Posts Tagged ‘mortgages’

Banking and finance roundup

  • SEC in-house administrative law judges are unconstitutional, rules 10th Circuit, creating circuit split [ABA Journal, Jonathan Adler]
  • “Dear Sen. Warren: If we care to share our policy views, we’ll let you know. Otherwise MYOB. Signed – 33 firms” [Elizabeth Warren letter demanding to know what financial firms think of delay in Labor Department fiduciary rule, coverage WSJ/MarketWatch]
  • New York Gov. Andrew Cuomo’s grab for more regulatory power over financial institutions would erode due process protections [New York Post quoting Mark Calabria]
  • “Supreme Court Probes Whether Miami Can Sue Banks Over Foreclosure Crisis” [Daniel Fisher, earlier on Bank of America v. Miami here, etc.] Arnold Kling’s prescriptions for getting the government out of the mortgage market;
  • Mini-symposium on the personal benefit standard for insider trading in the recent Supreme Court case of Salman v. U.S. [Bainbridge]
  • India’s devastating crackdown on cash [Cato Daily Podcast with Jim Dorn and Caleb Brown]

About that “Mnuchin’s bank foreclosed on widow over 27 cents” tale

Last month Politico reported that Treasury Secretary nominee Steven Mnuchin’s bank “filed to take a 90-year-old woman’s house after a 27-cent payment error.” Ted Frank writes that four minutes of fact checking would have shown the story wrong. “A. Widow was never foreclosed on and never lost her home. B. It wasn’t Mnuchin’s bank that brought the suit….The story on its face made no sense. No court permits that kind of foreclosure, and banks lose money on the deal.” The story was widely spread in the media (CNN, Vanity Fair, The Hill) and popped up again at Mnuchin’s confirmation hearing for Treasury secretary.

Banking and finance roundup

  • The Department of Justice cuts a settlement deal with Bank of America under which the bank agrees to give millions to liberal groups [Sean Higgins/Washington Examiner, Federalist Society blog rounding up criticisms]
  • Seizures under bank structuring law have hit small business owners who deposited cash in under-$10,000 amounts because their insurance policies wouldn’t cover cash-on-hand holdings above that amount [Ali Meyer/Free Beacon, earlier and generally]
  • “It is hereby enacted that Smith wins his lawsuit” statutes and the Bank Markazi (Iran funds) case [Michael Greve, Liberty and Law]
  • Second Circuit panel throws out $1.2 billion verdict against B of A over Countrywide mortgage lending, saying government didn’t prove fraud [Daniel Fisher, more]
  • “The crowdfunding catch: government regulations” [Thaya Brook Knight, Newsweek/Cato]
  • Too left-wing to get tenure at Harvard Law in era of the Crits. Now, to banks, “he’s judge and jury and everything else.” [Wall Street Journal profile of Fed governor Daniel Tarullo]

Profs: considering credit history could violate rights of mentally ill

Various federal laws, including the Americans with Disabilities Act and Fair Housing Act, prohibit discrimination against disabled persons, and mental illness is a disability. And so — say three professors — businesses may be violating these laws by dinging credit applicants for poor credit history unless they make allowance for persons whose poor financial choices were the result of mental illness. Bonus: citation to authority of “United Nations Convention on the Rights of Persons with Disabilities (which the United States has signed)” [Christopher Guzelian, Michael Ashley Stein, and H. S. Akiskal, SSRN via @tedfrank]

Banking and finance roundup

  • “Why We Could not Bail Out Mortgage Borrowers” [Arnold Kling]
  • Here come the Wall Street pay clawback rules [John Carney/WSJ MoneyBeat Blog, more, yet more] Jesse Fried on “Rationalizing the Dodd-Frank Clawback” [SSRN via Bainbridge]
  • Price controls on credit card interchange fees: “the folks who supported the Durbin amendment [to Dodd-Frank] should be ashamed of themselves” [Bill Isaac, quoted by Kevin Funnell]
  • New light on whether Treasury handling of Fannie and Freddie bailouts violated existing creditor or shareholder rights [Peter Van Doren, Cato]
  • “Dollar Value of Securities Class-Action Settlements Surges” [WSJ Law Blog on Cornerstone Research analysis, Insurance Journal]
  • Some reasons to think that actual tax evasion falls far short of what was speculated in the wake of the Panama Papers story [Tim Worstall] Legal confidentiality was breached in that episode. Should we be celebrating? [Tyler Cowen] Economist mag proposes more regulation of offshore, not so fast [Bainbridge first, second]

Banking and finance roundup

  • Federal judge refuses to dismiss suit against prosecutor Preet Bharara, FBI agents by hedge funder David Ganek over treatment in now-dismissed Chiasson inside trading case [Peter Henning, New York Times “DealBook”; Business Insider] SEC agrees to return $21.5 million extracted from Ganek’s Level Global Investors [BNA via Ira Stoll]
  • CFPB follies: “Government-Directed Lending Comes to America” [Ike Brannon, Cato] Agency casts its eye on marketplace, otherwise known as peer-to-peer, lending [Thaya Brook Knight, Cato]
  • SEC inspector general sides with agency against allegations of undue sway over ALJs [Reuters, earlier here, here, etc.]
  • Third party liability for crime: “HSBC Sued Over Drug Cartel Murders After Laundering Probe” [Bloomberg]
  • Former Ally Bank CEO: administration extorted race-lending settlement by threatening to derail regulatory approvals [Paul Sperry/New York Post, more]
  • Bellevue, Wash.: $213,000 award to complainant Leticia Lucero “could mean other cases where homeowners argue lenders [cause] emotional distress during negotiations.” [AP/Yakima Herald]

Banks’ $110 billion mortgage payout: where did it go?

Following the 2008 crash, government enforcement action extracted $110 billion from lenders and other players over a variety of alleged sins relating to the rise and collapse of the mortgage bubble. Where did it go? Governments held on to a lot of it, a lot went to the government-sponsored Fannie and Freddie mortgage enterprises, favored “housing-related community groups” got some, some went to homeowners with mortgage struggles or to new low-interest loans. In New York, money is going to rebuild the Tappan Zee bridge and “the annual state fair is using bank-settlement money to build a new horse barn and stables.” But no one has kept track of where a lot of the money went, there being no overall effort to account for it. [Christina Rexrode and Emily Glazer, WSJ]

Maryland, which impairs foreclosures, now leads nation in foreclosure filings

Unintended consequences: “It was the second consecutive month that Maryland led the nation in [the rate of] foreclosure filings, RealtyTrac said.” While filings nationwide were down 7 percent from a year earlier, those in Maryland were up 13 percent. [Baltimore Business Journal] We’ve noted before that although liberal legislators in Annapolis imagined they were doing poorer homeowners a favor by making the state’s foreclosure process so slow, the results have included unusual delays in bounce-back from housing recessions and persistent neighborhood blight. That’s to say nothing of the entrenchment of non-paying occupants in luxury homes for years at a stretch. To quote another commentator’s words in our March item:

“Living rent-free in a $600,000 house is a ‘plight’ only in the sense that at some point you may have to stop.” [Arnold Kling on the Washington Post’s naive Prince George’s County foreclosure series; coverage of Maryland’s unusually lender-hostile foreclosure law at Overlawyered here, here, here, here, here, and here]

[cross-posted from Free State Notes]

Banking and finance roundup

  • “Fee-shifting: Delaware’s self-inflicted wound” [Stephen Bainbridge, more] Needed: a new Delaware [Reuters] Fordham lawprof Sean Griffith fights trial bar on shareholder suits [Bainbridge, more]
  • Goodbye, insurance (hugs). I think I’ll miss you most of all. [Bridget Johnson on anti-cinema, anti-stock-trading views of radical Islamist British activist and former lawyer Anjem Choudary]
  • Rare coalition of bankers, housing advocates urges limits on mortgage-related suits [W$J]
  • “The Administrative State v. The Constitution: Dodd-Frank at Five Years” hearing includes testimony from Mark Calabria of Cato (law delegates vast authority to bureaucracy, has failed to generate clear rules for regulated parties) and Neomi Rao of George Mason (unconstitutionality of Consumer Financial Protection Bureau) [Senate Judiciary Committee, related on a CFPB constitutional challenge]
  • Do-it-yourself Operation Choke Point: letter from one Illinois sheriff shut down adult-ad credit card payments [Maggie McNeill, Daniel Fisher]
  • “Obama DOJ Channels Bank Shakedown Money To Private Groups” [Dan Epstein, Investors Business Daily]
  • “The U.S. listing gap” [Doidge, Karolyi, & Stulz NBER paper via Tyler Cowen, MR]

“A New Look at the U.S. Foreclosure Crisis”

Hmmm, this doesn’t match the received account [Fernando Ferreira, Joseph Gyourko, “A New Look at the U.S. Foreclosure Crisis: Panel Data Evidence of Prime and Subprime Borrowers from 1997 to 2012”, National Bureau of Economic Research (NBER) Working Paper No. 21261, just out]:

Utilizing new panel micro data on the ownership sequences of all types of borrowers from 1997-2012 leads to a reinterpretation of the U.S. foreclosure crisis as more of a prime, rather than a subprime, borrower issue. Moreover, traditional mortgage default factors associated with the economic cycle, such as negative equity, completely account for the foreclosure propensity of prime borrowers relative to all-cash owners, and for three-quarters of the analogous subprime gap. Housing traits, race, initial income, and speculators did not play a meaningful role, and initial leverage only accounts for a small variation in outcomes of prime and subprime borrowers.

More: Daniel Fisher.