OCC Criticizes Durbin Amendment
Last Friday, John Walsh, the Acting Comptroller of the U.S. Currency who oversees regulation of the nation’s largest banks, sent a letter to the Federal Reserve criticizing the Fed’s proposed rule to implement the Wall Street Reform Act’s “Durbin debit card swipe fee” amendment. In the letter, Walsh said the Durbin amendment “takes an unnecessarily narrow approach to recovery of costs that would be allowable under the law and that are recognized and indisputably part of conducting a debit card business. This has long term safety and soundness consequences – for banks of all sizes – that are not compelled by the statute.”
Locke to Leave Commerce for China
On Thursday, President Obama announced that he had chosen Commerce Secretary Gary Locke to succeed Jon Huntsman as U.S. Ambassador to China. While the President has yet to announce Locke’s replacement, speculation has centered on the former Mayor of Dallas and current U.S. Trade Representative Ron Kirk.
Attorneys General Mortgage Settlement Stalled
The proposed settlement by state attorneys general with the five biggest U.S. mortgage servicers leaked out this week. The proposal, which calls for a dramatic increase in loan modifications, is intended as the basis for settling allegations of widespread wrongdoing by the big loan servicers in handling millions of foreclosures. The settlement would be with Bank of America Corp, Wells Fargo & Co, JPMorgan Chase & Co, Citigroup and GMAC/Ally Financial Inc. In a press conference earlier this week, Iowa Attorney General Tom Miller, who led an investigation on behalf of the 50 states’ attorneys general, predicted that a broad settlement could be reached within about two months. Miller said the agreement was worked out jointly with federal agencies including the Federal Deposit Insurance Corp, the newly created Consumer Financial Protection Bureau and Justice Department. On Tuesday, Brian Moynihan, chief executive of Bank of America, the largest U.S. servicer, said at a meeting with analysts and investors that he opposes widespread principal reductions for homeowners in default. On Thursday, Rep. Spencer Bachus (R-AL) and Sen. Richard Shelby (R-AL), the top Republicans on the House and Senate banking committees, also criticized the proposed settlement as a “regulatory shakedown.”
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The following outlines the primary consumer protection requirements of the Mortgage Reform and Anti-Predatory Lending Act (the “Act” or the “Mortgage Act”), which is Title XIV of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Effective Dates. The Mortgage Act is somewhat ambiguous as to its effective dates. There is a possible argument that those many provisions of the Act for which no regulation is specifically required took effect immediately upon the signing of the Act by the President on July 21, 2010. We believe do not believe that to be a plausible interpretation.
Under the best interpretation of the Act, those provisions for which no regulations are issued would take effect 18 months after the designated transfer date. The designated transfer date is the date on which the various consumer protection functions are transferred from the federal banking agencies to the Consumer Financial Protection Bureau (the “Bureau”). Where regulations are required by the Act, they must be issued in final form within 18 months of the designated transfer date, and the regulation and corresponding Act provision then would take effect within 12 months thereafter.
The Consumer Financial Protection Bureau. The majority of the Mortgage Act’s provisions will be included in the “enumerated consumer laws” that the Bureau will implement and enforce. However, most of the regulations that the Act requires would be written by the Federal Reserve, presumably due to the delay until the designated transfer date.