Archive for December, 2010
Financial services companies large and small need eyes and ears in Washington as the Obama administration sets about review of some 3,300 regulations on everything from mortgages to credit cards.
Elizabeth Warren, the Obama administration adviser responsible for setting up the Consumer Financial Protection Bureau, has made clear that the operative word in the new organization’s name is “consumer.”
She has expressed outrage that Wall Street banks are making profits and paying their executives huge bonuses while consumers are not seeing similar benefits from America’s nascent recovery.
“This just staggers me; I mean, I just don’t have words to describe what this means,” she said in an interview for Bloomberg Television’s “Conversations With Judy Woodruff.”
“For me, what an economic recovery is about is about what happens to American families. It’s what happens in the real economy. It’s whether or not families are building up wealth in their homes or whether or not their homes are dragging them over an economic cliff,” she said.
Though she is just now in the process of setting up the bureau, it was made clear in the enabling legislation that its powers will be broad. For the financial services sector, keeping tabs on the bureau’s progress and exercising as much influence as possible through Congress and the administration is critical.
Some in Congress are worried that the bureau, and Warren herself, are planning too much new regulation that could harm the industry by forcing it to comply with overly burdensome regulations. She has suggested, for example, that credit cards be required to carry a sort of warning label, ala the Food and Drug Administration, to make terms and conditions clear to consumers.
But Warren also says that the concerns of the banking industry will not be lost on the bureau in its zeal to protect consumers.
“We want to level the playing field by streamlining regulations and eliminating outdated or ineffective rules. We want to make it easy for banks—large and small—to meet their obligations to their customers and to make the costs and risks of credit clear,” she wrote in an Op-Ed published recently in Politico.
She has said, for example, that the bureau’s recommendations could benefit financial companies by prompting changes in the labyrinthine process they must follow to meet federal disclosure rules. Under the Truth in Lending Act and the Real Estate Settlement Procedures Act mortgage companies must provide borrowers with vast amounts of information.
“What if we dump both of those forms and in its place we have a one-page mortgage shopping sheet that gives the consumer the key information that the consumer needs?” she said. “They overlap by about 80 percent in terms of content, but because they use different terms, they have to be calculated in different ways, so they’re costly for the banks to fill out.”
So there could be a silver lining for financial services firms in this otherwise worrisome regulatory storm.
Either way, the industry needs to protect its interests through aggressive representation as the regulatory landscape is rewritten.Read Full Post | Make a Comment ( None so far )
Totally frustrated with legislative gridlock on the Hill, Caren Turner, President and CEO of Turner GPA, participated in the founding meeting of No Labels—a new organization pledged to end the excessive polarization and hyper-partisanship of American politics.
“I’m proud to be here with Democrats, Republicans and Independents; Americans of all stripes and backgrounds from all 50 states, to tell our political leaders to stop the partisan politics, put the labels aside, and get to work doing what is best for America,” said Turner, during a break in the meeting held on the campus of Columbia University in New York City on Dec. 13. “It’s not about left or right but moving forward.”
According to the group’s website, No Labels is “united by a commitment to encourage our leaders to work together and develop practical solutions to our nation’s problems…No Labels will create a space where ideas can be judged on their merits, not their conformity to pre-fabricated stereotypes. It is the creation of a new voice—one that has been missing from the current political system, a counterweight to ideological extremes.”
Turner joined with more than 1000 like-minded people – politicians, students, business and civic leaders, journalists and activists—at No Label’s inaugural meeting. The gathering featured an impressive speakers list: U.S. Senators Joe Lieberman, Evan Bayh and Joe Manchin; Reps. Tom Davis, Michael Castle and Bob Inglis; New York City Mayor Michael Bloomberg; Los Angeles Mayor Antonio Villaragosa; and, media personalities David Brooks, David Gergen, Mika Brzezinski and Joe Scarborough.
Gergen, a former adviser to presidents of both parties and a CNN commentator, speaking during a No Labels panel session said that on a scale of 1 to 10, hyper-partisanship is “about a 15.”
MSNBC talk-host and former Republican Congressman Scarborough likened the atmosphere on the Hill to the Sopranos. He said if you don’t “agree with your party at least 95 percent of the time” then you are seen as being disloyal, “you’re a traitor.”
Gergen said the country is “on the edge” and in desperate need of citizen engagement. “We still have a shot at saving the country but we need citizen engagement to give support to those who have the courage to do the right thing.”
Turner said No Labels has set its sights on establishing chapters in all 435 congressional districts and on college campuses across the country.
In addition to hosting monthly meet-ups, No Labels plans to support officials facing election challenges by the “ideological extremes” of either party, along with tracking the activities of every member of Congress and calling-out those “playing hyper-partisan games.”Read Full Post | Make a Comment ( None so far )
We hate to be Grinch-like in casting cold water on signs that a fragile recovery may be taking hold, but there’s an elephant in the room that must not be ignored.
The foreclosure crisis, remember that? When the new Congress convenes in January, it will face a serious threat to the health of the financial system in the form of a scandal over mortgage companies’ flawed documents, including the use of so-called robo-signers to sign loan papers without human review.
This should come as no surprise to lawmakers. The Congressional Oversight Panel, which was charged with overseeing the $700 billion federal bank bailout, told them as much in a report issued last month. The report’s language was harsh, warning of “much deeper problems in the mortgage market that could potentially threaten financial stability.”
At the very least, the panel said, the Treasury Department and bank regulators should do new research to determine if banks can handle the impact of taking back billions of dollars in foreclosed loans. But much more is needed and some, at least, are taking the threat seriously.
The Treasury Department says the loan put-backs caused by flawed paper will carry a price tag of at least $56 billion to $64 billion, a figure the lenders acknowledge and are prepared to absorb. But the total could be much, much higher.
Investigations are underway by the Senate Banking Committee, federal authorities and the attorneys general in every state. Mortgage lenders have pledged to fix the system and several major lenders, including Bank of America Corp. and J.P. Morgan Chase & Co. are seeking to determine the depth of problem.
Former Sen. Ted Kaufman, the oversight panel’s chairman, held out some hope that the problem might not be as bad as it seems. “It could turn out to be nothing, but it could turn out to be a big deal,” he said.
Still, with the economy lurching toward recovery, this is no time to be taking any chances. Congress, bank regulators and the mortgage industry ignore the potential impacts of the flawed paperwork at the nation’s peril.
Sen. Christopher Dodd (D., Conn.), the outgoing head of the Senate Banking Committee, has called for the establishment of an independent board to dig beneath the topsoil.
And Sen. Richard Shelby (R., Ala.), the panel’s ranking Republican, says federally controlled mortgage companies Fannie Mae and Freddie Mac also should be included in the investigation.
While we hope Kaufman is correct when he suggests the problem may not be as widespread as it appears, the possibility of damage to the recovery is too great to leave to chance. We’re hoping Congress, the feds and the industry include getting to the bottom of this crisis on their lists of 2011 New Year’s resolutions.Read Full Post | Make a Comment ( 3 so far )