Everyone is interested in the new financial industry regualation that will be proposed and debuted this week. I intend this posting to be a primer on some of the issues which are being discussed during the week. Some of the issues being discussed on the internet include:
Regulatory Arbitrage – banks and financial institutions using fractured regulatory agencies – in legal parlance “forum shopping.”
Foreclosure – Modificaitons are having a minimal effect on delinquencies; most modifications result in a higher monthly payment due to the recapitalization of outstanding interest and fees on the loan. State enacted foreclosure moritoria are expiring and the number of bank held (REO) properties are skyrockting. Is there any other role for Federal agencies in this area being proposed?
Mortgage Servicing – Are the practices of mortgage servicers addressed in any future consumer protection regulation? Some of these pratices are being used, such as the “produce the note” foreclosure defense (also, see one lawyer’s blog about the arguments and techniques).
Underwriting – Are the underwriting practices of the lenders, one of the causes of the mortgage crisis that triggered the current economic stress, being addressed in regulation, or will this be left to market forces?
New Consumer Regulator – Elizabeth Warren has been advocating a new Financial Products Safety Commission (also see my previous blog posting linking her interview with Charlie Rose). Senator Dodd last week expressed his support, so will we be seeing this new regulatory body?
I will try to update the posting during the week as issues come up.