This is the latest issue of our weekly update from Washington, designed to keep NACBA members informed about significant and relevant activity on the part of Congress, regulatory agencies and interest groups/think tanks.
ON THE HILL Wells Fargo settled with regulators for $185 million after its employees were found to have opened some 1.5 million bank accounts and applied for almost 600,000 credit cards that may not have been authorized by customers, but as promised, the Senate investigation continues. Senators Warren, Sanders, Markey and Hirono sent a letter to accounting firm KPMG asking for an explanation as to why its audits of Wells Fargo failed to uncover the cross-selling misconduct. The senators asked KPMG a series of questions, including whether the firm has faced disciplinary action from the Public Company Accounting Oversight Board (PCAOB) related to Wells Fargo audits. KPMG has until Nov. 28 to reply.
The special inspector general for the Troubled Asset Relief Program (TARP) is proposing to make it easier to charge bank executives when fraudulent activity occurs at their institution. Christy Goldsmith Romero, in SIGTARP’s quarterly report to Congress, recommends that Congress require senior bank officials to sign an annual certification that they have done their due diligence to determine that there is no criminal conduct or civil fraud happening at their institution.
The White House called on Congress to rethink its approach to rebuilding the hobbled mortgage market and offered, for the first time, a set of principles for housing reform.
Affordability and access to credit, especially for middle-income Americans and minorities, must provide the foundation of any new system, the White House said. The White House went on to say that revamping the arcane infrastructure of the global mortgage market, which has challenged policymakers since the 2008 housing collapse, should take a backseat. The request is laid out by Treasury advisers Antonio Weiss and Karen Dynan and can be read here.
IN THE AGENCIES In a speech given at a major payments and financial technology industry conference (Money 20/20) in Las Vegas, Consumer Financial Protection Bureau (CFPB) Director Richard Cordray called for consumers to have more control over their financial data. “Consumers should be able to access this information and give their permission for third-party companies to access this information as well.” The CFPB director added that his bureau is “gravely concerned by reports that some financial institutions are looking for ways to limit, or even shut off, access to financial data rather than exploring ways to make sure that such access, once granted, is safe and secure.” You can read Director Cordray’s speech here.
Director Cordray also delivered remarks at the Consumer Advisory Board meeting in Washington, DC. His remarks addressed the issues people encounter when they are paying back debt, and more specifically, the debt collection market and the student loan servicing market. You can read his remarks here.
The U.S. Department of Education announced final regulations to protect student borrowers against misleading and predatory practices by postsecondary institutions and clarify a process for loan forgiveness in cases of institutional misconduct. Read the full press release from the Department of Education here. Reaction to the new regulations is unfolding, with at least one publication (Bloomberg analysis) suggesting that the new regulations will make seeking student debt relief more difficult.
FROM THE INTEREST GROUPS In a letter to the CFPB, the Consumer Bankers Association (CBA) told regulators that its members have changed or are changing contracts for private student-loan customers to ensure that loans in good standing aren’t placed in default because a co-signer has died or filed for bankruptcy. The changes address the regulators’ criticism of the banks’ practice known as “auto-defaults.” The system causes surprise defaults for borrowers when the status of co-signers changes even when the borrowers’ themselves have met their payment obligations. You can read the CBA’s press release here.
The Mortgage Bankers Association has stepped up political pressure for housing reform. The group will launch an inside-the-beltway campaign in January to promote the stability and transparency of the home loan industry. They also will call on the incoming president to appoint a housing director to coordinate policy across multiple agencies and local state and federal governments. “Someone who works in the White House, someone with the authority of a direct report to the new president,” MBA President David Stevens said in a speech at the group’s annual meeting in Boston. “It’s the only way to untangle the confusion and imbalances. It’s the only way to avoid the housing crisis to come.”