Dodd-Frank News Center

FHA Reform Needed to Fix Housing Market

This story appeared in Bank Digest.

Following a hearing (webcast) on the state of the housing market conducted by the Senate Banking Committee, Sen. David Vitter, R-La., called for reform of the Federal Housing Adminstration to make sure the agency can remain solvent without a federal bailout. Vitter stated that the FHA has been violating the congressionally mandated ratio of capital it must keep in its mortgage insurance fund since 2009. “The FHA has a responsibility to manage their funds responsibly and keep their books in order,” Vitter said. He added that he does not “believe that giving even more power to the FHA is going to fix what's broken in the housing market.”

Foreclosure Settlement May Hurt Americans' Retirement Savings: Corker

This story appeared in Bank Digest.

In a letter to Housing and Urban Development Secretary Shaun Donovan, Sen. Bob Corker, R-Tenn., a member of the Senate Banking Committee, has requested information regarding how the $26 billion settlement with banks over improper foreclosure practices would impact Americans' retirement savings. Earlier this month, the nation's five largest banks agreed to execute $20 billion in mortgage relief and provide $5 billion in payments to states as restitution for failing to comply with filing regulations when foreclosing on homeowners who were not making their mortgage payments. Investors have warned the mortgage relief will be borne in part by pension and 401k plans invested in mortgage securities that will lose value when banks reduce principal on the underlying home loans.

Volcker Rule July Deadline Unlikely to Be Met, Bernanke Says

By Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter.

Federal Reserve Board Chairman Ben Bernanke told Congress that he does not expect the Volcker Rule to meet its July 2012 implementation deadline.

“I don’t think it will be ready for July,” Bernanke told a House Financial Services Committee hearing on Feb. 29, 2012. He noted that the Fed recently closed the comment period, and now has about 17,000 comments and “a lot of very difficult issues to go through, so I don’t know the exact date but we’ll obviously be working on it as fast as we can.”

 

The Volcker Rule includes a two-year transition period, Bernanke said, noting that “we’ll make sure firms have an adequate period of time to adjust their systems and comply with the rule.”

Comment Sought on State Official Notification Rule Information Collection

This story appeared in Bank Digest.

The CFPB is inviting comments regarding the information collection requirements contained in the State Official Notification Rule (12 CFR 1082). Section 1042 of the Dodd-Frank Act requires the CFPB to prescribe rules establishing procedures that govern the process by which state officials notify the bureau of actions undertaken pursuant to Section 1042 to enforce the Act or its regulations. In accordance with the Dodd-Frank Act, the CFPB has published an interim final rule establishing that notice should be provided at least 10 calendar days before the filing of an action, with certain exceptions, and setting forth a limited set of information that is to be provided with the notice.

Fed Releases Plans for Correcting Foreclosure, Servicing Deficiencies

This story appeared in Bank Digest.

The Fed has released action plans to be followed by nine holding companies and their subsidiaries that are required by a 2011 enforcement action to fix problems in the way they handle mortgage servicing and foreclosures. The Fed also released engagement letters between the institutions and the independent consultants they hired to review foreclosures that were in process in 2009 and 2010.

Pilot REO Property Sales Begin in Hardest-Hit Areas

This story appeared in Bank Digest.

The FHFA has announced the first pilot transaction under the Real Estate-Owned (REO) Initiative, targeted to hardest-hit metropolitan areas--Atlanta, Chicago, Las Vegas, Los Angeles, Phoenix and parts of Florida. With this step, prequalified investors will be able to submit applications to demonstrate their financial capacity, experience and specific plans for purchasing pools of Fannie Mae-foreclosed properties with the requirement to rent the purchased properties for a specified number of years.

Banks Post $26.3 Billion in Q4 Net Income

By Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter.

The banking industry posted $26.3 billion in net income in the fourth quarter of 2011, as lower loan loss provisions once again helped the sector record a year-over-year improvement, according to the Federal Deposit Insurance Corp. A year earlier the industry posted earnings of $21.4 billion.

FDIC-insured commercial banks and savings institutions with assets over $10 billion accounted for the bulk of the earnings in the fourth quarter, at approximately $21.8 billion. For all of 2011, banks posted earnings of $119.5 billion.

CFPB Lists Ways to Increase Savings

This story appeared in Bank Digest.

As part of America Saves Week, the Consumer Financial Protection Bureau offered steps that consumers can use to “save money, reduce debt, and build wealth.” The agency suggested that one way to achieve these goals to set up an automatic savings plan by: 

• Paying yourself first. Determine how much you can set aside for savings every pay period and put the money in the bank before you pay your other bills;
• Asking your employer to directly deposit a portion of your paycheck into a savings account;
• Setting up automated transfers from your checking account to savings; and
• Contributing at least enough to your work retirement plan to get a savings match from your employer (if your employer offers this benefit). Otherwise, you are leaving free money on the table.

The CFPB noted that whether savings goals are large, such as saving for a home, or small, such as saving for a vacation, automatic savings and any extra money received through income tax refunds or other sources can help consumer achieve their goals. To learn more about America Saves Week, go to www.americasaves.org.

CFTC Commissioner Strongly Criticizes Agency Cost-Benefit Analysis

By Lene Powell, J.D., Commodity Futures Law Reporter.

In a blistering dissent, CFTC Commissioner Scott O’Malia criticized a final rule imposing certain reporting and recordkeeping requirements for swap dealers and major swap participants. In the commissioner’s view, the agency committed “regulatory malpractice” by implementing a major rule without adequate discussion of anticipated costs. 

“I have reached a tipping point and can no longer tolerate the application of such weak standards to analyzing the costs and benefits of our rulemakings,” said the commissioner in a prepared dissent. “I believe it is time for professional help.”

CFPB Proposes Standardized Applications for Advisory Boards

This story appeared in Bank Digest.

The Consumer Financial Protection Bureau is requesting comments on a proposed information collection entitled “Applications for Advisory Boards, Groups, and Committees,” which will allow the CFPB to standardize the way it obtains information on the qualifications of individuals nominated to the Consumer Advisory Board and to other advisory boards and committees that may be established. For certain applicants being strongly considered for board or committee membership, the CFPB will use this information to perform a background check, conduct a conflict of interest review and perform other similar due diligence activities associated with the selection of members on CFPB advisory boards and committees.