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Washington
Inside Washington (05/10/2011)
* WASHINGTON (5/11/11)—State Attorneys General will reportedly offer renewed negotiation terms to the top five mortgage servicers in a bid to settle several servicing-related enforcement actions. A group of state attorneys general and several federal agencies have been negotiating a settlement agreement with the major mortgage servicers which could create a possible loan modification process. As reported in American Banker, the new settlement terms may not include language that would force lenders to reduce a mortgageholders principle owed. However, the new settlement may force servicers to allow mortgageholders that were denied modifications through the U.S. Treasury’s Home Affordable Mortgage Program to reapply for that program. Additional foreclosure documentation may also be required. While the terms of any financial settlement related to the enforcement actions has not been disclosed, the states may use whatever fines are collected to start a so-called "cash for keys" program that would give troubled mortgageholders financial incentives to vacate their homes, speeding the overall foreclosure process. The funds could also be redirected to financial counseling initiatives. Banks have not agreed to the terms, and the overall impact of the settlement on mortgage servicers in general… * WASHINGTON (5/11/11)--Sen. Richard Shelby (R-Ala.) will have a pivotal role in deciding whether President Barack Obama’s nominees for key financial services policy posts are ultimately confirmed. Shelby has previously blocked nominations for the Federal Reserve Board and Federal Housing Finance Agency, and is leading efforts to halt the Consumer Financial Protections nomination until changes are made to the new agency’s make up. (American Banker May 10). Shelby, although part of the minority party in the Senate, holds great influence with Republicans because of his longtime membership in the Senate Banking Committee. Mark Calabria, a former top aide to Shelby and a director of financial regulations studies at the Cato Institute, said Shelby has close to a veto vote. Shelby previously blocked the nominations of Peter Diamond, who won a Nobel Prize for economics last October, whom he called unfit to serve on the Federal Reserve. The White House withdrew its nomination of Joseph Smith to be director of the Federal Housing Finance Agency after Shelby said Smith could be a “lapdog” to the administration … * WASHINGTON (5/11/11)--Members of the Senate Banking Committee sent a letter to regulators demanding an assessment of the economic impact of the Dodd-Frank Act. The letter, sent last week to inspector generals at the Federal Reserve Board, U.S. Treasury Department, Federal Deposit Insurance Corp., and two other agencies, demanded that the inspectors general conduct reviews of economic assessments submitted by each agency and prepare written reports of their findings. On April 15, the inspector general for the Commodity Futures Trading Commission (CFTC) issued a report that found legal formalities in the rulemaking process had “trumped” economic analysis, according to the letter. “We are concerned that these rulemaking issues documented by the CFTC Inspector General's Report are not unique to the CFTC and are impeding the agencies’ ability to understand the economic effects of the proposed rules,” the letter said. The senators have asked for a response from the regulators by June 13 …


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