Regulatory Capture, But So Quickly?

The foxes have taken over the henhouse before the birds could even fluff their feathers. From the Captain:

Now the CFPB [Consumer Financial Protection Board] has released its first set of mortgage rules, ostensibly to protect consumers — and conservatives may like what they see, at least conceptually if not organizationally:

Quoting the WaPo now:

The government is establishing new rules for mortgages that will make it harder for some borrowers to qualify but that are designed to prevent the kind of risky lending that nearly caused the housing market to collapse during the financial crisis.

The Consumer Financial Protection Bureau on Thursday will roll out the first of several far-reaching changes to the nation’s mortgage market, limiting upfront fees and curtailing practices such as interest-only payments that can leave homeowners stuck with unsustainable loans. The agency also will set standards for how much income a consumer must have to obtain a mortgage.

And back to the Captain:

In other words, the government is going to force lenders to stick to rules they liked before the government forced them to stop using them.

Well, sure. Staid old-line banks will like using the goverment to force potential competitors into line. And all the banks will like the new protection against red-lining type CRA lawsuits.

That is slick marketing by the Dems. If Republicans had announced they were going to reform banking by limiting access by poorer people, Dems would have howled. But the new Dem plan is to protect consumers by shoving them out of the bank lobby and back onto the street.

Comments

[Clarice]

It's all how you frame the pitch, isn't it?

[NK]

REDLINING by the CFPB!!-- the CFPB is Racist!! This would have never happened if the CFPB was initially organized by a 1/32nd Cherokee phony-baloney Law Prof.-- wait, wait.

PS: meanwhile 'Wall Street' is buying up distressed SFHs, and will rent them back to the 'protected' consumer who can't get a mortgage-- for a small vig-- mais bien sur.

[rse]

For anyone interested I just posted the New Science Standards on the previous thread.

And the point is desired behaviors so it's a mistake to focus on mentions of knowledge. Those merely get incorporated into projects and activities.

And yes having such criteria will make regulatory capture even more common as fundamental innovation becomes rarer. That will inevitably mean fighting over diminishing resources whatever the mindsets of "cooperation and collaboration" supposedly cultivated.

Reality will prevail but these clowns do not seem to grasp that. And they have the power now.

[Melinda Romanoff]

You left out the side deal.

They will now be able to successfully sue, probably using the Equal Justice system, that these rules violate the CRA settlements. This will then unravel into a new Pigford scheme.

Another layer of taxpayer funded repaprations in the wings.

[Captain Hate]

None of these regs ever seem to deter lawsuits. There must be a reason for that...

[NK]

MelR-- I think that's a bit too far. I think the reality is the 'Regulatory Capture' TomM references. The TBTF Banks, Fannie and the Obamaniac cronies have agreed that the muddle can't be trusted with mortgages so the Big Banks will buy up SFHs and rent them back to the muddle. Now-- I can certainly see the CFPB/HUD some day getting into rent regultion for Big bank owned homes-- but the regulators want the power here to make deals with the cronie TBTF banks -- they don't want to share with the Trial lawyers, IMO.

[Melinda Romanoff]

This is by design. Wanna bet that the first suit gets filed here in Chicago?

[Otto]

I read this blog and Claire's weekly column regularly. This may not be appropriate for this web site, but when you see how framing and spin are the cornerstone of our culture , Clinton and Edwards nominated as father of the year, the Libby investigation handling, and the Benghazi situation I am so appreciative of the Bible. Someone once said " If you are not ruled by God you will be ruled by tyrants". Ok I am through with my babbling.

[NK]

Nothing would surprise me.. especially racial pay off lawsuits filed in Chicago.

[squaredance]

Did you expect anything else but madness and corruption out of the CFPB?

Remember that this is the "brainchild" of that fraud and imbecile E. Warren (looks like it .

The Real Estate con games seem to attract the particularly dim-witted apparatchiks such as Franks, Dodd and Warren.

This is just pure madness. It will end up even worse than the CRA.

Not a peep out of the GOP about the constitutionality of all of this I see, or the corruption either. What about those TBTF banks? What about Wall St. vs. Main St? Seem like one of those "teaching moments" to me. Crickets.

Why is that? It is not very hard to figure out.

[NK]

Unfortunately, I can't find anything to disagree with in squaredance's 10:17.

[sbw]

Gad! I hadn't even composed a post before the current thread was replaced.

[sbw]

Andrew Cuomo, trying to ride both guns and schooling, just launched the first salvo to win the Regressive Democrat nomination for president in 2016.

Cuomo belongs not to the good Democrats, mind you, but a new wing of Regressive Democrats that appears to operate under the motto rse identified, “Grab the guns and gut the minds.”

From good Democrats, some became Progressives, and not some have gone off the edge further to become Regressive. Regressive Democrats aren’t so much interested in solving a problem as using it to their advantage.

Regressive Democrats love “Change.” Change is an opportunity to disregard what works and replace it with whatever furthers their advantage. They believe in equal opportunity, using real or imagined victims.

It's official. Now we can talk about what Regressives bloviate.

[Janet]

I agree, Otto.

[Old Lurker]

Imagine how much pain would have been avoided if the only rule had been that the originating lender who sold a loan into the secondary market including Fannie & Freddie would remain on the hook for the first 10% lost on any single loan, and that any such claim would be uninsurable? It is amazing how careful folks are when it is their money at stake.

[Old Lurker]

Otto's 10:12 would not be babbling in my book.

[Captain Hate]

Junior Cuomo has just marginalized himself into the same dimwit corner as his bloviating POS father did. That garbage plays well in Manhattan, Syracuse, Ithaca and Albany; not so well elsewhere.

[jimmyk]

Posted on the previous thread in response to Narc, but will say here: The left is quite capable of simultaneously believing that both providing loans and denying loans to low income people are discriminatory.

[rse]

OL-amen. I used to do S & L conversion work from mutuals to publicly held. Understood risks involved that I would get hired to read prospectus even when U's were not running the books. The changes in the amount of deposit insurance had a huge role in causing the SL disaster. As did the chasing of fee income without regard to portfolio risk.

On reparations, the Professor Fecho I mentioned in the before the current post on school shootings and the psych emphasis had the foreword to his book written by one Gloria Ladson-Billings. She is the godmother of the reparations idea. She is toxic but many of her colleagues like Adam Gamoran have jobs with Ed. And Obama did not want to give up on Beverly Hall til he had no choice. Much of this ed spending is going to consultants and groups functions as reparations. It certainly is not buying academc achievement.

[NK]

OL@10:27-- now you're talking logic, we are talking crony politics in this thread. Entirely different concepts-- see JimmyK @10:34.

[Clarice]

OL, CH andjimmyk--how right you all are.

As for the shift in rules, what percentage of our fellow voters do you suppose actually know how it was the banks got into the high risk home mortgage loan business?

[Captain Hate]

Continuing with that simpleton column that Winesap Milloy wrote yesterday, the DC mayor has evidently said that if the Redskins don't change their name they won't be allowed to return to the city. First of all, he completely ignores why they're located outside of the city and that there's no reasonable consideration to return. Second, and not completely unrelated, doesn't his job involve dealing with many more pressing issues than a sports team located elsewhere?

[Ignatz Ratzkiwatzki]

--Did you expect anything else but madness and corruption out of the CFPB?--

That may very well be coming but all I see so far is essentially reasonable tightening of lending standards.

Now I happen to be one who thinks TBTF is insane and the Commerce Clause was intended only to give Congress the power to prevent one state from discriminating against another in economic matters, not the right to write lending standards for anyone, but that horse has been out of the barn so long it was dead when Elizabeth Warren's ancestors were out taking potshots at the ruddier side of the family.

[Captain Hate]

Clarice, if a majority of citizens really understood the housing situation and how it came about, all three branches of government would look and be a lot different.

[Old Lurker]

My bad, NK; right you are.

I know Mel sees the reparations agenda in many of these stories and as we see more and more multi-billion dollar "settlements" extracted from the cronies most of which seem to disappear into a black hole, I think he is right.

In all the stories this week about evil BoA agreeing to pay $10B for "abuses", did any story mention a single abused homeowner who was actually current in his loan payments?

Didn't think so.

[NK]

"High Risk" CRA Mortgages-- Andy Cuomo's HUD CRA rules obviously had an element of racial grievance give away to Trial lawyers and the Welfare Industry (Jackson's Op-Push, Rev Al, Maxine Waters' Imbecile husband et al) but ultimately Andy C and his Housing Boy Wonder Shaun Donavan really believed in the securitized MBS for low income buyers. Frankly, it's the finance model they grew up with in the 80's when they did their subsidized multi-family developments using LIHTC securitized financing -- so they figured, hey this can work for the muddle! And..... we'll make some fees in the private sector when we leave HUD -- which Andy did 2001-2006.

[Thomas Collins]

I don't know how many of you New England JOMers watched Boomtown as a little yute, but if you did, Rex Trailer has rejoined eternity. See LUN.

[Jane: Mock the Media]

I liked Rex Trailer (I think)

[Thomas Collins]

LUN for people speaking about their memories of Rex Trailer.

[marlene]

Growing up in southern NH,we watched the Boston stations.We watched Rex Trailer,oh gosh if I didn't feel old yesterday,I sure do now!
Re: Andrew Cuomo,when we heard his speech on the news last night,I looked at my husband and asked why is he yelling?

[James D.]

if a majority of citizens really understood the housing situation and how it came about, all three branches of government would look and be a lot different.

I'd like to believe, if a majority of citizens really understood the damage our elected officials and their appointees over the last couple of decades have done to this country, that there wouldn't be enough lampposts in DC for the citizens to hang politicans and bureaucrats from.

But then, I suppose that's the point of the damage done to our educational system (and the ever-increasing corruption of our media) - to produce a citizenry that's unable to understand that, or even to see the damage done for what it is in the first place.

[sbw]

James D.

Bingo!

[marlene]

Thanks TC! I feel a bit weepy. Boom! Boom! Boomtown!

[Captain Hate]

Speaking of a bit weepy, I had no idea this was going on: http://www.nationalreview.com/articles/337317/out-coup-and-out-sorts-robert-costa#

[Jane: Mock the Media]

I wonder if some of the dissing of the tea party in Congress is coming from the right, Capn - after reading that.

[narciso]

I don't think that's the case, Jane, for the most part, LaTourette, one of the leading button men, against the Tea Party, is a member of the former Republican Mainstreet coalition, which is no longer Republicans,

[Captain Hate]

I don't think so either, Jane, because it seems like the party leadership is doing its best to deep six the TP members through redistricting; particularly how Allen West was done in while using the "bipartisan commission" canard. Let me put it this way: If the donks had a charismatic n00b, do you think they'd allow a bipartisan commission to derail him or her?

[Captain Hate]

Speaking of LaTourette, it's funny we're hearing more from that thoroughly undistinguished back bencher since he slunk out of office after his Godfather, Kevin DeWine, was dumped by the TP out of the state steering committee.

[narciso]

Sounds like the Keystone cops down in Venezuela, ten years ago, who failed to 'Ned Stark' Chavez.

[Melinda Romanoff]

CH-

100% agree. Duke & Duke strangling the baby in its crib.

[Captain Hate]

Speaking of Chavez, is he smelling sulfur close by currently?

Mel, get any feedback on Mike Reed?

[Melinda Romanoff]

My contact is in a personal fast market and will be through MLK. I'll ask then.

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