen when it has been activated. You can press this button again if you
Page 3159 of 3826
would like to deactivate this feature.
When you receive a call on your BB that originated on your desk phone, you will hear a brief dial tone
upon answering your BB. You then need to press a single number from 1 to 9 (any single digit is
sufficient) in order to connect with the caller. If you miss the call on your cell, the caller will have an
opportunity to leave a voicemail on your desk phone.
Additionally, you can activate simultaneous ringing while youre away from your desk. Please program
the following phone numbers in your Blackberry:
(b) (6)
(b) (6)
When you dial either number, you will hear a brief dial tone followed by silence. You have now
activated or deactivated this feature depending on the number youve dialed above. Note: You must
call these numbers from the Blackberry you were issued by CFPB; calling these numbers from another
phone will not activate this feature.
If you would like to call and access your voicemail remotely, you may do so from any phone number by
calling: (b) (6)
Anya Williams, our new admin who is sitting outside of Peggys office, has
copies of a VM Quick Reference Guide should you want one.
Logging in and out of your phone
After pressing the Menu button on your phone (immediately above the 2 on the keypad), the second
tab has a Log Out option. Scroll to it and press Ok. Follow the prompts. Note that your password to
log in and out of your phone is your five-digit extension number.
Questions about your phone should initially go through the HelpDesk, but Michael Botelho can follow-up
if a problem youre having persists.
Thanks,
Rachael Goldfarb
Deputy Chief Technology Officer
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RE: TPs
Fri Apr 01 2011 12:13:41 EDT
Take a stab at a couple

Subject: TPs
Should we also ask Slagter if he wants to identify questions, or just identify them for him?
Kevin K. Lownds
Review Analyst
(202) 435-7399
Page 3162 of 3826
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FW: Needed for 2pm - Pick 2 questions for FRS Town Hall
Fri Apr 01 2011 12:04:20 EDT
From: Antonakes, Steve (CFPB)

Cc: Burniston, Tim (CFPB)
Subject: RE: Needed for 2pm - Pick 2 questions for FRS Town Hall
Liz,
Ill take questions 1 and 2. I think they are the most relevant and will provide opportunities to address
many of the issues raised by other questions.
Steve

To: Antonakes, Steve (CFPB)
Cc: Burniston, Tim (CFPB)
Subject: Needed for 2pm - Pick 2 questions for FRS Town Hall
Hi Steve --- as you may have noticed in your Speaker Talking Points (attached), each speaker will
address one or two of the pre-submitted FRS employee questions after their overview. Could you
please identify which 2 questions you would you like to address by 2 pm today? (Sorry for quick
turnaround.) I have copied the questions that pertain to Supervision in this email below.
Thanks!
Page 3164 of 3826
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FW: Draft Regulatory Analysis for List FR notice

Fri Apr 01 2011 11:55:55 EDT
Regulatory Flexibility Act and Exec Orders .docx
Model regulatory language 04 01 (1).docx

Subject: Draft Regulatory Analysis for List FR notice
Hi,
Here is a draft of the section of the List Federal Register notice that addresses the Procedural
Analysis under (i) the relevant Executive Orders and (ii) the Regulatory Flexibility Act.
As you will see, even though the basic information for the RFA is prepared here, we will need to revise
this section depending on our analysis under the APA.
Thomas E. Scanlon
tel. (202) 622-8170
http://www.whitehouse.gov/the-press-office/2011/01/18/improving-regulation-and-regulatory-reviewexecutive-order
Page 3170 of 3826
http://www.archives.gov/federal-register/executive-orders/pdf/12866.pdf
Page 3171 of 3826
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draft Agenda for APA Meeting 04 01 (1)

Fri Apr 01 2011 11:13:06 EDT
draft Agenda for APA Meeting 04 01 (1).docx
Page 3207 of 3826
From:

[email protected]
<[email protected]>
To:
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Date:
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RE: Bureau's meeting with Board attorneys yesterday -- follow up question.

Fri Apr 01 2011 11:12:01 EDT
Hi Krista,
Thank you for your question, and Im sorry for the late reply. In response, you should feel free to
provide us with additional information about your telework arrangement via a cover letter. While our
managers may contact you with further questions as the process moves forward, it will be helpful to
have all necessary information. Again, thank you for following up with me, and please let me know if
you have any additional questions.
Best,
Elizabeth
-----Original Message----From: [email protected] [mailto:[email protected]]
Subject: Re: Bureau's meeting with Board attorneys yesterday -- follow up question.
Thanks, Elizabeth, for the email. I generally do not work on Fridays and
Mondays, but please feel free to give me a call on my cell phone (b) (6)
or email me whichever works best for you.
Thanks for your assistance on this issue. I really appreciate it.
Krista
From:
To:
Date:
Subject:
<[email protected]>
<[email protected]>
04/01/2011 02:34 AM
Re: Bureau's meeting with Board attorneys yesterday -- follow up question.
Page 3209 of 3826
Hi Krista,
I'm sorry for the slow reply. Thanks for your note --- it is good to hear
from you.
I will provide more guidance soon with respect to your question (aiming for
today) or give you a call to discuss.
Thanks so much,
Elizabeth
----- Original Message ----From: [email protected] <[email protected]>
Cc: [email protected] <[email protected]>
Sent: Wed Mar 30 09:37:17 2011
Subject: Bureau's meeting with Board attorneys yesterday -- follow up
question.
Hi Liz -My name is Krista Ayoub. I'm a rule-writing attorney at the Federal
Reserve Board. Dennis and others from the Bureau came to meet with us
yesterday. I had a follow up question and Carolyn Welch indicated that
Dennis would prefer that we send our questions to you so that you can
compile them and make sure that they get to him.
Here is my question.
(b) (2), (b) (6)
Prior to the meeting

yesterday, I had already submitted my "expression of interest" document and
resume. At the time I sent in the materials, I believed that Bureau would
conduct "interviews" with the attorneys. But now I've learned that these
interviews will not be conducted. Given that the interviews won't be
conducted and given discussion at the meeting yesterday, I wonder whether
it would be helpful for me to supplement my materials with a "cover letter"
that further explains my arrangement. (As you can see from my attached
resume, I've indicated on my resume my current work arrangement, and
detailed my responsibilities at the Board since teleworking and while I
worked in the Washington D.C. office.) Or will Bureau management contact me
if they have additional questions about my arrangement. I didn't know how
much interaction there might be between Bureau management and Board
attorneys as the Bureau puts the offers together. I didn't want to miss
the opportunity to further explain my arrangement to the Bureau, but also
didn't want to bombard the agency with unnecessary documents either.
I appreciate any advice that you can give me on this issue.
If it is easier to chat by phone, don't hesitate to call me at 202 785
6027.
Thanks,
Krista
(See attached file: FRB SPT Form for Krista Ayoub March 25 2011.doc)(See
attached file: resume for Krista Ayoub.docx)
Page 3210 of 3826
------------------------------------------------------------------------This message was secured in transit. rep-ZFRSSE
------------------------------------------------------------------------This message was secured in transit.
Page 3211 of 3826
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RE: question
Fri Apr 01 2011 10:52:08 EDT
Both the MOU and the Dodd/Frank Act provide specific limitations on the timing of the transfer process.
Each employee may be transferred no later than 90 days after the designated transfer date. 12 U.S.C.
5584(b)(1). Assuming the designated transfer date remains July 21, 2011, no employee may be
transferred after mid-October of 2011. Of course, this does not limit a Fed employee from obtaining
employment with the Bureau outside the transfer process.

Subject: FW: question
Help? 90 day thing
From: Sokolov, Dan

Subject: question
Does the MOU with Fed allow someone to transfer long after July, say, September or December?
Page 3223 of 3826
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RE: 1063(i) Text

Fri Apr 01 2011 10:28:24 EDT
12 U.S.C. 5583(i).

Subject: RE: 1063(i) Text
New cite?

Subject: 1063(i) Text
Not later than the designated transfer date, the Bureau-(1) shall, after consultation with the head of each transferor agency, identify the rules and orders that
will be enforced by the Bureau; and
(2) shall publish a list of such rules and orders in the Federal Register.
Kevin K. Lownds
Review Analyst
(202) 435-7399
Page 3235 of 3826
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FW: Remind me to send

Fri Apr 01 2011 10:23:13 EDT
Can you send me this?

To: Glaser, Elizabeth (CFPB); Lownds, Kevin (CFPB)
Subject: Remind me to send
1063i language to bart - well consult w him on respa ils and safe
Page 3239 of 3826
From:
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Brown, Charles (CFPB)
(fydibohf23spdlt)/cn=recipients/cn=brownchar>
Quick Question
Fri Apr 01 2011 09:52:39 EDT
CB,
Quick question---do you have updated FTE estimates for the different CFPB divisions (e.g., OGC will
have 40 employees)? Im trying to put the final touches on the HUD transfer numbersthanks!
-K
Kevin K. Lownds
Review Analyst
(202) 435-7399
Page 3240 of 3826
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Mestre, Juan (CFPB)

(fydibohf23spdlt)/cn=recipients/cn=mestrej>
_DL_CFPB_AllHands
Elevator testing Saturday April 2, 2011

Fri Apr 01 2011 09:35:16 EDT
Good Morning
Buildning Management will be testing the elevators at 1801 L St. N.W. on the morning of Saturday, April
2nd, 2011. They will be testing the elevators' response to emergency situations such as fire alarms,
operation on emergency power, and safety override systems. Testing will require taking certain
elevators out of service. Once testing is completed, they will be returning the elevators to regular
service. Testing is scheduled to begin at 6:00 am and will likely be completed by noon.
Please take into account you may experience temporary delays in elevator service during the tests.
If you have any questions on this matter, please contact me.
v/r,
Juan Mestre
Implementation Team - Security
1801 L Street, N.W.
Room #: 7517
E-Mail: [email protected]
OFC#: 202-435-7045
(b) (6)
Page 3252 of 3826
(b) (6)
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Sorry another one

Fri Apr 01 2011 07:55:10 EDT
We have to make sure our fte counts r still right for hud chart
Page 3255 of 3826
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Remind me to ask you

Fri Apr 01 2011 04:10:09 EDT
If u think its a good idea... To prepare a short briefing memo for marilyn and dennis re hud. The issues
and key qs/result needed from hud meeting tues which I think is:
1.Final resolution on all placements OR
2. A short list for wally
Page 3256 of 3826
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(fydibohf23spdlt)/cn=recipients/cn=lowndsk>; Glaser, Elizabeth
Remind me to ask u
Fri Apr 01 2011 04:05:15 EDT
To help draft individual emails for steve, david, kelly, and dan asking them to highlight the question(s)
they want to aDdress. Perhaps we just copy their questions into the body of emails.
We need their q by 1 or 2 so we can incorporate into doc for prep meeting.
Page 3257 of 3826
From:
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Remind me to send
Fri Apr 01 2011 04:02:15 EDT
1063i language to bart - well consult w him on respa ils and safe
Page 3258 of 3826
From:
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Decker, Sharon (CFPB)

(fydibohf23spdlt)/cn=recipients/cn=deckers>
_DL_CFPB_AllHands
Farewell
Thu Mar 31 2011 17:27:11 EDT
As much as I really would have liked to say my farewells in person, email will have to do. Working with
all of you has been a gratifying experience. I wish you the best in establishing a premier consumer
bureau. I will try and visit in June when I get back down to DC.
BTW, I can now start to put weight on my left leg!
Page 3264 of 3826
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Hammonds, Jamice (CFPB)

(fydibohf23spdlt)/cn=recipients/cn=hammondsj>
_DL_CFPB_AllHands
Food and Beverages

Thu Mar 31 2011 15:14:59 EDT
Good afternoon, All
Please help yourself to the food and beverages located in the break room next to the Boomer Sooner
conference room (503). Thanks.
Page 3268 of 3826
From:

_DL_CFPB_AllHands
Adamske, Steven
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Thu Mar 31 2011 12:21:10 EDT
Index

National Journal GOP Lawmakers Say Warren Played a Bigger Role Than She Claimed
Bloomberg Republicans Say Warren Misstated CFPB Role in Mortgage Talks
The Hill (blog) Republicans want Warren to clarify her role in mortgage settlement talks
Page 3269 of 3826

National Mortgage Professional Reps. Bachus and Capito Call Out CFPB Head Warren on
Mortgage Servicing
Wall Street Journal (blog) Bachus: Warren Overstepped Her Authority
American Banker Warren Settlement Role Examined Again
Housing Wire Republicans say CFPB overstepped on mortgage servicing issues
Credit Slips The Elizabeth Warren Witch Hunt Continues
Mother Jones (blog) The GOPs Pathetic Attack on Elizabeth Warren
The Baseline Scenario What Is Spencer Bachuss Game?
Huffington Post What Passes for Scandal Among Republicans
Firedoglake House Republicans Deliver Nonsense Letter to Elizabeth Warren
New York Times In Foreclosure Settlement Talks With Banks, Predictions of a Long Process
Reuters Foreclosure deal with U.S. banks elusive
Chamber of Commerce Speech
New York Times Warren Defends Agency at Chamber of Commerce
Washington Post Consumer Financial Protection Bureau chief faces agencys critics head-on
Washington Post Chamber of Commerce pressed to back Obamas economic plans
Reuters Top banker and US regulator offer dueling agendas
American Banker Dodd-Frank Pummeled at Chamber of Commerce Event
Politico Elizabeth Warren faces big business at Chamber summit
Time (blog) Elizabeth Warren All Smiles in the Lions Den
Campaign for Americas Future (blog) Choose Your Financial Future: Be Daniel Or Be Eaten
Dow Jones Newswires US Consumer Bureau Hires Four Officials
Washington Business Journal U.S. Consumer Bureau taps local talent
The Hill (blog) House Financial Services Committee changes schedule to accommodate
Consumer Bureau bills
The Hill (blog) Sen. Durbin huddles with Elizabeth Warren
Page 3270 of 3826
American Thinker The Liberal Addiction to Bureaucracy
Associated Press Democrats lack a heavy hitter against Sen. Brown
Oregonian A game of keep away in consumer regulation
Credit Union Times Trades Urge Obama Administration to Weigh In on Interchange Delay
Daily Tribune (Michigan) Changes to credit card rules would make costs clearer
Colorado Springs Independent Help Warren fend off the GOP madness
Watertown Daily Times (Watertown, New York) Consumer protection: New law means higher
costs
Dodd-Frank Implementation
American Banker Apoplexy at Dodd-Frank
American Banker Lawmakers Weigh the Cost of Dodd-Frank to Federal Government
Consumer Credit
American Banker Reacting to Debit Regs, PNC Lets Customers Pick Which Perks to Keep
American Banker Strike the Right Balance in Raising ATM Fees
American Banker Credit Card Bills Trump Mortgages, TransUnion Study Says
American Banker Help Customers Apply Their Financial Literacy
Housing
American Banker Judge Denies Preliminary Injunction Against LO Comp Rule
American Banker B of A Shareholder Proposes Board Audit Foreclosure Controls
American Banker Mortgage Brokers, Its Time to Get Real
American Banker Dont Mourn the 30-Year Fixed-Rate Mortgage
National Journal
Page 3271 of 3826
GOP Lawmakers Say Warren Played a Bigger Role Than She Claimed
March 30, 2011
Stacy Kaper
Republican lawmakers demanded on Wednesday that Elizabeth Warren, the unofficial head of the
Consumer Financial Protection Bureau, explain documents that seemed to contradict her claims of
being only an adviser in recent mortgage negotiations between state prosecutors, federal regulators,
and the nations biggest banks.
It is plain that the CFPB has done more than provide advice on the proposed servicing settlement,
charged Rep. Spencer Bachus, R-Ala., the chairman of the House Financial Services Committee, in a
letter to Warren on Wednesday. Since you testified, new information has come to light indicating that
the CFPB has actually been deeply involved in the negotiations, the letter said.
The development could be explosive. Because Warren has never been nominated or confirmed as
director of the new bureau, she acts in a largely unofficial role with limited legal authority. That shadowy
role has provoked howls of protest from GOP lawmakers about the administrations lack of
transparency.
The possibility that Warren deliberately misled Congress could set the stage for a much nastier political
fight over her role and that of the fledgling consumer bureau. Suggesting that Warren either lied or
misled the committee at a hearing two weeks ago, Bachus and Rep. Shelley Moore Capito, R-W.Va.,
asked Warren to clarify or correct her testimony.
But the documents don't necessarily contradict Warren's claim of being an "adviser." Though they
confirm that bureau officials made recommendations, administration officials argue that they still
constitute advice rather than decision-making.
The letter, which was blasted out in a press release, references documents on the consumer bureaus
letterhead that proposed demands that state prosecutors could make on the banks as part of a
settlement of legal claims over shoddy mortgage-foreclosure practices.
Though the various sides are a long way from agreement, many of the state prosecutors and some
federal regulators want the banks to put up more money for troubled homeowners and to actually
reduce many of their loan balances. Bank executives are fighting those demands.
Republican lawmakers have hammered Warren and Treasury Secretary Timothy Geithner in recent
Page 3272 of 3826
weeks over their insistence that Warren had not played a role in proposing penalties for the banks. A
document offering perspectives on settlement alternatives in mortgage servicing was marked
confidential for AG Miller a reference to Iowa Attorney General Tom Miller, who has been a leader in
the servicing settlement talks.
The bureau document suggested that a global settlement could be the basis for reforming the banks
deeply flawed loan-servicing and foreclosure processes, and it contended that a $5 billion penalty might
be too low.
Rough estimates suggest that the largest servicers may have saved more than $20 billion through
under-investment in proper servicing during the crisis. As a result, a notional penalty of $5 million would
seem too low, says language at the top a CFPB chart that the committee released.
Another CFPB chart states, Effective special servicing of delinquent loans would have cost 75 basis
points a year more than the actual costs incurred.
In a letter to GOP lawmakers earlier this month, Geithner specifically refuted any connection between
the consumer bureau and any proposed settlement amounts. CFPB does not currently have authority
to administer penalties, and will, therefore, not be a party to any formal settlement with mortgage
servicers," Geithner said at a hearing on March 15.
In their letter on Wednesday, Bachus and Capito accused the CFPB of being the architect of servicing
-settlement negotiations, rather than merely providing advice.
Jen Howard, a spokeswoman for Warren, said there was no contradiction between Warrens testimony
and the documents. As Elizabeth Warren testified to Congress earlier this month, the consumer bureau
provided advice to various officials involved in the mortgage-servicing law enforcement matter, Howard
wrote in an e-mail on Wednesday. She is aware that not everyone agrees with that advice or how to
address the serious deficiencies at some of the nations largest mortgage servicing firms.
Geithner, meanwhile, reminded lawmakers earlier this month that the CFPB will obtain significant
authority to set standards for the mortgage-servicing industry when the bureau becomes officially
operational on July 21 -- the date when the consumer financial protection functions of other agencies
transfer to the CFPB.
For this reason, Geithner wrote, the CFPB has been invited to advise the other agencies on how to
design appropriate servicing standards for the mortgage servicing industry."
Page 3273 of 3826
State attorneys general, federal regulators, the Justice Department, and other federal agencies have
been trying to reach a global settlement with major servicers to rectify mistakes in foreclosure
processing, including robo-signing documentation. Rumors have swirled that the CFPB has been
pushing for a figure of about $20 billion to pay for principal write-downs on underwater loans to stem
foreclosures.
Bankers, who are supposed to meet on Wednesday with Miller and other enforcement officials to
submit a counteroffer, have balked both at the principal reduction modification plan idea and at the
servicing standards, which they say would expose them to limitless liability.
Back to Top
Bloomberg
Republicans Say Warren Misstated CFPB Role in Mortgage Talks
March 30, 2011
By Phil Mattingly and Carter Dougherty
U.S. Representative Spencer Bachus asked White House adviser Elizabeth Warren whether shed like
to clarify or correct March 16 testimony about foreclosure settlement talks between the Consumer
Financial Protection Bureau and state attorneys general.
Bachus, the Alabama Republican who leads the House Financial Services Committee, made the offer
to Warren, who has been charged with setting up the bureau, in a letter today.
Bachus suggested that her remarks to Congress conflicted with a Feb. 14 presentation the CFPB made
to Iowa Attorney General Tom Miller. A seven-page PowerPoint document prepared for the
presentation was released earlier this week. According to the document, a CFPB analysis concluded
that a $5 billion penalty would be too low, and banks could afford more.
The recently disclosed documents suggest that rather than merely dispensing advice to those involved
in negotiating the settlement, the CFPB was actually its primary architect, Bachus and Representative
Page 3274 of 3826
Shelley Moore Capito, a West Virginia Republican who leads a Financial Services subcommittee, wrote
in the letter sent today.
Jen Howard, a spokeswoman for the Consumer Financial Protection bureau, said in an e-mailed
statement that the agency provided advice to various officials involved in the mortgage servicing law
enforcement matter.
Not Everyone Agrees

She is aware that not everyone agrees with that advice or how to address the serious deficiencies at
some of the nations largest mortgage servicing firms, Howard said in the statement, referring to
Warren.
Capito said in an e-mailed statement that the letter gives Warren a chance to correct the record. Many
of my colleagues and I are concerned that the CFPB may have acted inappropriately, Capito said.
At the March 16 hearing, Warren emphasized that it would not be right to comment on the
negotiations since they are a law enforcement matter.
In one exchange during the hearing, Bachus asked whether Treasury Secretary Timothy F. Geithner
sought Warrens input on how to structure the settlement. Warren responded that Geither had asked
for advice about the ongoing problem we have with the mortgage servicers.
Geithner told eight members of Congress in a March 15 letter that he had invited officials from the
consumer bureau to advise on how to design mortgage servicing standards.
Back to Top

Republicans want Warren to clarify her role in mortgage settlement talks
Page 3275 of 3826
March 30, 2011

By Peter Schroeder
Republicans are accusing Elizabeth Warren, President Obama's adviser in charge of setting up the
Consumer Financial Protection Bureau (CFPB), of playing a larger role in recent settlement negotiations
than she previously suggested.
In a letter sent to Warren Wednesday, House Financial Services Committee Chairman Spencer Bachus
(R-Ala.) and Rep. Shelley Moore Capito (R-W.Va.) invited Warren to clarify what role she and CFPB
staff played in ongoing settlement talks between the government and mortgage servicers over
widespread foreclosure documentation problems that have emerged in recent months.
When Warren testified in front of Bachus's committee on March 16, she was pressed by several GOP
lawmakers about what role she may have played in those talks. In particular, lawmakers keyed in on
whether it was appropriate for Warren, working as an adviser to the president that has not been
confirmed by the Senate, to be involved in the talks.
"When political appointees involve themselves in enforcement matters, they may pressure regulatory
officials to take actions benefiting a particular political constituency or advancing a particular agenda at
the expense of sound policy," the lawmakers wrote in Wednesday's letter.
Warren said in her testimony that she and CFPB staff simply offered advice and expertise when asked
by administration officials involved in the talks.
But Bachus and Capito now believe Warren underplayed the role of the agency in the talks, citing a
confidential presentation drafted by CFPB staff.
The lawmakers argue that the presentation, included with the letter, prove that Warren and the CFPB
had "extensive involvement" in the negotiations, perhaps even going so far as to recommend how much
firms should have to pay under the settlement.
They singled out one slide of the presentation that said rough estimates suggest that servicers may
have saved more than $20 billion by cutting corners in mortgage servicing practices.
"Not coincidentally, it seems, it has been widely reported that the Department of Justice and state
Attorneys General are now seeking at least $20 billion in such penalties," they wrote. "It is plain that the
CFPB has done more than provide 'advice' on the proposed servicing settlement," they wrote.
Page 3276 of 3826
The lawmakers also attached a copy of Warren's testimony to the letter, asking her if there were any
areas she wanted to clarify.
A spokesperson for the CFPB maintained Wednesday that Warren was accurate in her
characterization.
"As Elizabeth Warren testified to Congress earlier this month, the consumer bureau provided advice to
various officials involved in the mortgage servicing law enforcement matter. She is aware that not
everyone agrees with that advice or how to address the serious deficiencies at some of the nations
largest mortgage servicing firms, said Jen Howard, senior spokesperson for the CFPB.
Back to Top
National Mortgage Professional

Reps. Bachus and Capito Call Out CFPB Head Warren on Mortgage Servicing
March 31, 2011
House Financial Services Committee Chairman Rep. Spencer Bachus (R-AL) and Financial Institutions
and Consumer Credit Subcommittee Chairman Rep. Shelley Moore Capito (R-WV) are asking Elizabeth
Warren, head of the Consumer Financial Protection Bureau (CFPB), if she wants to clarify or correct
her recent testimony regarding the CFPBs role in the ongoing mortgage servicing settlement
negotiations. Reports indicate that the CFPBs role in these negotiations has been more extensive than
Warren suggested during her testimony before the Subcommittee earlier this month.
In a letter to Professor Warren, Reps. Bachus and Capito write:
It is plain that the CFPB has done more than provide advice on the proposed servicing settlement.
Accordingly, we respectfully request that you carefully review the attached transcript of your testimony
at the March 16 hearing and advise the Subcommittee by April 1 if there are any aspects of that
Page 3277 of 3826
testimony relating to the CFPBs role in the mortgage servicer settlement negotiations that you wish to
clarify or correct.
Reps. Bachus and Capito suggest in their letter that Warren, in her role as head of the CFPB,
overstepped the Bureau's boundaries by providing advice to state attorneys general in their
negotiations with the nation's mortgage servicers.
"New information has come to light indicating that the CFPB has actually been deeply involved in the
negotiations," said Reps. Bachus and Capito in the letter. "This information comes from a document
bearing the CFPB's name and entitled 'Perspectives on Settlement Alternatives in Mortgage Servicing.'
The CFPB Settlement Presentation is dated Feb. 14, 2011, and marked 'CONFIDENTIAL FOR AG
MILLER,' presumably reference to Iowa Attorney General Tom Miller, who is coordinating the
negotiations for the State Attorneys General."
Back to Top

Bachus: Warren Overstepped Her Authority
March 30, 2011
Top Republicans on the House Financial Services Committee said Wednesday that theyve uncovered
new evidence that White House adviser Elizabeth Warren has actually been deeply involved in
ongoing negotiations over alleged mortgage servicing abuses not simply offering advice, as she has
testified.
Committee Chairman Spencer Bachus (R., Ala.) and Rep. Shelley Moore Capito (R., W.V.), chairman of
the Financial Institutions and Consumer Credit panel, sent a letter to Ms. Warren, asking her if she
wants to correct her recent testimony regarding the consumer bureaus role in settlement negotiations
with some of the nations largest mortgage servicers. The negotiations seek to address concerns that
banks used flawed practices to process foreclosures.
Page 3278 of 3826
Ms. Warren, who is in charge of preparing the Consumer Financial Protection Bureau for its July
launch, has faced criticism from congressional Republicans who say the bureau doesnt have authority
over mortgage servicing matters until it is formally launched.
A Consumer Financial Protection Bureau spokeswoman reiterated that the bureau has provided advice
on the foreclosure issue. As Elizabeth Warren testified to Congress earlier this month, the consumer
bureau provided advice to various officials involved in the mortgage servicing law enforcement matter,
spokeswoman Jen Howard said in a statement Wednesday afternoon. She is aware that not everyone
agrees with that advice or how to address the serious deficiencies at some of the nations largest
mortgage servicing firms.
But the lawmakers said the bureau has done more than provide advice on the proposed servicing
settlement. They urged Ms. Warren to advise a House Financial Services subcommittee by Friday if
there are aspects of her testimony relating to the CFPBs role in the mortgage servicer settlement
negotiations that need to be clarified or corrected.
They said newly disclosed documents about the settlement negotiations suggest that rather than
merely dispensing advice the CFPB was actually its primary architect.
Back to Top
American Banker
Warren Settlement Role Examined Again
March 31, 2011
By Cheyenne Hopkins
Top Republicans on the House Financial Services Committee clashed with Elizabeth Warren, who is
leading the Consumer Financial Protection Bureau creation, over her role in the mortgage servicer
settlement.
Page 3279 of 3826
The committee's chairman, Rep. Spencer Bachus of Alabama, and Rep. Shelley Moore Capito of West
Virginia, the head of the consumer credit subcommittee, asked Warren in a letter Wednesday to clarify
her role after the document "Perspectives on Settlement Alternatives in Mortgage Servicing" that she
sent to Iowa Attorney General Tom Miller was leaked to the media. In the document, she argues the
largest servicers have saved more than $20 billion by cutting corners in proper servicing and as a result
should be fined the same amount.
Warren has said she is limited to an advisory role, but Bachus and Capito wrote that the document
proves that Warren's involvement goes further. "It is plain that the CFPB has done more than provide
'advice' on the proposed servicing settlement," the lawmakers wrote. "Accordingly, we respectfully
request that you carefully review the attached transcript of your testimony at the March 16 hearing and
advise the subcommittee by April 1 if there are any aspects of that testimony relating to the CFPB's role
in the mortgage servicer settlement negotiations that you wish to clarify or correct."
Warren's office shot back quickly.
"As Elizabeth Warren testified to Congress earlier this month, the consumer bureau provided advice to
various officials involved in the mortgage servicing law enforcement matter," Jen Howard, a spokesman
for the CFPB, said in an email. "She is aware that not everyone agrees with that advice or how to
address the serious deficiencies at some of the nation's largest mortgage servicing firms."
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Housing Wire
Republicans say CFPB overstepped on mortgage servicing issues
March 30, 2011
By Kerri Panchuk
Republican lawmakers sent a letter this week to Consumer Financial Protection Bureau architect
Elizabeth Warren, saying they can prove the CFPB overreached by suggesting state attorneys general
settle with mortgage servicers for $20 billion.
Page 3280 of 3826
The letter, drafted by Sen. Spencer Bachus (R-Ala.), claims Warren appeared as a witness before a
House subcommittee and "repeatedly declined to acknowledge that the CFPB had participated in
foreclosure settlement negotiations."
Bachus wrote that Warren only confessed to providing "advice" and "expertise" to federal and state
officials.
However, Bachus said a presentation titled "Confidential for AG Miller" is a private draft document that
proves Warren and the CFPB played a role in helping Iowa Attorney General Tom Miller and a group of
AGs shape a $20 billion settlement proposed to mortgage servicers.
"Page 2 of the CFPB settlement presentation offers suggestions for monetary penalties," Bachus wrote.
He quotes the CFPB presentation as saying "rough estimates suggest that the largest servicers may
have saved more than $20 billion through under-investment in proper servicing during the crisis," and a
penalty of $5 billion would be too low.
Bachus suggests in the letter that Warren and the CFPB did more than provide advice to AGs on how
to settle with mortgage servicers. He added that it was not the CFPB's right to do so because they lack
true enforcement authority.
Republican lawmakers have been pushing back at the CFPB for some time, claiming the agency also
lacks appropriate congressional oversight.
In the letter, policymakers request that Warren clarify her exact role in advising officials on the proposed
mortgage servicing settlement.
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Credit Slips
The Elizabeth Warren Witch Hunt Continues
Page 3281 of 3826
March 30, 2011

By Adam Levitin
The latest chapter in the Republicans' Elizabeth Warren witchhunt would be farcical, if it didn't have
such potentially serious consequences. Congressional Republicans are now demanding that Elizabeth
Warren recant her Congressional testimony about her role in the non-existent mortgage servicing
settlement. The problem? Professor Warren stated that she "advised" the Treasury Secretary on the
settlement, whereas Republicans allege that:
according to the CFPB Settlement Presentation, the CFPB did more than provide advice: it
recommended the goals and provided a detailed framework for the structure of the settlement....rather
than merely dispensing advice to those involved in negotiating the settlement, the CFPB was actually its
primary architect.
In other words, the Republicans are insinuating that Professor Warren misled Congress in her
testimony because she said she "advised" when in fact she "recommended." This charge is truly
laughable and shows what a desperate witchhunt the Congressional Republicans are conducting as
part of their rear-guard action for the banks. This doesn't even pass the straight face test. I half expect
their next letter to demand that Elizabeth Warren show up at the House dunking pond to see if she
floats or sinks.
Let's consider the evidence here. It is a CFPB powerpoint presentation analyzing possible structures for
a settlement of the largest consumer financial fraud case in history. The point that is particularly
objectionable to Congressional Republicans is an analysis that shows that a $5B penalty as part of a
settlement would be far too low given the benefits banks gained from servicing fraud and that $20B
would be more appropriate.
Here's the Republicans' logic:
CFPB's analysis suggests that $20B is a more appropriate fine than $5B.
Media reports (but no government documents of which I know or official statements) have stated that
fines in the range of $20B-$30B have been proposed.
Ergo, CFPB is masterminding the whole operation.
This analysis misses the mark in four critical ways.
First, it assumes that there's consensus within the government on a $20B fine. Sadly, there ain't or this
case would be much closer to an actual settlement.
Page 3282 of 3826
Second, it dismisses the possibility that sources other than the CFPB might have suggested $20B. I
wouldn't be so sure about that. The CFPB isn't so powerful within the Administration that it can push a
number like $20B without the support of some of the bank regulators and other parties within Treasury.
Third, it ignores that nothing in this powerpoint relates to the 27-page proposed AG term sheet, which is
a critcial part of settlement proposals and to which the banks have made a paltry counterproposal that
largely promises to do things they are already supposed to do. At most, then this is evidence that the
CFPB contributed to one speculative piece of a complex settlement proposal.
Finally, it ignores that the CFPB cannot be the primary architect of the settlement. CFPB has no
authority to do anything except advise. CFPB does not exist yet. There is a CFPB transition team that
is part of the Treasury Department. There are no CFPB email addresses even, only Treasury email
addresses (remember, CFPB will be under the Fed, not Treasury). Elizabeth Warren and the CFPB
transition team cannot bind the US government or the state AGs in a settlement. All they can do is offer
advice, suggestions, recommendations, etc. It is the decision of the relevant bank regulators and
attorneys general whether to adopt those recommendations or not, just the way lobbyists often draft
legislation for Congress, but it's Congress's decision whether or not to adopt the legislation.
So what this ultimately boils down to is that Congressional Republicans are blaming the CFPB because
its advice was adopted. If the CFPB's advice had been ignored, no problem, but because they were
persuasive, now there's an issue. Bottom line is it wouldn't matter a lick if Elizabeth Warren had drafted
the entire proposed term sheet herself in her own handwriting and put her signature and thumbprint on
it and that became the final deal terms. It would still be nothing more than advice. To suggest that
Congress was in any way mislead is just laughable.
But notice where this game is leading--this is the Republicans' attempt to assemble a portfolio of
arguments against Elizabeth Warren becoming the Director of the CFPB. As long as the CFPB remains
without a Director, it cannot be an effective force in investigating foreclosure fraud and holding the
banks to account, which means the AGs' only settlement leverage is the threat of litigation, which will
take years to play out, by which point there won't be any distressed mortgages left to modify. Maybe the
banks will pay a fine, but it will be a fraction of what they'd pay under the settlement. So the game here
is for the banks to run the clock--negotiate in bad faith with the AGs and rely on their Congressional
pals to keep the CFPB out of action. That's a strategy that could save the banks' billions. I'm sure they'll
find good uses for that money.
For some other good takes on this non-issue see here and here.
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Page 3283 of 3826
Mother Jones (Political Mojo blog)

The GOPs Pathetic Attack on Elizabeth Warren
March 30, 2011
By Andy Kroll
Republicans in Congress love to attack Elizabeth Warren, the White House aide overseeing the start-up
of the new Consumer Financial Protection Bureau (CFPB). At a March 16 hearing, House GOPers used
Warren as a "punching bag," as one columnist put it, questioning her authority as the CFPB's for-thetime-being leader and predicting the bureau's imminent demise. None of those criticisms, however,
compares to the pathetic accusation leveled by Reps. Spencer Bachus (R-Ala.) and Shelley Moore
Capito (R-WV) in a letter (PDF) sent to Warren on Wednesday.
Bachus and Moore Capito accuse Warren of misleading Congress about the CFPB's role in the
negotiations over a proposed settlement for the mortgage servicing industry. The settlementwhich
has been savaged by Republicans, the Wall Street Journal's editorial page, and other conservatives
will likely demand that servicers fix their dysfunctional operations so that homeowners aren't ripped off
and improperly foreclosed on, an all-too-common occurrence. Warren told Congress that the CFPB
offered advice on what the settlement should contain. But in their letter, Bachus and Moore Capito say
Warren's agency "did more than provide advice: it recommended the goals and provided a detailed
framework for the structure of the settlement." It's a clear insinuation: you lied to us.
Really? According to Merriam-Webster Dictionary, the definition of "advice" is a "recommendation

regarding a decision or course of conduct." That is, to give advice is to recommend. Treasury Secretary
Tim Geithner asked the bureau for advice about the proposed servicer settlement, and Warren and the
CFPB did exactly that: they said what they thought the settlement should include. The "detailed
framework" cited in Bachus and Moore Capito's letter was nothing more than a 10-page PowerPoint
presentation written by the bureau, laying out its advice. Nothing nefarious there.
The Bachus and Moore Capito letter goes on to say that the CFPB was in fact the "primary architect" of
the mortgage servicing settlement. It's a claim that is far from accurate. For starters, the mortgage
servicing settlement is far from finished. How can Republicans accuse the CFPB of being the architect if
the deal is still in the making? Perhaps Republicans are referring to the term sheet (PDF) released by
Iowa attorney general Tom Miller, a Democrat, earlier this month, a rough guide to how the settlement
might look. That draft was 27 pages long. And while it included ideas offered by the CFPB, it featured
plenty that was not in the CFPB's recommendations. To call the bureau the "primary architect" simply
isn't correct.
Page 3284 of 3826
Even if the AGs' draft and the CFPB's recommendations aligned in several areas, that doesn't mean
Warren is secretly crafting the deal, as many on the right want to believe. It means the AGs took her
advice.
Here is what's really going on: With their letters and hearings, Republicans are trying to craft a narrative
that makes Warren and the CFPB out to be the bad guy, an example of evil big government prying into
the lives of ordinary Americans and eating up taxpayer money for no good reason. This spring,
President Barack Obama is due to appoint the head of the CFPB, and Warren is presumably in
contention for this slot. Consequently, Republicans are throwing everything they can at Warren to take
her out of the runningor to prepare for a brutal confirmation process.
And it's not just members of Congress. For weeks, the archconservative editorial page of the Wall
Street Journal has attacked Warren, calling her a "czar" and accusing her of "extorting billions of dollars
from private mortgage servicers" and "stalling a US housing market recovery." Behind the WSJ's
crusade against Warren reportedly is an editorial writer named Mary Kissel, who used to work for
Goldman Sachs.
Warren, a consumer advocate and onetime bailout watchdog, remains the leading candidate for the job.
The CFPB was, after all, her idea. She frightens not just Republicans but big banks and their fleets of
lobbyists in Washington because she intends to rattle the status quo and pass reforms that will actually
help working and middle class consumers. Bachus and Moore Capito's letter is just the latest in a
relentless campaign to tar Warren and prevent her from claiming a position that may belong to her more
than anyone else.
Already one liberal group has mobilized in response to Bachus' letter. On Wednesday evening, the
Progressive Change Campaign Committee sent an email urging supporters to call Bachus' office and
tell the Alabama Republican to "Stop attacking Elizabeth Warren and stop being such a sell out for Wall
Street."
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The Baseline Scenario

What Is Spencer Bachuss Game?
Page 3285 of 3826
March 30, 2011

By Simon Johnson
Representative Spencer Bachus, Republican chair of the House Financial Services Committee,
famously remarked in December,
in Washington, the view is that the banks are to be regulated, and my view is that Washington and the
regulators are there to serve the banks.
With regard to the Consumer Financial Protection Bureau (CFPB), this apparently now implies that Mr.
Bachus will use any means possible to change the topic away from substance how banks treat their
customers to imagined procedural issues.
Specifically, Mr. Bachus is wrongly accusing Elizabeth Warren of misleading Congress with regard to
the role of the CFPB in the negotiations over how to settle allegations that mortgage foreclosure
practices have been abusive (see also this news coverage).
On March 16, 2011, Ms. Warren told the House subcommittee on Financial Institutions and Consumer
Credit that the CFPB provided advice in these negotiations. Mr. Bachus and his colleagues have just
discovered some specific slides that were apparently used as part of this advice.
Impressed by the lucidity of these seven (7) slides, Mr. Bachus and Ms. Shelley Moore Capito (chair of
that subcommittee) have jumped to the conclusion that the CFPB must be the primary architect of the
governments position.
This is patently ludicrous.
First, there is no settlement agreement yet firmly on the table.
Second, there is obviously no unified federal government position on this issue in fact, the Office of
the Comptroller of the Currency (OCC) is most definitely not taking advice from Ms. Warren or anyone
sensible.
Third, the CFPB is very far from being any kind of decision maker in this process; that power rests with
Attorney Generals, the Department of Justice, the OCC, and other federal agencies. Either you have
the legal power to offer a settlement or you dont. The CFPB does not.
Page 3286 of 3826
Fourth, a close look at Ms. Warrens calendar (by Ben Protess of the NYT) suggests she is not the
prime architect of the settlement agreement not unless she can mastermind a complex legal
document while spending very little time on it.
Fifth, although the Bachus-Moore letter cites the Protess NYT article, it does so in a way that is
selective and misleading. Specifically, Representatives Bachus and Moore quote Iowa Attorney
General Tom Miller to whom the CFPB slides are apparently addressed as saying that Ms. Warren
has been a very active participant. But here is the full quote from the article in context (see the final
paragraphs):
In a recent interview, Mr. Miller said Ms. Warrens involvement was appropriate given the consumer
bureaus expertise in mortgage servicing. It would be strange to say, Were going to quarantine you.
He acknowledged that Ms. Warren has been a very active participant in talks about the servicing
settlement, but he said the proposal ultimately was the creation of the state attorneys general not Ms.
Warren.
We form our own opinions and make our own decisions about the foreclosure and servicing case, he
said.
Sixth, read the transcript of the March 16 hearing (which follows the Bachus-Capito letter in the same
pdf, as posted on the committees website) and determine for yourself who is misrepresenting what.
This is how the exchange between Representative Bachus and Ms. Warren actually reads (pp.34-35):
Chairman BACHUS. You have engaged in you have given input and advice into these [mortgage
servicing standards]. Is that correct?
Ms. WARREN: When we have been asked by the Secretary, by the Department of Justice and others,
we have given advice about mortgage servicing. Yes, sir.
And here is her exchange with Representative McHenry directly on the question at hand (pp.53-54).
Mr. MCHENRY: I am reclaiming my time. Are you engaged in these discussions on the settlement?
Page 3287 of 3826
Ms. WARREN: The negotiations with private parties are entirely directed by the Department of Justice,
by the State Attorneys General, by other Federal agencies.
Mr. MCHENRY: So you are not engaged in these discussions?
Ms. WARREN: We do not negotiate with private parties. We have been asked for advice,
Congressman. And wherever we can be helpful, we are not only glad to be helpful, we are proud to be
helpful.
On top of all this, the first paragraph of the Bachus-Capito letter is beyond bizarre. The
Representatives argue that political appointees should not be involved in the regulatory enforcement
process. But surely all the people responsible for the financial sector, inside and outside Treasury e.
g., heads of the OCC, FDIC, SEC, Chair of the Federal Reserve Board and of course the Treasury
Secretary are political appointees and therefore subject to congressional confirmation and scrutiny
(which is, generally speaking, a good thing).
Representatives Bachus and Capito claim to be concerned that When political appointees involve
themselves in enforcement matters, they may pressure regulatory officials to take actions benefitting a
particular political constituency or advancing a particular agenda at the expense of sound policy.
But the real issue here is how a powerful politician proudly holding the explicit view that Washington
and the regulators are there to serve the banks is pressuring regulatory officials of all kinds to take
actions that benefit his particular political constituency.
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Huffington Post
What Passes for Scandal Among Republicans
March 30, 2011
By Mike Lux
Page 3288 of 3826
With so many Americans out of work, working part-time or temp jobs that barely make ends meet, and
in danger of having their homes foreclosed on, you would think that the Republicans in the House would
have better things to do than erupt in outrage over whether something is "advice" or a
"recommendation." But Reps. Spencer Bachus and Shelley Moore Capito are all worked up over this
pressing matter. In one of the most ridiculous examples of a phony brouhaha I have ever witnessed
(and I have worked in politics for more than 30 years), Bachus and Capito wrote a letter asking
Elizabeth Warren to clarify whether she had merely offered advice and expertise, or whether she
actually had the temerity to make recommendations on the state AGs-big banks talks.
Our very democracy clearly hangs in the balance.
Just because this incident made me curious, I looked up the definition of the two words. It turns out that
the Merriam-Webster definition of "advice" is a "recommendation regarding a decision or course of
conduct." Wow, that is a big difference. Congressman and Congresswoman, I am so glad you are
taking the point on asking these tough questions and exposing these major scandals.
Seriously, it is really troubling that these guys in Congress don't have better things to do. Bachus is the
chair of an important committee, one that theoretically is supposed to have oversight over the American
banking industry. Given its role in the wrecking of the world economy in recent years, you would think
that having the job of providing oversight would keep one a little bit busy. Instead, we get burning issues
like this:
"You repeatedly declined to acknowledge that the (Consumer Financial Protection Bureau), 'a division
of Treasury,' had participated in foreclosure settlement negotiations, responding only that the CFPB had
provided 'advice' and 'expertise' to Federal and State officials involved in the negotiations ... But
according to the CFPB Settlement Presentation, the CFPB did more than provide advice: it
recommended the goals and provided a detailed framework for the structure of the settlement."
Wow, that is investigative rigor (or perhaps rigor mortis) at its best. Later the letter goes on to express
deep concern that the CFPB presentation (a slideshow this is all based on) offered suggestions for
monetary penalties. Now they've caught her in the act: not only giving recommendations but
suggestions as well. The outrage! The ignominy!
Bachus and Capito need to get a life. Even in the sometimes absurd world of D.C. parsing and phony
fights, this is just plain dumb. Elizabeth Warren is doing exactly what she should do as an adviser to the
President and Secretary of Treasury: she is weighing on the issues that matter to consumers and
homeowners in dealing with the mess the Wall Street bankers have made of the economy. If Bachus
and Moore spent their time investigating banks like they should, they might actually unearth something
that matters.
Page 3289 of 3826
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Firedoglake
House Republicans Deliver Nonsense Letter to Elizabeth Warren
March 31, 2011
By David Dayen
So Spencer Bachus and Shelley Moore Capito are really upset with Elizabeth Warren. In a letter from
the two leaders on the House Financial Services Committee, they demand that Warren correct her
testimony to the committee from March 16. See, when asked about the mortgage servicer settlement
and CFPBs role in it, Warren said that they merely provided advice and expertise to state and federal
regulators working on the agreement. But aha! Bachus and Capito write:
Since you testified, new information has come to light indicating that the CFPB has actually been deeply
involved in the negotiations. This information comes from a document bearing the CFPBs name and
entitled Perspectives of Settlement Alternatives in Mortgage Servicing. according to the CFPB
Settlement Presentation, the CFPB did more than provide advice; it recommended the goals and
provided a detailed framework for the structure of the settlement.
Of course, advice typically means providing recommendations. These werent forced upon the AGs or
federal regulators, but offered as alternatives. Hence, Perspectives of Settlement Alternatives in
Mortgage Servicing. Adam Levitin has the full Fisking, its too early in the day and Im too tired. Suffice
to say that this is a nonsense letter, and Warren wont be clarifying or correcting her testimony. Levitin
closes with this:
But notice where this game is leadingthis is the Republicans attempt to assemble a portfolio of
arguments against Elizabeth Warren becoming the Director of the CFPB. As long as the CFPB remains
without a Director, it cannot be an effective force in investigating foreclosure fraud and holding the
banks to account, which means the AGs only settlement leverage is the threat of litigation, which will
take years to play out, by which point there wont be any distressed mortgages left to modify. Maybe the
banks will pay a fine, but it will be a fraction of what theyd pay under the settlement. So the game here
is for the banks to run the clocknegotiate in bad faith with the AGs and rely on their Congressional pals
to keep the CFPB out of action. Thats a strategy that could save the banks billions. Im sure theyll find
good uses for that money.
Page 3290 of 3826
Now, I dont totally agree with Levitin about a world without a global settlement, and I dont totally
disagree with Yves Smith about the prospects of Warren getting that CFPB position (I have a couple
issues with her overall post). But I actually dont think thats the scenario right now. Levitin alludes to
this, but the real problem is CFPB not having a Director at all. They lose key powers and cannot
regulate non-bank financial institutions if no one is in place by July. And thats what looks to be
happening. Its pretty clear that the White House is dragging its feet.
The push for Warren among the progressive community, if it does anything, actually might get someone
nominated to the position. Someone that Warren would run out and endorse, to keep that left flank
mollified. But without the pressure, I dont think there will be a nominee, and the CFPB will just be
permanently sidelined.
Warren, meanwhile, is someone who can speak to the Chamber of Commerce and be completely
credible about the need for a set of principles for competitive markets. Of course, CoC members dont
want competitive markets; thats not how they got to where they are today. Theyre not capitalists, they
re rent-seekers.
So theyre going to fight Warren tooth and nail. And given the spirit at the White House, that fight will
wind up ultimately keeping her out of that director position. It already did, in fact. But the banks and their
allies in Congress need to worry just as much about head of enforcement Richard Cordray as they do
anyone else. Unlike the other captured federal agencies, CFPB actually has the power to enforce the
law, if a director actually gets in place. Thats whats behind the Warren push, to me.
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New York Times

Warren Defends Agency at Chamber of Commerce
March 30, 2011
By Edward Wyatt
Page 3291 of 3826
WASHINGTON She never actually uttered I come in peace, but Elizabeth Warren, the Obama
administration aide charged with setting up the new Consumer Financial Protection Bureau, might have
felt like an alien visiting an anxious planet Wednesday when she went to the United States Chamber of
Commerce.
I do not consider myself in hostile territory right now because I believe we share a point of principle:
competitive markets are good for consumers and for businesses, Ms. Warren told about 300
executives at the chambers annual conference on capital markets. But, she added, Markets dont work
in the way they are supposed to unless there are some well-enforced rules.
The detail and scope of those rules are what worry the members of the chamber and some members of
Congress, both of whom have been vocal in their criticism of the regulatory powers given to the new
consumer agency by the Dodd-Frank Act, the financial regulation bill signed into law last July.
The disagreements between Ms. Warren and one of her chief critics, Representative Spencer Bachus,
Republican of Alabama and chairman of the House Financial Services Committee, grew more heated
hours after her address. Mr. Bachus accused Ms. Warren of mischaracterizing her recent participation
in the mortgage service industry settlement talks.
Last week, Ms. Warren told the committee that she provided advice to the Treasury secretary and
others about a possible settlement but was not involved in the negotiations. State attorneys general and
federal officials are discussing a settlement with mortgage service companies in response to
questionable foreclosure practices.
On Wednesday afternoon, Mr. Bachus released a seven-page document titled Perspectives on

Settlement Alternatives in Mortgage Servicing, which, in a letter to Ms. Warren, he said demonstrated
that she had a larger role than she had indicated to the committee.
It is plain that the C.F.P.B. has done more than provide advice on the proposed servicing settlement,
Mr. Bachus wrote. The letter requested that Ms. Warren consider if there are any aspects of that
testimony related to the C.F.P.B.s role in the mortgage servicer settlement negotiations that you wish to
clarify or correct.
The letter was co-signed by Representative Shelley Moore Capito, Republican of West Virginia and
chairwoman of the subcommittee on financial institutions and consumer credit.
Jen Howard, a spokeswoman for the consumer agency, said that Ms. Warren correctly characterized
her participation. As Elizabeth Warren testified to Congress earlier this month, the consumer bureau
provided advice to various officials involved in the mortgage servicing law enforcement matter, Ms.
Howard said in a statement. She is aware that not everyone agrees with that advice or how to address
Page 3292 of 3826
the serious deficiencies at some of the nations largest mortgage servicing firms.
Mr. Bachus, a consistent critic of both the consumer agency and Ms. Warren, filled that role again
Wednesday when he addressed the Chamber of Commerce conference immediately before she spoke.
Noting that he has introduced a bill to change the governance of the consumer bureau from a single
director to a five-person, bipartisan commission, he characterized the powers given to the head of the
consumer agency as unmatched in government.
They regulate all financial products and services, so if it involves a dollar changing hands, they can
regulate it, or she can, because she actually has total discretion over consumer financial products, Mr.
Bachus said. If George Washington came back today, or Abraham Lincoln or Warren Buffett signed up,
I wouldnt give that person total discretion.
Ms. Warren was followed by Thomas J. Donohue, president and chief executive of the chamber, who
warned that the consumer agency could choke off economic growth in the United States.
If not used carefully, the C.F.P.B.s tremendous power to go after bad actors could cause serious
collateral damage to Americas job creators, he said.
Ms. Warren has disputed the notion that the consumer agency has unbridled power. There are plenty
of checks in place, she said, including a law governing how federal agencies write and adopt new
regulations. Its rules, like those of any agency, can be overturned by Congress or federal courts.
In addition, she said, the consumer bureau is the only bank regulator and perhaps the only agency
anywhere in government whose rules can be overruled by a group of other agencies, specifically the
Financial Stability Oversight Council, composed of nine regulatory agency heads and an independent
insurance industry expert. A two-thirds vote of the council is required to overturn a consumer agency
rule.
Ms. Warren also warned against making the agency subject to annual appropriations of Congress,
saying it would inject politics into the regulatory structure and cause banks and other regulated
agencies to lobby for looser oversight.
Regulation and competition are not, she said, mutually exclusive. In fact, when done right, they support
each other, Ms. Warren said. Are the Chambers members, as citizens or business owners and
executives, in a better place today because the F.A.A. regulates air safety, because the states regulate
insurance companies, because the federal government enforces antitrust statutes? Of course they are.
Page 3293 of 3826
And so is this country.
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Washington Post
Consumer Financial Protection Bureau chief faces agencys critics head-on
March 30, 2011
By Brady Dennis
In her perpetual campaign to win over the many opponents of the new Consumer Financial Protection
Bureau, Elizabeth Warren has crisscrossed both the capital and the country for months, meeting with
bankers and business owners and lawmakers.
On Tuesday, that quest took her only several blocks to the headquarters of one of the agencys most
ardent critics, the U.S. Chamber of Commerce, which spent millions of dollars and countless hours
trying to prevent the creation of the consumer bureau last year. Warren, the Harvard law professor
appointed to stand up for the new watchdog, joked that her visit had been likened to Daniel in the lions
den or President John F. Kennedy speaking to Protestant ministers.
I think its all in good fun, but I actually think the analogies are wrong, she said. I dont want to
minimize our differences, but I think its important to find our common ground.
That common ground, she added, came down to one word: competition.
Warren said believes in competition and free markets, and she argued that only through fair and
consistent regulation can those markets function properly.
She had an uphill battle.
Page 3294 of 3826
Warrens half-hour appearance was sandwiched between speeches by House Financial Services
Committee Chairman Rep. Spencer Bachus (R-Ala.) and chamber president Tom Donahue, both of
whom called for major changes to the bureaus structure, such as subjecting its funding to
congressional approval and replacing its independent director position with a five-member commission.
Bachus spoke first and received a warm introduction as a friend to the taxpayer, a friend to the
chamber and a friend to free enterprise.
He argued in favor of installing a five-member commission at the consumer agency, saying that
otherwise a single director like Warren would have total discretion to deem certain financial products
abusive and to write onerous new rules.
If George Washington came back today, or Abraham Lincoln, or if Warren Buffett signed up, I wouldnt
give that person total discretion, Bachus said, adding, Collective wisdom is much better in this case.
Speaking after Warren, Donahue argued that a commission would provide a lot more balance and
accountability, he said, adding that such a structure could win support from both parties. There are a
lot of Democrats who would not like to have one Republican sitting in that seat.
For her part, Warren defended the agency in its current setup, in which it receives its funding from the
Federal Reserve and has a single, independently appointed director.
Not one other banking regulator not one is subject to [congressional] appropriations, she said.
Requiring the CFPB to go into every examination against a trillion-dollar company knowing that the
company could turn its lobbying force against the agencys funding is not a prescription for fair and
evenhanded enforcement.
She added that the bureaus rules could be overturned by a group of fellow regulators and that a panel
must review the possible cost of proposed rules. Still, she insisted, putting in place meaningful new
rules and enforcing ones already on the books would permit honest competition to flourish.
We can differ over the form and substance of regulation, Warren said, but lets not deny the important
role of regulation.
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Page 3295 of 3826
Washington Post
Chamber of Commerce pressed to back Obamas economic plans
March 30, 2011
By Brady Dennis and Zachary A. Goldfarb
The White House pressed ahead Wednesday with its campaign to enlist the support of corporate
America, with two senior officials urging top business executives to sign on to the Obama administration
s plans for regulating Wall Street and laying the foundation for future economic growth.
The administration dispatched Gene Sperling, director of the National Economic Council, and Elizabeth
Warren, President Obamas pick to set up the new Consumer Financial Protection Bureau, to address
the U.S. Chamber of Commerce, which has opposed many of the White Houses initiatives on the
economy.
Sperling and Warren stressed areas where the administration and business could cooperate. Sperling
said the administration is open to improving regulations being put in place as a result of the Dodd-Frank
legislation passed last year to overhaul financial oversight. He did not name a particular regulation.
Lets have a vigorous debate. Nobody ever gets it totally right, certainly the first time, Sperling said.
But, he said, going back to the past that failed us cannot be an option ... We should put aside any
effort to undermine, undercut or underfund the basic mission of restoring confidence to our capital
markets.
Sperling also said it is crucial that corporate America work with the administration as it pursues policies
that would reduce the national debt and deficit, but not at the cost of killing programs that promote
American economic competitiveness or help the poor.
We must make sure there is shared sacrifice and that we do not take the easy way out by trying to
target any particular group or to put a disproportionate amount of spending cuts on those in our society
who have the least political power, Sperling said.
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He said it is important to protect funding for education, transportation, infrastructure, college grants, and
research and development.
Warren confronted a hostile audience. The Chamber of Commerce spent heavily on lobbying last year
in an effort to prevent the creation of the consumer bureau.
Warren, a Harvard law professor, joked that her visit had been likened to Daniel in the lions den or
President John F. Kennedy speaking to Protestant ministers.
I think its all in good fun, but I actually think the analogies are wrong, she said. I dont want to
minimize our differences, but I think its important to find our common ground.
That common ground, she said, came down to one word: competition. Warren said she believes in
competition and free markets, and she argued that only through fair and consistent regulation can those
markets function properly.
She had an uphill battle.
Warrens half-hour appearance was sandwiched between speeches by Rep. Spencer Bachus (R-Ala.),
chairman of the House Financial Services Committee, and Tom Donohue, president of the chamber.
Both called for major changes to the bureaus structure, such as subjecting its funding to congressional
approval and replacing its independent director position with a five-member commission.
In arguing for a panel, Bachus said that having a single director would give that person too much power
to deem certain financial products abusive and to write onerous new rules.
If George Washington came back today, or Abraham Lincoln, or if Warren Buffett signed up, I wouldnt
give that person total discretion, Bachus said.
Speaking after Warren, Donohue said that a commission would provide a lot more balance and
accountability and that such a structure could win support from both parties. There are a lot of
Democrats who would not like to have one Republican sitting in that seat.
Warren defended the agency in its current form, which involves funding from the Federal Reserve and a
single, independently appointed director.
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Not one other banking regulator not one is subject to [congressional] appropriations, she said.
Requiring the CFPB to go into every examination against a trillion-dollar company, knowing that the
company could turn its lobbying force against the agencys funding, is not a prescription for fair and
evenhanded enforcement.
She said that the bureaus rules could be overturned by a group of fellow regulators and that a panel
must review the possible costs of proposed rules. Still, she said, putting in place meaningful new rules
and enforcing ones already on the books would permit honest competition to flourish.
We can differ over the form and substance of regulation, Warren said, but lets not deny the important
role of regulation.
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Reuters
Top banker and US regulator offer dueling agendas
March 31, 2011
By Kevin Drawbaugh
Jamie Dimon and Elizabeth Warren, both power players in U.S. finance, used a high-profile U.S.
Chamber of Commerce platform on Wednesday to advance opposing agendas in the debate over
regulation reform.
The two did not cross paths at the forum on capital markets in the chamber's stately Washington
headquarters, situated within view of the White House, but their remarks reflected the intensity that still
characterizes the issue.
Two and a half years after the peak of the 2007-2009 banking crisis, tensions and tempers continue to
run high over a regulatory crackdown approved last year by Congress, with European and Asian
Page 3298 of 3826
governments moving on reforms as well.
Dimon, chief executive of Wall Street giant JPMorgan Chase, lashed out at efforts by regulators to
police the $600 trillion swaps market, in which his bank is a big player.
New regulations being implemented by the U.S. Commodity Futures Trading Commission, mandated
under 2010's post-crisis Dodd-Frank reforms, "would damage America," he said.
He said a part of the Dodd-Frank legislation requiring banks to spin off swap dealing operations was
"one of the most irrational pieces of legislation I've ever seen."
Another part requiring reduction of fees charged in debit card transactions, he said, was "price fixing at
its worst, which basically just penalizes us for having debit cards."
Once a close adviser to President Barack Obama on financial policy, Dimon has become a sharp critic
since Dodd-Frank was pushed through Congress by Democrats in July 2010 over the opposition of
most Republicans and an army of bank lobbyists.
Despite his criticisms about Dodd-Frank, Dimon was upbeat about the economy. "Corporate America is
in very good shape. It's well-financed, it's well-funded," he said. "The consumer is spending ... housing
is better than it was."
IMPLEMENTATION UNDER WAY
The remarks from one of Wall Street's highest-paid bankers, and arguably its most politically influential,
came as U.S. regulators work to implement scores of new Dodd-Frank rules as lobbyists and
Republicans try to weaken them.
The profits and pay at big banks that were bailed out by taxpayers, including Dimon's, are up strongly
since the crisis, while many Americans still struggle to recover from a severe recession with high
unemployment.
The chamber event also saw Elizabeth Warren come before some of her sharpest critics to defend the
independent funding of the U.S. financial consumer watchdog she is setting up for the Obama
administration. She said she is a strong supporter of competition and that she believes the chamber is
too.
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"I know that you believe in it passionately and so do I," she said at the event held by the chamber, the
nation's largest and richest business lobbying group.
"The chamber and I have not always seen eye to eye ... But I don't consider myself in hostile territory
right now, and that is because I believe we share this principle," she said.
Her appearance at the event was the latest stop in her charm campaign as the administration weighs
whether to formally nominate her to be director of the Consumer Financial Protection Bureau (CFPB)
that was created by Dodd-Frank.
Obama has done more recently to reach out to business, after a testy first two years in power, but the
chamber has remained a foe, analysts said.
"The chamber has been very aggressive in opposing pretty much any policy the Obama administration
has proposed," said Christian Weller, an associate professor of public policy at the University of
Massachusetts-Boston.
"These attacks on the administration and its policies are very surprising considering that the Obama
administration has gone out of its way to make sure that its policies will in fact enhance the functioning
of private markets," he said.
WARREN DEFENDS FUNDING
Warren used the chamber event to attack a proposal from congressional Republicans to put the CFPB's
funding through the congressional appropriations process, instead of getting funds independently as the
Dodd-Frank legislation required.
CFPB funding should be independent of the appropriations process, she said, as it is for other bank
regulators.
Chamber President Thomas Donohue, speaking at the event, said Dodd-Frank threatens a "steady
decline in our share of global economic activity ... We're in a dangerous position."
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In a familiar theme, he warned that "layer after layer or regulation" is driving business to other nations.
For years, Donohue and the chamber have warned that excessive regulation would drive U.S.
businesses to the United Kingdom.
The Wall Street Journal reported on Wednesday that UK banking giant Barclays Plc is considering
moving its global headquarters from London to New York due to the threat of higher capital
requirements in the UK.
The bank has had preliminary conversations with U.S. regulatory officials on a move and is conducting
an analysis of whether switching its domicile makes sense, the newspaper reported, citing a person
involved in the process.
Barclays declined to comment on the report.
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American Banker
Dodd-Frank Pummeled at Chamber of Commerce Event
March 31, 2011
By Cheyenne Hopkins
WASHINGTON Outrage over the Dodd-Frank Act, which has been building for months, escalated
even further Wednesday at a U.S. Chamber of Commerce conference.
Leaders in the government and industry, including JPMorgan Chase & Co. chief Jamie Dimon, decried
the law one by one, calling it backward and misguided.
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Dimon was blunt in his assessment. While he said some provisions of the law "were rational," others,
such as rules reining in the derivatives sector, were simply out of touch with reality.
"The system would be safer if we also went back to the horse and buggy," Dimon said, responding to a
question about whether big-bank derivatives trading was too risky. "The quaint notion is not going to
work in this world, in our great economy. There is so much misinformation about derivatives, it's
astounding. They really didn't cause the problem."
A provision in the law restricting debit interchange fees, authored by Sen. Dick Durbin, D-Ill., also went
too far, Dimon said.
"The Durbin amendment just basically penalizes us for having debit card," he said. "The only thing
that bothers me is they start to add up, the cumulative effect of" the law's provisions "starts to hammer
us. That's what bothers me."
Dimon was not alone. Reiterating his opposition to the law, Chamber President Thomas Donohue said
the law "fell far short of what the country needed."
"While Congress acted quickly it also acted in haste," he said.
However, the capital markets summit did not feature just opponents of the law. One notable exception
was Elizabeth Warren, the architect behind the new Consumer Financial Protection Bureau, the DoddFrank product perhaps most detested by the industry. During the legislative debate, the chamber
orchestrated an aggressive campaign to stop the bureau's formation.
"I've had more teasing about this meeting than I've had in a long time," Warren, who is now advising the
administration on implementing the CFPB, said to the audience.
"But then, perhaps, so have you. You can imagine the analogies: Nixon to China, Daniel in the Lion's
Den, Senator John Kennedy speaking before Protestant ministers. All of that's in good fun, and
although I'm not here to minimize our differences."
She said the industry was wrong to think the CFPB will operate with unlimited power. The law put
checks and balances in place, she pointed out.
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"The CFPB is the only bank regulator and perhaps the only agency anywhere in government
whose rules can be overruled by a group of other agencies," she said. "Let me say that again: Other
agencies can veto our rules, while we cannot do the same" for them. "This is an extraordinary restraint."
In interviews, analysts said that, while angst following the law's passage was inevitable, numerous
factors have made it sustained, including that an improved economy is mitigating the rhetoric that
dogged the industry in the crisis.
Jaret Seiberg, an analyst for MF Global Inc.'s Washington Research Group, said the improving
economy helps Dodd-Frank opposition.
"This is one of the strongest signs yet that the economy is on the road to recovery because you have
lawmakers that are willing to challenge the anti-bank mantra that has dominated the political
environment for the past two or three years," he said.
Others said an emboldened conservative base nationally, highlighted by the Tea Party movement, has
provide ammunition to critics of the financial reform law.
"It just reflects the change in the politics. You are going from overregulated by the Obama
administration to less regulation by the Tea Party," said Paul Miller, a managing director at FBR Capital
Markets Corp.
"The environment is giving these guys some room to argue the government again is overstepping their
mandate."
At the summit, Dimon complained that the largest banks are being blamed for the 2008 turmoil, and as
a result some of the strictest measures under Dodd-Frank.
"There are reasons for big companies and small companies," he said.
"There is a reason big banks are there. I think we're ostracized with big versus small. That's a
mistake."
Donohue, meanwhile, criticized Democratic supporters of the law for pushing enactment before official
findings of the Financial Crisis Inquiry Commission were released.
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Congress "legislated even before its own official report on root causes of the crisis was delivered. It
simply ignored some of the most blatant root causes of the market collapse," he said.
Rep. Spencer Bachus, R-Ala., the chairman of the House Financial Services Committee, said
regulators are moving too fast in implementing the law.
"Speed kills in Washington," Bachus said. "There is not a day that goes by that I don't get an email or a
letter or a call from a community bank that says 'the regulators are putting us out of business.' "
Bachus directed much of his ire at the CFPB. He has introduced a bill that would replace the agency's
director with a five-person board. He also supports subjecting the bureau to congressional
appropriations rather than its current funding through the Federal Reserve Board.
"My objection is not to Elizabeth Warren," Bachus said to reporters. "If the president had appointed
her to a commission and she was one of five or seven people on a commission, I don't think anybody
questions her commitment to consumer protection. It's just you are putting the power to judge and
regulate in an almost unprecedented manner into one person, and quite frankly, as much as I respect
her people skills and intellect, I have no idea what she would do. I don't know whether she would
overreach, whether she would do the right thing in every occasion. But I'd much rather take five people
and let their collective judgment substitute that."
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Politico
Elizabeth Warren faces big business at Chamber summit
March 31, 2011
By Abby Phillip
Page 3304 of 3826
Appearing at a U.S. Chamber of Commerce summit Wednesday, Elizabeth Warren veteran

consumer advocate and an architect of a federal agency to protect consumers from fraud
acknowledged that a roomful of business people and lobbyists seemed an unlikely place for her.
Ive been teased about this more than anything else you know, the Nixon in China, Daniel in the
lions den kind of analogies, Warren said. But I actually think those analogies are wrong.
Warren told the audience that she is seeking common ground with the Chamber and declared that the
agency she assembles will be fair.
The Chamber and I dont always agree on everything but I dont consider myself to be in hostile
territory right now, she said. I dont want to minimize where we have differences, but I think its
important to begin with common ground, and our common ground is reducible to a single word:
competition competition in the marketplace of ideas and competition in the economic marketplace.
But Warrens charm offensive was countered by detractors who echoed the widespread concern in the
financial world and among Republicans in Washington about what they see as the agencys broad
regulatory agenda.
I can tell you that Im anxious, and Im somewhat angry, said Alabama Rep. Spencer Bachus,
chairman of the House Financial Services Committee. Bachus, who participated in a Chambersponsored session just ahead of Warrens appearance, said the sweeping financial regulatory bill that
mandated the new Consumer Financial Protection Bureau will hamper job creation through
burdensome regulations on the banks and financial institutions that lend money for new and small
businesses.
This is a sad day for America, Bachus said. That we have chosen to abandon what makes us great
what makes us successful.
Last September, President Barack Obama tapped Warren, a Harvard law professor and high-profile
consumer advocate, to set up the bureau but stopped short of selecting her as its first director.
Whomever the president nominates will have to face Senate confirmation, and Warren who
monitored the Wall Street bailout and is a fierce critic of risky lending practices by big banks has few
allies on the right.
As part of continuing White House outreach to business, Warren spoke at the Chambers annual
Capital Markets Summit, a daylong conference of national business leaders. She spoke for about 20
minutes, then took two questions before a polite but obviously skeptical audience.
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Nevertheless, Warren emphasized the positive, declaring that the new consumer protection agency
wants to operate with consensus, plans to draft sensible rules of the road and intends to enforce them
fairly and consistently.
But she said the Consumer Financial Protection Bureau is subject to plenty of checks and balances,
including some that run counter to the tradition of independent banking regulators. Moreover, Warren
added, financial institutions that are questioned will have the ability and the resources to undermine the
bureau and attack its funding.
Requiring the consumer agency to go into every examination against a trillion-dollar company knowing
that the company could turn its lobbying force against the agencys funding is not a prescription for fair
and evenhanded enforcement, she said.
Warren also defended one part of her portfolio that most rankles her critics: her sharp advocacy for a
wide range of regulatory powers for the bureau, which she says is the only way to give consumers real
choices in the financial products marketplace. She pointed to the 2008 Wall Street meltdown, which
was triggered by high-risk mortgages and complex, under-regulated stock deals, as evidence for her
case.
Lets not pretend that a billion-dollar Ponzi scheme is attributable to too much regulation, Warren said.
Warrens detractors on the Hill and in the Chamber, however, complain that the law, known as the Dodd
-Frank Act, which established the consumer protection bureau, mandates more than 200 new
regulators and recommends dozens more. They say the requirements will add to the already
burdensome web of bureaucracy and potential legal litigation that has hampered banks from
making capital available for business, stalling the anemic economic recovery.
My grandchildren will be considering retirement before most of these rules are fully considered,
Chamber CEO Tom Donohue said in a speech after Warren had left the building. Many of the
provisions, Donohue said, are politically motivated and are actually detrimental to effective regulation.
Donohue said he is willing to pursue fixes to Dodd-Frank, and he even asked the crowd to keep your
fingers crossed that new White House chief of staff Bill Daley a former JPMorgan Chase executive
will help.
They will say that any effort to change or fix Dodd-Frank means that were trying to weaken the
regulatory oversight and return to the mistakes of the past, Donohue said. To use a technical term,
thats just a bunch of bunk.
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Business wants sound regulations; business wants clear rules of the road; business wants greater
regulatory certainty; and so does the Chamber, he added.
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Time (Swampland blog)

Elizabeth Warren All Smiles in the Lions Den
March 30, 2011
By Adam Sorensen, with Steven Gray
For the supposed bane of Wall Street, an ex-professor whose critics like to cast as an overzealous
regulator champing at the bit of Big Government, Elizabeth Warren is actually quite fluent in the
language of Big Business. "Rules should be focused, and those that are not useful should be revised or
eliminated," she told the U.S Chamber of Commerce's Capital Markets Summit on Wednesday,
pledging that the newfangled Consumer Financial Protection Bureau she's setting up for the Obama
administration would heed the corporate lobbying group's call to "prevent duplicative and inconsistent
regulation of Main Street business."
That friendly appeal to big biz chiefs isn't really new it's exactly what Warren has been doing for
months as she tours the country, meeting with bankers to try to convince them the CFPB is a worthy
pursuit. She's also made several high-profile hires of ex-Wall Streeters, including former Deutsche Bank
managing director Raj Date, now the bureau's associate director for research, markets and regulations,
and community bank liaison Elizabeth Vale, formerly of Morgan Stanley. But Warren's insistence that all
she wants is "a regulator with limited powers and the independence necessary to execute its authorities
effectively" was a tough pill for the Chamber crowd to swallow.
Though it's not up and running yet, many in the banking sector would like to see the CFPB's power
pared back. Republicans have proposed legislation to make the new agency's budget subject to
Congress's appropriations and oversight, rather than the independent position it was designed to have
under the umbrella of the Federal Reserve. But that legislation is unlikely to go anywhere. And the
industry has kept most of its jockeying and complaints out of the spotlight. Wednesday was an
exception.
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Jamie Dimon, CEO of JP Morgan Chase and a long-time foe of the CFPB, was on hand at the Chamber
confab to offer an opposing view to Warren's. He called the talk of increased transparency in the
financial system "bugaboo," accused regulators of "using fear to justify [their] position," said new capital
rules could be the "nail in our coffin of big American banks" and railed against the regulation of swipe
fees. "We had a system of too many regulators, too much overlap and too many gaps," he said.
"Instead of simplifying and strengthening, we added more. It's even more complicated now."
But there were few, if any, jabs directed at the CFPB specifically. There might be a good reason for
that. It's rare for Warren and Dimon to appear in the same forum. TIME's Steve Gandel once wrote of
the former :
This is also the woman who makes Dimon, the head of the largest bank in America, shake with fear at
night. How do I know this? Because I called and asked. I tried to set up a debate on the topic between
Warren and Dimon. My pitch was, If you feel strongly about the topic, defend it in the pages of TIME
magazine, and your side of the argument will be better for it. My proposal was that Dimon and Warren
go on a foreclosure bus tour together. Take a look at the damage that has been done by option ARM
loans and 2/28 hybrids, and then make the case as to why the proposed consumer financial protection
agency would or would not have stopped the problems that led to the financial crisis.
Warren said yes. Dimon said no. To be fair to Dimon, I can't find anyone of any stature (bank CEO or
otherwise) willing to debate Warren on the issue. Ed Yingling of the American Bankers Association
won't stand up for the banks on the topic. Even the U.S. Chamber of Commerce's Tom Donohue,
whose organization runs a website dedicated to trying to stop the CFPA, is too much of a wimp to
debate Warren. What's more, I realize that the setting of a foreclosure bus tour (during which you look
at houses that have been lost by borrowers to banks) might put Dimon on the defensive, but I said that
Warren and I were flexible with the location. He could name his home court. Even so, Dimon said no.
The p.r. person who was the go-between said Dimon and his team decided that arguing against
consumer protection in the banking industry would make the CEO look bad.
There were few sparks Wednesday, in part because Warren's appeal was so banker-friendly. "You can
ask any student who took one of my classes, whether at Houston or Michigan or Harvard, whether they
liked me or not, whether they got an A or a C," she said in closing. "And they'll be able to tell you about
my deep belief in the importance of marketplaces, in the marketplace of ideas." You might interpret that
as a signal that she's open to suggestions or a reassurance of her capitalist values. But a better
translation might be: "My idea for a consumer protection bureau won out in the public forum and you,
dear bankers, will have to live with it."
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Page 3308 of 3826
Campaign for Americas Future (blog)

Choose Your Financial Future: Be Daniel Or Be Eaten
March 30, 2011
By Isaiah J. Poole
When Elizabeth Warren, the White House adviser who is setting up the Consumer Financial Protection
Bureau, went to speak before the U.S. Chamber of Commerce this morning, one of the things she
compared the visit to was the Biblical story of Daniel in the lion's den. It's a particularly apt comparison,
since while the headlines of Warren's speech uses phrases as "olive branch" and seeking "common
ground," the lion has made it perfectly clear that he still wants to eat Daniel for lunch.
Predation, after all, is in the lion's DNA. It's why in the United States we don't allow lions to roam outside
of a cage in a zoo.
So at the Chamber's Capital Markets Summit we were treated to two visions of consumer finance, the
world as Elizabeth Warren as Daniel would have it and the one sought by Chamber president Thomas
Donohue, representing the financial sector lion gnawing at its leash, desperate to break free and snatch
all of the prey it can capture and devour.
The contrast couldn't be sharper. Warren believes that both business and consumers win when there is
a referee that is responsible for making the playing field even and fair. While her charge is to protect
consumers against illegal and unethical behavior by banks and other financial companies, she has
been meeting with and listening to the concerns of the financial sector. "I believe in regulatory
engagement with industry, and I understand that industry provides a critical perspective in the
regulatory process, she said.
She also said that at her bureau weve built a structure to make sure that any rules we write will be fact
-based and grounded in a deep understanding of the market being regulated."
Warren also underscored that the consumer financial protection bureau "is the only bank regulator
and perhaps the only agency anywhere in governmentwhose rules can be overruled by a group of
other agencies," namely a group of regulators called the Financial Stability Oversight Board, which
includes the Federal Reserve Chairman the head of the Securities and Exchange Commission and the
Secretary of Housing and Urban Development. As she said, "this is an extraordinary restraint."
Page 3309 of 3826
But that's not good enough for the lion, Donohue.
The Chamber president said that even with the ability of the SEC, the Fed and housing agencies to put
a check on the consumer bureau's power, he wants the agency further strait-jacketed. Instead of a
single director, he backs legislation pushed by Republicans in Congress to have the bureau run by a
bipartisan, five-member board. ""We think a bipartisan five-person commission would provide a lot more
balance and accountability in the bureau's management than a single powerful director," he said in his
speech.
Translation: Having failed in the original objective in keeping the financial protection bureau from being
created in the first place, at least with a five-member board the financial industry can play divide-andconquer and render the bureau impotent to issue any regulations other than what the industry wants.
Rather than being the cop on the beat beholden to the people that the creators of the bureau
envisioned, the bureau becomes a security guard for the financial industry.
Donohue's speech was filled with red herring threats on the one hand and the soothing and disarming
purrs of a feline at rest on the other. You need a "reasonable level of risk" in the marketplace to
encourage innovation, investment and job creation, he saidas if anyone was suggesting that
"reasonable risk" should be wrung out of financial markets. Encouraging whistleblowers to report
corporate malfeasance directly to federal regulators without reporting the wrongdoing to their bosses
would render ineffective the compliance mechanisms companies already have in place, he warned.
(After all, an executive such as Countrywide's Angelo Mozilo wouldn't have countenanced the firing of a
whistleblower disclosing fraudulent behavior that was enhancing the company's bottom line, would he?)
We're not against regulation, Donohue half-purred, half-growled. "This debate is not about being for or
against regulation of our capital markets. This is not a battle between regulation and deregulation," he
said.
He's right about that, actually. It's about who benefits from the regulations that do exist. What we saw in
the run-up to the financial crisis was a deck stacked in favor of Wall Street. Banks could issue credit
cards with Byzantine interest-charging schemes that would make a mathematician do a double-take,
but consumers had no effective way of challenging absent disclosure and unfair applications of the
rules. Mortgage brokers could encourage applicants to lie about their incomes on loans and then sell
those fraudulent loans on the bond markets with a rating they essentially purchased from one of the
credit rating agenciesbut only the consumer gets punished for falling for the seduction; the seducer
gets to enjoy the plunder.
Lions can't help themselves, it seems. Warren extends what the media calls an "olive branch," and
Donohue swats it away with his sharp claws and then chews on it, using it to sharpen his teeth for the
conquest to come. His conservative allies on Capitol Hill are on a full-bore attack to get rid of as much
of the Dodd-Frank financial reform bill as they can, even though it falls short of what is actually needed
to tame today's too-big-to-fail financial behemoths. If they succeed, they will be back to partying like it's
2006, and we will be their next meal.
Page 3310 of 3826
Back to Top
New York Times

In Foreclosure Settlement Talks With Banks, Predictions of a Long Process
March 30, 2011
By David Streitfeld
Little was settled in the first round of foreclosure settlement talks.
The nations top mortgage servicers met Wednesday in Washington with the attorneys general from five
states as well as Obama administration officials, beginning negotiations in earnest over new rules for
homeowners who are in default.
The one thing everyone seemed to agree on was that an agreement was going to take time.
We have a long way to go, Iowa Attorney General Tom Miller, who is leading the effort from the states
side, said after the afternoon session broke up.
Obviously this is a very large set of issues, and its going to take some time to work through, Thomas
J. Perrelli, associate United States attorney general, said.
The quest to secure new foreclosure rules, which began last fall after the banks were shown to be
breaking the rules as they pursued evictions, may be slow but it is playing out in public. When the effort
was started, every attorney general signed on, but the coalition has begun to fracture.
Several Republican attorney generals are accusing their colleagues of overreaching in their attempt to
Page 3311 of 3826
bring the banks under control, while at least one Democrat, Eric T. Schneiderman, the New York
attorney general, has expressed concern that any deal would immunize the banks from future legal
action.
After Wednesdays meeting, Mr. Schneiderman said through a spokesman that he remained worried
about providing broad amnesty to servicers.
The banks at the meeting were Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and GMAC.
A spokeswoman for GMAC, which is partly owned by taxpayers as a result of failing during the
recession, called the session productive and useful but added it was an extremely complex topic.
The other banks declined to comment.
Lengthy negotiations work to the banks advantage, critics say.
The banks strategy is to run the clock, a Georgetown University law professor, Adam Levitin, said.
The chances of a settlement that meaningfully reforms mortgage servicing and makes the banks pay
an appropriate price for illegal conduct are rapidly slipping away.
The government negotiators may receive some support from the imminent release of a report by
banking regulators. The report, based on investigations conducted over the winter, is expected to
establish what many households in default knew long ago: that banks cared little for the legal niceties
governing foreclosure, exacerbating the troubles of millions at a particularly vulnerable point of their
lives.
In addition, the report is expected to show that bank employees were poorly trained, that they let law
firms and other third party contractors run wild, and that they had little interest in keeping people in their
houses.
Lenders say they have fixed these problems, and that few if any homeowners were evicted who did not
deserve it. But as recently as a few weeks ago, a major bank, HSBC, which is based in London, was
forced to suspend foreclosures when regulators found a number of deficiencies.
Enforcement action is expected to follow the release of the report by the Federal Reserve, the Office of
the Comptroller of the Currency and other banking regulators. Those fines and penalties would be
separate from any monetary settlement that results from talks with the state attorneys general.
The banking regulators were not present at Wednesdays all-day meeting.
Page 3312 of 3826
About two million households are in foreclosure, and another two million are in severe default. Data
released this week by an analytics firm, LPS Applied Analytics, showed that banks were making some
progress with modifications but that foreclosure was becoming, for better or worse, a permanent state
for many families.
The government proposals require homeowners in foreclosure to be treated on an individual basis and
would put in place a variety of measures that would encourage banks to modify mortgages rather than
evict.
Im really hopeful something comes out of this, said Jay Speer of the Virginia Poverty Law Center. Its
starting to look like the last chance for real reform. The Virginia legislature still has this amazing
allegiance to the big banks.
If the negotiations are being conducted behind the scenes, the banks and their supporters are openly
waging a battle for popular sentiment. The banks are presenting themselves as champions of those
homeowners who might be hostile to the idea of someone in default getting an undeserved break.
Banks say cutting the mortgage debt of foreclosed families into something more bearable creates
issues of moral hazard that people will default to get a better deal.
Even as JPMorgan Chase representatives were meeting with the task force, the banks chief executive,
Jamie Dimon, was rejecting the idea of writing down delinquent balances.
Yeah, thats off the table, Mr. Dimon told reporters after a United States Chamber of Commerce forum
in Washington.
His comments echoed previous remarks by other bankers, including the Wells Fargo chief executive
John G. Stumpf, who said it makes no sense to entice people not to pay their debts.
Four Republican attorneys general wrote a letter last week to Mr. Miller of Iowa, expressing concern
with the scope, regulatory nature and unintended consequences, of the settlement proposals,
particularly with the question of principal reductions. The attorney general of Virginia, Kenneth T.
Cuccinelli, one of the signatories, was invited to Wednesdays session to allay his concerns.
Critics of the banks say the entire issue is a red herring, and that principal writedowns are not such a
gift that people would default to get them.
Page 3313 of 3826
Moral hazard is being invoked by the banks and their defenders as an excuse to do nothing, rather
than out of any real concern for fairness, Mr. Levitin said.
Back to Top
Reuters
Foreclosure deal with U.S. banks elusive
March 30, 2011
By Dave Clarke and Joe Rauch
Large U.S. banks are mired in negotiations with state attorneys general over mortgage servicing
abuses, as bank regulators prepare their own enforcement actions against the banks.
On Wednesday, banks including Bank of America and JPMorgan and a group of attorneys general met
at the U.S. Justice Department to kick off what could be a long and contentious negotiation.
"It was a breaking of the ice," said Iowa Attorney General Tom Miller who heads an executive
committee comprised of 13 state AGs.
The Justice Department, the Department of Housing and Urban Development, the Federal Trade
Commission, and Treasury officials were also at the meeting, but the leading U.S. bank regulators were
not.
Miller described the meeting as a good start but said the authorities and banks still have a long way to
go because there are many differences.
Page 3314 of 3826
However, U.S. bank regulators including the Office of the Comptroller of the Currency and the Federal
Reserve could hit banks in the next couple weeks with their own enforcement actions over the banks'
foreclosure process abuses, sources familiar with the matter said on Wednesday.
The enforcement actions would make the banks adopt better mortgage servicing standards and offer
restitution to borrowers who were wrongly foreclosed upon, said one of the sources who asked not to
be named because the negotiations are ongoing.
The source said the banking regulators have not reached a decision on financial penalties.
All of the agencies involved in the probe had originally planned to announce deals with banks at the
same time but that now seems highly unlikely.
PROPOSAL, COUNTER-PROPOSAL
On the agenda for Wednesday's meeting was the outline of a proposed settlement that state attorneys
general leading the probe sent banks on March 3.
That proposal was endorsed by some federal agencies, including the Justice Department, the Housing
and Urban Development Department and Treasury staff setting up the Consumer Financial Protection
Bureau.
Notably, the Office of the Comptroller of the Currency and the Federal Reserve did not endorse the
proposed settlement.
The five mortgage servicers represented at the meeting brought a counteroffer they all agree on,
according to a source familiar with the negotiations. Those servicers are Bank of America, JPMorgan,
Citigroup, Wells Fargo and Ally Financial.
The states' document included a proposal for servicers to reduce the principal on a loan if it would help
keep a borrower in a house and make the mortgage more valuable to investors than it would be in a
foreclosure.
Page 3315 of 3826
That proposal was not well received by banks.
The banks are arguing, according to the source, that they have already made corrections to their
servicing and foreclosure practices. If they have to abandon those in favor of new standards, it will take
longer to implement needed changes, the source said.
ADVISORY ROLE?
Also on Wednesday, House Republicans asked Elizabeth Warren to clarify her role in the mortgage
servicing negotiations.
Warren is leading the Obama administration's efforts to set up the new Consumer Financial Protection
Bureau, which opens its doors on July 21.
She has said her agency has played a limited role in the probe, and is there to advise the other
authorities.
Sources have said the consumer agency is pushing harder than some bank regulators for a big
monetary settlement and principal writedowns on mortgages.
Republicans posted on the House Financial Services Committee website a February 14 document that
the CFPB prepared for state attorneys general, laying out settlement alternatives with the banks.
Republicans charged the document shows Warren and her staff have had more of a role in negotiations
than she has said.
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Page 3316 of 3826
Dow Jones Newswires

US Consumer Bureau Hires Four Officials
March 31, 2011
By Alan Zibel
The Consumer Financial Protection Bureau has filled four key positions as it prepares to start
operations in July, the Treasury Department said Thursday.
The agency, created by the Dodd-Frank financial overhaul, has hired Catherine G. West, formerly chief
operating officer of J.C. Penney Co. (JP), as its chief operating officer. She has been an executive at
banks including Capital One Financial Corp. (COF) and First USA Bank.
The bureau also hired Gail Hillebrand, formerly a senior attorney with Consumers Union, as associate
director of consumer education.
Dennis E Slagter was hired as assistant director and chief human capital officer. He formerly worked at
the Millennium Challenge Corp., an independent foreign aid agency. David P. Gragan, former chief
procurement officer for the District of Columbia, will serve as the agency's assistant director for
procurement.
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Washington Business Journal

U.S. Consumer Bureau taps local talent
March 31, 2011
By Jeff Clabaugh
Page 3317 of 3826
The new U.S. Consumer Financial Protection Bureau, created by the Treasury Department as part of
financial reform, has made four new top-level appointments, including a former Capital One Financial
Corp. executive and a former D.C. government appointee.
Catherine G. West, most recently chief operating officer at J.C. Penney Co., has been named associate
director and chief operating officer of the new bureau. At Capital One, West had held executive roles
that included president, president of the U.S. bankcard business and executive vice president of
enterprise operations.
She also worked as credit card division vice president at Chevy Chase Federal Savings Bank.
David P. Gregan, who served as the District's chief procurement officer under former Mayor Adrian
Fenty, was named the Consumer Financial Protection Bureaus assistant director for procurement.
Dennis Slagter, previously head of administrative services and human resources at D.C.-based foreign
aid agency the Millennium Challenge Corp., was appointed the bureau's chief human capital officer.
Gail Hallebrand was named associate director of consumer education and engagement at the bureau.
She was previously a senior attorney for the Consumer Unions West Coast office.
President Barack Obama appointed Harvard Law professor Elizabeth Warren to head the newly created
bureau in September.
Last month, it announced its headquarters would be at 1700 G St. NW, just across the street from the
White House, in space currently occupied by the Office of Thrift Supervision.
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Page 3318 of 3826

House Financial Services Committee changes schedule to accommodate Consumer Bureau bills
March 31, 2011
By Peter Schroeder
More legislation to remake the Consumer Financial Protection Bureau (CFPB) appears to be
forthcoming from House Republicans.
The House Financial Services Committee has modified its April hearing schedule to now include an
April 6 hearing devoted to "legislative proposals to improve the structure of the Consumer Financial
Protection Bureau," according to the committee's website. A hearing was originally scheduled on that
date to discuss a small business lending fund.
Clearing the way for a hearing on CFPB bills suggests that Republicans have more measures that
would alter and perhaps limit the new agency in the works, as the GOP sets its sights on one of the
most hotly contested provisions in the Dodd-Frank financial reform law.
Committee members, including Chairman Spencer Bachus (R-Ala.) have already introduced legislation
that would alter the top of the CFPB to have it be run by a bipartisan five-member commission, as
opposed to a single director. Now that a hearing has been set to discuss multiple proposals, it appears
additional bills should be forthcoming shortly.
Administration officials are working to get the CFPB off the ground before it is set to go live in July.
Meanwhile, Republicans, who staunchly opposed the creation of the bureau when it was included in the
Dodd-Frank financial reform law, have levied multiple critiques of the agency and its architect,
presidential advisor Elizabeth Warren.
The GOP claims that the bureau has been given sweeping powers that give it the ability to exercise
control over almost any aspect of the consumer financial system. In addition, the CFPB is funded via
the Federal Reserve and not Congressional appropriations, which Republicans complain limits the
amount of oversight lawmakers can exercise on the fledging agency.
On the other hand, Warren has fiercely argued against bringing the CFPB's budget under
Congressional control, saying no other banking regulators have their budgets set that way, and doing
so would make the CFPB susceptible to lobbying pressures from deep-pocketed financial industries.
Page 3319 of 3826
Committee Republicans unveiled a package of bills that would alter various aspects of Dodd-Frank
earlier this month, but none of them tackled the CFPB.
A committee spokesperson declined to comment on the hearing.
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The Hill (Twitter Room blog)

Sen. Durbin huddles with Elizabeth Warren
March 30, 2011
By Jordan Fabian
Senate Majority Whip Dick Durbin (D-Ill.) met with Elizabeth Warren, a White House adviser helping to
establish the new Consumer Financial Protection Bureau.
The second-ranking Democratic senator let the nugget drop on Twitter:
Looking forward to meeting w/@CFPB head Elizabeth Warrenneed to protect consumers from the
tricks & traps of Wall St.
Warren is a consumer advocate and Harvard Law School professor who is well liked by liberals. It is
unclear if she will be nominated to permanently head the new agency.
Republicans have been closely monitoring her role in setting up the bureau and on Wednesday
suggested she might be overstepping her bounds.
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American Thinker
The Liberal Addiction to Bureaucracy
March 31, 2011
By Christopher Chantrill
These days we do not judge people on the basis of good and evil. Instead of saying that something is
evil, we say it is unhealthy. If someone is a drunk, we say he has an alcohol addiction. In the old days
you purged the evil in your heart with confession and repentance. Modern addiction you treat with
drugs and experts.
Take Elizabeth Warren and the remarkable new federal bureaucracy, the Consumer Financial
Protection Bureau, of which she is the head.
In this brand new agency we can see a great national problem that everyone ignores, pretending it isn't
there.
It is the liberal addiction to bureaucracy.
Why do liberals think that, after the failure of all their government programs in dysfunctional
bureaucracy, this time is different? Perhaps it is time for them to break through their denial with a visit
to the Addiction-Recovery section at their local independent bookstore.
Ms. Warren's Consumer Financial Protection Bureau, created by the Dodd-Frank financial reform act, is
a curious animal. It is not part of a regular executive department, but part of the Federal Reserve
System. It is funded not from normal appropriations, but from the Fed's profits. But it is not
accountable to the Fed. It is accountable instead to the Financial Stability Council, which can overrule
the bureau's rules only with a two-thirds supermajority vote. Right now according to the Wall Street
Journal, Ms. Warren and her bureau are working on a bureaucratic plan to "punish banks and reward
voters with mortgage principal writedowns," as if that will help turn around the continuing housing
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meltdown. As conservatives know, but liberals are reluctant to admit, the meltdown was caused at least
in part by the bureaucratic Community Reinvestment Act and the bureaucratic holdover from the Great
Depression once called FNMA, and now Fannie and Freddie.
Did I mention that Elizabeth Warren hasn't been confirmed by the Senate and that the whole Consumer
Financial Protection Bureau was her idea conjured up from a law-review article written back in 2003,
"The Growing Threat to Middle Class Families."
So that makes Ms. Warren similar to Samantha Power, the architect of the Libyan humanitarian
intervention. Power published in 2003 a book on genocide, A Problem from Hell, caught the attention of
Barack Obama, and now gets to use the entire United States military as her experimental laboratory.
Some people are discouraged by the way that bureaucracy is going rogue in the Obama administration,
with unaccountable "czars" operating out of the White House protected from Congressional oversight,
and the Warrens and Powers with their roving commissions to dodge around the defense in depth of
the Constitution's separation of powers
But I think these clumsy attempts to hide their stash of bureaucratic booze indicate that we are
approaching the crisis of liberal bureaucratic government.
Back in the good old days, liberals were proud of professional administration by experts. They boldly
erected mainline cabinet departments to administer their comprehensive and mandatory reforms, and
the names of their programs were on every tongue. But now, reduced to cunning and subterfuge by
their failures, they stoop to bending the rules and gaming the system. That's why they gamed
ObamaCare to pretend it would save money and that people could keep their current health insurance.
That's why they have to hide Elizabeth Warren's brainwave away in the Federal Reserve System, and
Obama's war on Libya is a humanitarian intervention.
The joke is that the liberals that erect these rigid, inflexible government programs are the same liberals
that insist that the universe runs on evolution and adaptation, and that the planet is a fragile thing that
should be protected from ruthless corporate exploitation by man and machine. The most exquisite
analysis should be done before setting down a clunking great electrical transmission line for fear that it
might damage the habitat of some minor rodent.
But when it comes to turning the financial system or the health care system upside down with untried
ideas from some academic crank and profoundly affecting the lives of millions of people, it's pedal to the
metal and damn the consequences. Let's pass the bill so we can see what is in it.
All in all, the liberal dynasty has had a good run, as political dynasties go. It set up its power base in the
Progressive Era with its civil service reforms, its Federal Reserve Act, its income tax, and its
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popularly elected US Senate. It's had a century of power in which it has taken government spending
from seven percent of GDP to the present 40 percent.
The pity of it is that political dynasties never go quietly. Before they leave, they usually trash the place,
and cause great suffering among ordinary people. Because people that seek political power don't care
about people, whatever they say. They care about power. They are addicted to it.
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Associated Press
Democrats lack a heavy hitter against Sen. Brown
March 31, 2011
By Andrew Miga
Democrats haven't found a solid challenger to GOP Sen. Scott Brown in liberal Massachusetts next
year, stoking concerns the party could blow its best shot to take back the seat held for nearly a halfcentury by the late Sen. Edward Kennedy.
It's a seat close to Democrats' hearts, still raw from their humiliating loss to the upstart Brown in 2010.
The senator's widow, Vicki Kennedy, has flatly ruled out running. So did former Rep. Joe Kennedy, who
joked he was "feeling ill all of a sudden" when reporters recently asked him about challenging Brown.
The state's leading Democrat, Gov. Deval Patrick, insists he's not interested. Former Rep. Martin
Meehan, flush with $4.8 million in campaign cash, has rejected pleas from party officials to jump in.
Boston Mayor Thomas Menino, who rarely minces words, described Brown's prospects bluntly.
Page 3323 of 3826
"There's nobody that can beat him," he told the Boston Herald recently.
With a crowded field of lesser-known candidates expected to run, Democrats fret that a long, costly and
divisive primary could sink their hopes of reclaiming a seat they feel they never should have lost.
Democrats are facing a tough fight in 2012 to hang onto their slim majority in the Senate.
"The looming liability right now for the Democrats is to go through a bloody, messy and expensive
primary and then turn around with just six weeks to take on Scott Brown," said Mary Anne Marsh, a
Democratic analyst in Boston. "So that's why Democrats have to think long and hard about who is
running and trying to solidify behind someone who has the best shot at beating Scott Brown."
Rep. Michael Capuano, a potential challenger whose district includes Harvard Square and Cambridge,
said rallying behind a single candidate would boost his party's chances considerably.
"The Democratic Party has to be totally, 100 percent unified in order to do it," said Capuano. "The
bottom line is, yeah, he's a strong candidate by every measure."
Yet Democratic leaders have balked at the idea.
"We will have a very good, hopefully clean, hard-fought primary that will separate the best nominee out
of that pack," said state party chairman John Walsh.
Robert Massie, a former lieutenant governor candidate, is already running. Potential challengers include
Setti Warren, the first-term mayor of the affluent Boston suburb of Newton; Kim Driscoll, the mayor of
Salem; Rep. Stephen Lynch of South Boston; City Year youth program co-founder Alan Khazei; and
Robert Pozen, a businessman.
Capuano and Khazei lost the 2009 Democratic primary to replace Kennedy.
"These are middleweights and lightweights," said Dan Payne, a veteran Boston Democratic strategist.
"There is a heavyweight, but it is not clear she will run."
That heavyweight is Elizabeth Warren, a Harvard Law professor tapped by President Barack Obama
last year to head the Consumer Financial Protection Bureau. She's been dubbed one of "The New
Sheriffs of Wall Street" by Time magazine. But she's given no public signs that she is interested in a
Page 3324 of 3826
Senate run.
Ron Kaufman, a longtime GOP strategist, said there's a chance Patrick could eventually decide to run.
"He'll get a lot of pressure from the White House and national Democrats to run," Kaufman said. "They
can't keep control of the Senate if they can't pick up a seat in Massachusetts."
Since his surprising January 2010 special election win, Brown has surprised many Democrats with his
political savvy. He was an obscure state senator best known for posing nude for Cosmopolitan
magazine and campaigning with his pickup truck and his brown leather "barn coat."
Now he's sitting on more than $7 million in campaign cash. He's got a best-selling autobiography,
"Against All Odds: My Life of Hardship, Fast Breaks and Second Chances" and he has emerged in
recent polls as one of the most popular politicians in a state long dominated by Democrats.
"People in Massachusetts realize that Senator Brown is as strong as garlic," said Kaufman.
Brown has cast himself as a moderate, seeking to appeal to independents and conservative
Democrats. Such support is vital for a Republican to survive in heavily Democratic-leaning
Massachusetts. Democrats complain it's all a smokescreen to mask Brown's GOP loyalties.
Democrats were buoyed by how Massachusetts bucked the GOP tide in last fall's midterm elections.
The party kept all 10 U.S. House seats and the governorship. Since 2012 is a presidential year,
Democrats are hoping Obama's popularity in the state will hurt Brown.
But Marsh said Democrats still need to find a way to unite behind a strong challenger.
"Not to reduce myself to cliches here," she said, "but you can't beat somebody with nobody."
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Page 3325 of 3826
Oregonian
A game of keep away in consumer regulation
March 31, 2011
By Michael Cummins
Denial of the plain-English meaning of the Constitution has become commonplace among America's
ruling class. In circles of power, it's an article of faith that "A" does not necessarily equal "A." But even
the most audacious constitutional fantasist would concede that the separation of powers -- the "checks
and balances" -- among branches of the federal government was absolutely sacrosanct to the Framers.
So it is proving particularly difficult for defenders of the new Consumer Financial Protection Bureau to
justify the way that it has been set up. The bureau was created as part of the DoddFrank Wall Street
Reform and Consumer Protection Act of 2010. It is tasked with consolidating federal regulatory activity
for things like student loans, credit cards, home mortgages, payday loans -- virtually all consumer
financial products.
In modern times, new bureaucratic agencies of various size and reach are created fairly regularly.
There is a routine protocol -- implicit in the first two articles of the Constitution -- for their
institutionalization and funding provisions. They are generally house' within the executive branch and
are subject to congressional oversight and appropriations.
But the drafters of Dodd-Frank had a different idea for the CFPB. It is to be housed within and funded
by the Federal Reserve. That's right. The CFPB will not be subject to the annual congressional
budgeting process. It is instead authorized, with some qualifications, to receive up to 12 percent of the
Fed's net earnings, upon the bureau's request.
In case this sounds, at first blush, like a great money-saving idea, keep in mind that the lion's share of
the Fed's annual profits are, by law, sent to the U.S. Treasury (from whence most of the earnings come
in the first place). The bureau's funding will simply be deducted from the money that is to be returned.
So the sole effect -- the very intentional effect -- of this set-up is to relieve Congress of true oversight,
and to thereby insulate the bureau from the will of the "people's chamber." Sure, congressional
committees will be able to haul CFPB bigwigs to the hill, grill them, even impeach them. But the real
teeth of oversight lies in Congress's power to set agencies' annual budgets.
This congressional "power of the purse" is an integral part of the checks-and-balances mechanism
instituted by the Framers. Through Dodd-Frank, Congress did set up the parameters of the bureau's
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funding, but it did so as a third-party director. And the funding directives are, indeed, mere parameters
(the "up to 12 percent" provision).
But the Framers assigned Congress not only the power but the duty of hands-on appropriating for the
operations of the federal government. There is nothing in the Constitution to suggest that the power of
the purse is a discretionary, delegable "right" (much as Congress' war declaration powers do not appear
to be so). For Congress to direct another body, especially a quasi-public institution like the Fed, to
provide for and manage the funding of a government agency is an abrogation of its assigned duties.
Fortunately, some in Congress are properly startled by the implications of what Federal Reserve
historian Allan Meltzer recently called "an abomination." Rep. Randy Neugebauer, R-Texas, chairman
of the House Financial Services Oversight and Investigations subcommittee, has introduced a bill to
normalize the funding protocol of the CFPB and move it under the Treasury Department. This effort
comes as part of a larger reaction among House Republicans against the breathtaking regulatory power
that this new agency will soon wield. The House has already passed legislation that would cut the
CFPB's permissible ramp-up funding for the coming year by nearly 40 percent, relative to the DoddFrank parameters.
There is even dissent from within the Federal Reserve system. Naturally, St. Louis Fed President
James Bullard's objections do not touch directly on the question of constitutionality. But they do hint at
the wisdom behind the Framers' strict governmental design: "(The funding scheme) is not based on any
careful assessment of what the needs of the bureau will be ... (n)or is there any mechanism for
changing these amounts going forward, should market conditions change, or if the needs of the bureau
change."
But the bureau's champions will do what they can to keep it "protected" from Congress. Elizabeth
Warren is President Barack Obama's de facto first director of the agency. (She is technically just a
"presidential assistant," because the president knew that she could not pass confirmation as official
director by the Senate.) Warren recently complained that "many of those who have opposed the CFPB
are still trying to chip away at its independence by subjecting it entirely to congressional appropriations."
She went on to warn that "(p)oliticizing the funding of bank supervision would be a dangerous
precedent."
Imagine that -- an extremely powerful regulatory agency having to answer to officials elected by the
people! (Next thing you know, that meddlesome public body will be trying to properly oversee the
operations of the Federal Reserve itself.)
There is indeed a dangerous precedent in the works: A federal agency is being successfully stashed
outside the appropriate reach of Congress -- at least for now.
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Page 3327 of 3826
Credit Union Times

Trades Urge Obama Administration to Weigh In on Interchange Delay
March 31, 2011
By Claude R. Marx
Citing a potentially devastating impact on credit unions, both CUNA and NAFCU urged the Obama
administration to endorse a delay in the implementation of the Federal Reserves rule regulating debit
interchange fees.
The proposed rule is a recipe for consolidation and also for higher fees for consumers, NAFCU
Executive Vice President Dan Berger wrote in a letter to Austin Goolsbee, chairman of the White House
Council of Economic Advisers
Berger added that while merchants will have reduced costs. By contrast, for credit unions there will be
reduced income and increased costs are necessarily borne by the credit unions members.
NAFCU has also made its case through conversations with key administration members, including
Elizabeth Warren, who is setting up the Bureau of Consumer Financial Protection.
CUNA has also discussed the issue with administration officials including Warren.
CUNA President/CEO Bill Cheney today wrote Federal reserve Chairman Ben Bernanke and urged him
to support legislation to delay the implementation of the Feds rule.
In light of all the concerns about the regulation of debit interchange fees, we firmly believe that a
congressionally-mandated delay is not only reasonable but also necessary in order to ensure small
issuers will not be harmed and consumers that rely on them will not be disadvantaged, Cheney wrote.
The trade associations letters come a day after Bernanke told lawmakers that the Fed received so
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many letters about the proposed rule that it wont meet the April 21 deadline for issuing a final rule.
interchange fees.
interchange fees.
Page 3329 of 3826
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Daily Tribune (Michigan)

Changes to credit card rules would make costs clearer
March 31, 2011
Editorial
Proposed changes in federal regulations affecting credit cards would make costs clearer to cardholders.
The rules, under consideration by the new Consumer Financial Protection Bureau, are aimed at
showing consumers how to avoid fees and overloaded cards by changes to the ways fees are shown
on marketing materials.
Balance transfers, for example, carry a one-time fee, often about 4 percent. If you've never made one,
who knew?
But the first line of a summary of terms is likely instead to list the promotional interest rate, often 0
percent. That fee is several lines down. One tweak would be to move the fee up a few lines.
It's clearly important to the consumer, even if it may be counter to the interest of the issuer.
Other proposals, outlined in a recent Associated Press article, would ensure that consumers have a
clearer idea of costs, exact interest rate and credit maximum before applying, rather than after an
application is received and processed.
The proposed new rules continue the momentum of regulations that took effect in 2010. Those required
statements to tell cardholders how long it will take to pay off a balance if they make minimum payments,
how much interest they'll pay with those minimum payments, and what payments they'd be required to
make to pay off the card in three years.
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Indications are that the new rules are working for consumers. In a survey, many card holders said they
had noticed the changes on their statements, were using cards less and making larger payments. New
rules also made it easier to make payments on time. One of the rules set a due date on the same day of
the month. And it appeared that those with smaller incomes were even more affected by the changes.
The AP report cited a separate study showing that a 3-year schedule for paying down debt is becoming
more popular with cardholders.
The bureau also points out that the proportion of accounts being charged late fees has dropped, from
6.5 percent in February, 2010, to 5.7 percent in November, although the economy may also have
played a role.
Although the new agency isn't fully operational, it clearly has some good ideas.
Those affecting credit card promotional materials should be adopted.
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Colorado Springs Independent

Help Warren fend off the GOP madness
March 31, 2011
By Jim Hightower
It's a Mad, Mad, Mad, Mad World. That was the title of a kooky 1960s movie, but an even kookier
sequel could be made today starring the mad, mad, mad, mad Republican leaders of the U.S. House.
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They are mad in both senses of the word insane and angry. Start with insane.
They rant ceaselessly against the bugaboo of Big Government, mindlessly breezing past the fact that it
was meek and weak government that only months ago allowed Wall Street to crash our economy, BP to
make an environmental and economic mess of the Gulf, and Massey Energy to kill 29 miners in Upper
Big Branch.
How insane are they? They're openly hugging up Wall Street banksters the one group in America
with a public approval rating lower than Congress! The GOP majority is wailing that these poor
millionaires are victims of government abuse, while snapping at Democrats like mad dogs and howling
their intent to remove even the feeble restraints that Democrats put on Wall Street greed a year ago.
Their insane defense of these deservedly despised financial manipulators is now being magnified by
their uncontrolled anger at Elizabeth Warren. She's the bankruptcy expert who correctly warned during
the Bush regime that Wall Street's unbridled greed was leading our economy over a cliff. She also
successfully pushed to include, for the first time, a consumer voice in financial regulation, and she's now
doing the heavy lifting of getting the new consumer financial protection agency up and running.
Wall Street despises Warren, because she's smart, savvy and effective. So the bankers unleashed their
GOP attack dogs to go after her with a vengeance, and they've responded with a furious pettiness
including zeroing out her salary.
To help Warren fend off the madness, contact Bankster USA: banksterusa.org.
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Watertown Daily Times (Watertown, NY)

Consumer protection: New law means higher costs
March 31, 2011
Editorial
Page 3332 of 3826
Implementing the financial overhaul enacted last year will require the work of 2,600 federal employees
in 11 federal agencies and cost nearly $1 billion this year.
The projections are included in a Government Accountability Office report to the House Financial
Services subcommittee on Oversight and Investigations.
The legislation, known as the Dodd-Frank law, establishes greater federal oversight of consumer
financial matters such as mortgages and credit cards with new power to impose regulations on banks,
credit card companies and other financial institutions.
It was not known how many new employees would have to be hired to implement the law. Yet more
than 1,200 new workers will be needed to staff the new Consumer Financial Protection Bureau created
by the law, the Wall Street Journal reports. The new agency would take $329 million or nearly a third of
the estimated $1 billion initial cost.
The tab for the bill will run $2.9 billion over the next five years. "Financial firms will see their bills to the
government go up," the Journal said.
The report tries to temper the impact by pointing out that not all of the cost would come from taxpayers.
Only three of the agencies are funded by taxpayers.
Most of the remaining agencies are funded by assessments on the companies they regulate. Funds for
the new consumer bureau will come from the Federal Reserve, which receives its revenue from interest
on government securities and bank fees.
The Fed plans to hire 290 full-time workers and spend $77.5 million to implement the law, which will
mean creating three new offices.
Taxpayers might not foot the bill directly for the legislation. However, consumers could see higher fees
or reduced services as banks and other financial institutions seek to recover or reduce their costs.
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American Banker
Apoplexy at Dodd-Frank
Small banks cant see an upside to new law
March 31, 2011
By Kate Davidson
Regulators and small bank advocates seem to be losing the psychological battle over the Dodd-Frank
Act, despite recent efforts to calm bankers.
Significant parts of Dodd-Frank law will not affect small banks, and some of these banks' main
concerns, including new overdraft protection guidelines, tougher regulatory exams and higher capital
requirements, are technically unrelated to the law. Still, scary claims from big banks about what might
result from the law are whipping community bankers into a frenzy, said Cam Fine, the chief executive of
the Independent Community Bankers of America.
Big banks "keep pumping out poison after poison and it just scares the willies out of" community
bankers, he told reporters at the ICBA's annual convention in San Diego. "They just read the headline
and say, 'Oh my God, this is what's going to happen and this is terrible,' but not a thing has happened to
a community bank related to Dodd-Frank yet."
Aside from a proposed cap on interchange fees, Fine said very little will impact small banks. More than
half the bill's 16 titles, or 85% of the text, have virtually nothing to do with small banks, he said.
Such assurances are doing little to take the fight out of some bank executives, who remain convinced
that the law's unknowns and negatives outweigh any positives.
"All they do is pinch guys like me and you're gone, you disappear," said Tony Costa, the chairman and
chief executive of the $160.7 million-asset Empire State Bank in Newburgh, N.Y. "It's not even a ripple
on the ocean," he added. "I think sometimes you need to fight. You just need to dig your heels in and
say 'no.' "
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Legal experts say Fine's claims are mostly true.
"A lot of it really does not apply to run-of-the-mill community banks, at least not right now," said Sanford
Brown, a managing partner at Bracewell & Giuliani LLP in Dallas. "Neither Congress nor the regulators
have shown any great propensity to repeal laws or regulations."
Those regulations have a way of trickling down, industry observers said, doubting whether the intended
protections for small banks will stand the test of time.
"Not one of the supposed exemptions for small banks is worth the paper it's printed on," said Steve
Wilson, the chairman of the American Bankers Association and the chairman and CEO of LCNB
National Bank in Lebanon, Ohio.
"There's nothing there that is helpful to small community banks," Wilson added.
"I think what historically happens to community banks is that ultimately the things that are expected of
the big banks are going to be expected of the community banks," Brown said.
As it stands, the law is decidedly harsher on big banks, some experts said. Provisions relating to the
Volcker Rule; creation of a Financial Stability Oversight Council; orderly liquidation authority; regulation
of advisers to hedge funds; greater oversight of derivatives; and state and federal insurance reform
would largely impact large banks and non-banks.
Scott Anenberg, the co-head of Mayer Brown LLP's financial services and regulatory enforcement
practice, said the law is a mixed bag for community banks.
It includes a number of specific carve-outs for small banks. Those under $10 billion of assets will not
have to be examined by the Consumer Financial Protection Bureau though they will still be subject to
its rules and they will be exempted from parts of the Sarbanes-Oxley Act that requires a public
company's auditors to attest to its internal controls. Under a grandfathering provision, certain small
banks can keep trust-preferred securities as regulatory capital.
It also includes a number of tangible benefits for community banks, including a permanent increase in
the deposit insurance limit, to $250,000, lower assessments for smaller institutions and temporary
blanket coverage for transaction checking accounts.
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"How you evaluate it from a community bank perspective probably depends on your frame of
reference," Anenberg said.
"If you're comparing it to big banks, I think community banks probably did relatively better," Anenberg
added. "If you look at it from a zero sum game ... I suspect the vast majority of community banks would
say 'no.'"
Fine and others, including Sheila Bair, the chairman of the Federal Deposit Insurance Corp., and
Elizabeth Warren, the architect of the Consumer Financial Protection Bureau, have argued that, while
the law is flawed, the benefits that ICBA fought to include still outweigh the positives.
"Dodd-Frank is not a perfect law," Bair said in her speech at the ICBA convention last week. "There are
many things in it that I would like to change. But, on balance, it is a good law, and one which I think will
strengthen, not weaken, community banks."
Bankers, and a number of their consultants and lawyers, say the law contributes to a never-ending
increase in regulatory burdens.
"Even if there's specific provisions ... that obviously don't impact community banks directly, the general
thrust of Dodd-Frank is anti-banking and pro-regulation," which hurts small banks, said Kip Weissman,
a partner at Luse, Gorman, Pomerenk & Schick.
"Arguably it hurts them disproportionately, because they don't have the resources the big guys do to
deal with these regulations," Weissman added.
Though bankers at the convention gave Bair two standing ovations, Weissman said their public
reactions do not square with what they are saying privately. "I promise you, they were on their feet
because they're a polite group, and she was saying positive things and they were trying to encourage
her on that," he said. "I haven't met any community bankers and our firm represents hundreds that
said, 'Oh boy, Dodd-Frank, what a good thing for our industry.' They just don't feel that way."
Bankers bristled at Fine's suggestion that they are simply afraid of the unknown. Some said they are
already feeling the law's effects.
"When the regulators come and talk to you, the first thing they say is, now Dodd-Frank is going to be
implemented, there are going to be new rules," Costa said.
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"Every time they've got some new program, whether it's bank safety and soundness, whether it's
enterprise risk, BSA, AML, they want you to hire somebody to manage it."
French Hill, the chairman and CEO of Delta Trust & Banking Co., said the law's size makes it tough for
bankers to sort through its impact, leading many to assume the worst.
"I think that the average banker has a hard time getting around even the impact this legislation will have
on their bank, because so much of it is put off to regulatory rule-writing," Hill said.
Hill said there are enough concrete provisions, such as creating the CFPB, to inspire real fear. "I think
where there's smoke there's fire on the subject of increased burden and costs," he said.
Why isn't the message to look on the bright side resonating?
Philip Smith, the president of Gerrish McCreary Smith, a Memphis consulting firm, said he doubts many
bankers know enough about the provisions that help them. He suspects they would rather hear about
provisions that will penalize larger banks.
In the meantime, Smith said small banks are approaching the law with a skepticism. "I think the
pessimism and the skepticism that community banks bring to it may ultimately be helpful," he said. If
their skepticism helps identify unintended consequences, "then we have the ability before it's embedded
in us to go back and tweak it accordingly to make it better for community banks.
"We all know once it gets rolling then it's very difficult to go back and undo it," he added.
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American Banker
Page 3337 of 3826
Lawmakers Weigh the Cost of Dodd-Frank to Federal Government

March 31, 2011
By Donna Borak
WASHINGTON As critics of the Dodd-Frank Act are complaining about the effect of new regulations
on the industry, they are also railing against the overall price of the law.
The final tab of the regulatory overhaul promises to be hefty. But while the law is estimated to cost
nearly $30 billion, the impact on the federal budget is unclear. Most of that cost will fall on financial
institutions in the form of regulatory fees. Meanwhile, the Congressional Budget Office expects the law
will cost the government just over $1 billion in the first five years.
Republican lawmakers stress that the costs of the law on both the public and private sectors are not
worth it.
"It is Congress' job to analyze each proposed bill to determine whether the quantifiable benefits from
enactment outweigh the cost of implementation," said Rep. Randy Neugebauer, who chaired a House
Financial Services subcommittee hearing Wednesday on the law's budgetary and economic costs.
"Unfortunately, the committee did not undertake this type of cost-benefit analysis when considering
Dodd-Frank."
GOP members say the estimated costs on the industry are just the tip of the iceberg. There are the
indirect costs, they said, of regulatory reform that come in the form of capital formation, credit
availability, and the U.S economy's ability to compete globally.
"That represents a deadweight loss to the economy, in the form of foregone income that could have
been used by the private sector to fund investment in capital income, research and development, job
creation, or start-up funds for the next great American company," Neugebauer said.
He added that regulators should slow down the rulemaking process in order to do better cost analyses.
"My present concern is that regulators are failing to account for the true cost of this [law] prior to
implementing the roughly 300 new rules promulgated by" it, he said. "If that means we have to slow the
pace of rulemaking in order to give the regulators more time to analyze the impact then so be it."
But Democrats said the GOP was jumping the gun on calling the law a money pit.
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"We are not at a point yet to conclude that Dodd-Frank is costing us too much to implement," Rep. Al
Green, D-Texas, said at the hearing. "All legislation costs something."
Testifying at the hearing, Jill Sommers, who sits on the Commodity Futures Trading Commission,
advocated for agencies doing cost-benefit analyses as they implement rules. She said the CFTC has
had to act in "a compressed time frame" to move rules and acknowledged it has not quantified the costs
of them.
"As we add layer upon layer of rules, regulations, restrictions and new duties, my preference is that the
commission include in each proposed rule a thorough cost-benefit analysis that attempts to quantify the
cost associated with compliance," she said. "If we wait until we issue a final rule to conduct a thorough
cost-benefit analysis, the public is deprived of the opportunity to comment on our analysis because
there is no comment period associated with a final rule."
Other witnesses, however, were less concerned with the cost of implementing the law, saying the costs
would be much greater if the regulatory system were not reformed.
"Measures that inhibit and limit the full and effective implementation of Dodd-Frank will increase the
systemic risk in the financial system and substantially raise the probability that we experience another
major financial crisis in the near future," said David Min, associate director for financial markets policy at
the Center for American Progress.
Douglas Holtz-Eakin, a former CBO director and now president of the American Action Forum, said the
cost of the new law will be sizable.
"Dodd-Frank will be an expensive federal endeavor," he said.
But, he added, in the context of annual federal outlays totaling $3.6 billion, the law is "not a key driver of
federal deficit or debt accumulation."
The two most significant budgetary aspects of Dodd-Frank the housing government-sponsored
enterprises and the Consumer Financial Protection Bureau are not on the federal budget, HoltzEakin said.
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Page 3339 of 3826
American Banker
Judge Denies Preliminary Injunction Against LO Comp Rule
March 31, 2011
By Paul Muolo
U.S. District Court Judge Beryl Howell late Wednesday denied a preliminary injunction aimed at halting
the Federal Reserve's loan officer compensation rule, dealing loan brokers a major blow.
A posting Wednesday afternoon on the website of the National Association of Independent Housing
Professionals, one of the two plaintiffs in the case, stated: "Like all mortgage professionals throughout
the country, we are disappointed with Judge Howell's decision. To deny every argument presented to
the court and ignore the Board's own admissions in their answer, is beyond comprehension. NAIHP is
preparing to appeal to the Circuit Court." The other plaintiff is the National Association of Mortgage
Brokers."If they do appeal, it will have to be an expedited appeal," said Glen Corso, managing director
of the Community Mortgage Banking Project, which filed an amicus brief in the case.
As things stand now, the LO comp rule will become operative Friday, April 1. Among other things, the
rule bans broker compensation based on the rate and terms of the loan, disallows payments from both
consumers and wholesale funders on the same deal, and prevents brokers from offering discounts to
consumers by earning less money on a transaction.
Last Friday NAMB filed for a temporary restraining order and then changed its filing to a preliminary
injunction on Tuesday. Brokers alleged that the LO comp rule is misguided, will destroy the brokerage
industry, and may be illegal.
Their motion was filed in the District of Columbia.
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American Banker
B of A Shareholder Proposes Board Audit Foreclosure Controls
March 31, 2011
By Sara Lepro
The New York City Comptroller's office, representing pension funds that own shares in Bank of America
Corp., wants the bank's board to review the company's controls for loan modifications, foreclosures and
securitizations.
The request, disclosed Wednesday in a regulatory filing, is one of eight shareholder proposals that will
be voted on at B of A's annual meeting May 11 in Charlotte, N.C. The board has advised shareholders
to vote against all eight proposals, which range from limiting relocation benefits for senior executives to
giving shareholders an annual list of certain employees who have worked for the government in the
past five years.
The New York City pension funds hold of 29.7 million shares of B of A. The bank's mortgage servicing
practices are already under intense scrutiny, as B of A and several other large servicers await a
resolution of an investigation by all 50 state attorneys general and inquiries by other government
agencies.
"We believe the [board's] audit committee should act proactively and independently to reassure
shareholders that the company's compliance controls are robust," the comptroller said. The proposal
calls for B of A to report the audit's findings by Sept. 30.
In urging shareholders to vote against the proposal, B of A's board said the "company has already
taken significant steps to ensure that appropriate internal controls are in place" and that it "has already
provided extensive public disclosure regarding the requested information, which makes the report
sought by the proposal unnecessary."
Other shareholder proposals include one seeking information on the bank's policy concerning the use of
collateral on all over-the-counter derivatives trades.
Another seeks to prohibit any senior executive from receiving a benefit that would prevent that
executive from realizing a loss on the sale of his or her home in a relocation. Shareholder CtW
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Investment Group notes that the bank had provided Barbara Desoer, head of B of A's mortgage
division, with such a benefit when she relocated in December 2008.
"We are concerned home-loss protection programs like the one provided by BofA can confer a
substantial benefit that has no link to performance," the group said.
And the noted gadfly Evelyn Y. Davis, who owns 2,423 shares of B of A common stock, is trying again
to win approval for a proposal that would require the bank to furnish an annual list to shareholders of all
employees with the rank of vice president and above who served in any government capacity in the
previous five years. Last year, 12.1% of the shares voting were in favor of the proposal, according to
the proxy filing.
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American Banker
Mortgage Brokers, Its Time to Get Real
March 30, 2011
By Lawrence G. Baxter
Depending on whose version of the story you read, in 1929 either Joe Kennedy, James Pierpont
Morgan or Bernard Baruch is reported to have said that he knew it was time to get out of the stock
market when his shoeshine boy started giving him stock tips. I should have known in 2006 that we were
about to have the greatest financial crash since the Depression when my pool boy announced that he
was making his last visit to my home because he was off to join his friend in Florida as a mortgage
broker.
This week the mortgage brokerage industry is up in arms about the Fed's new broker pay rules. Broker
trade groups are attempting to enjoin the new rules in court and they are predicting all kinds of dire
consequences for the nation. Yet an article reporting these reactions in Wednesday's American Banker
["Broker Pay Rules Forcing Banks to Play the 'Bad Cop' "] draws all the wrong conclusions. The story
opens with the statement that "lenders are realizing sadly they will have to police their brokers," a
statement that, in the aftermath of the financial crisis and the substantial contribution to that crisis by out
-of-control mortgage lending, is quite extraordinary.
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And so the grumbling continues. Among the litany of complaints appears the stunning revelation that
the new rules require a "delicate balance between what you make in profit and the amount you need to
pay loan officers to be competitive." Welcome to the world of competition!
The new rules, it is said, will "unfairly hurt first-time homebuyers and borrowers with dings to their credit
who typically relied on brokers using some of the yield [spread premium] to fund a loan's closing costs."
Leave aside the fact that such premiums were generally kept secret from borrowers, why is the new
restriction a problem? After deciding, no doubt not for philanthropic purposes, whether to bestow some
of his or her secret commission upon a borrower who could not even afford to pay that much in order to
close the deal, would the broker also have been willing to sign a guarantee that the borrower would
actually repay the loan?
An astonishing analogy is drawn by one mortgage lender: "Would you rather buy a pair of shoes from
Target or a pair of shoes from Prada? They will both last the same time and do the job." Only often they
won't and didn't as we all learned to our massive collective cost in 2008.
The wailing continues: technology and compliance costs favor the larger banks well DUH! and
there will be a decline in customer service because the costs of better service cannot be factored into
the pricing. I thought it was the personal service that made brokers so special to customers? Or do
brokers want to be paid for mass production and then paid again for service?
Perhaps most absurd is the complaint by another mortgage company president that "high-producing,
high-paid brokers face an immediate pay cut because of the caps on lender-paid commission. The top
tier just got squeezed because of compensation reform." Where has he been during the past three
years?
Let's talk turkey. Mortgage brokers can earn exceptionally and I mean exceptionally high
compensation by applying a relatively modest range of skills. Good luck to them.
With high compensation, however, comes high responsibility. At least this used to be the case and
should once again be the quid pro quo. So why should the mortgage industry be especially exempt from
this basic principle of competitive economics?
Even more importantly, banks use mortgage brokers as an outsourced extension of their sales forces.
Why on earth would banks not want to "police their brokers"? Bank reputations have suffered
enormously as a result of the reckless practices of mortgage brokers. It would be as irresponsible for a
bank not to require attestations of compliance by brokers as it would be not to require outsourced
technology providers to guarantee minimum customer service and data protection standards. Banks
that, in the past, did not impose such minimum requirements were not only irresponsible to the public at
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large but were also neglecting their duty to shareholders. The general public, taxpayers and employees,
and bank shareholders all paid a huge cost as a result.
The reported protests from the mortgage banking industry are nothing more than self-serving hot air. It
is high time mortgage lenders stopped acting like victims and started exercising the responsibility that
comes with the rich fees they earn from lending. Or start servicing swimming pools instead.
Lawrence G. Baxter is a professor at Duke Law School. He was formerly an executive vice president of
Wachovia Corp., heading its e-commerce division from 1995-2006.
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American Banker
Reacting to Debit Regs, PNC Lets Customers Pick Which Perks to Keep
March 31, 2011
By Daniel Wolfe
As many banks break the unpleasant news to consumers about the disappearance of checking account
perks, PNC Financial Services Group Inc. has developed a way to make customers feel empowered
about the changes.
A button displayed to users of PNC's online-focused Virtual Wallet account provides an instant and
actionable way for consumers to switch to a new checking account if they are unhappy with the
changes to their current one. It's called the Supercharge button a brand that plays up the benefits of
the destination account. If Virtual Wallet customers do not opt in to switch accounts, they will stop
earning debit rewards and most ATM fee reimbursements in September.
By offering customers "the one-click choice" of whether to change accounts, PNC has "totally skirted
the forced migration to a new account type" that most banks are doing, said Edward R. Woods,
principal at Mindful Insights LLC, a research firm in Portland, Ore.
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PNC has "put the end user in control," Woods said. "People like to be in control."
The Supercharge button, which appeared March 27, stands in sharp contrast to the approach at other
banks, such as that of JPMorgan Chase & Co.
One of JPMorgan Chase's letters explicitly blames the Durbin amendment to the Dodd-Frank Act for the
end of debit rewards and steered customers to credit products rather than provide options for altering
their checking relationship.
At the beginning of March, PNC announced changes to its checking account lineup, including Virtual
Wallet, a group of three accounts tailored for customers who prefer online interaction. One change was
to cut the account's benefits down the middle, asking customers to keep one half or the other by
choosing whether to switch.
Those who choose to stay with the classic Virtual Wallet account keep the perks of having no monthly
fee or minimum balance requirement but give up debit rewards and most ATM fee reimbursements.
Those who Supercharge to the Performance account keep debit rewards and ATM fee reimbursements
but must maintain a minimum balance or deposits if they are to waive the account's $10 monthly fee.
The Performance account also does not charge fees for writing checks, whereas Virtual Wallet
assesses a 50-cent per-check fee after the first three checks each month.
Woods said one benefit of PNC's approach is that if it works as advertised, it's completely self-service.
PNC saves money by handling this conversion online rather than requiring customers to speak to a
representative at a branch or call center.
PNC would not make an executive available for an interview. In a post Monday on the Pittsburgh
company's Inside the Wallet blog, Mike Ley, a vice president in the e-business and payments group,
said the changes to Virtual Wallet were due in part to new debit card regulations, but he emphasized to
customers that "the choice is yours with a couple of clicks."
Jacob Jegher, a senior analyst for the market research firm Celent, said that as more banks change the
terms of their checking accounts, they must also have a straightforward process in place to try to retain
customers who are no longer happy with those accounts.
As a current customer looking to open a new account at the same bank, "if you're going to have to
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make a call to a call center, sign a form and mail in two other documents as proof of whatever, then
yeah, this is going to be a headache and maybe you'll switch because it's much easier for you to go
online and open an account elsewhere," Jegher said.
But in PNC's case, he said, "All you have to do is click 'switch,' " and "there's something compelling
about that."
He warned, however, that the process needs to work as advertised.
In a test of the Supercharge process on March 27 by American Banker, PNC's system displayed an
error message, suggesting the switch did not work even though by the next day it was clear the
change had gone through.
A spokesman for PNC said customers' issues that day were minor and quickly resolved, and that
overall the Supercharge launch went smoothly.
Still, Jegher cautioned, "any hiccup presents the risk of attrition."
Banks, he said, are especially at a disadvantage when they start taking away benefits, such as debit
rewards, that may have attracted the customer to the account in the first place.
"Once you give a customer something, to take it away is one of the worst things you can do," Jegher
said.
This is why banks have to go further than simply offering an alternative account, he said. "There have to
be real benefits."
Jegher said it is noteworthy that PNC would waive the fee on its Performance account if users kept a
$1,500 balance, which is lower than the $2,000 balance Virtual Wallet currently requires for users to
qualify for ATM fee reimbursements.
Jegher recommended merchant-funded rewards as a lure for customers to switch to a new account,
even if that new account carries fees that they do not pay today.
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"The harsh reality is that banking is going to cost money," he said.
James Van Dyke, the principal and founder of Javelin Strategy and Research in Pleasanton, Calif., said
some consumers would rather pay a monthly fee than give up certain perks.
"People don't switch banks over fees as much as you'd think they would," Van Dyke said. "They
typically only switch banks when they feel forced to," such as when they move to an area where the
bank has no branches.
In a consumer survey Javelin conducted in November, just 27% of respondents said they had switched
banks because they were paying too many fees.
The primary reason consumers switched banks was that they had moved away from the bank's branch
map, which 34% reported doing.
"The average consumer is willing to pay more fees, but it needs to be done at a click of a button and it
needs to be for things that have true value for the consumer," Van Dyke said.
For example, consumers are willing to pay a fee for expedited online payments, he said.
Woods said that other banks could follow PNC's example, but that the online experience PNC built for
Virtual Wallet makes it especially well suited for this kind of account-switching tool.
"It makes it a little more complicated with a more traditional bank and a more traditional user base,"
Woods said.
PNC saves money by making the account-switching process self-service for a customer base that is
primarily online; most banks would have to put more emphasis on mailings and branch interactions,
Woods said. "If it's an online-only account, [it's a] slam dunk if you're going to be copying" PNC's
approach, he said. "If your account is more traditional, then if you're going to be going down the road of
copying this, you need to think about the offline channels."
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American Banker
Strike the Right Balance in Raising ATM Fees
March 31, 2011
By Patrick OReilly
Banks received a lot of negative press when ATM fees started hitting $3 a few years ago. ATM fees
have continued to increase in recent years, but the ceiling has been at $3 across major banks, and fees
have largely been the same or lower at regional banks.
ATM fees are now back in the spotlight. Several leading banks made waves by announcing changes to
their surcharge policy. JPMorgan Chase is testing $4 and $5 fees, and other banks are no longer
paying foreign ATM fees, as American Banker reported.
The main impetus is the quest to replace lost fee income because of increased regulation. There are
certainly opportunities to increase ATM fee income, but there is also a lot of risk. The key is finding the
right balance. It is important to know how much to raise the fee and to find the right fee level for each
ATM instead of raising fees across the board. Banks not paying foreign ATM fees need to consider the
impact on retention and determine whether some types of checking accounts should keep this service.
When a bank's ATM fees are below the market rate (e.g., below $3 today), raising fees to the market
rate is typically profitable across most ATMs. However, going above the market rate is a different story.
The impact depends on a lot of factors, including how many competitor ATMs are nearby, what rates
they charge, demographics of the area and strength of your brand. Some ATMs can support going
above the market rate, but others can't. Banks therefore need to test the higher rate at a subset of
ATMs that are spread throughout the network to identify the right strategy for each ATM.
Not paying foreign ATM fees for your customers can affect account generation and retention. The
response will also vary widely by customer and by market. While it isn't feasible to have a different
policy by customer and challenging to have a different policy by market, it is easy to implement a policy
where the payment of foreign ATM fees depends on the type of product a customer has. A basic
checking customer may have a very different reaction than a premium checking customer.
It is tempting to raise fees to make up for lost income, but banks cannot go into these decisions blindly.
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Banks also need to be smart about testing. Chase is testing higher ATM fees in Texas and Illinois, but
these markets may react very differently than the rest of the country. Make an informed decision before
putting new account generation and customer retention at risk. Try new ideas first with a subset of
customers or markets, and test in a representative sample of your entire network.
Patrick O'Reilly is the president and chief operating officer of Applied Predictive Technologies, a
provider of market testing services.
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American Banker
Credit Card Bills Trump Mortgages, TransUnion Study Says
March 31, 2011
By Kate Fitzgerald
Certain effects of the economic downturn have begun to ease, but one recession-hatched trend
persists: Cash-strapped consumers continue to show a preference for paying their credit card bills over
their mortgages, TransUnion LLC said.
The Chicago credit bureau's study of 27 million credit records showed that last year when consumers
were unable to meet all their financial obligations, they were more likely to fall behind on their
mortgages than on their credit cards.
Although consumers' financial situations may be improving, their bill-payment hierarchy continues to
buck pre-recession patterns, the study suggests.
In previous decades, consumers were more likely to default on credit cards before letting their mortgage
payments fall behind, said Sean Reardon, a consultant with TransUnion's analytic and decision services
group.
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"When forced to prioritize, consumers have always ranked their securitized assets, such as their home
or car payment, first," Reardon said.
But a reversal of the traditional payment hierarchy began to surface during the first quarter of 2008,
Reardon said.
For the first time, the percentage of consumers who were keeping up with their credit card payments
while delinquent on their mortgage payments surpassed the percentage of consumers who were
current on their mortgage payments and behind on their credit card accounts.
When the payment hierarchy flipped approximately three years ago, "most analysts" predicted that the
trend would end after the recession. But that was not the case, Reardon said.
In fact, the reversal of the traditional pattern became more widespread, with the percentage of
consumers delinquent on their mortgages and current on their credit cards rising to as high 7.4% during
the third quarter of 2010, up 310 basis points from 4.3% during the first quarter of 2008, the TransUnion
study found.
"The reversal of the traditional payment hierarchy was driven by a perfect storm of falling home prices
and the glut of real estate in the market, combined with rising unemployment, Reardon said.
Those forces caused "a kind of economic tsunami" that prompted changes in how consumers viewed
their debt obligations, he said.
But TransUnion data from late 2010 suggests the trend reversal may be starting to shift back to
traditional patterns.
During the fourth quarter, the percentage of consumers who were behind on their mortgage payments
but current on their credit card accounts dropped 16 basis points, to 7.24%.
Meanwhile, the percentage of consumers who were delinquent on their credit card accounts and current
on their mortgages fell to 3.03%, its lowest level ever and down 107 basis points from 4.1% during the
first quarter of 2008.
The recent decline in consumers delinquent on their mortgages yet current on their credit card accounts
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"may be a sign that the divergence in the payment hierarchy has peaked," Reardon said.
TransUnion published the study on Tuesday.
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American Banker
Help Customers Apply Their Financial Literacy
March 31, 2011
By Jennifer Tescher
April is National Financial Literacy Month. If the past is any guide, the banking industry will use the
opportunity to tout the various curricula, websites and public service campaigns it has created during
the past year to help inform consumers about their finances.
Despite the good intentions and large sums of money behind these initiatives, there is little evidence to
suggest that they are working. It's time for a different approach.
Financial knowledge is important, but it's not the endgame. Knowledge is meaningful only if consumers
put it to work in the way they shop for and use or don't use financial products and services.
Given the vast array and increasing complexity of financial products, it's no wonder that consumers
have a hard time managing their money. More choices and features are good, but only up to a point.
Helping consumers become more financially capable means marrying high-quality, easy-to-use
products with timely, relevant, actionable and ongoing information. Consumers need both to be
successful.
Page 3351 of 3826
Banks are beginning to recognize this fact. As regulatory changes lead them back to the drawing board
on checking accounts and credit cards, some are incorporating the elements of financial capability into
both product design and customer communication in novel ways.
My organization has been on the hunt for innovative models that bring products and information
together in ways that can help shape positive consumer behavior. With support from a broad group of
financial services firms led by the Citi Foundation, we established a $1.5 million Financial Capability
Innovation Fund to seed and test new approaches.
A call for proposals we issued last year netted nearly 250 ideas from nonprofits across the country. We
ultimately selected five ideas, all of which are directly applicable to financial services providers.
Consumer Credit Counseling Service of Delaware Valley will test whether social commitments and text
alerts can help consumers reduce debt. In this 21st-century version of a support group, consumers that
sign up for a debt management plan will provide contact information for friends and relatives who will be
alerted should the participant fail to follow through on debt payments.
Grow Brooklyn, an affiliate of Brooklyn Cooperative Federal Credit Union, will leverage technology, peer
support and automation to help low-income savers turn virtual "impulse saving" into real cash in their
accounts. In partnership with the tech startup Piggymojo, credit union members will be able to set
savings goals and have funds automatically transferred from checking to savings when they make a
decision to not spend. Forgoing that morning latte, for instance, would translate into actual savings
accrued.
Mission Asset Fund of San Francisco will franchise its Cestas Populares program, a peer loan coupled
with peer-led education, to help immigrants build credit and manage credit wisely. The program
formalizes the lending circle concept, where a group of friends pools funds and loans the money to
each member of the group in succession, by collecting and reporting the payment history to help
consumers build credit.
Co-opportunity Inc. will leverage technology to enhance the effectiveness and scale of its volunteer
budget coaching program. The Connecticut nonprofit will partner with HelloWallet, an Internet-based
personal financial management platform, to link financial advice with financial products and test whether
automated tools can be as effective as in-person financial advising.
Filene Research Institute, an applied research and innovation center for credit unions, will test whether
rewarding consistent timely loan payments with interest rate reductions leads to better payment
behavior. Filene will work with six to eight credit unions across the country to provide timely
encouragement and an incentive to subprime auto borrowers to pay on time.
Page 3352 of 3826
These innovative projects hold promise, but what matters is whether they are successful in helping
consumers change their behavior and improve their financial well-being. Researchers will evaluate each
project to see what really works.
Community-based nonprofits play a critical role as trusted advisers, and they may be better suited than
banks to engage with consumers on financial matters, especially when the work will take weeks or
months.
Still, it is easy to see how various elements of these projects could be replicated directly by financial
institutions and baked directly into products and practices. For instance, several of the projects will
experiment with text messaging to provide consumers with real-time information and encouragement.
Increasingly, banks are using text messaging to provide customers balance information, or to warn
them about low balances before an account is overdrawn.
This is exactly the kind of marriage between products and information that can lead to tangible results
for consumers. It's beyond financial literacy. It's having your customer's back.
Jennifer Tescher is the president and chief executive of the Center for Financial Services Innovation.
The center's Catalyst Fund was an investor in RentBureau.
Back to Top
American Banker
Dont Mourn the 30-Year Fixed-Rate Mortgage
March 31, 2011
By Alex J. Pollock
Discussions of housing finance give a shining religious aura to 30-year fixed-rate mortgages. They are
the last refuge of the defenders of Fannie Mae and Freddie Mac, who argue that we have to have
government guarantees so we can have 30-year FRMs. First, this argument is wrong. Second, the 30-
Page 3353 of 3826
year FRM is not the unmitigated blessing the Fannie and Freddie loyalists imply. Indeed, it is a big
reason U.S. mortgage markets are in such bad shape.
No instrument is universally good in all times and economic situations. Let us consider not only the
advantages, but also the dark side of the 30-year FRM. For borrowers of 30-year FRMs, the
advantageous situation is when interest rates and house prices alike are rising. Then borrowers have
the same mortgage payments despite rising interest rates, and get to keep the whole inflationary
premium in the house price.
But suppose interest rates fall to very low levels and house prices also fall. This is the reality of the last
few years. The borrowers often cannot refinance because of the fall in house prices, so they are stuck
with a very high nominal and even higher real interest rate, and their payments stay the same despite
falling interest rates. The entire deflationary discount in the house price is imposed on them. Defaults
rise; house prices are pushed further down. In this situation, it becomes quite difficult to modify the 30year FRMs that cannot be refinanced, as the many government modification programs have
demonstrated. In contrast, a floating-rate mortgage, say of the typical British variety, does not need to
be modified the interest rate automatically falls with market rates. This relieves the cash payment
burden on the borrowers and shares the deflationary discount with the lenders.
Of course, American mortgage borrowers and lenders did not expect house price deflation and interest
rates near zero, but they got them anyway, in large part because they believed in house price inflation.
No loan is the best for all seasons, alas.
Alex J. Pollock is a resident fellow at the American Enterprise Institute in Washington. He was president
and CEO of the Federal Home Loan Bank of Chicago from 1991 to 2004.
Back to Top
Page 3354 of 3826
From:
Cronin, Katherine (CFPB)

(fydibohf23spdlt)/cn=recipients/cn=cronink>
_DL_CFPB_AllHands
To:
Cc:
Bcc:
Subject:
Date:
Attachments:
CFPB Vacancy Announcements on USAJOBS 3/31/11

Thu Mar 31 2011 11:28:40 EDT
Colleagues,
with them.
1.
Position: Supervisory Examiner, Field Examination Manager, CN-0570-6A/6A
Location: Southeast Region Washington, DC

Office: Offices of Large Bank and Non-Bank Supervision
Announcement Closes: Friday, April 29, 2011
special appointment eligibles
Link: 11-CFPB-069
2.

Link: 11-CFPB-070P
Page 3355 of 3826
3.
Location: Midwest Region - Chicago

Link: 11-CFPB-071
4.

Announcement Closes: Friday, April 29,2011
Link: 11-CFPB-072P
5.
Location: West Region San Francisco

Link: 11-CFPB-073
6.
Page 3356 of 3826

Link: 11-CFPB-074P
7.
Location: Northeast Region New York

Link: 11-CFPB-075
8.

Link: 11-CFPB-076P
9.
Position: Supervisory Examiner, Assistant Regional Director, CN-0570-7A/7A

Page 3357 of 3826

Link: 11-CFPB-077
10. Position: Supervisory Examiner, Assistant Regional Director, CN-0570-7A/7A

Link: 11-CFPB-078P

Link: 11-CFPB-079

Link: 11-CFPB-080P
Page 3358 of 3826

Link: 11-CFPB-081

Link: 11-CFPB-082P

Link: 11-CFPB-083

Vacancy Announcement #: 11-CFPB-084B
Page 3359 of 3826

Link: 11-CFPB-084P
17. Position: Supervisory Examiner, National Examiner, CN-0570-7A/7A

Link: 11-CFPB-085

Link: 11-CFPB-086P

Link: 11-CFPB-087
Page 3360 of 3826

Link: 11-CFPB-088P

Link: 11-CFPB-089

Link: 11-CFPB-090P

Page 3361 of 3826

Link: 11-CFPB-091

Link: 11-CFPB-092P
25. Position: Consumer Financial Protection Analyst, CN-1101-6A/6A

Link: 11-CFPB-097

Page 3362 of 3826

Link: 11-CFPB-098P

Link: 11-CFPB-099

Link: 11-CFPB-100P

Location: Midwest Region Chicago
Link: 11-CFPB-101
Page 3363 of 3826

Location: Midwest Region Chicago
Link: 11-CFPB-102P

Link: 11-CFPB-103

Link: 11-CFPB-104P
Katie
Page 3364 of 3826
Katherine M. Cronin
Human Capital Team
202.435.7059
for guidance.
Page 3365 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:
Sensiba, Vicki (CFPB)

(fydibohf23spdlt)/cn=recipients/cn=sensibav>
_DL_CFPB_AllHands
CFPB Vacancy Announcements on USAJOBS 3/31/11

Thu Mar 31 2011 11:07:17 EDT
Colleagues,
with them.
Deputy Director, Office of Servicemember Affairs CN-0301-7A

Office: Servicemember Affairs
11-CFPB-134 Deputy Director, Servicemember Affairs
Deputy Director, Office of Servicemember Affairs CN-0301-7A

Office: Servicemember Affairs
11-CFPB-135P Deputy Director, Servicemember Affairs
Page 3366 of 3826
Vicki S. Sensiba
Human Capital Team
202-435-7449 (1801 L St)
for guidance.
Page 3367 of 3826
From:
To:

_DL_CFPB_AllHands
Cc:
Bcc:
Subject:
FW: TREASURY DEPARTMENT ANNOUNCES SENIOR HIRES FOR CONSUMER
FINANCIAL PROTECTION BUREAU
Date:
Thu Mar 31 2011 10:20:10 EDT
Attachments: image006.jpg
image005.jpg
image004.jpg
image003.jpg
image002.jpg
image001.jpg
This went out this morning.
U.S. Treasury Department

Office of Public Affairs
FOR IMMEDIATE RELEASE: March 31, 2011

CONTACT: CFPB Public Affairs, (202) 435-7454
TREASURY DEPARTMENT ANNOUNCES SENIOR HIRES FOR

CONSUMER FINANCIAL PROTECTION BUREAU
WASHINGTONThe U.S. Department of the Treasury today announced the hiring of senior leadership
for the Consumer Financial Protection Bureau (CFPB).
Elizabeth Warren, Assistant to the President and Special Advisor to the Secretary of the Treasury on
the CFPB, highlighted the selection of Catherine West to serve as Chief Operating Officer and Gail
Hillebrand to serve as Associate Director of Consumer Education and Engagement.
In addition, Dennis Slagter will serve as Chief Human Capital Officer and David Gragan will serve as
Assistant Director of Procurement.
Page 3368 of 3826
With these hires, the CFPB has filled two of its most senior positions with people who have a proven
track record of leadership, said Warren. Catherine Wests experience in the private sector will inform
her work heading the division that will build and sustain the CFPBs entire organization. Gail Hillebrand
s years as a prominent consumer advocate will be valuable as she heads the division that will provide,
through a variety of initiatives and methods, information to consumers that allows them to make the
decisions that are best for them.
In Dennis Slagter and David Gragan, we have also hired two individuals with a history of exceptional
public service, including in the military, Warren added. They will continue to serve the country well by
playing key roles in the operations of the CFPB.
The following individuals were announced today as joining the CFPB leadership team:
Catherine G. West
Catherine West will serve as Associate Director and Chief Operating Officer. She will oversee several
offices, including Human Capital; Procurement; Information Technology; Finance; Operations and
Facilities; Freedom of Information Act, Privacy, and Records; and the Consumer Response Center.
West was previously the Chief Operating Officer of J.C. Penney. Prior to that, she was a senior
executive at Capital One, serving in roles that include President, President of the U.S. card business,
and Executive Vice President of Enterprise Operations. Previously, she worked at First USA Bank as
Executive Vice President of Marketing Services and Operations, and Senior Vice President of U.S.
Consumer Operations. West has also worked at Chevy Chase Federal Savings Bank as Vice President
of the Credit Card Division. She was named one of Fortunes 50 Most Powerful Women in Business
and one of Washingtonians 100 Most Powerful Women. She is a graduate of Lynchburg College.
Gail Hillebrand
Gail Hillebrand will serve as Associate Director of Consumer Education and Engagement. She will
oversee several offices, including Community Affairs, Consumer Engagement, Servicemember Affairs,
Financial Education, Older Americans, and Students. Hillebrand formerly worked as a Senior Attorney
at Consumers Unions West Coast Office, where she managed the credit and finance advocacy team
and led the organizations financial services campaign. She is the former founding chair and board
member of the California Reinvestment Committee, a statewide coalition working to encourage financial
institutions to serve low-income consumers and neighborhoods. Hillebrand has served on the
Consumer Advisory Council to the Board of Governors of the Federal Reserve System and on the
Council of the American Law Institute. She began her career as a law clerk to Judge Robert Boochever
of the U.S. Court of Appeals for the Ninth Circuit. She practiced law with the San Francisco firm of
McCutchen, Doyle, Brown and Enersen (now Bingham McCutchen). She is a graduate of the University
of California at San Diego and received her J.D. from the University of California at Berkeley.
Page 3369 of 3826
Dennis E. Slagter
Dennis Slagter will serve as Assistant Director and Chief Human Capital Officer. He previously worked
at the Millennium Challenge Corporation, an independent U.S. foreign aid agency, where he headed
administrative services and human resources as Acting Managing Director and Deputy Director. Prior to
that, Slagter served as the Director of Strategic Initiatives for the Assistant Secretary of the Army
(Manpower and Reserve Affairs), where he led the Armys personnel human capital and legislative
programs. He has also served as Director of Initiatives and Transformation for the Army Human
Resources Command, as a Corporate Fellow with the Office of the Secretary of the Defense, as an
Army personnel officer for the Task Force 1st Armored Division in Baghdad, and as a Military
Community Commander in Wiesbaden, Germany. He is a graduate of Creighton University and
Webster University, and was also educated at the U.S. Army Senior Service College.
David P. Gragan
David Gragan will serve as Assistant Director for Procurement. He most recently served as the Chief
Procurement Officer for the District of Columbia, having been appointed by Mayor Adrian Fenty. He has
been a public procurement professional since 1993, when he became the Chief Procurement Officer for
the State of Indiana. He also served as the state procurement director for Texas. He has served as a
consultant to state and local governments on procurement reform while at Accenture, Oracle, and CGI.
Gragan is currently the vice chair of the Universal Public Procurement Certification Council, the
certifying body for state and local government procurement professionals. He has received the
distinguished service awards of both the National Association of State Procurement Officials and the
National Institute of Governmental Purchasing. He is a Certified Public Procurement Officer. Prior to his
public procurement career, he was an intelligence officer in the United States Marine Corps. He is a
graduate of the United States Air Force Academy and the University of Southern California.
###
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Page 3371 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:
Royster, Felicia (CFPB)

accounts/cn=standard users/cn=roysterf>
_DL_CFPB_AllHands
CFPB Vacancy Announcement(s) on USAJOBS 3/30/11

Wed Mar 30 2011 15:24:56 EDT
Colleagues,
with them.
Senior Contract Specialist CN-1102-6A
Office: Procurement
11-CFPB-124 Senior Contract Specialist
Procurement Analyst CN-1102-3C/5C

Office: Procurement
11-CFPB-126 Procurement Analyst
Procurement Analyst CN-1102-4B/5C

Office: Procurement
Page 3606 of 3826

11-CFPB-127P Procurement Analyst
Thanks
Felicia Royster
Human Capital Team
202-435-7193 (1801 L Street Room 554)
202-435-7329 (Fax)
(b) (6)
for guidance.
Page 3607 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

FW: FRS Town Hall Questions 3-29-11 (2)

Wed Mar 30 2011 15:21:22 EDT
FRS Town Hall Questions 3-29-11 (2).docx
_____________________________________________
From: DiPalma, Nikki (CFPB)
Sent: Wednesday, March 30, 2011 1:11 PM
Cc: 'Angela Beatty'; Brown, Amy (CFPB); Weizmann, Jane (CFPB)(Contractor); Dickman, Marilyn
(CFPB); Slagter, Dennis (CFPB); 'Martin, Daniel (Dallas)'
Subject: FRS Town Hall Questions 3-29-11 (2)
Hi LizDan pointed out a Domestic Partner question under the Legal tab that I have included in my attached
responses. Thanks.
Nikki
Page 3617 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

FW: FRS Town Hall Questions - Due tomorrow at 3:00pm

Wed Mar 30 2011 15:21:06 EDT
RMR's Mission - TPs, 03.30.11 DRAFT.doc
From: Logan, Amanda (CFPB)

Cc: Sokolov, Dan; Cochran, Kelly (CFPB)
Subject: RE: FRS Town Hall Questions - Due tomorrow at 3:00pm
Elizabeth,
Dan (cced) asked me to send you the attached TPs [concerning RMRs mission] to help respond to
FRS transfer town hall questions. These have not been cleared for external distribution to date.
Thanks,
Amanda
Amanda M. Logan
202-435-7401 | [email protected]
From: Sokolov, Dan

Page 3623 of 3826
To: Logan, Amanda (CFPB)

Cc: Cochran, Kelly (CFPB)
Subject: FW: FRS Town Hall Questions - Due tomorrow at 3:00pm

Sent: Tuesday, March 29, 2011 10:22 AM
To: Antonakes, Steve (CFPB); Cantrell, Diane (CFPB); Cochran, Kelly (CFPB); Dickman, Marilyn
(CFPB); Forrest, David (CFPB); Fuchs, Meredith (CFPB); Reilly, Deb (CFPB); Sokolov, Dan; Twohig,
Peggy (CFPB)
Cc: 'Angela Beatty'; Brown, Amy (CFPB); Burniston, Tim (CFPB); Chopra, Rohit (CFPB); DiPalma, Nikki
(CFPB); Riley, Jeffrey (CFPB); Slagter, Dennis (CFPB); Vanderslice, Julie (CFPB); Weizmann, Jane
(CFPB)(Contractor)
Subject: FRS Town Hall Questions - Due tomorrow at 3:00pm
All,
FRS employees have submitted questions in advance of the transfer town hall this Monday, April 4.
Attached please find the questions divided by functional area. Please provide brief talking points for
questions in your respective areas. If you do not yet have an answer to a question please briefly note
that in the document as well.
To allow time for review and clearance, please submit the talking points to me by 3:00pm tomorrow.
Apologies for the short turn around.
Please let me know if you have any questions or if I can assist in any way.
Thanks so much,
Elizabeth
X5-7326
Page 3624 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:
Cantrell, Diane (CFPB)

(fydibohf23spdlt)/cn=recipients/cn=cantrelld>
_DL_CFPB_AllHands
Parking Benefit
Wed Mar 30 2011 15:09:25 EDT
To meet our growing needs, we have procured additional parking spaces in a nearby commercial
parking lot, Central Parking, on 18th Street between K
and L (next to Jacks Fresh). The spaces will be issued on a first come first serve basis. Employees
pay $120 per month for the use of the monthly parking pass. Parking is effective April 1st.
If you are interested in obtaining a pass, they will be distributed tomorrow (March 31st) between 10:30
12:00. Please stop by my office (room 7517) with your check payable to CFPB for $120. (Note, you
may not take advantage of the Treasury Metro Pass program and receive this subsidized parking offer.)
If you have any questions, please let me know.
Diane
x57271
Page 3634 of 3826
From:
To:
Cc:
Bcc:
Subject:
to join
Date:
Attachments:

RE: I might go to caribou this afternoon if you want me to get you anything or you want
Wed Mar 30 2011 14:04:19 EDT
Awesome, thanks, bud.

Subject: RE: I might go to caribou this afternoon if you want me to get you anything or you want to join
Got it.

To: Klein, Heather (CFPB)
Subject: RE: I might go to caribou this afternoon if you want me to get you anything or you want to join
Thanks. My initial assessment is that things seem completely insane up here right now, but that could
changecall me when youre going?

Subject: I might go to caribou this afternoon if you want me to get you anything or you want to join
Not sure when Ill goIm pretty flexible.
Page 3642 of 3826
From:

_DL_CFPB_AllHands
Adamske, Steven
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Wed Mar 30 2011 13:43:55 EDT
Index

Chamber of Commerce Speech
New York Times Obama Adviser on Consumer Agency to Address Business Leaders
New York Times (blog) Warren Courts Her Top Critics
The Hill (blog) Warren: Keep Congress away from Consumer Bureaus budget
Page 3646 of 3826
Bloomberg Warren Says U.S. Consumer Bureau Will Promote Fair Competition
Dow Jones Newswires Warren Touts Common Ground With Chamber of Commerce
CNBC.com Business Group Fights Regulation, Consumer Protection Agency
Politico Elizabeth Warren to keynote Wall Street reform summit
Reuters Bearing olive branch, Warren braves U.S. Chamber
CNNMoney Elizabeth Warrens olive branch to Big Business
Politico Morning Money Warren In The Lions Den
The Hill (blog) Overnight Money: Chatting at the Chamber
Dow Jones Newswires US Rep Bachus: New Regulations Are Chilling Economic Recovery
MSN Money Meet the woman the banks fear
Washington Post Consumer bureaus Richard Cordray, from state regulator to federal enforcer
Washington Post Whos who at the Consumer Financial Protection Bureau (slideshow)
insideARM Washington Post Offers Interesting Profile of New CFPB Enforcement Chief
Bloomberg Community Bankers Back Commission Over Consumer Bureau Chief (no external
hyperlink available)
MyBankTracker CFPB: Disclose Credit Card Interest Rates, Limits First
Washington Post Ahead of mortgage settlement talks, banks offer to change their ways
Reuters Banks and states to meet on foreclosure probe
Naked Capitalism The Consumer Financial Protection Bureaus Bogus Mortgage Settlement
Math
Forbes (blog) Banks Saved $25 Billion By Under-Serving Delinquent Mortgages
ConsumerAffairs.com 50-State Effort to Write Down Troubled Mortgages Starts to Crumble
Los Angeles Times Proposed settlement would force banks to allow short sales for delinquent
homeowners
Consumer Credit
Page 3647 of 3826
American Banker Dodd-Franks Bizarre Notion of Ability to Pay
American Banker Lenders Need to Dig Deeper than the Credit Score
New York Times (blog) Credit Score Recovery Time After a Foreclosure
Fort Worth Star-Telegram Tightly regulated or not, payday lenders learn to stay profitable
Housing
New York Times Foreclosure Aid Fell Short, and Is Fading
Politico A case for home loan modifications
Wall Street Journal Regulators Unveil Mortgage-Lending Rules
American Banker Broker Pay Rules Forcing Banks to Play the Bad Cop
American Banker Will Risk Retention Plan Spark a Credit Crunch?
New York Times

Obama Adviser on Consumer Agency to Address Business Leaders
March 30, 2011
By Edward Wyatt
WASHINGTON Elizabeth Warren, who is overseeing the beginnings of the new Consumer Financial
Protection Bureau, will confront some of her chief antagonists on Wednesday when she addresses a
gathering at the United States Chamber of Commerce, the business lobbying group that has adamantly
opposed the existence of the agency.
Ive had more teasing about this meeting than Ive had in a long time, Ms. Warren is scheduled to tell
the gathering, according to excerpts of remarks released late Tuesday. You can imagine the analogies:
Nixon to China, Daniel in the Lions Den, Senator John Kennedy speaking before Protestant ministers.
Ms. Warren is expected to stress that she and the chambers members share one important belief:
Competitive markets are good for consumers and for businesses, according to the excerpts. The
Page 3648 of 3826
important question is how to ensure that markets are competitive.
Ms. Warren, who is an assistant to the president and a special adviser to the secretary of the Treasury,
received a lashing from Republicans two weeks ago at her first appearance on Capitol Hill after
beginning her role at the consumer bureau.
During the hearing, Republicans on the House Financial Services Committee castigated the agency,
calling it unnecessary and saying it will overly burden businesses with regulatory red tape. Republicans
and Chamber members have also complained that the bureau lacks oversight and that its powers are
too broad.
Ms. Warren, a Harvard law professor whose writings about the importance of protecting consumers
were an inspiration for the new bureau, will tell the business group that making sure that the rules are
enforced is the best solution for the problems that became apparent during the financial crisis.
A cop on the beat looking out for consumers does not reduce the freedom or effectiveness of markets;
rather, it permits honest competition to flourish, her remarks say. If you are one of the guys who dont
use steroids when you play ball, then you dont want to compete against those who are juicing. We
understand that it isnt enough to have good rules; competition flourishes only when those rules are
consistently enforced.
The bureau is not allowed to enact any new regulations until a director is appointed, and though one is
expected by July 21, when the bureau is supposed to be operational, the Obama administration has not
signaled when the appointment might come. Mr. Obama stopped short of formally nominating Ms.
Warren as its first director because she would have had to face Senate confirmation.
So far, the bureau has indicated that much of its initial attention will be on consumer mortgages and
simplifying the confusing array of mortgage disclosures that home buyers face.
Fine print and overly long agreements get in the way of an efficient and competitive market, Ms.
Warren is expected to say. The role of regulation in credit markets is, at its heart, to make it easy for
consumers to see what they are getting and to make it easy for customers to compare one product with
another, so that markets can function effectively.
Back to Top
Page 3649 of 3826

Warren Courts Her Top Critics
March 30, 2011
By Ben Protess
Elizabeth Warrens charm campaign made a stop in enemy territory on Wednesday.
Ms. Warren, the Obama administration official who is overseeing the new Consumer Financial
Protection Bureau, brought her calls for tough regulation to the Chamber of Commerce, a ferocious
opponent of regulation and the bureau itself.
But you wouldnt know from her remarks that she had stepped into the lions den.
Ms. Warren, in a speech to the chambers Capital Markets Summit on Wednesday morning, treaded
lightly on the bureaus plans to regulate Wall Street. She instead played to her audience, saying the
bureau would ease some burdensome regulations.
The lesson seems clear: Rules should be focused, and those that are not useful should be revised or
eliminated, she said, adding that the bureau would not primarily focus on writing new regulations. Ms.
Warren even said she agreed with the chambers recent proclamation that the bureau should work to
prevent duplicative and inconsistent regulation of Main Street business.
That is why, she said, the bureaus top priority is to consolidate the duplicative and burdensome
mortgage closing documents.
Ms. Warrens charm offensive comes as the deadline approaches for President Obama to name an
official director of the bureau a spot that many consumer advocates want her to fill. Ms. Warrens visit
to the chamber one of the financial industrys top cheerleaders and lobbying shops is her latest
olive branch to fierce critics who stand in the way of her nabbing the job.
Ms. Warrens calendar this year has been jam-packed with meetings on Wall Street. She has met with
Page 3650 of 3826
the chief executive of every major Wall Street bank, including Jamie Dimon of JPMorgan Chase, Vikram
S. Pandit of Citigroup and James P. Gorman of Morgan Stanley. Her industry outreach included talks
with dozens of community bankers, too, and meetings with top credit card executives like Ajay Banga,
the president and chief executive of MasterCard.
I believe in regulatory engagement with industry, and I understand that industry provides a critical
perspective in the regulatory process, she said in the speech.
Ms. Warren also played up her recent hires, which include some familiar faces on Wall Street. The
bureau tapped Rajeev Date, a former Deutsche Bank managing director and Capital One Financial
senior vice president, to oversee the rule writing process. Mr. Date, Ms. Warren told the chamber, has
spent almost his entire career working for financial services firms, and he is acutely aware that we need
to make sure that any rules we write will enhance the market.
Ms. Warren also hired Elizabeth Vale, a former Morgan Stanley managing director, a lawyer who has
represented the financial industry and a former senior employee at the mortgage-finance giant Freddie
Mac.
Weve built a structure to make sure that any rules we write will be fact-based and grounded in a deep
understanding of the market being regulated, Ms. Warren said.
Still, playing nice with Wall Street will not be an easy feat for the bureau.
Ive been in Washington only a short time, but I have eyes, Ms. Warren said. Industry groups have
extraordinary resources to push back on oversight and to make their views known, as is their right.
It also remains to be seen whether Ms. Warrens efforts will win her the job as the bureaus director.
When President Obama tapped Ms. Warren, a Harvard law professor, to set up the bureau in
September, he stopped short of nominating her to be its first director. The bureaus director will face
Senate confirmation not a sure bet for Ms. Warren, an outspoken consumer advocate and leading
critic of risky lending practices. The bureau will formally open its doors in July, but it is handcuffed from
writing several key rules until it has a director.
Ms. Warren on Wednesday did not comment on her possible nomination, although she did say, I didnt
come to Washington looking for a job in government.
Page 3651 of 3826
Ms. Warrens appearance comes a year after the chamber led a campaign to sabotage the bureau. The
lobbying powerhouse ran a series of fatalistic radio ads warning that the bureau would suffocate small
businesses and ultimately hurt consumers.
Those efforts failed. Lawmakers created the bureau as part of the Dodd-Frank Act, the financial
regulatory law signed by President Obama in July. The law gave the bureau authority over a wide swath
of financial businesses, including payday lenders, mortgage companies and big banks.
Ms. Warrens prepared remarks acknowledged the awkwardness surrounding her speech. At the
outset, I need to tell you that Ive had more teasing about this meeting than Ive had in a long time, she
said. But then, perhaps, so have you.
Ms. Warrens speech on Wednesday will be followed by remarks from a more friendly face for the
chamber: Mr. Dimon, of JPMorgan.
Back to Top
MSN Money
Meet the woman the banks fear
Why do they see this affable 'granny' as a threat? She wants a consumer-friendly financial industry and
may soon have the power to bring it about.
March 23, 2011
By Liz Weston
When I asked Elizabeth Warren last week how she'd like to be remembered, I expected her to cite one
or more of her professional accomplishments. Perhaps:
Her groundbreaking research as a Harvard law professor with the Consumer Bankruptcy Project, which
exposed the fragility of many American families' finances, or her best-selling books that sprang from
Page 3652 of 3826
that research, "The Two-Income Trap: Why Middle-Class Mothers and Fathers are Going Broke" and
"All Your Worth: The Ultimate Lifetime Money Plan."
Or her role as head of the Congressional Oversight Panel, which investigated the bank bailout,
criticized how rescue funds were used and suggested ending the notion of "too big to fail" by liquidating
insolvent banks.
Or her current job putting together the fledging Consumer Financial Protection Bureau, which she
championed and which she believes, had it existed earlier, could have prevented the financial crisis by
blunting the growth of subprime mortgage lending to unsophisticated borrowers.
But no. After first asking for a rain check to consider my question, the former Sunday school teacher
blurted out that what she'd really like to be known for is being "a good granny" to her three young
grandchildren, whom she was flying to see in California the next day.
Warren, 61, has a way of confounding expectations. Bankers so loathed her for her criticism of their
industry that naming Warren as the director of the consumer protection bureau was considered
politically untenable last year. President Barack Obama instead hired her as a special assistant to
Treasury Secretary Tim Geithner, which didn't require congressional confirmation.
But recently, in what The Wall Street Journal and others have called a "charm offensive," Warren has
been reassuring groups of bankers that what she wants is more transparency, not necessarily more
regulation, which the Oklahoma native likens to fences on a prairie that lawyers can easily dodge
around.
She has also been soliciting the opinions of credit card companies' CEOs. In our conversation, she
cited Nigel Morris, a co-founder of Capital One, as someone who "thoughtfully talks about how the thing
works, how decisions are made."
"It's been people like Nigel, who are on the inside," Warren said, "who've helped me understand the role
the regulation should play to keep a market free, to make a market competitive."
Warren's corner office at the Treasury Building looks out on two of D.C.'s best-known icons: She can
see the Capitol from one window and the Washington Monument from another. These are visual
reminders of just how far she's come, from studying the lives of financially desperate families to
wrestling with some of the most financially powerful special interests.
Competition is not an excuse for deception
Page 3653 of 3826
It remains to be seen whether Warren can blunt the antipathy that bankers feel toward her in time to be
named the head of the bureau by its July 21 launch date. Meanwhile, House Republicans still are
looking for ways to gut the agency's funding. They're convinced that an agency devoted to protecting
consumers from unsafe and deceptive financial products will squash innovation and kill jobs.
Warren, obviously, doesn't see it that way. Rather than tying lenders up in regulatory vines that prevent
them from competing, she wants to see clearer disclosure and less fine print, which she famously likens
to shrubbery in which the "muggers" of hidden fees and other anti-consumer "gotchas" can hide.
"A competitive market is one where the competition is not about how many things you can hide in the
fine print," she said. "A competitive market is one where the consumer sees the differences, and so
people are competing to attract the consumer. That's the whole difference."
The role of the bureau, Warren says, will be "to ask the questions, gather the data and to monitor the
markets to make sure they work for consumers."
The credit card market, for example, has always been competitive, she said -- but not competitive in a
way that necessarily benefited consumers. Instead, card companies competed for how much revenue
they could produce.
"And the smartest way to do that had over time become to pretend to sell at a low price at the front end
and then sock people hard on the back end with fees and interest rate repricing," Warren said. "The
difficulty, of course, with doing that is that the consumer can't ask two basic questions: 'Can I really
afford this?' and 'Could I get it somewhere else cheaper?'"
The Credit Card Accountability Responsibility and Disclosure Act, which went into effect a year ago,
banned some of the worst practices:
Rate hikes for no reason.

Universal default, which allowed card issuers to raise your rates if you fell behind with another lender.
Repeated approval of over-limit transactions in order to charge multiple fees.
Ever-moving due dates and due times, which meant you could be slapped with a late fee if your
payment didn't reach the card's processing company by a certain time of day.
Page 3654 of 3826
Some have claimed that the Credit CARD Act caused card issuers to slash credit limits, raise interest
rates and precipitously close accounts. The reality is more nuanced. Card companies began reducing
credit limits, closing accounts and raising rates when the credit crunch began in late 2007, well before
the act was passed. The recession accelerated those trends.
The Credit CARD Act definitely cut into issuers' revenue. According to a report by the Office of the
Comptroller of the Currency, card companies' income from over-limit fees virtually disappeared in the
year after the law went into effect and issuers were required to get consumers' consent before
approving over-limit transactions. Late-fee revenue dropped in half after issuers were required to fix due
dates and due times were eliminated.
The issuers knew their revenue was in peril, of course, and that interest rate hikes would be much
tougher under the law, so they raised rates on many accounts before the law kicked in.
But Warren said the comptroller study, and the bureau's analysis of data supplied by the largest credit
card issuers, show that the Credit CARD Act was still beneficial to consumers.
"The data indicates that the overall cost of credit cards did not go up," Warren said. "The pricing is just
more visible upfront."
Hacking through the gobbledygook
But there is still work to be done, thanks to that fine-print shrubbery that Warren wants to chop down.
"Today it is not possible to look at four credit card agreements and tell which one is cheaper," Warren
said. "Part of the reason is that agreements are still too long and complicated."
The same is even more true of mortgage agreements. Warren said that the agencies responsible for
two forms provided to consumers have been in negotiations to combine the forms -- for the past 15
years. Instead "the forms have been revised to become longer and more complicated," she said.
Cutting through the bureaucracy is something the nascent bureau can do, since it will take over
consumer protection responsibilities that are currently scattered among seven agencies.
That is, of course, exactly what scares the banks, which are used to ineffective, understaffed consumer
protection departments hidden in the agencies' backwaters.
Page 3655 of 3826
Equally scary is that the bureau may be headed by a plain-spoken, personable "granny" who
understands exactly how tough it is for consumers today and who wants financial products that can help
them rather than make things worse.
For her part, Warren seems to relish the challenge.
"I have so much fun doing this," she said. "I get up every morning looking forward to this."
Back to Top
Washington Post
Consumer bureaus Richard Cordray, from state regulator to federal enforcer
March 29, 2011
By Brady Dennis
The tall, soft-spoken man padding around the fifth floor of 1801 L St. often not wearing shoes and
occasionally quoting Shakespeare seems at first more like a college professor than a hard-charging
enforcer. But he holds what soon could become a powerful post in Washingtons changing financial
regulatory landscape, a prospect that has heartened consumer advocacy groups and deepened the
concerns of an already skeptical financial industry.
Just months ago, Richard Cordray was Ohios attorney general. In that role, he sued some of the nation
s largest banks for their bungling of mortgage foreclosures, spoke of Wall Street as a fixed casino and
became a leading advocate for the creation of the federal Consumer Financial Protection Bureau.
Today, he is the chief enforcement officer for the fledgling watchdog. When the bureau officially opens
this summer, Cordray will head a federal team with wide authority to write and enforce rules that will
Page 3656 of 3826
govern many of the firms that he butted heads with as a state official.
It offered a possibility to continue to do some of the most important work I felt I was doing as a state
attorney general, Cordray said in a recent interview in his new office in Washington, and in many
respects, on a better footing, from a better foundation, with better tools, better authority and on a 50state basis.
Many state attorneys general, who have complained that their efforts to enforce stricter consumer
protections have been stymied by federal regulators over the years, have echoed consumer advocates
in cheering Cordrays appointment.
Hes got a gold-plated resume and a wealth of experience. ... Hes very reasonable, hes very smart,
hes very fair, said Illinois Attorney General Lisa Madigan. He understands the financial, the economic,
the fiscal things, as well as the law enforcement side of it. ... To me, thats the type of person you want
in that position.
Representatives of the banking industry have reacted with far less enthusiasm, saying they fear that
Cordray will overreach in his new role and burden them with unnecessary new oversight.
Richard Cordray was known as sort of a regulatory zealot in Ohio and generally was pretty tough on
the financial services industry within his state, said Camden Fine, head of the Independent Community
Bankers of America, echoing others in the financial industry who were reluctant to speak publicly. We
have concerns about how he will handle enforcement of CFPB regulations and the new rules that the
CFPB will be pumping out. ... The jury is still out.
The 51-year-old Ohio native took a circuitous, and in many ways accidental, path on his way to
becoming a Washington regulator, including a law degree from the University of Chicago, a stint as a
clerk for Supreme Court Justice Anthony M. Kennedy and a five-day run as a Jeopardy champion in
the late 1980s.
After losing races for the U.S. House and Senate, Cordray won a special election in 2008 to replace
Attorney General Marc Dann, who left during the middle of his term after a sexual harassment scandal.
Well before the robo-signing issue triggered a national furor last fall, Cordray aggressively went after
financial firms for what he perceived as fraudulent and shoddy mortgage servicing and foreclosure
practices.
In 2009, he sued multiple-loan servicing companies, alleging that they had violated state consumer
laws. Last year, he filed suit against GMAC Mortgage and its parent company, Ally Financial, alleging
fraudulent, unfair and deceptive practices. Along the way, he lobbied for the creation of the CFPB,
which had become a controversial topic in Washington.
Page 3657 of 3826
Several days after he lost his bid for reelection in November, part of a wave of Republican victories in
Ohio, Cordray got a call from Elizabeth Warren, the Harvard law professor appointed by President
Obama to set up the new bureau. I just really hadnt given much thought to anything yet, and here she
was recruiting me, he said. It was unexpected.
Despite his initial reservations about seeing his wife and 12-year-old twins back in Ohio only on
weekends, Cordray agreed to join the new bureau.
Richard Cordray has the vision and experience to help us build a team that ensures every lender in the
marketplace is playing by the rules, Warren said in a December statement announcing Cordrays hire.
These days, Cordrays time is a mixture of looking at the big picture and small details. For every
meeting about changes to mortgage-servicing practices an issue he still cares about intensely
there are personnel issues that demand attention. Questions about the bureaus overall enforcement
philosophy compete with questions about IT systems and office space.
It kind of goes in fits and starts, Cordray said. But you can see progress. ... Getting off to a good start
with this bureau will set it on a good footing for years to come.
In December, he was quoted in a Columbus Dispatch article saying he intends to run for governor of
Ohio in 2014. But ensconced in his small office on L Street, he now takes a more measured approach
about his political future.
Someday, if and when Im no longer here, I will think about that again, he said. In the meantime, Ive
had to put that to the side and focus on my job here. And Im totally happy with that.
Back to Top
Washington Post
Page 3658 of 3826
Whos who at the Consumer Financial Protection Bureau

March 29, 2011
Elizabeth Warren is the chief architect of the new agency. She has previously served as the
chairwoman of the Congressional Oversight Panel for the TARP.
In his previous role of Ohio attorney general, Richard Cordray sued several loan servicers for alleged
deceptive business practices. Now he heads up the consumer bureau's enforcement division.
Raj Date is the associate director for research, markets and regulations at the Consumer Financial
Protection Bureau. He leads the part of the agency responsible for analyzing consumer financial
products and writing the rules that Wall Street banks and other financial firms will have to follow.
Holly Petraeus, wife of General David Petraeus, is part of the agencys Office of Service member
Affairs. Her goal will be to provide financial education and decision-making assistance to military
families.
Meredith Fuchs is a member of the CFPB implementation team. Before coming the watchdog agency,
she worked for the House of Representatives as Chief Investigative Counsel of the Committee on
Energy and Commerce.
Elizabeth Vale oversees the team in charge of small financial service providers, which includes
community banks and credit unions.
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insideARM
Washington Post Offers Interesting Profile of New CFPB Enforcement Chief
Page 3659 of 3826
March 30, 2011

By Mike Bevel
The most important thing you should know about me is that Im firmly pro shoes in the workplace. The
least important thing you should know about Richard Cordray, former Ohio Attorney General and
current Chief Enforcement Officer of the Consumer Financial Protection Bureau, is that he pads around
shoeless in his new digs.
Cordray is profiled in a Washington Post article, and if the name sounds familiar, its most likely
because of his reputation as a hard-liner against abusive debt collection practices. In September of
2009, Cordray went on record as the standard bearer in the Ohioan war against collection agencies. A
line must be drawn, he said, to keep debt collection from crossing over into harassment.
Making good on that promise, Cordrays office went after a large collection agency for harassing
consumers when attempting to collect on debt.
As Ohios attorney general, his actions were pretty localized. As Chief Enforcement Officer for the newly
-created Consumer Financial Protection Bureau (set to open this summer; free hotdogs, and balloons
for mom), his fighting technique may be unstoppable.
This is good news for consumers ahd anyone angry at banks. The news isnt being greeted with the
same level of enthusiam elsewhere. As Camden Fine, head of the Independent Community Bankers of
America, told the Post, Richard Cordray was known as sort of a regulatory zealot in Ohio and generally
was pretty tough on the financial services industry within his state.
Id like to explore two different avenues of thinking on this, if youll bear with me:
(1) On one hand, I dont think being a regulatory zealot is necessarily as pejorative as Fine wants to
insinuate. A little regulatory zealotry, for instance, might have been nice back in, oh, the early 2000s
or any moment before the housing bubble burst and we started reading daily articles about people
getting mortgages under their dogs name, and that dog having pretty bad credit in the first place.
Labeling someone as a rule-follower as your major form of criticism might not be the most effective
means of winning others to your side of the argument.
(2) On the other hand, its not like the world loves debt collectors. And this barrier to appreciation makes
it easy for regulations to be piled on regulations in the name of consumer protection. In those scenarios,
its less consumer protection from harassing debt collectors, and more often consumer protection from
accountability. This is not to suggest that there are no justified complaints out there. This *is* to
suggest, however, that justified and unjustified complaints get lumped together in the interest of
Page 3660 of 3826
creating drama. That drama leads to further regulations that make it increasingly for companies to
recoup their bad-debt losses.
(Bonus) They dont even need to be especially *nice* shoes, Richard. They just need to be shoes, and
they need to be on your feet, because Im pretty sure youre making eleventy-one percent more than Im
making (I think they categorize me as a volunteer for tax purposes or something; Im paid in gold stars
and high-fives), and I have to wear shoes in the office. I mean, honestly.
Harvard law professor Elizabeth Warren, hand-picked by President Obama, selected Cordray for his
new position after his failed re-election bid in 2010. [He] has the vision and experience to help us build
a team that ensures every lender in the marketplace is playing by the rule, Warren said in a statement
regarding Cordrays hire. Itll be interested to watch what kind of broad strokes Cordray will paint with on
his newer, larger canvas.
How do you feel about shoes in the workplace?
Back to Top

Warren: Keep Congress away from Consumer Bureaus budget
March 30, 2011
By Peter Schroeder
Elizabeth Warren, the architect of the new Consumer Financial Protection Bureau (CFPB), mounted a
spirited defense Wednesday for keeping the agency's budget free of the congressional appropriations
process.
House Republicans are backing legislation that would bring the CFPB's funding within Congress's
control, but Warren said in a speech to the U.S. Chamber of Commerce that there is no "principled
reason" for doing so.
Page 3661 of 3826
"Not one other banking regulator not one is subject to appropriations," she said at a capital
markets summit hosted by the Chamber. "Requiring the CFPB to go into every examination against a
trillion-dollar company knowing that the company could turn its lobbying force against the agency's
funding is not a prescription for fair and evenhanded enforcement."
Currently, the CFPB's budget is funded by transfers from the Federal Reserve. Critics of that
arrangement contend that it prevents lawmakers from using the congressional pocketbook to exercise
oversight over the bureau, but Warren maintained that the CFPB needs to be "insulated from the
political process" to ensure fair and consistent supervision.
She added that, while the Chamber fiercely opposed the creation of the CFPB during the debate on the
Dodd-Frank financial reform law, the two sides could reach common ground working to ensure a fair,
competitive marketplace.
"I know that you believe in it passionately, and so do I," she said, but added later that she will not shrink
from pushing new rules.
"Let's not pretend that billion-dollar Ponzi schemes are attributable to too much regulation," she said.
Prior to her comments, House Financial Services Committee Chairman Spencer Bachus (R-Ala.)
jabbed Warren for her ambiguous role at the CFPB. Officially titled the special assistant to the president
and Treasury secretary for the CFPB, Republicans have accused Warren of running the agency before
being appointed by the president or confirmed by the Senate. Warren has maintained that she is simply
an adviser helping to set up the new bureau, which goes live in July.
Bachus referred to the CFPB as "the agency which she runs or doesn't run, I've not be able to figure out
if she runs it or doesn't."
"I know she hasn't been nominated, she hasn't been appointed," he added.
Bachus also used his comments to the Chamber to back a bill he recently introduced, which would
change the CFPB's leadership from a single director to a bipartisan five-member commission. Under his
bill, only three of the commission members can be from the same political party.
Bachus maintained that his bill was not targeting Warren specifically.
Page 3662 of 3826
"If George Washington came back, or Abraham Lincoln, or if Warren Buffett signed up, I wouldn't give
that person total discretion," he said.
Speaking more broadly about Dodd-Frank, Bachus struck a dire tone about what the new regulations
mean for America's economy.
"We will, in my mind, kill the one thing America is known for all over the world, and that's innovation and
entrepreneurship," he said. "It's a sad day for America when we have chosen to abandon what made us
great. I can tell you that I'm anxious, and I'm somewhat angry."
Thomas Donohue, the chairman and chief executive officer of the Chamber, backed the bill in his own
speech.
"We think a bipartisan, five-person commission would provide a lot more balance and accountability
than a single director," he said.
The legislation could garner bipartisan support, since both parties know that eventually they will fall into
the minority, he added.
"There are a lot of Democrats that would not like one Republican to be sitting in that seat," he said.
Back to Top
Bloomberg
Warren Says U.S. Consumer Bureau Will Promote Fair Competition
March 30, 2011
By Carter Dougherty
Page 3663 of 3826
Elizabeth Warren, the White House and Treasury Department adviser charged with setting up the new
Consumer Financial Protection Bureau, told the U.S. Chamber of Commerce that the agency will focus
on rules to make markets more competitive.
I believe we share a point of principle: Competitive markets are good for consumers and for
businesses, Warren said in a speech today to the U.S. business group. The important question is how
to ensure that markets are competitive.
In her speech, Warren argued that regulation and competition are not mutually exclusive, and that
simpler disclosures for credit products will promote efficient markets.
The mission of the consumer bureau is to stick with these basic ideas, the ideas that make a free
market work for customers and for businesses that want to compete in a fair, transparent and
competitive market, Warren said.
Warren cited federal regulation of air safety, state rules on insurance and U.S. antitrust statutes as
examples of regulation that has worked.
We can differ over the form and substance of regulation, Warren said. But lets not deny the important
role of regulation.
In response to a question from the audience suggesting that regulations lead to lawsuits, Warren
argued that regulations that are complex can promote lawsuits; simpler ones may not.
The real answer to this is going to be a different approach to regulation, Warren said.
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Page 3664 of 3826
Dow Jones Newswires

Warren Touts Common Ground With Chamber of Commerce
March 30, 2011
White House adviser Elizabeth Warren Wednesday will argue that the consumer protection bureau
she's setting up has at least one thing in common with the giant business federation that fought the
bureau's creation: both groups want competitive financial markets.
"Competition in the marketplace of ideas and competition in the economic marketplace. I know that you
believe in it passionately. So do I," Warren will say when she speaks at a Chamber of Commerce
summit, according to her prepared remarks.
Warren and the Chamber of Commerce were foes during last year's intense debate on the Dodd-Frank
financial overhaul, which calls for the creation of the consumer watchdog agency. And the Chamber
continues to voice concern about the structure of the Consumer Financial Protection Bureau and its
broad powers to write financial rules.
When President Barack Obama in September put Warren in charge of preparing the Consumer
Financial Protection Bureau for its July 21 launch, the Chamber criticized the move because it made
way for Warren, a vocal banking industry critic, to make key decisions about the new agency without
having to win approval from the Senate.
"The full Senate should have the ability to ask a duly nominated director whether he or she believes the
new agency should focus on effectively enforcing consumer laws and improving consumer disclosures
or whether he or she believes it should use its unprecedented powers to restrict consumer choices, limit
consumer credit, or otherwise politicize the allocation of credit," the Chamber said in a September
statement.
J.P. Morgan Chase & Co. (JPM) Chief Executive Jamie Dimon, who has argued that Washington has
unfairly demonized banks and criticized aspects of the Dodd-Frank law, will speak at the summit as
well.
House Financial Services Committee Chairman Spencer Bachus (R., Ala.), who argues that the bureau
has too much power, also plans to speak.
Page 3665 of 3826
Still, Warren will make clear she doesn't see the conference as hostile territory.
"I believe we share a point of principle: competitive markets are good for consumers and for
businesses," she says in her remarks. "A cop on the beat looking out for consumers does not reduce
the freedom or effectiveness of markets; rather, it permits honest competition to flourish."
Back to Top
CNBC.com
Business Group Fights Regulation, Consumer Protection Agency
March 30, 2011
By Margo D. Beller
U.S. Chamber of Commerce CEO Thomas Donahue, citing a need for "balance and common sense,"
told CNBC Wednesday there are too many entities regulating U.S. business, and that has to change.
"We have had extraordinary regulation of the capital markets for many years," he said ahead of the
Chamber's capital markets summit, "and were making improvements in it to reflect massive expansion
of markets around the globe and some serious problems we had. Were not arguing that we shouldn't
have regulation. We need regulation, we need certainty, we need transparency."
However, "when somebody writes a bill in a short period of time that's going to have hundreds and
hundreds of rulemakings across five or six major organizations, maybe the people that are being
regulated have a few questions to ask or suggestions to make that might keep us competitive, might put
capital in the hands of small businesses and might help us compete around the globe," he said of the
Dodd-Frank financial regulatory law.
One of his biggest concerns is the Consumer Financial Protection Bureau being created by Elizabeth
Warren, a special advisor to President Obama. Warren is speaking at today's summit meeting.
Page 3666 of 3826
"Youre going to have Elizabeth Warren or some reasonable facsimile running the most powerful
regulatory agency thats ever been put together, nobody overseeing the budget, and one person in
charge reporting to no one," Donahue said. "Were saying simply, couldn't we have a five-person
oversight board and couldn't the Congress oversee the budget? I think that would be balanced."
He said the chamber's biggest focus is on the "fundamentals of how to create jobs." In that, the
chamber shares the views of the Obama administration.
"There's been a true, sincere movement on issues that are significant to creating jobs in this country,
which is an issue and an objective that we all share," Donahue said.
However, the Obama administration has not moved to the political center and become more "probusiness" despite recent meetings between the president and the Chamber and the appointment of
former Commerce Department secretary William Daley as chief of staff.
Back to Top
Politico
Elizabeth Warren to keynote Wall Street reform summit
March 30, 2011
By Chris Frates
The U.S. Chamber of Commerce is holding a summit on Wall Street reform Wednesday, featuring such
titans of industry and government as Tom Donohue, Jamie Dimon and Elizabeth Warren.
Thats right, the same Elizabeth Warren named by President Barack Obama to create a consumer
protection bureau that the Chamber has long criticized will be giving a keynote address alongside
Chamber President Donohue and JPMorgan Chase CEO Dimon.
Page 3667 of 3826
The daylong meeting, scintillatingly titled Ensuring Competitiveness in a Post-Regulatory Reform

Environment, takes a look at the new Dodd-Frank reform law through speeches and panel discussions.
The summit includes policymakers such as Warren and House Financial Services Committee Chairman
Spencer Bachus (R-Ala.) to explain how the overhaul will affect corporate America.
Businesses across the country are wondering, How does this work? said David Hirschmann,
president of the Chambers Center for Capital Markets Competitiveness. This is a chance for regulators
to hear firsthand how businesses across the country feel about the proposals on the table.
Also scheduled to attend are Caterpillar CEO Doug Oberhelman, Financial Services Roundtable
President Steve Bartlett, Property Casualty Insurers Association of America President David Sampson,
American Institute of Certified Public Accountants CEO Barry Melancon, Investment Company Institute
President Paul Schott Stevens and Financial Services Forum President Rob Nichols.
Its important, Hirschmann said, that the new regulations dont create winners and losers.
As we construct the rules of the road, we need to make sure we keep in mind how businesses use
capital and we strengthen that, he said. Whats been lost in a lot of the debate the last couple of years
is: What are the users of financial services needs and how do we make sure that every company in this
country has access to the capital they need to grow?
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Reuters
Bearing olive branch, Warren braves U.S. Chamber
March 30, 2011
By Kevin Drawbaugh
Page 3668 of 3826
Elizabeth Warren went before some of her sharpest critics on Wednesday to defend the independent
funding of the U.S. financial consumer watchdog agency she is setting up for the Obama administration.
At a U.S. Chamber of Commerce event attended by scores of financial industry lobbyists keen to rein in
her agency, Warren said she is a strong supporter of business competition and that she believes she
has that in common with the chamber.
"I know that you believe in it passionately and so do I," she said in the chamber's chandeliered Hall of
Flags in its headquarters near the White House. The chamber is the nation's largest and richest
business lobbying group.
"The chamber and I have not always seen eye to eye ... But I don't consider myself in hostile territory
right now, and that is because I believe we share this principle," she said.
Her appearance at the event was the latest stop in her charm campaign as the administration weighs
whether to formally nominate her to be director of the Consumer Financial Protection Bureau (CFPB)
created by 2010's Dodd-Frank reforms.
Warren took the opportunity to attack a proposal from congressional Republicans to put the CFPB's
funding through the congressional appropriations process, instead of getting funds independently as the
Dodd-Frank legislation required.
CFPB funding should be independent of the appropriations process, she said, as it is for other bank
regulators.
"A new restriction has been proposed to subject the consumer bureau to the yearly appropriations
process. Not one other banking regulator -- not one -- is subject to appropriations," she said.
"There is no principled reason for breaking from this historical practice and for stripping the
independence of the first banking agency devoted to consumer protection," said Warren, a Harvard Law
School professor.
Jamie Dimon, CEO of banking giant JPMorgan Chase & Co, was slated to speak at the event later on
Wednesday, as well as senior White House economic adviser Gene Sperling.
Page 3669 of 3826
Republican Representative Spencer Bachus told the chamber that he is "anxious and ... somewhat
angry" about Dodd-Frank, the sweeping package of banking and market reforms approved last year
following the severe 2007-2009 financial crisis.
"We've moved toward a government command and control economy and that is really what you see, in
my estimation, with Dodd-Frank," Bachus said.
Chamber President Thomas Donohue said Dodd-Frank threatens a "steady decline in our share of
global economic activity ... We're in a dangerous position."
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CNNMoney
Elizabeth Warrens olive branch to Big Business
March 30, 2011
By Jennifer Liberto
Elizabeth Warren extended an olive branch Wednesday to the group that has been her arch-nemesis in
creating a new consumer financial protection bureau.
Speaking before a U.S. Chamber of Commerce conference in Washington, Warren talked about a point
common ground shared with the chamber - seeing competitive markets flourish.
"I know this won't come as a shock to you, but the Chamber and I have not always seen eye-to-eye on
issues," Warren said in prepared remarks released to the news media. "But I do not consider myself in
hostile territory right now because I believe we share a point of principle: competitive markets are good
for consumers and for businesses."
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Warren, a Harvard University professor and outspoken consumer advocate, is working as an adviser at
the Treasury Department to set up the new Consumer Financial Protection Bureau. The new
independent agency is in charge of regulating financial products such as mortgages and credit cards on
behalf of consumers.
The U.S. Chamber of Commerce invited Warren to speak at their Fifth Annual Capital Markets Summit,
even as the group continues to push for narrower government regulation on financial products. The
Chamber spent millions on TV commercials and lobbying in a campaign to "kill" the consumer bureau
during debates over what became the Dodd-Frank Act.
Warren said the bureau can help markets work more efficiently by targeting fine print and overly long
contract agreements.
"The role of regulation in credit markets is, at its heart, to make it easy for consumers to see what they
are getting and to make it easy for customers to compare one product with another, so that markets can
function effectively," Warren said.
She'll add that having a "cop on the beat" allows "honest competition to flourish."
Warren's speech at the Chamber follows several others she's made to business groups ranging from
the Financial Services Roundtable to the Independent Community Bankers Association since starting
her gig at Treasury.
She has also been busy playing defense against a new round of criticisms launched at the consumer
bureau by House Republicans seeking to limit its power and funding.
During her speech at the U.S. Chamber, Warren reiterated her defense against those attacking the new
bureau as too powerful, saying "there are plenty of checks in place on the new consumer agency."
"The CFPB is the only bank regulator -- and perhaps the only agency anywhere in government -- whose
rules can be overruled by a group of other agencies," Warren said, referring to a newly created panel of
regulators called the Financial Stability Oversight Board, which can overturn consumer bureau rules
with a two-thirds vote. "This is an extraordinary restraint."
After Warren left the chamber -- in a hurry, greeting no one and taking no questions -- Chamber
president Tom Donohue spoke about his concerns that the bureau's powers are too broad and could
cause "collateral damage to those who are obeying the rules."
Page 3671 of 3826
He said he's in favor of a House GOPe proposal to replace the job of leading the new bureau with a five
-person panel.
"We think a bipartisan five-person commission would provide a lot more balance and accountability in
the bureau's management than a single powerful director," Donohue said.
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Bloomberg
Community Bankers Back Commission Over Consumer Bureau Chief
March 28, 2011
By Carter Dougherty
The Independent Community Bankers of America endorsed a U.S. House Republican bill that would
replace the post of director of the Consumer Financial Protection Bureau with a five-member
commission.
A commission form of governance would allow for a variety of views on issues before the bureau and
thus build in a system of checks and balances that a single director form of governance simply cant
do, Camden Fine, the head of the association, wrote in a March 24 letter to lawmakers.
Fine wrote that a commission would be non-partisan and result in balanced, high-quality rules and
effective consumer protection.
Representative Spencer Bachus, the Alabama Republican who is chairman of the Financial Services
Committee, introduced the legislation on March 16. Elizabeth Warren, the special adviser in charge of
setting up the bureau, said at a hearing the same day that Congress made the right decision when it
fully deliberated and chose to structure the consumer bureau with a director instead of a commission.
Page 3672 of 3826
Unlike most of the rest of the banking industry and most Republicans in Congress, the community
bankers group did not oppose the Dodd-Frank regulatory overhaul last year.
Warren sought the help of community bankers to defend the new agency before Republicans took
control of the House of Representatives this year. She has wooed the banks by arguing that the
consumer bureaus rules would level the playing field and help them compete against larger Wall Street
institutions as well as regulate competitors such as payday lenders and mortgage originators.
San Diego
On March 22 Warren addressed the associations convention in San Diego, saying, We will build a
strong enforcement arm that will -- for the first time ever -- put significant federal resources behind
ensuring compliance by non-bank financial companies.
The day after the meeting ended, Fine sent the letter endorsing the Republican bill.
Fine said in an interview today that endorsing the Bachus bill is consistent with the position the group
took during the debate over Dodd-Frank.
The Obama administration is searching for a nominee to run the bureau and has not publicly ruled out
Warren.
There are a great many community bankers who have gone from a negative to a positive opinion of
Professor Warren, Fine said. Thats a long way from saying they would endorse her as director.
Dan Geldon, a spokesman for Warren, declined to comment on the ICBA endorsement of the
legislation.
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Page 3673 of 3826
Washington Post
Ahead of mortgage settlement talks, banks offer to change their ways
March 29, 2011
By Brady Dennis
On the eve of planned settlement negotiations between state and federal authorities and the nations
largest mortgage servicers, the companies have submitted detailed changes they are willing to make to
alter past practices and aid troubled homeowners in the months ahead, people familiar with the matter
said.
The five banks at the center of the settlement negotiations over shoddy foreclosure practices Ally
Financial, Bank of America, Citibank, J.P. Morgan Chase and Wells Fargo submitted the proposal to
government officials ahead of the first planned face-to-face meetings between the groups Wednesday
in Washington.
Sources familiar with the 15-page proposal said the banks have offered to make significant changes
such as ending the dual track" process that has caused homeowners to receive foreclosure notices
even as they are negotiating modifications, and giving borrowers a single point of contact when they are
seeking to modify their loans. They also plan to implement a series of new servicing standards such as
verifying that affidavits submitted in foreclosure cases are accurate and complete, which banks failed to
do in the recent robo-signing scandal.
At the same time, the banks proposal doesnt offer the extent of concessions requested in a 27-page
term sheet submitted earlier this month by a core group of state attorneys general and backed by a
handful of federal agencies, including the Justice Department and the new Consumer Financial
Protection Bureau.
That document included calls for servicers to undertake more principal reductions for certain types of
borrowers, allow borrowers to submit and track documents electronically in real time and allow
homeowners in trial modification programs to automatically convert to permanent modifications if they
have made three payments on time, among other changes. Government officials also have considered
imposing tens of billions of dollars in penalties on the banks for the shoddy foreclosure practices,
requiring that part of those funds be used to reduce loan balances for troubled borrowers.
Iowa Attorney General Tom Miller, who is leading the multistate effort and will head up Wednesdays
meeting at Justice along with U.S. Associate Attorney General Thomas Perrelli, said in an recent
interview that state officials would not settle for anything less than wholesale changes.
Page 3674 of 3826
At the same time, bank officials have pushed back against some proposed changes. They clearly dont
like the idea of heavy fines and have questioned the fairness and the massive cost of being forced to
write down a significant number of loans. In addition, they point out that stakeholders on every side of
the issue have struggled to design a workable and equitable loan-modification program.
Both sides say they see Wednesdays meeting as the beginning of negotiations that could last weeks or
months. And whatever the outcome, its unlikely the banks, federal regulators and state officials will
wind up on the same page. There has been much disagreement within each group. In addition, some
federal regulators such as the Office of the Comptroller do not plan on attending the meeting and have
pursued their own settlement with the banks.
The settlement negotiations come as the House voted 252 to 170 Tuesday evening to kill the Obama
administrations key foreclosure-mitigation program, which has been dogged by criticism that it has
helped far fewer homeowners than expected.
A group of 50 House Democrats this week wrote to Treasury Secretary Timothy F. Geithner, urging him
to revamp the controversial program and saying that HAMP must change to meet its potential.
Administration officials have recently defended HAMP (the Home Affordable Mortgage Program) as an
important part of the effort to help homeowners and arguing that despite its disappointments it has
spurred the industry to ramp up modifications.
Tuesdays vote was largely symbolic. The legislation is not likely to pass the Senate, and the White
House has threatened to veto any bill to eliminate the program.
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Reuters
Banks and states to meet on foreclosure probe
Page 3675 of 3826
March 29, 2011

By Corbett B. Daly and Dave Clarke
The big U.S. banks and state attorneys general negotiating a settlement over alleged mortgage
servicing abuses will meet on Wednesday at the U.S. Justice Department, according to sources briefed
on the meeting.
The banks and authorities are expected to discuss a settlement proposal that the AGs sent out earlier
this month, calling on banks to treat borrowers better and to reduce loan balances for some struggling
homeowners.
On March 3, state attorneys general leading the probe sent banks the outline of a proposed settlement
endorsed by some federal agencies, including the Justice Department, the Housing and Urban
Development Department and Treasury staff setting up the Consumer Financial Protection Bureau.
Notably, the Office of the Comptroller of the Currency and the Federal Reserve did not endorse the
proposed settlement, highlighting how difficult it will be for all the officials to reach a coordinated
settlement with the banks.
The banks that received the proposal and that will have representatives at Wednesday's meeting are
Bank of America Corp, JPMorgan Chase & Co, Citigroup Inc, Wells Fargo & Co and Ally Financial,
according to sources briefed on the meeting.
The state probe is being led by Iowa Attorney General Tom Miller who heads an executive committee
comprised of 13 state AGs.
Representatives from the federal agencies that endorsed the state's proposal are also expected to
attend.
The March 3 settlement offer included a controversial proposal of having servicers reduce the principal
on a loan if it would help keep a borrower in a house and make the mortgage more valuable to investors
than it would be in a foreclosure.
Page 3676 of 3826
Banks have balked at this approach and parts of the broader proposal, as have some Republican state
attorneys general.
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Naked Capitalism
The Consumer Financial Protection Bureaus Bogus Mortgage Settlement Math
March 29, 2011
By Yves Smith
A new article by Shahien Nasiripour of Huffington Post, Big Banks Save Billions As Homeowners
Suffer, Internal Federal Report By CFPB Finds, includes a presentation from the ConsumerFinancial
Protection Bureau dated February 14 prepared for Tom Miller, the Iowa Attorney who is leading the 50
state attorneys general foreclosure fraud settlement negotiations.
If I were a betting person, Id wager this document was leaked to show that the Administration and the
AGs did not just make up the $20 to $30 billion settlement figure that has been bandied about as their
ask, but have a sound, reasoned basis for their demand.
Unfortunately, the document simply proves that they did make up the $20 to $30 billion figure.Not only
is the analysis effectively fabricated, its the wrong analysis. But I have to say, having been at
McKinsey, its impressive how the use of McKinsey firm format makes a story look much more credible
than it really is.
CFPB Settlement Presentation
The critical part comes on the third page, Calibrating the Size of Potential Penalties. Youll note it
assumes that the cost of special servicing of delinquent loans would have cost 75 basis points a year
more than actual costs incurred. That drives the entire analysis.
Page 3677 of 3826
The rest is based on delinquencies at various major servicers from 2007 to the third quarter of 2010;
presumably the CFPB has been able to get reasonably accurate data on that front.
Now.is this 75 basis points a year a knowable figure, ex doing a lot of real nitty gritty work, which
certainly has not taken place? We can debate whether this is the right figure, and whether the CFPB
has also captured the actual costs correctly. Servicers are already losing boatloads of money; the
economic model was never designed for a high level of delinquencies. Our Tom Adams has estimated
that servicing now costs 125 basis points versus the banks typical fees of 50 basis points, plus another
30 to 50 basis points in late and junk fees.
If you take this analysis at face value, the biggest question is what standard of servicing is implied by
effective special servicing of delinquent loans? If they mean loan modification, thats the same as a
new underwriting of a mortgage. That cannot be done through the current platform and would require
new staff with different skill sets and software/systems support. So any estimates are at best finger in
the air exercises. And given that some servicers are far more abusive with junk fees than others, Tom
Adams comment above suggests that a one-size-fits-all estimate is misleading too.
But arguing over a pretty much made-up figure misses the critical point: the money the servicers saved
is not even remotely the right basis for thinking about the appropriate settlement level. Settlements are
based on potential liability. For instance, in 1998 the tobacco settlement, the tobacco companies agreed
to pay a minimum of $206 billion over 25 years to be released from liability on Medicare lawsuits on
health care costs plus private tort liability.
The saved costs bear no relationship to the banks legal liability for servicer-driven foreclosures, nor to
the damage they have done to homeowners or broader society through their actions. Its like basing the
penalties in a robbery on the unpaid parking fees and rental costs of the car used to make the heist.
This resorting to completely irrelevant metrics results from the problem we have harped on from the
onset of the settlement talks: the lack of investigations. You cant settle what you havent investigated.
The fact that Tom Miller has suddenly mentioned to an obscure mortgage industry rag that state
banking regulators probed Ally is unpersuasive. First, Miller has a record for being less than truthful; he
promised criminal investigations in no uncertain terms and has been walking that back ever since.
Second, his own staff and various state attorneys general have effectively said there has been no
investigation (as in theyve at most gotten voluminous but undigested responses to subpoenas). Youd
think state AGs would be aware of what their own state banking regulators were up to on a hot topic like
foreclosure fraud. Third, I guarantee whatever thin investigation has taken place has overlooked the
most important issue, and one that lay at the heart of the 2003 FTC/HUD examination of and settlement
with rogue servicer Fairbanks: junk fees and misapplication of payments that push borrowers whod
otherwise be viable into foreclosure.
Theres more not to like in this document. For instance, on the second page, Mortgage Servicing
Page 3678 of 3826
Settlement in Context, under the column Align Servicer Incentives, we see the statement Create a
new trust structure outside existing RMBS which traps cash to align servicer and investor incentives.
Earth to base, this is a new variant on HAMP, which is pay the servicers to do mods. The only new
wrinkle: taking the money from servicers and giving them the opportunity to earn it back. But as we saw
with HAMP, the puny incentives provided by payments are dwarfed by the need to preserve the fictive
value of over $400 billion of home equity loans and second mortgages, held by banks affiliated with the
five biggest servicers. That, sports fans, means only shallow mods, when investors would prefer to take
the hit of deep mods to viable borrowers, because the costs of foreclosure are even higher.
And we see the perverse program design on page 6, Calibrating Breadth And Depth. To be presented
as some sort of success, the program needs to be able to tout large numbers of mods. Yet it is only
clawing back a relatively small amount of money relative to the US negative equity hole (for starters,
$480 billion on homes 50% or more underwater). So its going to focus on those only a little bit in
negative equity land, which means its going to concentrate its efforts on those least in need of help.
What is that going to do for the ground zeros of the housing crisis, such as Florida, Nevada, California,
and Arizona? And what is it going to do to stem the losses investors are facing on foreclosures on deep
negative equity homes, which from their perspective are the ones where mods make most sense?
Apparently nothing.
This document looks to be rooted in Jean Baptiste Colberts saying: The art of taxation consists in so
plucking the goose as to get the most feathers with the least hissing. Any number that was within
hailing distance of the real damage done by foreclosure (which father of securitization Lew Ranieri was
astonished to learn in 2008 was standard practice), rather than by doing mods for viable borrowers,
would be a multiple of the levels under discussion here; and the servicer-driven foreclosure aspect
pushes the figure higher still. This document bears the hallmarks of looking to rationalize a figure that
would sound big enough to impress the public as being punitive, yet not hurt the banks at all (as page 4
demonstrates). But having a settlement designed around not damaging predators is certain to
perpetuate their destructive conduct.
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Warren In The Lions Den
March 30, 2011
Page 3679 of 3826
By Ben White
WARREN IN THE LIONS DEN - CFPB czar Elizabeth Warren will liken her appearance at the event to
Nixon going to China or Daniel entering the Lions den. From prepared remarks: A cop on the beat
looking out for consumers does not reduce the freedom or effectiveness of markets; rather, it permits
honest competition to flourish. If you are one of the guys who dont use steroids when you play ball,
then you dont want to compete against those who are juicing.
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Overnight Money: Chatting at the Chamber
March 29, 2011
By Bernie Becker, Erik Wasson, and Peter Schroeder
WEDNESDAYS BIG STORY:
The financial sectors movers and shakers a lot of them, at least are scheduled to spend part of
their Tuesday at the U.S. Chamber of Commerces Capital Markets Summit.
Rep. Spencer Bachus (R-Ala.), the chairman of the House Financial Services Committee, is set to offer
his Capitol Hill perspective, while Elizabeth Warren, the architect of the Consumer Financial Protection
Bureau, will launch a defense of new regulations as a way to help keep markets free.
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Page 3680 of 3826
Dow Jones Newswires

US Rep Bachus: New Regulations Are Chilling Economic Recovery
March 30, 2011
By Jeffrey Sparshott
Government overreach on regulations is chilling the U.S. economic recovery, a top Republican
lawmaker said Wednesday.
"The economy was coming back. We are adding jobs right now. But if there is a tremendous
government overreach it could chill the recovery. I think it already is," Rep. Spencer Bachus (R., Ala.)
told reporters on the sidelines of a U.S. Chamber of Commerce conference.
Bachus is chairman of the House Financial Services Committee, which oversees financial regulation.
"There is a lot of capital that has not been deployed. It is sitting on the sidelines. That is capital that is
not creating jobs," he said.
Bachus singled out the new Consumer Financial Protection Bureau, but said that regulators in general
are trying to move too fast on implementing rules mandated by the Dodd-Frank financial overhaul.
"The regulators know they don't have enough time," Bachus said.
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Page 3681 of 3826
Forbes (Working Capital blog)

Banks Saved $25 Billion By Under-Serving Delinquent Mortgages
March 29, 2011
By Halah Touryalai
The consumer protection agency developed by the Obama administration in the aftermath of the
financial crisis is already stirring Wall Streets pot.
According to the agency, Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and others
dodged more than $20 billion in expenses between 2007 and 2010 by taking shortcuts when servicing
troubled home loans. Thats according to a confidential presentation authored by the Consumer
Financial Protection Bureau.
The 7-page presentation, which was published by the Huffington Post yesterday, was made for the 50
state Attorneys General who are leading the investigation on improper foreclosure procedures by Bank
of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial.
The Attorneys General want the banks to accept billions of dollars in fines and to agree to principal
reductions on home loans.
The settlement amount has been speculated to to range between $5 billion to about $30 billion but
banks are resisting the hefty fines saying were are no systemic or widespread problems with their
mortgage services procedures.
The presentation by the CFPB tells a different story, however. The group, led by Elizabeth Warren, says
a $5 billion penalty would seem too low considering rough estimates suggest the largest servicers
may have saved more than $20 billion through under investment in proper servicing during the crisis.
The bar graph in the presentation shows that BofA and Wells Fargo saved about $7 billion each by
under-serving distressed home loans between 2007 and the 3rd quarter 2010. JPM saved about $5
billion in the same time period.
Page 3682 of 3826
Tomorrow the big banks and state Attorneys General come face-to-face in Washington to address a
resolution to the mortgage service probe. According to the Wall Street Journal, all the major players will
be in attendance tomorrow including folks from Bank of America, JPMorgan, Wells Fargo, Citigroup,
Ally Financial, the Attorneys General, the U.S. Department of Justice and the Department of Housing
and Urban Development.
One of the topics to be discussed at the meeting is a proposal for resolution put forth by the banks. Not
surprisingly, the proposal by the banks doesnt mention principal reductions for home owners or
penalties on the banks, according to the Journal.
Check out the Consumer Financial Protection Bureaus Perspective on Settlement Alternatives in
Mortgage Servicing, as obtained by Huffington Post:
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ConsumerAffairs.com
50-State Effort to Write Down Troubled Mortgages Starts to Crumble
Four attorneys general said reducing mortgage principal presents a moral hazard
March 30, 2011
By James R. Hood
Last year, attorneys general from 50 states were working together to put pressure on mortgage lenders
to clean up the foreclosure process and provide more help to consumers trying to stay in their homes
despite financial difficulties.
The multi-state effort worked out a proposal that would offer relief to selected struggling homeowners by
reducing the principal on their mortgage. It reportedly calls for banks to write down $20 billion in loan
balances.
But a lot has changed since last year. The November elections saw the ouster of several of the more
Page 3683 of 3826
aggressive AGs, including Richard Cordray of Ohio, who was later named to head the enforcement
division of the new Consumer Financial Protection Bureau. Cordray was the first AG to sue a major loan
servicer in the robo-signing scandal.
After newly-elected attorneys general took office in January, many displayed an abrupt change in their
attitude towards consumer protection in general and the mortgage industry in particular. Now the 50state coalition is falling apart with the defection of four attorneys general.
Florida's Pam Bondi, Greg Abbott of Texas, Kenneth Cuccinelli of Virginia and Alan Wilson of South
Carolina have sent a four-page letter to Iowa Attorney General Tom Miller, who heads the multi-state
effort.
The letters expresses the AGs' concern about the moral hazard posed by reducing loan principals to
help select homeowners stay in their homes.
Miller's group earlier this month proposed a major increase in the number of mortgage modifications
and called for prohibiting foreclosures while a modification is in progress.
Goes too far
But Bondi and her three colleagues say the proposed settlement goes too far and is unfair to
homeowners who have kept up their payments.
"These proposals do a disservice to homeowners who, despite an economic downturn, have worked
hard to maintain their mortgages," the letter states.
Miller's communications director Geoff Greenwood said the letter is under review.
"While all 50 attorneys general may agree on the pressing need to solve these very complicated
problems, they may not all agree on all of the terms," Greenwood said.
The Palm Beach Post's editorial page differed sharply with Bondi. Whose side is Bondi on? Not
Florida's, the paper thundered. It quoted a study which found that borrowers with equity in their homes
default less often than those without equity.
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If Florida Attorney General Pam Bondi has been paying attention, she knows that about 25 percent of
Florida homeowners who are delinquent on their mortgages have decided to default. They have no
equity in their homes, and don't believe that the market will improve soon enough for them ever to get
above water, the paper said.
In Virginia, the director of the Virginia Poverty Law Center said he is troubled that the talk of moral
hazards seems prefaced on the assumption that the homeowners not the banks are the ones guilty
of wrongdoing.
"They [the banks] seem to be getting the benefit of the doubt -- despite the fact that they have been
caught falsifying documents and abusing the legal system," Speer said, according to the Roanoke
News.
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Los Angeles Times

Proposed settlement would force banks to allow short sales for delinquent homeowners
March 30, 2011
By Jim Puzzanghera and Alejandro Lazo
Major banks may be forced to let severely delinquent homeowners sell their houses for less than the
loan amounts owed as part of a broad settlement of federal and state investigations into botched
foreclosure paperwork, according to government officials involved in the negotiations.
The requirement to allow so-called short sales would be in addition to forcing mortgage servicers to
reduce the amount some homeowners owe on their loans, said two officials, who spoke on the
condition of anonymity because negotiations are ongoing.
The goal of short sales would be twofold: provide a quicker and more economical way for banks to
dispose of distressed real estate and to help stabilize the real estate market by clearing out a backlog of
Page 3685 of 3826
defaulted mortgages that are poised for foreclosure.
They would be used in situations in which borrowers were so underwater that the more costly and timeconsuming process of foreclosure would seem to be the only option.
"Short sales just command a better premium than foreclosures," said Glenn Kelman, chief executive for
online brokerage Redfin. "It's like day-old bagels. They never sell for the same price. If they sit there for
a while, nobody wants them because houses just break down when they are left alone."
Foreclosures continue to drive down housing values, with prices in 20 major U.S. cities down an
average of 3.1% in January compared with the same month a year ago, according to new data from a
Standard & Poor's/Case-Shiller index. Prices in Los Angeles were down 1.8%.
The latest proposal is among those to be discussed when executives from the top five mortgage
servicers meet Wednesday in Washington with state and federal officials working on a settlement that
could range from $5 billion to $25 billion.
Those servicers are Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc.
and Ally Financial Inc.
It will be the first face-to-face meeting since attorneys general from all 50 states, along with federal
officials from the Justice Department and other agencies, presented the banks with 27 pages of
demands calling for sweeping changes to mortgage servicing, including how homeowners are treated
when they try to modify their loans.
The banks have given officials a counterproposal on some of the mortgage servicing requirements that
includes a single point of contact for distressed homeowners, timelines for considering modifications, an
online system for checking the status of applications and a third-party review of rejections, one of the
officials said.
Short sales would help accelerate the turnover of homes from borrowers who are months behind on
their mortgage payments, Kelman said.
Some sellers are not eager to complete a short sale because it would force them out of their home. And
Page 3686 of 3826
lenders can withhold approval of a short sale if they don't like the price.
Banks often resist such sales because they are difficult to execute, particularly when multiple creditors
and other parties are involved. In addition, short sales lock in losses for the lender that might be
reduced if the sale is delayed until the market improves.
Requiring banks to allow short sales could fuel further opposition from some Republican attorneys
general and members of Congress who already have criticized the broad scope of the proposed
settlement.
Some House Republicans have derided possible payments of $20,000 to encourage distressed
homeowners dubbed by some as "cash for keys" as a bailout for irresponsible behavior.
Seven Republican attorneys general recently wrote to Iowa Atty. Gen. Tom Miller, a Democrat who is
leading the negotiations for the states, saying the proposals go beyond resolving damages from
foreclosure paperwork problems. Those problems include robo-signing, the practice of bank employees'
signing sworn documents without reading or understanding them.
"I think it's morphed into something that's bigger and different than what we talked about in the
beginning," said Oklahoma Atty. Gen. E. Scott Pruitt, a Republican who organized the signing of one of
the letters.
Pruitt said he might not join the settlement if it is too broad. And with 24 Republican attorneys general
nationwide, opposition could limit the size of a settlement and how many people it covers.
Miller has been in contact with some of the attorneys general who have raised concerns, said
spokesman Geoff Greenwood.
"We'll do the best we can to reach a comprehensive agreement that is in everyone's best interest,"
Greenwood said. "At the end of the day, an attorney general must decide for himself or herself whether
to sign on to this, assuming we get a settlement."
In Southern California, short sales made up an estimated 19.8% of the market for previously owned
homes last month. That was up from an estimated 18.4% in February 2010 and 12% in February 2009,
according to DataQuick Information Services of San Diego.
Page 3687 of 3826
Combined with foreclosures, these so-called distressed sales made up more than half of homes sold in
the Southland last month.
Though struggling homeowners escape weighty mortgage debts quickly under a short sale, they don't
get away unscathed.
Their credit scores are damaged enough to limit their borrowing capability for years, though the damage
is perhaps less severe than in foreclosure. Money for down payments and renovations would be lost,
and there may be tax consequences.
The California Assn. of Realtors has been pushing for short sales to be made simpler. Earlier this
month, in an open letter in the Los Angeles Times and six other California newspapers, the group called
on banks to approve more short sales and for regulators to streamline the process.
The real estate agents argued that short sales are better for consumers and banks.
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MyBankTracker
CFPB: Disclose Credit Card Interest Rates, Limits First
March 30, 2011
By Simon Zhen
The Consumer Financial Protection Bureau (CFPB) is on a quest to change how consumers will apply
for credit cards costs and details of the credit line must be disclosed before applying for the card.
Since the CFPB came into existence with Elizabeth Warren at the helm as a result of the Dodd-Frank
Act, the new government agency has begun stomping on the front yards of banks and other financial
institutions.
Page 3688 of 3826
Most recently, the consumer advocate entity wants credit card issuers to specify the exact interest rate
and credit limit on a credit card before a consumer applies for it, according to a report by the Associate
Press.
Currently, credit card applicants sign up for credit cards without knowing whether theyd be approved. If
and when an application is approved, then consumers learn of the cards APR and credit limit.
Sometimes, they end up with a high interest rate and small credit line despite having a great credit
profile.
The CFPB hasnt cleared up how credit scores will be impacted as a result of this proposed change.
Because a card issuer must pull an applicants credit reports for review, the applicants credit score
takes a small hit, regardless of an application approval or not.
Also, the CFPB proposed tweaks to the summary of rates and fees on marketing materials so that all
fees and charges will appear with the corresponding service or transaction, according to the Associated
Press.
For example, currently, the fees for balance transfers and cash advances do not appear in the same
section of a summary disclosure as their respective interest rates. A change would put that information
together.
Finally, the CFPB wants to revamp legal disclosures so that they are easily understood by consumers
who sign up for credit cards.
The CFPB will begin wielding legal authority starting July 21, 2011.
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American Banker
Page 3689 of 3826
Dodd-Franks Bizarre Notion of Ability to Pay

March 30, 2011
By Andrew Kahr
On March 18 the Federal Reserve issued a 323-page release, purportedly aiming to render more
precise, among other things, a provision of the Dodd-Frank Act that requires credit card issuers to
consider "the ability of the consumer to make the required payments" in arriving at credit decisions for
credit cards.
What is this nonsense?
In order for a bank to operate in a safe and sound manner, it must of course "consider" whether a
prospective or current borrower will repay according to terms. That is true for any loan, credit cards
included. And if a consumer lacks the "ability" to make the payments, then he will not make them. So,
this provision of Dodd-Frank is, at absolute best, supererogatory useless.
Has there been a particular problem of banks becoming unsound because they failed to consider ability
to repay in opening or increasing limits on card accounts? Hardly. Cards did not cause the recent crisis,
and card lending, particularly including subprime card lending, came through this true stress test with
flying colors, despite massive unemployment of people who previously had plenty of income.
So, where's the beef?
The beef is apparently someone's weird notion that banks can and did make money by lending to
people who could be seen in advance to be unable to pay. Or, maybe the idea was that banks were too
stupid to see that they needed to "consider" ability to pay, but once compelled to consider it, they would
make better lending decisions. Bizarre!
Ability to pay has something, but not much, to do with income. Payments on a card are usually only a
very small fraction of income or household spending, and a customer who has been paying nicely on
one card may pay it off with his new one irrespective of his income. But the simple mind confuses
"ability to pay" with "income."
Before Dodd-Frank, many card issuers weren't asking applicants to state their income on their
applications. They had found that obtaining and using this unverified, "stated income" figure didn't
enable them to make better underwriting decisions. No evidence has been cited showing that lenders
who asked for stated income had lower losses as a result.
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With Dodd-Frank implemented, most card issuers now include an income question in their applications.
"Considering" this information can readily lead to another hit on bank earnings and the economy by
causing eminently creditworthy customers to be turned down. Credit officers will blame bank lawyers for
this unfairly.
Up to this point in the saga, there was uncertainty and compliance expense, based on no evidence at
all of likely public benefit. But, bad enough was too good to be left alone.
Subsequently, and tardily, the Fed noticed that some card lenders were asking for "household income"
rather than "income" on their applications. That was nothing new, and of course it wasn't caused by
Dodd-Frank.
Nevertheless, another regulatory proceeding followed, one that supposedly ended by the time of the
March 18 release.
Cutting through the verbiage, what we have now from the Fed is that as a lender you can ask for
"income" from an individual applicant, who will interpret that however she or he likes individual,
household, pretax, after-tax income, whatever. You just can't ask for household income. This despite
the fact that the Fed itself notes there may be little or no difference between the dollar amounts you get
by asking applicants for income versus asking them for household income.
If the Fed were serious about this, it would have mandated that the applicant be asked for something
like "individual income (excluding income of others in your household)." But it didn't mandate that. So, it
got the squeal but not the pig. Why take this route?
My educated guess is that denying individual credit card accounts to nonworking adult household
members a violent disruption of current patterns of credit granting that would result in a substantial
reduction in the overall availability of consumer credit for retail sales was too much for the Fed to
swallow. So, in its "clarified" regulation, the agency jumped through hoops to give lip service but no
substance to the principle of requiring individual income. The rest of the industry now has to follow the
central bank through these hoops.
The road not taken would have been even bumpier, if passable at all. Is a nonworking spouse's
"allowance" not to be considered as income? Is it any less reliable than casual employment income? If
an individual has a checking account showing regular deposits, aren't these deposits income? Are
monthly payments from a reverse mortgage income?
Page 3691 of 3826
It is possible now to conclude that this provision of Dodd-Frank, like many others, could never have
produced benefit, only cost. The Fed has materially increased this cost by wading into the hot water and
then jumping for a slippery rock.
[email protected].
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American Banker
Lenders Need to Dig Deeper than the Credit Score
March 30, 2011
By Barrett Burns
As every lender knows, the current environment is one of sustained depressed levels of credit quality,
and naturally increasing competition among lenders for the least risky borrowers. Bank managers
continually ask themselves, Where are the opportunities for growth in this market?
As lenders consider how to move beyond recession-based management strategies and intelligently reenter the world of originations and portfolio profit maximization, they can take comfort in the fact that
deeper insight about consumer credit behaviors can identify profitable opportunities and expose
segments that require increased risk mitigation.
More specifically, growth opportunities come from predicting which borrowers in a portfolio will and
which will not pose new risks and which ones are poised to improve their creditworthiness.
With that in mind, an important arrow in a lender's quiver is a segmentation process that uses a credit
score in conjunction with consumer financial management behaviors (available on the consumer credit
files) to go beyond indicating the likelihood of default.
Page 3692 of 3826
VantageScore Solutions used segmentation strategies to demonstrate score migration on a macro level
and found that more than 60 million borrowers are creditworthy today and will likely either improve their
credit score or remain stable over a 12-month period.
Within these 60 million consumers, VantageScore identified 10.6 million whose overall credit quality is
improving and whose risk profile is consequently very attractive. Beyond the 60 million, another 11
million consumers were identified who are likely to drop in credit quality over a 12-month period.
While these figures may appeal to a lender's drive for growth, it's the concepts and methodologies used
to arrive at these numbers that lenders need to consider more carefully.
In other words, a lender needs to ask whether it is possible to predict which borrowers in a portfolio will
trend upward and downward when they have nearly identical credit scores.
Based on our analysis, the answer is yes, but lenders need to dig deeper than the score and use
information in a credit report to garner value added insight and then apply that information to portfolio
optimization strategies.
Based on VantageScore's analysis, consumers considered to be superprime who are predicted to be

stable are identified as having 15% fewer inquiries on their credit report, 21% more real estate trades
and 22% fewer real estate delinquencies.
Consumers with prime credit scores who are considered stable exhibit specific behaviors in their credit
profiles when compared with the average prime-credit-quality consumer, including fewer trades, fewer
inquiries, lower bank card utilization and fewer auto and real estate trades.
Consumers with lower inquiries and older loans are signaling that they need less credit and have kept
their loan products in better shape for longer, underscoring that they can handle their debts more
effectively.
Extending this logic to all credit tiers, more than 50 million consumers were considered stable, with
strong credit scores, representing 74% and 62% of the prime and superprime scoring bands,
respectively. Among these 50 million, the risk for those in the prime category was 0.1% (a tenth of 1%)
or less, as determined by the average 90-day-plus delinquency rate in the most recent 12 months.
This risk level for the "stable, prime" consumer was approximately 75% lower than the average risk
Page 3693 of 3826
level for the prime scoring band overall.
In the superprime category, the risk among those with stable credit improves to an average of 0.001%.
In addition, VantageScore identified 10.6 million consumers whose overall credit quality is improving
and whose risk profile is consequently very attractive.
The study suggests that if lenders can predict score migrations, then they can potentially extend credit
where they may not have otherwise, thus potentially improving profit and loss ratios.
This strategy can work in reverse as well.
Using segmentation strategies, VantageScore determined 11 million consumers whose credit quality is
declining. Of these 11 million, more than 8 million are currently considered prime and superprime
quality when reviewed using credit scoring methods alone.
The deteriorating population can be identified by segmenting those prime borrowers who have 14%
more recently opened trades and 65% higher bank card utilization among other things when
compared against all other behavior categories.
These borrowers are signaling potential distress, and are obviously pockets of risk in their portfolios that
lenders may not recognize.
The purpose of a credit score is to predict the likelihood that a consumer will default on a loan, defined
as being more than 90 days overdue. The score is an interpretation of information in a consumer's
credit report. These truisms notwithstanding, just because the score is based on a consumer's credit
report doesn't mean those data points cannot be used for strategic portfolio optimization.
Segmentation strategies, in conjunction with prudent underwriting, can help lenders succeed in a
challenging economic environment.
Barrett Burns is the president and chief executive of VantageScore Solutions LLC.
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Page 3694 of 3826

Credit Score Recovery Time After a Foreclosure
March 29, 2011
By Ann Carrns
Wondering how long it will take your credit score to recover from a home foreclosure or short sale? That
depends on how good your credit was in the first place, says John Ulzheimer, a credit reporting guru
who blogs on the subject for mint.com.
Somewhat depressingly, the better your credit score was before your mortgage woes started, the longer
it will take you to recover. Citing data from credit reporting firm FICO, Mr. Ulzheimer said it would take
roughly three years for a consumer with a 680 FICO to recover to that level after a foreclosure,
compared with seven years for someone with a 780 score. Thats because high scores require pristine
credit files, he said, while a middling 680 doesnt.
Late mortgage payments follow the same pattern. A person with a 680 score who pays 30 days late can
bounce back to that level in about six months, compared with three years for someone with a 780
score. His (somewhat obvious) advice? Dont miss payments.
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Tightly regulated or not, payday lenders learn to stay profitable
Page 3695 of 3826
March 30, 2011

By Mitchell Schnurman
Last month, when a state senator proposed new oversight for payday lending, the industry reacted like
Chicken Little.
"If this bill is passed, we will be forced to shut our stores down in Texas," Jay Shipowitz, president of
Ace Cash Express in Irving, told a Senate committee.
Others expressed similar fears. But that same week, Fort Worth-based Cash America International
provided a much different view of how regulations affect its business.
In its annual 10-K filing, the company noted that Colorado, Illinois, Wisconsin, Arizona, Montana and
Maryland had adopted tighter restrictions on payday loans. In three of the states, rules were so
stringent that Cash America had stopped offering the loans there.
Yet none of this had a material effect on the company, its consolidated revenue or its operations in
2010, the filing said. That's because Cash America developed new products and grew loan volume in
other markets, including abroad.
One example: Online loans in the United Kingdom, Australia and Canada doubled in the fourth quarter
of 2010, and operating income surged. For the year, the company reported almost $1.3 billion in total
revenue and more than $115 million in net income, both record highs.
Pawnshops remain Cash America's biggest business, but its big growth has come from short-term loan
fees. They totaled nearly $491 million last year, more than three times as much as in 2005.
Consumer advocates criticize payday loans because they target the working poor and often trap
borrowers in a cycle of debt. Loans are typically small, about $300, and carry fees of $60 or more.
They're supposed to be repaid in two weeks, when the next paycheck rolls in.
But borrowers often can't pay them off, and most lenders don't accept partial payments. So the entire
amount gets rolled over, with another $60 fee -- sometimes eight or nine times -- with effective annual
interest rates that can top 400 percent.
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That system has created a backlash in the industry, and roughly one-third of states have reformed
payday loan rules in recent years. In 2006, Congress passed a federal law to protect military personnel
and their families from the loans, and they don't have to pay more than 36 percent interest annually.
Some states have adopted the same 36 percent cap, and some lenders abandoned those markets. But
elsewhere, operators have learned to live with restrictions that aren't quite so tight, along with entering
new markets and doing more business in uncapped states like Texas.
Cash America is a prime example of finding growth regardless of the regulatory climate. Last year, its
consumer loan segment grew 33 percent, compared with a 9.5 percent increase in pawn loan fees.
Cash America is also making good money from its mix -- $207 million in operating income last year,
twice as much as in 2006.
Analysts always worry about new state restrictions, and in a January conference call they asked about
Texas because it's such a big market and has so little government interference. CEO Dan Feehan said
that sentiments in Austin weren't much different than in past years.
"You never rest in one of these things until the session is over," Feehan said. "But again, we have not
seen anything we didn't expect."
Given the demographics in Texas, it's not surprising that the industry is huge here. (Reformers say
there are more payday loan locations than McDonald's and Whataburger stores combined.) The
industry says the strong demand demonstrates the need for its loans, while opponents say that's
exactly why borrowers need more protections.
In Texas, 17.2 percent of residents live in poverty, compared with a national average of 14.3 percent.
More than 4.2 million Texans fall into this category, earning less than $18,310 for a family of three,
according to the Center for Public Policy Priorities in Austin.
Another metric: 9.5 percent of hourly workers in Texas earn the federal minimum wage or less, says the
Bureau of Labor Statistics. That compares with 6 percent for the nation, and only one state matches us
-- Mississippi.
Neither past crackdowns by states nor new threats are dampening perceptions of payday lenders on
Wall Street. Cash America's stock price traded at a 52-week high Tuesday, closing at $45.43 a share.
It's up almost 23 percent in 2011.
Page 3697 of 3826
And Cash America's performance isn't a recent wonder. Over the past decade, its stock value
increased by an average of more than 22 percent a year, swamping its comparative indexes.
That doesn't mean payday loan restrictions are insignificant -- just that companies are finding ways to
work around them. In the Senate hearing, Sen. Wendy Davis, D-Fort Worth, asked Shipowitz why Cash
Express could offer payday loans in Oregon for less than half the rate that it charges in Texas.
If the company makes it work in Oregon, she said, why would new rules in Texas put it under?
Shipowitz never answered the question to the committee's satisfaction, and if the Legislature finally acts
on payday loans, that will be the issue: Where's the sweet spot that protects borrowers and still lets
operators make a healthy profit?
Davis has proposed generous caps: more than twice as high as Oregon.
Another local player, First Cash Financial Services in Arlington, is trying to unwind from the payday
business and open more retail pawnshops. In 2009, it sold 22 payday loan stores in California,
Washington and Oregon, and closed its Michigan unit. Last year, it stopped online loans in Maryland,
too.
"The company's strategy is to focus on its retail-based pawn operations and further reduce regulatory
exposure from payday lending-type products," First Cash wrote in its 10-K filing.
Texas still has a special pull, however. In this state, First Cash has 81 payday loan locations and coowns 39 Cash & Go kiosks in convenience stores. That business generated more than $45 million last
year, almost 11 percent of the company's total revenue.
First Cash is also a Wall Street darling, with its stock gaining more than 80 percent in the past 12
months. That doesn't sound like the sky is falling, no matter what happens in Austin.
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Page 3698 of 3826
New York Times

Foreclosure Aid Fell Short, and Is Fading
March 29, 2011
By Michael Powell and Andrew Martin
Last summer, as President Obamas premier plan to save millions of Americans from foreclosure
foundered, the administration tossed a new life preserver to homeowners.
Officials unveiled a $1 billion program to offer loans to help the jobless pay their mortgages until they
could find work again. It was supposed to take effect before the end of the year, but as of today, the
program has yet to accept any applications.
We wait and wait, and they keep saying its coming, said James Tyson, 50, a Philadelphia homeowner
who lost his job a year ago.
That could be an epitaph for the administrations broader foreclosure prevention effort, as tens of
billions of dollars remain unspent and hundreds of thousands of homeowners have been rejected. Now
the existence of the main program, the Home Assistance Modification Program, is in doubt.
Saying it is a waste of money, the Republican-controlled House voted on Tuesday night to kill the
foreclosure relief program. The Senate, which the Democrats control, will pursue a rescue. But
Democrats, too, consider the program badly flawed.
The effort has failed to stanch a wave of foreclosures and a decline in home prices, which have fallen
for six consecutive months and are now just barely above their recession low, according to a key index
updated on Tuesday. All of this threatens the fragile economy, which is also being buffeted by foreign
crises.
The banking industry fought us tooth and nail, and we ended up with a program that is failing
homeowners, said Representative Zoe Lofgren, a Democrat from California. The administration doesn
t give us real enforcement or answers; we just get the old yokey-doke.
Yet the need remains great. There were 225,000 foreclosure filings in February, according to
Page 3699 of 3826
RealtyTrac. About 145,000 homeowners are in trial modifications under the Obama program. An
examination of federal documents and lawsuits, and interviews with legislators, state attorneys general,
housing counselors, homeowners and regulators, reveal a federal mortgage modification program
crippled by weak oversight, conflicts of interest, mind-numbing complexity and poor performance by
many participating banks.
For example:
Congress set aside $50 billion for foreclosure prevention, amid administration projections that three
million to four million homeowners would benefit from modifications. So far, the Treasury Department,
which oversees the program, has spent slightly more than $1 billion, and just 607,000 homeowners
have received permanent loan modifications (of those, 11 percent have defaulted).
The companies that service mortgages, typically large banks, continually lose homeowner paperwork
and incorrectly tell homeowners that they must be delinquent to qualify.
Treasury officials have not fined any servicers, and the government-controlled company hired by the
Treasury to oversee the program has expressed reluctance to crack down on banks.
Interviews with a dozen homeowner applicants in four states reveal a familiar pattern: Banks deny many
who, by income and credit scores, appear to qualify. And homeowners end up weighed down by legal
fees and facing foreclosure.
I call constantly, they lose all my paperwork, and the same guy never gets on the phone, said Ada
Caceres, 53, who owns a modest home in Staten Island.
Ms. Caceres has struggled to make mortgage payments since her hours as a bartender were cut. She
applied for relief, and her bank, JPMorgan Chase, twice granted temporary modifications. She made
every payment.
Last August, Chase promised a permanent modification. Then it rescinded the offer, documents show.
I love my house, said Ms. Caceres, who is still negotiating. Its a good neighborhood. But oh my God,
you want to just give up.
Homeowners can appeal denials, but the odds are not in their favor, says the programs inspector
Page 3700 of 3826
general. A first step is a hot line providing counseling, from an agency created by mortgage servicers.
Treasury officials argue that the mortgage program has kept more than half a million American
homeowners out of foreclosure and has pressured banks to offer in-house modifications. These private
modifications, however, typically offer terms significantly less favorable to homeowners than what the
government program offers.
Michael S. Barr, who was a top Treasury official involved with the program, says the Obama
administration sought to help homeowners and encourage banks even as it protected taxpayers.
We tried to bring some order out of the chaos, said Mr. Barr, now a University of Michigan law
professor. Taxpayer money was only used for successful modifications. I think that was directionally
the right thing to do.
Trouble at the Start
In the winter of 2009, the Obama administrations urgency to address foreclosures was palpable.
Hundreds of thousands of families had lost homes, and in towns from Florida to California to Nevada,
foreclosure slums took root, marked by boarded-up homes and uncut grass.
Treasury officials invited Neil M. Barofsky, the special inspector general for the bank bailout, to discuss
a rescue plan. They told him details of the plan were still weeks away. That night, I was driving home
and I heard on the radio that the president was going to announce it next Wednesday, Mr. Barofsky
recalled. It was a ready, fire, aim approach.
Ready or not, President Obama announced the housing assistance program on Feb. 18, 2009. Banks
and mortgage brokers could extend mortgages, or cut the amount of the loan or the interest rate. A
monthly payment could not exceed 31 percent of gross income.
In return, the administration offered payments to banks and servicers.
It will give millions of families resigned to financial ruin a chance to rebuild, Mr. Obama said. By
bringing down the foreclosure rate, it will help shore up housing prices for everyone.
None of those hopes came to pass.
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In fairness, Mr. Obama confronted a daunting challenge: a foreclosure crisis without precedent since
the Great Depression. The Bush administration already had tried several weak foreclosure relief
programs.
In October 2008, as financial calamity loomed, President Bush signed the $700 billion bank bailout
known as the Troubled Asset Relief Program, or TARP. At the insistence of Congressional Democrats,
he agreed to plow billions of dollars into foreclosure prevention.
When the newly elected Obama administration drew up program guidelines, officials concluded they
could neither force servicers to participate nor fine them for poor performance.
This, critics say, was a mistake.
The banks were so despised, and TARP was so front and center, you could have actually done
something, said Katherine M. Porter, a visiting law professor at Harvard. In the midst of real boldness
in bailing out the banks, we get this timid, soft, voluntary conditional program.
Treasury officials say this is an unfair accounting. In those harried days in early 2009, no one knew how
much stress near-insolvent banks could withstand. And officials tried to fine-tune the mortgage
program, adding elements and redirecting unused billions of dollars into the most distressed regions.
Each new version, however, added layers of complication.
Administration officials also cite unrealistic expectations, saying they underestimated the complexity of
modifying millions of troubled loans. I wish the three to four million had never been uttered, said Peter
Swire, a former special assistant to Mr. Obama for economic policy.
Critics wave off such arguments. The Obama administration, they say, could have flexed its muscles.
The president could publicly challenge bank officials. Treasury officials could withhold payments. The
administration could buy troubled mortgages at a discount and modify loans on its own.
We needed to go out and fine the five worst offenders, said a former administration official familiar
with internal discussions, who was not allowed to talk publicly given his current position. In hindsight, I
Page 3702 of 3826
m almost certain we would have been well served by taking the risk and being challenged in court.
Dysfunctional System
To listen to a handful of Bank of America employees speak candidly about the mortgage program is to
hear deep frustration with their banks performance. Their accounts, offered on the condition of
anonymity as they are not allowed to talk to the press, dovetail with lawsuits filed by state attorneys
general in Nevada and Arizona. (A coalition of state attorneys general is pushing an expanded
foreclosure rescue plan that would impose fines on recalcitrant banks.)
Bank of America, these employees say, routinely loses documents. One department does not talk to
another. Applications drag on for more than a year. Sometimes the bank forecloses while homeowners
are paying modified loans. And homeowners who are denied face an imposing bundle of late fees and
back-payments.
A bank employee says she often advises homeowners not to apply, given the slim chances for success.
Many of these people are losing their homes, she said. The paperwork that sets them up is not
detailed enough. It does not tell the customer the consequences of going forward with this.
Dan B. Frahm, a Bank of America spokesman, acknowledged that the bank had made its share of
mistakes, including losing too many documents. But it faced a narrow window to carry out a complex
and ever-changing program, he said.
We have completed more modification under HAMP (106,000) than any other participating servicer,
and have more active modifications than other participants as well, Mr. Frahm wrote in an e-mail, using
the programs shorthand name. We continue to improve performance.
For years, loan servicing departments acted as money machines for banks. They collected payments
and foreclosed on the occasional delinquent homeowner.
But a foreclosure flood rolled in by 2007, and servicers all but drowned. The governments program
added to the problem. At first, Treasury allowed homeowners to apply without proof of income, figuring
that quick relief might save homes. It later demanded income verification, loosing another flood, as
homeowners sent in piles of documents by fax.
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Federal regulators added their own confusion of overlapping authority and conflicts of interest.
Treasury hired Fannie Mae and Freddie Mac, two government-controlled mortgage finance giants, to
oversee the program. This decision was problematic. As the Congressional Oversight Panel noted,
these agencies are highly conflicted because they hold the credit risk on most mortgages in the United
States and have their own operational concerns.
As if to underscore that point, Freddie Mac filed documents with the Securities and Exchange
Commission noting that imposing penalties on banks could negatively impact our relationships with
these sellers/servicers, some of which are among our largest sources of mortgage loans.
Treasury has paid the agencies a combined $212 million to administer the program.
The Treasury Department, too, was a reluctant enforcer, declining to impose fines or demand
repayments. This was structured as a voluntary program, said Timothy Massad, acting assistant
secretary. We do not have the power to impose fines.
Mr. Barofsky, the special inspector general, waves off protestations of powerlessness. How, he asked,
could Treasury sign agreements to pay billions to banks without penalties for failure to comply?
Treasury wasnt willing to kick them in the only place that matters: in the pocketbook, he said.
Mortgage Problems
In private conversations, senior Treasury officials offer an often-heard critique: Homeowners failed the
program. That is, Americans were in far worse shape jobless, underwater on mortgages and with
terrible credit than anyone realized in 2009.
Daily encounters in county courthouses suggest this is overstated. Homeowners bring in foot-high piles
of paper documenting income, credit reports and loan payments. Some missed a payment or two, but
many are not deadbeats.
Yet they cannot obtain a modification.
Page 3704 of 3826
In Staten Island, The New York Times examined eight cases where homeowners seemed to possess
the income and credit scores to qualify for the program. Yet after months of trying, even with the help of
Staten Island Legal Services, not one has obtained a permanent modification.
Any single case speaks as eloquently as another.
Eric and Annette Padilla bought their home in 2003. Then Mr. Padilla fell ill and Ms. Padilla quit her job
to care for him, and the couple fell behind on their mortgage in 2009. (Their income dropped to less
than $60,000, from $96,000.)
They applied for the program through their bank, HSBC, and received a three-month modification. They
made the payments on time. In August 2009, they requested a permanent modification.
The Padillas called the bank every week. One representative said their file was incomplete, another
asked for more documents, a third said the documents were there all along.
In September, the bank said their documents had become stale and told them to resubmit. Eventually,
they were given a new temporary modification. Once again they made every payment on time.
In January 2010, they sought another permanent modification. Then they heard back from HSBC:
denied. The reason? The couple had overpaid one month.
Last summer, HSBC filed papers to foreclose against the Padillas. For Mr. Padilla, 41, the house was
his step out of the housing projects; he has no intention of surrendering.
I ask myself sometimes, why is this happening? he says. Wasnt this program set up for hard-working
people like us?
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Page 3705 of 3826
Politico
A case for home loan modifications
March 29, 2011
By Timothy Massad
The House is set to consider legislation Tuesday that would terminate the Home Affordable Modification
Program which provides critical foreclosure prevention aid to struggling homeowners.
Lets be clear about the effect this proposal would have on neighborhoods and communities in every
part of our country. It would deny critical assistance to struggling Americans who are working in good
faith to save their homes. It would increase the number of avoidable foreclosures. It would also put the
still-fragile housing market recovery at greater risk.
This would be a serious mistake. And it would cause damage not just to the families who would lose
their homes through avoidable foreclosures but to all Americans. More avoidable foreclosures could
mean steeper home price declines and even more vacant homes in neighborhoods and communities
across our nation.
To date, HAMP has helped more than 600,000 families lower their mortgage payments and stay in their
homes after the worst housing crisis in a generation. On average, these homeowners are receiving
about $500 per month in lower mortgage payments. Each month, were helping an additional 25,000 to
30,000 homeowners with this program.
HAMPs positive effect goes beyond the number of mortgage modifications. By setting affordability
standards and developing a framework for how the private sector should provide assistance to
struggling homeowners, it has helped push the industry to modify the mortgages of about 2 million more
homeowners outside of HAMP. And it has established new protections for borrowers and kept the
pressure on mortgage companies.
Without question, the mortgage-servicing industry still has a long way to go in meeting customers basic
needs. To help ensure that homeowners are better served by mortgage companies, Treasury is moving
into our next phase of disclosure around servicer compliance.
Beginning next month, Treasury will release a quarterly compliance scorecard for each of the 10 largest
HAMP servicers. Each will be graded on key performance metrics, including evaluation of homeowners
for modifications and whether their staff resources and internal processes dedicated to program
implementation are sufficient. These mortgage companies also will be rated against their peers. We
Page 3706 of 3826
have and will continue to require that servicers take remedial actions to address inadequacies, and
Treasury will begin withholding financial incentives from for servicers that receive an unsatisfactory
grade.
The industry must also move expeditiously to establish a single point of contact for homeowners
seeking assistance from their mortgage company. Too often, homeowners receive contradictory or
conflicting information from their servicer and cannot gain access to someone knowledgeable about
their case. Ensuring a single point of contact for homeowners moving through the modification process
should be key in advancing national servicing standards.
Weve been clear from the beginning: HAMP wasnt intended to prevent every foreclosure. It does not
help with vacation homes, investors with vacant properties or jumbo loans. And it doesnt cover
modifications that homeowners can afford themselves or for modifications that homeowners are unlikely
to afford even with government help.
But for Americans facing financial hardship, and where it makes economic sense to help prevent
foreclosure, HAMP can make all the difference.
Gabe from Springfield, Ohio, is one of those Americans. In 2008, he was laid off from his IT job right
after Christmas, and he struggled to keep up with his mortgage payments while searching for work.
Gabe and his family got a HAMP modification. It lowered their monthly mortgage payment by more than
$400 and gave the family the breathing room they needed to keep their home. HAMP is, Gabe said,
the only way we survived my unemployment.
Americans like Gabe, represent the people who would be hurt the most if HAMP were terminated. They
re the reason were fighting so hard to ensure that this program remains in place.
Those homeowners are also the reason were continuing to work hard to refute misinformation about
HAMP, which those intent on terminating the program are circulating. Some have tried to portray this
critical assistance to homeowners as a waste of money. But HAMP uses taxpayer funds prudently
through a pay-for-success model. And funds cannot be used for any other purpose.
HAMP money is spent only after homeowners complete a trial period and demonstrate that they can
make their modified mortgage payments on time. Eligibility standards help ensure that fewer people
with permanent HAMP modifications have redefaulted than for traditional private-sector modifications.
There is no easy way to repair the deep damage caused by the housing crisis. It will take time and a
sustained, comprehensive effort.
Page 3707 of 3826
But whats clear is that terminating HAMP and denying critical assistance to struggling Americans isnt
the answer. Well continue to fight on behalf of homeowners to make sure that doesnt happen.
Timothy Massad serves as the acting assistant treasury secretary for financial stability.
Back to Top
Wall Street Journal

Regulators Unveil Mortgage-Lending Rules
March 30, 2011
By Nick Timiraos and Victoria McGrane
Federal regulators proposed far-reaching changes to lending rules that eventually could raise the cost
of borrowing for most homeowners, kicking off what is likely to be a furious effort by the housing and
banking industries to soften the proposal.
The Dodd-Frank financial-overhaul law requires banks to hold 5% of the credit risk for mortgages and
other loans that are bundled together and sold off as securities. The idea is that banks and other
issuers of securitized loans will do a better job ensuring the quality of those loans if they are required to
have more "skin in the game."
Lawmakers directed six different regulators to write the proposed rule, and the law also allowed
regulators to exempt certain gold-standard residential mortgages from the risk-retention requirement.
Since the rules are likely to raise costs for lenders, any mortgages satisfying the "qualified residential
mortgage" definition are likely to have lower borrowing costs.
If approved, the proposal would eventually reset what constitutes a prime mortgage as only those to
borrowers who make down payments of at least 20%, with higher equity levels required for refinances.
Page 3708 of 3826
The real-estate industry and consumer-advocate groups already have forged an unlikely alliance to
push for less-restrictive rules. They say the rules could substantially raise borrowing costs, particularly
for first-time home buyers. "You're clearly creating a nation of have and have-nots when it comes to
housing," said Jerry Howard, president of the National Association of Home Builders.
Critics of the rule say relatively few borrowers will be able to obtain the less costly, gold-standard
mortgages. Around 46% of all homeowners with a mortgage had less than 20% equity in their homes at
the end of 2010, according to CoreLogic Inc., a real-estate data firm.
"A rigid 20% down payment requirement is going to unnecessarily prevent the middle-class, first-time
home buyers from getting affordable mortgages," Sen. Kay Hagan (D., N.C.) said in an interview.
Any changes won't be felt immediately because government agencies are exempt. The proposal also
said Fannie Mae and Freddie Mac currently satisfy the risk-retention rules because the firms, which
guarantee 100% of losses to investors on mortgages they securitize, are backed by the U.S.
government. The mortgage giants, together with federal agencies, currently back nine in 10 new loans.
Advocates of a narrow definition of a qualified mortgage, including Wells Fargo & Co., have argued it
would create a more robust and liquid market for loans that fall outside the definition and are subject to
the risk-retention rule. Regulators echoed that view Tuesday. Federal Deposit Insurance Corp.
Chairman Sheila Bair said the rule doesn't mean "all home buyers would have to meet these high
standards to qualify for a mortgage." The exemption, she said, will apply to "a small slice of the market."
While regulators opted for a narrow set of standards to define the "qualified" mortgage, they allowed
greater flexibility for sponsors of securitizations to decide how to retain risk. Critics have said the riskretention rules could fail to ensure better underwriting or have more serious, unintended consequences
for housing markets by raising costs for even qualified borrowers.
"With the way it's drafted, very few loans are going to qualify" as qualified residential mortgages, says
Lewis Ranieri, the pioneer of the home-mortgage-bond market.
One concern is that if the risk-retention rule isn't properly designed, the sponsors of securitizations,
primarily the nation's largest banks, "are going to figure out ways around it, and it's not going to be all
that meaningful," said Mark Zandi, chief economist at Moody's Analytics.
After the draft version is approved by each agency, it will be open to public comment until mid-June.
The FDIC's five-member board voted unanimously Tuesday to approve the draft rule, as did the Federal
Reserve on Monday.
Page 3709 of 3826
Once the comment period ends, the regulators would be able to make changes to it before adopting a
final version.
Separately, U.S. banking regulators proposed Tuesday to require that the nation's largest financial firms
provide a road map to help quickly and cleanly dismantle them in the event of a financial crisis.
The FDIC approved a draft rule requiring the firms to submit to regulators resolution plans, also known
as living wills, with regular updates and reports on the firms' credit exposures. The Federal Reserve,
which co-wrote the rule, is expected to vote on it later this week. The proposal will then be open to
public comment for 60 days, after which regulators will revise it and approve a final rule.
"The ability to plan in advance for the orderly resolution of a systemic entity is key to ending 'too big to
fail,' " Ms. Bair said.
Back to Top
American Banker
Broker Pay Rules Forcing Banks to Play the Bad Cop
March 30, 2011
By Kate Berry
As new restrictions on mortgage broker compensation kick in, lenders are realizing sadly they will
have to police their brokers.
The pay rule has caused so much rancor for other reasons that two broker trade groups were still
hoping for a temporary restraining order to stop the changes from taking effect Friday. (A judge had not
granted the request at a hearing late Tuesday.)
Page 3710 of 3826
But little attention has been paid to the added risks for banks and wholesale lenders of buyback
requests if loans they fund do not comply with the Federal Reserve's new broker pay rules. Banks and
wholesalers face higher compliance and technology costs because they now have to structure and
track broker compensation plans.
"The government has put the onus on us, the lender," said Joe Amoroso, the national sales director at
Real Estate Mortgage Network, Inc. "If the loan was originated and [it] violated compensation laws, then
I'm on the hook for it. We may very well find ourselves in a situation where on every loan we originate,
we have to request the broker compensation package, and where banks may want to know how the
loan officer got paid on that loan."
Kevin Marconi, the chief operating officer at United Fidelity Funding, a wholesale and retail lender in
Kansas City, Mo., said he is making his brokers sign an attestation that they are being paid according to
the new rule.
He wants those assurances because his firm may be required to buy back loans from investors if they
turn out to have been made in violation of the broker pay rules.
"It's all on our shoulders that the compensation was paid properly," Marconi said. For example, the rule
allows brokers to be paid either by the lender or the borrower, but not both. "If there is dual
compensation on a loan, it is technically out of compliance it could be pushed back to us by a
mortgage insurer, Fannie Mae or Freddie Mac."
After months of figuring out how to structure their pay plans, most banks and wholesale lenders have
chosen to let mortgage brokerages pick from a range of options that vary by state or geographic region.
U.S. Bancorp, for example, has told brokers to pick a specific pay plan ranging from 1.25% to 2.5% of
the loan amount at quarter-point increments. Wells Fargo & Co. has five pay plans that vary by state
ranging from 1% to 3% per loan, also in quarter-point increments.
Now instead of brokers receiving a single rate sheet from a lender, each brokerage will pick its
compensation and the lender will issue it one of a variety of rate sheets.
"From a lender standpoint, it becomes more complicated to manage," said Andrew Soss, founder and
branch director of Stewart & Soss Mortgage, a San Jose, Calif., mortgage bank. "From a broker
standpoint, it becomes simpler because you take all the pricing flexibility off your plate."
Page 3711 of 3826
Brokerages likely will pick a monthly or quarterly pay plan, depending on the lender. They also will have
to determine how to compensate individual brokers and loan officers according to the pay plan they
choose. The level of compensation selected by brokers will determine their competitiveness both
with consumers and with recruitment.
The rule will force brokerages to parse the competitive advantage of receiving higher pay on each loan,
which helps them retain good salespeople, or lower interest rates that would allow them to attract more
borrowers and, therefore, volume.
"It's a delicate balance between what you make in profit and the amount you need to pay loan officers
to be competitive," Soss said.
For brokers, the biggest change will involve adjusting to life without receiving a yield spread premium, a
form of hidden compensation paid as a rebate by lenders that the Fed found was confusing to
borrowers and gave brokers a perverse incentive to steer borrowers to more expensive loans.
Some brokers say the rule will unfairly hurt first-time homebuyers and borrowers with dings to their
credit who typically relied on brokers using some of the yield spread premium to fund a loan's closing
costs.
"Ask any broker if they've had to contribute to the buyer's closing costs, and 100% will say they have,"
said John Frangoulis, president of Realty Financial Network Inc., a Walnut Creek, Calif., mortgage
brokerage. "It's the borrowers not served by the big banks, the ones we have to work with to fix their
credit, that will be hurt."
The new pay rule prohibits brokers and loan officers from being paid according to the interest rate or
any term or condition of the loan. It also prohibits brokers from "steering" a consumer to a lender
offering less favorable terms in order to increase the broker's compensation.
Most of the largest lenders have capped the amount a broker can earn at 3% of the loan amount,
because of state laws and provisions of the Dodd-Frank Act that limit compensation on loans deemed
"high cost" to that level, lenders said.
Because of those caps, brokers will likely prefer to be paid by the borrower if the borrower agrees to
do so.
Marconi said he thinks borrowers will end up paying most broker commissions because brokers offer
something the big banks do not: They can close a loan in 30 days or less, a critical issue for borrowers
Page 3712 of 3826
whose deposits on a home are at risk if the loan does not close on time.
"Would you rather buy a pair of shoes from Target or a pair of shoes from Prada?" Marconi said. "They
are both shoes. They will both last the same time and do the job. It is the perceived value, though," that
the borrower is paying for.
Others say borrowers are unwilling to pay thousands of dollars out of pocket at the closing table for a
broker's commission even if it can be financed over the life of the loan.
Matthew Pineda, president of Castle & Cooke Mortgage LLC in Salt Lake City, said high-producing,
high-paid brokers face an immediate pay cut because of the caps on lender-paid compensation.
"The top tier just got squeezed because of compensation reform," Pineda said.
Still, the rule allows brokerages to vary compensation within each broker shop according to the
experience, quality and volume of loans produced, so some brokers may simply get paid bonuses at a
later date, for factors not tied to the terms of a loan such as loan quality or pull-through rates.
The pay rule also provides a safe harbor from the anti-steering provision if brokers give borrowers three
loan offers: a loan with the lowest interest rate for which the consumer qualifies; one with the lowest
points and origination fees; and the lowest rate for a loan with no risky features such as a prepayment
penalty, negative amortization, or a balloon payment in the first seven years.
Matt Ostrander, CEO of Parkside Lending LLC, a San Francisco wholesale lender, said the rule ignores
such important features as "high-touch service" or "faster turn times" that are the strong suit of smaller
mortgage bankers.
"The law creates a situation where the only thing that gives you a safe harbor is price. Customer service
means nothing," Ostrander said. "What this law does in a nutshell is, it basically makes it a lot more
difficult for disadvantaged borrowers to get loans."
Some brokerages may take a safe route by selecting the same pay say 2.5% per loan from every
lender they work with.
Having a one-size-fits-all pay plan will make accounting easier and would ensure that pay "did not have
any influence on the loan product," Amoroso said.
Page 3713 of 3826
He compared the pay change to the Federal Housing Administration's elimination of the "mini-Eagle"
designation for brokers. Instead of the Department of Housing and Urban Development tracking
brokers, now the lenders who fund FHA loans through brokers are responsible for the tracking.
Another consequence of the anti-steering provision is that brokerages may end up doing business with
fewer wholesale lenders. Operationally it may be too cumbersome for banks and wholesalers to
implement, monitor and review so many pay plans.
"There's more technology and more costs, and bigger lenders can absorb that easier than the smaller
guys, which have to purchase new technology to catch up," said Craig Doriot, founder and chief
technology officer of the pricing engine firm LoanSifter Inc. in Appleton, Wis.
Back to Top
American Banker
Will Risk Retention Plan Spark a Credit Crunch?
March 30, 2011
By Donna Borak and Cheyenne Hopkins
WASHINGTON Depending on who you talked to, the risk-retention proposal out Tuesday would
either restore sensible standards to the lending market or result in a significant credit crunch.
Even before the plan was out, regulators were in something of a defensive crouch, emphasizing that an
exception to the new standards for so-called qualifying residential mortgages was narrowly crafted
on purpose and is not designed to capture most mortgages.
"It's important for people to understand that the QRM rule is going to be a small slice of the market,"
Federal Deposit Insurance Corp. Chairman Sheila Bair told reporters. "It doesn't mean everybody is
Page 3714 of 3826
going to have to comply with these standards with a mortgage going forward."
But plenty of others were unconvinced. They argued that the QRM criteria, which would force borrowers
to make a 20% down payment and comply with income, debt and credit history requirements, are so
narrow that the plan would significantly curtail lending. Sen. Kay Hagan, D-N.C., who drafted the riskretention provision in the Dodd-Frank Act, said the plan looked inflexible.
"The 20% down payment looks to me as to be too rigid and it would unnecessarily prevent the middleclass, first-time homebuyers from being able to get an affordable mortgage," Hagan said in an interview.
Analysts agreed. While regulators may not be intending to set national underwriting standards, analysts
said, the QRM effectively does so and would prevent many borrowers from getting a loan.
"Fundamentally with a 20% down payment unless you're rich, have a high income or have rich parents,
it's going to be a major hurdle," said Brian Chappelle, a partner at the Washington consulting firm
Potomac Partners. "We haven't gotten a housing recovery in place yet. By imposing these additional
restrictions, I think it actually creates more risk for the government."
Industry representatives said there would be dire consequences if the risk-retention plan is not changed
before it is finalized.
"This rule potentially has a disastrous impact on the market," said Robert Davis, executive vice
president of government relations for the American Bankers Association. "This will require risk retention
for a large percentage of mortgages. I've already had email replies from bankers about how much this
will curtail their lending if this goes into effect."
The plan was drafted by several regulators, including the FDIC, the Office of the Comptroller of the
Currency and the Federal Reserve Board. It would force lenders to retain 5% of the credit risk of loans
they securitize, but the government-sponsored enterprises would be considered already in compliance
because they retain all of the credit risk.
That did not sit well with some lawmakers, who argued the GSEs were getting an inappropriate
exemption at the expense of the government. "Basically what you are saying is if this was a private
institution doing this, if it was a bank, if you were a securitizer you would be required to have some
capital behind it," said Rep. Scott Garrett, R-N.J., the chairman of the House subcommittee with
oversight of the GSEs. "Where is the actual capital that would be behind this? Right now it is just the
good faith and credit of the United States."
Regulators have pledged to revisit the issue once the GSEs are out of conservatorship.
Page 3715 of 3826
While the risk-retention plan exempted certain asset classes, like well-underwritten auto loans, from the
proposal, the QRM received most of the attention, with many industry groups calling for an expanded
set of criteria.
"The proposed QRM definition is so narrow that there will be very limited or any opportunity for
securitizers to meet that definition particularly since the GSEs have an exemption and it's expected that
most of the loans they will be originating will be in the QRM space," said Tom Deutsch, executive
director of the American Securitization Forum.
The Securities Industry and Financial Markets Association said it was critical that market analysis be
undertaken of the proposal.
"The QRM definition appears to be narrowly crafted," Richard Dorfman, managing director and head of
SIFMA's Securitization Group, said in a statement. "A market impact analysis of this QRM proposal is
imperative, including consideration of proposed servicing standards and how the QRM definition aligns
over the long term with the conforming loan market that is eligible for the GSEs, and will be another
focus of SIFMA's comments on this proposed rule."
Though the National Association of Realtors said regulators had gone too far, the agencies did leave
options on the table to expand QRM. Under one, there they could create a second class of loans that
would require some risk retention, but not the full 5%. Under another option, regulators could
significantly expand QRM criteria but require more risk retention for any loan outside of that status.
Speaking with reporters after an FDIC meeting, Bair acknowledged that some would want to expand the
QRM definition.
"I respect their viewpoint," Bair said. "But it's the exception, not the rule. I think it's appropriate to keep it
narrow."
She was backed by Acting Comptroller of the Currency John Walsh, who said QRM was meant to be
narrow. "While the rule is drafted to provide flexibility, it is important to bear in mind that its purpose to is
to implement a risk-retention requirement," Walsh said. "Because risk retention is the rule's focus, any
exemption from risk retention is intended to be narrow, and include only loans of high credit quality. This
balance is important. Expanding exemptions too broadly could cause credit availability outside the
exempt category to evaporate." But it appeared not all regulators were on the same footing. John
Bowman, acting director of the Office of Thrift Supervision, said he hoped the QRM would serve more
as a model for the industry.
Page 3716 of 3826
"I would hope that the provisions of QRM and other possible exemption levels that could come out of
this regulation and its further iterations would serve not as a limit but would serve as an impetus to
encourage the availability of credit in the market going forward," Bowman said.
Analysts were quick to note that the proposal was only the first step in a long process. Comments are
expected due back June 10.
"We also caution that this is the start of the fight and not the final battle," Jaret Seiberg, an analyst for
MF Global Inc.'s Washington Research Group, wrote in a note to analysts. "We expect industry to
pressure the Department of Housing and Urban Development, the administration and the rest of the
regulators to further moderate the proposal to lessen the potential impact on housing finance."
Back to Top
Page 3717 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:
Williams, Anya (CFPB)

(fydibohf23spdlt)/cn=recipients/cn=williamsany>
_DL_CFPB_AllHands
RE: Conference Room Requests

Tue Mar 29 2011 13:41:58 EDT
All,
Due to our space issues OFS has been assisting with providing conference rooms to CFPB Members.
Our requests has been on extremely short notice and as a result is consuming more than half of their
work day. Effective immediately, OFS will process our request within 1 business day. Anya Williams
and Kevin Tucker will continue being the POCs for these requests. The following information must be
included in all requests:
1.
Number of People
2.
Meeting Time
3.
Meeting Date
4.
Meeting POC Name/Phone Number
5.
Type of technology needed

(202) 435 - 7276
Page 3726 of 3826
From:

_DL_CFPB_AllHands
Adamske, Steven
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Tue Mar 29 2011 13:15:44 EDT
Index

The Hill (blog) GOP bill amending new consumer bureau gets key endorsement
New York Post Hostile chamber
The Hill (blog) Chamber watching Dodd-Frank for emerging problems
Page 3727 of 3826
Associated Press Is credit card debt protection worth paying for?
CBS MoneyWatch Tab for Enforcing Financial Reform: $2.9 Billion
Forbes (blog) Broken Windows, Libya And The Constitution
Huffington Post Big Banks Save Billions As Homeowners Suffer, Internal Federal Report By
CFPB Finds
Politico Morning Money Talker: CFPB Role Questioned
Bloomberg Bank Mortgage Shortcuts Dodged $20 Billion in Costs, CFPB Says
Wall Street Journal Banks Offer Own Mortgage-Servicing Plan
Falkenblog CFPB to Start Big
Consumer Credit
American Banker Banks Need to Return to Fundamentals to Rebuild Their Image
American Banker SunTrust to End Most Debit Rewards
Wall Street Journal Minnesota AG: Encore Capital Robo-Signed Affidavits in Debt Collection
Housing
Bloomberg BofA Board Sued by Holders Over Mortgage Recording Paperwork
Housing Wire Bank of America set to write down principal on California mortgages
American Banker Cheat Sheet: Details of Regulators Plan for Risk Retention, QRMs
American Banker Will GSE Reform Kill the 30-Year Fixed-Rate Mortgage?
The Hill (blog) Dem lawmakers: Fix HAMP, dont kill it
Bloomberg U.S. Treasury to Grade Mortgage Servicers on Loan Modifications
NPR Mortgage Brokers Decry Loan Payment Reforms
Housing Wire Electronic mortgages: There is a way, but not enough will, tech panel finds
Housing Wire Dreamed up cash for keys proposal draws heavy criticism
Page 3728 of 3826
Huffington Post
Big Banks Save Billions As Homeowners Suffer, Internal Federal Report By CFPB Finds
March 28, 2011
NEW YORK -- The nation's five largest mortgage firms have saved more than $20 billion since the
housing crisis began in 2007 by taking shortcuts in processing troubled borrowers' home loans,
according to a confidential presentation prepared for state attorneys general by the nascent consumer
bureau inside the Treasury Department.
That estimate suggests large banks have reaped tremendous benefits from under-serving distressed
homeowners, a complaint frequent enough among borrowers that federal regulators have begun to
acknowledge the industry's fundamental shortcomings.
The dollar figure also provides a basis for regulators' internal discussions regarding how best to
penalize Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial in a settlement
of wide-ranging allegations of wrongful and occasionally illegal foreclosures. People involved in the
talks say some regulators want to levy a $5 billion penalty on the five firms, while others seek as much
as $30 billion, with most of the money going toward reducing troubled homeowners' mortgage
payments and lowering loan balances for underwater borrowers, those who owe more on their home
than it's worth.
Even the highest of those figures, however, pales in comparison to the likely cost of reducing mortgage
principal for the three million homeowners some federal agencies hope to reach. Lowering loan
balances for that many underwater borrowers who owe less than $1.15 for every dollar their home is
worth would cost as much as $135 billion, according to the internal presentation, dated Feb. 14,
obtained by The Huffington Post.
But perhaps most important to some lawmakers in Washington, the mere existence of the report
suggests a much deeper link between the Bureau of Consumer Financial Protection, led by Harvard
professor Elizabeth Warren, and the 50 state attorneys general who are leading the nationwide probe
into the five firms' improper foreclosure practices, a development sure to anger Republicans in
Congress and a banking industry intent on diminishing the fledgling CFPB's legitimacy by questioning
its authority to act before it's officially launched in July.
Earlier this month, Warren told the House Financial Services Committee, under intense questioning,
Page 3729 of 3826
that her agency has provided limited assistance to the various state and federal agencies involved in
the industry probes. At one point, she was asked whether she made any recommendations regarding
proposed penalties. She replied that her agency has only provided "advice."
A representative of the consumer agency declined to comment on the presentation, citing the law
enforcement nature of the federal investigation into the mortgage industry's leading firms.
The seven-page presentation begins by stating that a deal to settle claims of improper foreclosures
"provides the potential for broad reform."
In it, the consumer agency outlines possibilities offered by the settlement -- a minimum number of
mortgage modifications, a boost to the housing market -- and how it could reform the industry going
forward so that investors in home loans and the borrowers who owe them would be able to resolve
situations in which borrowers fall behind on their payments without the complications of a large
mortgage company acting in its own interest.
The presentation also details how much certain firms likely saved in lieu of making the necessary loanprocessing adjustments as delinquencies and foreclosures rose. Bank of America, for example, has
saved more than $6 billion since 2007 by not upgrading its procedures or hiring more workers,
according to the report. Wells Fargo saved about as much, with JPMorgan close behind. Citigroup and
Ally bring the total saved to nearly $25 billion.
The presentation adds that the under-investment far exceeds the proposed $5 billion penalty that has
been on the table. People familiar with the matter say the Office of the Comptroller of the Currency
wants to fine the industry less than $5 billion.
The alleged shortchanging of homeowners has prolonged the housing market's woes, experts say,
because distressed homeowners who are prime candidates to have their payments reduced aren't
getting loan modifications and lenders are taking up to two years to seize borrowers' homes.
The average borrower in foreclosure has been delinquent for 537 days before actually being evicted, up
from 319 days in January 2009, according to Lender Processing Services, a data provider.
The prolonged housing pain has manifested itself in various ways.
Purchases of new U.S. homes dropped last month to the slowest pace on record, according to the
Commerce Department. Prices declined to the lowest level since 2003, according to the National
Association of Realtors. About 6.9 million homeowners were either delinquent or in foreclosure
Page 3730 of 3826
proceedings through February, according to LPS.
A penalty of about $25 billion -- based on mortgage servicing costs avoided -- would have "little effect"
on the five firms' capital levels, according to the presentation, since the five banks collectively hold
about $500 billion in tangible common equity, the highest form of capital. Those numbers
notwithstanding, banks and Republicans in Congress have complained that such a large penalty would
have a disproportionate impact on bank balance sheets, hurting their ability to lend or pay dividends to
investors.
The presentation adds that given the extent of negative equity -- underwater homeowners owe $751
billion more than their homes are worth, according to data provider CoreLogic -- "we have gravitated
towards settlement solutions that enable asset liquidity and cast a wide net." The solution is an
emphasis on reducing mortgage debt and enabling short sales, thus allowing borrowers to refinance
into more affordable loans or to sell their homes and move on.
Top Federal Reserve officials and other economists have pointed to the large numbers of underwater
homeowners as being one of the reasons behind high unemployment, as underwater homeowners are
unable to move to where the jobs are. More than 23 percent of homeowners with a mortgage are
underwater, according to CoreLogic.
The proposed settlement, as envisioned by the consumer agency, could reduce loan balances for up to
three million homeowners. If mortgage firms targeted their efforts at reducing mortgage debt for three
million homeowners who owe as much as their homes are worth or have less than 5 percent equity, the
total cost would be $41.8 billion, according to estimates cited in the presentation.
If firms lowered total mortgage debt for three million homeowners who are underwater by as much as
15 percent and brought them to 5 percent equity, that would cost more than $135 billion, according to
the presentation. That would include reducing second mortgages and home equity lines of credit.
In its presentation, the consumer agency said the new program, titled "Principal Reduction Mandate,"
could be "meaningfully additive to HAMP" -- the Home Affordable Modification Program, the Obama
administration's primary mortgage modification effort.
The CFPB estimates that there are about 12 million U.S. homeowners underwater, most of whom are
not delinquent, according to its presentation. Of those, nine million would be eligible for this new
principal-reduction scheme born from the foreclosure deal. The new initiative would then "mandate"
three million permanent modifications.
News of the level of the consumer agency's involvement in the state investigation would likely be
welcomed by consumer and homeowner advocates, who have long complained of the lack of attention
Page 3731 of 3826
paid to distressed borrowers by federal bank regulators like the OCC and the Federal Reserve.
But Republicans will pounce on the news, creating yet another distraction for a fledgling bureau that
was the centerpiece of the Obama administration's efforts to reform the financial industry in the wake of
the worst economic crisis since the Great Depression.
Meanwhile, the banking industry will likely celebrate government infighting as attention is diverted away
from allegations of bank wrongdoing and towards the level of involvement of Elizabeth Warren, a fierce
consumer advocate and the principal original proponent of an agency solely dedicated to protecting
borrowers from abusive lenders.
Warren is standing up the agency on an interim basis. It formally launches in July, at which point it will
need a Senate-confirmed director in order to carry out its full authority. One of those areas will be how
mortgage firms process home loans for distressed borrowers.
A spokeswoman for JPMorgan Chase declined to comment. Spokespeople for the other four banks
were not immediately available for comment.
Back to Top

Talker: CFPB Role Questioned
March 29, 2011
By Ben White
TALKER: CFPB ROLE QUESTIONED - HuffPos Shahien Nasiripour scored a copy of a CFPB
presentation made as part of the agencys efforts to help state AGs negotiate a $20 billion-plus
settlement of mortgage servicer probes: [T]the mere existence of the report suggests a much deeper
link between the [CFPB], led by ... Elizabeth Warren, and the 50 state attorneys general ... a
development sure to anger Republicans in Congress and a banking industry intent on diminishing the
fledgling CFPB's legitimacy by questioning its authority to act before it's officially launched in July. http:
Page 3732 of 3826
//huff.to/fBFxh1
RAPID REACT - An attorney close to the process emails M.M. that the HuffPo piece is likely to
generate intense anger on the Hill where Warren minimized her role .... and probably [cause] some
raised eyebrows in the banks, who will question the rigor of Warren's analysis which converts a $5
billion dollar settlement into a $20 billion dollar opportunity for broad reform. The five largest mortgage
lenders (JP, Citi, Wells, BofA and Ally) and federal and state regulators are set to meet Wednesday to
discuss a possible settlement and this is likely to be a hot topic.
Back to Top
Bloomberg
Bank Mortgage Shortcuts Dodged $20 Billion in Costs, CFPB Says
March 29, 2011
By Carter Dougherty
Bank of America Corp. (BAC) and Wells Fargo & Co. (WFC) led U.S. mortgage servicers that may have
jointly avoided more than $20 billion in costs since 2007 by cutting corners on collections and
foreclosures, confidential estimates by the Consumer Financial Protection Bureau show.
The bureau provided the analysis in a seven-page Feb. 14 presentation to state attorneys general led
by Iowas Tom Miller, who are pressing banks to accept billions of dollars in fines and concessions,
including principal reductions on home loans, after a probe of foreclosure practices. A $5 billion penalty
would be too low, and banks can afford more, the agency found.
Rough estimates suggest that the largest servicers may have saved more than $20 billion through
under-investment in proper servicing during the crisis, the bureau wrote in the document. A penalty
based on servicing costs avoided would have little effect on Tier 1 capital ratios, a measure of financial
strength, it said.
JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C), both based in New York, are also among banks
Page 3733 of 3826
listed as saving the most money. The estimate, spanning the period from 2007 to Sept. 30 last year,
assumes that effective special servicing of delinquent mortgages would have boosted firms costs 75
basis points annually. A basis point is one-hundredth of a percentage point.
In talks on a mortgage servicing settlement, regulators and state attorneys general in February floated a
possible $20 billion to $25 billion penalty for banks, according to two people briefed on the talks.
Bank Resistance
Banks are resisting the penalties on grounds that federal agencies havent found widespread examples
of unjustified home seizures. John Walsh, acting Comptroller of the Currency, told lawmakers last
month that his agencys investigation had found only a small number of wrongful foreclosures.
The presentation, with seven slides, was published on the Huffington Posts website yesterday after
business hours in Washington. Its authenticity was confirmed to Bloomberg News by a person with
knowledge of the discussions.
A bar chart in the presentation shows that Bank of America, based in Charlotte, North Carolina, and
San Francisco-based Wells Fargo may have each avoided about $7 billion in costs. The graphic doesnt
specify the exact amounts. JPMorgan saved about $5 billion, while Citigroup and Detroit-based Ally
Financial Inc. saved about half of that, it shows.
Spokesmen for Citigroup, Bank of America and Ally declined to comment. JPMorgan spokeswoman
Kristin Lemkau wasnt immediately available.
Wells Fargo
Teri Schrettenbrunner, a spokeswoman for Wells Fargo, said the bank has incurred various costs to
keep people in their homes, including hiring and training more than 10,000 home preservation staff for
a total of 16,000.
Without seeing the CFPBs analysis, we dont know if the agency has considered all of the costs
involved in our home retention efforts, Schrettenbrunner said in an e-mail.
Miller, a Democrat, is negotiating with the biggest servicers and key federal regulators. Federal
agencies and state attorneys general on March 3 delivered a 27-page settlement proposal that would
set standards for how companies would service loans and conduct foreclosures. That document didnt
include any estimates of potential penalties.
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In a March 9 letter to Treasury Secretary Timothy F. Geithner, Representative Scott Garrett, a New
Jersey Republican who is chairman of a Financial Services subcommittee, criticized the role of the
consumer bureau in the settlement talks, singling out Elizabeth Warren, the Treasury and White House
adviser charged with setting up the agency.
Bank of America, JPMorgan, Wells Fargo, Citigroup and Ally submitted a 15-page proposal to
government officials with their ideas on how to settle allegations of abuses in the mortgage- servicing
business, the Wall Street Journal reported today. The proposal includes time lines for processing
modifications, third-party reviews of foreclosures and a single point of contact for borrowers having
difficulty repaying their loans, the newspaper said.
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Wall Street Journal

Banks Offer Own Mortgage-Servicing Plan
March 29, 2011
By Dan Fitzpatrick
Five of the nation's largest banks sent government officials a proposal Monday that outlines a set of
mortgage-servicing standards they would abide by as part of a settlement of abuses in the industry.
The document, reviewed by The Wall Street Journal, is a response to a 27-page term sheet banks
received earlier this month from state attorneys general that would require the servicers to consider
reducing principal for troubled borrowers. The 15-page bank proposal, dubbed the Draft Alternative
Uniform Servicing Standards, includes time lines for processing modifications, a third-party review of
foreclosures and a single point of contact for financially troubled borrowers. It also outlines a so-called
"borrower portal" that would allow customers to check the status of their loan modifications online.
But the document doesn't include any discussion of principal reductions. Nor does it include a potential
amount banks could pay for borrower relief or penalties. Government officials have discussed a
settlement sum of more than $20 billion.
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Those sensitive topics are expected to be discussed at a meeting in Washington D.C. on Wednesday,
the first faceoff over a proposed resolution of a nationwide investigation of mortgage-servicing
practices.
Representatives from Bank of America Corp. J.P. Morgan Chase & Co., Wells Fargo & Co., Citigroup
Inc. and Ally Financial Inc.'s GMAC unit are all expected to attend, according to people familiar with the
situation. The state attorneys general, the U.S. Department of Justice and the Department of Housing
and Urban Development are among those expected to be there from the government side.
Eleven federal agencies and the 50 state attorneys general have been trying to determine the
appropriate penalties for mortgage-servicing abuses uncovered after the foreclosure-paperwork
controversy erupted in the fall. Officials have been weighing a range of ways banks could pay those
penalties by targeting those sums toward the housing recovery, including by writing down loan balances
on first- or second-lien mortgages. Banks have predicted lasting damage to the U.S. economy if broadbased principal reductions are required.
Back to Top

GOP bill amending new consumer bureau gets key endorsement
March 28, 2011
By Peter Schroeder
A group of community banks has endorsed legislation that would give Republicans a leadership role at
the new Consumer Financial Protection Bureau.
House Financial Services Committee Chairman Spencer Bachus (R-Ala.) announced Monday that his
proposal to replace the CFPBs director with a five-member commission has the backing of the
Independent Community Bankers of America (ICBA).
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Bachus's bill would ensure that Republicans have a seat at the table at the CFPB, as it stipulates that
no more than three members of the commission can come from the same political party. Each
commission member would be appointed by the president and confirmed by the Senate.
Running the CFPB via a five-member commission would "allow for a variety of views on issues before
the bureau and thus build in a system of checks and balances that a single director form of governance
simply can't do," said ICBA President Camden Fine in a March 24 letter sent to Bachus.
Bachus and Rep. Shelley Moore Capito (R-W.Va.) introduced the legislation earlier this month.
The endorsement from community banks could provide key support for the measure. Lawmakers and
regulators have in recent months tried to assuage concerns that the implementation of the Wall Street
reform bill, which created the CFPB, will hurt small banks.
In a speech on March 23, Federal Reserve Chairman Ben Bernanke hailed community banks as
integral to the economic recovery and assured they would enjoy a "more level playing field" once DoddFrank was in place, arguing the law primarily targets the largest financial institutions.
Bachus said his bill would protect small banks.
"A balanced, bipartisan commission will protect consumers without giving such incredible power to just
one unelected person in Washington, as the Dodd-Frank Act does, Bachus said.
Republicans have criticized the leadership situation at the CFPB, which does not technically begin work
until July.
When presidential assistant and CFPB architect Elizabeth Warren appeared before Bachus's committee
on March 16, she faced fierce criticism from GOP members who argued she was acting as the de facto
head of the organization without being nominated or confirmed to the position.
Warren defended her role, saying she works as an adviser to the president and to the Treasury
secretary, not as director of the agency.
When Bachus unveiled his bill on the same day of Warrens testimony, he warned that the CFPB "might
be the most powerful agency ever created."
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New York Post

Hostile chamber
March 29, 2011
By Mark DeCambre
Give the consumer watchdog teeth!
That's one of the key points gutsy consumer watchdog Elizabeth Warren is expected to voice when she
appears before a potentially unfriendly crowd tomorrow at the US Chamber of Commerce -- and battles
two of her toughest critics.
The brainy Harvard professor, battling back after a few tough weeks, which included reprimands from
lawmakers and bankers over her role in trying to hammer out a deal on toxic mortgages, is scheduled to
speak in front of the anti-regulation Chamber for the first time -- and will find herself sandwiched
between two of the staunchest critics of the new Consumer Financial Protection Bureau she's been
charged with getting off the ground.
House Financial Services Chairman Spencer Bachus (R-AL) is expected to serve as the opening act in
the Chamber's fifth annual summit, entitled "Ensuring Competitiveness in a Post-Regulatory Reform
Environment."
Headlining the event is JPMorgan Chase CEO Jamie Dimon, perhaps Wall Street's most outspoken
critic of the CFPB.
When all is said and done, the summit will be more than words from a dais. Banks claim overregulation,
from the CFPB and other agencies, will ramp up costs -- everything from credit and debit cards to
mortgages and checking accounts.
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Warren says regulation will bring clarity to financial services. Although Warren won't be speaking at the
same time as Bachus or Dimon, the summit will give the tenured Ivy League intellectual a chance to
make her strongest case yet in support of the new agency that she helped birth.
Sources also say that Warren, 61, is expected to aggressively petition for a CFPB that isn't watered
down and has enough funding to give its regulatory and enforcement functions bite.
She'll be talking to a tough crowd -- the US Chamber has made financial regulatory rollbacks one of its
top priorities.
Bachus recently introduced a bill that could potentially dilute the power of the consumer agency and
convert its leadership from a single person, something Warren favors, to a five-member panel.
Dimon, 55, isn't expected to talk about the CFPB directly but has been openly critical of the agency. The
JPMorgan CEO is a proponent of beefing up consumer safeties but views Warren's CFPB as largely
overkill given the number of regulators already focused on mortgages and credit cards.
"If we had had this agency six years ago, eight years ago, we would not be in the mess we are today,"
Warren told a Republican-controlled House two weeks ago.
The Washington face-off between the consumer watchdog and her detractors comes during a week that
promises to bring a regulatory sea change to the banking industry.
Today, the Federal Deposit Insurance Corp. releases for comment details of new rules that would
require financial institutions to keep more of the riskiest mortgage assets on their own balance sheets in
order to mitigate the spread of toxic loans.
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Page 3739 of 3826

Chamber watching Dodd-Frank for emerging problems
March 28, 2011
By Peter Schroeder
The U.S. Chamber of Commerce is promising to keep a close eye on the implementation of Dodd-Frank
financial reform law.
Officials with the business lobby said Monday they are worried that as the sweeping Wall Street reform
law is put into action by various regulators, the new rules will arbitrarily benefit and harm various
companies.
"The great danger is that as we move from the architecture stage ... once regulators start building the
house, that will start creating winners and losers," said David Hirschmann, president and chief
executive officer of the chamber's Center for Capital Markets Competitiveness. "The goal should be
having the best regulatory structure without picking winners and losers."
He made clear the Chamber will not hesitate to call on Congress to make legislative fixes to emerging
problems in Dodd-Frank, as well as additional reforms that went unaddressed in the first pass over Wall
Street.
"A lot of the existing problems were simply unaddressed by Dodd-Frank, and some new problems were
created," he said.
Specifically, he said there needs to be a strong, workable exemption for so-called "end users" of swaps
-- non-financial entities that use derivatives to hedge against risk to their business -- and criticized
another provision that enables regulators to hear from company whistleblowers, saying it would
"undermine internal compliance programs at companies."
"We might have a situation where the goal here is to maximize the reward to the whistleblower rather
than to really address the underlying problem," he said.
Hirschmann's comments come two days before the chamber hosts its Capital Markets Summit, where
the business group will hear from Dodd-Frank bigwigs including Elizabeth Warren, the architect of the
new Consumer Financial Protection Bureau and Rep. Spencer Bachus (R-Ala.), the chairman of the
Page 3740 of 3826
House Financial Services Committee.
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Associated Press
Is credit card debt protection worth paying for?
March 29, 2011
It's a credit card service that might catch your eye. If you lose your job or fall into other financial
hardship, you can cancel or defer payments in exchange for a monthly fee. But a new government
report finds that consumers pay high fees for these "debt protection" services while reaping limited
benefits.
How It Works
At Bank of America, for example, cardholders who want to enroll in debt protection pay a monthly fee of
95 cents for every $100 of their balance.
Customers can cancel payments under certain circumstances, including involuntary job loss,
hospitalization and the arrival of a new baby. The number of cancellations permitted varies depending
on the situation. For example, cardholders can cancel up to 18 payments if they're laid off.
Only the minimum payment due for that month is waived.
The Details
A report from the Government Accountability Office found that the top nine card issuers collected $2.4
billion in fees for debt protection products in 2009, but paid out just $518 million.
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That gap allowed banks to pocket $1.3 billion in pretax earnings. Banks told the GAO that debt
protection can generate more profits because there are no price controls.
The GAO acknowledged that the products can help consumers during times of financial distress. But it
said consumers often fail to understand how much they are paying or how much coverage they enjoy.
Background
Credit card issuers have stepped up marketing of debt protection in recent years through recorded
messages on customer-service hotlines, direct mail, email and telemarketing.
In a response to the report, the newly created Consumer Financial Protection Bureau said it will explore
ways to improve disclosures about the costs and benefits of the service.
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CBS MoneyWatch
Tab for Enforcing Financial Reform: $2.9 Billion
March 29, 2011
By Carla Fried
The 11 federal agencies tasked with enforcing the financial reforms laid out in last years mega DoddFrank legislation are expected to run up a $2.9 billion tab in the first five years to cover the cost of their
increased policing efforts. The bill for year one alone is estimated to be nearly $1 billion, according to a
new report from the General Accountability Office. A big slice of that cost is to cover hiring more than
2,600 additional oversight staff across the agencies, with the newly created Consumer Finance
Protection Bureau (CFPB) accounting for nearly half of the new hires.
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That hefty price tag is sure to be quite the talking point tomorrow when the oversight subcommittee of
the House Financial Services Committee is scheduled to convene a hearing on the cost of Wall Street
reform. House Republicans have been angling to scale back, if not outright get rid of much of DoddFrank, and it was Republicans on the Financial Services committee that asked GAO to prep the report
in advance of the cost hearing.
Close to three billion dollars is indeed a serious chunk of change. Many critics of Dodd-Frank point out
that the final watered-down version of the bill lacks teeth that would have prevented the last crisis.
Moreover, theres a pretty sound argument that the fix neednt require piling on more regulations when
a big part of what went wrong is that existing regulations already on the books werent enforced.
Still, I look at $2.9 billion as a pretty good deal if it in fact steps up Washingtons oversight game. I
realize thats a pretty big if given Washingtons recent track record at policing the financial services
industry. But Im going to stick with the notion that this is an area where doing something flaws and
all is better than doing nothing. And the creation of the CFPB is a definite win for consumers, if it in
fact is ever given the ability to operate as the law intended.
Some points to consider as the $2.9 billion price tag for implementing Dodd-Frank is sure to get plenty
of air and blog time in the coming days:
Its not all coming directly out of taxpayers pockets. Only three of the 11 agencies with DoddFrank oversight get their funding directly from Congressional appropriations. The others rely on money
they collect from the businesses they oversee, or from revenues they collect. But thats not to say were
off the hook here
Well probably pay for it nonetheless. We have to look no further than the recent push by banks to
get rid of free checking and ramp up fees to offset revenues they lost as a result of 2009s consumer
friendly credit card reform. When banks take a hit to their revenues, its the customers who pay. Thats
just the nature of the beast. But if at the same time, the existence of Dodd-Frank means theres a more
robust police force in D.C. stepping up the oversight, there is at least a potential benefit to those costs.
Isnt consumer protection worth $2.9 billion all by itself? Disagree? The comments section below
is open. Have at it. But the way I see it, the fact that the financial industry through the bidding of
some House Republicans is borderline apoplectic about Elizabeth Warren and the creation of the
CFPB is a signal that she and the bureau are on to something very worthwhile. Nobody makes a fuss
over nothing. You make a fuss when you feel threatened. And the prospect of the CFPB policing the
financial services industry in the name of the consumer is a very big threat to the financial sector. Good.
If the existence of a consumer watchdog and assuming said dog is given a long enough leash to be
effective means more transparency that pushes both the financial services industry and consumers
to make wiser choices, well all have gotten our moneys worth out of the $2.9 billion investment.
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Page 3743 of 3826
Forbes (Community of Liberty blog)

Broken Windows, Libya And The Constitution
March 28, 2011
By Charles Kadlec
This is about the Constitution.
Thats how Congressman Dennis Kucinich (D- Ohio) explained his opposition to President Barack
Obamas commitment of U.S. military strikes against Libya last week in an interview with Bill OReilly.
The President has to have Congressional approval (to attack another country), and he didnt ask for it.
Welcome, Congressman Kucinich, to America, 2011.
Why are you surprised by the presidents disdain for the Constitution and the Congress? After all, you
and your colleagues in the Democratic Party have aided and abetted his administrations grab for power
with a similar disdain for the American people and the rule of law, and with a similar disregard for the
constitutional limits placed on the federal government.
When ordinary Americans appeared at town hall meetings in August 2009 to protest passage of what
became the Patient Protection and Affordable Care Act, better known as ObamaCare, they were
treated with disrespect. When 800,000 people gathered on the Washington Mall to protest this
legislation, the leadership of the Democratic Party dismissed them as astro-turf, and belittled their
concerns by labeling them racist.
When in a special election following the death of Sen. Edward Kennedy the people of Massachusetts
that bastion of support for your partyvoted to send a Republican to the Senate who promised to block
passage of the bill by being the 41st vote to sustain a filibuster, your party used parliamentary tricks
and short-cuts to pass a highly partisan, 2,700 page law that few, if any, Congressmen or Senators had
read, far less understood.
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Instead of listening to the American people and respecting legislative procedures and the Constitution,
you and your fellow Democrats voted to massively expand the governments power over the lives of the
American people, including a mandate that individuals purchase a commercial product as a condition of
being a lawful resident.
Although other examples do not rise to the levels of ObamaCare and Libya, they are analogous to
tolerating broken windows and petty crimes that bred general disrespect for the law and a breakdown
of order in our cities. Members of your party in the Senate hardly objected when President Obama last
July circumvented the constitutional checks and balances of the confirmation process by making a
recess appointment of Donald Berwick as the new head of the all powerful Centers for Medicare and
Medicaid Services. As you may recall, Berwicks appointment faced bi-partisan opposition given his
controversial support for the rationing of health care by government edict.
In an even more blatant disregard for the checks and balances guaranteed by the Constitution,
President Obama last summer put the controversial Elizabeth Warren in charge of the new Bureau of
Consumer Financial Protection (CFPB) without submitting her name to the Senate for confirmation as
required by the just passed Dodd-Frank Bill. Instead, he named her an Assistant to the President and
Treasury Secretary Timothy Geithner appointed her Special Advisor with responsibility for overseeing
the development of the CFPB.
The bureaus website makes clear what everyone knows: Warren is the Bureaus de facto director. The
president simply ignored the law.
And what have you or your colleagues over in the Senate done? Nothing.
Of course, you are not a member of the Senate. But, Congressman, you and your colleagues in the
House continue to abide the specific absence of Congressional authority over the CFPB budget, a
bureaucracy that will be funded by the Federal Reserve and spend up to $200 million a year. Doesnt
this lack of Congressional oversight raise constitutional issues too?
In the first two years of the Obama administration, Democrats used their overwhelming majorities in the
House and Senate to pass laws that grant government employees vast new discretionary power over
the lives and fortunes of individual Americans. We have seen the Secretary of Health and Human
Services, at her discretion, exempt more than 1,000 entities and an entire state from complying with the
requirements of ObamaCare. Under the Dodd-Frank Bill, a panel of elite public servants now has the
authority to seize any bank or other company they feel poses a systemic risk to the economy. Once
seized, the chairman of the Federal Deposit Insurance Corp. (FDIC) has the power to decide which
creditors get paid, and which do not, regardless of their rights in a normal bankruptcy proceeding. And
neither the seizure nor the dispensation of assets is subject to judicial review.
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Do you not see investing such powers in individuals replaces the rule of law with the arbitrary rule of
men and women?
Ever since the Great Depression, the current and former members of Congress on both sides of the
aisle have bent and stretched the meaning of the Constitution in the name of the greater good or
national security or the children or the poor until all sense of a government with limited and
enumerated powers has disappeared. You and your colleagues think nothing unusual about telling the
American people that they must use fluorescent light bulbs, which produce hazardous waste; burn cornbased ethanol in their cars, which even Al Gore now admits degrades the environment, raises food
prices and does nothing to reduce oil imports; and require appliance manufacturers to produce wash
machines that do not clean clothes in order to comply with arbitrary energy efficiency standards.
Why are you surprised that the president ignores the Constitution when the Congress has itself become
a source of lawlessness and is incapable of restoring balance to the governments budget, or providing
the American people a currency with stable and enduring value.
I applaud your decision to forcefully object when the president arguably has exceeded his authority
under the Constitution. But, the shattered glass of the Constitution lies at your feet, undercutting the
once solid ground it provided for standing against the abuse of power by the powerful.
To restore this documents ability to restrain the Executive Branch, you must also accept and defend
the limits it imposes on you and your colleagues in the Legislative Branch.
You could start by taking a principled stand against ObamaCare, by opposing the operation of the
CFSB as a rogue agency not answerable to the Congress, and by objecting publically to the systematic
refusal of President Obama to comply with the law by not submitting his nominees to the Senate for
confirmation.
These actions, too, are about the Constitution and securing our unalienable rights to life, liberty and the
pursuit of happiness.
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Falkenblog
CFPB to Start Big
March 28, 2011
By Eric Falkenstein
A months-long internal investigation of 500 loan files by the Federal Reserve found no wrongful
foreclosures, members of the Fed's Consumer Advisory Council said earlier this month. Zero out of 500.
The Fed's report defined "wrongful foreclosures" as repossessions of borrowers' homes who were not
significantly behind on their payments. But consumer advocates stated that didn't matter, because "That
homeowners were not delinquent has never been our contention," said Rashmi Rangan, a member of
the panel and the executive director of the Delaware Community Reinvestment Action Council. "Our
contention is that many of these foreclosures were avoidable."
In other words, they could have written down the loan and kept the delinquent borrower in their homes.
Heck, why require anyone to pay back their debts, just think of the Keynesian stimulus!
A new regulator, meanwhile, is not encumbered with lots of banking experts. The CFPB, Elizabeth
Warren's new financial regulator, is excited to make a bang in home lending. A power point leaked to
the HuffPost shows that the CFPA notes banks saved $20B by not applying 'special servicing of
delinquent loans'. Presumably, given foreclosed loans were found to all be truly delinquent, this would
merely add more signatures and busy work to what is a fact. Somehow, I don't see how adding costs to
the intermediation process helps anyone, but that's why I'm not in charge.
The CFPB presentation notes that it could 'require 3.0 million principal reduction modifications over six
months , exempting government FHA and VA loans. Why any private bank lends to homeowners any
more is an interesting question. The CFPB notes 'servicers fund write-downs (make investors whole)',
as if the problem with banks is they have too much money. That will really get the economy going.
With all the financial problems in the pipeline, I'm almost hoping the CFPB does something this boneheaded right out of the gate, because creating a big mess early is probably the best thing they can do.
That is, if they did something subtle it would probably be worse because it would take longer to fester.
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Page 3747 of 3826
American Banker
Banks Need to Return to Fundamentals to Rebuild Their Image
March 29, 2011
By Harvey Radin
Banks have serious image issues. Not just now in the aftermath of the Great Recession, a global
economic calamity that many people believe Wall Street firms and big banks precipitated. Banks have
had image issues for a long time. For many reasons.
Back in the 1990s, banks began to charge a host of fees. Remember the ATM surcharge? Point of sale,
overdraft and bounced-check fees?
Fees are just the tip of the iceberg. How many businesses, other than banks, deny consumers their
products and services? Banks deny loans to individuals and businesses, for perfectly valid reasons, in
many cases.
But still, such actions lead to hurt feelings, negative word-of-mouth advertising and sour opinion of
banks. Banks also foreclose on homes and repossess cars. Information about financial products and
services is loaded with small type and confusing communication.
Banks rake in revenue from the interest rates consumers are forced to pay on credit card balances and
personal loans, but they are currently paying minuscule interest on CDs and other deposit accounts.
Central banks play a role in setting interest rates, of course, but much public angst is still leveled at
banks. Giant Wall Street firms and commercial banks pay huge salaries and bonuses to executives, as
the middle-class and lower-income individuals struggle.
What's not to love about banks?
Financial firms work hard to counter negative opinion. Some by spending big money in attempts to
advertise their way out of trouble, with soft, positive messages. Banks allocate funding for major
philanthropic programs. Supporting public needs through charitable giving is critically important, but,
unfortunately, such initiatives often fail to counter negative perception of banks and the financial
services industry.
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So then, considering the nature of banking and the manner in which financial firms are doing business,
is it realistic to believe that anything can be done to promote positive public opinion of banking?
Actually, yes. Banks can reverse negative opinion by getting back to fundamentals of their business.
The solution is at the very core value of what big banks can be, and really should be, all about. The
solution can be found in a single word: enterprise.
When you think about it, shouldn't the core business of banking be the channeling of financial resources
in support of enterprise? If your business and industry can play a key role in building the enterprise of
individuals and businesses, aren't you adding value to society and the economy? The financial
resources that banks have at their command can encourage, generate and strengthen enterprise.
Fundamentals of banking that were more closely observed decades ago focused on priorities such as
the need for bankers to know their customers; to have a sense of their customers' goals and objectives;
to base lending decisions on customers' willingness and ability to manage and to repay loans.
By focusing on such fundamentals, banks were able to use financial resources to build enterprise. And
by knowing their customers, banks seemed better able to evaluate and manage risk.
Before the financial services business became more complicated than it should be, banks were doing
quite well by focusing on the fundamentals of their business. Many banks grew and prospered by
channeling financial resources to small, midtier and large businesses.
Banks financed the work of small-business entrepreneurs and the development and growth of such key
industries as electronics, aerospace and agriculture. Various banks that are among the largest financial
institutions, today, achieved success by supporting enterprise.
But that was in the past. These days, impossibly complex, fancy banking is in vogue, more than
fundamental banking. And most of us are feeling the impact of this shift in focus within the financial
services industry.
If banks big banks, in particular truly want to reverse negative opinion of their companies and their
executive leadership, they might want to consider, as a new paradigm, the good, old fundamentals of
banking.
Harvey Radin, an independent public relations consultant, was a senior vice president at Bank of
Page 3749 of 3826
America and head of western region corporate communications and media relations.
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Bloomberg
BofA Board Sued by Holders Over Mortgage Recording Paperwork
March 28, 2011
By Karen Freifeld
Bank of America Corp. (BAC)s board and some officers were sued by shareholders claiming they were
hurt by false and misleading statements that hid defects in mortgage recording and foreclosure
paperwork.
Bank of America did not properly record many of its mortgages when originated or acquired, which
severely complicated the foreclosure process when it became necessary, according to the complaint
filed today in New York state Supreme Court in Manhattan. The bank also concealed that it didnt have
adequate personnel to process the large numbers of foreclosed loans in its portfolio, the shareholders
said.
The banks stock traded at inflated prices, reaching a high of $19.48 on April 15, 2010, and fell almost
42 percent after the problems were disclosed, according to the complaint.
The directors and officers also hid the banks involvement in dollar rolling, omitting billions of dollars in
debt from its balance sheet, according to the complaint. Bank of America later admitted it wrongly
classified the transactions as sales when they were secured borrowing, according to the complaint.
In October, after news of improprieties at Bank of America and other large banks, the Charlotte, North
Carolina-based lender temporarily halted foreclosures and admitted to possible irregularities.
Page 3750 of 3826
The investors accused the board and senior management of a breach of fiduciary duty, abuse of
control, a waste of corporate assets, gross mismanagement and unjust enrichment.
Lawrence Grayson, a spokesman for Bank of America, had no immediate comment.
The case is Thomas OHare v. Brian T. Moynihan, 103729/2011, New York state Supreme Court
(Manhattan).
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Housing Wire
Bank of America set to write down principal on California mortgages
March 28, 2011
By Jon Prior
Bank of America will begin a new pilot program in the next few weeks, allowing some California
homeowners to receive a principal writedown on their mortgage.
The program will be funded from the $699.6 million the California Housing Finance Agency received
from Treasury Department's Hardest Hit Fund last year. A spokesperson for the CalHFA said there is
no set amount of loans BofA is targeting, but the bank will be soliciting eligible homeowners soon.
CalHFA has not given BofA a limit to the funding "unless they blow us out of the water," the
spokesperson said.
CalHFA is in talks with other lenders and servicers, but they did confirm that Guild Mortgage Company
will also participate in the program.
"We're really excited to get the program going," the CalHFA spokesperson said.
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Rebecca Mairone, the new national mortgage outreach executive at BofA, said in an interview with
HousingWire Monday that it would soon begin the California initiative as well as several other states
that received Hardest Hit Funds.
Earlier in March, BofA announced it was sending letters to Arizona homeowners regarding possible
principal writedowns under Hardest Hit Fund programs. Through that program, BofA said it was
targeting 8,000 households.
Ally Financial agreed last week to participate in another principal-writedown program in Michigan, again
using the Hardest Hit Fund.
Back to Top
American Banker
Cheat Sheet: Details of Regulators Plan for Risk Retention, QRMs
March 29, 2011
By Joe Adler, Donna Borak, and Cheyenne Hopkins
WASHINGTON One of the most important pieces of the Dodd-Frank Act is set to start falling into
place Tuesday as regulators offer a plan that would establish stringent underwriting standards for most
mortgages, provide limited new rules for servicers, and detail how institutions must retain some risk of
loans they intend to sell to the secondary market.
The risk retention proposal is likely to draw protests from the banking industry and concern from
lawmakers because it is so sweeping and may reshape the entire lending business.
According to a summary of the plan obtained by American Banker, regulators are proposing strict
criteria for what loans are exempt from risk retention requirements, including mandating a 20%
borrower downpayment, compliance with certain debt-to-income ratios and limits depending on a
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borrower's credit history. The so-called "qualifying residential mortgage" test is one of the most
important pieces of the risk retention plan because many lenders are hoping to make loans exclusively
according to those terms.
Under the Dodd-Frank law, lenders are required to hold 5% of the risk of a loan unless it is considered a
qualifying mortgage. But lawmakers left it up to the regulators to determine how that risk was structured,
what types of securities may be exempt and what was defined as QRM. Following is a guide to the
regulators' plan, which is expected to top 300 pages.
Qualifying Residential Mortgages (QRM)
Lawmakers intended certain loans that met "traditional" underwriting standards to be exempt from any
risk retention requirements. But regulators have offered a conservative definition that would exclude
many mortgages currently made in the market. Regulators acknowledged as much in the summary,
saying they want to ensure QRM loans are "very high credit quality."
To meet the definition, a borrower would have to make a 20% downpayment and could not have a 60day delinquency on any debt obligation within the past two years. Lenders must also ensure that the
borrower's mortgage bill should not consume more than 28% of their income, and their total debts could
not eat up more than 36% of their pay. A maximum loan-to-value ratio of 80% under a purchase
transaction would be required for a home purchase, while a 75% combined LTV would be needed for
refinance transactions (or 70% for cash-out refinancings).
Loans deemed QRM could not have certain product features such as negative amortization, interestonly payments, or significant interest rate increases that add risk to mortgage loans.
Regulators said the LTV ratio would be calculated without including mortgage insurance. While they
acknowledged that such insurance typically protects investors from losses when borrowers default, they
requested further comment to assess whether loans with mortgage insurance would be less likely to
default than other mortgages.
Servicing Rules and QRM Options
The proposal would also include a limited set of servicing requirements that could lower the risk on
default of residential mortgages as part of its QRM criteria.
For example, an originator of a QRM would be required to incorporate certain requirements regarding
servicing policies, like loss mitigation actions and procedures for dealing with second liens when a first
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one is modified.
Regulators were quick to note that any servicing requirements included in the proposal will not replace
ongoing interagency efforts to develop national mortgage servicing standards. According to the
summary, the interagency effort is considering a number of factors not included in the QRM, including
the quality of customer services provided throughout the life of the mortgage, foreclosure processing,
and servicer compensation and payment obligations.
It also left open to comment whether a national approach would be a more effective in addressing
servicing problems over its proposed QRM criteria.
Importantly, regulators appear to be considering possible alternatives to QRM. According to sources,

the proposal will ask whether the proposed definition is too narrow and suggest at least two
alternatives. Under one plan, regulators would create a second-class of loans that are exempt from a
5% risk retention requirement, but include at least some risk retention amount between 0% and 5%.
Under another plan, regulators could broaden QRM criteria to capture more loans but enforce a tougher
risk retention requirement for loans that fall outside that status.
Exempt Asset Classes
Qualified assets such as auto loans, commercial loans, commercial real estate, and residential
mortgage would not be required to retain any part of the credit risk if they meet the underwriting
standards included in the proposal.
Regulators said auto loans, for example given its depreciable nature, should focus primarily on the
borrower's ability to repay the loan. In the case of commercial loans, underwriting standards should be
designed to ensure that the borrower's business would remain in sound financial condition and would
have the ability to repay the loan.
The agencies did not propose a different set of residential mortgage underwriting than the QRM
standards at this time.
The agencies can develop underwriting rules for more asset classes, but chose not to do so at this time.
As a backstop measure, two provisions have been included in the proposed rule to guard against abuse
of the QRM, or possible exemptions. Under the first, the sponsor would be required to provide a selfcertification to ensure that loans were underwritten in accordance with the rule. In the second, for loans
Page 3754 of 3826
which are later deemed as not having the proper underwriting standards, the sponsors must buy them
back within 90 days.
As expected, federal and state guarantees are exempted, as are single class re-securitizations.
Risk Retention Structure
Regulators also detailed which entities must retain risk and provided options for how it could be
structured.
According to the summary, the "sponsor" of the securitization, which takes the loan from the originator
before it is packaged for the secondary market, is required to "hold the required risk retention." But the
proposal would allow the sponsor to assign a "proportional" share of the risk to the originator of the
loan.
"This would have to be voluntary on the originator's part, however, through a contractual agreement
with the sponsor," the summary said.
How the risk retention is structured is designed to be flexible "to allow the securitization markets for non
-qualified assets to function in a manner that both facilitates the flow of credit to consumers and
businesses on economically viable terms and is consistent with the protection of investors," regulators
said.
The summary lays out seven options for how a sponsor could structure risk retention. They include a so
-called "vertical slice," in which a sponsor holds 5% of each tranche in the securitization. Alternatively,
sponsors could hold a "horizontal" piece, in which their first-loss position would be on the whole
securitization. A third option would involve sponsors taking an "L-shaped interest", in which the 5%
interest would be split 50-50 between a vertical slice and horizontal loss position.
Further choices are tailored toward more specialized structures, including certain master trusts as well
as asset-backed commercial paper conduits.
GSEs
In addition, the summary explicitly says that Fannie Mae and Freddie Mac would satisfy risk retention
requirements because they retain 100% of the credit risk of loans they purchase. While not an
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exemption per se, the regulators said they would revisit the question after the GSEs are out of
conservatorship and no longer receive direct Treasury Department support.
The issue of whether the GSEs would be captured under risk retention has been the source of
considerable anxiety within the mortgage market. After media outlets said the GSEs would be exempt
from the plan, Housing and Urban Development Secretary Shaun Donovan said an exemption was not
under discussion. The proposal puts that argument to rest by clarifying the risk retention plan does not
apply to the GSEs while under conservatorship but stipulating that it is not an exemption.
Other Requirements
According to the summary, sponsors would also face compensation restrictions barring them from being
paid in advance for "excess spread income" that securitized assets earn over their duration.
The proposal would also take steps to limit securitizers from hedging their mandated risk retention or
transferring it to other entities, only allowing it under certain scenarios. For example, they could hedge
interest-rate risk.
The proposal, the summary said, would impose disclosure requirements "specifically tailored to each of
the permissible forms of risk retention."
Back to Top
American Banker
Will GSE Reform Kill the 30-Year Fixed-Rate Mortgage?
March 29, 2011
By Donna Borak
WASHINGTON The drive to reform the government-sponsored enterprises is raising two questions
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that could fundamentally reshape the way borrowers obtain mortgages: will a revamp effectively
eliminate the 30-year fixed rate mortgage, and would that be a good thing?
For decades, it's been conventional wisdom that the 30-year fixed rate mortgage is the best option for
most homeowners, and any attempt to restrain or supplant it has largely failed to take hold. But efforts
to replace Fannie Mae and Freddie Mac are likely to at the very least make such mortgages more
expensive. Depending on what approach Congress and the Obama administration take, the ultimate
plan could eliminate such types of loans entirely.
While that prospect likely still disturbs many banks and lawmakers, some in the industry say it is time to
reevaluate the benefits of the 30-year fixed mortgage.
"There is a lot of skepticism about whether it is quite the gold standard as some hold it up to be," said
Bert Ely, an independent consultant based in Alexandria, Va. "Fannie and Freddie did a very effective
job of convincing Americans that a 30-year fixed rate mortgages was the thing to get. But one of the
things that is happening very slowly is some rethinking whether a 30-year fixed rate mortgage is the
best thing to get."
The 30-year fixed-rate mortgage has evolved into the traditional home loan in the United States,
although it has proven far less popular in other countries. Its advent mostly owes to implicit or explicit
government backing, because banks generally are unwilling to hold such long-term maturities which are
funded by short-term deposits.
But fixed rate mortgages with such long terms require some kind of securitization vehicle to buy them. If
Fannie and Freddie are eliminated and the government's role reduced, it's not clear if any fully private
market player would be willing to take up that mantle.
The Treasury Department has proposed three options for reforming the housing-finance sector. In all
three, the government would provide significantly less support. Depending on how far Congress is
willing to privatize the system, the costs of the 30-year mortgage are at least expected to rise, becoming
potentially prohibitive under certain scenarios.
As a result, some observers said other options, such as adjustable rate mortgages - may become more
attractive to borrowers.
"The discussion is shifting in that direction," said Glen Corso, managing director of the Community
Mortgage Banking Project. "Proponents of a purely private mortgage market can't answer the question
about whether investors will be there and are willing to invest money for 30 years without a government
guarantee. Because of that uncertainty advocates of a purely private market are now trying to shift the
terms of the discussion to, 'Maybe we don't really need a 30-year fixed rate mortgages? Maybe we can
Page 3757 of 3826
get by with a 5-, 7-, or 10-year fixed rate mortgage?'"
The question of whether the 30-year fixed mortgage is really necessary underscores the entire GSE
debate, observers said.
"That's the threshold question before you get to reform," said Jaret Seiberg, an analyst for MF Global
Inc.'s Washington Research Group. "Because if your answer is yes, it's hard to envision a market
without any sort of government presence, but if the answer is no, you probably can dramatically dial
back the government's role."
Of the three options the administration laid out in its white paper in February, its first option would likely
eliminate the 30-year fixed mortgage altogether. Under option one, the government would significantly
scale back support, leaving only the Federal Housing Administration and a few other targeted programs
to help low-income borrowers.
Option two would call for some kind of government guarantee of the mortgage market that could be
scaled up in bad economic times and reduced during boom times. Because the concept of a guarantee
is so vague, however, it's unclear what kind of impact it would have on the 30-year fixed-rate mortgage.
In theory, it could be structured to preserve it or eliminate it.
Under the third option, the long-term fixed-rate mortgage is likely to survive, although it would probably
cost more for borrowers. Option three would allow a group of private mortgage companies to provide
guarantees for mortgage-backed securities that meet certain strict underwriting criteria. A government
entity would then provide reinsurance to the holders of the securities, which would only be paid if
shareholders were entirely wiped out. The government would charge a premium for its reinsurance that
would be used to offset losses to taxpayers.
The key test then becomes how expensive each of these options would make a long-term mortgage in
comparison to shorter-term loans.
"From a borrower's standpoint, generally the behavior I have seen in the past is a tug and pull between
having a fixed payment that lasts for a long time that provides certainty - and all things being equal
that's what a borrower tends to prefer," said William Longbrake, an executive-in-residence at the
University of Maryland and former vice chairman at Washington Mutual. "But the other piece of that is
monthly payments matter, and usually on a 5-year the monthly payment is a little less than on the 30year."
To be sure, some argue a fully privatized market may allow for a 30-year mortgage, contending that
interest rates may go up, but housing prices may go down.
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"People say well, wouldn't the interest rate be probably somewhat higher?" said Alex Pollock, a fellow
for the conservative think tank American Enterprise Institute. "I think that's right. It probably would be.
But I think house prices would be somewhat lower."
But without GSEs to buy long-term fixed-rate loans, it is unclear who will take up the slack. Pete Mills, a
principal at Mortgage Banking Initiatives, said the key potential buyers would be pension funds,
insurance companies or hedge funds that are comfortable with long-term exposure.
He noted, however, that their interest may be affected by the forthcoming risk retention rule, due out
Tuesday, which requires lenders to keep an interest in loans they sell to the secondary market unless
they meet certain criteria, dubbed "qualifying residential mortgages" that make them exempt.
"To have a 30-year fixed rate without FHA, you have to have a securitization vehicle," said Mills. "If
QRM is drawn so narrowly that only a handful of loans qualify at 20 percent, or 25 percent, or 30
percent down payments, then you won't see a whole lot of fixed rate product out there."
Even if the 30-year fixed-rate mortgage continues to exist, it may look radically different.
"The real question in many ways is not so much whether a 30-year fixed-rate mortgage will exist, it's will
people want a 30-year fixed mortgage rate which might exist absent Fannie and Freddie and FHA?"
said Ely. "It's really more a matter of price, the interest rate, not the product itself."
Back to Top

Dem lawmakers: Fix HAMP, dont kill it
March 28, 2011
By Peter Schroeder
Page 3759 of 3826
A coalition of 50 House Democrats are calling on the Obama administration to overhaul one of its key
housing relief programs, as Republicans are pushing to eliminate it.
In a letter sent Monday to Treasury Secretary Timothy Geithner, the lawmakers, led by Rep. Maxine
Waters (D-Calif.), say the Home Affordable Modification Program (HAMP) has been "disappointing" and
is in need of major improvements.
However, they also draw a clear line in the sand between their thoughts on the program and those of
their Republican colleagues. A bill to eliminate the program will be considered on the House floor
Tuesday.
"Make no mistake, our criticisms of HAMP should be in no way construed as support for the Republican
position that we should precipitiously let the 'market bottom-out' in order to begin our housing recovery,"
they wrote. "In fact, we believe that the 'market bottoming-out' is simply a euphemism for more families
losing their homes, and more children being uprooted from their communities."
While designed to help 3 to 4 million struggling homeowners modify their mortgages, the program has
made just over 600,000 modifications since being created.
"It is clear to us that HAMP must change in order to reach its potential in helping American families," the
lawmakers wrote.
They go on to ask the Treasury to make a number of changes to whip the program into shape. Specific
requests include establishing a single point of contact for borrowers navigating the program, and halting
the "dual track" process where foreclosure proceedings are allowed to advance while a borrower is
pursuing a mortgage modification. They also ask the Treasury to being levying fines and penalties on
mortgage servicers that fail to follow program rules.
The letter comes as House Republicans have made a major push in the last month to eliminate several
of the administration's housing relief programs, calling them wasteful and ineffective. The House GOP is
pushing four measures, each of which would eliminate a program. However, the Obama administration
has threatened to veto each measure if they were to reach his desk.
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Bloomberg
U.S. Treasury to Grade Mortgage Servicers on Loan Modifications
March 29, 2011
By Lorraine Woellert
The U.S. Treasury Department plans to publicly grade mortgage servicers on how well they respond to
homeowners seeking reductions in payments as the government encourages loan modifications to stem
foreclosures.
Timothy G. Massad, acting assistant secretary at the U.S. Treasury Department, said the agency will
publicize servicer compliance beginning next month, according to the text of a speech prepared for
delivery today at Harvard University in Cambridge, Massachusetts. He said companies will be graded
on how they evaluate homeowners eligibility for aid and how quickly they respond to customers.
This is a voluntary program based on a contract, Massad said in his prepared remarks. We do not
regulate the servicers and we cannot fine them. Transparency, he said, is the best way to improve
servicer behavior.
The U.S. House of Representatives is scheduled to vote tonight on a bill to eliminate the two-year-old
Home Affordable Modification Program, which pays banks to modify borrowers monthly mortgage
payments. HAMP is an Obama administrations programs intended to reduce foreclosure filings, which
fell last month to 225,101, the lowest in three years.
Massad is scheduled to speak to students at Harvards Mossavar-Rahmani Center for Business and
Government at the John F. Kennedy School of Government. He said the grading of mortgage
companies will be based on data collected by the Treasury during 2010.
Programs Criticized
Republicans and Democrats have complained about the programs effectiveness, particularly HAMP. A
government watchdog, the Congressional Oversight Panel for the Troubled Asset Relief Program,
criticized how aid was delivered.
Page 3761 of 3826
A major difficulty in implementation of this program has been poor servicer performance, Massad said.
The servicers were accustomed to collecting payments on performing loans; they did not have the
people, the procedures or the systems to deal with this crisis.
Servicers collect monthly mortgage payments and handle other administrative chores for lenders. They
also may modify or foreclose on a loan in default.
The five biggest loan servicers by portfolio size are Bank of America Corp., Wells Fargo & Co.,
JPMorgan Chase & Co., Citigroup Inc. and the GMAC unit of Ally Financial Inc. They service more than
half of the $10.6 trillion in U.S. home loans by value, according to data from news website
MortgageDaily.com.
The Treasury is projected to spend about a fourth of the $50 billion allocated for HAMP, according to
the Congressional Budget Office. The program has spent about $1 billion so far.
Back to Top
American Banker
SunTrust to End Most Debit Rewards
March 29, 2011
By Sara Lepro
Following the lead of other big banks, SunTrust Banks Inc. is ending rewards for its primary debit card.
The Atlanta bank began notifying clients a few weeks ago that it would stop offering SunTrust Rewards
on check card purchases starting April 15. Customers will have until December 31 to redeem their
rewards.
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Other banks, including JPMorgan Chase & Co. and Wells Fargo & Co., are doing away with various
parts of their debit rewards programs. JPMorgan Chase explicitly blamed the Durbin amendment, which
led the Federal Reserve Board to propose a 12-cent cap on the interchange fees banks earn on such
purchases.
JPMorgan Chase said this month that customers will no longer be able to earn points on debit
purchases after July 19. The points will not expire, however. The bank stopped issuing debit rewards
cards to new customers in February.
"The proposed regulations, as they currently stand, impact the economics of the industry's check card
programs," said SunTrust spokesman Hugh Suhr in an email to American Banker.
The bank's Delta SkyMiles Check Card will continue to offer rewards, as will SunTrust credit cards,
Suhr said.
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Wall Street Journal

Minnesota AG: Encore Capital Robo-Signed Affidavits in Debt Collection
March 29, 2011
By Jessica Silver-Greenberg
Minnesota Attorney General Lori Swanson accused Encore Capital Group Inc., the nation's largest
publicly traded debt-buying firm by revenue, of filing "false and deceptive 'robo-signed' affidavits" to
collect debts owed by Minnesota residents.
In a statement, Ms. Swanson said the San Diego company used phony, sloppy and fraudulent
documents in Minnesota courts "in order to obtain judgments against or extract payments from mostly
unrepresented citizens, some of whom had no knowledge of any alleged debt."
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The attorney general didn't say how many times Encore or subsidiary Midland Funding LLC allegedly
used improper documentation as part of the company's debt-collection efforts. Since 2008, Encore had
filed more than 15,000 lawsuits against Minnesota borrowers, Ms. Swanson said.
Encore officials couldn't be immediately reached for comment Monday.
Ms. Swanson said she is seeking "clarification" about whether a pending federal-court settlement in
Ohio by Encore "was not intended" to block Minnesota officials from taking enforcement action against
the company.
In the Ohio case, U.S. District Judge David A. Katz ruled that Encore employees determined the validity
of a debt "based entirely" on a printout, rejecting a request by Encore's lawyers to throw out the suit.
In the same case, a Midland employee testified in a deposition that he signs 200 to 400 affidavits a day,
few of which are reviewed for accuracy. Judge Katz ruled that the company violated U.S. and state laws
by trying to recoup soured credit-card debt using a fraudulent affidavit.
In February, Encore agreed to settle all pending class-action lawsuits accusing the company of using
flawed and phony affidavits as proof of debts allegedly owed by borrowers across the U.S.
The Ohio suit and concerns that the debt-collection industry is filing insufficient documents to collect
debts was part of a page-one article in November in The Wall Street Journal.
Some judges across the U.S. say that robo-signing, in which affidavits are signed without fully reviewing
underlying documentation, is more prevalent in debt-collection cases than in foreclosures. Debt
collectors buy accounts in bulk, but many individual accounts lack information about the underlying
debts, Ms. Swanson said.
In 2010, Encore collected $266.7 million through 425,000 lawsuits filed against borrowers, up 15% from
$232.7 million and 334,000 lawsuits in 2009.
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NPR Morning Edition

Mortgage Brokers Decry Loan Payment Reforms
March 29, 2011
By Chris Arnold
New federal rules go into effect on April 1 that will change the way mortgage brokers across the country
can make money. They will no longer be allowed to earn a bigger commission for giving a customer a
loan with a higher interest rate.
Consumer groups are applauding the change, but the mortgage industry says the rules are unfair and
could drive lots of smaller brokers out of business.
In the past, a broker arguably had an incentive to steer potential homebuyers or existing homeowners
who want to refinance their house into a loan with a higher interest rate. Of course, many honest and
reputable mortgage brokers would never mislead their clients.
"They've basically received a kickback from the lender," says Ira Rheingold, the executive director of
the National Association of Consumer Advocates in Washington, D.C. He says mortgage brokers have
"made more money when they were able to stick you with a loan that was worse than what you
otherwise would have qualified for."
The Debate Over Yield Spread Premiums
The practice has been perfectly legal until now. Brokers get the extra money through what's called a
"yield spread premium." And Rheingold is happy to see new rules from the Federal Reserve that will
ban brokers from making extra money this way.
"It's about time," he says, adding that the new rule will begin to "create a place where consumers have
a better chance of not being cheated in the marketplace when they're buying a mortgage."
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Many mortgage brokers have a different perspective.
Robert Petrelli, the owner of Mount Vernon Mortgage Corp. in Weymouth, Mass., has been in the
banking and mortgage business since 1971. And he's a former president of the state's mortgage broker
trade group.
"Yield spread isn't a kickback," he says. At his desk, he pulls out a home loan rate sheet from a major
bank and explains how mortgage brokers make their money.
Basically, he says, brokers get a wholesale price for a loan from a bank the same way retail shoe
stores or supermarkets pay wholesale prices.
And just like a shoe store, to stay in business Petrelli has to charge something extra to cover his
overhead and make a living. In the mortgage business, one of the central ways that's done is through
yield spread premiums, which are targeted in the new rules.
Petrelli says there's nothing inherently wrong with receiving the premiums. He says the premiums are
just a basic building block of how reputable, honest mortgage brokers make their money.
These new rules will change the way the industry gets paid. And many in the business say the new
rules aren't fair.
A Bias Toward Big Banks?
If these rules go into effect on April 1, it will mean, "a tremendous amount of layoffs," says Mike
Anderson, the chairman of the government affairs committee for the National Association of Mortgage
Brokers. "We are hearing from mortgage brokers across the country that say they're going to let all their
loan officers go and become one-man shops."
Anderson says the Fed's new rules favor big banks at the expense of small mortgage broker
businesses. Big banks will have more flexibility in what they charge customers, while mortgage brokers
will be locked into a set profit margin that will tie their hands and make it hard to compete, he says.
Anderson's trade group has filed a lawsuit in federal court against the Fed seeking an injunction to
postpone the new rules.
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Back to Top
Housing Wire
Electronic mortgages: There is a way, but not enough will, tech panel finds
March 28, 2011
By Jason Philyaw
Moving mortgage documents onto entirely electronic platforms provides numerous cost and operating
efficiencies. It also doesn't help that the industry is slow to adopt the necessary technology, experts say.
A panel at the Mortgage Bankers Association national technology in mortgage banking conference in
South Florida Monday said electronic signatures and contracts are as valid as paper signatures and
contracts.
Harry Gardner, president of SigniaDocs, said the perfect infrastructure is one that manages all
mortgage documents electronically, but the number of loans in the Mortgage Electronic Registration
Systems' eRegistry is about 200,000, or "a small fraction of mortgages written in the last 10 years."
"And by eMortgage, we mean truly paperless not some hybrid of some paper and some electronic
documentation," Gardener said. "Ten years ago, we were saying mainstream eMortgage
documentation was three to five years away, and I'm happy to say that mainstream eMortgage
documentation is now three to five years away."
Chris Christensen, an attorney with PeirsonPatterson, said a fully electronic mortgage process helps
lenders, borrowers and investors alike. The traditional paper-based closing process takes about an hour
and a half, but the electronic close can take as little as 15 minutes, "with doughnuts," according to
Christensen.
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Meanwhile investors like it because they can quickly and easily access all the data.
"Investors are taking a more data-centric approach to loans and we're going to see more and more
investors combing through every data point as they try to restart the (mortgage-backed securities)
market," Christensen said.
Christensen also said eMortgage platforms provide a bit of legal loophole because the law is actually
ahead of the technology.
"Some industry lawyers argue that e-notes aren't real, saying 'show me the original note,' but that's not
a valid defense," Christensen said. "Your state law says e-notes are original. We live in a world where
electronic signatures are regularly honored" as the equivalent of an ink signature.
Brenda Clem, senior director mortgage product manager at Equifax, said the foundation for moving the
entire mortgage process to an all-electronic system is already in place.
"This truly is a process we need to adopt to move our industry forward," Clem said. "It allows us to
respond to regulatory changes with greater efficiency, while enhancing the borrower experience and
resulting in higher closing ratios and pull throughs that result in greater revenue," Clem said.
Back to Top
Housing Wire
Dreamed up cash for keys proposal draws heavy criticism
March 28, 2011
By Jon Prior
Sources are downplaying discussions over a mandatory cash-for-keys program that would pay a
Page 3768 of 3826
reported $21,000 to a delinquent borrower, with one prominent Republican quickly shooting down the
idea.
"This proposal is simply outrageous and the worst bailout idea dreamed up so far," said Rep. Spencer
Bachus (R-Ala.), chairman of the House Financial Services Committee.
Regulators led by the Federal Deposit Insurance Corp. proposed the idea last week, according to
reports. But sources familiar with the matter told HousingWire Monday that the idea did not come from
the FDIC and that it was only one of many proposals discussed during the meeting.
At any rate, there are no ongoing discussions, sources said.
The talks were reportedly part of the ongoing settlement saga between the 50 state attorneys general,
federal regulators and major lenders. However, a spokesman for the lead in the investigation, Iowa AG
Tom Miller, said their office was not a part of the meeting.
Still, the cash-for-keys discussion is the latest battle-line drawn between Republicans like Bachus
attempting to deconstruct foreclosure prevention programs and consumer advocates who are
repeatedly pushing for a crack down on mortgage servicers still trying to fix foreclosure errors found last
fall.
"While its important to have good options for the limited number of families who will not be able to stay
in their homes, the emphasis needs to remain focused on keeping families in their homes," said Tim
Lilienthal, bank accountability campaign director for the PICO Network. "The banks have not come
anywhere near exhausting the options for avoiding foreclosure and the work needs to stay focused on
that."
The PICO Network, the National People's Action and the Iowa CCI will head a national call-in day
Tuesday for homeowners to reach out to their AG offices nationwide. Leaders said they will continue to
push for mandatory principal write-downs, criminal penalties and restitution for families caught up in the
problems.
"The Attorneys General need to pick a side the millions of homeowners theyve sworn to protect or the
big banks that have bankrupted our communities and country," said Judy Lonning, a member of the
Iowa CCI and schoolteacher.
Bachus, however, said such a settlement would have the exact opposite effect.
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"Regulators are using the glorified phrase fresh start to sell a bad idea," Bachus said. "Its not a fresh
start, but a rotten finish that is bad for homeowners, bad for taxpayers and bad for our economy."
Back to Top
Page 3770 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Black, Brad
FW: Flat Organizational Structure

Tue Mar 29 2011 10:48:27 EDT
Hi everyone,
Page 3771 of 3826
From:

_DL_CFPB_AllHands
Sealy, William
(fydibohf23spdlt)/cn=recipients/cn=sealeyw>
To:
Cc:
Bcc:
Subject:
Date:
Attachments:
Interested in being a Founding Member of the CFPB Softball Team?

Tue Mar 29 2011 08:35:15 EDT
March Madness is almost over, the cherry blossoms are starting to bud, and, this year, the
Congressional Softball League (CSL) is gearing up for its 40th year of play.
The CFPB is ready to flex its federal muscles and show the District just what the newest government
agency is made of.
If you are interested in becoming a founding member of the first official CFPB Softball Team, please
send an email to Will Sealy by COB Wednesday, March 30th with the following information:
Are you interested in being a full-time or part-time player?
Ideas for our team name, if you can think of a good one (examples: Pew Research Center is
Pews Your Daddy, DOT is Transport This, The White House is STOTUS Softball Team of the
United States).
*Any additional questions about game times and dates Will would be happy to answer.
More information:
The CSL is a fun, casual, coed league of both Hill and off-the-Hill teams (that are not required to
call balls/strikes during the regular season). Teams consist of ten full-time players of whom at least
three players must be women, and an additional number of part-timers (fill-ins, subs, and interns).
Every team will play a minimum of two games before advancing into the year-end tournament
played over a few Saturdays in late August and early September under lights. Registration fees to play
are $24 per full-time player ($6 for part-timers), which provides $5 million in liability insurance.
Page 3776 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

Black, Brad
FW: CFPB HC Employees

Tue Mar 29 2011 08:30:55 EDT
CFPB HC Employees (1).msg <extracted>
Hi everyone,
Page 3778 of 3826
Here is the most updated HC employee contact list. Feel free to drag onto your contact list.
Marilyn
Page 3779 of 3826
From:
To:
Cc:
Bcc:
Subject:
Date:
Attachments:

_DL_CFPB_AllHands
Black, Brad
</o=ustreasury/ou=do/cn=recipients/cn=blackb>
Online personnel information for CFPB employees
Tue Mar 29 2011 08:06:07 EDT
CFPB Employee Self Service Guide.doc
Colleagues - as a reminder, you have access to online resources to review your payroll and personnel
data. Two documents that may be of particular interests to you are the SF-50, a summary of your most
recent personnel action, and the statement of earnings and leave, aka your pay stub. Your most
recent SF-50 is currently available in HR Connect and you can review your earnings and leave
statement when you log into the NFC Employee Personal Page. Please take a few minutes to review
the attached document that gives you some information about HR Connect, the NFC Employee
Personnel Page and a comparison of what you can view/change in both systems.
If you have any questions about your personal data or your earnings and leave statements, please
contact the Bureau of Public Debt Administrative Resources Center at 304-480-8000. Our POC is:
Brad Black at 5-7398
Program Analyst, Room 533
Thanks
Dennis
Dennis Slagter
202-435-7143 (1801 L St)
(b) (6)
for guidance.
Page 3781 of 3826
CFPB Employee Self Service Guide.doc (Attachment 1 of 1)
Where to Access and Update Your Information

Post this chart in a visible place to ensure you know where to go when its time to access or update your personal information.
Employee Self-Service Actions
Type of Action
HR Connect
https://www.hrconnect.treas.gov
National Finance Center EPP

www.nfc.usda.gov/personal
Change Federal / state tax withholding
Enter health benefit changes (open season)
Start, change, or stop direct deposit
Start, change, or stop financial allotments
Start, change, or stop TSP contributions
View/print Statements of Earnings and Leave
View/print W-2s
Update emergency contact information
Update work and home telephone numbers
Update home email addresses
Change home address
Change name
Correct birth date
Correct gender information
Correct Race and National Origin information
Research career opportunities
Update educational information
Review training information
Update disability status
Update languages
Update licenses/certificates/memberships
Update veterans preference
View leave balances
View benefits information
X
X
View your employment information
View current and previous performance ratings
View performance bonuses
Submit resignation
Submit retirement request
2
Page 3784 of 3826
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FW: Supervision Talking Points

Mon Mar 28 2011 18:19:27 EDT

Sent: Saturday, March 19, 2011 12:40 AM
Subject: RE: Supervision Talking Points
(
Hi Elizabeth,
We have a whole ton of TPs for the testimony, which were based on previously cleared material. They
might not be entirely suitable for other uses, though. Take a look at the document here and then show
me which, if any, TPs youd like to use, and Ill try to obtain approval.
Best,
Alex

Sent: Friday, March 18, 2011 5:47 PM
To: Blenkinsopp, Alexander (CFPB)
Hi Alex,
Page 3795 of 3826
Thanks so much! I have to admit I sort of prefer Elizabeth and Im making an attempt to steer folks
away from Liz, but its no biggie! I definitely want people to use whatever comes naturally.
Thanks again for the mission/vision points. Presumably, we dont have any points handy for the other
areas (supervision, rulemaking, etc.)?
Have a great weekend,

Elizabeth or anything!

Sent: Thursday, March 17, 2011 12:26 PM
Hi Liz (Everyone here calls you Liz, but you sign your e-mails Elizabeth. What do you prefer to be
called?),
Thanks for your reply! How does the following work for the CFPBs mission/vision? Also, EWs
testimony has some useful language you should consider borrowing.
Best,
Alex
The CFPB will make it easier for a family to see the costs and risks of a mortgage upfront and will
give them the tools to make the choice that is right for them.
The CFPB will cut down the fine print in credit card agreements, empowering consumers to make
direct comparisons between products and restoring competition. If the costs are clear, some people will
dial back the risks, purchase less, or decide to use a different payment method.
The CFPB is the first 21st century consumer agency, and it will be a voice for families and a cop
Page 3796 of 3826
on the beat making sure lenders are playing by the rules.
The fine print in consumer credit agreements prevents families from being able to make apples-to
-apples comparisons among loan products.
Getting rid of the tricks and traps buried in the fine print of credit agreements will provide a direct
financial support to tens of millions of American families by plugging a hole in the bottom of their
economic boats.
A major goal of the CFPB is to reduce the fine print in consumer credit contracts so that American
families can compare products and then choose the ones that are right for them.

Sent: Thursday, March 17, 2011 11:53 AM
Cc: 'Angela Beatty'
Alex,
Is this a record for a slow reply? Im so sorry. In response to your question, I cant not recall if it went
through the formal clearance process. At a minimum, I personally circulated these talking points, along
with others, to numerous folks including Steve, Peggy and OGC. I hope that helps.
With regard to the upcoming Fed town hall, thank you so much for the EW talking points you sent me.
There will be several other attendees speaking about their particular divisions - Steve for Bank
Supervision, Peggy for Non-Bank Supervision, Kelly for rulemaking, David Forrest for consumer
engagement, and Dan for RMR. Wally will also likely give a high level introduction.
If you have any relevant talking points you could share, I would be grateful. In particular, any talking
points concerning CFPBs vision/mission.
Page 3797 of 3826
As always, thank you for your help.
Thanks again,
Elizabeth

Sent: Thursday, January 27, 2011 5:12 AM
To: Glaser, Elizabeth
Thanks again for these. A quick question: The talking points are not at all controversial, but did they go
through any formal clearance process? Just trying to keep track of that in the spreadsheet of TPs.
Thanks once more,

Alex
From: Glaser, Elizabeth

Sent: Wednesday, January 26, 2011 11:03 PM
Hi Alex,
Im sorry for the delay I just read your email. Here you go -
Steves Supervision Talking Points
It is my pleasure to be here to discuss the exciting work that CFPB will perform in the area of
supervision.
Page 3798 of 3826

One of our chief responsibilities will be to supervise banks with over $10 billion in assets for
compliance with federal consumer financial laws, which is no trivial task given that these institutions and
their affiliates hold over 75 percent of bank assets.
We will also be supervising non-banks. These include mortgage lenders, debt collectors, credit
bureaus, private student loan providers, and auto finance companies. For the first time, many of these
nonbank financial services companies will be subject to federal compliance examinations, regardless of
their charter.
CFPB now has the authority to act fast: no longer will problems need to fester or develop into
lawsuits before a response kicks in. The expanded supervisory role will try to stop bad practices before
they grow and spread.
Our new agency will have consolidated supervisory, examination, and rule writing authorities.
This means that when abusive practices are detected, the agency will deploy the least burdensome tool
in its toolkit with the quickest impact, such as supervisory guidance, rather than relying exclusively on
issuing rules.

Sent: Wednesday, January 26, 2011 11:15 AM
To: Glaser, Elizabeth
Hi Liz,
Do you happen to have a copy of the TPs that Steve ended up using?
Thanks,
Alex
From: Glaser, Elizabeth

Sent: Wednesday, January 12, 2011 10:48 PM
Cc: Lownds, Kevin
Page 3799 of 3826

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From:

Deutsch, Rebecca (CFPB)

RE: 1063(i) Questions

Thanks Kevin. This is very helpful. Much appreciated!

From: Lownds, Kevin (CFPB)

Slagter, Dennis (CFPB)

Welcome our New Hires!

On April 25, we welcomed:

2011 PP09 Cohort 042511

Left to Right after Wally:

On May 2nd, we also welcomed (not pictured):

Lownds, Kevin (CFPB)

Slagter, Dennis (CFPB)

New Jobs for Posting on CFPB Web Site & Distribution

Information Technology Specialist (INFOSEC), Cyber Threat Security Analyst,

Information Technology Specialist (INFOSEC), Information Systems Security Manager,

Paralegal Specialist CN-0950-4B/5B

Office: General Counsel or Supervision & Enforcement

Paralegal Specialist CN-0950-4B/5B

Human Capital Support Assistant CN-303-3C

Human Capital Support Assistant CN-303-3C

Consumer Response Specialist CN-0301-5B/5C

Consumer Response Specialist CN-0301-5B/5C

Adeyemo, Adewale (Wally) (CFPB)

(fydibohf23spdlt)/cn=recipients/cn=browntri>; Burniston, Tim

(CFPB) </o=ustreasury/ou=exchange administrative group

(Rick)((CFPB) </o=ustreasury/ou=exchange administrative group

(CFPB) </o=ustreasury/ou=exchange administrative group

(fydibohf23spdlt)/cn=recipients/cn=libermanj>; Perry, Vanessa

(fydibohf23spdlt)/cn=recipients/cn=smullinr>; Smyth, Nick

(fydibohf23spdlt)/cn=recipients/cn=williamsk>; Witt, Michael

CFPB Weekly Report 5/2

CFPB Weekly Report

Other Policy Developments

Procurement will issue a solicitation for regional office space.

We also aim to launch an internal staff directory soon.

Professor Warren Week Ahead

Tuesday, May 3, 2011

Wednesday, May 4, 2011

HPetraeus Meeting w CUNA

Thursday, May 5, 2011

Friday, May 6, 2011

Monday, April 25, 2011

Tuesday, April 26, 2001

Wednesday, April 27, 2011

Thursday, April 28, 2011

Friday, April 29, 2011

Glaser, Elizabeth (CFPB)

FW: Draft Rules

From: Deutsch, Rebecca (CFPB)

Blenkinsopp, Alexander (CFPB)

CFPB Press Clips 5/2

Press Clips 5/2/2011

Click publication title to find its location in this e-mail.

Consumer Financial Protection Bureau

USA Today Opposing view: Stop excessive regulation

Dow Jones Newswires Spending At Consumer Watchdog Agency Is On The Rise

Politico Morning Money First Look: Bachus on CFPB

Fayeteville Observer (North Carolina) The Other Petraeus

American Banker Washington People: Baring Her Fangs