I don’t want to jinx it, but the age of miracles may not be past. Huffington Post has been reporting on the split between the FDIC and other regulators on getting tough with mortgage, more specifically, securitization, abuses. The FDIC has been serious about putting serious securitization reforms in place; it launched a well-thought-out proposal early last year. By contrast, other banking regulators, the Fed in particular, have been taking up the sell side industry’s point of view, which is that any meaningful change would be detrimental. But of course, this is yet another case where what is good for the banking industry is not so hot for a lot of other constituencies, such as investors, homeowners, and communities.
Huffington Post has learned the Fed is in the process of reversing its position on this issue. As Zach Carter writes:
The Federal Reserve has reversed its opposition to new rules reining in foreclosure abuses, and will support stronger regulations on the nation’s largest banks…
The FDIC has been pushing hard to ensure that new regulations on the mortgage bond market include clear instructions for how banks handle mortgages– and under what circumstances they can evict delinquent borrowers…
The Fed had opposed using the mortgage bond rules to crack down on foreclosure abuses, despite pressure from the FDIC. But FDIC General Counsel Michael Krimminger recently told the Fed his agency would not support any new mortgage bond regulations that do not include strong rules forbidding foreclosure abuses. Krimminger told HuffPost that other regulatory agencies are “moving in our direction on the issue.”
Krimminger would not specify which agencies were coming around. But a separate source close to the discussions told HuffPost that the Fed has come on board, with systemic risk watchdogs at the central bank sympathetic to Krimminger’s position.
The article also mentions various measures that put more focus on this issue in recent weeks, such as an open letter signed by 50 experts, a push from House Democrats led by Brad Miller, as well as the StopServicerScams petition.