From:

To: Cc:

Gordon, Ashley (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gordonas> _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands> Adamske, Steven </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=adamskes>; Moore, Megan </o=ustreasury/ou=do/cn=recipients/cn=mooreme>; Hunt, Anita Maria </o=ustreasury/ou=do/cn=recipients/cn=hunta>; Wallace, Kim </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=wallacek>; Wolin, Neal </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=wolinn>; Warren, Elizabeth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=warrene>; Fitzpayne, Alastair </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=fitzpaynea>; LeCompte, Jenni </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=engebretsenj>; Murray, Colleen </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=murrayco>; Coloretti, Nani </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=colorettin> CFPB Press Clips 5.17.11 Tue May 17 2011 12:38:54 EDT

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Press Clips 5/17/2011

Index

Click publication title to find its location in this e-mail. Click article title to go to its source website.

Consumer Financial Protection Bureau MSN Money -- Banks attack consumer safeguards American Banker -- Consumer Protection Gets More Emphasis, Separate House at FDIC

Reverse Mortgage Daily -- CFPB Reform Bill Introduces Commissioner Who Will Oversee Reverse Mortgages

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DailyKos.com -- Banks continue efforts to keep consumers in the dark

CFPB & Congress Credit Union Times -- Consumer Protection Bureau Clash Follows Party Lines

Consumer Credit BNET (blog) -- How the Credit Rating Bureaus Favor Celebrities American Banker -- Prepaid Unemployment Benefit Cards Draw Fire from Consumer Group iWatch News (blog) -- Unregulated FICO has key role in each American's access to credit USA Today -- What impact will users feel from plan to cut debit card fees?

Housing Huffington Post -- Confidential Federal Audits Accuse Five Biggest Mortgage Firms Of Defrauding Taxpayers Other American Banker -- Turn Dodd-Frank Resolution-Plan Proposal into an Advantage Boston Globe -- Mass. investigating top for-profit college American Banker -- Growing Banks Seek to Balance Bigger Scale With Old Community Feel New York Times -- New York Investigates Banks Role in Financial Crisis Wall Street Journal -- New York AG Probes Banks Over Mortgage Securities American Banker -- Higher Capital Minimums May Bring Mortgage M&A Wave

MSN Money Banks attack consumer safeguards May 13, 2011 1:35pm By Liz Weston

The financial industry and its friends in Congress are trying to gut the Consumer Financial Protection Bureau before it even gets off the ground.

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Only one thing is powerful enough to beat special-interest money in Congress, and that's public opinion.

Which is why now is a good time for you to speak up.

Banks are maneuvering to gut the nascent Consumer Financial Protection Bureau before it even gets off the ground.

Yes, the same industry that brought you, among other goodies, a) the subprime mortgage crisis, b) anytime, any-reason rate hikes on your credit cards, c) $39 fees for $1 over-limit charges and d) huge bonuses for insiders while the economy imploded wants to be able to keep unleashing such "financial innovations" on an unsuspecting public.

So the banks have set their sights on crippling the bureau. They've gotten their functionaries in the House of Representatives to craft bills that would:

Give veto power over the bureau to the same regulators that failed to prevent the last crisis. Replace the bureau's single director with a five-member commission, to further dilute its decisionmaking powers and authority.

Prevent the bureau from even launching until a Senate-confirmed director is in place, effectively holding the bureau hostage to politics.

Bureau held hostage The banks' representatives in Congress know the majority of lawmakers wouldn't go along with these shenanigans. Even if the bills passed the House, the changes likely wouldn't make it through the Senate.

So they found a way to go around majority rule to hold the bureau hostage. Forty-four Republican senators, including some who originally voted to create the bureau, now say they won't confirm a director unless major changes are made in the bureau's structure, including instituting the multimember commission, allowing other regulators to have veto power and subjecting the bureau's funding to annual congressional review -- the latter being the best way known to humankind to create a weak and easily intimidated agency.

Make no mistake: This is all about power. Banks are terrified of any regulator that might actually force

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them to play fair with consumers. Proponents of this nonsense are harrumphing that the bureau is "too powerful," when what they mean is that bureau might actually put the interests of regular people ahead of those of Congress' big donors.

Those trying to kill the bureau try to paint it as a killer of jobs and innovation, when in fact its mandate is to protect people from unsafe and deceptive financial products. Rather than craft more regulations, Elizabeth Warren, who is setting up the bureau at President Barack Obama's request, has made it clear that the bureau will enforce those already on the books and prevent banks from hiding tricks and traps in the fine print.

'Gotcha' capitalism Warren points out the obvious: Banks and other financial companies have replaced free-market capitalism with "gotcha" capitalism, where consumers are lured in by lowball upfront prices only to be slammed with unexpected and poorly disclosed fees.

If you have any doubt that a real regulator is needed, just look at a recent survey showing most banks failed to produce a list of their fees -- even though federal law has required them to maintain and provide such lists since 1991. If you can't even get a bank to tell you what your checking account will cost, how can you trust it to be honest about the loans it offers or the other financial products it's pushing?

At its core, our recent financial crisis stemmed from risky and deceptive lending practices. Our lawmakers have done little to keep another financial crisis from happening, and now the banks' handmaidens are determined to undo the little that Congress has done.

What astonishes me is that more voters aren't calling their lawmakers on the carpet for this flagrant kowtowing to the financial industry. I guess if you were delighted about the bank bailouts, thought those fat bonus checks to bankers were a great idea and don't care if your government is run for the benefit of Wall Street, then it's OK do nothing. Otherwise, it's time to contact your lawmakers and tell them to stop trying to kill the Consumer Financial Protection Bureau before it even gets off the ground. You might say something like this: "I want you to represent my interests, not those of Wall Street. Stop the banks' efforts to gut the Consumer Financial Protection Bureau." Back to Top

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American Banker Consumer Protection Gets More Emphasis, Separate House at FDIC May 17, 2011 By Joe Adler

WASHINGTON As the government builds a new regime for writing consumer protection rules, an existing bank regulator has put a twist on enforcing them.

For most of the past decade the Federal Deposit Insurance Corp. had combined safety and soundness oversight in the same division with consumer compliance. But in the wake of the crisis and the creation of the Consumer Financial Protection Bureau to draft rules for all banks, the agency split the functions into two distinct arms, launching the Division of Depositor and Consumer Protection.

With the reorganization, the FDIC embraced a model akin to what it tried after the thrift crisis of the 1980s and '90s. The agency said the new structure strengthens its focus on compliance, as it retains authority to enforce CFPB rules for community banks, while observers said the move furthers the perception the FDIC takes its consumer protection responsibilities more seriously than other agencies.

"Before even the CFPB was a sparkle in Elizabeth Warren's eye," the FDIC was "focusing on consumer concerns that other bank regulators were ignoring, such as overdraft lending and credit compliance related to subprime issuers that they had jurisdiction over," said Travis Plunkett, a legislative director for the Consumer Federation of America.

The new division does not appear to be about adding more responsibilities, but instead about giving the consumer role, including compliance exams and development of guidance, more emphasis.

"With safety and soundness, there are good times and there are bad times. The bulk of our examination efforts and staffing are on the risk management side," said Mark Pearce, a former state regulator and consumer advocate who directs the new division. "Having its own division structure ensures that we maintain that consistent and dedicated focus on consumer protection."

Richard Riese, director of the American Bankers Association's Center for Regulatory Compliance, said the division's importance is that consumer compliance oversight "is now on a reporting line to the [FDIC] chairman without going through safety and soundness."

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That increased stature comes as all the agencies take on a new role under the Dodd-Frank Act: synchronizing their enforcement with the CFPB. The new agency, which will not formally inherit is authorities until July 21 and has yet to have a permanent director, will enforce its rules for companies with assets of more than $10 billion. But the FDIC and Federal Reserve Board will share enforcement for smaller banks with state charters, while the Office of the Comptroller of the Currency will still enforce rules for smaller national banks.

Observers said the new FDIC division will help give the agency more influence when weighing in on moves by the consumer protection bureau, including when the FDIC is concerned about the effect of proposed consumer rules on community banks.

"It was worthwhile doing regardless of CFPB," but "it certainly has significant additional advantages in terms of coordinating with the CFPB," said Michael Calhoun, president of the Center for Responsible Lending.

Pearce, who was Calhoun's predecessor at the center, agreed.

"Having all of the consumer protection efforts within one division hopefully will make it easier for us to work with the bureau in a collaborative and cooperative fashion," Pearce said.

"Dodd-Frank encourages consultation," Pearce added. "We hope that consultation will be real. The FDIC is the primary federal regulator with the most community banks under supervision. Understanding the perspectives of community banks and their operations and bringing that perspective to bear in the policy arena with the bureau is something that we intend to do."

In announcing the new structure in August, shortly after Dodd-Frank's enactment, the FDIC said the new division would "provide increased visibility to the FDIC's compliance examination and enforcement program."

It also houses staff specializing in educating customers about deposit insurance. In addition to the new consumer division, the FDIC created an office focusing on the agency's authority under Dodd-Frank to resolve systemically important firms.

Under the reorganization, which took effect in mid-February, the former DSC was renamed the Division of Risk Management Supervision.

After Pearce was hired the new division added two well-known figures from the policy and advocacy

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worlds. Jonathan Miller, who was a key Democratic aide for the Senate Banking Committee during the drafting of Dodd-Frank, was named a deputy director of the division in charge of policy and research. Keith Ernst, who ran the lending center's research wing, was named associate director.

Plunkett said the hirings will bolster the FDIC's credentials as it works with the new consumer bureau.

"The staff in that division have deep experiences from the public-interest point of view and the regulatory point of view in helping to protect consumers," he said. "They will speak the same language.

"It will be a very good thing for the CFPB to hear from the FDIC, from people they know have a strong commitment to consumer protection to hear from the point of view of the banks regulated by the FDIC."

This is not the first time such a reorganization has been attempted. In 1994, after the savings and loan crisis, the agency formed the Division of Compliance and Consumer Affairs, separating consumer protection from safety and soundness supervision. Eventually, after the industry had recovered and the FDIC had new leadership, it went back to the previous model. In 2002, the two functions were consolidated in the Division of Supervision and Consumer Protection.

"Obviously, the FDIC has had consumer protection responsibilities for a long time and over that history there have been different ways to organize our efforts," Pearce said. "We've had separate divisions in the past, and merged those divisions together, and we've now taken a look at things and having a separate division makes sense."

Before coming to the FDIC, Pearce was chief deputy banking commissioner in North Carolina, where the Center for Responsible Lending is based.

The state "was at the forefront on a lot of [consumer] issues," Calhoun said. "They set up one of the first foreclosure diversion programs. It saved thousands of households. But North Carolina is also rightfully regarded as having a regulatory environment that is friendly to banks as well."

To an extent, the FDIC's decision to split up consumer compliance and safety and soundness regulation corresponds with the broader debate leading up to the CFPB's creation.

The Fed, which for years has had a distinct consumer-oriented arm, lost its rule-writing authority to the new bureau under Dodd-Frank amid criticism the central bank failed in its duties leading up to the crisis.

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Supporters of creating a separate agency said consumer protection had languished for years at the banking agencies in the shadows of safety and soundness, while critics said breaking the functions apart would have negative consequences.

"It's a microcosm of the same issues CFPB raised when it was proposed," said Arthur Wilmarth, a law professor at George Washington University. "The notion was: Can you simply include consumer protection within the broader safety and soundness examination function, and will enough attention be given to consumer compliance issues? The concern at least before the crisis was consumer compliance issues were given fairly short shrift in the traditional banking agencies, with the exception of the FDIC after Sheila Bair became chair."

It also reflects the priorities of the chairmen involved. Outgoing FDIC Chairman Sheila Bair was much more consumer-minded than her predecessor, Don Powell, who merged the safety and soundness and consumer compliance divisions in 2002. Vice Chairman Marty Gruenberg, who is expected to be nominated as Bair's successor, also has a long-standing interest in consumer protection.

Plunkett said all the regulators seem to have warmed to a more aggressive consumer role after the crisis.

"I am hopeful that the gaps, which have been very wide in the past, will not exist, because there is an increased focus on protecting consumers and on coordinating to protect consumers," he said.

Cornelius Hurley, a banking law professor at Boston University and a former Fed lawyer, said that, in a sense, the FDIC is following a model similar to that of the central bank with its Division of Consumer and Community Affairs.

"They may say, 'We have a robust presence in the field that nobody else does,' " Hurley said. "Plus, historically the Fed has been the repository of consumer affairs. They are going to have whatever's left, and they may figure that that's the nucleus for what the FDIC is just going about creating."

Meanwhile, although the OCC's management of compliance exams is housed under its broader supervision arm, it employs teams that concentrate on consumer compliance issues in its legal division. Yet the agency also operates a distinct compliance division responsible for developing consumerfocused guidance.

"That division is probably going to double in size in the near future just to keep up with the Dodd-Frank provisions," an OCC spokesman said.

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Back to Top

Reverse Mortgage Daily CFPB Reform Bill Introduces Commissioner Who Will Oversee Reverse Mortgages May 16, 2011 By John Yedinak

What the leadership of the Consumer Financial Protection Bureau will look like isnt clear, but a bill that is slowly making its way through the House of Representatives shows how quickly things could change for the reverse mortgage industry.

Introduced by Rep. Spencer Bachus (R-Ala.), H.R. 1121, a bill that would reform the CFPB and would establish a five-member commission to govern the agency, passed the Committee on Financial Services last week. Included in the bill is an amendment from Rep. Nydia Velazquez (D-N.Y.) that assigns one commissioner to oversee the bureaus activities in protecting consumers who are older or are veterans from abusive, unfair and deceptive lending practices.

The CFPB faces many challenges dealing with the aftermath of the financial collapse that eroded $14 trillion in wealth and saw 7.5 million jobs lost, said Velazquez during a House Financial Services markup last week. Strong leadership will be required to address the many aspects of the economy that continue to be plagued by predatory and abusive lending practices.

To demonstrate the need for such a position, Rep. Velazquez said lenders have been targeting the equity in seniors homes with reverse mortgages.

Over the last decade the number of reverse mortgages has increased more than 1,300%. Unfortunately, this prolific increase of reverse mortgages has resulted in 61% more bankruptcies by Americans over 55.

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A report from the American Bankruptcy Institute cites the 61% figure as the percentage increase of filers ages 55 and over from 2002 to 2007, but fails to mention anything about reverse mortgages. RMD contacted Rep. Velazquezs office seeking clarification of her statements, but several attempts for comment made by email and phone were not returned as of press time.

Rep. Carolyn B. Maloney (D-N.Y.) voiced her strong support of the amendment, which she said would bring leadership and accountability to the bureaus new offices for servicemember affairs and financial protection for older Americans.

To have this additional protection and focus is legitimate and appropriate, and it will only serve to ensure that the CFPB carries out its consumer protection mission with older Americans and with our men and women in the military, she said.

The amendment added to the bill that passed by a 33 to 24 vote late last week.

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Daily Kos Banks continue efforts to keep consumers in the dark MAY 16, 2011 AT 07:00 PM PDT By Joan McCarter

There's a fundamental aspect of consumer financial protection that the banks just don't seem to be grasping, as is apparent in this statement about the banks efforts to keep us in the dark about fraud. At issue here is a complaint line for consumers to be created by the Consumer Financial Protection Bureau, and whether these complaints should be available in a public database. "The point of banking supervision is to get the system working properly, not to air dirty laundry and scare capital away from banks," Richard Riese, senior vice president at the bankers associations Center for Regulatory Compliance, said in an interview.

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The point of banking supervision is to make the banks comply with the law and to protect consumers from unnecessary financial risk in the form of shady practices by banks.

Nonprofit groups such as Consumers Union and the Sunlight Foundation are pushing for an open system that would allow anyone to scan the raw submissions. Industry groups including the American Bankers Association argue that making them public could allow frivolous complaints to damage reputable brands.... The hotline has become a focal point of a philosophical debate about the bureaus rolewhether it should aim to improve consumer financial products primarily by working directly with companies or by bringing public attention to unfair practices.

One could argue that if the banks and financial institutions were complying with the law and providing good customer service and fair products, then they wouldn't have to worry about even having any dirty laundry to air. Public exposure of bad bank and financial institution practices has two key goals: providing information to consumers so they can make educated decisions about where to put their money, and keeping pressure on institutions to keep their noses clean.

In setting up the bureau, Elizabeth Warren has argued for a very 21st century, public approach: crowd sourcing.

Warren has said that a public database would allow consumers to look for patternsa process known as "crowd- sourcing"and make their decisions accordingly. "Through crowd-sourcing technology, consumers can deal collectively with those who would take advantage of themand can reward those who provide excellent products and services," Warren said in a speech on Oct. 28....

Warren addressed the consumer complaint system at an April 6 meeting with groups that campaign for more open government, according to a blog post on the agencys website. The groups urged Warren to make the complaints public despite bank objections, said Angela Canterbury, director of public policy at the Project on Government Oversight, a watchdog group.

"These concerns about consumer complaints on the part of industry reflect an old-fashioned sensibility," Tom Lee, director of Sunlight Labs at the Sunlight Foundation, said in an interview.

Lee, who attended the meeting, pointed out that Amazon.com Inc. (AMZN) publishes unedited consumer complaints about products on its website "and global capitalism has not ground to a halt."

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The whole point of the Consumer Financial Protection Bureau is just that: consumer protection. It's worked for the automobile industry, which has been subject to a similar system since 1966. The National Highway Transportation Safety Administration maintains a public database. It's been fine for them, says Wade Newton, a Wade Newton, a spokesman for the Alliance of Automobile Manufacturers. "We compete on consumer satisfaction.... The idea that we have a channel to get feedback from our customers is a good thing."

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Credit Union Times Consumer Protection Bureau Clash Follows Party Lines May 18, 2011 By Claude R. Marx

Maybe Bill Clinton was right.

Everybody in Congress and in the Obama administration said they are for consumer protection. However, in the debate over the new consumer bureau, it seems to be the caseto paraphrase the former presidentthat it depends on what the meaning of "consumer protection" is.

The disagreements about the structure and leadership of the Consumer Financial Protection Bureau are mostly breaking down along party lines. Being against consumer protection would be like being against apple pie.

Last year, the Democratic-controlled Congress passed a financial overhaul bill that created the bureau, which is supposed to begin operating in May.

Republicans fought the bill at every turn and were especially opposed to the new bureau. They argued that it would duplicate the efforts of existing regulators, punish those who didnt cause the financial crisis and add to regulatory burdens.

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Thats the argument that some credit union lobbyists made. They contended that since credit unions were among the angels of the financial crisis, they didnt need additional regulatory burdens.

Proving that in many Washington policy clashes nothing is ever really settled, the GOP is trying to refight that battle. House Republicans (who now control that chamber) are on track to pass a series of structural changes to the agency.

Senate Republicans are threatening to filibuster the confirmation of anyone President Obama nominates to run the bureau if Obama and Senate Democrats dont agree to structural changes in the bureau. Senate Democrats, who hold a majority of seats but not the 60 needed to break a filibuster, say no dice. Obama could circumvent lawmakers and name a new director as a recess appointment, which would allow him or her to serve until the end of 2012.

Such a move would give Obama what he wants in the short term. He would have someone running a bureau that is quite important to him. And if he picked Elizabeth Warren, who came up with the idea and is in charge of setting up the bureau, hed be sending the political equivalent of a bouquet of roses to his liberal base. Thats important leading up to an election since many on the left think Obama has gone wobbly.

The downside to such a move is that he would alienate congressional Republicans, whose votes he needs on certain bills. But since the GOP has said defeating Obama next November is its No. 1 priority, comity and bipartisanship may be in short supply during the next 18 months.

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BNET How the Credit Rating Bureaus Favor Celebrities May 16, 2011 By Alain Sherter

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Getting a mistake fixed in your credit report can be an ordeal unless youre Mick Jagger. Reports the NYT:

The three major agencies, Equifax, Experian and TransUnion, keep a V.I.P. list of sorts, according to consumer lawyers and legal documents, consisting of celebrities, politicians, judges and other influential people. Those on the list and they may not even realize they are on it get special help from workers in the United States in fixing mistakes on their credit reports. Any errors are usually corrected immediately, one lawyer said.

And the great unwashed? Disputes go straight into the proverbial (and automated) black box, where overseas phone reps spend a grand total of two minutes trying to sort our your problem. The credit bureaus are supposed to investigate, but seldom actually do, experts say.

The credit agencies dont sweat such disputes for one very simple reason they dont have to. First, their customers arent consumers, but rather the creditors that provide or use credit data. As one expert told the Times:

There is no neutrality in the credit reporting agencies, said John Ulzheimer, who has been an expert witness in more than 80 credit-related cases and is president of consumer education at SmartCredit. com. They work for the lenders who buy credit reports from them, and anyone who suggests otherwise is not being intellectually honest.

Second, getting to the bottom of why, say, grandma suddenly stopped payment on her Harley-Davidson is expensive. Thats why some bureaus pay their outsourced contractors as little as 57 cents to try to resolve a customer complaint. Its also why reps commonly have dispute quotas requiring them to blow through dozens of fraud, identity theft or other complaints per day. In fact, as Kevin Drum points out, the credit agencies actually make money peddling services to protect consumers from the bureaus own mistakes.

Locked-in state

Put another way, why would these companies wrack up costs helping people who arent even their customers?

If the credit bureaus dont need consumers, by contrast, consumers need the bureaus. Unless you have satchels of cash laying around, you obviously need a decent credit history when it comes to, say, buying a car, attending college or, increasingly, even getting a job. The upshot: Most consumers are

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captive to companies that have little use for them.

Under the law, meanwhile, consumers have little recourse in forcing the credit bureaus to correct an incorrect report. Given the importance of a good credit record these days, thats wrong. Its also economically counterproductive people cant spend or borrow if their credit is unfairly marred.

The solution? Well, if the Consumer Financial Protection Bureau survives the Republican hit-job in Congress, it will have authority to develop stricter dispute-resolution rules. The goal here is to ensure that when mistakes crop up in your credit report, everyone can get some satisfaction.

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American Banker Prepaid Unemployment Benefit Cards Draw Fire from Consumer Group May 17, 2011 By Will Hernandez

Prepaid debit cards for unemployment benefits are under fire from a consumer group that claims they have unnecessary and undisclosed costs.

The National Consumer Law Center has singled out prepaid card issuers, particularly U.S. Bancorp and JPMorgan Chase & Co. The organization was especially critical of U.S. Bank, which charges $10 to $20 in overdraft fees on prepaid cards it issues in Arkansas, Idaho, Nebraska, Ohio and Oregon.

"There is no excuse for permitting overdraft fees to drain funds from cash-strapped unemployed workers," the group said in a report, which was released May 10.

But U.S. Bank counters that overdraft coverage is an opt-in feature for cardholders. "The terms are clearly disclosed so cardholders are aware of the fee should they need to use it," a bank spokeswoman

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said. She stressed that overdraft protection is an option states can choose to add to an unemployment card program.

The spokeswoman also challenged the group's claims that the overdraft charges might violate federal law.

"All of our products and services go through rigorous regulatory compliance review," she said.

The consumer group, which did not respond to a request for additional comment on the report, also criticized Tennessee's prepaid debit unemployment card, which JPMorgan Chase issues. The report claims Tennessee's card had the most "junk fees" and claims that the state does not offer free withdrawals at ATMs.

However, the Tennessee Department of Labor and Workforce Development said cardholders may make withdrawals for free at MoneyPass or JPMorgan Chase automated teller machines. ATM withdrawals elsewhere cost $1 for the first two transactions and 60 cents for each additional withdrawal.

JPMorgan Chase said the states ultimately determine their fee schedules.

The consumer group urged the Consumer Financial Protection Bureau to ban overdraft and other "unfair" fees and to improve transparency and competition by requiring issuers to place all fee schedules in a central location.

It remains unclear how the bureau will address prepaid debit cards. A bureau representative last month said it did not have anything to share yet regarding prepaid cards. The bureau, however, is reaching out to industry players.

Steve Streit, Green Dot Corp.'s chairman, president and chief executive, said last month that the prepaid card provider has been "very positively impressed by [the bureau's] genuine outreach to the industry and their high level of understanding of both our products and the customers we serve."

Green Dot recently was involved in a pilot test with the U.S. Treasury Department to distribute 2010 tax refunds to reloadable prepaid card accounts.

Bonneville Bank, a subsidiary of Bonneville Bancorp, a Provo, Utah, bank holding company, issued the cards. Green Dot has an application to buy Bonneville Bancorp pending regulator approval.

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Back to Top

iWatch News Unregulated FICO has key role in each American's access to credit May 17, 2011 By Amy Biegelsen

Like Kleenex or Xerox, the word FICO has become shorthand for an entire industry, in this case the credit scores that determine every Americans access to loans, credit cards, apartment rentals and insurance.

Despite a name that vaguely sounds like it must be federal something-or-other, FICO actually stands for Fair Isaac Corp., a Minneapolis company that creates proprietary mathematical algorithms used to calculate consumer credit scores. But FICO, which had $605 million in revenue last year, is not directly regulated by any government agency and its credit rating formulas are secret.

Credit scores boil down consumer payment histories on short and long-term debts ranging from a home improvement loan to phone bills into a three-digit number between 300 and 850. A score over 650, for example, is generally considered to be pretty good, while a score of 580 is not.

The scores largely determine whether people can qualify for mortgages, car loans, insurance, credit cards or other major financial transactions. Bad scores can mean applicants will be denied outright or pay higher rates. According to Fair Isaac, A 100-point difference in your FICO score could mean over $40,000 extra in interest payments over the life of a 30-year mortgage on a $300,000 home loan.

That number is a passport to whether people can get ahead in life, said Ed Mierzwinski, director of the U.S. Public Interest Research Groups consumer program. And nobody knows what its derived from.

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Consumer groups also complain that without knowing how the formula is put together, theres no way to be sure its reasonable or accurate. Furthermore, they say errors in credit reports can be devastating, and difficult to fix.

In one extreme example, a Virginia man killed himself in 2006 after repeated attempts to correct an inaccurate credit history that blocked him from getting a mortgage, according to the National Consumer Law Center. Kenneth Baker, who had always paid his bills on time , left a suicide note referring to his ordeal of failing to clear his credit record of the delinquencies and judgments that belonged to another man with the same name.

An impartial government agency will soon issue its evaluation of whether FICO and the credit bureaus are playing fair.

The new Consumer Financial Protection Bureau has been specifically tasked with producing by July 21 a study analyzing disparities in reports the credit bureaus sell to creditors and to consumers.

"You can buy [credit] bureau scores directly from the bureaus for a fee, but the score they sell you may not be the same score that a lender might use. CFPB is studying how much the scores you can buy from the bureaus are different from the ones the lenders use, and whether that difference is important in how lenders judge your credit worthiness," said Corey Stone, assistant director of the agency's credit information markets team.

FICO officials did not respond to iWatch News requests for an interview. How scoring works The FICO formulas dont do anything on their own; they are purchased by credit risk information companies and applied to individualized consumer data.

TransUnion Corp., Equifax Inc. and Experian Plc the three major credit bureaus vacuum up information on customers payment histories with banks, retailers, credit cards, utility companies, landlords, mortgage loans, student loans, phone bills, and even parking tickets.Think of it this way: If credit scores were chili, FICO would write various recipes then sell them to the credit bureaus, which gather the raw ingredients themselves.

The industry is huge.

Experian and TransUnion each say they have credit histories on 500 million consumers worldwide.

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Experian, the industry leader, saw its revenue grow to $3.9 billion last year while No. 2 Equifax reported sales of nearly $1.9 billion. TransUnion, the third-largest credit bureau which was privately owned last year, had revenue of more than $1 billion, according to one industry analysts estimate.

Together, the three companies plus FICO control all this data and control the access to credit for every American, said Chi Chi Wu, a staff attorney at the National Consumer Law Center. The main force thats been keeping them somewhat in line is private litigation.

Until now, the Federal Trade Commission has overseen the credit bureaus, and thereby FICO, indirectly. But the FTCs limited authority meant that for the most part, the agency could only respond to complaints rather than acting in advance to stop any problems, leaving private lawsuits to take up the slack.

The FTCs power to make administrative rules that could proactively stop financial services abuses are complex, cumbersome and time-consuming, resulting in rule making proceedings lasting many years, agency Chairman Jon Leibowitz told Congress last year.

The new Consumer Financial Protection Bureau (CFPB), on the other hand, will be able to write rules policing large participantsin certain financial markets. That means it could potentially require reports and conduct examinations to make sure the credit scorers currently comply with the law, not just enforce complaints after the fact.

Equifax and TransUnion did not respond to requests for comment.

"We support the CFPBs study of credit scores and believe it will inevitably conclude that consumers are best served by focusing less on the different types of consumer credit scores available, and more on the underlying document that is used to generate a score the credit report and how it can be an empowering tool for consumers," Experian said in a statement.

Privacy concerns Wu says that the U.S. form of credit reporting is relatively rare in other countries. Privacy laws prevent companies from collecting personal data in France and Argentina, while a government agency compiles the information in some countries.

FICO contends that credit scoring is not an invasion of privacy because it evaluates the same credit bureau report, application form, and bank file information that lenders already look at.

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A score is simply a numeric summary of that information, the FICO website says. Scoring has proven to be an accurate and consistent measure of repayment for all people who have some credit history.

Defenders of FICO say a federal law giving consumers free access to one credit report each year also gives them more power over their financial futures.

Terry Clemans, executive director of the National Credit Reporting Association, Inc. is not convinced. While consumers can get a free credit report each year, or buy additional ones, he says there is no guarantee they will reflect the score that credit bureaus give to creditors.

Its a real roll of the dice for a consumer to rely on any score they can buy, because the score the lender buys may not even be close, Clemans said.

That is because credit bureaus commonly buy multiple FICO algorithms. The credit bureaus use different ones to generate scores depending on what the end use will be a general overview of a consumers credit history, for example, or one tailored to indicate default risk to a mortgage lender.

Experian uses FICO-branded scores for its creditor reports, Clemans says, but the scores the company sells to consumers are not calculated with a FICO algorithm.

Critics also say that the opaque credit scoring algorithms ignore the distinction between a person who suddenly falls behind in payments because of a huge medical bill, and a genuinely irresponsible borrower with a flatscreen-TV habit.

A former FICO executive says those distinctions are eventually reflected in the credit scoring formula.

Efficient scoring cuts costs for consumers FICO is trying to build the best predictive model they can, said Tom Quinn, FICOs former vice president of scoring who now works for the consumer education website Credit.com. If the data predicts a different pattern, between people with different kinds of debt, then that would be picked up eventually. They let the data tell them whats fair.

A credit score also helps protect consumers from discrimination, Quinn said. The creditor is looking at just the information in the credit, he said, versus back in the old days when you sat in front of a loan officer.

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The computerized system of credit scoring and distributing also makes it more efficient to process credit applications, ultimately reducing the cost of credit to consumers.

According to Hoovers Inc., a clearinghouse for company profiles and industry information, the newest FICO formula reduces penalties for multiple accounts and is more lenient on occasional late payments, which don't necessarily indicate a poor credit risk. Additionally, authorized credit card users (such as teenagers on a parent's account) no longer benefit from activities of the account owners, which prevents artificial score inflation.

Another concern of consumer groups: Credit bureaus have little, if any, financial incentive to treat consumers fairly.

Before extending credit to a consumer, an auto dealer or a landlord buys the customers credit score from one of the three big credit bureaus to assess the risk of default. That means the customer for the credit bureaus is the creditor, not the consumer, critics say.

Consumers cant choose Equifax over Experian, Wu said. I cant say I dont like the way TransUnion handled my data. So even normal market forces, which are supposed to keep the market in line, dont.

As for increased transparency of how scores are calculated, Quinn says the new consumer agency should have some insight into how FICO models are developed to ensure fairness and accuracy. But too much sunlight might ultimately undo the consumer benefits that having a trusted metric has brought.

There are years and years and years of intellectual property that have been built into these scores and [companies] should have a right to have that protected, Quinn said. If a company like FICO were to reveal the coding for the model, then [consumers] could potentially use that to manipulate their score for short-term benefit. The creditor will lose confidence in the tool and ultimately raise the cost of credit for everyone.

The value of the proprietary data underlying their business is not lost on the three credit bureaus, which together spent more than $6 million on lobbying during the past four years (see related table).

What will happen with oversight of FICO and the credit bureaus may become clearer as the new Consumer Financial Protection Bureau pulls itself together. The bureau, created by the Dodd-Frank financial reform law, officially opens on July 21, but political gridlock threatens to stall the appointment of a director, and the agencys powers will be limited until it has one.

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As Fair Isaac Corp. prepares for more attention, a final note about its unusual moniker: The company was named after its 1956 founders: Bill Fair, a mathematician, and Earl Isaac, an engineer.

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USA Today What impact will users feel from plan to cut debit card fees? May 16, 2011 By Sandra Block

The battle about a plan to slash the fees retailers pay banks every time a shopper uses a debit card has reached epic proportions, with both sides spending millions of dollars to convince lawmakers that they're looking out for average Americans.

Financial institutions have blanketed the Washington, D.C., subway with ads calling the planned reduction in swipe fees a "$12 billion gift to retailers." Retailers have characterized proposals to postpone the fee reduction as another bailout for the banking industry.

Caught in the cross hairs are consumers, who tend to have a dim view of banks but don't have a lot of faith in retailers, either. A March poll sponsored by the Merchant Payments Coalition, a group representing retailers, found that 70% of likely voters favor a reduction in swipe fees, once the rule was explained to them. But a survey by Javelin Strategy & Research, a bank consulting firm, found that 60% of consumers don't expect prices to fall if swipe fees are reduced.

Danielle Haskell, 41, of Monrovia, Calif., says retailers should pass on savings from lower debit card fees to their customers, but adds, "I'd be shocked out of this world if that ever happened."

Sheila Sutherland, 61, of Upstate New York, says that if banks limit consumers' use of debit cards which some have threatened to do she'll go back to using cash: "I'm sick of bank robbery and it's the banks that are doing the robbing."

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The broad financial reform legislation that Congress enacted last year required the Federal Reserve to issue rules that place "reasonable" limits on debit card fees. In December, the Federal Reserve proposed capping fees at 12 cents per transaction, down from an average of 44 cents. Since releasing the proposal, the Federal Reserve has received more than 11,000 comment letters.

Amid the controversy, this much is clear: The Fed rule, scheduled to take effect July 21, could have farreaching effects on how consumers spend and save, in ways that will be both welcome and distasteful.

Here are five ways a reduction in swipe fees could affect you: Discounts and perks for debit card users. If the Federal Reserve's proposed rule is enacted, debit card fees will be sliced by up to 70%, but the fees retailers pay when shoppers use credit cards won't be affected. According to the National Retail Federation, debit card fees average 1% to 2% of the cost of a transaction and would go lower; credit card fees average 2% to 3% and wouldn't change. That means retailers will have a huge incentive to encourage customers to use debit cards instead of credit cards.

Possible enticements include:

Across-the-board discounts. Currently, many gas stations offer customers a discount for using cash. A reduction in swipe fees could lead to three prices at the pump: one for cash, one for debit and one for credit, says Mallory Duncan, general counsel for the National Retail Federation. Enhanced loyalty rewards. Retailers that already offer special deals for loyalty card holders could offer even lower prices when members use debit cards, Duncan says. For example, consumers who use a grocery store club card might get an additional discount on steaks if they pay with their debit cards, he says. Extra services. Consumers who purchase luxury items and high-end appliances typically use credit cards, and a small discount might not be enough to get them to switch to debit. As a result, retailers will look for other ways to add value, Duncan says. For example, a retailer might offer debit card users free delivery, or in the case of clothing, free alterations, he says.

Higher bank fees. Last month, Chase scrapped a pilot program to charge non-customers up to $5 to use its ATMs. But while a $5 ATM fee appeared to exceed what consumers will tolerate, many other fees will rise if the Fed proposal is enacted, bank analysts say. Most banks will end free checking unless customers maintain a minimum balance, predicts Robert Hammer, CEO of R.K. Hammer, a bank advisory firm. Customers who want paper credit card statements or copies of canceled checks will also have to pay a fee, he says.

Other services that are subsidized by debit card fees include 24/7 customer service and online banking, says the Financial Services Roundtable, a trade group. Without "reasonable" swipe fees, the group

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says, financial institutions "will be required to charge consumers for these services."

Some consumer groups are concerned that banks' efforts to make up for lost debit card fees could make it more difficult for low-income consumers to afford a basic bank account. The National Community Reinvestment Coalition, for example, has called on the Fed to delay the reduction in swipe fees until it analyzes the potential impact on low-income communities.

The fee increases won't be limited to big banks, says Fred Becker, chief executive of the National Association of Federal Credit Unions. More than two-thirds of NAFCU members said they're considering eliminating free checking if the swipe-fee proposal is adopted, Becker says, and more than half said they may lower interest rates on savings accounts. Credit unions and small banks have been vociferous opponents of the swipe-fee provision, even though the legislation exempts institutions with assets of less than $10 billion. "We don't think, as a practical matter, that a two-tiered system will work," Becker says. It's unclear whether processing systems can be adapted to accept two different fees for debit cards, he says. Credit unions and small banks also fear that retailers will refuse to accept their debit cards.

The Merchants Payments Coalition has dismissed that concern, arguing that it's bad business to discriminate against customers based on the debit cards they use. The group also contends that MasterCard and Visa network rules require merchants to accept all their debit cards, without regard to the issuer.

Better credit card rewards. Faced with sharply diminished revenue from debit cards, financial institutions are seeking ways to encourage customers to use credit cards instead, says Bill Hardekopf, chief executive of LowCards.com. One tried-and-true way is to offer airline miles, cash or other rewards. In March, for example, Capital One offered to match up to 100,000 airline miles for customers who signed up for its Capital One Venture Rewards card (the program ended in early April after Capital One gave away the 1 billion miles it allocated for the program). Customers who sign up for the new Chase Freedom Visa can earn up to $100 in cash back if they spend up to $500 in the first three months. Other card issuers are offering up to 5% cash back on certain categories of purchases, such as gas or groceries. To qualify for these attractive rewards, though, card holders need excellent credit. The economic downturn led to a jump in credit card defaults, and financial institutions are still unwilling to take risks, Hardekopf says. Their ideal customer, he says, is someone with a high credit score who uses credit cards frequently generating lots of transaction fees then pays the full bill every month. The way card issuers compete for that elusive customer, Hardekopf says, "is by upping rewards."

Less favorable interest rates. More than half of credit unions are considering lowering rates on deposits if the swipe fee proposal is enacted, according to a NAFCU survey. A quarter said they would raise rates on loans.

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Penalty interest rates for credit card holders could also skyrocket, Hammer says. Some banks are already charging penalty rates of up to 30% on new purchases when card holders make a late payment. A few charge even higher rates for delinquent customers, he says. Banks that haven't already boosted penalty rates probably will do so in the future, depending on how much they lose in swipe-fee revenue, Hammer says.

Fewer rewards, higher fees for debit cards. In the past, banks had a strong incentive to reward customers for using their debit cards, says Ken Lin, chief executive of Credit Karma.com, a website that helps consumers improve their credit scores. Debit cards generated nearly as much in swipe fees as credit cards, without the risk that customers wouldn't pay the bill, he says.

But a cap on fees would make such rewards programs unprofitable, Lin says. SunTrust, Wells Fargo, JPMorgan Chase and PNC Bank have already informed customers of plans to curtail or phase out rewards programs.

In a letter to customers, SunTrust stated that the Fed proposal "will impact the economics of the industry's check card programs. As a result, SunTrust will no longer offer the SunTrust Rewards Program for any SunTrust-issued check card."

Once the cap on fees goes into effect, Lin says, "I don't think you'll see anymore rewards-based debit cards."

Also, banks might charge debit card holders an annual fee unless they use their card a specific number of times a month, Hammer says. Sixty-seven percent of NAFCU members said they're considering imposing an annual or monthly fee for debit card users.

While consumers may miss the rewards and grouse about annual fees, they're unlikely to abandon debit cards in favor of credit cards any time soon. Debit card payment volume exceeded credit card volume for the first time in 2009, according to Javelin, a trend believed to have continued in 2010. With memories of the recession still fresh, debit cards have become the preferred payment choice for consumers who want to live within their means, analysts say.

"The thrift mentality has taken over," Hammer says.

"Banks are going to have to figure out how to deal with it. "

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Huffington Post Confidential Federal Audits Accuse Five Biggest Mortgage Firms Of Defrauding Taxpayers May 16, 2011 4:42 PM ET By Shahien Nasiripour

WASHINGTON -- A set of confidential federal audits accuse the nations five largest mortgage companies of defrauding taxpayers in their handling of foreclosures on homes purchased with government-backed loans, four officials briefed on the findings told The Huffington Post.

The five separate investigations were conducted by the Department of Housing and Urban Developments inspector general and examined Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial, the sources said.

The audits accuse the five major lenders of violating the False Claims Act, a Civil War-era law crafted as a weapon against firms that swindle the government. The audits were completed between February and March, the sources said. The internal watchdog office at HUD referred its findings to the Department of Justice, which must now decide whether to file charges.

The federal audits mark the latest fallout from the national foreclosure crisis that followed the end of a long-running housing bubble. Amid reports last year that many large lenders improperly accelerated foreclosure proceedings by failing to amass required paperwork, the federal agencies launched their own probes.

The resulting reports read like veritable indictments of major lenders, the sources said. State officials are now wielding the documents as leverage in their ongoing talks with mortgage companies aimed at forcing the firms to agree to pay fines to resolve allegations of routine violations in their handling of foreclosures.

The audits conclude that the banks effectively cheated taxpayers by presenting the Federal Housing Administration with false claims: They filed for federal reimbursement on foreclosed homes that sold for less than the outstanding loan balance using defective and faulty documents.

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Two of the firms, including Bank of America, refused to cooperate with the investigations, according to the sources. The audit on Bank of America finds that the company -- the nations largest handler of home loans -- failed to correct faulty foreclosure practices even after imposing a moratorium that lifted last October. Back then, the bank said it was resuming foreclosures, having satisfied itself that prior problems had been solved.

According to the sources, the Wells Fargo investigation concludes that senior managers at the firm, the fourth-largest American bank by assets, broke civil laws. HUDs inspector general interviewed a pair of South Carolina public notaries who improperly signed off on foreclosure filings for Wells, the sources said.

The investigations dovetail with separate probes by state and federal agencies, who also have examined foreclosure filings and flawed mortgage practices amid widespread reports that major mortgage firms improperly initiated foreclosure proceedings on an unknown number of American homeowners.

The FHA, whose defaulted loans the inspector general probed, last May began scrutinizing whether mortgage firms properly treated troubled borrowers who fell behind on payments or whose homes were seized on loans insured by the agency.

A unit of the Justice Department is examining faulty court filings in bankruptcy proceedings. Several states, including Illinois, are combing through foreclosure filings to gauge the extent of so-called robosigning and other defective practices, including illegal home repossessions.

Representatives of HUD and its inspector general declined to comment.

The internal audits have armed state officials with a powerful new weapon as they seek to extract what they describe as punitive fines from lawbreaking mortgage companies.

A coalition of attorneys general from all 50 states and state bank supervisors have joined HUD, the Treasury Department, the Justice Department and the Federal Trade Commission in talks with the five largest mortgage servicers to settle allegations of illegal foreclosures and other shoddy practices.

Such processes have potentially infected millions of foreclosures, Federal Deposit Insurance Corporation Chairman Sheila Bair told a Senate panel on Thursday.

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The five giant mortgage servicers, which collectively handle about three of every five home loans, offered during a contentious round of negotiations last Tuesday to pay $5 billion to set up a fund to help distressed borrowers and settle the allegations.

That offer -- also floated by the Office of the Comptroller of the Currency in February -- was deemed much too low by state and federal officials. Associate U.S. Attorney General Tom Perrelli, who has been leading the talks, last week threatened to show the banks the confidential audits so the firms knew the government side was not playing around, one official involved in the negotiations said. He ultimately did not follow through, persuaded that the reports ought to remain confidential, sources said. Through a spokeswoman, Perrelli declined to comment.

Most of the targeted banks have not seen the audits, a federal official said, though they are generally aware of the findings.

Some agencies involved in the talks are calling for the five banks to shell out as much as $30 billion, with even more costs to be incurred for improving their internal operations and modifying troubled borrowers home loans.

But even that number would fall short of legitimate compensation for the bank's harmful practices, reckons the nascent federal Bureau of Consumer Financial Protection. By taking shortcuts in processing troubled borrowers' home loans, the nation's five largest mortgage firms have directly saved themselves more than $20 billion since the housing crisis began in 2007, according to a confidential presentation prepared for state attorneys general by the agency and obtained by The Huffington Post in March. Those pushing for a larger package of fines argue that the foreclosure crisis has spawned broader -- and more costly -- social ills, from the dislocation of American families to the continued plunge in home prices, effectively wiping out household savings.

The Justice Department is now contemplating whether to use the HUD audits as a basis for civil and criminal enforcement actions, the sources said. The False Claims Act allows the government to recover damages worth three times the actual harm plus additional penalties.

Justice officials will soon meet with the largest servicers and walk them through the allegations and potential liability each of them face, the sources said.

Earlier this month, Justice cited findings from HUD investigations in a lawsuit it filed against Deutsche Bank AG, one of the world's 10 biggest banks by assets, for at least $1 billion for defrauding taxpayers by "repeatedly" lying to FHA in securing taxpayer-backed insurance for thousands of shoddy mortgages.

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In March, HUD's inspector general found that more than 49 percent of loans underwritten by FHAapproved lenders in a sample did not conform to the agency's requirements.

Last October, HUD Secretary Shaun Donovan said his investigators found that numerous mortgage firms broke the agencys rules when dealing with delinquent borrowers. He declined to be specific.

The agencys review later expanded to flawed foreclosure practices. FHA, a unit of HUD, could still take administrative action against those firms for breaking FHA rules based on its own probe.

The confidential findings appear to bolster state and federal officials in their talks with the targeted banks. The knowledge that they may face False Claims Act suits, in addition to state actions based on a multitude of claims like fraud on local courts and consumer violations, will likely compel the banks to offer the government more money to resolve everything.

But even that may not be enough.

Attorneys general in numerous states, armed with what they portray as incontrovertible evidence of mass robo-signings from preliminary investigations, are probing mortgage practices more closely.

The state of Illinois has begun examining potentially-fraudulent court filings, looking at the role played by a unit of Lender Processing Services. Nevada and Arizona already launched lawsuits against Bank of America. California is keen on launching its own suits, people familiar with the matter say. Delaware sent Mortgage Electronic Registration Systems Inc., which runs an electronic registry of mortgages, a subpoena demanding answers to 75 questions. And New Yorks top law enforcer, Eric Schneiderman, wants to conduct a complete investigation into all facets of mortgage banking, from fraudulent lending to defective securitization practices to faulty foreclosure documents and illegal home seizures.

A review of about 2,800 loans that experienced foreclosure last year serviced by the nation's 14 largest mortgage firms found that at least two of them illegally foreclosed on the homes of "almost 50" activeduty military service members, a violation of federal law, according to a report this month from the Government Accountability Office.

Those violations are likely only a small fraction of the number committed by home loan companies, experts say, citing the small sample examined by regulators.

In an April report on flawed mortgage servicing practices, federal bank supervisors said they could not provide a reliable estimate of the number of foreclosures that should not have proceeded."

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The review of just 2,800 home loans in foreclosure compares with nearly 2.9 million homes that received a foreclosure filing last year, according to RealtyTrac, a California-based data provider.

The extent of the loss cannot be determined until there is a comprehensive review of the loan files and documentation of the process dealing with problem loans, Bair said last week, warning of damages that could take years to materialize.

Home prices have fallen over the past year, reversing gains made early in the economic recovery, according to data providers Zillow.com and CoreLogic. Sales of new homes remain depressed, according to the Commerce Department. More than a quarter of homeowners with a mortgage owe more on that debt than their home is worth, according to Zillow.com. And more than 2 million homes are in foreclosure, according to Lender Processing Services.

Rather than punishing banks for misdeeds, the administration is now focused on helping troubled borrowers in the hope that it will stanch the flood of foreclosures and increase consumer confidence, officials involved in the negotiations said.

Levying penalties can't accomplish that goal, an official involved in the foreclosure probe talks argued last week.

For their part, however, state officials want to levy fines, according to a confidential term sheet reviewed last week by HuffPost. Each state would then use the money as it desires, be it for facilitating short sales, reducing mortgage principal, or using the funds to help defaulted borrowers move from their homes into rentals.

In a report last week, analysts at Moodys Investors Service predicted that while the losses incurred by the banks will be sizable, the credit rating agency does not expect them to meaningfully impact capital.

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New York Times New York Investigates Banks Role in Financial Crisis May 16, 2011 By GRETCHEN MORGENSON

The New York attorney general has requested information and documents in recent weeks from three major Wall Street banks about their mortgage securities operations during the credit boom, indicating the existence of a new investigation into practices that contributed to billions in mortgage losses.

Officials in Eric T. Schneidermans, office have also requested meetings with representatives from Bank of America, Goldman Sachs and Morgan Stanley, according to people briefed on the matter who were not authorized to speak publicly. The inquiry appears to be quite broad, with the attorney generals requests for information covering many aspects of the banks loan pooling operations. They bundled thousands of home loans into securities that were then sold to investors such as pension funds, mutual funds and insurance companies.

It is unclear which parts of the byzantine securitization process Mr. Schneiderman is focusing on. His spokesman said the attorney general would not comment on the investigation, which is in its early stages.

Several civil suits have been filed by federal and state regulators since the financial crisis erupted in 2008, some of which have generated settlements and fines, most prominently a $550 million deal between Goldman Sachs and the Securities and Exchange Commission.

But even more questions have been raised in private lawsuits filed against the banks by investors and others who say they were victimized by questionable securitization practices. Some litigants have contended, for example, that the banks dumped loans they knew to be troubled into securities and then misled investors about the quality of those underlying mortgages when selling the investments.

The possibility has also been raised that the banks did not disclose to mortgage insurers the risks in the instruments they were agreeing to insure against default. Another potential area of inquiry the billions of dollars in credit extended by Wall Street to aggressive mortgage lenders that allowed them to continue making questionable loans far longer than they otherwise could have done.

Part of what prosecutors have the advantage of doing right now, here as elsewhere, is watching the civil suits play out as different parties fight over who bears the loss, said Daniel C. Richman, a professor of law at Columbia. Thats a very productive source of information.

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Officials at Bank of America and Goldman Sachs declined to comment about the investigation; Morgan Stanley did not respond to a request for comment.

During the mortgage boom, Wall Street firms bundled hundreds of billions of dollars in home loans into securities that they sold profitably to investors. After the real estate bubble burst, the perception took hold that the securitization process as performed by the major investment banks contributed to the losses generated in the crisis. encouraged reckless lending because pooling the loans and selling them off allowed many participants to avoid responsibility for the losses that followed.

The requests for information by Mr. Schneidermans office also seem to confirm that the New York attorney general is operating independently of peers from other states who are negotiating a broad settlement with large banks over foreclosure practices.

By opening a new inquiry into bank practices, Mr. Schneiderman has indicated his unwillingness to accept one of the settlements terms proposed by financial institutions that is, a broad agreement by regulators not to conduct additional investigations into the banks activities during the mortgage crisis. Mr. Schneiderman has said in recent weeks that signing such a release was unacceptable.

It is unclear whether Mr. Schneidermans investigation will be pursued as a criminal or civil matter. In the last few months, the offices staff has been expanding. In March, Marc B. Minor, former head of the securities division for the New Jersey attorney general, was named bureau chief of the investor protection unit in the New York attorney generals office.

Early in the financial crisis, Andrew M. Cuomo, the governor of New York who preceded Mr. Schneiderman as attorney general, began investigating Wall Streets role in the debacle. But those inquiries did not result in any cases filed against the major banks. Nevertheless, some material turned over to Mr. Cuomos investigators may turn out to be helpful to Mr. Schneidermans inquiry.

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Wall Street Journal New York AG Probes Banks Over Mortgage Securities May 17, 2011 By Ruth Simon

New York Attorney General Eric Schneiderman has opened an investigation into the packaging of mortgage loans into securities, in the latest sign of increased scrutiny of the mortgage industry.

Mr. Schneiderman will hold meetings with executives of several major banks, including Bank of America Corp., Morgan Stanley and Goldman Sachs, according to people familiar with the investigation. He intends to discuss securitization of mortgage loans and other mortgage practices and has requested related documents from the firms, these people said. The meetings over securitization are expected to happen in the coming week.

Spokesmen for Bank of America, Goldman Sachs and Morgan Stanley declined to comment.

The New York inquiry comes just as banks are trying to resolve mortgage related problems on various fronts. Federal officials and state attorneys general continue their efforts to negotiate a settlement to the investigation of questionable mortgage servicing practices, including "robo-signing," that came to light last fall.

Banks are also edging closer to resolving civil-fraud charges related to mortgage-bond deals. The Securities and Exchange Commission is in talks with a number of major Wall Street firms to settle allegations of fraud on their sales of collateralized debt obligations or CDOs. Wall Street's $1 trillion sales of these complex pools of mortgages and other loans lay at the heart of the financial crisis.

Mr. Schneiderman, who took office this year, appears to be continuing in the aggressive footsteps of his predecessors, Andrew Cuomo and Eliot Spitzer.

They have a powerful legal tool at their disposal. The 1921 Martin Act, revived by Mr. Spitzer as a weapon against Wall Street, is seen as one of the most potent prosecutorial tools against financial fraud. The sweeping definition of fraud in the Martin Act doesn't require prosecutors to prove intent to defraud, in contrast to federal securities laws. The act has been used to prosecute Wall Street firms for securities manipulation, improper allocation of initial public offerings of stock and misleading stock research on Wall Street.

Mr. Schneiderman has said for months that he intends to pursue investigations related to the mortgage

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meltdown. He has expressed concerns over the mortgage-servicing talks that a broad deal could allow companies to escape liability for future legal claims.

The New York attorney general has also broadened his scrutiny of the mortgage industry, investigating firms that have profited from the foreclosure boom.

Mr. Schneiderman recently issued subpoenas to two investment firms that own stakes in a paperworkprocessing firm, according to people familiar with the investigation.

The firm, Pillar Holdings Inc., was spun off from the law firm of Steven J. Baum, which handled nearly 40% of all foreclosure cases filed in New York. Mr. Schneiderman is investigating whether the investment firms profited from questionable foreclosure practices, people familiar with the matter said.

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American Banker Higher Capital Minimums May Bring Mortgage M&A Wave May 17, 2011 By Paul Muolo

Not only are mortgage bankers facing the prospect of lower loan originations this year, but by May 2013 their minimum capital requirements will rise, increasing the likelihood of a merger and acquisition boom, according to industry advisers.

"They had better be prepared," said Chuck Klein, managing partner of Mortgage Banking Solutions in Woodway, Texas. "The [capital] minimum rises but even if they're at $2.5 million, it may not be enough."

Ideally, nonbank depositories that are selling loans to Fannie Mae, Freddie Mac or receiving guarantees from the Federal Housing Administration should have $3 million to $5 million in capital,

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Klein said.

"It only takes one big hiccup to rack up losses," he said.

Klein said he and his partners at MBS are busy these days fielding phone calls from worried mortgage firms. "We're in a lot of discussions right now," Klein said, but he declined to name specific firms because of confidentiality agreements.

The government-sponsored enterprises and the FHA are phasing in their capital minimums over three years, giving smaller lenders more time to either raise additional funds or find a mortgage partner. Certain warehouse providers require a minimum capital base of $1 million but that figure, too, will rise by 2013.

Meanwhile, most lenders have reported their first-quarter production numbers (the publicly traded ones at least) with a majority showing a gain compared with the first quarter of 2010 but a steep decline from the fourth quarter, when rates bottomed out in early December.

Over the past 18 months, roughly 70% of loan production has entailed refinancings. With many eligible mortgagors already engaging in a refi, mortgage bankers said they now believe that purchase money transactions will dominate the business in the second half of the year. The wholesale/brokerage share of fundings continues to suffer, accounting for less than 10% of fundings in the first quarter, according to preliminary survey figures compiled by National Mortgage News and the Quarterly Data Report.

Brokers are still mad over new federal compensation rules that went into effect in early April, which limit how they can be compensated and prevent them from discounting their services to consumers. The National Association of Mortgage Brokers is contemplating continuing a court challenge to the rule. Another broker trade group, the National Association of Independent Housing Professionals, is still sorting through its options but is not inclined to use the courts at this time.

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American Banker

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Turn Dodd-Frank Resolution-Plan Proposal into an Advantage May 17, 2011 By Jon Greenlee and Chris Dias

While the Dodd-Frank Act and the global regulatory reform initiatives pose significant challenges for the nation's major financial institutions, the proposed rule requiring bank holding companies with consolidated assets over $50 billion and nonbank companies deemed systemically important to submit annual resolution plans is among the most challenging and has far-reaching implications.

The proposal, issued for comment by the Federal Deposit Insurance Corp. and the Federal Reserve, makes clear that this is not just another compliance exercise. Rather, the preparation of the resolution plan would require a fundamental assessment of a bank's legal entity structure, how products and services are delivered to customers and, ultimately, the overall strategy of the organization. Boards of directors and senior management will need to be actively engaged in making decisions and ultimately approve the annual resolution plan submitted to the FDIC and the Fed.

Discussions with institutions indicate that many consider the preparation of a resolution plan to be a daunting task due to the complexity of the exercise and the short time frame for submitting the initial plan. The good news is that as banks begin to go through the process, some have already identified opportunities to enhance shareholder value. At the same time, the exercise could challenge existing business models and require a fresh look at the institution's strategic plan.

Here are some areas that need immediate consideration as you draft a resolution plan.

An important component is an analysis of the bank's legal entity structure, including how subsidiaries are capitalized and funded. This analysis is likely to highlight the complexity within a specific organization and where the key interdependencies are for operational, technology, human resources, treasury and other shared services.

In addition, regulators will be focused on cross-border exposures; intercompany guarantees; back-toback trades; exposures booked in one jurisdiction and managed in another; and anything that could pose an impediment to timely resolution. Senior management and the board of directors will need to consider the trade-offs between the value of the current structure, operations, tax implications and interdependencies against the risk that the FDIC and the Fed will require changes or impose additional capital requirements that an orderly resolution of the organization could be accomplished.

Regulatory reform has already prompted many banks to reassess their business models as compliance costs and capital requirements increase. The preparation of a resolution plan will provide further insights into the organization's opportunities and obstacles. Banks will need to evaluate and make

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decisions around the value derived from businesses that involve, for example, cross-border exposure or activities that pose significant systemic risk to the financial system, since regulators may force changes such as requiring legal entities to be able to stand fully on its own from a capital, funding and management perspective, or even mandate that a business or activity be divested. This will test the strategy of the institution and will require crucial decisions around core versus noncore businesses and ultimately the value of certain activities compared with the compliance costs and regulatory requirements.

Boards of directors and senior management should not view resolution plans in isolation from other regulatory reform efforts. Rather, banks should use the resolution planning process to reassess how capital and funding is allocated to subsidiaries especially in light of heightened requirements for both and help put transparency on risks and possibly introduce additional risk mitigation activities. Since resolution plans are focused on legal entities, it is equally important that institutions also evaluate their governance and risk management processes including identifying roles and responsibilities of key individuals for subsidiaries to ensure the board of directors and senior management have a holistic view of the risk and activities of the enterprise.

The preparation of a resolution plan will be a critical yet complex process that has wide implications for the future of individual banks and the industry as a whole. While the proposed requirements seem onerous, the process can help leaders identify opportunities to realize improved operational efficiencies, reduce costs and allocate capital and funding across the enterprise more efficiently.

Banks that can act quickly and take advantage of these opportunities will be in a much better competitive and regulatory position.

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Boston Globe Mass. investigating top for-profit college May 17, 2011 By Todd Wallack

The states growing investigation into the for-profit college industry now includes the countrys biggest

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player, the University of Phoenix.

The chains parent corporation, Apollo Group, which is based in Phoenix, yesterday said it has received a demand for information about its recruiting and financing practices from Massachusetts Attorney General Martha Coakley.

She recently sent similar requests to Kaplan Career Institute in Boston, owned by The Washington Post Co., and the Everest Institute campuses in Brighton and Chelsea, which are owned by Corinthian Colleges Inc.

The University of Phoenix is the largest for-profit college in the country, serving more than 400,000 students at more than 200 US campuses, including three schools in Massachusetts. Last fiscal year, it reported $4.5 billion in revenue, mostly from federal student grants and loans.

In documents filed with the Securities and Exchange Commission, Apollo said Coakleys office is looking into whether for-profit educational institutions used unfair or deceptive practices in the recruitment of students and the financing of their educations. The company was asked to provide nine years worth of detailed information about its Massachusetts operations.

In a statement, the school said it was reviewing the letter but is proud of the education it provides.

Apollo Group is committed to being a leader in higher education and setting the gold standard in transparency, accountability, and robust student protections, said Chad Christian, a company spokesman.

State and federal officials across the country are investigating whether for-profit schools used highpressure or fraudulent tactics to recruit students. The office of Kentuckys attorney general, Jack Conway, said it is leading an 11-state investigation. Coakleys office declined to comment.

The Government Accountability Office last year found recruiters at 15 schools gave deceptive or questionable information to investigators posing as prospective students. Many students have complained the schools did little to prepare them for jobs, leaving them unable to pay their student loans.

We have lots of indicators that the problems are systemic, said Pauline Abernathy, a vice president for the Institute for College Access & Success, an advocacy group in Oakland, Calif.

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The for-profit school industry has exploded in recent decades as students increasingly look for specialized training to land jobs. According to federal data, there were more than 3,000 for-profit schools serving at least 1.8 million students in 2008.

But students at the schools tend to graduate with higher debt and be more likely to default than those at nonprofit and public schools, federal data show. Though for-profit schools account for 10 percent of college students, they account for about half of all student loan defaults, Abernathy said.

The US Department of Education recently imposed new restrictions on recruiters and proposed rules to cut off federal student aid from schools with the worst repayment rates.

For-profit schools said the statistics are skewed because they serve poorer and older students, who might have more trouble paying back their loans. They also insist they serve a vital niche of providing specialized training to students who are not served by other schools.

Rebekah Mroz, a 22-year-old single mother, recently sued Sullivan and Cogliano Training Centers Inc. in Brockton, claiming it falsely promised to train her to become a certified medical assistant. For example, the lawsuit said, an admissions officer assured Mroz she would receive training in drawing blood and other medical tasks.

But the school never provided live instruction, just coursework on a computer supervised by a proctor, according to the lawsuit. When Mroz asked about learning to draw blood, she said she learned that the program was actually for people who want to become an administrative assistant in a medical office.

They advertised a training program that they didnt teach, said her attorney, Marian H. Glaser of Boston.

Glaser said Mroz was stuck with $6,500 in student loans.

In March, a Plymouth Superior Court judge, Robert C. Cosgrove, rejected the schools request to dismiss the suit, ruling in part that the schools ads possessed a tendency to deceive readers. According to the suit, the Council on Occupational Education, a regional accrediting agency, also ordered the school to stop advertising that it offers training for medical assistants.

The schools attorney, Steven Kramer of Wellesley, acknowledged the ads were problematic, but said the school moved quickly to correct them. And Kramer said that both the admissions officers and the forms Mroz signed made it clear she was enrolling in an office program.

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Back to Top

American Banker Growing Banks Seek to Balance Bigger Scale With Old Community Feel May 17, 2011 By Kate Davidson

Second of three parts

Large community banks that aspire to the next rung face a critical challenge: expanding in size and scope while maintaining their small-bank identity.

Banks on the cusp of midsize status not quite regionals, but not quite community banks anymore either must find ways to prove they will be good corporate citizens in their new markets, diversify products and evaluate top-tier management to meet the demands of a larger institution.

The real trick will come in making structural changes as invisible as possible to outsiders.

"There are two opposite things going on," said Mark Fitzgibbon, an analyst at Sandler O'Neill & Partners LP. "Underneath, you're trying to evolve and become a much more complicated company, but to the customer, you're trying to maintain that small, hometown, local feel. It's a delicate balance."

The industry has resembled a barbell in recent years, with the number of midtier, regional banks shrinking. Analysts and investors are looking to a new crop of banks to fill the gap, including First Niagara Financial Group and People's United Financial Inc. in the Northeast, IberiaBank Corp. and Hancock Holding Co. in the Southeast and Umpqua Holdings Corp. in the West.

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As those companies expand into new territories via acquisitions, smaller banks are apt to portray them as big out-of-town banks. Community outreach, such as sponsoring local events, donating to charitable causes or financing community development projects, cannot be underestimated, said Jason O'Donnell, an analyst at Boenning & Scattergood Inc.

"What ends up happening in most cases is the financial impact of these philanthropic endeavors tends not to be significant, but the good will that's created in the community is huge," O'Donnell said.

Several analysts said Buffalo's First Niagara is an example of a company using outreach. Shortly after entering Philadelphia in 2009, the company pledged $650,000 to help close a funding gap and keep the city's public swimming pools open, and establish a program for free swimming lessons at 13 local YMCAs.

When First Niagara moved into Connecticut this spring, it agreed to be the lead sponsor of the New Haven Open at Yale, part of the Olympus U.S. Open Series, at a time when the tennis tournament's organizers said its future was in doubt.

John Koelmel, First Niagara's president and chief executive, said the company's goal is to establish itself as the leading corporate citizen in the new markets it enters.

"For us it's about building those relationships, leveraging what exists, or otherwise doing what we need to do to better solidify those relationships that will be important to our long-term success or better define how we can contribute to the long-term success and viability of the markets that we serve," Koelmel said.

Another way to break the big bank stigma is dividing a bank's footprint into smaller territories run by regional presidents, each of whom has a certain degree of autonomy, along with a mission to build customer relationships and act as the face of the local bank in each market.

"It's their market, and they're responsible for it," said Daryl Byrd, the president and chief executive of IberiaBank in Lafayette, La., which has 14 regional market presidents.

Each of Iberia's markets has its own advisory board made up of community leaders that meets twice a week, Byrd said. The goal is to help members network, while at the same keeping the bank in touch with its constituents.

At the Gulf South Bank Conference last week, for instance, Iberia hosted an event for the advisory

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boards to visit charter schools in New Orleans.

Advisory board members "were amazed at this different way to educate," Byrd said. "We got huge kudos, and that's an idea they can take back to their communities if they choose."

Such moves also benefit the company. "That tends to provide us with a networking structure," Byrd added.

There is a trade-off between localized decision-making and efficiency, O'Donnell cautioned.

"Having a large leadership team in each core market that's going to create potentially some efficiency problems," O'Donnell said. "Conversely, if you have no leadership in those markets, then you can make some poor decisions and that can come back to bite you later."

Finding and keeping the right people in new markets is critical, analysts said. Banks must work hard to connect with customers, especially after acquisitions, lest they feel ignored or unloved by their growing bank.

"You have to make sure that you've locked up the best commercial lenders and that you have managers in the markets that you've acquired that are known commodities to both commercial and retail customers in those communities," said Matthew Kelley, an analyst at Sterne, Agee & Leach Inc.

In some cases, limiting the pace of change after an acquisition can help mitigate customer shock, O'Donnell said. For instance, Hancock, in Gulfport, Miss., which is set to buy Whitney Holding Corp. in New Orleans, has said it plans to keep the Whitney name on branches in Texas, where Hancock has no presence, and Louisiana, where the Whitney brand is stronger.

Midsize companies also need to continually reevaluate upper level talent, Fitzgibbon said.

"I think as you become a regional bank, you really need to demonstrate to the market that you've brought in people with experience in a variety of different kinds of institutions and with a broad enough background that they can help you run this much larger company," Fitzgibbon said.

First Niagara hired David Ring, a former executive at Wells Fargo & Co., as its New England regional president this year. It also hired a new chief financial officer, Gregory Norwood, a former president and chief risk officer for Ally Bank in Detroit.

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The $23.8 billion-asset People's United in Bridgeport, Conn., made a similar move in February, when it hired Kirk Walters, a former senior executive vice president and director of Santander Holdings USA Inc., the parent of Sovereign Bank, as its chief financial officer.

Ray Davis, the president and chief executive of Umpqua in Portland, Ore., said keeping employees happy keeps customers happy, too. That started with building a culture at Umpqua that empowers people to make decisions on their own, he said.

Over the last 15 years, Umpqua expanded from a six-branch bank to 185 offices across the Pacific Northwest. In the process, Davis said, Umpqua developed its own formula-based system for measuring service, called return on quality.

"This has enabled our people to compete in our markets with more than price, and that is huge," Davis said.

In addition, Umpqua's employees have helped the company make Fortune magazine's "100 Best Companies to Work For" for the past five years.

"I think most of the time most companies it's not just banks most companies that just grow for the sake of growth, basically they forsake their culture too many times," Davis said.

"The challenge for us is we have to be able to look back and say at $30 billion [of assets that] we're stronger than we were at $12 billion," he added.

Editor's Note: This is the second in a series about the plight of today's midtier banks and the prospects for future ones. What's next: Some midtiers are fiercely fighting to stay independent.

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From:

To: Cc:

Martinez, Zixta (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=martinezz> _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands> English, Leandra (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=englistl> Weekly Outreach Calendar May 16 - 20, 2011 Mon May 16 2011 17:10:49 EDT

Bcc: Subject: Date: Attachments:

Events & Meetings w/External Groups May 16-20, 2011

Monday, May 16, 2011 EW Meeting w FSR DSilberman Meeting w Capital One

Tuesday, May 17, 2011 TILA RESPA Meetings: (1) Community Banks, (2) Consumer Groups & Housing Counselors, (3) Trade Association & Large Banks, (4) Realtor, Broker & Other Stakeholders EWarren speaking at Your Money Matters: Financial Consumer Protection for Todays Economy w/Representative Chris Van Hollen EVale Call Time w NAFCU

Wednesday, May 18, 2011 TILA RESPA Interagency Roundtable TILA RESPA Press Teleconference TILA RESPA Hill Briefing DSilberman Meeting w Pew Safe Card Project HPetraeus Meeting w OSA Americas Promise Alliance

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Thursday, May 19, 2011 EWarren Call Time w Community Bankers (New York & Alabama) EVale Remarks to New Hampshire/Vermont Community Bankers in NH GHillebrand & New Media staff Meeting w Americans for Financial Reform PMcCoy Meeting w LoanSifter CStone Meeting w Pew Research

Friday, May 20, 2011 HPetraeus Meeting with Wright-Patterson Credit Union

Zixta Q. Martinez Assistant Director for Community Affairs Consumer Financial Protection Bureau 202.435.7204 www.consumerfinance.gov

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From:

To:

Adeyemo, Adewale (Wally) (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=adeyemoa> Abney, Wilson (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=abneyw>; Adeyemo, Adewale (Wally) (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=adeyemoa>; Alag, Sartaj (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=alags>; Antonakes, Steve (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=antonakess>; Antonellis, Sherry (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=antonelliss>; Assebab, Catherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=assebabc>; Bach, Mary (Stacey)(CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=bachs>; Basham, Stephanie (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=bashams>; Bateman, Jon (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=batemanj>; Bernstein, Ethan (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=bernsteine>; Betts, Kristina (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=bettsk>; Black, Brad (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=blackb>; Blanton, Mary </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=blantonm>; Blenkinsopp, Alexander (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=blenkinsoppa>; Blow, Marla (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=blowm>; Blumenthal, Pamela (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=blumenthalp>; Boateng, W. (Kwadwo)(CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=boatengk>; Boenau, Susan (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=boenaus>; Botelho, Michael (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=botelhom>; Breslaw, April (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=breslawa>; Brolin, John (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=brolinj>; Brown, Allison (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=brownall>; Brown, Amy (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=brownam>; Brown, Charles (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=brownchar>; Brown, Lawrence (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=brownlaw>; Brown, Robert

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(CFPB) </o=ustreasury/ou=do/cn=recipients/cn=brownr>; Brown, Trina (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=browntri>; Burniston, Tim (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=burnistont>; Burton, Matthew (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=burtonm>; Callan, Nicole (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=callann>; Campbell, Michael (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=campbellmic>; Canfield, Anna (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=canfielda>; Cantrell, Diane (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cantrelld>; Carroll, Peter (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=carrollp>; Chandler, Deidra (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=chandlerde>; Chanin, Leonard (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=chaninl>; Chopra, Rohit (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=choprar>; Chow, Edwin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=chowe>; Chuhaj, Yuri J </o=ustreasury/ou=do/cn=recipients/cn=ots/cn=ch4970>; Cochran, Kelly (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cochrank>; Coleman, John (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=colemanjo>; Coney, Steven (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=coneys>; Cordray, Richard (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cordrayr>; Coyle, Raymond (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=coyler>; Craft, Nadine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=craftn>; Cronan, Russell (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cronanr>; Cronin, Katherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cronink>; Cumpiano, Flavio (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cumpianof>; D'Amico, Christina </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=damicoc>; Darling, Eben (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=darlinge>; Date, Rajeev (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dater>; Davidson, Terri L </o=ustreasury/ou=do/cn=recipients/cn=ots/cn=da0037>; Decker, Sharon (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=deckers>; Deutsch, Rebecca (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=deutschr>; Dickman, Marilyn (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dickmanm>; DiPalma, Nikki

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(CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dipalman>; Dokko, Jane (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dokkoj>; Donoghue, Kristen (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=donoghuek>; Dorsey, Darian (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dorseyd>; Duncan, Timothy (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=duncant>; Egerman, Mark (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=egermanm>; Elliott, Brandace (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=elliottbr>; English, Jared (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=englishjar>; English, Leandra (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=englistl>; Forrest, David (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=forrestda>; Fravel, Wesley (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=fravelw>; Frotman, Seth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=frotmans>; Fuchs, Meredith (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=fuchsm>; Galicki, Joshua (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=galickij>; Gao, Jane (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gaoj>; Geary, John (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gearyj>; Geldon, Daniel (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=geldond>; Gelfond, Rebecca (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gelfondr>; Glaser, Elizabeth (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=glasere>; Goldfarb, Rachael (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=goldfarbr>; Gonzalez, Roberto (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gonzalezr>; Gordon, Ashley (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gordonas>; Gordon, Michael (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gordonm>; Gorski, Stephanie (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=gorskis>; Gragan, David (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gragand>; Granat, Rochelle </o=ustreasury/ou=do/cn=recipients/cn=granatr>; Gregorio, Laurie (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=gregol>; Griffin, Mary (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=griffinm>; Grover, Eric (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=grovere>; Gupta, Neeraj

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(CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=guptan>; Hackett, Richard (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=hackettr>; Hammonds, Jamice (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=hammondsj>; Hancock, Gary (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=hancockg>; Hannah, Stephen (Rick) (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=hannahs>; Harpe, Pam (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harpep>; Hart, Maria (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=hartm>; Harvey, Imani (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harveyi>; Haynes-Gholar, Tywana (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=haynes-gholat>; Healey, Jean (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=healeyj>; Herchen, Emily (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=herchene>; Herring, Maia (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=herringm>; Hillebrand, Gail (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=hillebrandg>; Holmes, Cordelia (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=holmesc>; Horan, Kathleen (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=horank>; Horn, Richard (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=hornr>; Howard, Jennifer (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=howardje>; Hrdy, Alice (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=hrdya>; Hupp, James (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=huppj>; Jackson, Monica (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=jacksonmo>; Jackson, Peter (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=jacksonpe>; Jimenez, Dalie (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=daliej>; Johnson, Christopher (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=johnsonch>; Keane, Micheal (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=keanem>; Kearney, Thomas (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=kearneyt>; Kennedy, Leonard (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=kennedyle>; Kern, Shaun (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=kerns>; Kim, Lynn (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=kiml>; Kitt, Brett (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=kittb>; Klein, Heather (CFPB) </o=ustreasury/ou=exchange administrative group

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(fydibohf23spdlt)/cn=recipients/cn=kleinh>; Krafft, Nicholas (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=krafftn>; Kunin, Noah (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=kuninn>; Ladd, Christine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=laddc>; Lauderdale, Steve (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lauderdales>; Leary, Jesse (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=learyje>; Leiss, Wayne (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=leissw>; Lepley, Richard (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=lepleyr>; Lev, Ori (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=ofac/cn=ofac users/cn=levo>; Levisohn, Ethan (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=levisohne>; Lilly, Antona (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=lillya>; Logan, Amanda (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=loganam>; Lombardo, Christopher (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lombardoc>; Lopez-Fernandini, Alejandra (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lopez-fernadinia>; Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk>; Lucero, Tamara (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lucerot>; Mann, Benjamin </o=ustreasury/ou=do/cn=recipients/cn=mannb>; Mann, Seth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=manns>; Markus, Kent </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=marcusk>; Marshall, Mira (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=marshallm>; Martin, Alyssa (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=martinal>; Martinez, Adam (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=martinezaz>; Martinez, Zixta (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=martinezz>; McCoy, Patricia (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=mccoyp>; McDonald, Alicia (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=mcdonalda>; McQueen, Suzanne (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=mcqueens>; Megee, Christine (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=megeec>; Mestre, Juan (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=mestrej>; Mewhorter, Shawn (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=mewhorters>; Meyer, Erie (CFPB) </o=ustreasury/ou=exchange administrative group

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(fydibohf23spdlt)/cn=recipients/cn=meyerer>; Michalosky, Martin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=michaloskym>; Middlebrook, Jack (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=middlebrookj>; Miller, Kimberly (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=millerki>; Morris, Lucy (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=morrislu>; Mosena, Lea (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=mosenal>; Munz, Daniel (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=munzd>; Nelson, Sheila </o=ustreasury/ou=do/cn=recipients/cn=nelsons>; OMealia, Sean (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=omealias>; Osborn, Meredith (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=osbornm>; Patross, Whitney (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=patrossw>; Pearl, Joanna (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=libermanj>; Perry, Vanessa (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=perryv1>; Petersen, Cara (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=petersenc>; Petraeus, Holly (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=petraeush>; Plunkett, Alexander (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=alexanderp>; Pluta, Scott (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=plutas>; Prince, Victor (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=princev>; Proctor, Althea (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=proctora>; Puri, Angela (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=puria>; Reeder, Garry (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=reederg>; Reese, Angelique (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=reesea>; Reilly, Deb (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=reillyd>; Reilly, Elizabeth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=ericksone>; Rexroth, Mariana (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=rexrothm>; Riley, Jeffrey (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=rileyje>; Rothstein, Paul (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=rothsteinp>; Royster, Felicia (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=roysterf>; Ruihley, Joshua (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=ruihleyj>; Sanders, Kathy (CFPB) </o=ustreasury/ou=exchange administrative group

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(fydibohf23spdlt)/cn=recipients/cn=sandersk>; Sanford, Paul (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sanfordpa>; Scala, Courtney (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=scalac>; Scanlon, Thomas </o=ustreasury/ou=do/cn=recipients/cn=scanlont>; Scurlock, Angelika (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=scurlocka>; Sealy, William (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sealeyw>; Selden, R. Colgate (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=seldenr>; Sena, Theresa (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=senat>; Sensiba, Vicki (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sensibav>; Shue, Jeffrey (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=shuej>; Silberman, David (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=silbermand>; Skinner, Cathaleen (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=skinnerc>; Slagter, Dennis (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=slagterd>; Smith, Rorey (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=smithror>; Smullin, Rebecca (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=smullinr>; Smyth, Nick (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=smythn>; Sobczak, Greg (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sobczakg>; Sokolov, Dan </o=ustreasury/ou=do/cn=recipients/cn=sokolovd>; Stapleton, Claire (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=stapletonc>; Stark, Paula-Rose (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=starkp>; Starr, John (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=starrj>; Sterken, Nathan (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sterkenn>; Stone, Bayard (Corey) (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=stonec>; Suess, Robert (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=seussr>; Taiwo, Ebunoluwa (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=taiwoe>; Tamberrino, Mary (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tamberrinom>; Taylor, Doug (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=taylord>; Tierney, Patrick (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tierneyp>; Tingwald, James (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tingwaldj>; Trueblood, Andrew (CFPB) </o=ustreasury/ou=exchange administrative group

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(fydibohf23spdlt)/cn=recipients/cn=trueblooda>; Tucker, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tuckerke>; Turenne, Jeannine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=turennej>; Twohig, Peggy (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=twohigp>; Vaeth, Chris (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=vaethc>; Vail, Amber (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=vaila>; Vale, Elizabeth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=valee>; Van Loo, Rory (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=vanloor>; Vanderslice, Julie (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=vanderslicej>; VanMeter, Stephen (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=vanmeters>; Vinton, Merici (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=vintonm>; Wanderer, Agnes (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=wanderera>; Wang, Shou (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=wange>; West, Catherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=westca>; Williams, Anya (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=williamsany>; Williams, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=williamsk>; Witt, Michael (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=wittm>; Worthman, Katherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=worthmank>; Young, Christopher (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=youngc>; Yuda, John (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=yudaj>; Zapanta, Victor (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=zapantav>; Zorc, Anne (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=zorca> Cc: Bcc: Subject: Date: Attachments:

CFPB Weekly Report 5/16 Mon May 16 2011 13:10:18 EDT

CFPB Weekly Report 5/16/2011

Overview

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The CFPBs Know Before You Owe mortgage disclosure project goes live Wednesday on ConsumerFinance.gov, where industry stakeholders, consumer advocates, and the American public can provide input and feedback on two draft mortgage forms that combine the disclosures required under the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA). The combination of the TILA & RESPA forms is a requirement of the Dodd-Frank Wall Street Reform and Consumer Protection Act signed into law last summer.

Throughout the week, CFPB officials will hold outreach briefings for House and Senate committees of jurisdiction as well as for industry and consumer advocates. CFPB will hold a background briefing for reporters and issue a press release on the Know Before You Owe project on Wednesday.

On Tuesday, Elizabeth Warren will speak at an event hosted by Rep. Chris Van Hollen, Your Money Matters: Consumer Protection for Todays Economy, in Silver Spring, Maryland. This event is open to the public.

Policy

Cards On Tuesday, the OCC will be demonstrating its credit card account-level database to representatives from Supervision, Research, and Card Markets. On Wednesday we will be meeting with the Pew Safe Card project to review the results of Pews latest research. We will also meet this week with a large card issuer.

Mortgages On the Know Before You Owe project, we made final preparations for the public launch scheduled for the third week of May, including posting a landing page and two blog announcements, scheduling public outreach sessions, finalizing the forms and the web feedback tool, and securing OMB approval for the qualitative testing.

The Mortgage Markets team, along with Consumer Engagement and Consumer Response, interviewed housing counselor networks and will be working with the consumer response team on a plan to handle complaints from distressed homeowners. The team also made progress on a survey of servicing problems and met with counterparts from the Federal Reserve Board and representatives of Genworth and the National Association of Independent Housing Professionals.

The Institutional Review Board approved a proposal to acquire loan-level mortgage datasets for Research, Markets, and Regulations.

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Other Policy Developments

In the deposits and overdrafts space, we are meeting today with economists from the Consumer Payments Research Center at the Boston Federal Reserve Bank. On Thursday and Friday, David Silberman is attending a conference on the New Face of Retail Payments sponsored by the Chicago Federal Reserve Bank.

The CFPB is negotiating MOUs on several issues, including with the Federal Reserve Board regarding handling of Home Mortgage Disclosure Act responsibilities; with the EPA for use of the Regs.gov website to collect and post comments for rulemakings and other public notices; on access to FDIC examination and compliance training materials; governing information sharing with other regulators, states, etc. (HUD, FHFA, NCUA, and the FDICs Home Ownership Preservation Office); with OPM and FDIC to provide CFPB Continuity of Operations site; and with OPM Federal Investment Services Division to support electronic transfer of certain sensitive confidential information.

The Fair Lending team continued its discussions with the DOJ regarding MOUs to coordinate information sharing regarding pending referrals of transferring institutions and ongoing investigations.

Nonbank Supervision will meet with HUD regarding the transfer of responsibility over the Interstate Land Sales Act.

Section 1024 of Dodd-Frank requires CFPB to define a larger participant for many nondepository markets. We will continue planning to gather public input on this project.

We received Treasury signoff for data agreements with the three credit reporting agencies for our study on credit scores and with a major remittance services provider for our study on remittance transfers.

We will also be finalizing the Charter for, and scheduling the launch of a Payday Lending Staff Working Group that will draw cross-functional representatives and tasked with recommending near-term action priorities in this product area. We will continue to conduct interviews with remittance industry players and review the Federal Reserves just-announced proposed disclosure rules so that we can reflect their research and analysis in the portion of the remittance transfers study that deals with remittance exchange rate disclosures. We will be expanding the payday lending primer to include online payday loans, as well as other small dollar lending categories. We will be preparing a primer on money services, including remittances, check cashing, money orders, and in-person bill payment.

Corey Stone will be speaking at the National Association of Consumer Advocates annual FCRA Conference on Saturday, May 21.

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Outreach

On Tuesday, representatives from community banks and credit unions will attend two separate briefings on the draft TILA/RESPA documents. Elizabeth Vale will attend both meetings and direct questions that arise to the appropriate policy experts.

On Wednesday, Elizabeth Vale will join Gail Hillebrand at the Financial Literacy and Education Commission (FLEC) meeting at main Treasury.

Also on Wednesday, Holly Petraeus will meet with Americas Promise Alliance, a non-profit established by General & Mrs. Colin Powell, to talk about the financial challenges military families face.

On Thursday, Elizabeth Vale will travel to New Hampshire and Vermont to meet with community bankers.

Also on Thursday, Petraeus will meet with staff of the Senate Banking Committee to update them on the Office of Servicemember Affairs.

The same day, Petraeus will be interviewed by ABC-7 (local), discussing the Office of Servicemember Affairs and the steps the office will take to protect military families.

On Friday, Petraeus will meet with the CEO of the Wright-Patterson Credit Union to discuss their efforts on behalf of servicemembers in Western Ohio and the innovative products they have developed in the short-term loan market.

Management

The CFPB received a FOIA request last week requesting appointment affidavits for senior staff.

Consumer Response will establish an intra-agency working group with various departments to obtain comment regarding proposed coding systems.

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We hope to obtain final clearance and transmit the fourth transfer request to the Fed for funding through September 30, 2011.

We have heard three companies sales pitches for notebook computers. We will use this information to help decide which brands computers the CFPB will purchase.

Professor Warren Week Ahead Monday, May 16 Meeting with Steve Bartlett (Financial Services Roundtable) (No financial interest, past work, gifts, or AARA/EESA Meeting with Sheila Bair (FDIC)

Tuesday, May 17 TILA/RESPA Outreach: Consumer Groups, Financial Services companies and Trade Associations (No financial interest, past work, gifts, or AARA/EESA) Event with Rep. Chris Van Hollen, "Your Money Matters: Financial Consumer Protection for Today's Economy"

Wednesday, May 18 Meeting with Gloria Borger Meeting with Toby Stock (AEI) Media: Prepared Statement on Press Briefing Call for TILA/RESPA

Thursday, May 19 Meeting with Jim Clifton (Gallup) (No financial interest, past work, gifts, or AARA/EESA)

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From:

To: Cc:

Gordon, Ashley (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gordonas> _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands> Adamske, Steven </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=adamskes>; Moore, Megan </o=ustreasury/ou=do/cn=recipients/cn=mooreme>; Hunt, Anita Maria </o=ustreasury/ou=do/cn=recipients/cn=hunta>; Wallace, Kim </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=wallacek>; Wolin, Neal </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=wolinn>; Warren, Elizabeth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=warrene>; Fitzpayne, Alastair </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=fitzpaynea>; LeCompte, Jenni </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=engebretsenj>; Murray, Colleen </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=murrayco>; Coloretti, Nani </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=colorettin>

Bcc: Subject: Date: Attachments:

Mon May 16 2011 12:41:08 EDT

Press Clips 5/16/2011

Index

Click publication title to find its location in this e-mail. Click article title to go to its source website.

Consumer Financial Protection Bureau Credit.com (blog) -- Top Payday Lender Sings Federal Consumer Watchdogs Praises The Truth-Out.org -- Field Notes on Wall Street Reform: the Battle Continues

CFPB & Congress

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CNN Let protection bureau work [Video Clip] Philadelphia Inquire -- Republicans trying to derail financial overhaul

Cleveland.com -- Republican assault on Consumer Financial Protection Bureau could - and should - misfire The American (blog) -- Senator Shelby Is Right on CFPB

L.A. Times (blog) -- House committee votes to limit power of new Consumer Financial Protection Bureau Bloomberg -- Dodd-Frank Consumer Bureau Changes Approved by U.S. House Panel Reuters -- House panel votes to weaken consumer watchdog MarketWatch -- GOP OKs three bills to restructure consumer bureau

Consumer Credit New York Times -- Credit Error? It Pays to Be on V.I.P. List Lansing State Journal -- Michigan's unemployed take hit with debit card fees American Banker -- Minimal CARD Impact on Rates Wall Street Journal -- Maybe We'll Charge an Extra Fee to Read This Wall Street Journal -- Drawing Benefits Via a Debit Card? There's a Fee for That Wall Street Journal (blog) -- Americans Turn to Credit to Deal With High Oil Prices The Hill (blog) -- AT&T exec: Dodd-Frank put brakes on new mobile payment network Washington Post -- Growing number of consumers pay credit card debt before mortgage Dayton Business Journal -- New fees cost big banks millions of customers Missoulian.com -- Tester sides with banks on 'swipe fees'

Housing Other American Banker -- M&A Could Replenish Fading Class of Midsize Banks American Banker -- Should Mortgage Servicing Data Be a Public Utility? Housing Wire -- Independent reviews in mortgage servicer consent orders to stay sealed Housing Wire -- Registers of Deeds ask Iowa AG to postpone servicer settlement New York Times -- Budget Cuts Imperil Aid in Foreclosure Cases Wall Street Journal (opinion) -- Bleak House Transcript

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 Huffington Post -- Deutsche Bank Sues Foreclosure Fraud Expert's Son With No Financial Interest In Her Case

Credit.com Top Payday Lender Sings Federal Consumer Watchdogs Praises May 13, 2011 By Christopher Maag

The Consumer Financial Protection Bureaus newest admirer may come as a surprise to some, but hes making no secret about his affections. Billy Webster, chairman of Advance America, one of the nations largest payday lenders, is touring Washington, D.C. and saying nice things about the bureau and its interim chief, Elizabeth Warren.

People . . . might think were opposed to CFPB, and were not, Webster tells the Huffington Post. Websters position on the bureau may seem unexpected because payday lenders are often criticized by consumer advocates for charging exorbitant fees. The average payday loan costs $15 to $17 per $100 borrowed, which works out to an annual interest rate (APR) of 391%, according to research by the Center for Financial Services Innovation.

But Webster and the Consumer Financial Protection Board have one important thing in common: They both dislike overdraft fees charged by mainstream banks. Such fees perform the same function as payday loans of providing short-term credit.

The main difference: overdraft fees are actually much more expensive, Webster argues, and much less transparent to consumers than the fees associated with payday loans. As President Obamas special advisor in charge of getting the Consumer Financial Protection Board up and running, Warren has criticized banks for failing to disclose the cost of overdraft fees and other charges.

Warren also has suggested that once the board becomes fully operational in July, she may require banks to give consumers better notification about their fees. Thats where Websters support comes in.

Youve got bank overdraft, check overdraft, ATM overdraft. Those operate no different than the product

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we offer, and they dont carry the same APR disclosure that we carry, says Jamie Fulmer, spokesman for Advance America. Transparency, simplicity, making sure consumers have the ability to look at their short-term financial products on an apples-to-apples basis, we think all of that is good stuff.

Other payday lenders appear to agree with Webster and Advance America. The Community Financial Services Association of America (CFSAA) says it supports Warrens call for better transparency and disclosure.

These are the right criteria to evaluate all products, whether from banks or payday advance stores, that comprise the short-term credit market, Samantha Pepi, spokeswoman for the association, said in an email.

In a debate over fees, payday lenders may be able to score some rhetorical points on traditional banks. But the new consumer bureau may not take it easy on payday lenders either, consumer advocates say. Making consumers choose between payday loans and bank overdraft fees is a false choice, says Kathleen Day, spokeswoman for the Center for Responsible Lending. We dont think consumers should have to choose between two abusive products.

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TheTruth-Out.org Field Notes on Wall Street Reform: the Battle Continues Sunday 15 May 2011 By Robert Pollin

President Barack Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act in July 2010. Dodd-Frank is the most ambitious measure aimed at regulating U.S. financial markets since the Glass-Steagall Act was implemented in the midst of the 1930s Depression. However, it remains an open question as to whether Dodd-Frank is capable of controlling the hyper-speculative practices that produced the near-total global financial collapse of 2008-2009, which in turn brought the global economy to its knees with the Great Recession.

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Dodd-Frank is a massive piece of legislation, 875 pages in length, covering a wide range of issues. These include coordinating the efforts of the Federal Reserve, Treasury, Securities and Exchange Commission (SEC), and other financial regulatory agencies to control excessive speculation; creating a consumer financial protection bureau; establishing regulatory controls on the previously unregulated hedge funds and derivative markets; and placing restrictions on big banks, like Goldman Sachs, trading on their own corporate accounts - a practice known as "proprietary trading" - when they are supposed to be focused on their clients' interests only. The prevailing view on the left is that Dodd-Frank was a major victory for Wall Street. There are valid reasons for progressives to reach that conclusion. The most important is that, despite its length, Dodd-Frank mostly lays out a broad regulatory framework, allowing the various regulatory agencies to settle on the details of implementation over the next few years. Both Wall Street lobbyists as well as advocates for strong regulation anticipate that the lobbyists will be able to dominate this process of detailed rulemaking. But the reality is more complex. In fact, Dodd-Frank remains a contested terrain because there are lots of areas where strong regulations can emerge through this detailed rulemaking process.

Terms of Engagement The very fact that Dodd-Frank exists demonstrates that the glory days of financial deregulators are mercifully over for the foreseeable future. Yet Wall Street is clearly moving into the phase of regulatory rulemaking with a strong hand. The major Wall Street firms have huge budgets at their disposal to intervene at will during the process of detailed rule-setting. In addition, the regulators themselves understand that they can burnish their future private sector career prospects if they are solicitous to the concerns of Wall Street while still working for Uncle Sam. These are unavoidable realities. But the ammunition on behalf of serious reform is also powerful. It begins with the overwhelming evidence, provided by the financial meltdown itself, that weakly regulated financial markets produce economic disasters. The final version of Dodd-Frank that was passed into law testifies to this. Despite the ambiguities included in the final law, many features of the measure were actually strengthened through the drafting process, as lobbying efforts by Americans for Financial Reform and other citizens' groups did end up exerting influence over many important issues. An important example is the regulations that were established around derivative markets, including the markets for options and futures contracts, swap agreements, and other complex financial instruments. The version of the bill that passed in the Senate was much tougher than the House version in requiring, for example, derivates to be traded on regulated exchanges, as opposed to being permitted to operate in unregulated, freewheeling, over-thecounter markets. Wall Street was quite displeased when, despite its intensive lobbying efforts, the final version of Dodd-Frank that emerged out of the reconciliation conference between House and Senate members ended up much closer to what the Senate had drafted. There is another important consideration here. In fact, it is not necessary for the supporters of effective regulations to win victories on each and every rule that needs to be hammered out. Rather, reformers can achieve a great deal winning victories in a few key areas within the full expanse of Dodd-Frank. We can see this by considering one crucial case in point, the features of Dodd-Frank covering proprietary trading by the giant banks.

Taming the Banks' Proprietary Trading Through the Volcker Rule The Volcker Rule is not actually one rule, but a series of measures, which were strongly supported by former Federal Reserve Chair Paul Volcker, to greatly limit proprietary trading and related highly risky and destabilizing activities by Goldman Sachs, J.P. Morgan, Citibank, and other mega-banks. Proprietary trading and related activities by the big banks were a major cause of the financial bubble as well as the collapse of the bubble and near-total global meltdown in 2008-2009. The banks ran large trading books - inventories of securities that they themselves own - ostensibly so that this supply of

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securities would be readily available for their clients to purchase. But maintaining large trading books enabled the banks to operate with inside information on their clients' trading patterns. This allowed the banks to stay ahead of market movements, which could be quite profitable for them, sometimes even at the expense of their own clients. For example, J.P. Morgan traders could see which securities their clients wanted to buy. The Morgan traders could then buy those securities first, before prices rose as a result of their clients' increased demand. The Morgan traders would then have the option to sell these securities as soon as the prices rose, again staying crucial steps ahead of their clients in cashing out at a profit. In addition, the banks' proprietary trading activities were closely intertwined with hedge funds and private equity funds which, unlike the banks themselves, were essentially unregulated financial firms. This allowed the banks' proprietary trades to be financed through mobilizing huge pools of money without worrying about regulatory restrictions in using these funds. This raised the level of risk exposure to all the parties involved. It was precisely interconnections such as these that fueled the credit market bubble, which in turn led to the crash. Dodd-Frank includes measures that could prove effective in dramatically reducing the risks associated with the banks' proprietary trading. First, the legislation includes a blanket prohibition against banks engaging in transactions involving material conflicts of interest or highly risky trading activities. For example, the J.P. Morgan proprietary trading practice I described above would now be prohibited. Dodd-Frank also establishes that regulators impose capital requirements or other quantitative limits on trading, such as margin requirements, on banks. Capital requirements entail that traders maintain a minimal investment of their cash relative to the overall asset holdings, including their stocks, bonds, buildings, land, and machinery. Margin requirements establish that traders use their own cash holdings, in addition to borrowed funds, to make new asset purchases. There are two interrelated purposes to both capital and margin requirements. The first is to discourage excessive trading by limiting the capacity of traders to finance their trades almost entirely with borrowed funds. The second is to force the banks to put a significant amount of their own money at risk - "putting skin in the game," as they say on Wall Street.

Dodd-Frank Includes Lots of Holes. They Can and Will be Filled. At the same time - and here is where we run into trouble with Dodd-Frank - the law allows for exemptions from regulations as well as various ambiguities that could be readily exploited by the banks. Thus economics Nobel laureate Joseph Stiglitz laments that "unfortunately, a key part of the legislative strategy of the banks was to get exemptions so that the force of any regulation passed would be greatly attenuated. The result is a Swiss cheese bill - seemingly strong but with large holes." For example, Dodd-Frank permits some proprietary trading as long as such activities support "market-making activities" and "riskmitigating hedging activities." Down in the bowels of the regulatory agencies, clever Wall Street lawyers could potentially earn lavish fees parsing the details of language on such issues in discussions with regulators.

Optimism of the Will Dodd-Frank does, indeed, include lots of holes. They can and will be filled. The question is, who will do the filling? I am not so nave as to assume that regulatory standards, such as the Volcker Rule, will be enforced effectively simply because they are written down on paper within Dodd-Frank. But the fact that they are written down on paper does offer real opportunities for serious political engagement and positive outcomes. As such, Dodd-Frank can be used as a framework for building effective regulations. Capturing these opportunities will require combining two things that do not often mesh well - insightful economic analysis along with effective political mobilizations. It will be a difficult, but by no means insurmountable, challenge.

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Philly.com Republicans trying to derail financial overhaul May 15, 2011 By Jeff Gelles

Politicians are notorious for counting on voters having short memories. Even so, the current push by congressional Republicans to derail the fledgling Consumer Financial Protection Bureau, and to undermine other key elements of last year's hard-won financial reforms, stand out for their sheer gall.

Last I looked, the nation is still suffering grievously from the last decade's housing bubble and the financial crisis and recession triggered by its collapse. The result: The worst sustained unemployment since the Great Depression, along with deep shortfalls in federal and state budgets - which is what happens when revenues collapse and expenses rise to cope with a severe downturn.

So what are GOP leaders trying to do about it? As always with Washington politics, it's crucial to keep your eyes focused in more than a single direction.

On the main stage is the battle over the budget - an epic drama pitting President Obama against Republican leaders and featuring themes that center on what we value more as a society: Low taxes and minimal government vs. public investment and a strong safety net for the elderly, disabled, and poor. The final acts remain unwritten, even as Republicans try to use the debt-ceiling vote to force a quick denouement.

But if you shift your gaze for a moment to one of the capital's side stages, you'll witness another key drama with much the same ideological divide but enough strange twists to make your head spin. Its stars are slightly lesser lights: Elizabeth Warren, the Harvard scholar tapped by Obama to set up the new consumer-protection agency - her own brainchild - and Republicans such as Sen. Richard Shelby of Alabama, who has always opposed the idea of an independent CFPB.

Shelby has now convinced almost every other Republican senator to sign a letter pledging to block the

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appointment of anyone to head the new agency until its structure is overhauled - even before it gets off the ground in July. Apparently fearing that Obama might name Warren as its director, Shelby is insisting that no one get the post. "To prevent a single individual from dominating the actions of the CFPB it should be governed by a board of directors," the letter says.

It's true that the nation's financial mess has thick, tangled, and, yes, bipartisan roots. But one of the deepest roots was finally exposed when the housing bubble began to burst. Trace it back - as Warren does more eloquently than anyone - and you'll find a series of failures by regulators and lawmakers that first damaged consumers, then investors, and finally the whole economy.

Financial markets in the 1980s and '90s were busy with genuine innovations, such as the computerized risk-based-pricing models that opened up credit to more and more Americans. Another key innovation was securitization of mortgages and other consumer loans, which fed back investors' money into the system through instruments such as mortgage-backed securities.

All might have been well and good - if key players in Washington hadn't drunk the marketfundamentalist Kool Aid that markets are always efficient and can be trusted to self-regulate. That basic, faulty assumption put much of the nation in a deep hole long before Lehman Bros. collapsed in September 2008 and triggered the need for massive bailouts.

For more than a decade, for instance, credit card companies routinely lent money to cardholders at one rate and then, for little or no reason, bumped their entire balances to "default" or "penalty" rates as high as 30 percent or more. That and similar practices were finally barred by the Federal Reserve in late 2008 as unfair and deceptive, and were banned more firmly the next year by Congress, but only after accumulating interest left many consumers deeply in debt and pushed Americans' total revolving debt toward the $1 trillion mark.

The Fed had long had authority to stop credit card lenders from unfair or deceptive practices, just as it had authority since the early 1990s to clamp down on high-cost mortgage loans, but it failed to do so until the bubble collapsed. Nor did other banking regulators, all primarily concerned with the financial system's "safety and soundness," step into the breach.

Mortgage oversight was incredibly weak. Until the Dodd-Frank financial reform, believe it or not, there was never even a formal requirement that "ability to repay" be considered an essential element of mortgage underwriting.

The role of subprime and exotic mortgages such as "liar loans" in the collapse is widely recognized, but the threads linking the various regulatory failures are often overlooked. Such oversights - or the sorry assumption that voters have short memories - are the only possible explanations for another Republican proposal pending in Congress, which would repeal the risk-retention requirement in DoddFrank for those who create mortgage-backed securities.

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Stupid loans that borrowers can't repay would never have been made by smart bankers or mortgage lenders, but for one reason: They lacked "skin in the game," because securitization allowed them to immediately resell the loans, which were packaged into bonds sold to investors who were ultimately left on the hook. Warren was ahead of her time in drawing the connections among consumer abuses, misguided incentives, and broader market failures. As a bankruptcy researcher, she had long recognized the downside of some financial innovation, such as some consumers' ability to accumulate tens of thousands of dollars in debt without ever sitting down with an actual banker. The result was that even some sophisticated borrowers didn't understand the complex terms - the "tricks and traps," she likes to say - of their needlessly complex loan contracts.

The threads linking consumer abuses to the broader collapse are too numerous to detail here. Another was the pernicious link between everyday consumer debt and mortgages as lenders - include brokers pitching subprime loans - promoted home-equity loans as a way to repay credit card balances. If you think you weren't affected by these practices because you were so prudent and smart, think again. Everybody was. For instance, there's no question that loose lending enabled poorly qualified borrowers to bid up prices for homes during the frenzied years of the bubble.

Yes, you may get some gratification by watching as the "losers" are foreclosed on and evicted - the sentiment behind Rick Santelli's founding declaration of the tea party. But you'd be mistaken for seeing that as a useful response to what went wrong.

Sadly, that's apparently why some key Republicans fear Warren so profoundly: Because her prescription - smart, evidenced-based regulation that will allow consumers to understand financial products and protect them from needless risks - might actually work.

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Cleveland.com Republican assault on Consumer Financial Protection Bureau could - and should misfire May 14, 2011, 12:00 PM

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By Sheryl Harris

Republicans are trying to squeeze the Consumer Financial Protection Bureau any way they can and their little gambit could ultimately backfire.

Banks have opposed from day one the creation of this agency, whose sole mission is protect people shopping for credit cards and loans from gotcha fees and surprise terms.

So two months from the bureau's opening, Republicans are body-blocking for the banks. A trio of Republican-backed bills that would weaken the bureau's authority and delay its July start-up are sailing toward a U.S. House floor vote, where they seem doomed to pass.

Senate Republicans piled on, too.

Forty-four of them, including Ohio's Rob Portman, sent a letter to the president vowing to block the confirmation of any director for the Consumer Financial Protection Bureau unless President Obama agrees to defang the foundling watchdog agency.

Without a director, the bureau is barred from doing much of the work it was created to do. A leading candidate for the job is Elizabeth Warren, the woman banks love to hate. She's the Harvard law professor who proposed the agency and the person hired to prepare it for its July opening.

Here's what Warren stands for: An agency that will make sure lenders present the costs and risks of financial products in a clear way so that consumers can compare offers and choose what's best for them. What a radical notion.

By threatening to block any nomination not just Warren's -- the Senate's little ploy could backfire. It gives President Obama all the reason he needs to appoint Warren during a recess, when Senate Republicans aren't around to foil his plans.

To be on the safe side, the senators want to make sure any director would inherit a weakened agency. They want to switch the new bureau's funding from the Federal Reserve which pays its own way through interest it makes from securities -- to the backs of taxpayers.

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By throwing the agency into the congressional budget scrum, Republicans know they can strangle it by cutting off its funding.

The American public should be furious.

Sixty percent of American families saw their personal wealth decline in the two-year period between 2007 and 2009, thanks largely to plummeting home prices and stock values, according to a study released by the Federal Reserve Board in March.

"Surveying the Aftermath of the Storm" found families headed by older Americans were hardest hit, particularly those headed by people 55 to 64 years old.

The old system didn't work. Banking regulators not only failed to protect the economy, they failed to protect consumers, even when it was their job.

It took an act of Congress to end crazy late penalties for credit cards. Remember the dark days when a consumer's credit card payment was due at 12:01 a.m. on the due date and the card companies delayed processing payments so they could squeeze customers for more late fees?

The Consumer Financial Protection Bureau was created to end the craziness.

It was designed to consolidate consumer protection into a single agency, rather than five, and to police the financial marketplace for unfair and deceptive contracts and products.

If you've ever paid a surprise fee when you thought you were following the rules, if you tripped over fine print buried so deep in a contract you didn't see it, if you own a home you can't sell for the price you paid for it, you have a stake in the Consumer Financial Protection Bureau's survival.

These Republican bills would impede the bureau with last-minute structural changes.

Seduced by the whisperings of the more than 350 bank lobbyists crawling over Capitol Hill, the Republicans argue that the bureau can act unchecked, even though a panel made up of bank regulators already has the authority to veto a bureau-proposed rule.

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They are delivering a death of a thousand cuts to a regulatory agency the financial industry never wanted to see born.

Big banks and finance companies don't want an agency that will pester them to write clear contracts. They don't want a regulator that will call them out when they spring gotcha terms or fees on customers. They don't want a watchdog.

They want a sickly lap dog that yips but can't bite.

And they're willing to buy one.

According to the Center for Responsive Politics, banks, credit card companies and financial institutions have spent more than $26 million to lobby Washington and that's just since January.

You know what it costs you to fight back?

Ten minutes.

Make a phone call.

Write an email. Contact the people who represent you in Congress and demand they stop the assault on the Consumer Financial Protection Bureau.

These next two months are critical.

We know what happens when banks make all the rules. We deserve better.

When this agency opens July 21, it must have its powers intact.

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The Journal of the American Enterprise Institute Senator Shelby Is Right on CFPB May 13, 2011, 2:32 pm By Peter J. Wallison

On May 2, all the Republicans in the Senate notified President Obama in an open letter that they would not vote to confirm anyone for director of the Consumer Financial Protection Bureau (CFPB) unless the agency was converted into a multi-headed commission, subjected to the appropriations process, and required to consider the safety and soundness of financial institutions when it adopts regulations for banks. This demand evoked considerable commentary among the punditry, and a direct attack on Senator Richard Shelby (the ranking member of the Senate Banking Committee) by Barbara Rehm, an opinion writer for the American Banker. Ironically, the theme of the Rehm article was Is this any way to run a government?

This, of course, is the very theme of the Republican objection to the CFPB as it was established by the Dodd-Frank Act. Our constitutional system is based on the idea that the separation of powers is the ultimate protection of the peoples liberties. Indeed, scholars have pointed out that before the adoption of the Bill of Rights the Framers assumed that simply dividing the government between executive and legislative branches was a sufficient safeguard, because neither branch would have the ability by itself to oppress the American people. Under this system, Congress would make the laws and appropriate the funds to run the government, and the executive branch would enforce the laws and spend appropriated funds only as provided and directed by Congress. The president would be elected by the whole nation, but would also be responsible for the conduct of the executive branch.

This structure has been altered gradually over timeregulatory commissions, for example, have been created that enforce the law but are not truly subject to presidential controlbut measured against the original constitutional structure the CFPB is in a class by itself. This agency has jurisdiction over a market that extends vertically from the largest international banks to the smallest local check cashing office, and horizontally from banking to financial advice. It is not authorized to regulate an industry so much as it is authorized to control the daily financial transactions of the American people. There is no agency of the governmentwith the possible exception of the Internal Revenue Servicethat has the inherent power to control so much about how the American people go about their daily business.

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And yet, the CFPB is set up to be totally insulated from the control by either of the elected branches of governmentthe president and Congress. Unlike most regulatory agencies the SEC, the FCC, or the CFTCthe CFPB is to be headed by a single administrator. But unlike the cabinet departments and governmental units throughout the executive branch, the head of the CFPB is appointed for a terms of five years and cant be removed from office by the president, except for cause. Significantly, the Comptroller of the Currencythe regulator of national banksis also appointed for a term of five years, but can be removed by the president for any reason. So the director of the CFPB, once appointed, is virtually immune from presidential control. In addition, the CFPB is exempted from the appropriations process, with which Congress can control the scope of activities of an agency in the executive branch. Unlike any other agency, the CFPB, which is lodged in the Federal Reserve, is to be supported by a percentage of the operating funds of the Fed, and never has to appear before Congress to account for its use of these funds.

There is even more irony in this CFPB-Fed marriage. Although the CFPB is given access to the funds of the Fedfunds the Fed gets without appropriation in order to assure its independence for monetary policy purposesDodd-Frank forbids the Fed from having any control over the CFPB. Moreover, the Fed itself is a multiheaded body that guarantees a variety of voices will be heard before a policy is decided, while the CFPB is headed by a single administrator who need listen to no one before deciding on a policy. So we have the peculiar situation in which the CFPBwhich should be subject to some control by some elected branchis even more insulated from any kind of deliberative process than the Fed itself.

And so we can say, picking up on the theme of the Rehm attack, is this any way to run a government? The effort by 44 Republican Senatorsled by Senator Shelbyto bring the CFPB back into some semblance of constitutional order should be applauded rather than criticized.

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L.A.Times House committee votes to limit power of new Consumer Financial Protection Bureau May 13, 2011 11:29 am By Jim Puzzanghera

The House Financial Services Committee voted to limit the power of the new Consumer Financial

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Protection Bureau as Republicans continued to fight against the centerpiece of last year's Wall Street reform law.

Voting largely along party lines, the Republican-controlled committee approved three bills Friday aimed at reducing the agency's authority as it prepares to begin operations in July. The Consumer Financial Protection Bureau will have the power to set and enforce rules on mortgages, credit cards and other consumer lending products, taking authority from the Federal Reserve and other regulators.

One bill would replace the powerful Senate-confirmed director position -- still without a nominee -- with a five-member bipartisan commission. Another makes it easier for a panel of financial regulators to reverse actions of the new agency, reducing the standard and lowering the required vote from twothirds to a simple majority. The last bill would prevent the agency from using its new authority in July unless it is led by a Senate-confirmed director.

The bills are expected to be approved by the full House, but likely would die in the Democraticcontrolled Senate. President Obama would veto the legislation even if it passed as the consumer agency is one of his administration's major accomplishments.

Nearly all congressional Republicans and much of the financial industry opposed creation of the Consumer Financial Protection Bureau. The agency is being set up by Harvard Law professor Elizabeth Warren, who was appointed to special White House and Treasury positions out of fear Republicans would block her nomination as director.

Senate Republicans have promised to block any nominee unless major changes are made to the agency's structure, along the lines of those approved by the House committee.

The Consumers Union decried Friday's votes.

"These bills put the CFPB on a short leash and will make it harder for this watchdog to protect consumers from hidden bank fees, shady loans, and other financial rip-offs," said Pamela Banks, senior policy counsel for Consumers Union. "Congress should be standing with consumers, not the big banks and Wall Street firms that caused our financial crisis."

But House Financial Services Committee Chairman Spencer Bachus (R-Ala.) said the changes were needed to provide more accountability for the new agency.

Despite the overheated rhetoric from opponents, none of these bills weakens consumer protection in any way, shape or form," said Bachus, who has been an outspoken opponent of the new agency. "In

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fact, these bills will help make sure the consumer protection rules issued by the CFPB are consistent, fair and do not endanger the safety and soundness of financial institutions."

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Bloomberg Dodd-Frank Consumer Bureau Changes Approved by U.S. House Panel May 13, 2011, 4:32 PM EDT By Phil Mattingly

May 13 (Bloomberg) -- Republicans on the House Financial Services Committee advanced three bills today to reshape the Consumer Financial Protection Bureau, turning the tables on Democrats who approved the agency in party-line votes last year.

Lawmakers led by Representative Spencer Bachus, the Alabama Republican who leads the panel, are pushing changes to the Dodd- Frank Act, the regulatory overhaul theyve targeted since taking control of the House in January. The Republicans have proposed about a dozen bills to revise the new rules, which they were nearly unanimous in opposing when Dodd-Frank was passed in July.

The three bills approved today are important pieces of legislation, all of which will promote greater certainty for our economy and job creators, Bachus said yesterday.

After more than 10 hours of debate yesterday over the CFPB measures and a bill to re-authorize the National Flood Insurance Program, Bachus put off until May 24 consideration of an 18- month delay of derivatives rules mandated by Dodd-Frank. The bill would push implementation of rules for the $583 trillion over-the-counter swaps market -- many of them due by July -- to December 2012.

The Republican measures, even if they are approved by the full House, are likely to face opposition from the Senate, which remains in Democratic hands, and from President Barack Obama, who initiated the regulatory overhaul in response to the worst financial crisis since the Great Depression.

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Republican Questions

The CFPB, which Obama proposed after financial firms were accused of predatory practices in mortgage and credit-card lending, has faced questions from Bachus and his colleagues over its funding and potential reach. The Republican bills would clamp down on the bureau by replacing its as-yetunnamed director with a bipartisan, five-member board, delaying its scheduled July 21 start date and making it easier for bank regulators to veto bureau rulemakings.

The proposals have been criticized by consumer groups as a way for Republicans to gut the bureau and undermine Elizabeth Warren, the Harvard University law professor serving as an Obama adviser to shape the agency shes credited with conceiving.

This legislation completely disregards and denies the causes of the regulatory failures that led to the current financial crisis, a group of consumer groups and labor unions, including the AFL-CIO and the National Community Reinvestment Coalition, said in a May 3 letter to committee members.

Necessary Checks

Representative Shelley Moore Capito, a West Virginia Republican, said the bills are necessary checks on the power of bureau that will play a large role in financial markets.

Whether we like it or not, the bureau will likely be the financial product regulator for the foreseeable future, said Capito, who leads the financial institutions subcommittee.

Representative Barney Frank of Massachusetts and the committees Democrats have attacked the bills as delay tactics aimed at weakening consumer protection. The Democrats offered several amendments to change the measures, including one that would require that the president appoint Warren as the chairman should a commission be installed.

Make no mistake, by expanding the ability for banking regulators to veto the CFPB, I believe that my Republican colleagues are far less concerned about the stability of the banking system, and far more concerned about hurting bank profitability, Representative Maxine Waters, a California Democrat, said.

--Editors: Gregory Mott, Lawrence Roberts

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Reuters House panel votes to weaken consumer watchdog Fri May 13, 2011 12:57pm EDT By Kevin Drawbaugh

WASHINGTON (Reuters) - The power and independence of a new U.S. financial consumer watchdog agency would be curbed under three pieces of legislation approved on Friday by a Republicancontrolled House of Representatives panel.

The measures may win approval in the full House later, but analysts do not expect them to become law. Democrats in control of the Senate oppose them, as does President Barack Obama, who could veto. Obama has been a strong supporter of the Consumer Financial Protection Bureau (CFPB), which Republicans and the banks want to undermine.

The three bills are part of a broad effort by House Republicans to pick apart the 2010 Dodd-Frank financial regulation reforms via legislation.

"These bills will help make sure the consumer protection rules issued by the CFPB are consistent, fair and do not endanger the safety and soundness of financial institutions," said committee Chairman Spencer Bachus, a Republican. Dodd-Frank was propelled through Congress by Democrats last year with the aim of bolstering government oversight of the financial system and preventing a repeat of the 2007-2009 banking crisis that dragged the economy into a deep recession, leading to taxpayer bailouts of Wall Street.

Republicans largely opposed Dodd-Frank last year throughout the debate. Since they took control of the House in November, they have been targeting the reforms for roll-back on multiple fronts, so far with little success.

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Republicans, arguing that Dodd-Frank is an overreach by government that is weighing on credit markets, have also sought to cut funding for it at the agency level.

"It's outrageous that the Republicans continue to push these measures to dismantle Dodd-Frank ... in direct opposition to widespread public opinion, and in total disregard to recent history and common sense," said Democratic Representative Carolyn Maloney.

One of the Republican bills would put a five-member, bipartisan commission in charge of the CFPB, instead of a single director as called for by Dodd-Frank.

Another bill would make it easier for banking regulators from other agencies to block new rules put forth by the CFPB.

Republican Representative Shelley Moore Capito applauded the committee's passage of a third bill, which she backed, also dealing with the watchdog agency.

Her measure would block the CFPB from fully taking over financial consumer protection duties from other agencies until it has a director who is confirmed by the Senate.

Obama has not yet nominated a CFPB director.

Forty-four Republican senators said last week they would not vote to confirm any nominee unless the CFPB's powers were curbed.

Analysts said the Senate ultimatum could convince Obama to name a director while the Senate is in recess, side-stepping the confirmation process. Capito's measure, if approved, could negate such a recess appointment strategy.

"The powers of the CFPB are too broad to allow it to function fully without a confirmed director," Capito said.

(Editing by Ted Kerr)

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MarketWatch GOP OKs three bills to restructure consumer bureau May 13, 2011, 12:04 p.m. EDT By Ronald D. Orol

WASHINGTON (MarketWatch) - A top House committee on Friday approved three Republican bills that would restructure a soon-to-be-formed Consumer Financial Protection Bureau charged with writing rules for mortgages and other credit products. One bill would set up the CFPB as a bipartisan commission made up of five members, instead of having one person in charge, as currently required. Another bill would expand the authority of a newly formed Financial Stability Oversight Council to reject rules approved by the bureau. The third bill would prohibit the bureau from having any regulatory authority until a Senate-confirmed director is in place. The bills, approved by the House Financial Services Committee, are unlikely to receive support from the Democratic-controlled Senate.

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New York Times Credit Error? It Pays to Be on V.I.P. List May 14, 2011 By TARA SIEGEL BERNARD

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The credit rating bureaus, whose reports influence everything from credit cards to mortgages to job offers, have a two-tiered system for resolving errors one for the rich, the well-connected, the wellknown and the powerful, and the other for everyone else.

The three major agencies, Equifax, Experian and TransUnion, keep a V.I.P. list of sorts, according to consumer lawyers and legal documents, consisting of celebrities, politicians, judges and other influential people. Those on the list and they may not even realize they are on it get special help from workers in the United States in fixing mistakes on their credit reports. Any errors are usually corrected immediately, one lawyer said.

For everyone else, disputes are herded into a largely automated system. Their complaints are often electronically ferried to a subcontractor overseas, where a worker spends, on average, about two minutes figuring out the gist of the matter, boiling it down to a one-to-three-digit computer code that signifies the problem account not his/hers, for example and sending a dispute form to the creditor to investigate. Many times, consumer advocates say, the investigation translates to a perfunctory check of its records.

The legal responsibility of the credit reporting agencies and of the creditors is well established, said Leonard Bennett, a consumer lawyer in Newport News, Va. There is a requirement that they do meaningful research and analysis, and it is almost never done.

Consumers who have trouble fixing errors through the dispute process can quickly find themselves trapped in a Kafkaesque no mans land, where the only escape is through the court system.

You are guilty before you are proven innocent in a situation like this, said Catherine Taylor, 45, of Benton, Ark., who said she had been denied employment and credit because her filing was mixed up with a felon who had the same name and birthday.

Judy Johnson of Bossier City, La., was confused with a less creditworthy Judith Johnson, with a similar address and Social Security number. For nearly seven years, Judy Johnson, a 63-year-old credit manager for a building supply company, said she tried to remove the black marks from her credit report. But when she was denied a credit card, she knew the problem had returned a third time. This time, I was livid, she said.

She ultimately brought a suit against one of the bureaus, and recently settled for an amount she cannot disclose. But the problems still linger. A deputy sheriff recently came to her door to serve her papers for a debt she says she does not owe.

The credit rating bureaus, private-sector companies that each attempt to track all American consumers credit use, have grown much more powerful over the last couple of decades as credit has become a

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crucial cog in the nations financial system. Their reports are used to formulate the all-powerful credit score, which lenders use to determine creditworthiness.

But as the bureaus work has become more important, consumer advocates say, regulation has not kept up, in large part because their overseer, the Federal Trade Commission, lacks broad authority. That could change once responsibility for the credit bureaus shifts to the new Consumer Financial Protection Bureau, which will be able to write rules and examine the credit agencies policies.

The bureaus, meanwhile, do not have an economic incentive to improve the system, consumer advocates say, because their main customers are the creditors, not consumers.

There is no neutrality in the credit reporting agencies, said John Ulzheimer, who has been an expert witness in more than 80 credit-related cases and is president of consumer education at SmartCredit. com. They work for the lenders who buy credit reports from them, and anyone who suggests otherwise is not being intellectually honest.

When asked about the V.I.P. category, TransUnion said all consumers have the ability to speak to a live representative. Equifax said consumers who received a free copy of their credit report were provided with a number for customer service.

Experian denied that it had V.I.P. lists. But a spokeswoman did say that prominent people deemed high risk like politicians in an election year might have their credit files taken offline so that creditors or other companies making inquiries could not get access without the bureaus permission. Experian said those people did not receive any other special handling.

David Szwak, a consumer lawyer in Shreveport, La., who has handled dozens of credit cases, said that the V.I.P. designation and preferential treatment did exist at Experian, and he provided sworn testimony from former Experian employees that the category existed.

Estimates of credit reports with serious errors vary widely, anywhere from 3 to 25 percent. A recent study, paid for by the Consumer Data Industry Association, the trade group for the bureaus, found potential errors in 19.2 percent of reports, but said that less than 1 percent of them had disputes that, when settled, resulted in a meaningful increase in scores. Even 1 percent translates into millions of consumers, since there are at least 200 million files at each of the bureaus.

The F.T.C. is expected to deliver a nationwide study on credit report accuracy next year that could provide more clarity. It could also include recommendations for legislative action.

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The volume of disputes has been rising as consumers borrow more and gain greater access to credit reports. The automated system was a response to that. A spokesman for the trade group said most consumers received an answer within 14 days.

Experian is the only bureau that still processes disputes in the United States, experts said, though most complaints wind their way through the same online system unless the dispute involves a V.I.P.

They get a lot more high-end treatment, said Mr. Szwak, the lawyer, who has read the bureaus internal procedure manuals and deposed or cross-examined employees. The biggest difference at TransUnion and Equifax, lawyers said, is that V.I.P.s disputes are specially handled domestically. Regular consumers files, meanwhile, may get priority treatment if they involve a time-sensitive issue, like a mortgage pending, or if the consumer is represented by a lawyer or dealing with fraud.

Last year, new rules went into effect to strengthen existing regulations on the accuracy of reports. The rules also allow consumers to dispute errors directly with the creditor. But critics say the rule lacks any teeth because consumers dont have the right to sue the companies. (Individuals can, however, sue the bureaus and creditors after lodging a dispute through their system.)

But the problem, advocates say, is that consumers cannot vote with their feet. They cannot remove their information from the bureaus, said Chi Chi Wu, a staff lawyer at the National Consumer Law Center, who wrote a report on the automated dispute process in 2009, or take their business elsewhere.

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Lansing State Journal Michigan's unemployed take hit with debit card fees May 14, 2011 3:56pm By Susan Tompor

Michigan's debit card for jobless benefits hits the unemployed too hard in the pocket with "junk fees," a

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national consumer group says.

The group, which did a study of such cards for jobless people in 40 states, took issue with a fee on the Michigan debit card that charges $1.50 each time a purchase or ATM transaction is denied because there's not enough money on the card.

Another fee charges $1 to track the balance on the card at an ATM after two free balance inquiries each month at a network ATM. There are no free balance inquiries at out-of-network ATMs.

Lauren Saunders, managing attorney for the National Consumer Law Center, said both of those fees are the highest of any of the 40 states that offer plastic debit cards for jobless benefits.

Michigan's card is not the worst in the survey - that dubious honor went to Tennessee.

But Saunders noted that the two junk fees make Michigan's card problematic.

Saunders said in a phone conference last week that states are able to negotiate the types of fee structures with the banks that handle such cards, including Bank of America Corp., U.S. Bancorp's U.S. Bank and JPMorgan Chase & Co.'s Chase, which issues the Michigan debit card for state unemployment benefits.

Denied transaction fees, she noted, are as little as 25 cents in some states.

The state of Michigan said it uses some of the best practices the U.S. Department of Labor recommended in 2009.

Those include offering direct deposit, allowing more than one free withdrawal per payment and unlimited free balance inquiries by telephone or the Internet. In July 2010, all cardholders also were mailed wallet-size guides to fee-free use of the cards.

"While the fees they cite are accurate, we have made efforts to provide information to cardholders that will allow them to avoid those fees," said Melanie Brown, a spokeswoman for the Michigan Department of Licensing and Regulatory Affairs.

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According to the National Consumer Law Center survey, California and New Jersey have the best prepaid debit cards for jobless benefits, both issued by Bank of America.

The report urges the new U.S. Consumer Financial Protection Bureau, which starts work in July, and Department of Labor to work together to ban overdraft and other unfair fees and to improve transparency.

The states do not keep the fees. The banks use the fees to cover costs of the program.

Such plastic debit cards, obviously, can help jobless workers who do not have bank accounts avoid high check-cashing fees.

The Michigan Unemployment Insurance Agency has said the electronic payment options, including direct deposit and debit cards, save the state money.

If you're laid off, though, you've got to watch every dollar and pay extra care to take advantage of limited free options for getting cash or balance inquiries on the Michigan card.

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American Banker Minimal CARD Impact on Rates May 16, 2011 By Kate Fitzgerald

Credit card terms have not changed much in the past year, despite expectations that issuers would raise interest rates and fees on new accounts to offset the effects of restrictions imposed last year under the Credit Card Accountability, Responsibility and Disclosure Act, according to data from the Pew Health Group.

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Most provisions of the CARD Act went into effect in February 2010, including a rule prohibiting issuers from raising existing cardholders' interest rates in most cases. Other new safeguards included applying payments first to cardholders' highest-interest balances and notifying consumers of any pending changes in their interest rates.

As part of its continuing analysis of the credit card industry through its Pew Safe Credit Cards Project, the Washington nonprofit organization compared card interest rates and fees touted in online card solicitations among the 12 largest U.S. banks from January 2011 with those from March 2010. The results were released May 10.

Pew found that median advertised interest rates for purchases have held steady at 12.99% to 20.99%, depending on a prospect's credit history.

About 95% of all online card solicitations in January featured penalty fees for payments received after their due date, unchanged from a year earlier, but the fees are somewhat lower. Penalty fees for late payments within the past year have declined to a range of $25 to $35 from a median of $39 a year earlier, Pew found. The CARD Act limits late-payment fees to $25 for the first violation and $35 for subsequent violations within six months.

Fees for exceeding credit limits have fallen dramatically. Only 11% of new card offers in January carried penalty fees for cardholders exceeding their credit limit, down from 23% a year earlier and more than 80% in 2009.

The percentage of card offers with annual fees rose slightly compared with a year earlier. About 21% of bank card offers in January included an annual fee compared with 14% a year earlier.

Annual fees on new card offers held steady at $59 for banks and $25 for credit unions, Pew found.

"Pew's research shows that predictions that the legislation would spark new charges and long-term interest rate growth have not materialized," Nick Bourke, director of Pew's Safe Credit Card Project, said in a press release. "Whatever increases in advertised interest rates we saw going into 2010 have not continued into 2011. The act created a new equilibrium, where interest rates have flattened, penalty charges have declined and a number of practices deemed 'unfair or deceptive' have disappeared."

The data compares favorably with certain other recent analyses of direct-mail credit card solicitations within the past year. According to Mintel Comperemedia, the percentage of card offers measured in March featuring low-interest annual percentage rates lasting at least 13 months increased from a year

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earlier.

Mintel said in August that the fallout from the CARD Act had not been as extensive as many in the industry predicted.

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Wall Street Journal Maybe We'll Charge an Extra Fee to Read This May 15, 2011 By RACHEL LOUISE ENSIGN

Lose your PNC Bank debit card on vacation, and it'll likely cost you $32.50 for a replacement. If U.S. Bank gets more than one of your statements returned in the mail because of an incorrect address, you'll be charged $5 -- for each return.

If you feel banks are nickel-and-diming you these days, you'd be right.

Free banking has gone the way of the free in-flight meal. Banks are now restricted in some fees they can charge -- and stand to lose billions of dollars in revenue as a result -- so they're coming up with new fees for things that used to be free.

Checking accounts at the 10 biggest U.S. banks had a median 49 fees in October, according to an April study by the Pew Charitable Trusts.

But there are ways to beat your bank at its own game -- and minimize or avoid some fees.

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Monthly Service Fees. More banks have gone back to charging you for holding your money. And those fees keep going up. The average monthly fee for a non-interest-bearing checking account was $2.49 in 2010, up from $1.77 in 2009, according to Bankrate.com. An interest-bearing account charged an average $13.04, up from $12.55.

The easiest way to eliminate that fee: direct deposit. About three in five banks with a monthly service fee will waive it if a customer signs up for regular direct deposit, according to an April study from the U. S. Public Interest Research Group, a consumer advocacy group.

And it doesn't just apply to a paycheck. Direct deposit of Social Security, veterans, disability and pension benefits also qualify. Distributions from 401(k) plans and individual retirement accounts often qualify, says Scott Lang, senior vice president of association services at NACHA, a Herndon, Va.-based group that promotes electronic payments.

One caveat: Some banks are now requiring a minimum deposit amount. It also can pay to consolidate your accounts and loans at one bank. Chase, for instance, eliminates the monthly charge if you maintain a $1,500 minimum daily balance or have $5,000 or more in linked deposits and investments, which include savings accounts and investment accounts.

ATM Withdrawals. You not only have to pay up to keep your money in a bank, you're also getting dinged when you want to take your money out. While ATM fees have been rising for years, new regulations have added fuel to the fire, sending fees higher than ever, says Greg McBride, senior financial analyst at Bankrate.com.

Withdrawing money from an ATM outside your bank costs you an average $2.33, up more than 18% from the fall of 2008, according to Bankrate.com. Wells Fargo and Bank of America already are charging non-customers $3 to use their ATMs. And your own bank likely is penalizing you for going to another bank. The average surcharge banks impose on customers for using an outside ATM is $1.41, up from $1.32 in the fall of 2009.

Limit your need to go to an ATM by getting cash back when using a debit card for purchases. But there's usually a limit on how much you can get back -- typically between $50 and $100, says Nessa Feddis, vice president and senior counsel at the American Bankers Association.

Another option is to open an online checking account. Online banks, such as State Farm Bank, Ally Bank and Charles Schwab Bank, refund all ATM fees at the end of the month since they typically don't have their own ATMs.

If you have an account with a smaller bank or credit union, see if the institution belongs to a third-party network of ATMs, such as Allpoint or MoneyPass. ATM machines in these networks, which can be

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found in places like Wal-Mart and McDonald's, don't charge you a withdrawal fee (though your bank may charge you one).

The (Fill in the Blank) Fee. Some of the most basic banking services are now being recast as extras that come with, you guessed it, a price.

Empty your kid's piggy bank to deposit the coins at a Citibank branch in Illinois, and it'll cost Junior 5% of the deposit. (After The Wall Street Journal Sunday inquired about the fee, the bank said it planned to eliminate it.)

If you're a Bank of America customer with an e-banking account and make just one deposit a month through a teller, drive-up window or night deposit box, an $8.95 fee will kick in. The fee also comes into play if you want paper statements.

And, even if they don't charge for the initial statement, most banks charge $5 each for copies of deposits, checks or past statements.

And those PNC Bank customers who have a debit card lost or stolen while on vacation? On top of its standard $7.50 replacement fee, the bank tacks on an extra $25 "expedited card delivery fee" if you want to have the card mailed to somewhere other than home.

Overdraft Protection. The biggest hit is the overdraft fee, which the bank charges you for letting a payment go through when you don't have enough funds in your account. It will run you $10 to $36 for every transaction you make while your account is in the red, according to the Pew study (though most banks limit the number of daily overdraft charges).

If your bank charges you, say, $34 on one $100 overdraft that takes you two weeks to pay back, it's equivalent to a loan with a whopping 886% annual percentage rate, according to the Center for Responsible Lending.

Instead of signing up for overdraft protection, apply for an overdraft line of credit. You'll pay a much smaller transfer fee, typically $5, each time you overdraw plus 18% interest until the balance is paid back, according to the Center for Responsible Lending.

Another option is to link your checking account to a savings account. You'll typically pay $5 to $10 each time you have to dip into the savings account to cover a transaction in your checking account, says Ed Mierzwinski, consumer advocate at the U.S. Public Interest Research Group.

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Take it a step further and sign up for automatic text-message or email alerts when your checkingaccount balance drops below a certain amount. Then transfer money online from your savings account to your checking account yourself. That's still free at most banks. But give them time.

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Wall Street Journal Drawing Benefits Via a Debit Card? There's a Fee for That May 14, 2011 By JESSICA SILVER-GREENBERG

Instead of paper checks, Oregon officials pay weekly unemployment benefits by loading the money onto debit cards that come with several unusual fees.

After she found a job last year, 48-year-old Jennifer Schmidt of Riddle, Ore., was charged an "inactivity fee" of $2 by U.S. Bancorp for not using her debit card once she stopped drawing unemployment.

The $2 fee sank the balance on her card into the red, triggering an overdraft fee of $17.

"How is it possible that the bigwigs in government can't get a better deal for us?" she says.

More than 40 U.S. states use prepaid debit cards to funnel unemployment benefits, child-support payments and other funds to recipients.

Getting rid of paper checks and postage is hard to resist for cash-strapped governments, which last

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year steered $53.2 billion in unemployment benefits and child-support payments to prepaid debit cards, up 33% from 2009, according to Mercator Advisory Group Inc., a research firm in Maynard, Mass. Such cards made up 32% of the overall prepaid debit-card market in 2010.

Banks are barreling into the business, led by J.P. Morgan Chase & Co., the second-biggest U.S. bank in assets, which has contracts with 21 states. U.S. Bancorp, based in Minneapolis, has contracts with 16 U.S. states. The nation's largest bank by assets, Bank of America Corp., has deals in five states and will start issuing debit cards for California's unemployment benefits in July.

One reason why financial institutions like prepaid debit cards: They largely escaped the recent crackdown by U.S. lawmakers and regulators on fees, interest rates and billing practices for credit and debit cards.

Last year, 10 state treasurers successfully prodded lawmakers to shield prepaid debit cards from part of the Dodd-Frank financial-overhaul law that limits so-called "swipe fees" charged to retailers. Prepaid debit cards also are exempt from a 2009 law that outlawed fees for infrequent card use. In addition, most of those cards aren't subject to Federal Reserve rules requiring debit-card users to agree before banks can charge them for overdrawing the balance in their account.

Richard Davis, U.S. Bancorp's chairman, president and chief executive, said last month that prepaid debit cards and other products will help the company recover roughly half of the revenue likely to be lost from swipe-fee rules being written by regulators. The banking industry is lobbying to repeal or delay the rules.

The combined regulatory changes for credit and debit cards are expected to cost financial firms about $26.2 billion a year in revenue, according to R.K. Hammer, a credit-card consulting firm in Thousand Oaks, Calif.

About 10 states have started issuing government benefits through prepaid debit cards since DoddFrank was signed into law last July. The fees each state negotiated vary widely. The U.S. government isn't moving as quickly, though the Treasury Department launched a pilot program in January that encouraged 600,000 taxpayers to get their 2010 federal tax refunds on prepaid cards instead of paper checks.

Government agencies usually sign a contract with a bank to issue the plastic, which looks like traditional debit cards and is equivalent to cash. Some states give recipients the option of having money deposited electronically into their checking account. But prepaid debit cards are the only way to get unemployment benefits in Kansas, Indiana and Maryland.

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Some of the fees commonly charged on prepaid debit cards were widespread in the U.S. banking industry but have faded because of fierce competition and criticism.

For example, PNC Financial Services Group Inc. subtracts 50 cents from the unemployment benefits of Indiana residents every time they check their balance at one of the Pittsburgh bank's automated teller machines. Recipients also get just one free cash withdrawal per week; other cash withdrawals cost $1.25.

Those two fees don't apply to PNC checking-account customers. A spokesman declined to comment.

Madeline Aufseeser, a senior analyst at Aite Group LLC, a research firm in Boston, says such fees "are the only means that issuers have to offset the cost of the prepaid cards."

Oregon State Treasury spokesman James Sinks says prepaid debit cards are "an alternative for unbanked customers" who otherwise would face even higher check-cashing fees. Since 2007, Oregon's deal with U.S. Bancorp for unemployment and child-support benefits has resulted in $11.5 million in cost savings, the agency says.

In 2009, the U.S. government urged states to drive a harder bargain with debit-card providers, including free ATM withdrawals. But federal officials lack any authority over the states' contracts. Prepaid debit cards for 2010 federal tax refunds, issued by a unit of Bonneville Bancorp of Provo, Utah, and managed by Green Dot Corp., Monrovia, Calif., came with unlimited transactions at nearly 15,000 ATMs.

In March, more than 600 people protested outside U.S. Bancorp branches in Oregon, demanding the elimination of fees on debit cards tied to government benefits. At the bank's shareholder meeting last month, Mr. Davis deflected a question about the spat, saying Oregon officials have "a role in the matter."

A U.S. Bancorp spokeswoman declined to comment. Mr. Sinks, the Oregon spokesman, says state officials will push for "the lowest fees possible" when the unemployment contract is reviewed in December.

Loree Levy, a spokeswoman for California's Employment Development Department, says officials were determined to squeeze a good deal out of Bank of America during negotiations about using debit cards for unemployment benefits.

The Charlotte, N.C., bank agreed not to charge inactivity fees or for cash withdrawals at its ATMs. "I

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think we won," she says.

Margaret Scopelianos, who runs Bank of America's government card programs, says the bank strives to provide "real value to cardholders."

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Wall Street Journal Americans Turn to Credit to Deal With High Oil Prices MAY 13, 2011, 10:18 AM ET By Kathleen Madigan

Its all about oil right now.

Faced with soaring energy bills, businesses and consumers have had to develop coping mechanisms. The strategies seem to be helping the U.S. economy weather this headwind. For shoppers, the approach is twofold: spend less on other items and rely more on credit.

On the surface, shoppers are spending freely. Retail sales increased a healthy 0.5% in April, on top of a 0.9% jump in March. But more than half of the two-month gain, 56%, was accounted for by increased sales at gas stations, although that sector is only 11% of total retail sales. The rise reflects the 50-cent jump in gasoline from end-February until end-April. Excluding gasoline, store receipts increased 0.5% in March and 0.2% in April.

Consumers may also be dealing with sticker shock at the pump by pulling out their credit cards. According to the National Association of Convenience Stores, its members are seeing more gasoline bought on credit. (In the U.S., about 80% of fuel is bought at convenience stores.)

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Traditionally, two-thirds of transactions at the pump are by plastic, says Jeff Lenard, NACS vice president of communications. I have heard that this figure has increased to 80% or even 90% in many markets.

The greater use of plastic is borne out in consumer debt data. According to the Federal Reserve, revolving debt which includes credit cards increased in March for only the second time since the financial collapse of 2008.

The shift to plastic suggests consumer spending can tolerate higher energy prices now. Bigger debt payments later on could curtail future spending, unless job and income growth revs up.

For businesses, the coping mechanism is keeping a tight rein on other costs. One way is good inventory management. True, inventories have been increasing so far this year (partly reflecting higher input costs). But their rise is not out of line with the recent advance in sales.

The ratio of inventory to sales which measures how long it would take to draw down inventories at current sales rate shows businesses are keeping stockpiles extremely lean. The ratio fell to a record low of 1.33 in February and stayed there in March.

Retailers have also pared down inventories after they soared during the recession when consumers snapped shut their wallets. The retail inventory-sales ratio dropped to a record low 1.23 in March.

The slight decline in the [inventory-sales] ratio paired with the improvement in sales suggests that output growth will likely continue to improve as demand picks up throughout the supply chain, say economists at Wells Fargo.

In other words, solid inventory control doesnt just function as an offset to energy costs. It also improves the economic outlook.

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The Hill AT&T exec: Dodd-Frank put brakes on new mobile payment network May 14, 2011 2:04pm ET By Peter Schroeder

New limits on debit card fees have discouraged mobile carriers from competing with Visa and Mastercard, according to a top AT&T executive.

The executive told Reuters that AT&T, Verizon Wireless and T-Mobile USA scrapped plans to launch a competing mobile payments processing network due in large part to the so-called Durbin amendment. That amendment was a late entry into the Dodd-Frank financial reform law, and requires the Federal Reserve to set limits on the amount of fees banks and networks can charge retailers for swiping debit cards.

"Some changes in the banking laws occurred with the amendments that were put in with the DoddFrank bill," said John Stankey, AT&T's head of business solutions. "As transaction fees were limited and things were changed, it kind of changed the business model."

When the networks launched "Isis" in November, they originally envisioned it would offer direct competition to Visa and Mastercard as another network to process payments. However, last week it was announced that Isis would be working with the two existing card networks. The battle over the Durbin amendment -- named after its primary backer, Sen. Dick Durbin (D-Ill.) -- has been one of the fiercest on Capitol Hill for months, as banks and retailers square off with billions in revenue at stake. The Fed hopes to finalize the limits in July, but some lawmakers are pushing legislation that would delay implementation for one or two years, arguing the matter needs further study.

The Fed's proposed rules, unveiled in December and slated to be finalized in April, would slash bank fees from the current 44-cent average to seven to 12 cents per swipe.

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Washington Post Growing number of consumers pay credit card debt before mortgage May 14, 4:00 PM By Ylan Q. Mui and Dina ElBoghdady

A significant number of Americans are now willing to lose their house to save the stuff thats in it.

That kitchen-table calculus provides a window into the deep-seated changes in consumer psyche wrought by the financial crisis. Traditionally, home loans have perched at the top of the payment hierarchy as families have strived to ensure that a roof stayed over their heads. But as Americans unload more than $100 billion in debt leftover from the economic boom, many households face a daunting question: What to pay off first?

The answer increasingly has become the credit card. According to statistics from credit bureau TransUnion, the number of consumers who default on their mortgages but continue to pay their credit cards on time has remained well above normal even as the country has moved into an economic recovery. The steady climb up from 37 percent before the recession to more than half at the end of last year has some financial experts questioning whether the shift reflects a permanent change in how families manage their personal balance sheets.

If you get into the mind-set of a person experiencing financial distress, this is a perfectly rational and logical response, said Mark Cole, executive vice president of CredAbility, a nonprofit education and credit counseling firm. They didnt have enough in savings, and credit cards became the shock absorber.

Under the new payment hierarchy, their homes have become a liability and the consequences of skipping a mortgage payment seem far away, especially as legal wrangling over foreclosure can stretch for months. A credit card, on the other hand, can help them satisfy the immediate demands of paying for food or keeping the lights on. In addition, lax lending standards allowed many to buy a home with little financial investment now manifesting itself as a lack of emotional attachment as well.

Jeff Horton of Orlando stopped paying the mortgage on his home 19 months ago, and said he still hasn t heard from his lender, Bank of America. He bought the home in 2007 for $265,000 only to find out that the value plunged to less than half that a year later. A condo he purchased in late 2005 for $140,000 is now worth $34,000, he said. Horton said he cant even rent the properties at a price that would cover his mortgages.

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Its absurd, he said. Im completely bound to these properties. I cant get rid of them.

Horton said that his condo has gone through foreclosure, and that he knows it will take years to repair his credit. But he figures it could take even longer for the value of his home to recover.

As for his credit card, student loans and car note? I pay all that stuff. Im not behind on anything else. Never have been, Horton said.

Financial advisers caution that the mortgage is still the most important debt to pay on time, and many Americans agree. A survey by the National Foundation of Credit Counselors last year showed that 91 percent of consumers said they would pay their mortgage before their credit card bill. Losing a home can result in financial and emotional upheaval that lasts long after the debt collectors stop calling.

A credit card bill should not be paid until after all those other things can be paid, said Johanna Anderson, a program administrator at the Housing Initiative Partnership. People in trouble need to think of credit card companies as the little yapping dogs. Theyll be calling all the time and sending letters constantly, but their bite is not that bad.

Thats the advice Anderson gave to Troy and Alicia Graham of Landover when the couple fell behind on their mortgage in late 2008 after maxing out their credit cards.

Troy Graham, a youth counselor at the time, suffered a knee injury on the job and his income was dramatically scaled back as he recovered. His medical bills kept piling up, and the couples adjustablerate mortgage was about to reset to a higher rate.

Unsure how to tackle their mounting debt, they turned to Anderson, who helped them apply for a loan modification that ultimately saved them from foreclosure in early 2009. They havent missed a mortgage payment since.

We figured it was more important for us to have a roof over our heads than anything else, Alicia Graham said. The rest, we just had to wing it. We cut back on everything. It becomes more about what you need and not what you want.

Still, Jon Maddux, chief executive of YouWalkAway.com, said that not paying the mortgage often frees up cash for families to pay off other creditors. The company has counseled about 6,000 people on how to default on their home loans, many of whom have cleaned out savings and retirement plans to make

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their monthly mortgage payments. An analysis by VantageScore, which creates scores based on credit reports, found that 4.3 percent of consumers with a late payment had skipped their mortgage but kept their car note and credit card payments current.

Theyre at that tipping point where its like, okay, were headed toward bankruptcy if we do this, Maddux said.

The trend is particularly pronounced among subprime consumers, many of whom were saddled with home loans they could not afford. An analysis by TransUnion found that 30.4 percent of subprime households were behind on their mortgage payments but current on their credit card payments at the end of last year. Meanwhile, only 12.3 percent were late on their cards but up to date on their home loans.

Blake Fetrow, chief attorney with Marylands Legal Aid Bureau, said he regularly counsels families struggling to stretch their money. He tells them to take care of bills first and creditors second.

Thats a very personal thing, he said. Is it going to be the heat? Is it going to be the water? What do I have to leave off to make it through this month?

In addition, Fetrow said, families often mistake moral obligations to pay off debt for legal ones.

Olivia Stanfield, 67, of Riverdale fell into debt after her husband died several years ago. She had handled the bookkeeping for the construction company he owned, and thought she could manage it by herself. But soon she was overwhelmed and was forced to dig into her own wallet to pay off the businesss debt, racking up $40,000 on credit cards in the process.

I thought I could make it work. I thought I knew enough to keep it going, she said.

Stanfield lost her home in Southeast Washington three years after her husbands death and moved in with her daughter in Riverdale. With Social Security as her only income, her credit card payments became insurmountable and she stopped putting money toward them about a year ago, she said. Now Stanfield is considering filing for bankruptcy, which would shield her from debt collectors.

But there is one bill that she is determined to keep up: her medical bill. She has only $100 left to pay for some dental work, she said.

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Actually, make that $60. Stanfield remembered that she recently sent $40.

I figure that type of thing I need to pay for, she said.

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Dayton Business Journal New fees cost big banks millions of customers May 15, 2011, 7:52pm EDT By DBJ Staff

Big banks in the U.S. will lose millions of customers this year as higher fees are driving people away from traditional banks, often choosing to join credit unions that offer a fee-free haven for regular customers. That is part of a report on USAToday.com Sunday that details some of the banks increasing fees and what impact that is having on customers. In the report, it details fee hikes that in some cases are double what they were before.

Bank of America is hiking the monthly fee on its most popular checking account to $12 on May 24, up from $8.95. And on June 27 it will charge customers $35 if they have an overdraft on their account of less than $10.

JPMorgan Chase & Co. also has raised fees for various transfers and overdrafts, and new customers for basic checking accounts have a monthly fee of $12, double the previous $6 fee, according to the report. All of this has led to customers leaving in droves, with banking industry analyst Michael Moebs telling USAToday.com that banks will lose 13 million checking accounts across the country this year and next. That will drop their share of the checking account market to 35 percent by the end of this year, down from 45 percent two years ago.

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But not all banks are charging the higher fees.

Huntington Bancshares Inc. (Nasdaq: HBAN) is rolling out a new fee-free checking account this month to lure in more customers. Huntington said the "Asterisk-Free" accounts are free to open, dont have a monthly maintenance fee or minimum balance requirement, and dont have a check or debit card usage requirement. It includes a linked savings account and a free identity theft resolution service, the bank said.

PNC Financial Services Group Inc. also is trying to attract new customers with free checking accounts and holding the line on most fees.

But for the big winners so far seem to be credit unions, which continue to have net positive customer growth.

The Ohio Credit Union League said this month that credit unions in the state had a positive net gain of 32,500 new members in the most recent quarter, marking the eighth consecutive quarter of growth that started after a long period without much growth.

"Demand for local, community-based, affordable financial services continues to rise," said Paul Mercer, OCUL president in a statement. "Membership growth, paired with an increase in deposits and assets, tells us that credit unions are becoming an answer for more Ohioans, their families, and small businesses, than ever." Ohio is home to 387 credit unions totaling 2.68 million members.

The credit union league said the new customers are mainly coming from large regional banks. Charlotte, N.C.-based Bank of America (NYSE: BAC), the nations largest by assets, has three mortgage home loan offices in the Dayton region.

In terms of assets, Bank of America held $2.27 trillion in assets at the end of last year, while JPMorgan Chase & Co. (NYSE: JPM) had $2.12 trillion in assets at year-end, Citigroup Inc. (NYSE: C) had $1.91 trillion and Wells Fargo & Co. (NYSE: WFC) had $1.26 trillion. All of those banks have operations in the Dayton region.

Fifth Third Bancorp (Nasdaq: FITB) ranks as the largest bank in the Dayton market, with $4.33 billion in local deposits.

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PNC Bank (NYSE: PNC), JPMorgan, First Financial Bancorp (Nasdaq: FFBC) and U.S. Bancorp (NYSE: USB) round out the top five largest banks in the local region.

KeyCorp (NYSE: KEY) and Huntington (Nasdaq: HBAN) are just outside the top five.

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Missoulian.com Tester sides with banks on 'swipe fees' May 14, 2011 10:45 pm By MIKE DENNISON

HELENA - U.S. Sen. Jon Tester, D-Mont., self-proclaimed defender of the little guy and rural America, has sided with the banking industry on the issue of debit-card "swipe fees" - and the owners of convenience stores and other retailers aren't happy with him.

"I personally think the senator has made a big mistake by taking this side," says Ronna Alexander of the Montana Petroleum Marketers and Convenience Store Association, which supports a proposed limit on fees that merchants pay to banks and credit card companies when customers use a debit card. "(His bill) essentially kills it."

Tester introduced a bill March 15 to delay implementation of the swipe-fee limit for two years, so the Federal Reserve and other federal financial agencies can study its impacts. It awaits action in committee. The limit, set to take effect in July, says banks with more than $10 billion in assets cannot charge merchants more than 12 cents per transaction involving a debit card. Merchants say the cost to the bank of processing the transaction is about 4 cents.

In 2009, the per-transaction fees averaged 44 cents. The Federal Reserve says banks and credit card

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companies took in nearly $16 billion that year in these fees.

Most of Montana's banks would be exempt from the limit, because they have less than $10 billion in assets. But Montana banking groups still oppose the limit, arguing it would affect smaller banks anyways, because they'd have to lower their fees to compete with the larger multistate banks, such as Wells Fargo or U.S. Bank. "Those below may be held to a different standard, but in the marketplace, the impact will still be just as damaging for small banks," says Steve Yeakel, executive director of the Montana Independent Bankers. "The concern is that we'll end up losing market share."

That concern, says Tester, is why he's sponsoring the bill - and has voted against the swipe-fee limit from the beginning.

Montana's community banks and credit unions will be forced to start charging lower fees or quit offering debit cards, make up the revenue loss by increasing fees on things like checking accounts and risk losing customers, he says.

"When they quit offering a debit card, (you as a customer) would go to a bigger bank," Tester says. "You're going to move everything with it, because that's what you do as a business. "I'm doing this because (the limit) is the wrong thing to do for rural America."

Tester points out that if his bill passes and Congress does nothing after the two-year study, the limit still takes effect.

U.S. Rep. Denny Rehberg, R-Mont., who's challenging Tester in the 2012 Senate race, says he hasn't taken a position on the issue.

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American Banker

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Should Mortgage Servicing Data Be a Public Utility? May 16, 2011 By Alex Ulam

Why do some mortgage servicers appear to be modifying a great many more loans than others? How many loans are getting principal reduced, rather than interest rate reductions? How many loans in a given neighborhood are more than 30 days late?

Answering such questions may be critical to craft effective policy responses to the housing crisis. But it's hard to get definitive answers, because data on mortgage performance is incomplete and often expensive.

Most of the detailed information on mortgage performance is gathered by the two companies, CoreLogic Inc. and Lender Processing Services Inc., and sold in various forms to regulators for sums that can reach hundreds of thousands of dollars for a particular data set. Members of Congress, state banking regulators and academics say they have been regularly stymied in attempts to access the data. In many cases they cannot afford it. Sometimes regulators who have the data cannot share it because of proprietary arrangements with data providers.

But thanks to a little-discussed provision of the Dodd-Frank Act, legislators, regulators and even nonprofit housing activists may eventually get a more comprehensive picture of the mortgage servicing industry.

Section 1447 of the law calls for the Department of Housing and Urban Development to establish and maintain a comprehensive national database on foreclosures and defaults on mortgages and to make the information publicly available. The data is supposed to drill down to the census tract level and include the number and percentage of loans that are delinquent by more than 30 days; those that are in the foreclosure process; and those that are underwater.

Proponents of the idea say such a database is long overdue. "There are no complete data sources and there is overreliance on third-party vendors," said Richard Neiman, former New York State banking commissioner and former member of the Congressional Oversight Panel for the Troubled Asset Relief Program, who submitted a proposal for such a database in 2009. "We as regulators and stakeholders should not be relying on third party vendors whose data is incomplete and subject to inaccuracies."

Neiman, who is expected to join PricewaterhouseCoopers as vice chairman of global regulatory practice, said the forthcoming database could be as valuable as the information collected under the Home Mortgage Disclosure Act, which is used to evaluate possible discrimination in loan approvals. "Having a mortgage performance database would provide a similar window on mortgage servicing," he

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said. "Just like HMDA was used to identify violations in the origination process, a national mortgage database could provide a similar window on servicing and modifications."

CoreLogic and LPS depend on voluntary reporting by servicers. And their data has blind spots: CoreLogic covers about 41 million first-lien loans and 7 million second liens, out of a total of about 60 million mortgages in the country, while LPS has detailed information on about 40 million first liens.

LPS says building a system like the one called for by Neiman and Dodd-Frank would be unnecessary because currently the mortgage industry, which uses the data to establish benchmarks, is helping to defray the cost of gathering it.

"Today anybody can license from LPS or from CoreLogic," said Kyle Lundstedt, a managing director at LPS. "We charge the mortgage industry, which benefits, and it is not like the American public is not getting the benefit too, because the regulators who manage the industry on our behalf are also accessing the data. So it leaves me befuddled when someone says, 'Wait a minute, we need to make that data free.' "

Brendan Keane, a senior vice president at CoreLogic, said that the data providers themselves face challenges assessing how banks report mortgage modifications.

"To the best of my knowledge, there has not been a complete or comprehensive ability to aggregate all of the data," Keane said. "What one bank may consider a modification, another bank may characterize it differently, so there is not a complete standard modification test as far as I know. I think that in the current regulatory construct they consider any change to a mortgage pretty much a modification."

Having more comprehensive and reliable data could be helpful in assisting distressed homeowners, said Rep. Brad Miller, D-N.C. "There seems to be guesswork on what works and what doesn't work in regard to modifying mortgages," he said. "In the time I have been in Congress, we really have had to rely upon the industry to tell us what is going on and what they have told us has not been reliable. It has not always been accurate and not complete sometimes plain not truthful so having an independent source of information would be an enormous benefit."

The Office of the Comptroller of the Currency, which, together with the soon-to-be-phased-out Office of Thrift Supervision, gathers data on the servicing operations of nine banks accounting for 34 million loans, has made strides in tracking loan performance. Among other advances, the agency's quarterly Mortgage Metrics Report has helped establish common definitions for such categories as subprime and prime. Before the establishment of Mortgage Metrics, these definitions differed from bank to bank.

However, the report only covers 63% of the mortgages in the country and it does not cover the substantial holdings of second lien loans on bank balance sheets.

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Alan White, a law professor at Valparaiso University in Indiana who has studied various data on mortgage servicing, said the OCC data that is available publicly does not allow researchers to get a comprehensive picture.

"The OCC data is a biased sample," he said. "What you get are summaries. The loan-level data is not available anywhere to the public or to researchers. You can get summary statistics from the Mortgage Bankers [Association] once a quarter and then the OCC and OTS metrics comes out, but they give you the numbers they want to give you."

Another issue is the need to protect borrowers' privacy. "We don't share that data because it is supervisory data and the data at loan level includes privacy information," said an OCC official, who did not want to be identified.

However, White said it should be possible to have a system that releases detailed loan information without compromising borrowers' personal information. "You wouldn't want public releases that included the names and addresses of borrowers," he said. "But I think that there is also certainly with the bank regulators a lot of concern about protecting bank proprietary information. If you were able to look at what kinds of loss severities resulted from foreclosures and modifications, you might get an idea of which servicers are doing a better or worse job for investors and the timing and severity of losses."

Researchers can gain access to some databases at the Treasury Department, but that comes with restrictions, according to White.

"Treasury has been very secretive about their data," he said. Although the agency releases periodic report cards on the Home Affordable Modification Program, "and it is possible to gain access to some of the proprietary databases, but they have licensing agreements and most of the time the licensing agreements prevent researchers from disclosing information that would hurt the reputations of the subscribers to these services" the subscribers being the banks.

Andrea Risotto, a Treasury spokeswoman, said she had no knowledge of special access agreements with academics. "I can only answer for Hamp," she said. "We have a database online that literally has every data element for every homeowner who has ever participated or even submitted one piece of paper to apply for the program."

Lundstedt at LPS argued that a national database would be expensive. "I am a little bit at a loss as to why HUD would have to create a separate database when they already subscribe to LPS," he said. "Given the budget constraints that we are operating under" as a nation, "I find it a little odd that" anyone "would suggest that it would be a better thing for the government to go out and collect this data than to have the one or two companies that already collect the data."

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However, government officials say that licensing agreements with LPS and CoreLogic actually end up costing government agencies unnecessary amounts of money and that the new mortgage database could help resolve what has been an enduring issue.

"We are buying both LPS and CoreLogic mortgage performance data, and other agencies are doing this as well, so those companies are collecting a lot of money," said a senior HUD official, who also requested anonymity. "So that different government agencies can understand what is going on, we are talking with those agencies to figure out whether there is some way that the government can pay once."

Some agencies cannot even afford all of the data they say they need to do their job. "A lot of this data is very expensive," Neiman said. When he was New York's banking commissioner, he said, "we had some budget restrictions, so our first thought was can we reach out to some of our federal counterparts, and they are under contractual restrictions for sharing it."

And when the department could afford to buy private data, Neiman said, it found inaccuracies. "On a quarterly basis we were having to go back and correct data with regard to foreclosure filings," he said. "It is for that very reason that we established a mandatory requirement within the state that institutions have to file pre-foreclosure information with us as well as the filing of lis pendens" pending foreclosure actions "because we were continuously finding inaccuracies and lack of completeness from the private sources of that information."

There are formidable challenges to establishing the national mortgage performance database.

HUD officials say that it could take several years to build it and that no money has been appropriated for the project. (Dodd-Frank does not set a deadline.) Another question is how the agency would build the database. Would HUD (which already publishes loan-level peformance data for Federal Housing Administration loans on its Neighborhood Watch website) gather the data itself or could it buy the information from vendors like CoreLogic and LPS?

"A potential barrier is will they agree to sell it to us given what we are supposed to do with the data," the senior HUD official said. "Would we render their products obsolete by giving away the information at the census tract level Congress asked for?"

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Housing Wire Independent reviews in mortgage servicer consent orders to stay sealed May 13th, 2011, 5:23 pm By Jon Prior

When mortgage servicers signed consent orders with the Office of the Comptroller of the Currency and the Federal Reserve, these companies were required to hire outside firms to conduct "look back" evaluations of questionable foreclosure practices.

But these reviews will not be made public, according to an OCC spokesman.

Major servicing arms at Bank of America (BAC: 12.06 +1.09%), JPMorgan Chase (JPM: 43.44 +0. 67%), Wells Fargo (WFC: 28.28 +1.25%), Citigroup (C: 41.57 +0.10%), Ally Financial (GJM: 24.16 -0.00%) and others agreed to the enforcement actions taken in April as a result of mishandled foreclosures still being corrected.

Servicers have to put in place new operations, add staff, establish a single-point of contact for borrowers and end the practice of pursuing a foreclosure while evaluating a possible modification.

The banks were also required to hire third-party firms to review foreclosure proceedings between Jan. 1, 2009 and Dec. 31, 2010. The reviews will be done to identify borrowers who suffered financial harm because of faulty foreclosure practices. The OCC and Fed will approve which companies conduct the reviews.

Federal Deposit Insurance Corp. Chairman Sheila Bair said in a Senate committee hearing this week that these reviews will be a major issue. The investigation conducted by the OCC and the Fed included a review of 2,800 case files between Jan. 1, 2009 and Dec. 31, 2010.

But the additional "look back" reviews could provide more meaningful details over the scope of the problems, and she told Congress it was vital for regulators to choose wisely.

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"These independent companies may have other business with them and may want to conduct future business with them, so I think this is a huge issue," Bair said.

The OCC spokesman said the agency has a number of control points in the process.

"We will approve the third-party reviewer, and the action plan. We will also review and approve the 'look back' results and related actions to ensure compliance with the consent orders," the spokesman said, "however the results of individual look back reviews are supervisory materials that are not releasable."

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Housing Wire Registers of Deeds ask Iowa AG to postpone servicer settlement May 13th, 2011, 5:23 pm By CHRISTINE RICCIARDI

Two Registers of Deeds asked Iowa Attorney General Tom Miller Friday to postpone a settlement with the nation's largest mortgage servicers until the cost damage to land records is better understood.

John O'Brien, Register of Deeds of Southern Essex County in Massachusetts, and Jeff Thigpen, Register of Deeds of Guilford County in North Carolina, wrote a letter to the attorney general, stressing the need to appropriately settle terms with servicers based on the amount of damaged practices such as robo-signing caused.

"We need to take a long hard look at the damage that these banks have caused, not only to our economy but also to people's chains of title," O'Brien commented. "There can be no settlement for pennies on the dollar."

Attorney General Miller, who was not available for comment Friday, is leading an investigation by all 50

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state attorneys general into the servicing practices that lead to the housing crisis. According to reports this week, a second and less stringent draft of the settlement has been circulating throughout the industry. Miller is maintaining this effort outside the consent orders between the Office of the Comptroller of the Currency, the Federal Reserve, the Office of Thrift Supervision and 14 major servicers.

The OCC reported Friday that it will not make independent reviews required under the consent orders available to the public.

O'Brien believes Mortgage Electronic Registration Systems is to blame for much mortgage fraud surrounding the housing crisis because of "their failure to record documents in the local registry of deeds in order avoid paying billions of dollars in recording fees."

MERS claims O'Brien's statement are unfounded, and attested that all MERS mortgages are recorded in the public land records.

"MERS members pay recording fees when the mortgage is recorded," Janis Smith of MERS said. "The use of MERS is in compliance with the purpose and intent of the state recording acts."

Along with their initial request, O'Brien and Thigpen sent a follow up request to Miller asking for representation and access to settlement talks.

"Why the Registers of Deeds have not been involved in these negotiations is puzzling" according to O'Brien and Thigpen. "We need to bring our knowledge of the land recordation system and consumer's problematic chain of title issues to the table."

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New York Times Budget Cuts Imperil Aid in Foreclosure Cases

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May 13, 2011 By DAN BILEFSKY

In the large immigrant community of Jamaica, Queens, which is ground zero of New York Citys foreclosure crisis, a small squad of young lawyers fans out to local courts every day to do battle with lenders, negotiate hard-fought changes to onerous loans and provide free legal representation to lowincome homeowners about to lose their homes.

Now, however, the anti-foreclosure team itself is facing foreclosure.

The states budget squeeze has put at risk more than 120 legal aid and homeowner-counseling agencies across the state that have provided a last-ditch legal and economic lifeline to thousands of distressed homeowners.

I am not sure I will have enough money to pay my staff by the end of this year, said Jennifer Ching, the project director of Queens Legal Services, one of the groups whose future is threatened. New York could soon find itself with thousands of unrepresented homeowners who risk falling through the cracks.

Foreclosure-prevention programs, which over the past three years have helped more than 3,000 homeowners facing foreclosure in New York City, have been financed since 2009 by federal stimulus spending, but that money will run out by the end of this year. That has left lawmakers scrambling to try to find new state financing, while the small army of pro bono lawyers fighting foreclosures waits and worries. Some have already stopped taking on new clients.

To bridge the three-month gap between the end of the calendar year and the start of New Yorks next fiscal year in April, Democrats in the State Assembly sought to add $4 million in foreclosure-related spending to the state budget that took effect April 1, but they were unsuccessful. If the program is halted, even briefly, its supporters fear that it will be very difficult to get permanent financing for it in the future.

As a stopgap effort to come up with new money, Assemblyman Vito J. Lopez, a Democrat from Brooklyn, who is chairman of the Housing Committee in the Assembly, inserted a $1.5 million earmark in the budget for the programs. But that failed, too: Gov. Andrew M. Cuomo, who banned new earmarks from the budget, vetoed the money.

We were disappointed, said Mr. Lopez, whose borough has also been hit hard by foreclosures. That veto almost makes it impossible for us to have a support system available for people that have such a need.

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New Yorks foreclosure-prevention laws are among the most stringent in the country, requiring lenders to give a 90-day preforeclosure notice during which homeowners can seek help. But Ms. Ching said that the lack of new financing would undercut the laws effectiveness.

It is incredibly disappointing that the governor, a former son of Queens and former housing secretary under President Clinton, can cut the last line of defense for people who are about to lose their homes, she said.

Cuomo administration officials say that pinning the blame on Mr. Cuomo is unfair, since the bulk of the financing for foreclosure prevention has come from the federal government, and the state reduced its spending this year for the first time in more than a decade, cutting areas like education and state operations.

But such arguments are cold comfort to distressed homeowners who are fighting to keep their homes and have turned to advocacy groups like Queens Legal Services as their last resort.

Luis Mendoza, a 64-year-old truck driver, was behind on the $477,000 mortgage on his Queens home two years ago when there was a knock on his door at 5 a.m. As his wife and four children looked on, he said, he was served with court papers warning him that he faced foreclosure on his handsome fourbedroom home in Woodhaven.

Unable to afford the interest rate on his adjustable-rate subprime mortgage when it rose to 7.8 percent, he turned to Queens Legal Services. The group represented him at his settlement hearing with Deutsche Bank, which holds the loan in a trust, and helped him apply for a loan modification under an Obama administration program intended to provide a safety net to homeowners. After nine months of fraught negotiations, the bank said that changes to Mr. Mendozas loan had been approved for a trial period. But the paperwork never arrived. Then, the bank rescinded its offer, according to Mr. Mendozas lawyer.

So Queens Legal Services brought a successful action against the bank in State Supreme Court in Queens arguing that it had not negotiated in good faith. In October, American Home Mortgage Servicing, the agent servicing the loan for Deutsche Bank, offered Mr. Mendoza a trial loan modification at an interest rate of 2 percent for five years. The court also ordered that five months worth of interest be waived due to Deutsche Banks previous delays, helping him save $13,000.

I didnt know where I would go, with six people, if we got kicked out, said Mr. Mendoza, speaking through a translator provided by Queens Legal Services to help him navigate the process. It was my dream to buy a house for my kids.

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Scott Helfman, a Deustche Bank spokesman, said loan servicers, not the bank, were responsible for foreclosure-related legal proceedings, including decisions on loan modifications.

The financial challenges facing foreclosure-prevention programs come amid a debate in Washington over the effectiveness of the Obama administrations $30 billion Home Affordable Modification Program, which gives lenders incentives to make changes to borrowers mortgages. Critics say the program has failed to prevent many foreclosures and has left countless homeowners in New York frustrated and desperate because so few applicants get permanent loan modifications.

But Ms. Ching argued that the program, while flawed, had been at least partially successful in Queens, where 11,200 homeowners currently face foreclosure. The county has the second-highest foreclosure rate among counties in New York State, after Suffolk, according to a study by the Empire Justice Center.

Legal advocacy, Ms. Ching said, is more imperative than ever now, as the loan modification process often drags on for months and the companies that service mortgages, typically large banks, continually lose homeowner paperwork or use delaying tactics.

She said that after the housing market collapsed, more than 90 percent of homeowners in Queens who faced foreclosure defaulted because they felt intimidated and did not appear in court. Since then, she said, her group has helped 600 low-income homeowners avoid losing their homes, and foreclosure defaults in Queens have fallen by 30 percent. In New York State, some 40,000 homeowners are fighting foreclosures.

In Queens, residents in middle-class enclaves like Jamaica and St. Albans complain that the values of their homes are dropping monthly due to foreclosures in their midst, while their once-tidy communities are becoming blighted by boarded-up houses with unmowed lawns.

Vicki Been, co-director of the Furman Center for Real Estate and Urban Policy at the New York University School of Law, warned that foreclosures had devastating social and economic consequences, causing house prices to plummet, promoting crime and forcing children to change schools.

We are hardly at the end of the foreclosure tsunami, she said. There continue to be a lot of people losing their homes. The numbers have softened, but the crisis is not over.

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Wall Street Journal Bleak House Transcript May 16, 2011 By Paul Gigot .

Freeman: Go back to HOPE NOW with President Bush. That didn't work, so they revised that. Then they went to HOPE for Homeowners, Home Affordable Loan Modification Program from President Obama, said he was going to save three or four million homes. That's going to top out around half a million. So, I mean, it's sad, but kind of a nice academic study in how government cannot--cannot meet the promises that it set out to do in terms of saving this market.

Gigot: Yeah, the prices, Dan, went up, as Mary suggested, so fast, for so long that they really do have to get back to what would have been kind of the natural rate of growth, which is roughly about 3% a year in appreciation, when we were going up some years in double digits.

Henninger: Yeah, well, let's not deny this is an ugly situation. This is really hard on a lot of people who own homes and are now in negative equity. It's not nice.

But just to put a few numbers on what Mary was describing, the Case-Shiller price index, which measures the price of houses, from 1965 to about 1997, was at 110. And from 1997 to almost 2000, it nearly doubled, it spiked up to around 200. It was just an incredible anomaly. While those prices were running up, all of these policies that we put in place were shoving homeownership--new homeowners, into it. Investors were piling in; the banks were piling in. What was created was an incredibly complex financial mess. And when that bubble burst, all of this came tumbling down, and it is a mess. But for the government to then intervene and try in its various cockeyed ways to try to stanch the fall, it's simply going--unfortunately make the problem worse.

Gigot: There's another way the government's affecting the market now, I think, which is that there is a big fight over mortgage foreclosures. The government accuses the banks of having been unfair to homeowners who are--some of whom are underwater and in the foreclosure process, and they're trying to get a settlement from the banks of about $20 billion. What impact is that having on home prices?

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Kissel: Well, there are actually two groups in government that are approaching the banks to try to fix these problems with documentation about foreclosures and other internal processes. There's the Federal Reserve, comptroller of the currency and other bank regulators who went into the banks, looked through the books, came up with regulations, and now the banks are implementing those. Then there's--

Gigot: These are process reforms.

Kissel: These are process reforms. This is what they would normally do. This has happened in the past, it's happening now, and everybody understands what's involved in that process. Then there's a second group out there, which is the--

Gigot: Consumer Financial--

Kissel: --Consumer Financial Protection Bureau, that's right, state attorneys general and others, who basically are saying to the OCC and the Fed, "Well, forget that process. We want to go to the banks and basically squeeze money out of them, and we want to squeeze a lot of money out of them, $25 billion."

Gigot: And that's in negotiation now.

Kissel: Absolutely.

Gigot: That's to shut down--I gather that's to shut down the foreclosure process.

Kissel: Completely. There's basically a foreclosure moratorium. HSBC and others have said that they're not going to move forward, because how can they? They don't know what their legal risk is if they start the process of foreclosures again.

Gigot: And in turn, that leads to a bigger overhang of housing supply over the market, so you can't--so people are holding off purchasing because they don't know if prices are going to go down further.

Freeman: Yeah, that's where you could say maybe they're actually--they haven't just prevented the inevitable. They may actually be reducing prices with this kind of government action where it says to a

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potential buyer: "Who knows how they're going to intervene next? Will they allow foreclosures eventually? How many homes are going to be on the market in six months?" So I think this is a case where it's not just delaying the inevitable and spending a lot of money. They might actually be reducing the value of our homes.

Henninger: All the while, Paul, one of our favorite points--the Fed has been keeping interest rates near zero, in part in the hopes that the people would buy some of the houses coming on the market. But people think that houses are a bad investment now. Meanwhile, the Fed has got this open spigot.

Gigot: OK, thanks, Dan.

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American Banker M&A Could Replenish Fading Class of Midsize Banks May 16, 2011 By Robert Barba

First of three parts

The midtier bank seemed destined for the endangered species list after the meltdown, but a fresh crop of small-bank survivors are eager to fill the void.

From 2005 to 2010, assets at such banks, loosely defined as having $10 billion to $100 billion of assets, shrank nearly 30%, to $2.6 trillion, according to data from the Federal Deposit Insurance Corp. Larger banks grew by 49% over that time, in terms of assets, and smaller competitors managed to hold their own.

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A rising number of industry observers are convinced that the midsize category could enjoy a renaissance of sorts, if smaller banks are able to tap into an economic recovery or grow through acquisition.

As it turns out, size still matters perhaps even more so now than it did before the industry came under fire. But getting bigger certainly will have its own challenges and risks. Building scale now goes beyond having a pervasive deposit base or expansion into high growth markets. The Dodd-Frank Act is adding a new dimension to the way banks view scale.

"The pendulum of regulation is swinging, and we are entering a world where scale is becoming important in a way that we haven't seen in the last two decades," said Scott Siefers, an analyst at Sandler O'Neill & Partners LP.

All banks must adjust their structure to handle rising costs, but some now on the low end of the midtier scale are uniquely poised to buy smaller institutions that cannot absorb the costs.

"For someone our size, the new regulations become a nuisance, but we already have a significant compliance department in place, so it will become an additional expense," said Monte Redman, the president and chief operating officer of the $18 billion-asset Astoria Financial Corp.

"For smaller shops, it is going to be a major burden," Redman added. "When people used to talk about the need for economies of scale, they were talking about back-office operations. Now it is about dealing with the regulations."

Analysts said that an expected wave of consolidation will not be one-sided. Though smaller banks will search for partners, the remaining midsize banks are just as much in need of ways to offset the additional cost of regulations.

"The midtier banks are not going to be immune to the higher costs," Siefers said. "They are going to need additional revenues, too, and efficiencies are getting tougher to get."

To William Cooper, the chairman and CEO of TCF Financial Corp in Wayzata, Minn., a new regulatory environment is more than just burdensome; it is enough to change his view of banking.

"I've never believed that in a regular operating environment that scale mattered. There was never any

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data to support that bigger banks had higher return on assets or return on equity," Cooper said. "I've always operated under that theory, but this layers in a cost on to the banking business that makes it subject to economies of scale."

With $17 billion of assets, Cooper considers TCF a small bank that must get larger. He said the target is unclear since much of the costs are still being figured out, but he said banks in the $40 billion to $50 billion range might be in the right position. TCF has largely expanded organically, but Cooper said he is rethinking that, too, if not reluctantly.

"We started most of our businesses from scratch," Cooper said. "All of this does open the question and I am still not positive of the answer if acquisitions are becoming more efficient than de novo expansion."

In the pre-crisis days, revenue growth was easy to find. As loan growth remains soft, it is considerably more challenging to grow revenue. Analysts said that acquisitions might be the only way to build assets and revenue.

"All banks are dealing with customers deleveraging and with expenses going up, so you have two arrows moving in the wrong direction," said Peyton Green, an analyst at Sterne Agee & Leach Inc. "Scale was much more organically intended in the past. Now, you increase your market share by getting rid of your competitors."

Redman, who is set to become Astoria's chief executive this summer, said his company is interested in talking to smaller community banks that are looking to sell to a larger institution. He added, however, that organic growth prospects are rosy for the Lake Success, N.Y., company, which specializes in jumbo mortgages.

Since early 2008, Astoria has shrunk by nearly 20%, to $17.71 billion in assets at March 31, due to an increase in the conforming loan limit. As that drops, Astoria is set to recover. The company has also hired a team to expand mutlifamily and commercial real estate mortgages. Redman said the goal is to start lending in that arena by the third quarter and "be a major player" by 2012.

"We are ready to start growing again," Redman said. "And we think there are a lot of opportunities for us out there."

Other banks seemed to share his eagerness. As they describe it, they are in the ideal position to thrive in a new banking environment. Big banks have become bigger and less responsive, and small community banks are hindered by higher liquidity and capital requirements, making the middle of the barbell the sweet spot.

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"We believe that we should be able to excel in this environment, and by excel, we mean as a provider of loans and of retail banking products that are in touch with the needs of our customers and the markets we serve," Robert Wann, the chief operating officer at New York Community Bancorp Inc., which has $41 billion of assets, said in an email.

"We have the liquidity and the capital to serve our depositors and borrowers well ... and the capacity to continue growing through acquisitions," Wann added. "The only challenge to us with regard to expansion would be the $50 billion threshold, which would place more restrictions and supervision on us from a regulatory point of view."

Several slightly smaller banks, such as First Niagara Financial Group Inc. in Buffalo, N.Y., and Hancock Holding Co. in Gulfport, Miss., have already catapulted themselves into the midtier through acquisitions. Other acquisition-minded companies that are teetering around $10 billion of assets could make the transition over the next few years, analysts said.

"There are a lot of names that are coming out of the crisis stronger than before, and it is going to push some of the larger community banks into this midrange and it is going to push some of the midrange guys to get even bigger," Siefers said.

With all the opportunities that will be presented to this emerging group of banks, analysts said the companies need to take a more methodical and studied approach to expansion, not only to get the most out of any deal but also to reduce risk.

"Scale before might have been having the most branches and staying open the latest, but we are in a different environment," said Terry McEvoy, an analyst at Oppenheimer & Co.

"They need a more focused strategy. I think they've figured out that they can't be all things to everyone, so they need to decide where they can generate the best return," McEvoy added. "That might be to focus on your own backyard."

Siefers said that the pain of the credit crisis is still fresh and should keep companies disciplined, at least for awhile. "I think everyone has learned some important lessons, but unfortunately we can sometimes have relatively short memories," he said.

Editor's note: This is the first in a series about the plight of today's midtier banks and the prospects for future ones. What's next: aspiring midtiers face tough M&A challenges.

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Back to Top

Huffington Post Deutsche Bank Sues Foreclosure Fraud Expert's Son With No Financial Interest In Her Case May 13, 2011 7:17pm By Zach Carter

WASHINGTON -- Deutsche Bank appears to have retaliated against a high-profile foreclosure fraud expert, whose years-long battle against her own foreclosure helped reveal a wave of apparent malfeasance, by suing her son.

The expert, Lynn Szymoniak, an attorney who specializes in white-collar crime, is widely considered on Capitol Hill to be one of the nation's top experts on foreclosure law. When Deutsche Bank attempted to jack up the interest rate on the mortgage for her Palm Beach Gardens, Fla., home in May 2008, she contested the move, setting off an investigation which unveiled mountains of forged signatures and fraudulent bank paperwork associated with the foreclosure process.

Szymoniak alerted other attorneys, neighborhood advocates, lawmakers and the media about the apparent rampant fraud. She appeared on "60 Minutes" in April to discuss the broader foreclosure scandal [video appended below].

Her own home has been in foreclosure since June 2008. A month earlier, she had been notified that the interest rate on her adjustable-rate mortgage was being raised, increasing her monthly payments by about $1,000. But the terms of her mortgage only allowed interest-rate hikes at certain dates.

In an interview with The Huffington Post, Szymoniak noted that Deutsche Bank was not acting within the allowed timeframe.

"They missed my adjustment date, and then when they figured it out, they just slapped that higher payment on anyway," she said. "I paid one payment at the higher rate and then I said, 'This is

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ridiculous.' And I stopped paying and then they sued me in June '08."

Both Deutsche Bank and their legal counsel, Akerman Sentertfitt LLP, declined to comment for this report. After she'd been sued, Szymoniak said, she began investigating the documentation on Florida foreclosures, uncovering alarming irregularities, including signatures that were apparently forged. If so, those signatures allowed banks to push foreclosures through overly quickly, charge improper fees and assert improperly inflated borrower debts.

Shortly after appearing on "60 Minutes" Szymoniak won a major victory in her own foreclosure case. The court found that Deutsche Bank was unable to demonstrate ownership of her mortgage, which had originally been issued by the defunct subprime mortgage lender Option One, and threw the case out.

Deutsche Bank was permitted to refile their case if the bank could obtain proper documentation, however. And on Friday, May 6, Szymoniak received a notification from the bank's lawyers that she was again being sued for foreclosure.

But Deutsche Bank wasn't just going after her. The bank was also attempting to sue her son, Mark Cullen, who is currently pursuing a graduate degree in poetry at the New School in New York. Cullen hasn't lived in Szymoniak's house for seven years and is not a party to any aspect of her mortgage -- he has no interest in either the property or the loan, and never has had any such interest, according to Szymoniak.

"It is just absolute harassment," Szymoniak said. "He doesn't own anything, for god's sake! He's getting a masters in poetry. He not only doesn't have any money, he's never going to have any money."

And other Florida foreclosure experts say it's difficult to interpret Deutsche Bank's move as anything other than retaliation for Szymoniak's media presence. If it is not, in fact, retaliation, they argue, then Deutsche Bank's lawyers have demonstrated rank incompetence.

"It sounds crazy," said Margery Golant, a principal with the foreclosure defense law firm of Golant & Golant PA in Florida. "I can think of no legitimate reason, if he doesn't have some connection to the property or to the mortgage, to include him in an action to foreclosure."

"It's an intimidation tool," said Matt Englett, a partner at the Florida law firm Kaufman Englett Lynd PLLC. "Most people, they get scared and they get nervous and I think that's the effect that they're trying to have on him and his mother."

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"If he's not an owner of the house, it's pretty clearly just vindictive," said Joshua Rosner, the managing director of Graham Fisher & Co., a mortgage investment firm. "If they're doing it intentionally, that's one hell of a statement. If they're doing it randomly, that's still pretty incredible."

The experts said the lawsuit against Szymoniak's son could also have negative implications for him beyond the immediate costs of fighting the foreclosure case, even though he has no financial interest in anything related to it.

"He's going to have a lawsuit out there against him," Englett said, "so if someone were to do some kind of background check against him, that would come up."

Watch Szymoniak's "60 Minutes" interview: http://www.huffingtonpost.com/2011/05/13/deutsche-banklynn-szymoniak_n_861900.html

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Ashley Gordon Office of Public Affairs Consumer Financial Protection Bureau ashley.gordon@treasury.gov (o) 202-435-7446 Web.Facebook. Twitter

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From:

To:

Cc:

Canfield, Anna (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=canfielda> _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands>; Ladd, Christine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=laddc>; Lilly, Antona (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=lillya>; Betts, Kristina (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=bettsk>; Worthman, Katherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=worthmank>; Leary, Jesse (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=learyje>; Donoghue, Kristen (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=donoghuek>; Starr, John (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=starrj>; Chanin, Leonard (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=chaninl>; Hackett, Richard (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=hackettr>; Zorc, Anne (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=zorca>; Rothstein, Paul (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=rothsteinp>; Brown, Lawrence (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=brownlaw>; OMealia, Sean (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=omealias>; Sanders, Kathy (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sandersk>; Mewhorter, Shawn (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=mewhorters>; Gordon, Ashley (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gordonas>; Jimenez, Dalie (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=daliej>; Lucero, Tamara (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lucerot>; Vaeth, Chris (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=vaethc>; Griffin, Mary (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=griffinm> Grover, Eric (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=grovere>; Keane, Micheal (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=keanem>; Hillebrand, Gail (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=hillebrandg>; Gupta, Neeraj (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=guptan>; Deutsch, Rebecca

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(CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=deutschr>; Healey, Jean (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=healeyj>; Brolin, John (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=brolinj>; Wanderer, Agnes (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=wanderera>; Selden, R. Colgate (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=seldenr>; Young, Christopher (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=youngc>; Petraeus, Holly (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=petraeush>; Blow, Marla (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=blowm>; Plunkett, Alexander (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=alexanderp>; Coleman, John (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=colemanjo>; Scala, Courtney (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=scalac>; Gragan, David (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gragand>; Tingwald, James (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tingwaldj>; Shue, Jeffrey (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=shuej>; Bach, Mary (Stacey)(CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=bachs>; Turenne, Jeannine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=turennej>; Riley, Jeffrey (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=rileyje>; D'Amico, Christina </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=damicoc>; Reeder, Garry (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=reederg>; Petersen, Cara (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=petersenc>; West, Catherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=westca>; Sena, Theresa (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=senat>; Mosena, Lea (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=mosenal>; Gao, Jane (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gaoj>; Geldon, Daniel (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=geldond>; Pearl, Joanna (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=libermanj>; Boenau, Susan (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=boenaus>; Dickman, Marilyn (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dickmanm>; Mann, Seth (CFPB)

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</o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=manns>; Morris, Lucy (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=morrislu>; Herchen, Emily (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=herchene>; Silberman, David (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=silbermand>; DiPalma, Nikki (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dipalman>; McQueen, Suzanne (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=mcqueens>; Sanford, Paul (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sanfordpa>; Jackson, Peter (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=jacksonpe>; Hrdy, Alice (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=hrdya>; Date, Rajeev (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dater>; Michalosky, Martin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=michaloskym>; Cordray, Richard (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cordrayr>; Cumpiano, Flavio (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cumpianof>; Cochran, Kelly (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cochrank>; Stark, Paula-Rose (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=starkp>; English, Jared (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=englishjar>; Twohig, Peggy (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=twohigp>; Gordon, Michael (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gordonm>; Lev, Ori (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=ofac/cn=ofac users/cn=levo>; Chow, Edwin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=chowe>; Vanderslice, Julie (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=vanderslicej>; Smullin, Rebecca (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=smullinr>; McCoy, Patricia (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=mccoyp>; Lopez-Fernandini, Alejandra (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lopez-fernadinia>; Williams, Anya (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=williamsany>; Gorski, Stephanie (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=gorskis>; Fuchs, Meredith (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=fuchsm>; Geary, John (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gearyj>; Reilly, Deb (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=reillyd>; Fravel, Wesley

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(CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=fravelw>; Abney, Wilson (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=abneyw>; Proctor, Althea (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=proctora>; Cronin, Katherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cronink>; Lombardo, Christopher (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lombardoc>; Vail, Amber (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=vaila>; Rexroth, Mariana (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=rexrothm>; Breslaw, April (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=breslawa>; Suess, Robert (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=seussr>; Harvey, Imani (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harveyi>; Trueblood, Andrew (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=trueblooda>; Brown, Allison (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=brownall>; VanMeter, Stephen (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=vanmeters>; Levisohn, Ethan (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=levisohne>; Bergman, Hannah (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=bergmanh>; Leiss, Wayne (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=leissw>; Carroll, Peter (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=carrollp> Bcc: Subject: Date: Attachments: Canceled: All Hands Meeting Mon May 16 2011 11:21:56 EDT

When: Tuesday, May 17, 2011 9:30 AM-10:00 AM (UTC-05:00) Eastern Time (US & Canada). Where: 5th floor elevator bank Note: The GMT offset above does not reflect daylight saving time adjustments. *~*~*~*~*~*~*~*~*~*

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CFPB.culturerocks </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cfpbculturerocks> CFPB.culturerocks </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cfpbculturerocks>; _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands>; Petraeus, Holly (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=petraeush> Gorski, Stephanie (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=gorskis>; Kitt, Brett (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=kittb>; Abney, Wilson (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=abneyw>; Bach, Mary (Stacey)(CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=bachs>; Mosena, Lea (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=mosenal>; Sena, Theresa (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=senat>; Lev, Ori (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=ofac/cn=ofac users/cn=levo>; Taylor, Doug (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=taylord>; Lombardo, Christopher </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lombardoc>; Williams, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=williamsk>; Horan, Kathleen (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=horank>; Brown, Allison (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=brownall>; Sensiba, Vicki (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sensibav>; Turenne, Jeannine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=turennej>; Shue, Jeffrey (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=shuej>; Williams, Anya (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=williamsany>; Wanderer, Agnes (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=wanderera>; Lepley, Richard (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=lepleyr>; Vail, Amber (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=vaila>; Petersen, Cara (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=petersenc>; Cronan, Russell (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cronanr>; Scala, Courtney (CFPB) </o=ustreasury/ou=exchange administrative group

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(fydibohf23spdlt)/cn=recipients/cn=scalac>; Proctor, Althea </o=ustreasury/ou=do/cn=recipients/cn=proctora>; D'Amico, Christina </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=damicoc>; Donoghue, Kristen (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=donoghuek>; Gragan, David (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gragand>; Suess, Robert (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=seussr>; Gupta, Neeraj (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=guptan>; Herchen, Emily (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=herchene>; Carroll, Peter (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=carrollp>; Jimenez, Dalie (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=daliej>; Brolin, John (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=brolinj>; Gao, Jane (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gaoj>; Twohig, Peggy (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=twohigp>; Forrest, David (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=forrestda>; Smyth, Nick (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=smythn>; Reese, Angelique (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=reesea>; Ladd, Christine </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=laddc>; Riley, Jeffrey (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=rileyje>; Tamberrino, Mary (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tamberrinom>; Skinner, Cathaleen (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=skinnerc>; Keane, Micheal (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=keanem>; Levisohn, Ethan (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=levisohne>; Taiwo, Ebunoluwa (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=taiwoe>; Worthman, Katherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=worthmank>; Chandler, Deidra (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=chandlerde>; Grover, Eric (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=grovere>; Holmes, Cordelia (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=holmesc>; McQueen, Suzanne (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=mcqueens>; Silberman, David (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=silbermand>; Fravel, Wesley (CFPB) </o=ustreasury/ou=exchange administrative group

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(fydibohf23spdlt)/cn=recipients/cn=fravelw>; Stapleton, Claire (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=stapletonc>; Coney, Steven (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=coneys>; Alag, Sartaj </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=alags>; Blow, Marla (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=blowm>; Vaeth, Chris (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=vaethc>; Sanders, Kathy (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sandersk>; Fuchs, Meredith (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=fuchsm>; Mann, Seth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=manns>; Starr, John (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=starrj>; Slagter, Dennis (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=slagterd>; Darling, Eben (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=darlinge>; Brown, Lawrence (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=brownlaw>; Sanford, Paul (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sanfordpa>; Lopez-Fernandini, Alejandra (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lopez-fernadinia>; Griffin, Mary (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=griffinm>; Cumpiano, Flavio (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cumpianof> Bcc: Subject: Date: Attachments: CFPB Lunch & Learn: Marking Memorial Day Fri May 13 2011 21:03:27 EDT

StartTime: Thu May 26 12:00:00 Eastern Daylight Time 2011 EndTime: Thu May 26 13:00:00 Eastern Daylight Time 2011 Location: Invitees: Recurring: No ShowReminder: Yes ReminderMinutes: 15 ReminderTime: Thu May 26 11:45:00 Eastern Daylight Time 2011 Accepted: No When: Thursday, May 26, 2011 12:00 PM-1:00 PM (UTC-05:00) Eastern Time (US & Canada). Where: Conference Room 503 - Conference Bridge Number 202-927-2255 (Code: 218890) Note: The GMT offset above does not reflect daylight saving time adjustments. *~*~*~*~*~*~*~*~*~*

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You are Invited to a CFPB Lunch & Learn! Topic: Marking Memorial Day: Reflection on a National Holiday Date: Thursday, May 26, 2011 Time: 12:00 pm - 1:00 pm Place: Room 503 1801 L St. Presenter: Holly Petraeus

Session Goal: To reflect on the history and significance of Memorial Day, remind us that it's more than just the weekend the pools open and consider how CFPB and the Office of Servicemember Affairs can positively impact military families.

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CFPB.culturerocks </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cfpbculturerocks> _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands>; Petraeus, Holly (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=petraeush> Gorski, Stephanie (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=gorskis>; Kitt, Brett (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=kittb>; Abney, Wilson (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=abneyw>; Bach, Mary (Stacey)(CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=bachs>; Mosena, Lea (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=mosenal>; Sena, Theresa (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=senat>; Lev, Ori (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=ofac/cn=ofac users/cn=levo>; Taylor, Doug (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=taylord>; Lombardo, Christopher </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lombardoc>; Williams, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=williamsk>; Horan, Kathleen (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=horank>; Brown, Allison (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=brownall>; Sensiba, Vicki (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sensibav>; Turenne, Jeannine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=turennej>; Shue, Jeffrey (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=shuej>; Williams, Anya (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=williamsany>; Wanderer, Agnes (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=wanderera>; Lepley, Richard (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=lepleyr>; Vail, Amber (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=vaila>; Petersen, Cara (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=petersenc>; Cronan, Russell (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cronanr>; Scala, Courtney (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=scalac>; Proctor, Althea </o=ustreasury/ou=do/cn=recipients/cn=proctora>; D'Amico, Christina </o=ustreasury/ou=exchange administrative group

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(fydibohf23spdlt)/cn=recipients/cn=damicoc>; Donoghue, Kristen (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=donoghuek>; Gragan, David (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gragand>; Suess, Robert (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=seussr>; Gupta, Neeraj (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=guptan>; Herchen, Emily (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=herchene>; Carroll, Peter (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=carrollp>; Jimenez, Dalie (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=daliej>; Brolin, John (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=brolinj>; Gao, Jane (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gaoj>; Twohig, Peggy (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=twohigp>; Forrest, David (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=forrestda>; Smyth, Nick (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=smythn>; Reese, Angelique (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=reesea>; Ladd, Christine </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=laddc>; Riley, Jeffrey (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=rileyje>; Tamberrino, Mary (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tamberrinom>; Skinner, Cathaleen (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=skinnerc>; Keane, Micheal (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=keanem>; Levisohn, Ethan (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=levisohne>; Taiwo, Ebunoluwa (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=taiwoe>; Worthman, Katherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=worthmank>; Chandler, Deidra (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=chandlerde>; Grover, Eric (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=grovere>; Holmes, Cordelia (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=holmesc>; McQueen, Suzanne (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=mcqueens>; Silberman, David (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=silbermand>; Fravel, Wesley (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=fravelw>; Stapleton, Claire (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=stapletonc>; Coney, Steven

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(CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=coneys>; Alag, Sartaj </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=alags>; Blow, Marla (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=blowm>; Vaeth, Chris (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=vaethc>; Sanders, Kathy (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sandersk>; Fuchs, Meredith (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=fuchsm>; Mann, Seth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=manns>; Starr, John (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=starrj>; Slagter, Dennis (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=slagterd>; Darling, Eben (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=darlinge>; Brown, Lawrence (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=brownlaw>; Sanford, Paul (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sanfordpa>; Lopez-Fernandini, Alejandra (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lopez-fernadinia>; Griffin, Mary (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=griffinm>; Cumpiano, Flavio (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cumpianof> Bcc: Subject: Date: Attachments: CFPB Lunch & Learn: Marking Memorial Day Fri May 13 2011 21:03:18 EDT

When: Thursday, May 26, 2011 12:00 PM-1:00 PM (UTC-05:00) Eastern Time (US & Canada). Where: Conference Room 503 - Conference Bridge Number 202-927-2255 (Code: 218890) Note: The GMT offset above does not reflect daylight saving time adjustments. *~*~*~*~*~*~*~*~*~* You are Invited to a CFPB Lunch & Learn! Topic: Marking Memorial Day: Reflection on a National Holiday Date: Thursday, May 26, 2011 Time: 12:00 pm - 1:00 pm Place: Room 503 1801 L St. Presenter: Holly Petraeus

Session Goal: To reflect on the history and significance of Memorial Day, remind us that it's more than just the weekend the pools open and consider how CFPB and the Office of Servicemember Affairs can positively impact military families.

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CFPB.culturerocks </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cfpbculturerocks> CFPB.culturerocks </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cfpbculturerocks>; _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands> Gorski, Stephanie (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=gorskis>; Kitt, Brett (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=kittb>; Abney, Wilson (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=abneyw>; Bach, Mary (Stacey)(CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=bachs>; Mosena, Lea (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=mosenal>; Sena, Theresa (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=senat>; Lev, Ori (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=ofac/cn=ofac users/cn=levo>; Taylor, Doug (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=taylord>; Lombardo, Christopher </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lombardoc>; Williams, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=williamsk>; Horan, Kathleen (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=horank>; Brown, Allison (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=brownall>; Sensiba, Vicki (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sensibav>; Turenne, Jeannine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=turennej>; Shue, Jeffrey (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=shuej>; Williams, Anya (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=williamsany>; Wanderer, Agnes (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=wanderera>; Lepley, Richard (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=lepleyr>; Vail, Amber (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=vaila>; Petersen, Cara (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=petersenc>; Cronan, Russell (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cronanr>; Scala, Courtney (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=scalac>; Proctor, Althea </o=ustreasury/ou=do/cn=recipients/cn=proctora>; D'Amico, Christina </o=ustreasury/ou=exchange administrative group

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(fydibohf23spdlt)/cn=recipients/cn=damicoc>; Donoghue, Kristen (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=donoghuek>; Gragan, David (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gragand>; Suess, Robert (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=seussr>; Gupta, Neeraj (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=guptan>; Herchen, Emily (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=herchene>; Carroll, Peter (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=carrollp>; Jimenez, Dalie (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=daliej>; Brolin, John (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=brolinj>; Gao, Jane (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gaoj>; Twohig, Peggy (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=twohigp>; Forrest, David (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=forrestda>; Smyth, Nick (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=smythn>; Reese, Angelique (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=reesea>; Ladd, Christine </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=laddc>; Riley, Jeffrey (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=rileyje>; Tamberrino, Mary (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tamberrinom>; Skinner, Cathaleen (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=skinnerc>; Keane, Micheal (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=keanem>; Levisohn, Ethan (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=levisohne>; Taiwo, Ebunoluwa (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=taiwoe>; Worthman, Katherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=worthmank>; Chandler, Deidra (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=chandlerde>; Grover, Eric (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=grovere>; Holmes, Cordelia (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=holmesc>; McQueen, Suzanne (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=mcqueens>; Petraeus, Holly (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=petraeush>; Silberman, David (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=silbermand>; Fravel, Wesley (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=fravelw>; Stapleton, Claire

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(CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=stapletonc>; Coney, Steven (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=coneys>; Alag, Sartaj </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=alags>; Blow, Marla (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=blowm>; Vaeth, Chris (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=vaethc>; Sanders, Kathy (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sandersk>; Fuchs, Meredith (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=fuchsm>; Mann, Seth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=manns>; Starr, John (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=starrj>; Slagter, Dennis (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=slagterd>; Darling, Eben (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=darlinge>; Brown, Lawrence (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=brownlaw>; Sanford, Paul (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sanfordpa>; Lopez-Fernandini, Alejandra (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lopez-fernadinia>; Griffin, Mary (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=griffinm>; Cumpiano, Flavio (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cumpianof> Bcc: Subject: Date: Attachments: CFPB Lunch & Learn: CFPB's Nonbank Supervision Team Fri May 13 2011 21:02:17 EDT

StartTime: Fri May 20 12:00:00 Eastern Daylight Time 2011 EndTime: Fri May 20 13:00:00 Eastern Daylight Time 2011 Location: Invitees: Recurring: No ShowReminder: Yes ReminderMinutes: 15 ReminderTime: Fri May 20 11:45:00 Eastern Daylight Time 2011 Accepted: No When: Friday, May 20, 2011 12:00 PM-1:00 PM (UTC-05:00) Eastern Time (US & Canada). Where: Conference Room 503 - Conference Bridge Number 202-927-2255 (Code: 218890) Note: The GMT offset above does not reflect daylight saving time adjustments. *~*~*~*~*~*~*~*~*~* You are Invited to a CFPB Lunch & Learn!

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Topic: CFPB's Nonbank Supervision Team Date: Friday, May 20, 2011 Time: 12:00 pm - 1:00 pm Place: Room 503 1801 L St. Facilitators: Members of the Nonbank Supervision Team

Purpose: What exactly is a nonbank or nondepository institution? How many of them are there? How will we keep track of and examine them? Come find out how will navigate the concrete jungle of consumer financial products and services. Mortgage Servicers, Payday Lenders, and Student Loan OH MY!

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CFPB.culturerocks </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cfpbculturerocks> _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands> Gorski, Stephanie (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=gorskis>; Kitt, Brett (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=kittb>; Abney, Wilson (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=abneyw>; Bach, Mary (Stacey)(CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=bachs>; Mosena, Lea (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=mosenal>; Sena, Theresa (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=senat>; Lev, Ori (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=ofac/cn=ofac users/cn=levo>; Taylor, Doug (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=taylord>; Lombardo, Christopher </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lombardoc>; Williams, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=williamsk>; Horan, Kathleen (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=horank>; Brown, Allison (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=brownall>; Sensiba, Vicki (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sensibav>; Turenne, Jeannine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=turennej>; Shue, Jeffrey (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=shuej>; Williams, Anya (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=williamsany>; Wanderer, Agnes (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=wanderera>; Lepley, Richard (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=lepleyr>; Vail, Amber (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=vaila>; Petersen, Cara (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=petersenc>; Cronan, Russell (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cronanr>; Scala, Courtney (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=scalac>; Proctor, Althea </o=ustreasury/ou=do/cn=recipients/cn=proctora>; D'Amico, Christina </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=damicoc>; Donoghue, Kristen (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=donoghuek>; Gragan, David

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(CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gragand>; Suess, Robert (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=seussr>; Gupta, Neeraj (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=guptan>; Herchen, Emily (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=herchene>; Carroll, Peter (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=carrollp>; Jimenez, Dalie (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=daliej>; Brolin, John (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=brolinj>; Gao, Jane (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gaoj>; Twohig, Peggy (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=twohigp>; Forrest, David (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=forrestda>; Smyth, Nick (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=smythn>; Reese, Angelique (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=reesea>; Ladd, Christine </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=laddc>; Riley, Jeffrey (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=rileyje>; Tamberrino, Mary (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tamberrinom>; Skinner, Cathaleen (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=skinnerc>; Keane, Micheal (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=keanem>; Levisohn, Ethan (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=levisohne>; Taiwo, Ebunoluwa (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=taiwoe>; Worthman, Katherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=worthmank>; Chandler, Deidra (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=chandlerde>; Grover, Eric (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=grovere>; Holmes, Cordelia (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=holmesc>; McQueen, Suzanne (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=mcqueens>; Petraeus, Holly (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=petraeush>; Silberman, David (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=silbermand>; Fravel, Wesley (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=fravelw>; Stapleton, Claire (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=stapletonc>; Coney, Steven (CFPB) </o=ustreasury/ou=exchange administrative group

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(fydibohf23spdlt)/cn=recipients/cn=coneys>; Alag, Sartaj </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=alags>; Blow, Marla (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=blowm>; Vaeth, Chris (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=vaethc>; Sanders, Kathy (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sandersk>; Fuchs, Meredith (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=fuchsm>; Mann, Seth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=manns>; Starr, John (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=starrj>; Slagter, Dennis (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=slagterd>; Darling, Eben (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=darlinge>; Brown, Lawrence (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=brownlaw>; Sanford, Paul (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sanfordpa>; Lopez-Fernandini, Alejandra (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lopez-fernadinia>; Griffin, Mary (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=griffinm>; Cumpiano, Flavio (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cumpianof> Bcc: Subject: Date: Attachments: CFPB Lunch & Learn: CFPB's Nonbank Supervision Team Fri May 13 2011 21:01:13 EDT

When: Friday, May 20, 2011 12:00 PM-1:00 PM (UTC-05:00) Eastern Time (US & Canada). Where: Conference Room 503 - Conference Bridge Number 202-927-2255 (Code: 218890) Note: The GMT offset above does not reflect daylight saving time adjustments. *~*~*~*~*~*~*~*~*~* You are Invited to a CFPB Lunch & Learn! Topic: CFPB's Nonbank Supervision Team Date: Friday, May 20, 2011 Time: 12:00 pm - 1:00 pm Place: Room 503 1801 L St. Facilitators: Members of the Nonbank Supervision Team

Purpose: What exactly is a nonbank or nondepository institution? How many of them are there? How will we keep track of and examine them? Come find out how will navigate the concrete jungle of consumer financial products and services. Mortgage Servicers, Payday Lenders, and Student Loan OH MY!

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From:

To: Cc: Bcc: Subject: Date: Attachments:

Gragan, David (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gragand> _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands>

Administrative Operations Fri May 13 2011 17:17:59 EDT

All, since we have had some personnel changes in the facilities and security areas this week, I thought it would be timely to share some information about that section, which we call Administrative Operations, under COO Catherine West.

What does the Administrative Operations team do?

The Administrative Operations team performs two main functions: Facilities acquire, set up and assign office space and other logistical needs required by staff to do their work. Security new hires background investigation process, physical security, badges, building access, etc.

Who does what on the Administrative Operation team?

David Gragan Acting Assistant Director

Stephanie Basham Leasing Lead (working with Kevin Tucker to handle nearly all facilities matters) John Starr and Kathleen Horan Physical and personnel security matters

As we finalize position descriptions to advertise and fill the Administrative Operations team, it is important to remember that we are growing at a rapid rate. Consequently, space for incoming personnel is becoming a real issue. While we are working diligently on getting additional space for CFPB, we need to make the most of what we have. Under no circumstances should an employee, contractor or temporary employee utilize a space because they think it is vacant. This goes for conference rooms as well. Although a space my literally be vacant, an assigned individual may be inprocessing at that time, or the space may have been assigned to the interviewing and on-boarding process.

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In addition, the 7th floor is shared with OFS and we need to be considerate of their space. The copy room designated for CFPB on the 7th floor is room 7518. Please do not use OFSs copy room (7416) and especially, do not remove any supplies from this room.

If you have any questions regarding seating assignments, space in general, facilities or security, please contact Kevin Tucker or myself for assistance. Thanks for your continued patience and understanding with our facilities and space challenges.

David P. Gragan Assistant Director for Procurement Consumer Financial Protection Bureau Department of the Treasury 1500 Pennsylvania Avenue, NW ATTN: 1801 L Street Washington, D.C. 20220 Desk: (202) 435-7192
(b) (6)

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From:

To:

Cc:

Dickman, Marilyn (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dickmanm> Gorski, Stephanie (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=gorskis> Bach, Mary (Stacey)(CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=bachs>; Brown, Amy (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=brownam>; Black, Brad </o=ustreasury/ou=do/cn=recipients/cn=blackb>; Burden, Gail (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=burtong>; Coyle, Raymond (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=coyler>; Cronin, Katherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cronink>; Darling, Eben (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=darlinge>; Dickman, Marilyn (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dickmanm>; DiPalma, Nikki (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dipalman>; Glaser, Elizabeth (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=glasere>; Gorski, Stephanie (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=gorskis>; Harpe, Pam (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harpep>; Harvey, Imani (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harveyi>; Herchen, Emily (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=herchene>; Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk>; Mann, Seth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=manns>; Megee, Christine (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=megeec>; Plunkett, Alexander (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=alexanderp>; Royster, Felicia (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=roysterf>; Sensiba, Vicki (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sensibav>; Slagter, Dennis (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=slagterd>; Tamberrino, Mary (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tamberrinom>; Tingwald, James (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tingwaldj>; Wanderer, Agnes (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=wanderera>

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Bcc: Subject: Date: Attachments: Stephanie

Consolidate Transferee Questions Fri May 13 2011 17:07:22 EDT Consolidated Offer Question_05 12 2011.docx

Attached is final set of Q&As with my best shot. Dennis and I are okay with these and would like you to proceed to provide to offerees.

At the same time, I am ccing HC employees, Amy Brown and Stacey Bach in case we need to make additional tweaks going forward.

In addition to sending to offerees, would you please also provide to whomever in the management team who has been actively involved in the transfer selection process in case they receive questions.

Let me know if you need anything else.

Marilyn

Marilyn A. Dickman Deputy Chief Human Capital Officer Consumer Financial Protection Bureau 202-435-7157 (W)

This e-mail may contain Privacy Act/Sensitive Data, which is intended only for the individual to which it is addressed. It may contain information that is privileged, confidential, or otherwise protected from disclosure under applicable laws. Do not disclose sensitive data to others within or outside of CFPB unless they have a legitimate need for the information based on their official duties. If you are unsure of the appropriateness of information disclosure, please contact the General Counsel or the Privacy Team for guidance.

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Consolidated Offer Question_05 12 2011.docx (Attachment 1 of 1)

Consolidated Offer Questions

This document is intended to answer questions related to employment at CFPB. If you have unanswered questions that affect your ability to accept our offer, please feel free to call the hotline at 202-435-7330. Please describe your question and leave name and telephone contact information. We will respond to you as soon as possible. Salary Offers 1. The starting salary listed on my offer letter is already above the salary range listed for the position being offered. What will happen to my salary after the 2 year period of saved pay? What opportunities for growth are there if Im already at the top of my range? Under the Dodd-Frank Act, with few exceptions, transferees are protected against salary reduction until July 21, 2013. CFPB has not yet decided how pay will be set at the end of the salary-protection period in Dodd-Frank. For most employees, salary growth opportunity exists within the pay band. The salary structure may also grow in future years. Transferees whose salary exceeds the maximum rate of the pay band may also achieve salary growth by successfully competing for a position in a higher-level pay band. 2. Is the salary listed on my offer letter negotiable? If you have questions about your offer, contact the hotline and your request will be referred to CFPBs CHCO and Deputy CHCO. 3. I anticipate receiving a promotion before July 21, 2010. Will my offer and starting salary change when this occurs? If you receive a promotion before the designated transfer date, CFPB will reassess your offer. You should notify us of any pay increases that occur between now and your transfer date. 4. Where can I get a copy of CFPBs salary and pay band structure? I understand it has been recently updated. We have attached a copy of our pay band chart to this set of FAQs 5. Currently, attorneys at the Board receive variable pay. My impression was that the CFPB would not continue variable pay, but would take variable pay into account when setting base salaries. It does not appear that was the case for me. Our job and salary offers were based on the role and responsibilities of the position to which you will be assigned, the skill set you bring to the position and how closely those skills align with our needs. Your pay was considered in our offer but was not the only factor. 6. In determining the offer, I am under the impression that our variable pay currently paid

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Consolidated Offer Question_05 12 2011.docx (Attachment 1 of 1)

by the Board was taken into account when formulating the base salary. Assuming I am correct, I noticed that my offer letter provides a full time annual salary that will be prorated according to my part time schedule. As a result, my variable pay component will be prorated as well, resulting in a decreased percentage being included in my pay. Is this result intended? Please see the answer in #5. Pay was based on full-time employment. Your actual gross and net pay will be prorated based on the actual number of hours you work each pay period on your part time schedule. 7. (OTS employees) I understand that those of us with salaries above our pay band will operate under a "saved pay" system for merit increases. Will our total current salary (base + geo) count toward our "High 3" in the FIRF system? As long as you remain in the FIRF system, all rules of FIRF will continue to apply. 8. Although people have been given offers in line with their current annual pay, in some cases their equivalent grades have dropped when compared to the Bureau's scale. Is there any way that this can be remedied? Our job and salary offers were based on the role and responsibilities of the position to which you will be assigned. These positions and offers are based on the needs of the CFPB, applicant preferences and manager interview decisions. While in some cases this did result in pay level offers below the current equivalent grades of certain individuals, in all cases offers met (in line with the protection provisions of the Dodd Frank Act) or exceeded current salaries of individuals to whom offers were made. In addition, as a start up, we will have numerous developmental and advancement opportunities against which employees may apply over time. Employment Status 1. My current offer is for a term appointment. Are there any opportunities for me to become a permanent employee at CFPB? Under the transfer process set forth in Dodd-Frank, the position CFPB offers you must have an equivalent tenure to your current appointment. If you are currently working under a term appointment, you will continue to work on a term appointment at CFPB, with the same term as your current appointment. To obtain a permanent appointment, you may compete for permanent positions posted on www.ConsumerFinance.gov. 2. I recently applied for a position through USAJOBS that is higher than my current grade level, for which I believe I am qualified for. When can I hope to get the response for the position that I applied for through the USAJOBS, and will you be able to inform me about it before the deadline for accepting the current offer? The review of candidates who applied through the competitive process is ongoing. There are a large number of certificates and a very large number of candidates to review. Management is reviewing the supervisory and higher graded positions first and working toward the lower graded positions. It will take some time to review all of the candidates. At this time it is not possible to know when your application might be

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Consolidated Offer Question_05 12 2011.docx (Attachment 1 of 1)

reviewed however, we continue to make significant progress on our referral lists. We hope to have decisions made in the near future. Transfer Date 1. When will transfer be effective? Transfer will occur between July 21, 2011 and October 8, 2011. CFPB will negotiate specific dates for transferees with each agency. 2. Can I be detailed to CFPB before my transfer date? In certain circumstances, there may be early detail opportunities; however, such details will need to be negotiated with each transferee agency. 3. I have files and materials I would like to bring with me. How will these files and materials be moved? CFPB has been in ongoing communications regarding information that needs to be transferred in order for us to fulfill our mission and will ensure, to the maximum extent possible, that this information will be made available. You will be responsible for the movement of all personal items you wish to bring. Creditable Service 1. On the acceptance page, it asks for an estimate of our years of creditable service. The definition of creditable service doesn't mention part time work. As you can see from the Board's policy on part time, the Board's retirement plan has some formula for how to calculate creditable service based on part-time work. Is the Bureau doing the same? In terms of filling out the info on creditable service, should I just specify how many years of full time service and how many years of 24 hours/per week service. Also, this is listed as an estimate. You are going to have access to our Board records to verify these numbers, right? As long as you remain in the Boards retirement plan, whatever formulas the Board applies to credit part-time service will continue to apply. We understand the years of creditable service you provided on the acceptance page is an estimate and ask that you provide your best approximation. However, if you join CFPB, we will have access to your official records and will ensure you will receive credit for the accurate amount of service.

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Consolidated Offer Question_05 12 2011.docx (Attachment 1 of 1)

Advancement Opportunities 1. Will I continue to be considered for higher level positions with the CFPB through the transfer process? The offer you currently have is the only offer you will receive from CFPB through the transfer process. If you receive pay adjustments and/or promotions prior to the transfer date, you should notify us immediately and we will make appropriate adjustments in line with your offer. If you are interested in higher level positions at CFPB, we encourage you to apply to the vacancy announcements posted on www.ConsumerFinance.gov. Doing so allows CFPB to also consider you through the competitive process. If you are offered and accept a higher-level position through that process, the protections set forth in Dodd-Frank for the transfer process no longer apply. 2. I have met certification requirements for promotion to the next higher grade but will not meet experience requirements for promotion until after the designated transfer date. When will I be promoted? If you accept an offer with CFPB where the position has a career path for noncompetitive promotion (e.g., Examiner, CN-3 to CN-5B), and meet all of the certification and experience requirements for the next higher level, the determination of the effective date of any promotion will be based on supervisory review and recommendation. Promotions are not automatic on the date the minimum eligibility requirements are met. 3. What are the opportunities for change positions or occupations once I have transferred to CFPB? As a start up, CFPB will have numerous job opportunities for which employees may apply such postings will be on www.ConsumerFinance.gov. Position Assignment 1. If I have questions about the title and duties related to my position, who should I call? If you have any questions related to your position, please call the hotline number at 202-435-7330 with the specifics of your question. Please leave name and telephone contact information and we will get back with you as soon as possible. 2. How was the position identified for my offer? The positions and offers are based on the needs of the CFPB, management interview decisions, and applicant preferences.

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Consolidated Offer Question_05 12 2011.docx (Attachment 1 of 1)

Benefits 1. At the Board, any employee working 64 hours per pay period pays the same premiums etc for benefits as full time employees. What is the Bureau's policy? What benefits are offered to part time employees? If you work 64 hours per pay period and are covered under the Federal Employees Health Benefit program, CFPB will pay 80% of the amount paid for a full time employee. You will also have access to all other Title V benefits in accordance with Office of Personnel Management eligibility and other requirements. CFPB offers the follow non-Title 5 benefits to employees working at least 30 hours per week: CFPB Life Insurance (employee cost is based on part-time salary amount) CFPB Dental and Vision (100% paid by CFPB) 24-Hour Personal Accident Coverage (100% employee paid) Business Travel Accident (100% paid by CFPB) Short-Term Disability(100% paid by CFPB) Long-Term Disability (100% paid by CFPB)

2. Do we have the option to stay with our current agencys benefits programs? We are currently in negotiation with the other transfer agencies and will shortly finalize those benefits that will transfer with you. We will provide the information as soon as it is available. 3. Would the CFPB be willing to share benefits information (including the employee's portion of the cost) with transferees before the transfer day, for planning purposes? Please see the attached benefits information. We are currently negotiating with Small Savers Child Care Center at 1700 G Street to provide day care center services. In 2012, we will offer our own Flexible Spending Account program. Going forward, we will continue to revise and enhance our benefits, and look forward to current and future employees assisting us in that effort. 4. If a Board transferee chooses to keep all of the Board's current programs, will the transferee's portion of the cost for each benefit be the same as it is currently for the remainder of 2011 and the equivalent to what Board employees will pay in 2012? The employee's portion of the cost for benefits at the Board is quite low. The Board also provides a health care stipend of $40 per pay period (for a single subscriber). We are currently in consultation with the Board on these issues and will provide an update as soon as we have additional information. 5. What is the Bureau's leave policy? Will we receive information on the annual and sick leave policy, as well as holidays and floating holidays, before making our decision? Is leave deposited up-front or accrued as you go? How much carries over per year?
Employees transferring to CFPB will have their earned unused annual and sick leave transferred to CFPB. Leave will be credited to employee accounts as it is earned; that is, on

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a bi-weekly basis. At this time, sick and annual leave will be earned using the Title 5 accrual rules (i.e., full-time employees with up to three years of creditable service earn 13 days per year; three to 15 years of creditable service, 20 days per year; 15 years or more of service, 26 days per year). The maximum carryover limit for annual leave will remain the same as at the transfer agency, until the end of the protection period in the Dodd-Frank Act or until CFPB policy is written, whichever is later. CFPB is in the process of developing its longer term leave policy and will benchmark programs at other regulatory agencies in its creation. We plan to have our leave policy in place by September 30, 2011.

6. What options are available for selection of a retirement and associated thrift savings plan at CFPB? How will my current service be credited if I switch plans? Employees currently covered under FERS/CSRS/CSRS Offset will remain in their current retirement and associated thrift savings plan throughout their employment with CFPB, unless they elect before January 21, 2013, to participate in the Federal Reserve System retirement and thrift plan (FRS plans). Such an election will not become effective until January 21, 2013. Employees currently covered under the Federal Reserve System retirement and thrift plans will remain in their current retirement and associated thrift savings plan throughout their employment with CFPB, unless they elect before January 21, 2013, to participate in the Federal Employees Retirement Plan (FERS). Such an election will not become effective until January 21, 2013. We will provide information about the retirement/thrift plans and the election process after employees begin working at CFPB. At that time, we will also provide interested employees with access to retirement calculations under FERS/CSRS/CSRS Offset plans and under the Federal Reserve System plan. In addition, we will provide counseling to interested individuals to assist them in making their choice. These services will include information about how current service will be credited. 7. Will CFPB offer flexible work schedules? CFPB currently has a gliding flexible work schedule. A broader alternative work schedule policy is under development. Once that policy is finalized, we will provide access to it to all individuals who have accepted our transfer offer. 8. Please advise whether the CFPB will consider granting service credit for non-Federal experience for annual leave earning purposes.
Current CFPB policy includes an option for consideration of pertinent non-Federal service when determining total service credit for annual leave earning purposes. However, this option is only available for new Federal employees or those returning to Federal service after a 90-day break in service. Time at the Federal Reserve Board is considered Federal experience and, therefore, is not eligible for service credit for annual leave.

9. Must a transferee choose either to keep all of his/her agencys current programs or sign up for all of the CFPB's programs? Or will a transferee be permitted to mix and match plans? For instance, could a transferee keep their agencys vision insurance, but sign up for the CFPB's dental insurance?

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Consolidated Offer Question_05 12 2011.docx (Attachment 1 of 1)

We are currently in discussions with each agency to determine details of the benefit plans post transfer date. 10. How will the Federal Reserve System retirement plans (retirement and thrift) work at CFPB? If you are currently in the Federal Reserve System (FRS plans), everything will remain exactly the same, including the matching levels on thrift savings. If you are not currently in the FRS plans and are eligible for retirement coverage, specific information about the plans will be provided to you after transfer and you will have an opportunity to elect enrollment not later than January 21, 2013. . 11. What retirement - 401(k) programs does CFPB offer and will I be eligible to join them right away? If you are in CSRS/FERS/CSRS Offset, you will participate in the Title V Thrift Savings Plan. If you are in the Federal Reserve retirement plan, you will participate in the Federal Reserves Thrift Plan Eligibility to change retirement plans is dictated by the . language of the Dodd Frank Act and such changes cannot occur until January 21, 2013. CFPB has not decided whether it will offer additional 401 (k) programs in the future. However, we are committed to providing robust benefits options to our employees that are generally comparable to other FIRREA agencies to the Federal Reserve. 12. Is any specific information available yet regarding the TSP match percentage and will there be any additional 401K offering available with company matches? Until January 21, 2013, TSP match percentages are dictated by the retirement plan you bring with you to CFPB. If you are in the FERS retirement system, you receive an automatic 1% employer contribution and can receive up to an additional 4% agency matching depending on the amount of your contributions. Individuals in the CSRS and CSRS Offset programs do not receive any employer matching. If you are in the Federal Reserve System retirement plan (FRS plans), you will receive a 1% automatic CFPB contribution plus up to a 7% matching depending on the amount of your contributions. If you elect into another retirement plan as of January 21, 2013, TSP matching percentages are dictated by the terms of your new plan. CFPB has not decided whether it will offer additional 401 (k) programs in the future. However, we are committed to providing robust benefits options to our employees that are generally comparable to other FIRREA agencies to the Federal Reserve. 13. Will CFPB issue agency credit cards for use for official business, or do employees have to use their personal credit cards and get reimbursed for things like conference registration fees and official travel expenses? CFPB intends to use the Government Travel Program and plans to issue agency credit cards for official business. 14. Does CFPB participate in the Federal Metro pass program, and does CFPB offer a parking benefit to employees?

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Consolidated Offer Question_05 12 2011.docx (Attachment 1 of 1)

CFPB does participate in the federal Metro pass program. In the Washington, D.C. metro area, we currently offer limited subsidized parking as available. Satellite offices are not yet finalized, but parking and other logistics will be addressed. 15. The offer explains that my benefits will continue to be administered by my current employer or its de signee until July 21, 2012.Im currently employed by the OTS, which will go out of business on July 21, 2011. Who will administer my benefits until the CFPB takes over? The OCC will administer non-retirement benefits for OTS employees during this period. 16. Both the FDIC and the OTS paid my examiner dues annually. Will I continue to be reimbursed for my association fees by the CFPB? We currently do not have a policy for this issue. However, when we create a policy, it will be comparable to other FIRREA agencies. Performance Management and Bonuses 1. Are salary increases based upon performance? CFPB is currently in the process of developing a performance management system that will provide for performance-based salary increases. 2. If my salary is at the top of range for my pay band, am I eligible for performance based salary increases or bonuses? An employee receiving a salary at the maximum rate of the pay band cannot receive a performance-based salary increase. The employee would be eligible for a monetary performance award or bonus that does not increase the salary. 3. When do you expect to pay out bonuses for the performance year that will begin in October 2011? CFPB intends to implement a performance management system in October 2011. A date for awarding earned bonuses has not yet been determined. Office Locations 1. What is the specific location of satellite offices? CFPB will have 4 satellite offices. The Southeast Satellite Office will be located at CFPB headquarters in the Washington, DC metro area. The specific locations of the satellite offices for the West, Midwest, and Northeast are still being determined. CFPB anticipates that the: West Satellite Office will be located in or around the San Francisco/Oakland area; Midwest Satellite Office will be located in or around the Chicago area; and Northeast Satellite Office will be located in or around the New York City/Jersey City area.

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Consolidated Offer Question_05 12 2011.docx (Attachment 1 of 1)

2.

What is the specific Washington, DC location of CFPB? At this time, CFPB is currently located at 1801 L Street NW, Washington, DC. The Bureau will move to 1700 G Street, Washington, DC. The date of this move is undetermined.

Travel 1. What is CFPBs travel policy? CFPB has not yet established a policy for examiners and others who must travel frequently. The situations discussed in this question and other similar situations will be considered in developing the CFPB policy. Similar to all other benefits, CFPBs travel policy will be comparable to other FIRREA agencies 2. What is the percentage of time that examiners must travel? All examiners will be required to perform extensive overnight travel. CFPB expects that examiners will travel outside of their regular duty location for 50% or more of their regular work schedule. Relocation 1. My offer requires relocation to a new geographic area. How will relocation expenses work? At a minimum, CFPB will pay all mandatory relocation expenses for individuals required to move based on their offer. Mandatory relocation expenses include: - Transportation and per diem for you and your family - Expenses related to selling/buying your home or terminating your lease - Moving expenses - Transportation and storage of household goods, and - Relocation income tax allowance If you have specific questions about your move, please contact the hotline and we will respond as soon as possible. 2. My current duty location is in City X but I would like to relocate to City Y within the same geographic region. Will CFPB pay for my relocation? How will this affect my offer? Transferees are not required to relocate. Individuals may, for personal reasons, move to another geographical location. When an individual moves for personal reasons, CFPB will not reimburse costs associated with the move. Transfers within the same locality pay area will not affect the salary amount stated in your offer letter. The CFPB pay system has two componentsbase pay and locality pay. Depending

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Consolidated Offer Question_05 12 2011.docx (Attachment 1 of 1)

on where an employee moves, the CFPB salary could increase or decrease depending on the locality rate associated with the area to which an employee relocates. If a transferee relocates voluntarily, he/she would continue to be protected against reduction of basic rate of pay and locality pay until July 21, 2013. 3. My current duty location is in City X but I would like to relocate to City Y in a different geographic region. Will CFPB pay for my relocation? How will this affect my offer? Please refer to the answer to Relocation Question 1 above when an individual moves for personal reasons, CFPB will not reimburse costs associated with the move. In the case of a move from one geographic region to another region, there would need to be an equivalent vacant position in the other region to which the employee can be assigned. Relocating to another geographical region must be coordinated with and approved by regional management to ensure the availability of an appropriate vacant position. 4. How will my salary be affected by a move to a higher geographic pay location? Pay will be based on the rate of the new geographic base location.

10

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From:

To: Cc: Bcc: Subject: Date: Attachments: Colleagues,

Harvey, Imani (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harveyi> _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands>

CFPB Job Vacancy Announcements Posted on USAJobs as of 5/13/11 Fri May 13 2011 16:15:41 EDT

The CFPB Human Capital Team has posted new vacancy announcements on the CFPB website. Below, you will find the job title, grade level, and link for the new announcements. If you know great candidates who might be interested in joining our team, please share this information with them!

Deputy Associate Director for Consumer Education and Engagement, (not listed on USAJOBs) Office: Consumer Education and Engagement Announcement Closes: Monday, May 16, 2011 Who May Apply: All US Citizens Link: Deputy Associate Director, Consumer Education and Engagement

Consumer Response Manager (Quality Manager), CN-301-6A

Office: Response Center Vacancy Announcement #: 11-CFPB-188 Announcement Closes: Friday, May 25, 2011 Who May Apply: Candidates with permanent competitive service status, non-competitive eligibles, and special appointment eligibles Link: 11-CFPB-188

Consumer Response Manager, CN-301-6A

Office: Response Center Vacancy Announcement #: 11-CFPB-190 Announcement Closes: Friday, May 25, 2011

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Who May Apply: Candidates with permanent competitive service status, non-competitive eligibles, and special appointment eligibles Link: 11-CFPB-190

Consumer Response Policy & Procedure Analyst, CN-301-5A/5B/5C

Office: Response Center Vacancy Announcement #: 11-CFPB-205 Announcement Closes: Friday, May 26, 2011 Who May Apply: Candidates with permanent competitive service status, non-competitive eligibles, and special appointment eligibles Link: 11-CFPB-205

Imani Harvey Special Assistant to the Chief Human Capital Officer Consumer Financial Protection Bureau Email: Imani.Harvey@treasury.gov Phone: 202-435-7513

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From: To: Cc: Bcc: Subject: Date: Attachments:

HELPDESK (DO) </o=ustreasury/ou=do/cn=recipients/cn=helpdesk> Global_All </o=ustreasury/ou=do/cn=recipients/cn=global_all>

IT Maintenance - Friday May 13, 2011 Fri May 13 2011 14:05:39 EDT

Subject: IT Maintenance - Friday May 13, 2011

System: DO Audio Conference Bridge system

Start: Friday, May 13, 2011 10:00PM End: Friday, May 13, 2011 11:00PM

Impact: This Maintenance is not expected to impact users.

The DO Audio Conference Bridge will be upgraded with Microsoft security patches, and we will be enabling automatic alarm reporting capability.

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From:

To: Cc:

Gordon, Ashley (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gordonas> _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands> Adamske, Steven </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=adamskes>; Moore, Megan </o=ustreasury/ou=do/cn=recipients/cn=mooreme>; Hunt, Anita Maria </o=ustreasury/ou=do/cn=recipients/cn=hunta>; Wallace, Kim </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=wallacek>; Wolin, Neal </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=wolinn>; Warren, Elizabeth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=warrene>; Fitzpayne, Alastair </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=fitzpaynea>; LeCompte, Jenni </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=engebretsenj>; Murray, Colleen </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=murrayco>; Coloretti, Nani </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=colorettin> CFPB Press Clips 5.13.11 Fri May 13 2011 12:06:50 EDT

Bcc: Subject: Date: Attachments:

Press Clips 5/13/2011

Index

Click publication title to find its location in this e-mail. Click article title to go to its source website.

Consumer Financial Protection Bureau Bloomberg -- Banks Push Consumer Bureau to Keep U.S. Complaint Line Private Fayetteville Observer -- Military leaders oppose lender legislation

CFPB & Congress

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Politico Morning Money Warren Recess Appointment The Hill -- Name the latest congressional banking scandal Daily Kos (blog) -- Barney Frank: Recess appointment likely for CFPB job Housing Wire -- House Financial Services Committee approves bills to reform CFPB New York Times -- Uncertain Leadership Strains Financial Overhaul Reuters -- Regulators press on with Wall Street crackdown Huffington Post -- Dear GOP: We Don't Negotiate With Hostage Takers The Hill Overnight Money The Hill -- GOP moves forward bills checking Consumer Bureau

Consumer Credit Wall Street Journal -- Fed Proposes New Rules on Foreign Remittances Wall Street Journal -- Regulators Testify Against Debit-Fee Rule Smartmoney.com -- Bank Fees Attack: The Sequel American Banker -- Don't Show Legal The Hill -- Happy anniversary, swipe fee reform Wall Street Journal -- Payday Loan Executive: We're Ready For New US Federal Scrutiny

Housing Other New York Times (blog) -- Consumers Want Fast, Friendly Service American Banker -- Tech-Savvy Crowd Demands More Personal Service from Banks, Not Less Housing Wire -- New York foreclosure courts face seven-year backlog: RealtyTrac New York Times -- Financing Foreclosed Homes American Banker -- Lawmakers Start Push for Uniform Mortgage Servicing Standards Chicago Tribune -- Survey reveals consumer confusion on mortgages

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Bloomberg Banks Push Consumer Bureau to Keep U.S. Complaint Line Private May 13, 2011 By Carter Dougherty

May 13 (Bloomberg) -- The new U.S. consumer agency, which has yet to begin formal operations or write a rule, is already being squeezed between banks and advocacy groups over how to set up a complaint hotline.

Under the Dodd-Frank regulatory overhaul, the Consumer Financial Protection Bureau must establish a way for banking customers to submit reports about their problems with products and services. At issue is what happens after they're filed.

Nonprofit groups such as Consumers Union and the Sunlight Foundation are pushing for an open system that would allow anyone to scan the raw submissions. Industry groups including the American Bankers Association argue that making them public could allow frivolous complaints to damage reputable brands.

"The point of banking supervision is to get the system working properly, not to air dirty laundry and scare capital away from banks," Richard Riese, senior vice president at the bankers association's Center for Regulatory Compliance, said in an interview.

The hotline has become a focal point of a philosophical debate about the bureau's role -- whether it should aim to improve consumer financial products primarily by working directly with companies or by bringing public attention to unfair practices.

Bureau officials plan to open the hotline by accepting consumer complaints about credit cards starting on July 21, according to a person involved in the work.

'Timely Response'

Dodd-Frank requires the bureau to log complaints in a database and route them to the appropriate federal or state agency. A separate provision says the bureau and other regulators must create

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procedures to ensure that financial firms provide "a timely response" to consumers.

The agency is working with five of the largest credit-card issuers -- JPMorgan Chase & Co., American Express Co., Discover Financial Services, Capital One Financial Corp. and Bank of America Corp. -- to make certain they can begin receiving complaint referrals in July, said the person, who spoke on condition of anonymity because the process isn't public.

Credit-card complaints will be accepted first because they deal with the most common form of consumer finance, the person said. The complaints could also inform the bureau's enforcement actions, and its supervision of banks and non-bank lenders, another person involved in the process said.

While the bureau has not decided what information related to consumer complaints will be public, previous comments by Elizabeth Warren, the White House and Treasury adviser who is setting up the agency, suggest a preference for wide distribution.

Crowd-Sourcing

Warren has said that a public database would allow consumers to look for patterns -- a process known as "crowd- sourcing" -- and make their decisions accordingly.

"Through crowd-sourcing technology, consumers can deal collectively with those who would take advantage of them -- and can reward those who provide excellent products and services," Warren said in a speech on Oct. 28.

The debate over the hotline echoes one involving the U.S. Consumer Product Safety Commission. In November that agency approved the creation of a public consumer complaint database over objections from business groups. The web-based system, which also accepts complaints via phone, fax or letter, went live on March 11.

Banking lobbyists are asking the consumer financial bureau to limit the information in the database to other banking regulators and the consumer who made the complaint, according to a Feb. 8 letter from the ABA and four other finance groups.

'Suitable Notice'

"Any expansion of the use of or access to the database should be determined through a formal

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rulemaking process that involves a suitable notice and comment period," the ABA said in the letter, which was also signed by The Clearing House, the Consumer Bankers Association, the Financial Services Roundtable and the Housing Policy Council.

Consumers Union, which publishes Consumer Reports magazine, wrote the bureau in a Sept. 3 memo that the new agency should make public "all complaints from receipt" and not a subset that has been vetted by the bureau.

"Consumers can benefit from learning that a financial services provider is doing something that makes its customers unhappy even if that activity is not illegal," Consumers Union and 15 other groups wrote.

A contact person for the letter was Gail Hillebrand, a former senior attorney with Consumers Union. She has since been hired as the consumer bureau's associate director of consumer education and engagement.

Open Government

The creation of the complaint system is being overseen by Catherine West, the chief operating officer at the consumer bureau. West is a former COO at J.C. Penney Co. Inc. and former senior executive at Capital One, one of the banks cooperating with the system test.

Warren addressed the consumer complaint system at an April 6 meeting with groups that campaign for more open government, according to a blog post on the agency's website. The groups urged Warren to make the complaints public despite bank objections, said Angela Canterbury, director of public policy at the Project on Government Oversight, a watchdog group.

"These concerns about consumer complaints on the part of industry reflect an old-fashioned sensibility," Tom Lee, director of Sunlight Labs at the Sunlight Foundation, said in an interview.

Lee, who attended the meeting, pointed out that Amazon.com Inc. publishes unedited consumer complaints about products on its website "and global capitalism has not ground to a halt."

Simulated Complaints

The consumer bureau plans to accept complaints through a form on its website, by e-mail, by telephone or by letter. To test the system, officials have been passing along simulated complaints to the credit-

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card issuers.

"We want to be a part of any opportunity that helps us better understand the concerns of our customers," Paul Hartwick, a spokesman for Chase Card Services, said in an e- mail. "We believe we can help the CFPB develop a robust process for capturing, cataloguing and analyzing complaints, questions and inquiries that come from American consumers and their families."

Leslie Sutton, a spokeswoman for Discover, and Leah Gerstner, a spokeswoman for American Express, said they welcomed the chance to work with the consumer bureau. Spokesmen for Bank of America and Capital One did not respond to requests for comment.

NHTSA Database

The history of another government complaint database, at the National Highway Transportation Safety Administration, shows industry concerns may eventually recede. Since 1966, the agency has collected reports of possible safety defects in automobiles. The database is public and searchable by model year and make on the agency's website.

"The only way you can persuade the agency to do an investigation and get a potential recall is if you show examples of the problem," Joan Claybrook, a former director of the agency, said in an interview.

Wade Newton, a spokesman for the Alliance of Automobile Manufacturers, said the companies have few complaints about the system.

"We compete on consumer satisfaction," Newton said in an interview. "The idea that we have a channel to get feedback from our customers is a good thing."

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Fayetteville Observer

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Military leaders oppose lender legislation May 07, 2011 06:41 AM By Paul Woolverton

Leaders at North Carolina's three largest military bases oppose legislation in the N.C. General Assembly that would raise fees and interest rates on installment loans, Col. Stephen J. Sicinski said Friday during a financial forum at Fort Bragg.

Sicinski said installment loan lenders lure naive young soldiers into high-interest debt.

Sicinski, the garrison commander at Fort Bragg, said he discussed the legislation with his counterparts at Camp Lejeune Marine base near Jacksonville and Seymour Johnson Air Force Base in Goldsboro "and all of us are in violent opposition of letting that bill pass."

The lenders are state regulated and want state law changed to allow them to make larger loans at higher prices. Industry officials have previously said they need to raise prices to keep their businesses viable. North Carolina last adjusted their rates in the early 1980s.

Sicinski made his comments at a forum to discuss ways to help military families avoid landing in expensive debt. The forum included other Fort Bragg leaders as well as U.S. Sen. Kay Hagan and Holly Petraeus. Petraeus is director of the newly created federal Office of Servicemember Affairs at the Consumer Financial Protection Bureau. She also is the wife of Army Gen. David Petraeus. Her agency was created to help the military with personal finance matters.

One reason a soldier needs to avoid heavy debt: His security clearance, Petraeus said. People with debts they can't pay are thought to be vulnerable to bribes, she said.

The forum included a question-and-answer session with about 40 soldiers and spouses who have encountered financial problems.

The military is concerned that some of its personnel, inexperienced and naive in handling personal finances, are lured by local and online businesses into buying expensive appliances, electronics, furniture and other items with high interest, high-fee loans.

Fort Bragg provides eight hours of training to teach soldiers how to responsibly handle money, said

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Lynn Olavarria, program manager of Fort Bragg's Financial Readiness Program.

The military also offers soldiers zero-interest, 12-month emergency assistance loans to help those who run short of money, she said. For larger, non-emergency purchases, the military suggests that soldiers shop around at banks, credit unions and other lenders for the best prices.

Army Spc. Eric Jackson said it's good that the Army has the training and other programs, and that leaders from Washington are taking an interest. He wishes there was more of a support system several years ago, when he racked up $25,000 in debt on things like cars, furniture, electronics and rent and landed in bankruptcy.

"When I came in, I didn't have anybody," he said. "My NCOs knew I was making the purchases, but they didn't talk to me, they didn't counsel me until after they got phone calls saying, 'Hey, this soldier's behind. Hey, we're going to evict him. Hey, he can't pay this, he can't pay that.' "

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Politico Morning Money Warren Recess Appointment May 13, 2011 5:26am By Ben White

WARREN RECESS APPOINTMENT? - We also hear that a recess appointment of Elizabeth Warren to head the CFPB now seems likely in August. One lobbyist told M.M. it looked like an August appointment was likely but we could all be speaking Chinese by then so who knows? ... Presumably he was referring to the Chinese taking over if we default on our debt. As a caveat: The Warren chatter all comes from people OUTSIDE the West Wing. So take it for what its worth.

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The Hill Name the latest congressional banking scandal May 12, 2011 02:59 PM ET By Bartlett Naylor

On May 5, 44 members of the United States Senate affixed their signatures to a letter to President Obama. The letter tells the president that he must not nominate Elizabeth Warren to head the new Consumer Financial Protection Bureau, and adds that if he wouldnt mind changing the agencys structure in ways that make it harder to get work done, theyd be happier still. And thus, the latest congressional banking scandal was born.

Background: When it approved the Dodd-Frank Wall Street Reform and Consumer Protection Act in July 2010, Congress obliged the Consumer Financial Protection Bureau with combating unfair, deceptive and abusive practices by the banking industry. Most experts agree that the housing bubble was fueled by unfair practices such as the so-called liar loans (where unsuspecting borrowers were encouraged to lie about their financial credentials so that mortgage companies and banks could earn big fees on the deals and then simply pass the bad mortgages to someone else). When the bubble burst, the world entered the worst global economic recession since the Great Depression. So it seemed a little consumer financial protection might be the least reform Congress could muster. But, as leaders such as Reps. Barney Frank (D-Mass.) and Brad Miller (D-N.C.) have sagely observed, it appears that unfair, deceptive and abusive practices may be essential to the modern American banking value proposition. The average length of a checking account contract: 111 pages. Thats according to a recent Pew Charitable Trusts study. Fine print is where muggers hide, and 111 pages is certainly a good deal of hiding ground. That kind of talk comes from a certain Ms. Elizabeth Warren. Shes a plain spoken woman raised in Oklahoma, (and thus ruled by common sense full disclosure: I m from plain speaking Idaho myself) who happens to be an acclaimed Harvard Law School professor. Shes been adding quite a bit about to her already formidable knowledge of banking in the last few years since she was appointed to head the Congressional Oversight Panel.

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Congress charged the COP (a common sense acronym) with diagnosing the causes of the financial meltdown. That took more than a year, much running around interviewing experts along with the average banking consumer (as in victim), reading several thousand pages of reports, holding numerous public forums and more. Ms. Warren learned about the muggers hiding in the fine details of checking account contracts, and the liar loans and much more. The efforts of the COP also built support for an important idea: a Consumer Financial Protection Bureau. And eventually, over the grumbles of conservative, pro-bank lawmakers, the CFPB became law. But just because a law is passed doesnt mean the lawmakers themselves (some of whom didnt vote for it) are obliged to play along with it. (We must correct our high school civics textbooks.) The opposing lawmakers can try to overturn the law. Thats currently being tried in the House, where pro-bank conservatives have deconstructed parts of the reform law and are moving bills repealing those sections. Or lawmakers can threaten to block Ms. Warrens nomination, which is the Senates approach. Holding up a nominee should be a scandal, but its not.

Finally, lawmakers can simply resort to bullying. Thats political assault. And assault is a felony in any state; a scandal. And it deserves a name, such as Watergate, or Teapot Dome. Recall the Keating Five. Thats where five senators (Don Riegle , Alan Cranston, Dennis DeConcini, John McCain and John Glenn) joined to intimidate the regulators from doing their job and closing Lincoln Savings & Loan, the iconic rogue thrift from the S&L crisis in the 1980s. Those senators who are living remain mighty ashamed of themselves for that.

Then theres the scandal called 13 Bankers, when then-Treasury Secretary Lawrence Summers angrily called a banking regulator named Brooksley Born with 13 bankers in the room with him to threaten her off reforming the derivatives market. If Ms. Born had succeeded, she might have steered the ship of America clear of the crash we just suffered. MIT economist Simon Johnson coined the term 13 Bankers for this scandal in his eponymous best-seller. Now we need a name for this latest scandal. We could call it 44 Senators, the Senate 44, or maybe something using Cinco de Mayo, since the letter was sent on May 5th. We could work with Sinko, maybe. Or perhaps Snowe Job: Sen. Olympia Snowe joined fellow Maine Republican Susan Collins and voted for the Dodd-Frank Act.

Why are they changing now? Contributions (banks do count #1 as their richest source of donors)? Party loyalty? Modern scandals often end in gate, after the Watergate scandal. Senategate? GOPGate? GOPSolongate? DoddFrankGate? Lest we think this scandal doesnt match the gravity of a Watergate or Teapot Dome, recall that bad banking law led to the crash and global economic depravity, a situation arguably far worse than a break -in of a political party office. Those 44 senators perpetuate the legacy of bank-bought legislation that caused our mess, and promises to stifle efforts to prevent another calamity. As with all blogs in The Hill, theres a comment section below my entry today. So please, help name the scandal! America needs short-hand for this depraved Washington dynamic. Bartlett Naylor is financial policy advocate for Public Citizens Congress Watch.

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Daily Kos Barney Frank: Recess appointment likely for CFPB job THU MAY 12, 2011 AT 07:45 PM PDT By Joan Carter

Republicans have made killing the Consumer Financial Protection Bureau a primary goal in their efforts to undo everything President Obama and Democrats managed to accomplish in the first two years of his term. To that end, Senate Republicans have vowed to filibuster any candidate for the CFPB unless the agency is gutted and made essentially powerless.

In the wake of that threat, Rep. Barney Frank, co-author of the Dodd-Frank Wall Street reform bill that became law last year, says it's likely President Obama will make a recess appointment to the Consumer Financial Protection Bureau.

Frank, speaking to reporters, said the announcement by the Republicans has freed President Barack Obama to ignore them and name a CFPB director during a Senate recess, which would avoid the difficult confirmation process. "I assume they will now make a recess appointment," he said.

A panel in the Republican-controlled House of Representatives last week approved a bill that would weaken the CFPB. Like much of the GOP's anti-Dodd-Frank agenda, the measure was expected to stall in the Democratic-controlled Senate, with Obama's veto pen looming in the background.

Warren has made tremendous inroads, particularly with community banks. Here's Roger Beverage, president of the Oklahoma Bankers Association, who was exceedingly skeptical of the idea of the bureau, and of Warren, admitting he "had this vision that she was akin to the Antichrist.".

Today, Beverage considers himself a Warren convert. He openly praises Warrenwho was appointed

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by the White House to get the bureau up and running but has not been nominated to head itsaying she is "far and away" the most qualified person to become the bureau's permanent director. "Ms. Warren has demonstrated that she is willing to work as hard as possible for the benefit of consumers, consumers' families, and community banks," Beverage says. "She would be an outstanding director, and I have encouraged both of our US senators to look past political rhetoric and look at what the woman has done." It's not just Beverage.

This week, Camden Fine, president and CEO of the influential Independent Community Bankers Association, told a gathering of 1,000 bankers that the odds Obama would nominate Warren were "better than even," later remarking to American Banker that "you would have to look favorably on a [Warren] nomination because clearly she understands our model." Frank Keating, the head of the American Bankers Association, told a reporter that the ABA would support Warren if she were confirmed as CFPB director by the Senate. And Robert Palmer, who heads the Community Bankers Association of Ohio, captured the mood of small banks when he told Bloomberg Businessweek that if Warren "leaves, and the direction changes, we're not going to be very receptive."

All of which suggests that even though Republicans and the Chamber of Commerce would shriek bloody murder should Obama recess appoint Warren, it wouldn't be a controversial move in the entire financial community. Given the popularity in the general public of a strong CFPB and of Warren, and the general desire of the base to see Obama fight on the important stuff, a recess appointment of Warren would be a smart move.

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Housing Wire House Financial Services Committee approves bills to reform CFPB May 12, 2011 10:27pm By Christine Ricciardi

The House Financial Services Committee approved three bills Friday that aim to change how and when the Consumer Financial Protection Bureau takes a leadership role in safeguarding consumers and enforcing financial regulations.

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If these bills pass the House floor, regulators likely will enter gridlock over the issue. Washington think tank MF Global believes it is unlikely legislation to reform the agency will pass in the Senate.

The CFPB is scheduled to launch July 21, as stipulated by the Dodd-Frank Act. But less than two months out, there is no nomination for director.

Representatives in favor of the bills said the CFPB is flawed in structure and needs reforming in order to function adequately in the U.S. economy.

"Rarely have I seen the creation of a bureau that I believe is more anti-consumer than the one created under the Dodd-Frank Act," said Rep. Jeb Hensarling (R-Texas). "You do not protect consumers by taking away their informed choices."

However, those in opposition of the movement to reform the CFPB claim it is the only agency that will truly protect consumers.

"The fact is that the CFPB is going to be wedged into regulators who are extremely jealous of jurisdiction," said Rep. George Miller (D-Calif.). "But other regulators didn't do squat to protect consumers and that's how we got in this situation."

Members from both the Treasury and the Federal Deposit Insurance Corp. have expressed support for the CFPB. FDIC Chairman Sheila Bair recently told community bankers that many community banks lost significant market share to mortgage originators who were not accountable to consumer protections.

"But we're gaining market share again now," Bair said. "That's what we need, and it will be an important value added."

"The CFPB implementation team is off to a very strong start," said Deputy Treasury Secretary Neal Wolin in testimony before the Senate Banking Committee, "making sure they're putting in rules that are clear and making sure they're adhered to by not only banks but nonbanking financial institutions."

Rep. Spencer Bachus (R-Ala.) introduced the Responsible Consumer Financial Protection Regulations Act of 2001 (H.R. 1121), which would establish a five-member commission to govern the CFPB instead of one director.

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The second bill was introduced by Rep. Sean Duffy (R-Wis.) and would make it easier for the Financial Stability Oversight Council to overturn rules made by the CFPB. It's called the Consumer Financial Protection Safety and Soundness Act or H.R. 1315.

The last bill, the Bureau of Consumer Financial Protection Transfer Clarification Act (H.R. 1667), introduced by Rep. Shelley Capito (R-W.V.), would delay the entire agency from operation until a director is confirmed by the Senate.

Consumers groups oppose the bills, as they believe the legislation threatens the agency's oversight and aims to weaken the CFPB.

Pamela Banks, senior policy counsel for Consumers Union, said the legislation undermines the CFPB's ability to rein in abusive financial practices such as hidden bank fees, shady loans and other financial ripoffs.

"Congress shouldn't put this new consumer watchdog on a short leash," Banks said with regard to the bills. "American families have already paid a steep price for years of lax federal oversight of abusive financial practices."

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New York Times Uncertain Leadership Strains Financial Overhaul May 12, 2011 By BINYAMIN APPELBAUM

WASHINGTON When federal financial regulators next gather to compare notes and coordinate plans, one of the requirements of a banking law intended to prevent the next financial crisis, 5 of the 10 seats at the table will most likely be empty or filled by caretakers.

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The Obama administration has not announced nominees for several positions that Congress created last summer, nor has it nominated new heads for three agencies, including for an imminent vacancy at the Federal Deposit Insurance Corporation.

As a result, temporary leaders tapped by the president increasingly are responsible for the vast overhaul of financial regulations, raising concerns that their decisions will prove more vulnerable to political pressure than permanent leaders insulated by Senate confirmation to a fixed term.

I look back on my last five years and all the tough decisions I had to make, and if Id been in an acting capacity, it would have been very inhibiting to me in making some of the tough decisions I had to do, Sheila C. Bair, who in early June will complete her term as chairwoman of the F.D.I.C., told the Senate Banking Committee on Thursday.

The vacancies have accumulated in part because Senate Republicans have blocked votes on nominees for a wide range of positions. The White House, in turn, has not rushed to add names to the list. In one case, it has temporarily circumvented the Senate by giving the Harvard professor Elizabeth Warren acting responsibility for a new agency focused on consumer financial protection.

The White House also appointed an acting director for the Federal Housing Finance Agency, which oversees the mortgage finance giants Fannie Mae and Freddie Mac. The agency has operated without a permanent head since August 2009. And since August, 2010, an acting director also has run the Office of the Comptroller of the Currency, which oversees most of the nations largest banks.

A new position on the Federal Reserve Board, vice chairman for supervision, has remained vacant since it was created last summer. So has a seat on the council of regulators designated for someone with insurance expertise.

Amy Brundage, a White House spokeswoman, said that President Obama would announce nominees for the positions as soon as possible.

The president is looking for strong, well-qualified candidates who can lead these institutions to protect American consumers and taxpayers, while ensuring the stability of an American economy emerging from the worst recession since the Great Depression, she said.

The White House soon plans to nominate a replacement for Ms. Bair at the F.D.I.C., according to people familiar with the matter who spoke on condition of anonymity because no plans had been publicly announced. The front-runner is Martin J. Gruenberg, currently the agencys vice chairman, who

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worked for years as a Democratic staff member on the Senate Banking Committee.

A decision also is close on a nominee for comptroller of the currency, those people said.

The lack of permanent leadership is a significant handicap, according to current and former regulators. It is fairly easy to keep doing the same things, but much harder to navigate unexpected difficulties or to consider new ideas.

And agencies are being asked to do both of those things as perhaps never before.

The sweeping overhaul of financial regulations passed into law last year requires agencies to write hundreds of rules, an unprecedented task, even as they grapple with the unfamiliar financial landscape left by the crisis.

John Walsh, the acting comptroller of the currency, said that Treasury Secretary Timothy F. Geithner had encouraged him to do the job as if it were, indeed, his job.

But the fact is that I have said to him and have said repeatedly that I do think its very important for independent supervisory agencies to have nominated and confirmed heads in place, Mr. Walsh said Thursday at the same Senate hearing. Its important for independence and for the perception of independence.

Senator Sherrod Brown, an Ohio Democrat, said Thursday that the absence of leadership was complicating the work of identifying systemically important financial firms that could pose a threat to the broader economy.

We need strong nominees who will not be afraid to take bold steps to prevent a new financial crisis, Mr. Brown said. Senators from both parties urged regulators at a hearing Thursday to offer more detailed criteria for designating such firms, which will be subject to stricter regulation.

Bank holding companies with more than $50 billion in assets automatically fall under the designation, according to the Dodd-Frank law approved last year. But there is no clear standard for selecting other kinds of financial firms like insurance companies, hedge funds and investment managers.

Proposals issued by regulators in January lacked the necessary specificity that we need to understand how this process is going to unfold, Senator Pat Toomey, a Pennsylvania Republican, said at the

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hearing. Senator Mark Warner, a Democrat from Virginia, agreed. Weve got to give some more clarity here, the sooner the better.

Regulators, racing against a January 2012 deadline to complete the work, told the committee that they agreed more details were necessary, and that they hoped to release a package of proposed rules this summer.

But Ben S. Bernanke, the Federal Reserve chairman, said regulators still would need to make subjective decisions in some cases.

I dont think we can provide an exact formula that will apply mechanically without any application of judgment, said Mr. Bernanke who played a leading role along with Mr. Geithner in the governments bailout of certain banks and financial institutions in 2008.

The difficulty of appointing regulators to make those decisions was underscored in December, when Senate Republicans blocked the nomination of Joseph A. Smith Jr., the commissioner of banking in North Carolina, to lead the housing finance agency.

We need a watchdog, not a lapdog, Senator Richard Shelby of Alabama, the ranking Republican on the banking committee, said in voting against the committees decision to send Mr. Smiths nomination to the Senate floor.

After losing that vote 10 to 6, Republicans refused to allow a vote on the nomination, and Mr. Smith, bowing to the inevitable, withdrew.

Last week, Senate Republicans went one step further, announcing in a letter to Mr. Obama that they would not consider any nominee to lead the new consumer protection agency until Democrats agreed to reduce the agencys powers by rewriting the Dodd-Frank law that created the agency last year.

We are simply asking the president to support common-sense reforms that provide the accountability absent in the current structure, Mr. Shelby said in a statement last week.

Tim Johnson, the chairman of the banking committee, a Democrat from South Dakota, said Thursday that he was increasingly concerned by the Republican position.

Not having strong individuals in place at the agencies as we continue to implement Dodd-Frank, he

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said, seems to me to be detrimental to our fragile economic recovery and financial stability.

Edward Wyatt contributed reporting from Washington.

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Reuters Regulators press on with Wall Street crackdown May 12, 2011 3:30pm EDT By Kevin Drawbaugh

(Reuters) - A broad crackdown on Wall Street is churning forward, even as regulators assured a Senate panel on Thursday they would seek more input on how to pick which financial institutions need stricter policing.

Members of a new inter-agency council on U.S. economic stability said they would extend their public comment period on how to choose important banks, insurers and hedge funds for heightened surveillance and tougher capital rules.

The concession by the Financial Stability Oversight Council came as a House of Representatives panel was expected to vote on Friday for weakening the consumer protection provisions of 2010's DoddFrank law and slowing down implementation of its new rules for derivatives markets.

The measures in the Republican-controlled House were not expected to advance in the Democraticcontrolled Senate.

Still, for investors, the conflict on Capitol Hill over the issue translates into uncertainty, particularly for big bank and insurance stocks, as the 2012 elections approach. If Republicans next year win control of the Senate or the White House, Dodd-Frank could be in jeopardy, analysts said.

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In the months ahead, "the real key is whether any Democrats push back against this tougher regulatory regime. The more Democratic pushback, the easier time Republicans will have in 2013 in rolling back parts of Dodd-Frank," said MF Global policy analyst Jaret Seiberg.

Few signs of erosion of Democratic support for Dodd-Frank were in evidence at the Senate Banking Committee hearing.

Democratic Senator Mark Warner urged the inter-agency risk group to explain as soon as possible its criteria for tagging some financial businesses as systemically important financial institutions, or SIFIs.

"We've got to give some more clarity here. The sooner the better," Warner said, adding regulators are causing unneeded stress by keeping firms in the dark.

FED'S BERNANKE

Federal Reserve Chairman Ben Bernanke told the senators that the Fed would press ahead with a parallel effort to set stricter capital, leverage and credit limit standards for big financial firms -- measures he said will reduce the chance that these complex firms will fail.

"To meet the January 2012 implementation deadline for these enhanced standards, we anticipate putting out a package of proposed rules for comment this summer," he said.

Bank holding companies with assets of $50 billion or more are automatically included as SIFIs. Wall Street giants such as Goldman Sachs and JPMorgan Chase will likely be swept in. Major insurance companies, hedge funds and other non-bank firms are trying to avoid the SIFI tag.

Republican Senator Richard Shelby said markets are nervous about the SIFI rules. "Firms are unsure which types of activities will cause them to be subject to systemic risk regulation. The burden is on our regulators to demonstrate that they know exactly what they are doing before they begin to implement this new form of regulation," he said.

With an uneven economic recovery under way, and a massive federal deficit problem looming, financial regulation is being tightened in the United States, and at a faster pace than parallel efforts in the European Union.

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U.S. agencies are steadily putting the sprawling Dodd-Frank legislation into practice, and analysts expect no major change in course, at least not for the next 18 months, despite resistance from Republicans and banking lobbyists.

BE TOUGH, BAIR URGES

Republicans see Dodd-Frank as a regulatory over-reach that will restrict credit and harm U.S. competitiveness. Democrats in turn defend the need to prevent the excessive risk-taking linked to the 2007-2009 financial crisis, setting the tone for a debate that will continue up to and beyond the 2012 presidential election.

Federal Deposit Insurance Corp Chairman Sheila Bair, who is stepping down in early July, told the Senate panel that regulators need to signal to the markets that unstable financial giants will not be bailed out, as they were in 2008.

She said the government must be tough on "living wills" that these financial firms must submit, and force them to change their organizational structures so they can be dismantled easily, if needed, in a financial crisis.

She said regulators should impose even higher capital charges on firms until their "living wills" are approved.

"Unless reversed, we could expect to see more concentration of market power in the hands of the largest institutions, more complexity in financial structures and relationships, more risk-taking at the expense of the public, and, in due time, another financial crisis," Bair said.

In the House, the Financial Services Committee was expected to vote on Friday to approve two bills: one to weaken a financial consumer watchdog body being set up under Dodd-Frank; another to delay new derivatives regulation. The Commodity Futures Trading Commission recently said it was reopening the comment period for most of the rules it has already proposed for as much as 30 days.

House Republicans are backing a bill to curb the power and independence of the new, Dodd-Frankmandated Consumer Financial Protection Bureau (CFPB). It is set to open its doors in July to protect consumers from abusive mortgages and credit cards.

Like much of the Republican anti-Dodd-Frank agenda, the CFPB bill is expected to stall in the

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Democratic-controlled Senate, with President Barack Obama's veto pen a huge hurdle.

"Opponents of reform are just trying to cripple an agency they never supported in the first place," said Pamela Banks, senior policy counsel for Consumers Union, an advocacy group.

(Additional reporting by Sarah N. Lynch, Rachelle Younglai, Dave Clarke and Pedro da Costa. Writing by Kevin Drawbaugh; Editing by Tim Dobbyn)

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Huffington Post Dear GOP: We Don't Negotiate With Hostage Takers May 12, 2011 9:42am Rep. Carolyn Maloney

Last week, 44 Republican Senators signed a letter to President Obama declaring that they will refuse to confirm anyone as a director of the new Consumer Financial Protection Bureau (CFPB) "absent structural changes that will make the Bureau accountable to the American people."

The changes they propose -- which match legislation being considered today by the full House Financial Services Committee-- would cripple the bureau and slow the reforms necessary to help avoid another financial crisis.

In other words, Senate Republicans have the CFPB, and if we ever want to see it alive, we have to meet their demands.

My good friend and colleague Barney Frank called this "the worst abuse of the confirmation process I've ever seen" and I couldn't agree more.

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The CFPB was created to fill a huge gap in federal regulation: there is no entity in the federal government whose sole purpose and function is consumer financial protection -- consumers have been an afterthought. Which explains how predatory mortgage lending, abusive credit card practices, and anti-competitive policies came to be so widespread and so destructive in the run-up to the financial crisis.

Opponents of the CFPB have couched their proposals in some rather fine-sounding language about "improving" the bureau -- which opens its doors in July, and thus has yet to expose many flaws in practice.

If Republican proposals are translated into plain English, you can get the real picture of what they want....

1). The GOP Senators' letter says: Replace the single director with a five-member bipartisan board to oversee the Bureau.

Translation: Let's do everything we can to slow down reform by having the CFPB run by a committee, with each committee member to be confirmed by the Senate (where, as we've seen, any Senator can stall any action!) .

2). The GOP says: Subject the Bureau to the Congressional appropriations process (instead of funding through the Federal Reserve as is now law).

Translation: Let's politicize the process so that the mission of the bureau will always be subject to the influence of opponents and the special interests -- as Republican efforts this year to under-fund the SEC and the CFTC in the appropriations process demonstrate.

3). The GOP says: Establish "safety and soundness" as a criteria for review of CFPB rules.

Translation: Let's add another bottleneck, and use it as a way to stop block common-sense consumer protections. (And this is coming from those who complain about too much government bureaucracy!)

This bald-faced attempt by Republicans to derail the CFPB, mere weeks before it is to open its doors, is quite remarkable.

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President Obama should respond by nominating who has always been the single best choice as director, Elizabeth Warren. It's the most reasonable response to Republican abdication of their "advise and consent" function.

Even as a recess appointment, which is limited to one year's tenure, I have no doubt Professor Warren will be able to accomplish more in that year than anyone else. After all, the CFPB was her idea.

And Senate Republicans? They will have brought about real consumer protections as a result of their trying to derail the CFPB.

The phrase Shakespeare might have used for this ironic twist on the end result of their letter? The GOP will have been hoist on their own petard.

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The Hill Overnight Money May 12, 2011 6:33pm By Bernie Becker, Peter Schroeder, Erik Wasson and Vicki Needham

The committee [The House Financial Services Committee] also saw their Thursday markup of five bills four of which would delay or otherwise alter the Dodd-Frank financial reform law run long, and final votes on the bills are now scheduled for Friday morning. The Consumer Financial Protection Bureau and derivatives will be among the issues dealt with in the measures.

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Back to Top

Wall Street Journal Fed Proposes New Rules on Foreign Remittances MAY 12, 2011, 4:25 P.M. ET By MAYA JACKSON RANDALL

WASHINGTONThe Federal Reserve on Thursday proposed new rules aimed at protecting consumers who send money to relatives in countries in the Caribbean, Latin America and elsewhere.

The proposed regulations, which are expected to be finalized by the new U.S. consumer watchdog agency, would implement provisions of the Dodd-Frank financial overhaul Congress passed last summer that require that remittance transfer providers such as Western Union Co. and MoneyGram International Inc. disclose information about fees, the applicable exchange rate and the amount of currency to be received by the recipient.

This summer, the Consumer Financial Protection Bureau is set to inherit consumer-protection powers from the Fed and other regulatory agencies, and as part of that transfer, the bureau is expected to take over work on remittance transfers. It also will have broad authority to write new rules and supervise financial firms.

Consumer and public-interest groups have voiced concern about immigrants and other consumers having to pay excessive fees to send money abroad. They also have argued that the fees aren't adequately disclosed.

The remittance market is "the wild west of consumer products," said Janis Bowdler, director of the wealth-building policy project at the National Council of La Raza, a Hispanic civil-rights and advocacy organization.

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Ms. Bowdler believes the final regulations will be "very valuable for consumers" because they will mandate "common sense" practices so that immigrants won't get hoodwinked by companies. Ms. Bowdler says many consumers who send money abroad are low-income immigrant workers who speak English as a second language, and they are vulnerable to fraudulent practices.

The Fed on Thursday said "many consumers currently do not receive written information about their remittance transaction until after payment is tendered" and that "there is inconsistency in the type of information disclosed by different providers."

Under the proposed rules, remittance-transfer providers would need to provide prepayment disclosures that include information about the money transfer such as the exchange rate, applicable fees and taxes, and the amount to be received by the recipient.

Also, the proposal calls for the disclosures to be provided in English and in each of the foreign languages the remittance-transfer provider uses to market its services.

Comments on the proposal are due by July 20.

The World Bank estimates that the total volume of remittance transfers to developing countries reached $325 billion last year and that the U.S. is the largest remittance-sending country in the world. A majority of remittances from the U.S. are sent to the Caribbean and Latin America, the Fed notes.

White House adviser Elizabeth Warren has signaled that the consumer bureau will be aiming to ensure that prices and fees are made clear to consumers looking to send cash across the border.

"There's a lot of money moving in remittances, and we believe if we can make that a more competitive market, a more transparent market, a fairer market for families, some of that money is going to stay with the families instead of draining off to other institutions," she said at an October news conference.

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The Hill GOP moves forward bills checking Consumer Bureau May 13, 2011 10:01am By Peter Schroeder House Republicans on Friday advanced three bills that would remake the new Consumer Financial Protection Bureau (CFPB). However, consideration of another bill aimed at slowing the Dodd-Frank financial reform law has been postponed until May 24, when the House returns from a weeklong break. The House Financial Services Committee voted largely along party lines to move the bills forward for full consideration by the House. The approval marks the latest step in a long and public fight between Democrats and Republicans over the CFPB, which was created as part of the Dodd-Frank financial reform law and is scheduled to begin work in July. Republicans contend that their measures are intended to establish better checks on the outsized power of the agency. However, Democrats argue they are attempts to handcuff the agency before it even begins regulating consumer financial products. One of the bills approved would replace the top of the agency with a five-member, bipartisan commission, as opposed to a single director. Such a structure was originally included in the version of Dodd-Frank approved by the House, but the bureau's framework was changed when the bill reached the conference committee. A second bill would make it easier for other financial regulators to overrule the CFPB on its regulations, while a third would limit the work the bureau can engage in if a director has not been nominated by the president and confirmed by the Senate. Nearly every Senate Republican announced earlier this month that they would be blocking any nominee to head the CFPB unless several changes were made to its structure. The lawmakers are asking for the director position to be replaced by a multiperson board and want to make it easier for other regulators to block CFPB rules. They also want the bureau's budget to be brought under the congressional appropriations process. Lawmakers on Financial Services originally planned to vote on a bill that would delay the implementation of new rules on financial derivatives for 18 months, but a prolonged debate during a markup Thursday pushed consideration of that bill back. The panel will take up that measure when it returns from the weeklong break. Also on Friday, members approved a bill that would reform the National Flood Insurance Program. Back to Top

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Wall Street Journal Regulators Testify Against Debit-Fee Rule MAY 12, 2011, 7:06 P.M. ET By Victoria McGrane

Top U.S. financial regulators on Thursday threw more fuel on the raging debate over a controversial Federal Reserve Board rule capping debit-card fees, testifying that they still believe small banks could be hurt by the new limits despite efforts to shield them.

The strongest ammunition for those who are seeking to delay the debit-fee rule came from the Fed chairman himself, whose board has been charged by Congress in last year's financial-overhaul law with writing a rule capping debit-card fees.

Fed Chairman Ben Bernanke told senators at a hearing that "we're still not sure" whether the exemption for small banks that Congress included in the law will work. Mr. Bernanke added that while he couldn't make a hard-and-fast determination, he believes that "there is good reason to be concerned about it."

And if the carve-out for banks and credit unions with less than $10 billion in assets fails to effectively shield those institutions, the debit-fee rule would reduce the revenue of small banks "and it could result in some smaller banks being less profitable or even failing," Mr. Bernanke said.

Congress included in the financial-overhaul law, known as Dodd-Frank, a mandate that the Fed limit the "swipe fees" banks charge merchants every time a customer uses a debit card to pay for a purchase. The Fed released a draft rule in December that capped the fees that banks can charge at 12 cents a transaction, well below the average 44 cents per transaction banks charge now. The final rule is expected to be somewhat different as many Fed officials seemed unhappy with the draft, but the law is fairly prescriptive and gives the central bank very little flexibility in how they craft the fee limit, experts say.

But small banks and credit unions opposed the measure, despite the carve-out, and have mounted an intense lobbying campaign seeking repeal or delay of the rule.

That effort, backed by the big banks that stand to lose billions of dollars in fees, has gained traction, with lawmakers introducing bills in both chambers to delay the rule and further study its potential impact

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on small banks and consumers. The delay effort faces tough odds in the Senate, however, since the No. 2 Democrat thereRichard Durbin of Illinoisis the prime champion of the swipe fee rule.

Retailers, who lobbied Congress for years to limit debit card fees, argue that the current fee system isn't competitive and hurts consumers by driving up the cost of goods and services.

In an interview Thursday, Sen. Jon Tester, (D., Mont.) the author of the Senate delay bill said he has the votes to pass it if he can attach it to another bill. "I'm very confident that we're going to get a vote; we've just got to find a vehicle. And, who knows?" Mr. Tester said, adding that to work the vehicle has to be a bill that can pass the Senate. "If we get a vote, it will pass," he said.

The Fed was due to release a final rule implementing the "swipe fee" limits on April 21 but was forced to delay it as officials waded through more than 11,000 comments. Mr. Bernanke has said the central bank will not miss the July 21 deadline for the rule to take effect, which adds urgency to the delay supporters' mission.

Banks say the proposed cap wouldn't allow them to cover what debit cards cost them and that it would lead them to offer fewer products and charge consumers higher account fees. Small institutions say they are less able to make up for the lost revenue than larger competitors.

Mr. Tester said the debit-fee provision, as currently proposed, would drive business away from community banks and reduce access to financial services in some communities. "And it's going to further consolidate banking to the big boys. This is just bad, bad, bad policy."

Retailers sought to downplay regulators' statements, pointing to Mr. Bernanke's remark that the Fed has "plenty of information" with which to write the rule.

"Chairman Bernanke's comments confirm that Congress shouldn't insert politics or prejudge the thorough fact-based process the Federal Reserve has conducted," said Doug Kantor, counsel to the Merchants Payments Coalition. He said merchants have said they will honor the small-bank exemption.

Federal Deposit Insurance Corp. Chairman Sheila Bair also reiterated her concerns that the small-bank exemption won't work in practice. She said she believes the Fed should mandate that card networks such as those run by Visa and MasterCard accept a two-tier pricing system, which could help enforce the exemption. "If their view is that there's no legal authority to require that, it does become even more problematic," she said.

Getting hit with the fee cap wouldn't push small banks to failure, Ms. Bair said, "but clearly it would

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stress them. And if there are other challenges confronting community banking sector, it's probably something they don't need to be dealing with now."

Luca Di Leo contributed to this article.

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Smartmoney.com Bank Fees Attack: The Sequel MAY 12, 2011, 9:33 P.M. ET By Annamaria Andriotis

After the financial sector imploded, Congress passed sweeping legislation designed to protect consumers from egregious bank charges. And yet, just a few years later, consumers are paying more for checking accounts, getting less for their debit card purchases and, some say, signing up for expensive "protection" programs just to stop a torrent of bank solicitations.

When reform legislation was being discussed, banks warned they would find ways to make up for lost revenue. And they have. Last year, the number of free checking accounts dropped for the first time in recent history, according to a 2010 Bankrate.com study. The price of an interest-bearing checking account has gone up 21% since 2006. Meanwhile, rewards for debit-card users are dwindling, and a recent report by the Center for Responsible Lending accused banks of aggressively pushing pricey overdraft protection programs on consumers. "They're testing to see how elastic our wallets are," says John Ulzheimer, president of consumer education at SmartCredit.com, a credit-monitoring site.

Banks rarely deny that most of the new fees are a response to the new regulations. "We've looked at the impact of the changing economic and regulatory environment we're in today and we've made changes as necessary," says a spokeswoman for Wells Fargo. A Chase spokesman says the bank is cutting its debit cards rewards "as a result of Durbin," referring to the Durbin amendment to the financial reform bill, which limits how much banks can charge retailers when shoppers swipe a debit card. As a result, the spokesman says, the bank will lose $1.3 billion in annual revenue: "Therefore we can't afford to pay rewards."

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Already the government has worked to close some of the loopholes banks have found. In the wake of the CARD Act, which limited credit card interest rate increases and the total fees card companies can charge among other things, banks tested the new limits with new, potentially lucrative promotional strategies and processing fees. Regulators cried foul, and as of October, those moves will become offlimits too.

But some of these fees may be here for a while and tough to avoid, experts say. They primarily target checking accounts the most basic staple of household banking, held by some 90% of American households, according to the Pew Health Group.

In particular, critics are upset about the latest campaign to encourage consumers to sign up for overdraft protection. Prior to the Federal Reserve regulation on overdrafts, which went into effect in August, banks charged checking account-holders a fee of about $35 on average each time a debit-card purchase exceeded their checking-account balance. The new laws require customers to actively choose that kind of protection for debit cards, but critics say banks have been pushing it so aggressively that a healthy number of consumers have opted in simply to stop the advertising onslaught.

"They encouraged customers to sign up for the highest cost overdraft coverage," says Rebecca Borne, senior policy counsel at the Center for Responsible Lending based on a study the center conducted last month. Borne says that includes signing up for traditional overdraft or linking their checking accounts or to a savings account and in some cases to a credit card or a line of credit with the bank. Customers are charged a fee usually around $10 to $12.50 -- per day when they need to dip into those accounts. The banks, however, say they're offering their customers options.

Checking account and ATM fees are also still rising. At the end of May, Bank of America will raise its monthly maintenance fee on its "MyAccess" checking account from $8.95 to $12 for account holders who fall below an average balance of $1,500 or don't make direct deposits each statement period. A spokeswoman for the bank says it's added more benefits to the account, including text and mobile banking and deposit alerts.

And in some cases, consumers now have to pay extra for withdrawing their money at ATMs. In March, TD Bank ended its free-ATM policy; now some customers will pay $2 to use an ATM outside the network. That's partly because there are more ATMs now than there were a few years ago when TD Bank started expanding in the U.S., says Ryan Bailey, head of deposit products at TD Bank. During the same month, Chase charged noncustomers up to $5 to use a Chase ATMs in certain states. The bank, which says it was testing new fees, has since reverted to a $3 fee.

For debit card users, there are more changes to come. Already rewards are less generous than they once were, with more cuts on the way. Now some banks are considering capping the dollar amount consumers can swipe their debit cards for. Chase says it's considering a maximum of $50 or $100 per transaction. That's partly because Chase, like other banks, expects to make less money from debit

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cards, but they're expecting to face the same costs from stolen cards. "The risk of fraud goes up as the dollar amount goes up," a Chase spokesman says. "The amount of revenue for that transaction stays flat." Citi says it is evaluating potential changes as well.

Still, even as banking gets more expensive, consumers have many more protections now than they did pre recession, says Odysseas Papadimitriou, chief executive at CardHub.com. "Are consumers at a much, much better place now than they were prior to these rules? Absolutely," he says. But it does mean staying firm with the bank against overdraft opt-ins and reconsidering bank accounts. With interest rates low and fees rising, consumers who prefer not to stash a lot of money in their checking account might want to stick with non-interest accounts that on average require a couple-hundred-dollar balance as opposed to thousands of dollars in order to not incur a fee.

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American Banker Don't Show Legal May 13, 2011 By Jeff Horwitz and Matthew Monks and Sara Lepro

When it comes to opacity and obfuscation, JPMorgan Chase & Co.'s credit card notices can no longer compete with New Jersey election ballots and car seat installation instructions.

JPMorgan Chase, which last year was named and shamed by the Center for Plain Language for completely unparseable communications with its customers, apparently took the matter to heart. The bank brought in outside consultants to revise the notices and test the result.

The new ones were good enough for the center, a small nonprofit in the suburbs of Washington, to award JPMorgan Chase with a "TurnAround Award." The company's membership agreement, the center said, "has a higher likelihood of being read."

JPMorgan Chase's improvement leaves the rest of the financial services industry with a model to aspire

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to, the center said. But as even plain-language advocates acknowledge, consistently transparent and simple wording in the credit card industry is still a long way off.

"The regulations are dense, conditions are complicated and the amount of information that has to be included is enormous," said Deborah Bosley, a member of the center's board and associate professor at the University of North Carolina, Charlotte.

Complicating matters even further, she said, is the role of attorneys in drafting the statements.

"That makes it even more challenging to end up with a clear, concise document," Bosley said.

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The Hill Happy anniversary, swipe fee reform May 13, 2011 By Robert Shapiro

After repeated calls for reform of credit and debit card swipe fees, and considerable study of the problem, Congress last year finally enacted a new law to authorize the Federal Reserve to apply reasonable limits to the fees that the big card networks and the big banks that issue most cards can charge merchants for debit card transactions. The president signed this legislation part of the DoddFrank Act into law exactly one year ago today.

In the 12 months that have followed, the credit card companies and the big banks have mounted an aggressive counterattack. Their TV ads threaten bank customers with new and higher fees, and warn members of Congress that last years reforms were precipitous.

With the new Fed rules regulating debit card swipe fees scheduled to take effect this summer, the card companies and banks are pressing new legislation to delay the changes. If Congress, yet again, is unable to say No to big finance, the new safeguards will never take effect and all American

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consumers will pay the price every time they shop.

When Congress finally took action last year to rein in these fees, they were fixing a very-broken market. Well over half of all retail transactions now involve plastic, and consumers and merchants certainly should bear the actual costs of credit and debit card transactions, plus reasonable profits for the card companies and banks.

But studies have found that those costs come to well under 20 percent of the fees added to every payment with plastic. And the costs associated with debit card transactions are even less: A recent survey by the Fed found that the average debit card swipe fee charged to retailers is 44 cents, while the actual cost of processing the transaction is 4 cents.

The rest of these swipe fees go to attract more customers for the cards because the real profits come from late-payment penalties and interest charges plus very generous immediate profits for the card companies and the large card-issuing banks. Last year, American consumers and businesses spent $48 billion on those swipe fees, with than $10 billion going to cover the systems actual transaction and processing costs. While market competition usually drives prices towards actual costs down, plus reasonable profits, the credit card companies and banks have put together cartel-like arrangements that have sidelined normal market dynamics. Three card companies Visa, MasterCard and American Express account for some 80 percent of cards. They recruit banks to their networks by promising them the major cut of the average 2 percent swipe fees added to every card transaction. The banks then use of big slice of the fees they collect to attract new, well-to-do subscribers with reward program financed through these fees. And theres nothing that merchants or consumers can do to affect those fees. Merchants cant refuse the credit cards of the three dominant players without sacrificing their livelihoods. Moreover, consumers cant put market pressure on the card companies and the banks by refusing to use high-fee cards, because those card companies and banks threaten that any merchant who tries to charge less for noncard purchases will be excommunicated from the network.

Since merchants cant charge different prices based on their actual costs, much of those costs are simply passed along to everyone, whether or not they use a card. In a study completed last year, I found that almost $27 billion in swipe-fee costs were passed on to consumers through higher prices in 2010. That comes to $230 per household at a time when most Americans are struggling with stalled incomes and shrinking home equity. Moreover, less than half of lower and moderate income families use these cards; yet they have to pay the higher prices along with everyone else, in order to the rewards programs for much more affluent Americans. If the high swipe fees were limited to the system's actual transaction and processing costs, plus normal profits -- as the Feds proposed rule will require --the savings for consumers alone would support the creation of nearly 250,000 new jobs. If legislation to delay the new Fed rules is enacted, three big credit card companies and four big banks will continue to set their own rules; and the economic unfairness and waste will continue. As Congress considers their case for ever-higher profits, one hopes they will also consider the cost in jobs and higher prices for average Americans.

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Robert Shapiro, chairman of Sonecon, LLC, is author of an economic study on swipe fees supported by Consumers for Competitive Choice. He has served as principal economic advisor to Bill Clinton in his 1991-1992 campaign, Under Secretary of Commerce for Economic Affairs for President Clinton, and an economic advisor to the Obama campaign and presidential transition.

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Wall Street Journal Payday Loan Executive: We're Ready For New US Federal Scrutiny MAY 13, 2011, 10:37 A.M. ET By Maya Jackson Randall

WASHINGTON (Dow Jones)--Consumer groups have long criticized payday loans, and are expecting the new U.S. consumer watchdog agency to crack down on the expensive products they believe suck struggling consumers into dangerous debt traps.

But at least one payday loan industry executive says he's ready for new U.S. federal scrutiny and he's hopeful his company will thrive under the new regime.

In an interview this week, Advance America Cash Advance Centers, Inc. (AEA) Chairman William Webster said he thinks his company stands to benefit from the Consumer Financial Protection Bureau, which Congress created last summer to write and enforce consumer protection laws and root out fraudulent financial practices.

Although the financial industry largely opposed the creation of the new consumer bureau, Webster had positive things to say about the agency and its chief architect, Elizabeth Warren, whom the president could tap to spearhead it.

"Thus far, from what we've heard from professor Warren, she's focused on issues we think are critical-transparency, disclosure, fairness, making sure customers can compare products in a simple way and

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also treating similar banking products similarly," he said.

Webster would prefer that the consumer bureau have a commission at its helm rather than a single director. But if the president were to nominate Warren to spearhead the agency, "I'd expect her to be a good director," said Webster, one of the company's co-founders. "Elizabeth Warren's credentials and the kind of experiences she's had in her life...give her an understanding of the issues working middle class families face."

Advance America has more than 2,000 stores in 30 states. But like many payday loan providers, it has been facing new restrictions as more states decide to limit interest rates on the loans.

At the same time, state regulation has led to greater disclosure of the company's prices, said Webster. He said his company is required to disclose fees and the annual percentage rate to customers that obtain payday loans, which typically provide cash-crunched consumers a few hundred dollars until their next paycheck. He also noted that the company is subject to Securities and Exchange Commission disclosure requirements.

"Our quarterly filings must be 150 pages long," he said. "I'm not sure there's a single factor about our business that's undisclosed."

But Webster said not all small dollar credit products are as transparent, and he wants the new consumer agency to level the playing field so that various short-term credit products such as overdraft loans offered by banks and payday loans offered over the Internet all face the same kind of federal oversight.

"The first casualty will be and should be unregulated Internet lending," he said. "Every element is wholly unregulated."

Consumer groups agree that Internet payday loans and overdraft loans pose problems for consumers.

In a letter to lawmakers Wednesday, a coalition of consumer groups including Consumer Federation of America, the Center for Responsible Lending and the National Consumer Law Center, raised concerns about payday lenders that seek to skirt state interest rate caps by offering loans online. When consumers supply their Social Security numbers and bank account numbers online, the information is easier to steal, the groups said in the letter. They also said "complaints about unauthorized withdrawals from accounts, coercive collection tactics and inability to stop withdrawals from bank accounts are common."

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However, that doesn't mean consumer advocates think payday loans offered at stores are any better.

"All payday lending, we think, is dangerous," said National Consumer Law Center managing attorney Lauren Saunders. "But Internet payday lending has special dangers above and beyond the brick and mortar lenders."

Warren, who could become the agency's first director, has also raised concerns about payday loans. In written testimony to the House Financial Services Committee in 2009, Warren highlighted a survey that found that payday loan customers are aware of finance charges but often unaware of annual percentage rates. And in her 2008 "Making Credit Safer" article in Harvard Magazine, Warren accused a lender of trying to hide a 485.450% interest rate.

Many consumer advocates argue that payday loan interest rates should be capped at 36%, just as they are for military families.

But Webster says such a move would kill the industry.

"A 36% rate, and the consumer advocates know this, is not regulation; it's prohibition," he said.

In addition, Webster argued that payday loans are not aimed at trapping consumers.

"That's just unequivocally wrong," said Webster. "We disclose to the consumer at the point of sale and on their financial contract that if they can't pay us back in two weeks, they have a unilateral right to modification."

It's unclear how the consumer bureau, set to launch on July 21 as a new financial markets cop, will address payday loans. The agency cannot cap rates as many states are doing, but it does have authority to prevent "abusive" financial practices, a power that is somewhat concerning to Webster.

"Abusive is not a defined term and what is abusive to somebody may not be abusive to somebody else. Theoretically, anybody would be concerned about that as a benchmark," he said. "But having said that, if all financial products...are all evaluated based on the same criteria, we think it would give definition to what abusive really is."

But Saunders of the National Consumer Law Center disagrees and predicts significant changes in the payday lending industry.

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"It is true that a public-traded company can be at an advantage compared to one that doesn't have to reveal as much about their operations," said Saunders. "We don't think any payday loan the way they're currently structured can really stand the light of day. And when the true cost and risks of those are made apparent, we think they're all going to have to change."

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Housing Wire New York foreclosure courts face seven-year backlog: RealtyTrac May 12th, 2011, 3:19 pm By Jon Prior

At the rate the New York court systems are currently working through the backlog of foreclosure cases, it will take more than seven years to clear, according to RealtyTrac.

New York is a judicial state, whereby foreclosures are completed through the court system. But as cases mounted, the state developed the largest foreclosure timeline in the country. It currently takes an average of 900 days for a foreclosure to wind through the New York system, according to RealtyTrac, which maintains a count of filings at the county level.

At the end of April, New York held an inventory of 39,000 properties that received the initial foreclosure notice or had been scheduled for auction but remain unsold. Daren Blomquist, the editor of the RealtyTrac's monthly reports, said there is some estimation involved because the firm doesn't automatically remove a property from the active inventory if there has been no update or sale within a certain number of days.

New York averaged 314 scheduled auctions and 224 repossessions to REO per month so far in 2011. That's down from roughly 700 auctions and 520 REO each month last year. Assuming only half of the 39,000 ends up being foreclosed and the rate of repossession holds, it would take 87 months to clear this inventory, Blomquist said.

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One California investor said New York is of particular interest because investors like him usually hold the note on the loan and are waiting for the property to move through foreclosure before they can resell.

"So, looking at the rate at which these loans are moving through the system, it could take years to work through the backlog," according to the investor, who preferred not to be named.

In the meantime, however, home prices in extended-timeline areas aren't seeing the negative effects other states with quicker timelines are experiencing.

"One of the biggest drivers pressing prices down right now are distressed properties, and they are not clearing through the system in New York," the investor said. "That's why you haven't seen home prices fall all that much compared to other states."

Foreclosure timelines in Florida quadrupled in the first quarter. In the Sunshine State, it takes an average 679 days to complete a foreclosure in the judiciary process, up from 169 days one year ago. But one circuit court in Florida implemented a quicker system to move loans through the system. However, complaints and efforts to block the "rocket docket" arose in April.

New York, on the other hand, implemented new rules giving homeowners more protections in February, which may further delay not only the process but a recovery.

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New York Times Financing Foreclosed Homes May 12, 2011 By Maryann Haggerty

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FORECLOSED homes dont show very well financially strained borrowers may ignore maintenance; lenders turn off the water and power to cut the cost of letting the place sit. A poor appearance can complicate financing, but it doesnt prevent sales.

Most of what people call foreclosed homes are being sold by lenders saddled with a property because there were no other takers at the foreclosure auction. The borrower on such a house owes more on it than the house is worth. These are known as R.E.O. houses, short for real estate owned on a banks balance sheet.

Distressed properties those sold at a discount made up 40 percent of resales in March, up from 35 percent a year earlier, according to the National Association of Realtors. (That includes not only R.E. O. but also short sales, in which a buyer pays less than the loan balance, once it gets the banks blessing.) Though not a record, it is a huge portion of sales compared with what used to be considered normal.

Where the money comes from depends on the buyer and the property. If a house was in relatively good physical shape with water and power turned on it could be eligible for standard financing.

Otherwise, right now, all-cash sales are at their highest level ever 35 percent of total sales, according to the Realtors. Cash buyers, often investors who dont plan to live in the home, are a major player in the R.E.O. market, said Tom McGiveron of Realty Connect in Hauppauge, N.Y., a real estate agent who specializes in foreclosures on Long Island. Asset managers want to move their portfolios as fast as possible, he added.

For would-be owner-occupants without cash, the federally insured 203(k) loan is key, said Mark Yecies, the president of SunQuest Funding in Cranford, N.J. Borrowers can roll projected rehab costs into the loan.

As Mr. McGiveron put it, Since most R.E.O.s are as is, and the heat, plumbing and electric are turned off frequently, a 203(k) loan is necessary to cover the borrower and the lender a lender will not lend money on a home where the major heating and electrical systems are not operable.

Buyers generally hire an independent consultant certified by the Federal Housing Administration to review contractor cost estimates and architectural plans for things like whether the work will bring the property up to minimum standards while not going overboard on improvements.

In other words, Mr. Yecies said, if youre buying a home in Newark and you want to put in a Viking range, its not going to happen.

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Yet in a higher-priced neighborhood like Short Hills, N.J., he added, you probably would be able to borrow for more upscale appliances. The F.H.A. appraiser takes the consultants report into account when reviewing a property and determining how big the loan can be.

Not all R.E.O. properties are eligible, Mr. Yecies pointed out. For instance, a partially built house that has never had a certificate of occupancy requires a construction loan of the kind that a commercial developer would use.

Mr. Yecies estimated that an F.H.A-certified consultant would cost $500 to $1,200, depending on the extent of the repairs and the number of units in a property.

The interest rate on a 203(k) loan is about a quarter of a percentage point higher than on a standard F. H.A.-insured loan, and a buyer also can expect to pay 1 or 2 points, he said. (A point is an upfront charge equivalent to 1 percent of the loan amount.)

As with other F.H.A.-backed loans, down payments may be as low as 3.5 percent, and loan limits apply. Currently, most F.H.A. loans in the area are capped at $729,750. (Energy-efficient rehabs may be eligible for more.)

Despite the extra steps, these loans work, Mr. Yecies said. Were doing a half dozen a month here, he said. They can be done in a normal period of time, as long as everyone cooperates.

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American Banker Lawmakers Start Push for Uniform Mortgage Servicing Standards May 13, 2011 By Joe Adler

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WASHINGTON With federal and state officials still in talks with the top five mortgage servicers over lapses in the foreclosure process, lawmakers from both political parties introduced a bill Thursday that would establish national servicing standards.

Prior to a Senate Banking subcommittee hearing on the issue, Sens. Jeff Merkley, D-Ore., and Olympia Snowe, R-Maine, released legislation that would force lenders to assign a single point of contact for troubled borrowers and prohibit servicers from pursuing a foreclosure and modification at the same time.

"Families are rejected for modification because their payments aren't current after being told to stop making their payments so they will qualify," Merkley said. "Families have to tell their stories again and again to different people at the servicing company. Families get foreclosed upon while they are still negotiating a loan modification. This legislation will put these bad practices to an end."

The bill would also require an independent, third-party review of a foreclosure decision before it became effective.

"I am deeply troubled a myriad of foreclosures nationwide have occurred as a result of confusing communications with loan servicers and misfiled or flawed paperwork," Snowe, who does not sit on the Banking Committee, said in a press release. "What is deeply troubling is a number of homeowners throughout Maine, and across the nation, have gone into foreclosure in spite of their best efforts to obtain loan modifications for which they could be eligible."

But it was unclear whether the legislation would have sufficient support. While the two senators, in announcing the bill, cited eight co-sponsors, Snowe was the only Republican on the list.

During the hearing by the Senate Banking housing subcommittee, Sen. Robert Menendez, D-N.J., said it was clear some kind of mortgage servicing standards are needed.

"There seems to be increasing consensus that at least some kind of national mortgage servicing standards are warranted, and I believe if they are done in the right way, they can actually make mortgage servicers' jobs easier too," he said.

While witnesses at the hearing agreed on the need for more uniform standards, they were farther apart on how to craft them.

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David Stevens, the chief executive of the Mortgage Bankers Association, who formerly led the Federal Housing Administration, said that uniform standards would "be beneficial to streamline and eliminate overlapping requirements."

But he said that policymakers should be mindful of the potential for unintended consequences. The MBA opposes both a single point of contact and eliminating dual-track proceedings, Stevens said.

"In moving toward national servicing standards, policymakers must fully recognize the economics of mortgage servicing and balance laudable public policy goals against business and market realities," Stevens said.

But Diane Thompson, of counsel for the National Consumer Law Center, favored such changes.

During a Senate Banking Committee hearing earlier in the day with the principals at the banking agencies, the regulators, too, said national standards are needed. Federal Deposit Insurance Corp. Chairman Sheila Bair suggested that the Financial Stability Oversight Council study the problems.

"We need to be thinking about simplifying the servicing process, modification process, as well as the relocation process or some borrowers are just not going to make it," Bair said.

But Sen. Jack Reed, D-R.I., a co-sponsor of the Merkley-Snowe bill, speaking at the same hearing, said regulators have had their chance to fix the servicing problems.

"You know, what you've said, and I agree with it, has been said repeatedly for the last two years," Reed said. "And yet all of you, collectively as the federal regulators, had the chance to make these things happen. And essentially what I think you chose to do was to just kick the can down the road a bit further, let the banks appoint an independent evaluator to go in and look again."

Merkley agreed regulators have not done enough.

"There is a link between this and the Financial Stability Oversight Council, and a couple issues that trouble people in our working communities," he said. "One is the ongoing foreclosure crisis. And certainly that is related to financial stability."

Federal Reserve Board Chairman Ben Bernanke agreed that the foreclosure process remains a

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frustration.

"Attempting to address the foreclosure crisis directly is you know, there's been a lot of effort and so far only modest success," he said. "It's proven very difficult to find solutions in many cases."

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Chicago Tribune Survey reveals consumer confusion on mortgages May 13, 2011 By Mary Umberger

You'd think that with the word "foreclosure" an unwelcome part of our daily vocabulary, consumers would have learned a thing or two about how mortgages work.

You'd be wrong.

A sizable number of Americans appear to be clueless about home loans, judging by the responses to a survey by the Mortgage Marketplace unit of Zillow.com.

The website teamed with Ipsos, a polling company, to develop a nationally representative sampling of what adults know about mortgages. In releasing the results, Zillow pronounced homebuyers in general to be "ill-prepared" to take out a mortgage, getting the basic facts wrong in the survey about half the time.

Even so, 56 percent of the consumers still said they felt confident of their knowledge about mortgages.

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Among the survey's findings:

--Within participants who are prospective buyers, about one-third don't understand that lender fees are negotiable and vary by lender. They believe lenders are required by law to charge the same fees for credit reports and appraisals, when, in fact, homebuyers can save money by shopping for the lowest fees.

--45 percent believe one should always buy mortgage discount points to get a lower interest rate. That decision, however, could vary for individual consumers, based on how long they intend to stay in the home in order to break even on the cost of the points.

--42 percent believe that FHA-insured loans, which require lower down payments than what's available in much of the market, are only for first-time buyers; they're available to buyers in general, however.

--57 percent of those who were prospective homebuyers don't understand how adjustable-rate mortgages work. They believe that a five-year ARM will always reset at a higher interest rate, though sometimes they reset at lower rates.

Erin Lantz, director of Zillow Mortgage Marketplace, talked about what consumers know more precisely, what they don't know about home loans:

Q. Why did your firm decide to quiz consumers on what we know about mortgages and were you surprised by the findings?

A. We know the mortgage process is confusing, so we expected the results we got. We know it's complicated, and people aren't doing their research before obtaining their loans, so we thought this would be a way to bring it to light. We were somewhat surprised by some of the answers to the most basic questions, but overall we weren't surprised.

Q. As the foreclosure mess began to manifest itself, many government entities began to require some homebuyers to undergo financial counseling before closing on their loans. Now, many of these programs are going away because of cuts to the federal budget. Does your survey suggest that perhaps more such counseling would be useful?

A. Government programs for counseling may be one avenue, but I wouldn't say it should be a requirement. Some kind of study should be an expectation for all consumers before they embark on a financial transaction.

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There's something about mortgages that's particularly scary and complex for people. Getting it into a form that's easy and digestible is challenging.

Q. Recently, after a long and sometimes strained process that involved the financial services and real estate industries, the U.S. Department of Housing and Urban Development redesigned the costdisclosure forms that consumers receive when they apply for a loan. Now, Elizabeth Warren, a potential nominee to head the new Consumer Financial Protection Bureau, wants to revamp these forms again to offer more detail. Would this help consumers from making poor mortgage decisions?

A. There's a lot of room for improvement to find the right amount of clarity, without too much detail that overwhelms folks so that they stop reading.

Q. Consumers don't seem to understand a term that's commonly bandied about in lending: Many participants in the poll think that being prequalified by a lender means that they have the loan all wrapped up. But the term has little meaning. Is this something the lending business should clarify?

A. We did find that one-third of respondents thought that being prequalified meant they had secured bank financing. The term is really misleading.

In fact, prequalified is usually just a rough estimate, based on a few questions about what they can afford. There's no real standard of what prequalified means. I think a clear industry standard would remove confusion.

Q. What surprised you most in the study?

A. One thing was that 55 percent of prospective buyers believe that mortgage rates are set once per day at a specific time. In reality, they change all through the day, like stocks. We think this is something that's important for consumers to know; that a small change in a rate can have an impact. It clearly should be a part of the educational process.

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New York Times Consumers Want Fast, Friendly Service May 12, 2011, 4:14 PM By Ann Carnns

More than a third of consumers report having had a bad experience with a service provider, and the vast majority of them took time to complain about it, a recent survey finds.

The consulting firm Accenture surveyed 1,000 consumers about in-home service calls, and found that while most people still pick up the phone to complain to the company, many are increasingly going to online sites like Facebook and Angies List to lodge their grievances. Twenty percent of consumers under age 35 said they expressed their views online, compared with about half that for those age 35 to 44.

Consumers are also willing to go to another provider because of bad service: 63 percent of complainers, or 23 percent of the total, said they switched to a different company, and 77 percent of complainers (28 percent of the total) looked to use other service providers more often.

The survey findings also suggest that consumers judge companies like cable and satellite providers, appliance installation and repair firms, home improvement contractors and utilities not only on the range of services they provide, but also on how well they perform them and on how promptly they fix things when something goes wrong.

In other words, customers want their cable company to deliver high-speed Internet connections. But they may care even more that the cable guy can fix that broken modem on the first try. Younger consumers, in particular, have higher expectations for friendly, knowledgeable customer service.

Based on the survey, Accenture offers this consumer-friendly advice to companies: Invest in training your service representatives, and outsource with care. And rather than focusing on managing the companys reputation in online forums, companies should invest in providing better service overall. Social media can be an asset or a liability, the survey analysis says. The answer, the analysis went on, rests very much in how well the company provides service in the first place.

Have you had a particularly bad experience with in-home services? How did you complain? And did you switch companies as a result?

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American Banker Tech-Savvy Crowd Demands More Personal Service from Banks, Not Less May 13, 2011 By Jeff Horwitz

You can serve retail banking customers in branches, online and through mobile devices. But good luck getting them to ditch the first two for the mobile option.

New research by Novantas LLC, Forrester Research and others adds weight to an idea being kicked around in the industry: that mobile may have its limits as a way to entice tech-savvy customers, reduce branch use and cut costs. Depending on how it is deployed, it can even result in more phone and branch contacts.

None of this adds up to a Luddite argument against pursuing development of the mobile channel. But it does suggest that, like online before it, mobile's effect on the industry may be more incremental than some of its early proponents have suggested.

"Anyone who thinks mobile is about to replace stuff is wrong," said Madhavi Mantha, head of banking research at Novarica, a Novantas LLC subsidiary. "If banks are going to try to build a business case on diverting transactions, I don't think that's going to be valid."

One illustration of the point: Banks' most tech-savvy customers, an 8% swath of the population that Novantas dubs the "ultraconnected," use in-branch services more than less electronically adept peers. They are also more attached to quality branch service. More than half of the ultraconnected group said they would be reluctant to change banks because they have "personal relationships" with the staff a significantly higher proportion than among even "branch traditionalist" peers. And only 5% of them list "substandard mobile banking" as a credible reason for leaving a bank.

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The results jibe with a recent Forrester analysis finding that, at least to date, mobile's return on investment is "hardly a ringing endorsement of mobile as a significant profit center for banks." Though it advocates continued investment in the sector to keep pace with young clients, the Forrester report concludes that much of the mobile business' promise still rests on "hard to quantify" benefits and "nextgen mobile banking features."

Some, such as Bank of America Corp., have cited mobile reliance as a substitute for at least some branch interactions, but other well-established players do not expect that the technology will diminish the importance of brick-and-mortar. Secil Watson, Wells Fargo & Co.'s senior vice president of mobile, said the company had focused on providing simpler functions to the widest possible audience rather than producing immediate profits.

"Year one, year two is there an ROI? No," Watson said in an interview. "Our intention was not to cause a giant channel shift for customers."

Part of the reason, she said, is that Wells' research shows mobile users tend to simply be heavier users of bank services in general.

"When you look at early adopters of mobile, and follow their behavior through time, we realize they are heavy multichannel customers who are engaged with their finances, sometimes multiple times a day," Watson said. Though that makes servicing their accounts more work, she said, the group's young age and affluence make them compelling customers.

Another executive said it was a mistake to evaluate mobile's current worth in dollars and cents.

"I am always baffled when I go to different conferences and speak on mobile, and people ask, 'What did you put in your business case for mobile,' " said Jeff Dennes, chief digital officer of Huntington Bancshares Inc. "What were your assumptions, what was your benefit?' But you want to talk about the customer experience, or you're missing the biggest part."

While providing basic services like account balance checks unquestionably shifts some customer contact away from other channels, it may be a mistake to presume that increased mobile use will translate to decreased branch traffic and phone calls. A Javelin Strategy and Research survey of banking customers concluded that those who received mobile alerts from their banks and credit unions, a majority responded by either calling their bank or going to a branch. (About a third logged in to their account online.)

Jim Van Dyke, Javelin's CEO, is careful to point out that customers' mode of response to such prompts

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varies greatly by bank. Bank of America's customers, he said, were more likely to respond by using selfservice tools than those of Citizens Financial Group of Providence, R.I., whose customers had a tendency to head straight to the branch.

The discrepancy suggests that some institutions have woven their services together more successfully than others, he said. Nor should mobile be judged solely on its ability to steer customers toward lowcost contact, especially so soon. The recession slowed the diffusion of mobile devices, and customers are not yet aware of many banks' full array of mobile options.

Citizens, however, said that getting a high online-response rate was not necessarily the point.

"It really isn't about one or the other for us, it's about providing choice," said Martin Bischoff, vice chairman in charge of consumer and business banking for Citizens.

Van Dyke said his research included measuring customer perception of big banks' mobile capacities shortly after JPMorgan Chase & Co. launched an advertising campaign featuring a woman sorting out her finances while doing yoga.

"Chase hadn't introduced anything new, but around the time those ads ran, consumers rated Chase's mobile technology much higher," he said.

Van Dyke concedes that bankers still have not seen as clear a link between mobile investment and returns as they would like. "But they haven't given up hope, and because the adoption is there, they can't afford to pull back," he said.

Even if the Novantas data suggests that is not a risk banks will imminently face, the numbers do not rule out the possibility that it eventually could. Only 13% of smartphone users "most often" check their balance with the device, and even fewer regularly use it to transfer funds, research bank products or resolve a problem. But it is only fair to consider that the population of people doing such things has only in the last few years grown from a base of zero.

"That there was such a high proportion of customers that identified mobile as their favored way to do anything I thought was amazing," Mantha said.

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Ashley Gordon Office of Public Affairs Consumer Financial Protection Bureau ashley.gordon@treasury.gov (o) 202-435-7446 Web.Facebook. Twitter

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From:

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Harvey, Imani (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harveyi> Harvey, Imani (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harveyi>; _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands>

Cc: Bcc: Subject: REMINDER FOR ALL EMPLOYEES: Please input and validate your time in webTA BEFORE COB TODAY Date: Fri May 13 2011 11:49:54 EDT Attachments: StartTime: Thu May 19 00:00:00 Eastern Daylight Time 2011 EndTime: Fri May 20 00:00:00 Eastern Daylight Time 2011 Location: Invitees: Recurring: No ShowReminder: Yes ReminderMinutes: 15 ReminderTime: Wed May 18 23:45:00 Eastern Daylight Time 2011 Accepted: No When: Occurs every 2 weeks on Thursday effective 5/19/2011 (UTC-05:00) Eastern Time (US & Canada). Where: https://webta.publicdebt.treas.gov/cfpb/servlet/com.threeis.webta.H000welcome Note: The GMT offset above does not reflect daylight saving time adjustments. *~*~*~*~*~*~*~*~*~* If you have questions about the process, please check with your timekeeper or Imani Harvey @ Imani. harvey@treasury.gov https://webta.publicdebt.treas.gov/cfpb/servlet/com.threeis.webta.H000welcome

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Harvey, Imani (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harveyi> _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands>

Cc: Bcc: Subject: REMINDER FOR ALL EMPLOYEES: Please input and validate your time in webTA BEFORE COB TODAY Date: Fri May 13 2011 11:48:22 EDT Attachments: When: Occurs every 2 weeks on Thursday effective 5/19/2011 (UTC-05:00) Eastern Time (US & Canada). Where: https://webta.publicdebt.treas.gov/cfpb/servlet/com.threeis.webta.H000welcome Note: The GMT offset above does not reflect daylight saving time adjustments. *~*~*~*~*~*~*~*~*~* If you have questions about the process, please check with your timekeeper or Imani Harvey @ Imani. harvey@treasury.gov https://webta.publicdebt.treas.gov/cfpb/servlet/com.threeis.webta.H000welcome

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From:

To: Cc:

Howard, Jennifer (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=howardje> _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands> Adamske, Steven </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=adamskes>; Moore, Megan </o=ustreasury/ou=do/cn=recipients/cn=mooreme>; Hunt, Anita Maria </o=ustreasury/ou=do/cn=recipients/cn=hunta>; Wallace, Kim </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=wallacek>; Wolin, Neal </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=wolinn>; Warren, Elizabeth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=warrene>; Fitzpayne, Alastair </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=fitzpaynea>; LeCompte, Jenni </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=engebretsenj>; Murray, Colleen </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=murrayco>; Coloretti, Nani </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=colorettin> Press Clips 5.12.11 Thu May 12 2011 13:09:14 EDT

Bcc: Subject: Date: Attachments:

Press Clips 5/12/2011

Index

Click publication title to find its location in this e-mail. Click article title to go to its source website.

Consumer Financial Protection Bureau Washington Post The Republicans fight against consumer protection Housing Wire CFPB begins design of new mortgage disclosure forms Wallet Pop (blog) 5 Things the Consumer Financial Protection Bureau Will Do for You Politico Morning Money Driving the Day

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Politico Morning Money Singletary: Hands Off CFPB Housing Wire NAFCU supports Republican bills to reform CFPB

CFPB Director and Congress Bloomberg Schumer: Recess Appointment for Consumer Head

Tecnorati (blog) Senate Reps and Dems Butt Heads Over Procedure, with Consumers Protection at Stake Remapping Debate Causing a furor before it exists

CFPB Staffing Announcement Wall Street Journal Harvard Economist to Join Consumer Bureau

New America Foundation (blog) Sendhil Mullainathan Appointed as the CFPBs Assistant Director for Research Boston Herald Harvard professor picked for consumer agency Housing Wire CFPB hires former Fannie Mae ethics head Wall Street Journal Behavioral Economist Heads to Consumer-Protection Agency Politico Morning Money CFPB Posts Filled

Consumer Credit American Banker Appeals Court Cites Dodd-Frank in Preemption Ruling American Banker Banks Top Cards in Trust Survey American Baker Mind the Customer in Your Fee-Generation Brainstorming Boston Globe AGs office scrutinizing for-profit colleges NPR For-Profit Colleges: Targeting People Who Can't Pay Huffington Post States Shortchange The Unemployed With Junk Debit Card Fees: Study Creditslips.org The Servicing Fraud Settlement: the Real Game New York Times (blog) Prepaid Cards Subject Jobless to Host of Fees

Housing Huffington Post Obama Administration Pushing For Homeowner Fund While State Officials Try To Levy Fines In Ongoing Mortgage Probes

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Housing Wire Principal reduction still possible in AG settlement with mortgage servicers L.A. Times Foreclosure rate slows as repossession timeline lengthens The Atlantic Is the Obama Administration Pressuring Banks to Make More Subprime Loans? Bloomberg FDICs Bair Says Servicing Regulation Will Create Problems Huffington Post HSBC Continues Freeze On Home Seizures Washington Post In mortgage crisis, a lesson from Iowa farms

Washington Post The Republicans fight against consumer protection May 11, 2011 By Michelle Singletary

We the people the people who dont have the money to hire lobbyists need a strong Consumer Financial Protection Bureau.

But if we the people dont take action, the watchdog agency, which hasnt had a chance to really fight for us, will be stripped of much of its power by a group of Republican legislators trying to weaken it.

We must object. We must jump into this fight. Write, e-mail or call your congressional representatives and tell them to let the bureau be.

Forty-four Republican senators, in a letter to President Obama, threatened to hold up the nomination of anyone selected to head the new consumer bureau, regardless of party affiliation, unless certain changes on how the agency is structured are made.

The Consumer Financial Protection Bureau was created last year under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the most sweeping overhaul of financial regulations in decades. The bureau is supposed to promote financial education and enforce federal consumer financial

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protection laws, and it was given rulemaking powers that would head off unfair, deceptive and abusive financial practices and products.

The agency is supposed to be up and running by July 21. But if Republican senators have their way, it will never become what it was meant to be an unapologetic protector of consumers. For the most part, we have allowed the financial services industry to police itself. How has that worked for us?

It hasnt, or at least not well enough to prevent the exotic and predatory mortgage products that were inappropriately sold to borrowers, many of whom either have lost or are on the verge of losing their homes.

Lets just look at the changes the Republicans seek with the Consumer Financial Protection Bureau:

lInstead of having a single director, they want a five-member board to run the bureau. Thats Washingtons way of clogging any process: More than one head creates a monster. You have a director so you can set policy and not have that direction stymied by committee.

lThey want Congress and not the Treasury Department to control the agencys budget. This would ensure that the CFPB does not engage in wasteful or inappropriate spending, the senators wrote. Yes, Congress is a fine example of individuals capable of eliminating wasteful spending. Two words, senators: Federal deficit.

lThey want to create safety and soundness checks to prevent the bureau from imposing regulations that would cause a bank failure. I find this point the most laughable. The consumer bureau was established in the aftermath of banking and Wall Street firms that ran amok, causing their own failures. These institutions didnt need the governments help to fail they did a fantastic job of that all by themselves. It was the lack of adequate oversight that failed to stop the stupidity that led to the creation of banking instruments that pushed us into a recession.

At any rate, the Dodd-Frank financial reform act also created the Financial Stability Oversight Council. The council can overturn any rule by the bureau that puts the safety and soundness of the banking system at risk. The council is made up of five nonvoting members and 10 voting members nine federal financial regulatory agencies and an independent member with insurance expertise. Id say that s a good lineup for oversight. The council needs a two-thirds majority to overturn CFPB rules.

Many in Congress have made clear their intention to defund, delay and defang the consumer agency before it can help one family, said Elizabeth Warren, who is serving as an assistant to President Obama and a special adviser to the secretary of the Treasury. Warren is setting up the bureau. Its really Warren, a longtime consumer advocate, the GOP senators want to keep from heading the bureau. What, shes too pro-consumer to run an agency that is supposed to be consumer-focused?

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The senators say in their letter: We support strong and effective consumer protection.

Hogwash. Because if you did, then you wouldnt be entertaining several bills this week aimed directly at crippling the consumer bureau.

Countered Sen. Richard C. Shelby (Ala.), the ranking Republican on the Banking, Housing and Urban Affairs Committee: This is about accountability.

Shelby and the other senators who sent Obama that letter must think we are idiots. This is about the bankers and their continual efforts to avoid any meaningful oversight. So with all due respect, senators, it is clear that not everyone supports consumer protection. If Congress had been doing its job, many consumers wouldnt be hurting financially right now.

Senators, let the bureau be. Let it get up and running and see what it does before putting your foot out to trip it up.

Readers can write to Michelle Singletary at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071. Her e-mail address is singletarym@washpost.com. Questions are welcomed, but because of the volume of mail, personal responses may not be possible.

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Housing Wire CFPB begins design of new mortgage disclosure forms May 11, 2011 By Jon Prior

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Over the next few months, the Consumer Financial Protection Bureau will begin revising and posting drafts of new mortgage disclosure forms lenders will be required to provide.

The Dodd-Frank Act mandates the new federal agency to combine the Truth in Lending Act and Real Estate Settlement Procedures Act forms for borrowers to better understand terms of a mortgage. The agency is required to issue a proposal within 18 months of opening, which is scheduled for July 21. However, lawmakers continue to spar over how the agency will operate and who will lead it.

The CFPB is meeting with other regulators, researchers, industry representatives, graphic designers and consumer advocates, as it tinkers with the design of the disclosure forms, versions of which will be available on its website.

The agency also will visit six cities to test the drafts. Staff will interview consumers, lenders and brokers during these visits to discern what is helpful and what is confusing. The six cities include: Albuquerque; Baltimore; Birmingham; Chicago; Los Angeles; and Springfield, Mass.

"After five rounds of this testing, in six cities and with your input online, we expect the revised form to be a lot better than the old ones," the CFPB said Wednesday. "Then, after consulting with other regulators and small businesses, we will issue a proposed rule and give the public a chance to submit written comments on the revised form."

After the comment period, the CFPB will conduct one last test and issue a final rule that includes the new form.

"We hope our continued outreach will allow us to make the disclosure better and better, learning what works and what doesnt, until we have a product that makes a real difference for consumers," the agency said.

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Wallet Pop

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5 Things the Consumer Financial Protection Bureau Will Do for You May 12, 2011 By Lynnette Khalfani-Cox

The Consumer Financial Protection Bureau (CFPB) doesn't officially launch until July 2011, but already House Republicans are trying to gut the agency's powers and effectiveness.

Three bills passed this month in Congressional subcommittees and slated to be voted on on May 12 by the full House Financial Services committee would greatly weaken the bureau by limiting its ability to issue meaningful rules, and by placing a bi-partisan committee, instead of a single director, in charge of the CFPB. Still other proposals call for the CFPB, which was created to protect the public against financial abuses, to be eliminated altogether.

"We are dismayed at the proposals on the Hill to weaken the agency before it even gets started," says Jean Ann Fox, director of financial services at Consumer Federation of America. "American consumers need a strong independent CFPB to police credit and payment markets and to put consumer protection first."

Not sure what the CFPB will do for consumers? Here are five things, which translate into five reasons we should all fight for a strong CFPB and tell the politicians to back off from this much-needed watchdog agency.

1. Maintain a Toll-Free Consumer Hotline

If you've ever been victimized by unfair credit card fees, ripped off by a mortgage broker or scammed by a payday lender, the Consumer Financial Protection Bureau may be able to help. Starting July 21, 2011 you'll be able to voice your consumer complaints with the agency and file formal reports by calling a tollfree consumer hotline or submitting information online at www.consumerfinance.gov. Until then, you can be referred to other federal agencies for help, or you can check out the wealth of resources about credit counseling agencies, credit card protection, credit reports, debt collection, bank accounts and even budgeting in this section of the CFPB website.

2. Monitor the Marketplace on Your Behalf

The CFPB will also monitor the financial services marketplace and review financial products to help minimize and try to prevent deceptive marketing and predatory lending. The agency's reach will extend to such areas as credit cards, mortgages, payday loans and more. The goal is to make sure these type

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of companies are being transparent, acting legally and treating customers fairly.

3. Enforce Federal Consumer Financial Laws

In its current format, the Consumer Financial Protection Bureau will have the ability to help enforce federal consumer financial laws such as the Fair Credit Reporting Act or the Truth in Lending Act and can penalize companies that fail to comply with those laws.

4. Review Practices of Various Financial Service Providers

The CFPB presently has the power to review a number of practices, ranging from credit card marketing and mortgage lending to credit bureau reporting and high-cost lending (i.e. payday loans and auto title loans). When necessary, the CFPB can step in to force financial institutions to tighten up their business practices if those practices are deemed abusive, unfair or illegal.

5. Function as a Financial Literacy Resource

If you have questions about certain types of consumer financial products and services, you may be able to find the answer you're looking for by visiting www.consumerfinance.gov/protecting-you. This section of the CFPB's website features real stories and provides tips on how to handle various financial dilemmas. In addition to printed materials and videos, the CFPB is also planning special educational outreach efforts to specific groups, including the elderly and members of the military.

Despite the potential benefits to consumers, the CFPB's role in policing financial products is hardly guaranteed.

"Deceptive and abusive mortgage lending allowed to continue by the existing regulators was a fundamental cause of the financial crisis, and of the worst recession since the Great Depression," says Lisa Donner, executive director of Americans for Financial Reform, a coalition of more than 250 state and national organizations. "In response, Congress created the consumer bureau, so we will have a cop on the beat with fair play and the public interest as its first priority."

Unfortunately, 44 U.S. Senators have signed a letter to President Barack Obama declaring that they will not support any nominee as director of the new CFPB unless the agency is dramatically weakened. "These 44 Senators," Donner says, "are essentially declaring that they want to keep the CFPB from doing its job: standing up for consumers in the financial marketplace."

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Politico Morning Money Driving the Day May 3, 2011 By Ben White

House Ways and Means Committee holds a tax reform hearing ... Senate Banking has a second hearing at 2:40 p.m. on national mortgage servicing standard including testimony from Diane E. Thompson, counsel for the National Consumer Law Center, among others. ... House Financial Services spends the day marking up its efforts to delay the derivative title of Dodd-Frank and alter the structure of the CFPB, among others things. ... April produce-price index is expected to be up 6.5 percent in April over last year, which would be a fairly scary number ... Weekly jobless claims out at 8:30 a.m. with everyone hoping for a number back near or under 400,000.

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Politico Morning Money Singletary: Hands off CFPB

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May 3, 2011 By Ben White

WPs Michelle Singletary: We the people the people who dont have the money to hire lobbyists need a strong Consumer Financial Protection Bureau. But if we the people dont take action, the watchdog agency, which hasnt had a chance to really fight for us, will be stripped of much of its power by a group of Republican legislators ... We must object. We must jump into this fight. Write, e-mail or call your congressional representatives and tell them to let the bureau be. .

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Housing Wire NAFCU supports Republican bills to reform CFPB May 11, 2011 By Christine Ricciardi

The National Association of Federal Credit Unions said Wednesday it supports three bills aimed at reforming different aspects of the Consumer Financial Protection Bureau because the legislation could potentially loosen the government body's oversight of credit unions.

"As the committee is well aware, credit unions did not cause the financial crisis," wrote B. Dan Berger in a letter to Rep. Spencer Bachus (R-Ala.) and Rep. Barney Frank (D-Mass.). "While this fact has been well documented and cited by lawmakers on both sides of the aisle, credit unions were still inexplicably placed under the regulatory authority and new burdens of the CFPB."

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The House Financial Services Committee is scheduled to vote Thursday on three bills to reform the CFPB the Responsible Consumer Financial Protection Regulations Act of 2011 (H.R. 1121), the Consumer Financial Protection Safety and Soundness Improvement Act (H.R. 1315), and the Bureau of Consumer Financial Protection Transfer Clarification Act (H.R. 1667).

Rep. Bachus introduced H.R. 1121, which would establish a five-member commission to govern the CFPB instead of one director. The second bill was introduced by Rep. Sean Duffy (R-Wis.) and would make it easier for the Financial Stability Oversight Council to overturn rules made by the CFPB. The last bill, introduced by Rep. Shelley Capito (R-W.V.), would delay the entire agency from operation until a director is confirmed by the Senate.

All three bills were passed by the House subcommittee last week. If these bills pass the House, however, Washington think-tank MF Global doubts they will make it past the Senate.

"Odds are very low for pushing any of these bills through the Senate, but this continues to build the case for deregulatory legislation in 2013," MF Global said in commentary.

Republicans have consistently expressed concerns about the governing power of the director of the CFPB, and even said earlier this month they would not confirm a director until structural changes to the agency are made.

However, Elizabeth Warren, special adviser to the secretary of the Treasury Department and architect of the CFPB, continually refutes claims the agency is not subject to enough oversight from other federal regulators.

"The consumer protection agency is the only bank regulator whose rules can be overruled by another group of agencies," Warren said at the Society of American Business Writers and Editors conference in Dallas. "We cannot interfere with other agencies' rulemaking efforts, but other agencies can veto our rules."

Warren claims the House's proposed rules are attempts to defang her agency. Warren is expected to receive the nomination for director of the CFPB by President Obama, although no official announcement has been made yet.

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Bloomberg Schumer: Recess Appointment for Consumer Head May 11, 2011 By Carter Dougherty and Phil Mattingly

President Barack Obama will have to install a Consumer Financial Protection Bureau director by recess appointment to bypass Republican efforts to force changes at the agency, U.S. Senator Charles Schumer said today.

I think thats the way its going to have to go because the kind of changes theyre asking for wont happen, Schumer, a New York Democrat, said in a Bloomberg Television interview with Al Hunt. Who itll be? I dont know.

Forty-four Republican senators said in a May 2 letter to Obama that they wont confirm anyone to run the bureau unless Democrats agree to change its structure and funding. The group is big enough to deny Democrats the 60 votes needed to get a vote on a director in the 100-member Senate.

U.S. Representative Barney Frank said Republicans are acting like thugs in threatening to block nominees and are forcing Obama to go around them.

You have seen the greatest abuse of the nominations process, Frank, a Massachusetts Democrat, told reporters in Washington today. They are trying to use the confirmation process to substitute for the legislative process.

Frank said a temporary appointment during a congressional recess is Obamas only option unless seven Republicans change their minds, and they are under great pressure not to. Republicans hold 47 seats in the Senate.

In the Bloomberg Television interview, Schumer declined to say whether he would support a nomination of Elizabeth Warren, the Obama adviser charged with setting up the bureau.

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Shes done a very good job at setting up the agency, said Schumer, who serves on the Senate Banking Committee. And I think shes not as anti-business as many people think.

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Technorati Senate Reps and Dems Butt Heads Over Procedure, with Consumers Protection at Stake May 11, 2011 By Tim Chen

GOP senators began another round in the legislative showboating that is the Senate confirmation of presidential appointees. Using an arcane Senate rule of dubious legality and feasibility, Republicans are considering using a procedural loophole to prevent a recess appointment to the Consumer Financial Protection Bureau, a tactic that the Democrats employed against President George W. Bush in 2007. They hope to force President Barack Obama to accept oversight of the agency by both Congress and the banking industry.

The bureau, legislated into existence by the Dodd-Frank Act of 2010, has a mission to ensure that markets for consumer financial products and services work for Americans. It has jurisdiction over banks, credit unions, payday lenders, mortgage and foreclosure operations, and securities firms. According to incoming enforcement chief Richard Cordray, the bureaus priorities will be student loans, credit cards, and mortgages.

The CFPB is hamstrung without a formal director (its current head, Elizabeth Warren, was not confirmed by the Senate and is not its official leader). Although the agency is scheduled to open its doors on July 21st, without a director it can only counsel the Treasury Department and is barred from enforcing regulations. In addition, the bureau is subject to far more oversight than any other regulatory agency. It cannot appropriate funds itself, and is limited to a fixed percentage of the Federal Reserves operating budget; is specifically barred from implementing interest rate caps; and is subject to a veto by the Treasury Departments Financial Stability Oversight Committee (FSOC), Congress, and judicial review.

Obama hopes to appoint a director, presumably Warren, so that the CFPB would have some weight

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behind its many recommendations, and ideally wished to do so before the bureau officially came into its powers. But Republicans, unhappy about the CFPBs very existence, have sought to dilute, weaken or outright block the bureaus powers. Senator Richard Shelby of Alabama, in particular, is focusing his efforts against the bureau.

With his encouragement, 44 Republican senators sent a letter to President Obama last week promising to block his nominee unless he agreed to significant reductions in the boards power. Not only would they stall the directors confirmation, the senators threatened, but they would hold up all of his financial services appointments.

What Republicans would change

Among other changes, the Republicans want to replace the one-person directorship of the Consumer Financial Protection Bureau with a five-person committee. According to Mark Calabria, a former top aide to Senator Shelby, "The trade-off might be that, at the end of the day, Shelby sits down with the administration and says, 'Well, make it a board, and in exchange we'll let Elizabeth Warren be the chairman.

Professor Adam Levitin of Georgetown Law, testifying before the House Subcommittee on Financial Services, strongly opposed the idea of committee leadership. Switching to a five-member panel would tilt the balance at the agency to gridlock and inaction, would add unnecessary big government bloat, and would reduce accountability.

In addition, Republicans want to fund the bureau through the congressional appropriations process. They argue that the CFPB has too little oversight and would represent a deviation from the checks-andbalances model of federal governance. The bureaus supporters counter that such a move would significantly reduce the bureaus independence: every other banking regulatory agency is independently funded, and relying on congressional funding would expose the agency to political gamesmanship.

A third proposed change (the Duffy Bill, named for Representative Sean Duffy of Wisconsin) would increase the FSOCs veto power over the bureau. The authoritarian structure of the CFPB is very troubling. This new agency has broad, far-reaching powers and these powers are all assigned to one individualI believe in the system of checks and balances, said Congressman Duffy. Professor Levitin, however, argues that additional FSOC oversight is counterproductive and possibly unconstitutional.

The FSOC veto power provides an unnecessary and possibly unconstitutional check on the CFPB and should be eliminated, rather than made more stringentIndeed, under the Duffy Bills standard, several laws passed by Congress in recent years, such as the Credit CARD Act would be unenforceable by regulation because the laws themselves might reduce bank safety-and-soundness (i.e., profitability) The effect of the Duffy Bill would be to eviscerate several recent, popular, consumer financial

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protection statutes.

When a Senate confirmation becomes a logjam

President Obama considers most of the Republican demands to be unpalatable. Rather than accede, he planned to appoint the CFPB director during the Senates next recess. Many of the presidents nominees are held up in committee: Senator Shelby, citing qualification concerns, blocked MIT economist Peter Diamonds confirmation, just weeks before the rejected appointee received a Nobel Prize. A recess appointment allows the president to avoid the grueling process of mustering 60 Senate votes, the number necessary to end a filibuster.

But in addition to threatening to stymie President Obamas other nominees, Senate Republicans are considering a little-known procedural maneuver to prevent the chamber from going into recess. Adjournment proceedings cannot be filibustered, but the GOP hopes to convene what is known as a pro forma session.

Pro forma sessions: how 30 seconds can last for weeks

A pro forma session is a short meeting, sometimes lasting only seconds, in which no Congressional business is conducted. The sessions are usually held to satisfy the Constitutions requirement that no chamber of Congress can adjourn for more than three days without the others consent; however, according to some, they do prevent the chamber from going into recess.

This tactic, used by Democrats in 2007 after they gained control over the Senate to block President Bushs nominations, is on shaky ground both legally and logistically. According to John P. Elwood, formerly of the Office of Legal Counsel, a court could decide that the Senate is violating the Presidents right to make recess appointments. Some Republicans argue that a recess-appointed director would not fulfill the Dodd-Frank bills requirement that the CFPB be led by a Senate-confirmed director; Elwood says that It is unconstitutional to draw distinctions between recess-appointed officers, because it burdens the president's recess authority.

There are a number of logistical issues to a pro forma session as well. No one, including the senators themselves, is quite sure that a minority party can call a session. The 2007 sessions occurred when the Democrats controlled the Senate, with the blessing of the majority leader.

Even the assertion that pro forma sessions preclude a recess is in doubt. According to an article in the National Law Journal, a recess appointment can be made even in the brief time between pro forma sessions. According to the Senate Congressional Research Service, "The Constitution does not specify the length of time that the Senate must be in recess before the President may make a recess appointment. A 2004 US Court of Appeals ruling, Evans v. Stephens, confirmed that there is no

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minimum recess time.

Both sides risk political backlash

Both the Republican senators and President Obama risk losing public goodwill. The Republicans hope to paint a recess appointment as a back-door deal, an overreach by the federal government, and an infringement on personal liberties. They want to change the terms of the debate from Warrens individual qualifications to a more broad discussion of accountability.

On the other hand, Democrats and President Obama believe that public anger with the financial industry, and desire for consumer safeguards, will reward them for strengthening the bureau. In addition, they hope that Republicans will seem obstructionist and irresponsible for refusing to confirm any of the presidents appointees, favoring big banks over constituents.

Jean Noonan of Hudson Cook LLP believes that Republicans will ultimately suffer for their position. "That is crippling the government without any cost savings," she said. "It's one thing when one party is willing to shut down the government over budgetary differences, and even that hasn't proved popular. But to refuse to fill any vacancy would be irresponsible.

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Remapping Debate Causing a furor before it exists May 12, 2011 By James Lardner

May 12, 2011 With the passage of last year's Dodd-Frank reform law, the 111th Congress called for the creation of a Consumer Financial Protection Bureau. Now, two months before its scheduled launch date, the ascendant Republicans of the 112th Congress are trying to limit the bureau's power by making

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basic changes to its authority and architecture.

The House Committee on Financial Services moved last week toward approval of legislation that would put the new CFPB under a bipartisan commission rather than a single director, while enhancing the ability of a panel of traditional bank regulators to veto consumer-protection rulings that, in their view, jeopardize financial safety and soundness. Meanwhile, 44 senators (all the Republicans, except Scott Brown of Massachusetts and Lisa Murkowski of Alaska) signed a letter to President Obama declaring that until the White House agrees to similar limits on the bureaus power, they will refuse to vote for a nominee any nominee to run it.

At first glance, it was hard to understand the urgent need to reorganize an agency that hasnt had a chance to do anything yet. Outside observers might also have been startled by what a number of congressional Republicans identified as their underlying concern: the danger of having a financial regulatory body that simply cares too much about consumers, and too little about banks.

Hand in hand

One pending proposal put forward by Rep. Sean Duffy (R-WI) would allow a council of financial regulators to overrule, by majority vote instead of the two-thirds requirement set by Dodd-Frank, any CFPB action it sees as a safety-and-soundness threat. Duffys bill would also allow for consideration of the impact on financial institutions rather than just to the system as a whole (see box).

Critics of the CFPB in its present form argue that consumer protection and safety-and-soundness go hand in hand, as Rep. Shelley Moore Capito (R-WV) said recently, because many bank practices (loan underwriting, for example) have consequences for both.

The Bureaus supporters make two basic counter-arguments. What Duffy, Capito, and others are seeking, according to Rep. Brad Miller (D-NC), is a restoration of the old model of regulation one in which, Miller told Remapping Debate in a phone interview, all of the prudential regulators that had supposed consumer-protection responsibility put [that] protection way to the bottom of their list of responsibilities.

It was because of that history, Miller said, that Congress decided to establish a stand-alone financial protection agency. The record of recent experience suggests that a financial system that pays more attention to consumer protection will also be a more stable system, Miller added. If you trap consumers in debt that they cannot pay, its bad for the consumers immediately, he said. It was very bad for consumers in the early and middle part of the last decade, and eventually it caught up with the lenders as well.

The CFPB is needed, said Lisa Donner, who oversees a consumer-labor coalition known as Americans

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for Financial Reform, both in order to make sure that people arent gouged and treated unfairly day to day, and because if theyre allowed to be treated unfairly and gouged in the consumer market, that can be, and just was, profoundly risky for the system as a whole.

Drafted to protect safety-and-soundnessor something else? In its single-minded focus on consumer protection, critics say, the Consumer Financial Protection Bureau could take steps that ignore the competing interests of financial safety-and-soundness.

Such concerns were aired in the debate over the bureaus creation, leading to a number of provisions that already limit its authority. Under the Dodd-Frank law that set up the CFPB, a body known as the Financial Stability Oversight Council, which includes representatives of the Federal Reserve, the Office of Comptroller of the Currency and the Federal Deposit Insurance Corporation (as well as the CFPB itself), can veto any rule that seven of its ten members judge to put the safety and soundness of the United States banking system or the stability of the financial system of the United States at risk.

That language set the bar too high, bank lobbyists and congressional Republicans now argue. Under their revised formula, only five votes would be required (a majority of the council, with the CFPB director excluded). Moreover, the council could veto any rule viewed as inconsistent with the safe and sound operations of United States financial institutions.

The idea, according to its author, Rep. Sean Duffy (R-WI), was to guard against a threat to the safetyand-soundness of one part of the industry, such as credit unions or community banks. But defenders of the CFPB protest that the new wording would permit a veto on far slighter grounds. The Duffy bill, Rep. Brad Miller (D-NC) told Remapping Debate, could make it hard for the CFPB to issue a rule that causes financial harm to a few banks, even if the profits threatened by the rule came from taking advantage of consumers.

The language of Duffys proposal seemed to raise questions. Why wasnt it limited to rules affecting a sector or defined segment of the banking industry? Couldnt a consumer-protection requirement be consistent with the safe and sound operations of a vast majority of banks or actively promote safetyand-soundness for those banks even while making it harder for other banks to thrive? Could the failure of certain institutions, under such circumstances, even be considered a positive result (that is, one that clears the marketplace of less reputable operators)?

Remapping Debate was anxious to put these questions to Congressman Duffy in light of the fact that two banking lobbyists we interviewed had seemed to interpret his legislation as covering a rule that put the safety and soundness of even a single institution at risk. But, as noted elsewhere, the congressman and his staff did not respond to our repeated requests for an interview.

Remapping Debate asked a number of elected officials and bankers for illustrations of consumerprotection policies that would be bad for safety-and-soundness. Few responded (see box). One who

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did, Joe Witt, president of the Minnesota Bankers Association, offered the example of a rule ensuring quick customer access to deposited funds, before banks could properly determine if there are funds in the underlying account to cover [a deposited] check.

Ed Mierzwinski, a Washington-based consumer advocate, pointed out that Dodd-Frank assigns such questions to the shared jurisdiction of the CFPB and the Federal Reserve, thus putting some check on the new agencys power. Mierzwinski added that modern electronic-clearance practices allow banks to tap most funds overnight, while account-holders typically have to wait two or more days. Despite a 1988 law that gives consumers the right to withdraw $100 immediately (a figure raised to $200 by DoddFrank), Mierzwinski argued that banks still get the better of the situation. Banks have gotten rapid access to our money, he said, but they still havent given us [the same] rapid access.

Its not like the history of bank regulation or consumer product regulation in the United States suggests that the overwhelming problem is that the public voice is heard too loudly and special interests are silenced, Lisa Donner said. The truth is, the resources at the disposal of industry to influence the regulatory process are, and continue to be, overwhelming as compared to the resources of the public.

A charm offensive?

Elizabeth Warren, the Harvard law professor who conceived the idea for the CFPB and has been tapped by President Obama to oversee its implementation, has sought to calm bankers fears. In an interview with National Journal last week, Camden Fine, president of the Independent Community Bankers of America, suggested that Warren was making headway in that department: the small banks he represents might do well to consider supporting Warren as the bureaus permanent director, Fine said; better Warren, he explained, than some fang-tooth zealot who is going to lump us into the same box as Wall Street and just say I dont give a rats ass how big you are; I am going to hammer your butt!

Fine seemed to be expressing a minority viewpoint, however. Joe Witt, of the Minnesota Bank Association, acknowledged that Warren has been saying all the right things. Nevertheless, he said many in the industry were unconvinced by what they viewed as essentially a charm offensive.

As part of that effort, CFPB officials met with Witts group last week. They pointed out that thanks to the bureaus creation check cashers, mortgage brokers, and other nonbank entities will now have to observe some of the same financial rules that govern banks. In theory, this could be a step forward, Witt told Remapping Debate. But he said he had challenged the CFPB representatives about their ability to monitor between 70,000 and 100,000 nonbanks with anything like the same vigilance given to the regulation of the nations 7,000 banks.

They said no, realistically, we cant do it, Witt recalled. We cant come up with enough examiners to really do the job to the extent that its done in the banking industry. So I said, Then you dont have a level playing field Until there is equal enforcement, it is not a level playing field.

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Code language

What accounts for the intensity of the distrust? Why all the talk about consumer protection overriding safety-and-soundness? The issue is a legitimate one in some situations, said Travis Plunkett, legislative director of the Consumer Federation of America. Regulators around the world have struggled to find the right balance, Plunkett told Remapping Debate. But what were hearing in Congress now is not an intellectually serious argument, he added. Instead, safety-and-soundness is being used as code for fears that the consumer bureau will be too vigorous in restricting abusive, deceptive, or unfair practices.

Talk of safety-and-soundness allows elected officials to avoid coming across as tools of an unpopular, but politically generous, industry, according to Plunkett. For bankers, he said, its preferable to expressing their concern that the CFPB represents the beginning of something new: independent oversight.

Banks and other financial firms were exceedingly comfortable with the status quo where they had enormous influence with an alphabet soup of regulators, Plunkett said. Under the old arrangement, he added, banks had often been able to fend off consumer-protection rules. Plunkett recalled that the former head of the Office of Comptroller of the Currency, John Dugan, had challenged an effort to bar OCC banks from raising interest rates on existing credit-card balances because of a change in a customer's "risk profile" (typically triggered by a late payment to another creditor). Dugan defended this practice, known as "repricing," as vital to safety-and-soundness. (Dugan turned out to be mistaken on that score, according to Plunkett. The banks wound up losing money as a result of an unprecedented wave of credit-card defaults.)

Talk to us about safety-and-soundness Congressional Republicans are pushing several proposals to change the governance structure of the new Consumer Finance Protection Bureau. The aim, the backers all insist, is not to undermine the bureau, but to make sure that in its efforts to protect consumers, it does not do anything to compromise the safety and soundness of financial institutions.

Seeking examples of such missteps, Remapping Debate contacted the offices of half a dozen House members who have raised the issue. Repeated emails and phone messages failed to elicit a response from five of the six legislators. They were:

Sean Duffy (R-WI), who, interviewed on Fox TV last week, said that the CFPB was on the way to becoming so powerful that one of our concerns is that consumer protection can actually trump safetyand-soundness in the banking industry.

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Shelley Moore Capito (R-WV), who, in a recent press release, said that consumer protection and safety and soundness go hand in hand. Congress, Capito went on to say, has a responsibility to ensure that [consumers] personal financial decisions are left up to them and not unduly influenced by unelected bureaucrats who seek to limit consumer choice.

Blaine Luetkemeyer (R-M), who, during a March hearing, pressed Elizabeth Warren to say exactly how much money the CFPB would be willing to have banks spend meeting any particular regulation. When Warren declined to give a dollar amount, Luetkemeyer chastised her for what he said was indifference to cost-benefit analysis.

Edward Royce (R-CA), who unsuccessfully sought to impose a safety-and-soundness mandate on the CFPB as part of the original Dodd-Frank law.

Spencer Bachus (R-AL), chairman of the Financial Services Committee, who, in a February speech, described the creation of the CFPB as problematic, citing, among other concerns, reservations about the decision to separate consumer protection from safety-and-soundness.

The only substantive response came from the office of Rep. Scott Garrett (R-NJ), who had quizzed Warren on this issue in March: Your agency doesnt have a safety and soundness mission to it, does it? Garrett asked her at the time. Last week, Garretts press secretary, Ben Veghte, emailed Remapping Debate with an example of something the CFPB might do that would jeopardize safety-andsoundness: require mortgage modifications entailing principal writedowns as well as interest reductions. This could cause some banks to go belly up in order to protect consumers, Veghte said.

Consumer groups have long advocated for writedowns of mortgage principal, arguing that foreclosure often turns out to be a more costly alternative for banks. But the CFPB is not in a position to decide this question, according to Travis Plunkett of the Consumer Federation of America. They have to follow the law," he said, "and theres no federal law that would allow them or require them to mandate a principal write-down.

Brad Miller, the North Carolina congressman, recalled that safety-and-soundness had also been the OCCs justification when it specifically approved banks jiggling the order that they put customer charges through, so as to kick people over into [paying additional] overdraft fees. Lets say you got to the end of the month, Miller explained, and you had $100 bucks in your account, and you wrote a $20 check and then went to the ATM machine with your debit card a couple of more times for $20, and made a $15 purchase on your debit card, and then finally wrote a $105 check. Well, the OCC specifically allowed the banks to put the $105 check through first so that every one of those other transactions would trigger an overdraft fee. Its hard to square that with any concern for consumers at all.

With the advent of the CFPB, an important piece of bank regulation has moved to an agency that won't

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necessarily see things the banks' way, Plunkett said. The bureau might decide, for example, that some products or product features are so inherently tricky or dangerous that they need to be restricted or banned. That concept, according to Plunkett, is anathema to many bankers. Indeed, Joe Witt of the Minnesota Bankers Association expressed concern that the CFPB might impose severe limits on mortgage prepayment penalties. Consumer types, he said, always argue against prepayment penalties. But when banks go into the secondary market to obtain loan funds, they can face pre-payment penalties themselves. In any case, Witt added, its wrong to demonize certain types of loans or loan features when what youre really talking about is probably a series of ten steps that were bad or maybe even fraudulent The loan term isnt the bad thing, its the bad actor; lets go after the bad actors instead of making judgments about particular loan terms. In last weeks House markup session, Rep. Miller and others argued that the Republican proposals could effectively define any threat to bank profits as a safety-and-soundness problem. Since the CFPB cannot require any financial institution to offer any particular product, what its critics are really saying is that financial institutions, banks, and other lenders need to be able to cheat consumers to stay in business [I]f that is true of a financial institution, he said, maybe that one should be out of business. The efforts to rein in the CFPB are based on farfetched notions of its power and intent, Donner said. The bureau, she noted, is required by law to put its rules out for comment, to listen to what bankers say, and to specifically consider the impact of its decisions on regulatory compliance costs and the availability and affordability of credit, among other factors. For many bankers, these requirements are small comfort. Steve Zeisel, general counsel of the American Bankers Association, acknowledged that the bureau has an obligation to listen to bankers; but it doesnt necessarily have to be swayed by what it hears. The statute does talk about them consulting with the other agencies They obviously have to put rules out for comment thats standard administrative procedure; anybody would have to do that. The bottom line of Zeisels concern? Having a consultation requirement, he said, doesnt dictate what they decide. Back to Top

Wall Street Journal Harvard Economist to Join Consumer Bureau May 11, 2011 By Maya Jackson Randall and Justin Lahart

WASHINGTONThe Consumer Financial Protection Bureau on Wednesday tapped Sendhil Mullainathan, a leading behavioral economist, to help aid its work in crafting consumer-protection rules.

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Mr. Mullainathan, a Harvard University economist and research associate at the National Bureau of Economic Research, will run the agency's Office of Research. The research arm "will promote evidence -based policy-making" and help the bureau understand the potential benefits and costs of its policies, said Elizabeth Warren, the White House adviser helping launch the consumer bureau.

The consumer bureau, a creation of the Dodd-Frank financial overhaul law enacted last year, will have broad powers to write and enforce consumer-protection laws. The agency is poised to supervise large banks as well as thousands of smaller financial firms that offer student loans, payday loans and checkcashing services.

Mr. Mullainathan's research has focused on how people's biases and weaknesses lead them to make bad economic decisions. His research has provided much of the intellectual foundation for the establishment of the bureau.

"He's more or less exactly what the CFPB should be: evidence based, appropriately suspicious of concentrated interests, and he understands that real people can make mistakes," said Wharton School economist Justin Wolfers.

Mr. Mullainathan, who has received a MacArthur Foundation "genius award," told lawmakers in 2009 that he supported a two-part approach to financial regulationone in which safe products would be lightly regulated while other products with the potential to hurt consumers would be more heavily regulated.

He is a founder, with Esther Duflo and Abhijit Banerjee, of MIT's Jameel Poverty Action Lab.

The CFPB also tapped Patrice Ficklin, a former Fannie Mae staffer who most recently practiced at the civil-rights law firm Relman, Dane & Colfax, as assistant director for fair lending.

The financial industry, which largely opposed the creation of the bureau, has been watching closely as Ms. Warren staffs the agency and makes key decisions about the bureau's priorities. So far, Ms. Warren has attracted a diverse group of staffers, including former Wall Street banker Rajeev V. Date to head the agency's research, markets and regulations team. Elizabeth Vale, a Morgan Stanley managing director and longtime community banker, is the bureau's assistant director for community banks and credit unions. And Holly Petraeus, wife of Gen. David Petraeus, is in charge of an office aimed at protecting military families from predatory financial practices.

Ms. Warren has also brought in people who have been critical of the financial industry such as former Ohio Democratic Attorney General Richard Cordray, who is leading the agency's enforcement division. She has also named David Silberman, a former AFL-CIO general counsel, as head of the agency's

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credit-markets division.

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New America Foundation (The Ladder blog) Sendhil Mullainathan Appointed as the CFPBs Assistant Director for Research May 11, 2011 By Pamela Chan

Treasury just announced that Sendhil Mullainathan is the new Assistant Director for Research at the CFPB. He will lead the work in its Office of Research. This is big news for anyone interested in behaviorally informed policymaking. Mullainathan is a well-respected Harvard economist in behavioral economics and is known for conducting research and applying the findings to actual international development programs and domestic consumer finance policies. Hes got everything from a MacAuthur Foundation genius award to a TED fellowship on his resume. Of course, Im sure hell count his ties to the New America Foundation amongst his most honored accomplishments. In October 2008, Mullainathan co-authored a New America publication, Behaviorally Informed Financial Services Regulation, along with Michel Barr and Eldar Shafir, and presented at our Behavioral Economics and Policy Meeting.

The appointment of Mullainathan at the CFPB is another step towards the establishment of new generation of policymakers that are finding ways to design policies for real people in real communities. As I mentioned last week in a blog from the Federal Reserve Community Affairs Research Conference, there is a great need for more research and data to understand why people make seemingly irrational choices and whether those choices are predictable when incorporating cognitive and emotional considerations. Closing that gap requires researchers having the foresight to recognize the importance of human behaviors in policymaking. Mullainathan has blazed the trail for behaviorally informed policymaking through his research in the academic world. I look forward to seeing him leverage that experience in his new role at the CFPB.

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Boston Herald Harvard professor picked for consumer agency May 12, 2011 By Herald Staff

Sendhil Mullainathan, a professor of economics at Harvard University, is joining the team at the new Consumer Financial Protection Bureau.

The 38-year-old behavioral economist will serve as the bureaus assistant director of research, the U.S. Treasury Department said.

Mullainathan, who co-founded the Jameel Poverty Action Lab at MIT, joined the Harvard faculty in 2004. He is also a research associate at the National Bureau of Economic Research in Cambridge.

Obama administration adviser and Harvard Law professor Elizabeth Warren is setting up the bureau thats set to launch July 21.

The agency, which came out of last years Dodd-Frank Wall Street reform law, will police banks and financial firms, and protect consumers from deceptive or abusive practices.

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Housing Wire

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CFPB hires former Fannie Mae ethics head May 12, 2011 By Kerri Panchuck

The Consumer Financial Protection Bureau, which still lacks a director, announced two hires this week, including a former ethics leader at Fannie Mae.

Elizabeth Warren, the architect of the CFPB and special adviser to the secretary of the Treasury and assistant to the president, named Sendhil Mullainathan assistant director for research and Patrice Ficklin assistant director for Fair Lending.

Patrice Ficklin most recently worked at Relman, Dane & Colfax in the area of civil rights and focused her time there on lending, employment and housing. Prior to that, she served Fannie Mae, directing the GSE's employee grievance department, conducting internal investigations and heading the corporate ethics program. While at Fannie, Ficklin revamped standards on office and employee performance reviews, according to a press release issued by the CFPB. Ficklin graduated from Georgetown University and Harvard Law School.

Mullainathan is a professor of economics at Harvard University, and a research associate at the National Bureau of Economic Research. He also co-founded the Abdul Latif Jameel Poverty Action Lab and served as a board member of the Bureau for Research and Economic Analysis of Development.

"Under Sendhil Mullainathan, the Office of Research will promote evidence-based policy-making at the CFPB. The office will provide analytical support to the Bureau and strengthen its understanding of possible benefits and costs of potential CFPB policies," said Warren. "With Patrice Ficklin at its head, the Office of Fair Lending will provide oversight and enforcement of Federal laws intended to ensure fair, equitable, and nondiscriminatory access to credit for both individuals and communities."

Warren's appointments arrive two months before the bureau opens, yet the CFPB is still without a director.

The debate over Elizabeth Warren and whether she will ultimately become director of the CFPB continues, with other potential candidates bowing out of the process and Republican lawmakers introducing bills to quash the director's power through the creation of a commission, while also attempting to delay the bureau's roll out until other major issues are resolved.

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Wall Street Journal Behavioral Economist Heads to Consumer-Protection Agency May 11, 2011 By Justin Lahart

The Treasury Department announced the hiring of senior leadership for the Consumer Financial Protection Bureau. Among the hires: Harvard University economist Sendhil Mullainathan.

The leading behavioral economist of his generation, his research has focused on how peoples biases and weaknesses lead them to make bad economic decisions. He is also a founder, with Esther Duflo and Abhijit Banerjee, of MITs Jameel Poverty Action Lab.

His research has provided much of the intellectual foundation for the establishment of the CFPB, which is tasked with making markets for consumer financial products and services work for Americans.

Hes more or less exactly what the CFPB should be: evidence based, appropriately suspicious of concentrated interests, and he understands that real people can make mistakes, said Wharton School economist Justin Wolfers.

Mr. Mullainathan, 38, got an early lesson in how regulatory changes can affect peoples lives, and how fragile their livelihoods can be when a new rule in the 1980s disallowed foreign aerospace workers from doing defense-related projects. In practice, this meant that foreign workers couldnt work on aerospace at all, since the delineation between defense and nondefense projects was fuzzy. His Indian father, an engineer at McDonnell Douglas, lost his job.

There was this feeling of fragility, wow if my dad doesnt get a job, then what? Mr. Mullainathan recalled in a recent interview. I still have that feeling very strongly, I understand it. It informs my thinking on this stuff and my motivation to work on it.

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Back to Top

Politico Morning Money CFPB Posts Filled May 12, 2011 Bt Ben White

. Per release: Elizabeth Warren, Assistant to the President and Special Advisor to the Secretary of the Treasury on the CFPB, highlighted the selection of Sendhil Mullainathan to serve as Assistant Director for Research and Patrice Ficklin to serve as Assistant Director for Fair Lending. .

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American Banker Appeals Court Cites Dodd-Frank in Preemption Ruling May 12, 2011 By Kate Davidson

WASHINGTON Even before the Dodd-Frank Act takes effect on July 21, a federal appeals court has cited the regulatory reform law in a ruling that a national bank does not have to comply with a Florida

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consumer protection statute that limits bank fees.

The 11th Circuit Court of Appeals affirmed a lower court's decision to dismiss a case claiming JP Morgan Chase Bank violated a state law that prohibits banks from charging check-cashing service fees. In his decision, Chief Judge Joel F. Dubina referred to the Dodd-Frank Act, which itself referred to the so-called Barnett standard established by the Supreme Court in 1996. The standard said that state law is prohibited from interfering with the business of banking.

"It is clear that under the Dodd-Frank Act, the proper preemption test asks whether there is a significant conflict between the state and federal statutes that is, the test for conflict preemption," Dubina wrote.

Vida Baptista, who was not a Chase account holder, filed the class action lawsuit after the bank charged her a $6 fee to cash a check from a Chase customer.

A lower court found that OCC rules allow national banks to charge customers non-interest charges and fees. In addition, the OCC interprets "customer" as "any person who presents a check for payment"

Dubina said the court adopted the reasoning of the Fifth Circuit Court's decision in Wells Fargo Bank of Texas N.A. v. James, which used the Barnett standard to determine that OCC rules preempted a nearly identical statute in Texas.

"Congress clearly intended that the OCC be empowered to regulate banking and banking-related activities," Dubina wrote. "It is not unreasonable to define 'customer' as any person presenting a check for payment."

The court said the OCC specifically authorizes banks to charge fees to non-account-holders presenting checks for payment.

"The state's prohibition on charging fees to non-account holders, which reduces the bank's fee options by 50%, is in substantial conflict with federal authorization to charge such fees," Dubina said.

The decision is the first of what are likely to be several court cases that spar over Dodd-Frank's tweaks to preemption language. The OCC and several banking lawyers argue the reform law did not substantively affect preemption, while state regulators say it made it harder to preempt local law.

"It's probably the first word, but not the last word on the subject," said Laurence Hutt, a partner at

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Arnold & Porter. "It's significant not only because the decision upholds the decision of preemption . . . but it correctly indicates that under Dodd-Frank, you'd look at the test set forth in Barnett Bank."

Still, Hutt said the decision sent a good signal to national bank advocates.

"It presents a very hopeful sign to those of us who follow these things, and it's a very good first decision in this area," he said. "This is the first step, it's not the last step. So there are going to be a lot more decisions and a lot more challenges and a lot more cases, but it's good to have this one under our belt."

Ray Natter, a partner at Barnett Sivon & Natter and a former deputy chief counsel for the OCC, agreed the news was good for national banks.

"Regardless of whether it's technically a precedent or not, you can't take away from the fact that this is a high-level court that is interpreting the Dodd-Frank Act as retaining the Barnett standard," Natter said. "I read the case as saying that the preemption standard under Dodd-Frank is the same preemption standard that's been applied by the OCC since 1996, if not before."

But Buz Gorman, the general counsel for the Conference of State Bank Supervisors, said it's still not entirely clear what Congress meant by "prevent or significantly interfere," the language used in DoddFrank.

"We believe that Congressional intent clearly rolled back preemption in Dodd-Frank, but left room for judicial interpretation," Gorman said. "We think there are going to be other tough cases as well, until everyone has a clear understanding of what the standard in Dodd-Frank actually means."

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American Banker Banks Top Cards in Trust Survey May 12, 2011

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By Kate Fitzgerald

Digital wallet services are being promoted, in part, on the strength of the card brands behind them. But data shows that consumers do not place that much trust in the name on their card.

Just 32% of respondents in a survey from First Data Corp. and Market Strategies International said they would trust the financial institution that issued their card to keep their data secure in a mobile wallet, compared with 47% who trust PayPal Inc. and 59% who trust their primary bank. The card providers fared better than Google Inc. (23%), mobile phone carriers (22%), Apple Inc. (12%) and Facebook Inc. (8%).

First Data, a unit of the private-equity firm Kohlberg Kravis Roberts & Co., plans to present this data in a Web seminar Thursday.

That consumers are most inclined to trust their financial institutions to provide emerging technologies, such as mobile wallets, should be of interest to U.S. banks, Mark Willard, senior vice president and head of Market Strategies' financial services division, said in an interview.

"Consumers are saying that right now banks have permission to be leaders in [the mobile wallet] space," he said. "While there are many new players that want to enter that arena, banks have an opportunity to capitalize on the trust consumers have placed in them and market their products accordingly."

Not surprisingly, younger, more technologically advanced respondents were most ready to adopt new mobile banking and mobile payment technologies, while a large chunk of the population, including older participants, remained uninterested, Willard said.

"The study's results point to the fact that about a fourth of the population is leaning toward adopting these new technologies, a fourth feel technology is moving too fast for them, and about half are somewhere in the middle," he said. "The bottom line is that it remains an advantage to aim product marketing for new technologies toward younger people and early adopters, assuming that others will eventually follow their lead."

In the online survey of 2,000 U.S. consumers 18 and older conducted March 17 to 24, younger consumers, especially those under 35, showed the most curiosity about new banking technologies, including mobile wallet technology that would allow them to store information for purchases through credit and debit accounts in their smartphones for easier access and management, Willard said.

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Asked to describe their interest in mobile wallet technology, 18% of respondents said it sounded appealing.

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American Banker Mind the Customer in Your Fee-Generation Brainstorming May 12, 2001 Mark W. Olson

Fee income, once thought by bankers to be the answer to declining interest margins, has become an increasingly complex management challenge. Bank fees considered inappropriate or excessive contributed to the atmosphere that led to passage of the Dodd-Frank Act and are certain to be addressed in upcoming regulations. But banks have always found fee generation to be challenging.

The core challenge for bankers can be explained in a single phrase: it is difficult to disguise or bury the markup on a dollar. For example, when I buy a suit, I exit the clothing store carrying the suit, perhaps with alterations, on a hanger in a garment bag.

I know from my sales slip what I paid for the suit and perhaps for the alterations, but it is unlikely that I have the information to break down the cost of the hanger and garment bag. But in a well-run store, the cost of each is certainly included in the price.

Contrast that experience with going to an automated teller machine (other than one at my own bank) and withdrawing money. Not only is the fee for withdrawal explicit, but I am allowed to reconsider making it if I am unhappy about the fee. Fees added to most transactions are obvious and provide an opportunity for customer disgruntlement.

To put this in context, consider the remarkable advancement of ATM access. Before ATMs became ubiquitous, it could be quite difficult to convert bank balances to cash especially while traveling or

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away from an area with a branch of one's own bank.

But the banking industry spends hundreds of millions of dollars establishing, running and updating ATMs worldwide. Banks overcame both technological and antitrust challenges to integrate multiple systems, allowing customers not only to withdraw cash but conduct a number of banking functions thousands of miles from their bank or branch. Even when out of the country, bank customers can still conduct business at competitive exchange rates.

Three decades ago such services were hard to imagine. Now they are common. But if one listens to bank customer reactions one is more apt to hear complaints about the fee rather than admiration for the ease of today's banking services.

The growing reliance on fee income was a natural industry reaction to declining interest rate margins, a trend that began in the 1980s and has continued steadily. Some of the fees came from the addition of products such as insurance sales. Some banks chose to focus on low-hanging fruit for fee growth, such as overdraft fees or late fees on installment loans or credit cards.

Some of the more risk-prone bankers actually promoted products that were likelier to generate the "gotcha" fees, such as subprime credit cards or minimum balance checking accounts with heavy fees for overdrafts.

As is often the case, the practices of a few banks came to be seen as representative of the entire industry and therefore came to the attention of consumer groups and ultimately Congress.

Banking fees thought to be unfair or disproportionate to underlying costs were a prime area of debate surrounding Dodd-Frank. Some fees were unjustifiably high and made the entire industry vulnerable, but all banks will need to rethink their approach to fee income in light of the new focus.

The highest-profile example of the fee focus is the Durbin amendment, which directed the Federal Reserve to draft regulations that mandated a precise formula for the interchange fees that could be charged to merchants for debit card transactions.

While merchants view the amendment as banks finally getting their due, many banks say that the required formula does not even cover their full cost and that it will reduce the availability of debit cards. In addition, the newly established Consumer Financial Protection Bureau is expected to scrutinize both the types of products offered by banks and their fees. The agency will emphasize fairness and service to consumers.

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How should bank management respond to this focus? Our strong recommendation for banks is to rethink product selection, fee generation and compliance integration with a renewed emphasis on customer fairness. Beyond safety and soundness, bankers need to think about services from the consumer perspective. In addition to cost considerations, fees need to be value-based and not simply determined by what the market will bear.

Product selection also will be a key part of the banking industry's commitment to customer fairness. Certain retail financial products subprime credit cards come to mind provide limited consumer value but tend to generate maximum up-front fee opportunities for banks and often longer-term credit risk exposures.

Fee generation is an increasingly difficult management issue for bankers, but it will be more manageable for those bankers who give strong consideration to the customer's perspective.

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Boston Globe AGs office scrutinizing for-profit colleges May 12, 2011 By Todd Wallack Massachusetts Attorney General Martha Coakley is investigating the recruitment and student loan practices at several for-profit colleges in the state, the latest in a series of legal inquiries into the industry.

The Washington Post Co., which operates one of the largest chains of for-profit schools, said yesterday it received an inquiry on May 3 from Coakleys office for information on its Kaplan Career Institute campus in Boston. A second company, Corinthian Colleges Inc., reported receiving a similar request from Coakleys office about two of its local schools Everest Institute campuses in Brighton and Chelsea on April 29.

The inquiry comes at a time when for-profit chains have been under assault across the country for allegedly saddling students with onerous student loan debt while failing to adequately prepare them for

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jobs in their chosen fields.

Graduates of the proprietary schools have much higher delinquency and default rates on their student loans than those from traditional nonprofit and public schools, according to data released by the US Department of Education.

And the US General Accounting Office sent investigators posing as potential students to for-profit schools that depend on federal student loans for as much as 90 percent of their revenue. The GAO said all 15 schools it visited misled or made questionable statements about the cost of education, how much the prospective students would earn after graduation, and other issues.

And just last week, the Justice Department joined a whistle-blower lawsuit with 11 states, including Massachusetts, against another for-profit chain, Education Management Corp. The suit accused the company of illegally paying recruiters bonuses for signing up students at its schools, including the New England Institute of Art.

Coakleys investigation also appears to focus partly on recruitment. Corinthian disclosed that Coakley requested information and documents about its recruiters and enrollment practices, as well as its student loan default and graduation rates, and any analyses its schools have of their students ability to repay their loans.

Kaplans parent company, the Washington Post Co., said Coakley requested information about recruiting and educational financing at its Boston campus, according to a filing with the Securities and Exchange Commission.

Both companies said they would cooperate with the attorney general.

Corinthian spokesman Kent Jenkins Jr. said he was not aware of any specific complaints at its campuses that would have prompted Coakleys request. Kaplan said in a statement that it allows students to opt out of classes after a grace period and not face tuition or loan costs.

Brad Puffer, a Coakley spokesman, said he couldnt comment on or confirm the investigation.

Other states have launched investigations, including Kentucky, Florida, Illinois, and Iowa. Kentucky Attorney General Jack Conway recently told reporters he is leading a joint investigation of 10 attorneys general into whether for-profit colleges are engaging in deceptive marketing practices.

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Were entering a new phase of state activism without question, said Jarrel Price, an education industry analyst with Height Analytics in Washington, noting the federal regulators have been investigating the industry for the past two years. In the last couple months, weve really seen a lot more activity from the state attorneys general.

Nationwide, there are about 3,000 for-profit colleges, ranging from culinary academies to technical schools, with roughly 2 million students.

The US Department of Education already has adopted some new rules covering recruiters and proposed gainful employment regulations that would cut off funding to schools with the worst repayment rates. The US Senate education committee has held multiple hearings looking into for-profit colleges.

But the Washington Post Co. and other education companies are fighting the new federal regulations. For-profit schools insist they fill a valuable niche, providing critical employment skills to older workers and others who arent being served adequately by other schools. And they say their loan-repayment rates may be lower than some other schools simply because of the types of students they serve.

Washington Post Co. chief executive Donald Graham recently said the new regulations would be a death sentence for many for-profit schools serving large numbers of poor students. And he said it would force the company to focus on more affluent students who would be better able to pay off their loans.

Whatever their aim, the proposed regulations hit the wrong target, Graham said in a letter to shareholders. They scored a direct hit on institutions that serve low-income students.

The company declined to comment further on the Massachusetts investigation. But Graham will probably talk more about the increased scrutiny on the industry at the companys shareholder meeting today.

Some schools have also faced lawsuits on behalf of students. The parent company of the California Culinary Academy agreed to a $40 million settlement last year to settle allegations that it lied about its job placement rate and other facts.

Price, the industry analyst, said many schools have already cut back on incentives for recruiters, become more selective in accepting students, and made other changes to avoid running afoul of regulators. He said enrollment has fallen by 20 to 50 percent in the past year.

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Its very, very significant, Price said. The industry is contracting rapidly.

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NPR For-Profit Colleges: Targeting People Who Can't Pay May 12, 2011 By NPR Staff

For-profit colleges are making billions of dollars in profits by targeting vulnerable populations with misleading promises of low-cost tuition and jobs after graduation, says Bloomberg News investigative reporter Daniel Golden.

On Thursday's Fresh Air, Golden explains how the for-profit college industry has grown substantially in the past decade by targeting underprivileged students who qualify for federal loans. Many of these students drop out before graduating or can't find the types of jobs that will allow them to repay their loans, leaving them with staggering debt.

"Because the tuitions are high and they've had to borrow to pay the tuition, they're laden with debt and often they can't find a good enough job to be able to pay that debt off," he says. "And because these student loans can't be discharged even in bankruptcy, they follow these former students throughout life. ... It can be a lifelong drag on people who already are struggling."

Golden is an editor-at-large for Bloomberg News. He shared the George Polk Award for educational reporting for a series on the for-profit college industry. In 2004, he received the Pulitzer Prize for Beat Reporting for his series on college admissions and preferential treatment for The Wall Street Journal. He is also the author of The Price of Admission: How America's Ruling Class Buys Its Way into Elite Colleges and Who Gets Left Outside the Gates.

Interview Highlights

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"Until recently, most of these schools were paying their recruiters based on how many people would sign up. It's known as incentive compensation. So the recruiters had a motivation to sign up anybody they could and that's what they were doing. Incentive compensation in college recruiting was actually banned in 1992, but in 2002 the Bush administration put through a series of loopholes and the companies used those loopholes to get around the ban and pay their recruiters per-head. ... The Obama administration has sought to reign this in and has essentially gotten rid of those loopholes."

On the target population of for-profit colleges

"The target population tends to be predominantly low-income and minorities. I visited homeless shelters where for-profit colleges were seeking students. They've also looked for students very aggressively through active-duty military whose tuition is paid by the Defense Department and war veterans whose tuition is paid by the GI Bill."

On whether recruiters were honest with potential students

"The evidence seems to suggest that recruiters who were paid on the basis of how many students they would sign up did not necessarily provide a balanced picture of the pluses and minuses and didn't also necessarily give people enough time to make a thorough assessment for themselves. Often you're dealing with people whose families do not include college graduates and do not have a lot of sophistication about the system and may just have seen an ad on a website or a late-night television program, called up on a whim and got themselves signed up for federal student loans almost before they knew what happened. That doesn't absolve them totally of responsibility but it suggests that the colleges have a responsibility, too."

On regulation in Congress

"There has been a lot of battling over this particular regulation. There was an effort in Congress by supporters of for-profit colleges to essentially defund that rule that could have cut off some of the access to financial aid for some of the schools. That didn't pass the effort to defund it so I think the regulation looks like it will be taking effect at some point. But for-profit colleges have a lot of allies in Congress. It's another parallel in a way to the subprime [mortgage crisis] in a sense that they're a little bit like Fannie Mae and Freddie Mac where the for-profit colleges, because they're Wall Street companies, ... have a lot of sympathizers among Republican supporters of free enterprise and big business and because they serve low-income families, they have quite a few allies among Democrats who know that a lot of their constituents go there."

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Huffington Post States Shortchange The Unemployed With Junk Debit Card Fees: Study May 11, 2011 By Arthur Delaney

WASHINGTON -- Many states shortchange the jobless by distributing unemployment benefits on debit cards loaded with obnoxious fees, according to a new study by the National Consumer Law Center. Of the 40 states that have switched from paper checks to prepaid debit cards, 22 states' cards charge ATM fees, 24 charge balance inquiry fees, and 28 charge inactivity fees. The cards in Arkansas, Idaho, Nebraska, Ohio, and Oregon come with overdraft fees ranging from $10 to $20. And in Connecticut, Iowa, Rhode Island, and Tennessee, cardholders "must pay for every ATM inquiry or pay a denied transaction fee if they request cash when their balance is insufficient," the study says. Tennessee stands out for having the card with the most "junk fees," the study says. Tennessee's card, provided by JPMorgan Chase, charges $1 for initial ATM withdrawals, 40 cents for balance inquiries, and 25 cents whenever someone swipes the card at checkout. It's one of just four states that doesn't provide even one free ATM withdrawal per deposit. Tennessee doesn't think its card's fees are junk. "Im not sure calling them 'junk fees' is a fair statement," said Jeff Hentschell, a spokesman for the Tennessee Department of Workforce Development, which distributes Tennessee Automated Payment cards for jobless benefits. "When you look at the context of where we were and where we are today, the fees are actually minimal compared to where people were going to cash paper checks before." Indeed: The NCLC study itself points out that for people without bank accounts, "getting cash from a UC prepaid card will usually be cheaper than paying a check casher to cash a paper check."

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Creditslips.org The Servicing Fraud Settlement: the Real Game May 12, 2011 By Adam Levitin

Warning: This is a long blog post. But if you follow mortgage servicing, I think youll find it worth reading. Despite lots and lots of media coverage of the servicing fraud settlement, nobody seems to understand the real story that's going on. I think that this post will explain a lot.

Let's start by recapping what we know. Back in March we started hearing media reports of a proposed penalty for servicers in the $20-$30B range. Then the American Banker published a 27-page term sheet from the AGs for servicing standards. Next, Huffington Post published a 7-page CFPB powerpoint presentation. Then came the draft C&D orders and then in April, the final C&D orders (which eliminated the ridiculous "single point of contact which need not be a single person" and replaced it with "single point of contact as hereinafter defined" and then failedquite deliberatelyto define it anywhere in the document).

Now theres another round of activity and conflicting reporting. The American Banker reported that there was a new AG term sheet proposed and that principal reductions were off the table. That turns out to be incorrect, as Shahien Nasiripour reported in the Huffington Post. The new AG term sheet that the American Banker referenced deals only with servicing standards. The American Banker assumed that this mean that principal reductions were off the table because they werent referenced in the term sheet. In fact they are still very much in play. Theyre just in a second, separate term sheet. So now there are two separate term sheets--one covering servicing standard and another covering monetary issues/principal reductions. (Recall that the original AG term sheet did not cover the monetary issues that was clearly for a separate document.) We are also hearing news reports that the banks are offering to settle for $5B and wont go above $10B.

So how do we make sense out of all of this?

The short answer is that the fight is not over a piddling $5B or $10B or even $20B. The banks would buy peace in a second for $20B and servicing reform. So what does that tell us? It indicates that the negotiations are over a substantially bigger figure than $20B. And this explains everything about the banks' negotiating strategy including the recent attacks on Elizabeth Warren by the Wall Street Journal's editorial page and by Congressional Republicans on the CFPB.

Now this isn't just my theory from reading between the lines. Instead, its exactly what follows from a careful reading of the documents and the rhetoric. The key, our Rosetta Stone, as it were is the CFPB

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powerpoint. It hasn't gotten a lot of analysis, but careful analysis of it explains everything that's going on.

There are two important things to note in the CFPB powerpoint.

1.The CFPB powerpoint contains an analysis of how much money servicers' saved by failing to comply with the law. It concludes that they saved at least $25B, based on an assumption that it would cost 75bps more per year to service each of these loans. (One can argue about that assumption, but thats neither here nor there.) So if servicers were simply fined $24B, it wouldn't include any actual penalty. It would only be disgorgement of wrongful profits.

I don't think anyone has really understood the significance of this number. It means that the CFPB's (frankly rather conservative) estimate is that the banks made $24B from servicing fraud. That's the largest consumer fraud in history. This isn't just some chump game with cutting corners on affidavits. It's that doing that (and lots of other bad stuff) has saved the banks $24B in costs.

2. The CFPB powerpoint contained an analysis of the cost of various levels and numbers of principal reduction modifications. This is critical--the principal reduction modifications are separate from the $24B penalty. In other words, the total cost to the banks of a settlement would not be $24B. It would be $24B in disgorgement + the principal reductions.

The grid on the CFPB powerpoint shows the costs of a range of principal reduction modifications to be done over 6 months. The axes on the grid are the number of modifications and the depth of the modifiations. There's an enormous range of costs on the grid--from $7B to $135B. In other words, the total settlement cost (putting aside the cost of implementing improved servicing standards) would be between $32B and $160B depending on the number and level of principal reduction modifications. I want to underscore, however, that the powerpoint does not indicate what the CFPB thinks is an appropriate number--and clearly that would be a negotiated issue.

Whatever that number, it's also important to recognize that not all of the cost of principal reductions would be borne by the banks. In the powerpoint, at least, the MBS investors would bear the costs of the principal reductions if NPV positive, but 2d liens (big 4 bank balance sheets) would be reduced too. But it means that the price tag for settlement being offered to the banks isn't $24B. It's substantially higher. We don't know how much higher--the powerpoint was simply showing a range of options and their costs, not recommending any particular option--but even at the low end of $7B that's a sizeable increase on top of $24B.

Recognizing the full potential cost of a settlement to the banks and how most of it could be in the form of principal reductions rather than a fine explains everything that's been happening with the negotiations and the Congressional Republicans' witchhunt against Elizabeth Warren.

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If the cost of peace with the AGs and Feds was a mere $24B, the banks would settle. Remember, thats $24B for all the banks, not $24B for any one bank. The mortgage servicing issues are an enormous drag on BoA generally, Wells knows that it is a huge litigation target in every state, Citi just wants to keep its head down, and Ally wants a clean bill of health for its IPO. The banks really want to put these issues behind them.

$5B a piece for each of the big servicers isnt a ridiculous price for putting the issue to rest. Indeed, news reports that the banks will consider $5B-10B show that this is only a matter of haggling about price, not principle (no pun intended).

Thats why I don't think the hold up is over the $24B. Instead, the sticking point in the negotiations has got to be the additional cost of the principal reduction mods, whatever that might be. At the extreme level, if the settlement would cost a total of $160B, that would be about a third of the equity of the four biggest banks. (Compare that with the $750B in negative equity that exists.)

If I'm right about this, then everything about the banks' negotiating strategy makes sense. If the banks are willing to pay $24B, but not the additional cost of principal reduction mods, it makes sense for them to run the clock, to focus on principal reductions in their PR, and to do everything possible to minimize the role of the CFPB.

First, inflation alone will help reduce negative equity and thus the cost of principal reduction mods (unless we continue to see a double dipwhich is likely, but why not take a gamble on it?).

Second, the AGs' main leverage here is the threat of litigation. But litigation would be incredibly slow, especially if the OCC has the banks' backs and raises preemption challenges at every step (as it might do in light of the consent orders). It might take 3-4 years to get to a judgment, by which time housing prices might have rebounded and lots of foreclosures would have been processed, so there wouldn't be that much negative equity outstanding to reduce through principal mods. Delay lets the banks avoid principal reduction mods.

Moreover, the banks know that the AGs cant be too serious because they havent done any investigation. Im just baffled how the AGs are conducting settlement negotiations without having done any investigation. Its a serious problem. How can the AGs know the proper price for the settlement (high or low) without knowing what cards they hold?

Third, the one agency that could really speed along litigation is the CFPB. The part of the litigation that will take up the time would be discovery, but the CFPB could speed that up significantly through its examination power. But the CFPB can only be effective with this if it has a Director. And that explains why the banks (and the OCC) brought out the Wall Street Journal editorial page and Congressional Republicans to wage war on Elizabeth Warren, the frontrunner to be appointed CFPB Director. Make Elizabeth Warren politically toxic on whatever trumped up charges can be found (she said "advised"

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when she in fact recommended! She was in the room during negotiations! Gasp!). The goal is to keep the Director position vacant, so the CFPB can't move along litigation.

There was a lot of justified pushback (including from yours truly) against the attacks on Elizabeth Warren. So rather than beat up on Professor Warren, the bank strategy changed to attacking the CFPB itself under the guise of regulatory improvement. First, the GOP pushed several bills in the House Financial Services Committee meant to smother the CFPB in its crib. Then the GOP in the Senate said that they wouldnt confirm any CFPB Director unless the House reforms were made, and then they started making unpleasant noises at the suggestion that there could be a recess appointment. (News flash: winning 1 house of Congress in a mid-term election aint an electoral mandate to do anything. You need the hat trick for that.)

Every week that is spent on negotiations that get nowhere lets the banks run the clock a little further. So the banks will try to stay at the negotiating table as long as possible without every actually conceding anything. But that's the strategy here--run the clock to avoid principal reductions. What terrible is that this strategy seems to be working--the CFPB has been shut out of negotiations because the Wall Street Journal and Congressional Republicans have made such an issue over the CFPB. (This might turn out to be short-sited, but that's another story.)

And this ties in perfectly with the PR spin: the line coming out of the banks hasn't been an objection to $25B in fines. It's been an objection to principal reductions. The hackneyed moral hazard objection has been trotted out (despite the banks' doing some principal reduction mods already) and we've had Moynihan (BoA), Stumpf (Wells), and Jaime Dimon (JPM) saying that principal reduction mods are "off the table."

Listen to the banks. Their rhetoric says it all--the game here is about the principal reduction mods, not about the servicing standards or the $24B fine. It's about the cost of the principal reduction mods. (There might be some ancillary issues like the number of mods, but its really gotta be about cost.)

Now lets be clear. Principal reduction mods are not about correcting robosigning. Robosigning is what's gotten the most media attention, but that's not the only issue around. There are a host of other flat out legal violations (just consider the $20M jury verdict in the Servicemembers Civil Relief Act cases to get a sense of what these violations cost-1,000 verdicts is $20B). There's another panoply of questionable, but perhaps not illegal acts (e.g., MERS issues). And if you want a doozy, how about the many loans that are endorsed like simply to Deutsche Bank as trustee, rather than Deutsche Bank as trustee for a particular trust (Deutsche is trustee for over 2,000 RMBS trusts). That didnt fly in a North Carolina appellate court, and it wasnt a fluke endorsement (and there are worse problems than that in terms of endorsements).

And then there's also lots of good policy reasons for pushing principal reduction modifications. Principal reduction modifications start to address the $750B in negative equity in this country and help the housing market to clear without the inefficiencies and social externalities of foreclosure. And of course principal reduction mods make the banks pay an appropriate price (and in an appropriate form) for the economic and social harms they caused with the housing bubble and foreclosure aftermath, including

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threatening our fundamental property title systems via corner cutting on paperwork.

Finally, consider what it means that we're even seeing an eye-popping figure like $160B. It might be out there just to push the banks toward settling. But the amount of shit that the feds and AGs must think there is to come out with a number like that down on paper (especially for an agency under as much scrutiny for an sign of going off the rails as CFPB) makes my skin crawl. I worry that we don't have any handle on just how much rot is in the system and that we've been papering over it as the stock market rebounds.

Now the banks have some legitimate concerns about principal reductions. If they are handled incompetently they will undoubtedly lead to a strategic default problem. And the banks know this Countrywides settlement with the AGs was a paragon of foolishness. It made modification eligibility depend on delinquency status and applied prospectively. Thats virtually inviting strategic defaults.

But there are lots of ways to fix this. Heres a simple one: principal reductions apply only retrospectively. Now there are problems with doing it just retrospectively. But prospectively, it could be applied to mortgages that fit particular criteria irrespective of default status (indeed, for mortgages that are 240 days delinquent, Im not sure what good principal reduction is likely to do)the biggest bang in terms of stabilizing the housing market might be to do principal reduction to homeowners who are not yet in default or to those who do strategically default because theyre the ones who are willing to gamble (and walkaway) from their homes.

Whatever the terms of a settlement, perhaps the most important question is what issues actually get settled. Obviously the AGs cant settle for consumers or investors, and those issues are going to continue to plague the banks for some time to come. And the AGs can't bind the CFPB in terms of prospective regulation of the servicing industry. (Fat chance the banks clean up their act by July 21). But the AGs are the biggest dogs in the hunt at this point.

The banks are, of course, going to want the broadest possible settlement and if the AGs aren't careful, the banks will pull one over on them like they did on the merchants in the Wal-Mart interchange antitrust litigation settlement, where the wording was vague and then subsequently interpreted in the banks' favor.

The CFPB powerpoint also gives us a useful yardstick for measuring a final settlement. Anything less than $24B would let the banks come out ahead. Let me repeat that. Anything short of $24B means that the banks broke the law and got to keep some of the profits. If that's what the AGs settle for, it's a disgrace. $24B really has to be the baseline above which there's a settlement. I don't think the AGs are going to solve the foreclosure crisis in one fell swoop (they'd need to do some investigation to even have a shot at that), but settling for $5-$10B means that they'd let the banks keep 60%-80% of estimated illegal profits. Just keep that in mind.

Final thought: If I'm right about this, and that the number being bickered about isnt $5 vs. $10B but

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something more like $40B-$60B, I worry that all hell is going to break loose. Progressives that were hating on the AG settlement for being too light on the banks, might rethink that position. And the howl we are going to hear from the right is going to be unparalleled. The idea that businesses could have done multi-billion dollars worth of harm to consumers (or the legal system) simply isnt within the conceptual grasp of the Wall Street Journal editorial page and its ilk. The only possible explanation they have for this is a shake-down. Oh its going to be a fun summer.

Thanks for bearing through to the end. I hope it was worthwhile.

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New York Times Prepaid Cards Subject Jobless to Host of Fees May 11, 2011 By Ann Carrns

When youre getting unemployment benefits, you by definition dont have a lot of cash to spare. So it seems especially unfair that people who receive their jobless benefits on prepaid debit cards are subject to a variety of fees they can ill afford to pay.

A report out this week from the National Consumer Law Center lays out a host of ways in which banks nibble away at jobless benefits with fees the center called junk. The prepaid cards are most often used by jobless recipients who dont have checking accounts, and so are ineligible for direct deposit. Practices vary from state to state because jobless benefits are distributed at the state level, and state governments negotiate the terms of agreements with card providers. In many states, charges apply for using A.T.M.s, even if theyre in network; checking balances; and even for not using the card enough (inactivity fees, as high as $3).

The report is especially critical of a card issued in five states by U.S. Bank, which charges overdraft fees of $10 to $20 if recipients use more than the amount on their cards. Charging an overdraft fee to someone who doesnt even have a bank account struck me as particularly ingenious what are they overdrawing, exactly?

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U.S. Bank is able to do this, the report explains, because jobless benefits are typically paid into pooled accounts that then have subaccounts designated for individual recipients. In most states, if a recipient uses the card to make a purchase that exceeds his or her benefits, the transaction is simply denied. But in five states Arkansas, Idaho, Nebraska, Ohio and Oregon U.S. Bank lets the transaction go through, and then deducts the amount, plus the overdraft fee, from the recipients next benefits check. (The bank issues cards without overdraft fees in several other states.) Those fees can make a big dent, considering that the typical weekly unemployment check is just $294.

Teri Charest, a spokeswoman for U.S. Bank, said in an e-mail that overdraft protection is an option that states can choose to add to their prepaid card programs. But even when it is offered, cardholders must opt in to overdraft coverage. The terms are clearly disclosed so cardholders are aware of the fee should they need to use it, she said.

Other banks dont charge such hefty fees, but some do charge denial fees, ranging from 25 cents to $1.50, when an attempted A.T.M. or retail transaction fails for lack of funds. Some even charge for live customer service calls or withdrawing funds using a human teller.

The practice occurs despite a directive from the Department of Labor stating that deducting overdraft, overdraft fee, or denial fee from future unemployment payments is inconsistent with federal law.

The best cards, offering free in-network A.T.M. withdrawals, at least two free out-of-network withdrawals, no balance inquiry fees and no inactivity fees, are offered in New York and New Jersey by Bank of America, the report found.

The worst for junk fees, in addition to the U.S. Bank version with overdraft fees, is the Tennessee card issued by JPMorgan Chase. It is one of only two states that fail to offer any free A.T.M. withdrawals.

The report recommends that smaller states band together for more clout when negotiating card terms with banks. And it urges the new Consumer Financial Protection Bureau to take up the cause of excessive fees on prepaid cards when it opens for business this summer. We hope prepaid cards are high on the agenda, said Lauren Saunders, managing attorney at the Consumer Law Center in Washington, and the primary author of the report.

Have you received jobless benefits on a prepaid card? What has your experience been?

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Huffington Post Obama Administration Pushing For Homeowner Fund While State Officials Try To Levy Fines In Ongoing Mortgage Probes May 11, 2011 By Shahien Nasiripour

WASHINGTON -- The Obama administration is pushing for the creation of a federal account funded by the nation's 14 largest mortgage firms to help distressed borrowers avoid foreclosure and settle ongoing probes into faulty mortgage practices, according to a confidential term sheet reviewed by The Huffington Post.

The fund is one of three proposed by a coalition of state attorneys general and administration officials, which were discussed Tuesday with representatives of the nation's five largest mortgage firms. A second account would be funded by civil penalties and fines and used by states as they see fit. The third would be designated for homeowners directly harmed by bank abuses, like illegal home seizures and wrongful foreclosures.

While state officials are pushing for actual monetary damages, administration officials are looking to do something completely different: Rather than have banks shell out cash to settle claims or in admitting wrongdoing, the administration wants to create spending targets for each firm's efforts to help troubled homeowners. And for every dollar the firms spend, their accounts would be credited.

The probes are focused on improper home repossessions and flawed -- and sometimes illegal -foreclosure practices. Investigations were launched last fall after the nation's largest lenders voluntarily halted home seizures when defective document practices -- like so-called "robo-signing" -- came to light, erupting into a national scandal. State officials, Obama administration policy makers and bankers are discussing possible settlements this week in a hotel outside Washington, D.C.

One reason why the administration is pushing for a program that does not call for levying fines has to do with how that money could be used. Monetary penalties would go to the Treasury, as opposed to helping homeowners, and could only be appropriated for other purposes by Congress, one official involved in the negotiations said. The administration's approach is based on its goal of helping the souring housing market heal.

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But to others involved in the talks, who asked not to be named, the administration's approach resembles one long-criticized by Republicans in Congress as "HAMP 2.0" -- a second version of the Home Affordable Modification Program, the White House's now-discredited $50 billion signature foreclosure-prevention initiative. Federal auditors have said the administration will be lucky if it spends even a quarter of that amount helping homeowners. In March, the Republican-led House of Representatives voted to kill the program.

Federal officials involved in the discussions defended their approach Wednesday, arguing that the administration has long favored using the investigations to help distressed borrowers. The homeowner fund outlined in the term sheet could be used for housing counseling, short sales, reductions in mortgage principal or slashing borrowers' mortgage interest rates.

Representatives of the Treasury Department, Justice Department, and the Department of Housing and Urban Development declined to comment on the record.

The administration's approach also raises questions over whether federal officials will credit firms for new actions taken as part of the proposed settlement agreement, or whether firms will get credit for simply doing what they've been doing since the housing crisis began. Some speculated that the latter scenario could very well happen.

For example, the nation's nine largest mortgage handlers have reduced loan balances for more than 72,000 borrowers since the beginning of 2009, according to data from the Office of the Comptroller of the Currency and the Office of Thrift Supervision. Last year, those firms initiated more than 2.1 million trial and permanent modifications, as well as payment plans, data show.

Officials argued that the administration's fund for troubled borrowers would be greater in volume than what's been allocated in the past and would require firms to act much quicker in modifying mortgages -a positive for homeowners long beset by unnecessary delays and the paperwork snafus of their mortgage servicers.

Targets for each firm would be partly based on their current record at modifying mortgages. Firms that don't meet these targets in the specified time frames would be penalized.

However, those involved in the discussions said they were mindful of the potential for banks to game the process by simply claiming credit for initiatives they had already planned to undertake.

Some also wondered why federal officials weren't taking a harder line with the banks. If federal officials have evidence that the targeted firms indeed seized homes illegally and broke federal rules when

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dealing with delinquent borrowers, why isn't the administration pushing for steep penalties and forcing the firms to admit they abused homeowners?

But federal lawsuits against the banks are still on the table, officials stressed, arguing that any proposed settlement agreement or conclusions drawn from them remain premature. Last week, the Justice Department sued Deutsche Bank AG, one of the world's 10 biggest banks by assets, for at least $1 billion for defrauding taxpayers by "repeatedly" lying to a federal agency when securing taxpayerbacked insurance for thousands of shoddy mortgages.

To help the market recover, the administration is seeking to use the ongoing probes and the loan modifications that would result to stanch the flood of foreclosures depressing prices and confidence. Levying penalties can't accomplish that goal, an official argued.

It's either punish the banks or help homeowners.

Home prices have fallen over the past year, reversing gains made early in the economic recovery, according to data providers Zillow.com and CoreLogic. Sales of new homes remain depressed, according to the Commerce Department. More than a quarter of homeowners with a mortgage owe more on that debt than their home is worth, according to Zillow.com. And more than 2 million homes are in foreclosure, according to Lender Processing Services.

A review of about 2,800 loans that experienced foreclosure last year serviced by the nation's 14 largest mortgage firms found that at least two of them illegally foreclosed on the homes of "almost 50" activeduty military service members, a violation of federal law, according to a report last week by the Government Accountability Office.

Those violations are likely only a small fraction of the number committed by home loan companies. Federal bank supervisors "could not provide a reliable estimate of the number of foreclosures that should not have proceeded," they said in an April report on flawed mortgage servicing practices.

The April review led the OCC and the Federal Reserve to sanction 10 of the 14 targeted mortgage firms for their sloppy practices. The regulators also demanded that the institutions review past foreclosures and submit plans detailing new procedures.

Bankers and lawyers representing the five largest mortgage firms -- JPMorgan Chase, Bank of America, Wells Fargo, Citigroup and Ally Financial -- have told officials in the discussions this week that they do not want to pay civil penalties. Rather, they want the money they'd shell out to go towards helping homeowners, according to sources involved in the discussions who spoke on the condition of anonymity.

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The bankers asked state and federal officials to include the nation's 14 largest firms in any proposed settlement, as opposed to just the top five, because they feared falling behind competitors who would not be forced to play by the same rules when dealing with distressed borrowers, according to an official involved in the discussions. However, only the top five banks were represented in talks on Tuesday.

By taking shortcuts in processing troubled borrowers' home loans, the nation's five largest mortgage firms have saved more than $20 billion since the housing crisis began in 2007, according to a confidential presentation prepared for state attorneys general by the nascent Bureau of Consumer Financial Protection and obtained by The Huffington Post in March.

Some of the banks have already begun making arrangements in anticipation of federal and state action.

JPMorgan Chase recently wrote down $1.1 billion off the value of its mortgage servicing operation because it expects increased costs to come from complying with officials' demands.

Bank of America said it wrote down $450 million off the value of its mortgage servicing operations in each of the "last couple of quarters" because it anticipates rising costs when dealing with delinquent borrowers, chief executive Brian Moynihan told analysts last month.

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Housing Wire Principal reduction still possible in AG settlement with mortgage servicers May 11, 2011 By Jon Prior

The coalition of state attorneys general issued a revised settlement offer Friday to mortgage servicers under investigation for faulty foreclosure practices, and principal reduction is still part of the equation.

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The offer would, among other requirements, set up a monetary fund the banks would pay into, though no number was conveyed to the banks, said Geoff Greenwood, a spokesman for Iowa AG Tom Miller, in an interview with HousingWire Wednesday.

The fund would go to various state and federal agencies and would be administered by someone outside of the banks, though details are still being negotiated.

The AGs set up a variety of rules for how the money will be disbursed from this fund to families affected by the scandal, including restitution and principal reduction.

Reports surfaced earlier this week that the AGs dropped their demands for principal reduction from the initial offer. Greenwood said, while the requirement isn't in the new term sheet, some families could still receive this type of assistance through the fund.

"This is a combination of terms and some changes," Greenwood said. "It is not a start-from-scratch document."

A source familiar with the negotiations confirmed the banks offered to pay $5 billion as part of the settlement. Greenwood could not comment on what the banks were offering.

Last year, major servicing arms at Bank of America (BAC: 12.125 -1.02%), JPMorgan Chase (JPM: 43.73 -1.13%), Wells Fargo (WFC: 27.8599 -1.07%), Citigroup (C: 41.78 -2.66%), Ally Financial (GJM: 24.16 -0.04%) and smaller firms paused foreclosure processes to check and correct faulty foreclosure affidavits.

These companies signed consent orders with the Office of the Comptroller of the Currency and the Federal Reserve in April, pledging to implement new programs and internal oversight.

Greenwood said the negotiations between banks, the AGs and other regulators began in Washington Tuesday and will continue through Thursday.

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L.A. Times Foreclosure rate slows as repossession timeline lengthens May 12, 2011 By Alejandro Lazo

Increased scrutiny of how lenders foreclose on Americans has dragged the repossession process out to unprecedented lengths, driving down the pace at which banks are taking back homes.

Big banks are taking longer not only to push borrowers into foreclosure, but also to move homeowners through each stage of the process than in previous years, according to a report by Irvine-based RealtyTrac.

The extended timelines have meant a reprieve for troubled borrowers. But economists said the delays could hold back a national housing rebound if foreclosures remain a significant part of the market for years to come.

In April, U.S. foreclosure activity fell for the seventh month in a row on a year-over-year basis to the lowest point in more than three years, RealtyTrac said. The sharp April drop was the result of the foreclosure-processing slowdown and not an indication of a housing rebound lifting people out of default, experts said.

"The banks have had to slow down and get more lawyers involved because of all of the fuss over the robo-signing scandal," said Christopher Thornberg, principal of Beacon Economics, referring to the revelations last year that banks foreclosed on properties using faulty paperwork.

Foreclosure filings notices of default, scheduled auctions and bank repossessions dropped 9% in April from March and plunged 34% from April 2010 as 219,258 U.S. properties received new filings in April. The number of bank repossessions fell 5% from the prior month and 25% from April 2010, with lenders taking back 69,532 U.S. properties. In all, 239,795 foreclosure filings were made, with some properties receiving multiple filings.

In California, 55,899 properties received new foreclosure filings, down 7% from the previous month and

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off 20% from a year earlier. But a 22% jump in home seizures compared with March contributed to keeping the state's foreclosure rate the third highest in the nation, with 13,741 homes seized. That was still down 19% from April 2010.

One in every 240 California homes received a foreclosure filing in April, RealtyTrac said.

Houston Smith, a Hermosa Beach real estate agent who markets foreclosures for big banks, said that as a result of the paperwork fiasco, he has seen the pace of bank-owned properties released into the market slow significantly.

"[Lenders] are under increased pressure and encouragement to make every effort to do a loan modification, or a short sale, and that has been a dramatic change," Smith said. "It does not mean that there are fewer properties in trouble."

New laws have helped drag out the process in many states. Consumer advocates and attorneys also are increasingly challenging bank actions in courts and are ramping up their lobbying efforts to push for more mortgage workouts for borrowers in trouble.

"In the end it is really a sideshow," said Alys Cohen, a staff attorney for the National Consumer Law Center. "The paperwork needs to be proper, but the real question is whether homeowners will get loan modifications when they qualify for them."

Nationally, foreclosures completed in the first quarter of 2011 took an average of 400 days from start to finish, according to RealtyTrac, an increase from 340 days during the same period in 2010 and more than double the average of 151 days it took to foreclose during the same period in 2007.

The process has even slowed in California, where foreclosures remain largely outside of the court system. In California, the average foreclosure took 330 days in the first quarter, up from 262 days during the same period last year and more than double the average of 134 days during the period in 2007.

In states where a court order is needed to repossess a home, foreclosures are taking even longer.

The average timeframe from start to finish in New Jersey and New York was more than 900 days in the first quarter, more than three times the average in the first quarter of 2007 for both states, according to RealtyTrac.

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In Florida, the average foreclosure took 619 days in the first quarter, up from 470 a year earlier and nearly four times the average of 169 during the same period in 2007.

Federal regulators last month ordered the nation's biggest banks to overhaul their procedures and compensate borrowers injured financially by wrongdoing or negligence. A wider-ranging investigation conducted by a coalition of state attorneys general and other federal agencies is ongoing.

Several states have sought to put their own limitations on how quickly banks can take back homes. Homeowners also appear to be increasingly challenging foreclosures, particularly in states where a court order is required.

States with a judicial foreclosure process registered a 3% decrease in overall foreclosure activity from March, but a 47% plunge from April 2010. States with a non-judicial foreclosure process posted an 11% month-over-month decrease and a 26% year-over-year decrease.

Some economists are concerned that a slower foreclosure process will mean that the housing recovery will take longer to get going. Foreclosures tend to sell at a discount, and, when making up the bulk of sales in a market, give the perception that prices are falling. In addition, residential builders are struggling to compete with foreclosed homes. Home building has typically been an important boost to an economy exiting recession.

"Clearing this stuff out and getting this stuff over with is just essential, and so in the long run the faster these things can be resolved now, the better," said Richard Green, director of USC's Lusk Center for Real Estate. "That is the only point at which the market can resume normalcy."

But Kurt Eggert, a professor at Chapman University School of Law, said that much of the slowdown in California and other states has been intentional by banks that do not want to see another steep drop in prices. Fewer foreclosures and more mortgage modifications would be a good thing, he said.

"If servicers foreclosed as quickly as they could, and they dumped all the properties on the market, you could get a downward spiral," Eggert said. "As that happens, more and more borrowers go underwater and you could have a vicious cycle just like the housing boom was fed by the perception that prices always go up, you could have a housing slump that is fed by the perception that prices always go down."

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The Atlantic Is the Obama Administration Pressuring Banks to Make More Subprime Loans? May 11, 2011 By Daniel Indiviglio

Remember back in 2008 how the U.S. had a terrible financial crisis caused by too many subprime mortgages being issued by banks? Apparently, Washington doesn't. Even if you're cynical about the government's ability to learn from its mistakes, it seems unthinkable that it could be pressuring banks into making more subprime loans again. But according to a recent Bloomberg article, that's exactly what's happening.

Let's go to the article by Clea Benson:

Lawyers and bank consultants say regulators and the Obama Administration are scrutinizing financial institutions for a practice that last drew attention before the rise of subprime lending: redlining. The term dates from the 1930s, when the Federal Housing Administration drew up maps using red ink to delineate inner-city neighborhoods considered too risky for lending. Congress later passed laws banning lending discrimination on the basis of race and other characteristics. "The agencies have refocused on redlining because, in the wake of the subprime explosion and sudden implosion, they are looking at these disadvantaged neighborhoods and not seeing any credit access," says Jo Ann Barefoot, co-chair at Treliant Risk Advisors in Washington, D.C., which consults with banks on regulatory issues.

Let's start with a clear, unequivocal statement: racial discrimination is wrong and should not be tolerated. But is that really what's necessarily going on here? As the housing market struggles to find its footing, its problems have become highly localized. Even in a given county, one city might see housing price stabilize, while prices in another city continue to fall.

So if by "redlining," regulators are finding that banks are "discriminating" against certain neighborhoods because home prices there have yet to stabilize, then that seems pretty reasonable, even laudable. But if they have the minutes of a board meeting where one officer states, "Listen, no more loans to (African American/Latino/Asian/Indian/etc.) people, because I don't trust them." Then, that's not okay. Borrowers should not be using race as a credit characteristic, but they should use a neighborhood's localized housing market health as a risk factor.

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The article continues:

The 1977 Community Reinvestment Act (CRA) requires banks to make loans in all the areas they serve, not just the wealthy ones. A Bloomberg analysis found the percentage of banks earning negative ratings from regulators on CRA exams has risen from 1.45 percent in 2007 to more than 6 percent in the first quarter of this year.

This is an interesting statistic. There's some controversy surrounding how big a role the CRA played in the subprime crisis. And yet, now that banks have tightened their lending requirements, far more are failing to comply with the CRA. This appears to imply that if banks did not have to comply with the CRA, then they would originate safer loans. Indeed, they do have to comply with the CRA but more are increasingly failing to do so anyway. They may believe penalties they face would be less costly than additional bad loans.

And then:

At the Justice Dept., a new 20-person unit dedicated to fair lending issues received a record number of discrimination referrals from regulators in 2010 and has dozens of open cases, according to a recent agency report. Potential penalties can reach into the millions of dollars. "We are using every tool in our arsenal to combat lending discrimination," Thomas E. Perez, the assistant attorney general for the Civil Rights Div., told a conference of community development advocates in Washington in April.

Let's stress this one more time. Discrimination in its broadest sense is a positive behavior on the part of a bank. If a bank didn't discriminate between borrowers, then it would give a loan to anyone and huge losses would result. It's like if you're at the grocery store picking between two apples. If one is rotten and the other is without blemish, then you pick the good one. That's discrimination.

But not all discrimination is done in the name of logic and sound underwriting practices. As previously stated, discrimination based on race should not be tolerated, but it's not at all clear that's what's going on here. Instead, it sounds like regulators are pressuring banks to make what could very well be lots of bad loans, if they're in areas where home prices will continue to fall and borrowers do not demonstrate a clear ability to pay. And of course, since the government is backing virtually all mortgage at this time through various agencies, many of those losses will ultimately hit taxpayers.

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Bloomberg FDICs Bair Says Servicing Regulation Will Create Problems May 11, 2011 By Meera Louis

Future regulation of U.S. mortgage servicing in the wake of soaring foreclosures stemming from the credit crisis may increase costs and slow economic recovery, Federal Deposit Insurance Corp. Chairman Sheila Bair said.

Bair, who has fought to include servicing standards in Dodd-Frank Act rules requiring lenders to retain part of the risk when they sell loans to investors, expressed concern about the possible consequences today during a discussion at an FDIC community-banking conference in Washington.

I can see lots of regulation coming on servicing, Bair said. This is going to create more problems doing mortgages and I worry about that. It is more about the economy now.

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Huffington Post HSBC Continues Freeze On Home Seizures May 11, 2011 By Shahien Nasiripour

HSBC North America Holdings, the ninth-largest U.S. bank by assets, told investors Wednesday that

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the bank's moratorium on home seizures continues in some jurisdictions and it will be "a number of months" before the bank fully resumes foreclosing on defaulted borrowers.

The lender did not specify in filings with federal regulators where it continues to restrict home repossessions or how many borrowers have been affected. HSBC handles more than 892,000 home loans, making it the 12th-largest mortgage servicer in the U.S., according to the Federal Reserve.

The foreclosure freeze, which started last autumn, came on the heels of months-long criminal and civil probes by federal and state regulators into lenders' faulty mortgage practices. The nation's largest lenders voluntarily halted home repossessions when flawed document practices -- like so-called "robosigning" -- came to light and erupted into a nationwide scandal. Officials subsequently found that the nation's largest mortgage firms illegally seized the homes of at least dozens of borrowers and engaged in shoddy practices that allegedly deceived local courts, broke numerous state laws and federal rules, and short-changed distressed borrowers.

HSBC, though, did not halt home seizures until after Nov. 5, according to its filings with the Securities and Exchange Commission. Many of its competitors froze new foreclosures a few months earlier.

HSBC's two major U.S. subsidiaries, HSBC Finance Corp. and HSBC Bank USA, disclosed that its moratoria continue in certain parts of the country due to defective foreclosure practices.

"We have resumed foreclosures on a limited basis in certain geographies," the two divisions reported to investors. "It will be a number of months before we resume foreclosures in all jurisdictions as we need to ensure we are satisfied that applicable enhanced processes have been implemented."

HSBC initiated more than 43,000 home foreclosures in 2009 and 2010, according to the Fed.

HSBC's admission underscores the difficulty firms face trying to weed out faulty practices that went on for years before they were recently discovered.

By taking shortcuts in processing troubled borrowers' home loans, the nation's five largest mortgage firms have saved more than $20 billion since the housing crisis began in 2007, according to a confidential presentation prepared for state attorneys general by the nascent Bureau of Consumer Financial Protection and obtained by The Huffington Post in March.

That estimate, which did not measure HSBC's savings, suggests that the nation's largest banks reaped tremendous benefits by under-serving distressed homeowners, a complaint that appeared frequently enough that federal regulators finally acknowledged the industry's fundamental shortcomings and took

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action.

"We have already made several key procedural improvements to enhance our foreclosure processes as a result of our own internal reviews," HSBC's U.S.-based units disclosed in securities filings.

Spokesmen for the firm did not immediately respond to a request for comment.

In April, the lender was one of 14 mortgage firms to be sanctioned for their sloppy practices by the Fed and the Office of the Comptroller of the Currency.

State attorneys general, Obama administration officials and representatives from the nation's five largest mortgage firms -- Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial -- are meeting this week outside Washington, D.C. to discuss standards governing their treatment of delinquent borrowers and remedies for past abuses. Some state and Obama administration officials want to levy fines approaching $30 billion -- a few officials want even larger fines. The targeted banks said Tuesday they'd collectively pay $5 billion to settle all claims.

Government officials balked at the offer, according to sources involved in the discussions who spoke on the condition of anonymity.

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Washington Post In mortgage crisis, a lesson from Iowa farms May 10, 2011 By Brady Dennis

As Iowa Attorney General Tom Miller continues his leading role in negotiating a massive settlement with the nations largest mortgage servicers this week, he is guided in part by an episode that played out in

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his state a quarter-century ago.

In testimony on Capitol Hill, in news conferences and in numerous interviews, Miller repeatedly has singled out the response to the Iowa farm crisis of the 1980s as a model of how he hopes to overcome the often-adversarial relationship between lenders and borrowers, and restore a measure of stability to the countrys struggling housing market.

But that approach, which Miller has called a precedent for success, involves a controversial element that banks so far have dismissed as both unequitable and unworkable: forgiving part of the loan balance, or principal, for borrowers who are struggling to make payments.

Principal reduction is a tool in the toolbox thats been underused, Miller said in a recent interview. We had principal reduction in Iowa during the farm crisis and it worked very well. By reducing the principal, the farmer then the homeowner today can make the payment ... [and the] payment is greater than what the investor would make on foreclosure. Thats a win for everybody.

Miller had been in office for years when the farm crisis peaked in the mid-1980s. Thousands of farmers had become overleveraged in the preceding years, taking advantage of booming property values and low interest rates to take out more loans and buy more land and equipment.

When double-digit interest rates arrived and the value of the farmers land and crops began to tumble, many found themselves unable to pay their bills. A wave of foreclosures swept across the state and devastated many communities.

Things began to spiral downward, said Alan Tubbs, a veteran Iowa community banker who headed the agricultural division of the American Bankers Association. He worked with the Agriculture Department on programs to help mitigate the crisis. It was an emotional time as well as a difficult economic time.

As part of widespread efforts to ease the upheaval, Miller teamed with the Iowa Bankers Association and other groups to encourage the state legislature to pass a law requiring mediation between borrowers and lenders before foreclosure.

The goal, Miller said, was to find the sweet spot, in which the farmer could remain on his land and the bank received more in payments than it would from foreclosure, even if writing off a portion of the loan was necessary.

Some of the banks werent too thrilled with having to do that at the beginning, Neil Milner, then head

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of the Iowa Bankers Association, said of the mediations. But in time, he said, everybody gave a little. The farmer could walk away with something to get started again; the institution got the issue resolved.

Mike Thompson headed up the Iowa farm mediation program beginning in 1985, an effort that has handled more than 35,000 cases. Since 2007, he has run the states mortgage foreclosure hotline, which he said was inspired by the farm crisis.

Thompson said he sees parallels between then and now, including the reluctance of lenders to lower loan balances.

It took 21 / 2 years before a lot of the farm lenders really got to the point that they could acknowledge loss, he recalled. But then, he said, they discovered that they were in this together. They figured out, Lets dont make this adversarial, and thats when they began to seek common ground with many troubled farmers.

For whatever reason, he said, such a cease-fire has yet to arrive in the foreclosure crisis, marked by distrust and animosity on both sides. Were still in the fight model, he said.

Banks have lowered interest rates for some homeowners and have suspended payments temporarily, but they have been reluctant to embrace principal reductions on a large scale.

Such programs could be harmful to consumers, investors and future mortgage market conditions, and should not be undertaken without first attempting other solutions, including more targeted modification efforts, JP Morgan Chase executive David Lowman told lawmakers in a House hearing last year, estimating that broad-based principal reductions could cost the industry nearly $1 trillion.

Of course, there are fundamental differences between the Iowa farm crisis and the housing predicament.

While troubled homeowners often must navigate the impersonal bureaucratic maze at behemoth servicers such as Bank of America, lenders during the Iowa farm crisis were overwhelmingly local.

This was going on in your community, said Tubbs, the longtime Iowa banker. Youre dealing with neighbors and people you go to church with and see all the time.

In addition, the settlement talks continuing this week in Washington grew out of revelations last fall

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about extensive problems within the mortgage servicing industry from forged foreclosure documents to conflicting and contradictory information provided to struggling homeowners. Such problems were not part of the crisis in the 1980s.

Those scandals gave federal regulators and state attorneys general, led by Miller, leeway to try to force sweeping changes within the industry, as well as to potentially establish a multibillion-dollar fund that could be used, among other things, to prevent foreclosures.

Miller acknowledges that loan reductions arent right in many situations. But he remains convinced that history holds an important lesson, one worth repeating.

I think the underlying principle is just so similar, he said of todays crisis. When people got together, particularly with skilled mediators, it worked in so many cases and really kept, I believe, the fabric of rural Iowa together.

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From:

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CFPB.culturerocks </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cfpbculturerocks> CFPB.culturerocks </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cfpbculturerocks>; _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands>

Cc: Bcc: Subject: Date: Attachments:

CFPB Lunch & Learn: CFPB's Human Capital Team Thu May 12 2011 08:32:57 EDT

StartTime: Fri May 13 12:00:00 Eastern Daylight Time 2011 EndTime: Fri May 13 13:00:00 Eastern Daylight Time 2011 Location: Invitees: Recurring: No ShowReminder: Yes ReminderMinutes: 15 ReminderTime: Fri May 13 11:45:00 Eastern Daylight Time 2011 Accepted: No When: Friday, May 13, 2011 12:00 PM-1:00 PM (UTC-05:00) Eastern Time (US & Canada). Where: Conference Room 503 - Conference Bridge Number 202-927-2255 (Code: 218890) Note: The GMT offset above does not reflect daylight saving time adjustments. *~*~*~*~*~*~*~*~*~* You are Invited to a CFPB Lunch & Learn! Topic: Human Capital: Where We Focus On the People Date: Friday, May 13, 2011 Time: 12:00 pm - 1:00 pm Place: Room 503 1801 L St. Facilitators: Members of the Human Capital Team

Featuring Updates on CFPB Total Rewards Package, Training and Development Activities, Policies Completed and Under Development, and Hiring Activities.

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CFPB.culturerocks </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cfpbculturerocks> _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands>

CFPB Lunch & Learn: CFPB's Human Capital Team Thu May 12 2011 08:32:32 EDT

When: Friday, May 13, 2011 12:00 PM-1:00 PM (UTC-05:00) Eastern Time (US & Canada). Where: Conference Room 503 - Conference Bridge Number 202-927-2255 (Code: 218890) Note: The GMT offset above does not reflect daylight saving time adjustments. *~*~*~*~*~*~*~*~*~* You are Invited to a CFPB Lunch & Learn! Topic: Human Capital: Where We Focus On the People Date: Friday, May 13, 2011 Time: 12:00 pm - 1:00 pm Place: Room 503 1801 L St. Facilitators: Members of the Human Capital Team

Featuring Updates on CFPB Total Rewards Package, Training and Development Activities, Policies Completed and Under Development, and Hiring Activities.

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From:

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Cc:

Glaser, Elizabeth (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=glasere> Antonakes, Steve (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=antonakess>; Cochran, Kelly (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cochrank>; Cordray, Richard (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cordrayr>; Fuchs, Meredith (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=fuchsm>; Gonzalez, Roberto (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gonzalezr>; Lopez-Fernandini, Alejandra (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lopez-fernadinia>; Morris, Lucy (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=morrislu>; Reilly, Deb (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=reillyd>; Twohig, Peggy (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=twohigp>; Vale, Elizabeth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=valee> Adeyemo, Adewale (Wally) (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=adeyemoa>; Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk>; Slagter, Dennis (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=slagterd> HUD Transfer Status Wed May 11 2011 18:22:42 EDT

Bcc: Subject: Date: Attachments: All,

I wanted to provide you with an update on the HUD transfer process. Yesterday and today we sent out offer letters to the HUD employees. The employees have two weeks to respond to our offer letters, and we will follow up with you when we have received responses from employees who have been placed in your division.

The HUD employees will transferred on or around July 31. We have begun to coordinate with HUD concerning our request for certain employees to be detailed in advance of the transfer. We will provide an update as soon as we have more information concerning the status of the detail requests.

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If you have any questions in the meantime, please feel free to contact me. Thank you so much for all your help throughout this process.

Best, Elizabeth

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From:

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(b) (6)

Slagter, Dennis (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=slagterd> Slagter, Dennis (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=slagterd>; Black, Brad </o=ustreasury/ou=do/cn=recipients/cn=blackb>; Burden, Gail (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=burtong>; Coyle, Raymond (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=coyler>; Cronin, Katherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cronink>; Darling, Eben (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=darlinge>; Dickman, Marilyn (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dickmanm>; DiPalma, Nikki (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dipalman>; Glaser, Elizabeth (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=glasere>; Gorski, Stephanie (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=gorskis>; Harpe, Pam (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harpep>; Harvey, Imani (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harveyi>; Herchen, Emily (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=herchene>; Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk>; Mann, Seth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=manns>; Megee, Christine (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=megeec>; Plunkett, Alexander (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=alexanderp>; Royster, Felicia (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=roysterf>; Sensiba, Vicki (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sensibav>; Tamberrino, Mary (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tamberrinom>; Tingwald, James (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tingwaldj>; Wanderer, Agnes (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=wanderera>; Weizmann, Jane (Washington) (b) (6) Picerno, Emelia (Towers Perrin) (b) (6) Sayre, Leah (Washington) (b) (6) ; Jessica Goobic (b) (6) Martin, Daniel (Dallas) Full Disclosure Conference Room 503 </o=ustreasury/ou=exchange administrative group

Cc:

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(fydibohf23spdlt)/cn=recipients/cn=1801conferenceroom503>;
(b) (6)

Bcc: Subject: Date: Attachments:

CHCO All Hands Meeting Wed May 11 2011 18:12:55 EDT

StartTime: Thu May 12 10:00:00 Eastern Daylight Time 2011 EndTime: Thu May 12 11:00:00 Eastern Daylight Time 2011 Location: Invitees: Recurring: No ShowReminder: Yes ReminderMinutes: 15 ReminderTime: Thu May 12 09:45:00 Eastern Daylight Time 2011 Accepted: No When: Thursday, May 12, 2011 10:00 AM-11:00 AM (UTC-05:00) Eastern Time (US & Canada). Where: 503, Dial-in 202.927.2255 PIN 862861 Note: The GMT offset above does not reflect daylight saving time adjustments. *~*~*~*~*~*~*~*~*~* Attendance Guidance Per Dennis (Please Follow, Dial-in for others): Human Capital - All Towers - 2 reps A+ - 1 rep FMP - 1 rep Aon - 1 rep * Dial-in Number: 202-927-2255 * Moderator Pin access code: (none) * Participant Pin access code: 862861

AGENDA per Dennis: Around the Horn with Top 3 Issues Regarding 1.Tamberrino - Systems, Benefits Etc. (DiPalma & Brad Black on backup vocals) 2.Sensiba - Talent Acquisition 3.Gorski - Recruiting 4.Glaser - Transfer Process 5.Darling - Budget, COTR etc. 6.TW - Communications & Comp (the latter pending availability) 7.Mike Blank & Lisa Sper - A+ and FMP

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From:

To:

Darling, Eben (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=darlinge> on belhaf of Slagter, Dennis (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=slagterd> Black, Brad </o=ustreasury/ou=do/cn=recipients/cn=blackb>; Burden, Gail (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=burtong>; Coyle, Raymond (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=coyler>; Cronin, Katherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cronink>; Darling, Eben (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=darlinge>; Dickman, Marilyn (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dickmanm>; DiPalma, Nikki (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dipalman>; Glaser, Elizabeth (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=glasere>; Gorski, Stephanie (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=gorskis>; Harpe, Pam (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harpep>; Harvey, Imani (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harveyi>; Herchen, Emily (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=herchene>; Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk>; Mann, Seth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=manns>; Megee, Christine (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=megeec>; Plunkett, Alexander (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=alexanderp>; Royster, Felicia (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=roysterf>; Sensiba, Vicki (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sensibav>; Tamberrino, Mary (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tamberrinom>; Tingwald, James (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tingwaldj>; Wanderer, Agnes (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=wanderera>; Weizmann, Jane (Washington) <jane.weizmann@towerswatson.com>; Picerno, Emelia (Towers Perrin) (b) (6) ; Sayre, Leah (Washington) (b) (6) Jessica Goobic (b) (6) ; Martin, Daniel (Dallas)
(b) (6)

Cc:

Full Disclosure Conference Room 503

Page 280 of 2347

</o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=1801conferenceroom503>;

(b) (6)

Bcc: Subject: Date: Attachments:

CHCO All Hands Meeting Wed May 11 2011 18:12:52 EDT

When: Thursday, May 12, 2011 10:00 AM-11:00 AM (UTC-05:00) Eastern Time (US & Canada). Where: 503, Dial-in 202.927.2255 PIN 862861 Note: The GMT offset above does not reflect daylight saving time adjustments. *~*~*~*~*~*~*~*~*~* Attendance Guidance Per Dennis (Please Follow, Dial-in for others): Human Capital - All Towers - 2 reps A+ - 1 rep FMP - 1 rep Aon - 1 rep * Dial-in Number: (b) (6) * Moderator Pin access code: (none) * Participant Pin access code: (b) (6)

AGENDA per Dennis: Around the Horn with Top 3 Issues Regarding 1.Tamberrino - Systems, Benefits Etc. (DiPalma & Brad Black on backup vocals) 2.Sensiba - Talent Acquisition 3.Gorski - Recruiting 4.Glaser - Transfer Process 5.Darling - Budget, COTR etc. 6.TW - Communications & Comp (the latter pending availability) 7.Mike Blank & Lisa Sper - A+ and FMP

Page 281 of 2347

From:

To:

Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk> Glaser, Elizabeth (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=glasere>

Cc: Bcc: Subject: Date: Attachments:

Draft Email for HUD Employees Wed May 11 2011 17:47:16 EDT HUD EMAIL ADDRESSES_KL.docx

I couldnt remember what else you wanted to say to them, but this should be a start. Also, attached are the email addresses.

All,

We wanted to provide you with an update regarding the HUD-CFPB transfer process. We are in the final stages of this process, and have received your questions regarding transfer to the CFPB. We will make every effort to respond to these questions as soon as possible. As always, if you have any questions about the process, please dont hesitate to contact me.

Sincerely, Elizabeth

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HUD EMAIL ADDRESSES_KL.docx (Attachment 1 of 1)

HUD EMAIL ADDRESSES Paul.S.Ceja@hud.gov; Joan.L.Kayagil@hud.gov; Clare.Harrigan@hud.gov; Monica.L.Jordan@hud.gov; Joseph.Devlin@hud.gov; Craig.C.Erdmann@hud.gov; Chandana.R.Kolavala@hud.gov; Peter.S.Race@hud.gov; William.W.Matchneer@hud.gov; Efrosine.Kritikos@hud.gov; Eleonora.X.Cornejo@hud.gov; Kirsten.A.Iveycolson@hud.gov; Irene.B.Koerner@hud.gov; Anthony.P.Romano@hud.gov; Barton.Shapiro@hud.gov; Cheryl.J.Perrett@hud.gov; Lejorian.J.Stewart@hud.gov; Angela.B.Collier@hud.gov; Deborah.J.Denton@hud.gov; William.Thomas@hud.gov; Geri.Hansen@hud.gov; Deborah.G.Marcum@hud.gov; Kevin.McClary@hud.gov; Carolyn.Grimes-Sands@hud.gov; MaryJo.Sullivan@hud.gov; Tracey.A.Wilkerson@hud.gov; Henry.S.Czauski@hud.gov; David.L.Friend@hud.gov; Andrew.B.Fay@hud.gov; Daniel.JohnsonIII@hud.gov; Richard.E.Dunne@hud.gov; Dennis.J.Weipert@hud.gov; Shiloh.Kremer@hud.gov; Laura.T.Gipe@hud.gov; Tawanna.D.Matthews@hud.gov; Charles.A.Johanek@hud.gov; Ann.B.Shearer@hud.gov; Kevin.L.Stevens@hud.gov; Ivy.M.Jackson@hud.gov; Teresa.L.Payne@hud.gov; Eddy.F.Norfleet@hud.gov;

Page 283 of 2347

From:

To:

Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk> Glaser, Elizabeth (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=glasere>

Cc: Bcc: Subject: Date: Attachments: RMR: Cochran ENF: Morris CR: Reilly

Draft Email for Managers Wed May 11 2011 17:41:41 EDT

OGC: Fuchs/Gonzalez EDU: Hillebrand SUPER: Antonakes/Twohig EXT: Vale

CFPB Managers,

I wanted to provide you with an update on the HUD transfer process. We have sent out offer letters to the HUD employees based on the information that you provided us. The employees have until ____________ to respond to our offer letters, and we will follow up with you when we have received responses from employees who have been placed in your division.

If you have any questions in the meantime, please feel free to contact me. Thank you for all your help moving this process forward.

Sincerely, Elizabeth

Page 286 of 2347

From:

To:

Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk> Mann, Seth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=manns>

Cc: Bcc: Subject: Date: Attachments:

HUD Transfer Data 5-6-11.xlsx Wed May 11 2011 16:03:32 EDT HUD Transfer Data 5-6-11.xlsx

Heres the most up-to-date spreadsheet, Seth. Let me know if you have any questions.

-K

Page 287 of 2347

From:

To:

Tamberrino, Mary (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tamberrinom> Dickman, Marilyn (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dickmanm>; Slagter, Dennis (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=slagterd>; Sensiba, Vicki (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sensibav>; Harpe, Pam (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harpep>; Tingwald, James (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tingwaldj>; Royster, Felicia (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=roysterf>; Megee, Christine (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=megeec>; Cronin, Katherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cronink>; Black, Brad </o=ustreasury/ou=do/cn=recipients/cn=blackb>; DiPalma, Nikki (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dipalman>; Plunkett, Alexander (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=alexanderp>; Harvey, Imani (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harveyi>; Mann, Seth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=manns>; Wanderer, Agnes (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=wanderera>; Herchen, Emily (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=herchene>; Glaser, Elizabeth (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=glasere>; Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk>; Brown, Charles (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=brownchar>
(b) (6)

Cc:

>; Cumpiano, Flavio (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cumpianof>; Deutsch, Rebecca (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=deutschr>; Hart, Maria (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=hartm>; Kern, Shaun (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=kerns>; Klein, Heather (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=kleinh>; Lopez-Fernandini, Alejandra (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lopez-fernadinia>; Mosena, Lea (CFPB) </o=ustreasury/ou=exchange administrative

Page 305 of 2347

group (fydibohf23spdlt)/cn=recipients/cn=mosenal>; Osborn, Meredith (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=osbornm>; Scanlon, Thomas </o=ustreasury/ou=do/cn=recipients/cn=scanlont>; Sealy, William (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sealeyw>; Smullin, Rebecca (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=smullinr>; Smyth, Nick (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=smythn>; VanMeter, Stephen (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=vanmeters> Bcc: Subject: Date: Attachments: NEW TIME! Happy hour - Kevin Lownds farewell Wed May 11 2011 15:41:07 EDT

When: Wednesday, May 11, 2011 6:00 PM-7:30 PM (UTC-05:00) Eastern Time (US & Canada). Where: 19th and I Street NW (Elephant & Castle) Note: The GMT offset above does not reflect daylight saving time adjustments. *~*~*~*~*~*~*~*~*~* Whoops! New time too! ************************* UPDATE: Location confirmed - see link below http://www.elephantcastle.com/dc_eye ******************* All, Several of us will be going out for Happy Hour Wednesday to wish Kevin Lownds well. He is completing his time here at CFPB and will be taking a summer associate job at Wilmer Hale. We will miss him and want to give him a good send off! Hope to see you there (pls forward to anyone I may have inadvertently left off). Mary

Page 306 of 2347

From:

To: Cc: Bcc: Subject: Date: Attachments: Colleagues,

Harvey, Imani (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harveyi> _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands>

CFPB Job Vacancy Announcements Posted on USAJobs as of 5/11/11 Wed May 11 2011 15:35:01 EDT

The CFPB Human Capital Team has posted new vacancy announcements on the USAJobs website. Below, you will find the job title, grade level, and link for the new announcements. If you know great candidates who might be interested in joining our team, please share this information with them! Financial Education Program Analyst, CN-301-5C Office: Office of Servicemember Affairs Vacancy Announcement No: 11-CFPB-212 Announcement Closes: Thursday, May 19, 2011 Who May Apply: Candidates with permanent competitive service status, non-competitive eligibles, and special appointment eligibles Link: 11-CFPB-212 Financial Education Program Analyst, CN-301-5C Office: Office of Servicemember Affairs Vacancy Announcement No: 11-CFPB-219P Announcement Closes: Thursday, May 19, 2011 Who May Apply: All US Citizens Link: 11-CFPB-213P

Imani Harvey Special Assistant to the Chief Human Capital Officer

Page 307 of 2347

Consumer Financial Protection Bureau Email: Imani.Harvey@treasury.gov Phone: 202-435-7513

Page 308 of 2347

From:

To:

Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk> Osborn, Meredith (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=osbornm>

Cc: Bcc: Subject: Date: Attachments:

RE: 1063(i) Restatement Files Wed May 11 2011 15:16:24 EDT

Thank you very much, MeredithI appreciate it. Good luck with this project!

-Kevin

From: Osborn, Meredith (CFPB) Sent: Wednesday, May 11, 2011 3:07 PM To: Lownds, Kevin (CFPB) Subject: RE: 1063(i) Restatement Files

Kevin, Thank you for all your hard work on this project. We will have very big shoes to fill! Hope you have a great summer. Meredith

Meredith B. Osborn Consumer Financial Protection Bureau Office: (202) 435-7159

(b) (6)

Email: meredith.osborn@treasury.gov

From: Lownds, Kevin (CFPB) Sent: Wednesday, May 11, 2011 3:06 PM To: Deutsch, Rebecca (CFPB); Mosena, Lea (CFPB); Osborn, Meredith (CFPB); Smyth, Nick (CFPB) Cc: Glaser, Elizabeth (CFPB); Scanlon, Thomas Subject: 1063(i) Restatement Files

Page 309 of 2347

All,

As a follow up to our meeting on Monday on the Restatement Project, I wanted to let you know that I have placed our files associated with this project on the RRI drive. They can be found in the folder titled Restatement Project 1063(i).

These files include the current redlines of both the enumerated laws and their regulations, summaries of our work to-date and the issues weve encountered, and analyses of some of the complicated legal issues.

I have placed my contact information at the bottom of this email in case any questions arise. Its been great working with all of youthanks!

-Kevin

Kevin K. Lownds
(b) (6)

Page 310 of 2347

From:

To:

Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk> Glaser, Elizabeth (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=glasere>

Cc: Bcc: Subject: Date: Attachments:

Trueblood Files Wed May 11 2011 14:40:42 EDT 75 FR 44656 Registration of Mortgage Loan Originators.docx 74 FR 27386 Registration of Mortgage Loan Originators.docx 73 FR 52528 Implementation of Form 990.docx 65 FR 60246 Federal Crimes Enforcement Network.docx 64 FR 45438 Financial Crimes Enforcement Network.docx

These are also on the RRI drive, but here they are attached as well

-K

Kevin K. Lownds Review Analyst Consumer Financial Protection Bureau (202) 435-7399

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75 FR 44656 Registration of Mortgage Loan Originators.docx (Attachment 1 of 5)

FOR EDUCATIONAL USE ONLY 75 FR 44656-01, 2010 WL 2917873 (F.R.) RULES and REGULATIONS DEPARTMENT OF THE TREASURY Office of the Comptroller of the Currency 12 CFR Part 34 [Docket ID OCC-2010-0007] RIN 1557-AD23 FEDERAL RESERVE SYSTEM 12 CFR Parts 208 and 211 [Docket No. R-1357] FEDERAL DEPOSIT INSURANCE CORPORATION 12 CFR Part 365 RIN 3064-AD43 DEPARTMENT OF THE TREASURY Office of Thrift Supervision 12 CFR Part 563 [Docket No. 20100021] RIN 1550-AC33 FARM CREDIT ADMINISTRATION 12 CFR Part 610 RIN 3052-AC52 NATIONAL CREDIT UNION ADMINISTRATION 12 CFR Parts 741 and 761 RIN 3133-AD59 Registration of Mortgage Loan Originators Wednesday, July 28, 2010 AGENCY: Office of the Comptroller of the Currency, Treasury (OCC); Board of Governors of the

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75 FR 44656 Registration of Mortgage Loan Originators.docx (Attachment 1 of 5)

Federal Reserve System (Board); Federal Deposit Insurance Corporation (FDIC); Office of Thrift Supervision, Treasury (OTS); Farm Credit Administration (FCA); and National Credit Union Administration (NCUA). *44656 ACTION: Final rule. SUMMARY: The OCC, Board, FDIC, OTS, FCA, and NCUA (collectively, the Agencies) are adopting final rules to implement the Secure and Fair Enforcement for Mortgage Licensing Act (the S.A.F.E. Act). The S.A.F.E. Act requires an employee of a bank, savings association, credit union or Farm Credit System (FCS) institution and certain of their subsidiaries that are regulated by a Federal banking agency or the FCA (collectively, Agency-regulated institutions) who acts as a residential mortgage loan originator to register with the Nationwide Mortgage Licensing System and Registry, obtain a unique identifier, and maintain this registration. The final rule further provides that Agency-regulated institutions must: require their employees who act as residential mortgage loan originators to comply with the S.A.F.E. Act's requirements to register and obtain a unique identifier, and adopt and follow written policies and procedures designed to assure compliance with these requirements. DATES: This final rule is effective on October 1, 2010. Compliance with .103 (registration requirement) of the final rule is required by the end of the 180-day period for initial registrations beginning on the date the Agencies provide in a public notice that the Registry is accepting initial registrations. FOR FURTHER INFORMATION CONTACT: OCC: Michele Meyer, Assistant Director, Heidi Thomas, Special Counsel, or Patrick T. Tierney, Senior Attorney, Legislative and Regulatory Activities, (202) 874-5090, and Nan Goulet, Senior Advisor, Large Bank Supervision, (202) 874-5224, Office of the Comptroller of the Currency, 250 E Street SW., Washington, DC 20219. Board: Anne Zorc, Counsel, Legal Division, (202) 452-3876, Virginia Gibbs, Senior Supervisory Analyst, (202) 452-2521, and Stanley Rediger, Supervisory Financial Analyst, (202) 452-2629, Division of Banking Supervision and Regulation, Board of Governors of the Federal Reserve System, 20th and C Streets, NW., Washington, DC 20551. FDIC: Thomas F. Lyons, Examination Specialist, (202) 898-6850, Victoria Pawelski, Senior Policy Analyst, (202) 898-3571, or John P. Kotsiras, Financial Analyst, (202) 898-6620, Division of Supervision and Consumer Protection; or Richard Foley, Counsel, (202) 898-3784, or Kimberly A. Stock, Counsel, (202) 898-3815, Legal Division, Federal Deposit Insurance Corporation, 550 17th Street, NW., Washington, DC 20429. OTS: Charlotte M. Bahin, Special Counsel (Special Projects), (202) 906-6452, Vicki HawkinsJones, Special Counsel, Regulations and Legislation Division, (202) 906-7034, Debbie Merkle, Project Manager, Credit Risk, (202) 906-5688, and Rhonda Daniels, Senior Compliance Program Analyst, Consumer Regulations, (202) 906-7158, Office of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552. FCA: Gary K. Van Meter, Deputy Director, Office of Regulatory Policy, (703) 883-4414, TTY (703) 883-4434, or Richard A. Katz, Senior Counsel, or Jennifer Cohn, Senior Counsel, Office of General Counsel, (703) 883-4020, TTY (703) 883-4020, Farm Credit Administration, 1501 Farm Credit Drive, McLean, VA 22102-5090. NCUA: Regina Metz, Staff Attorney, Office of General Counsel, 703-518-6561, or Lisa Dolin, Program Officer, Division of Supervision, Office of Examination and Insurance, 703-518-6360, National Credit Union Administration, 1775 Duke Street, Alexandria, VA 22314-3428. SUPPLEMENTARY INFORMATION:

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75 FR 44656 Registration of Mortgage Loan Originators.docx (Attachment 1 of 5)

Nationwide Mortgage Licensing System (NMLS), for the State licensing of mortgage loan originators in participating States.[FN3] Mortgage loan originators in these States electronically complete a single uniform form (the MU4 form). The data provided on the form is stored electronically in a centralized repository available to State regulators of mortgage companies, who use it to process license applications and to authorize individuals to engage in mortgage loan origination, as well as for other supervisory purposes. FN3 The NMLS system is owned and operated by the State Regulatory Registry LLC (SRR), which is a limited-liability company established by CSBS and the American Association of Residential Mortgage Regulators as a subsidiary of CSBS to develop and operate nationwide systems for State regulators in the financial services industry. SRR has contracted with the Financial Industry Regulatory Authority (FINRA) to build and maintain the system. FINRA operates similar systems in the securities industry. More information about this system is available at http://www.stateregulatoryregistry.org. The Federal banking agencies, through the FFIEC, and the FCA are working with CSBS to modify the NMLS so that it can accept registrations from mortgage loan originators employed by Agencyregulated institutions. This modified registry will be renamed the Nationwide Mortgage Licensing System and Registry. The existing NMLS was not designed to support the Federal registration of Agency-regulated institution employees, who are not required to obtain additional authorization from the appropriate Federal agency to engage in mortgage loan origination activities that are permissible for an Agency-regulated institution. Accordingly, the system must be modified to accommodate the differences between the requirements for State licensing/registration and Federal registration. It also must be modified to accommodate the migration of an individual between the State licensing/registration and the Federal registration regimes or the dual employment of an individual by both an Agency-regulated institution and a non-Agencyregulated institution.[FN1] Furthermore, the S.A.F.E. Act requires new enhancements to the current system, such as the processing of fingerprints and public access to certain mortgage loan originator data. These modifications and enhancements require careful analysis and raise complex legal and system development issues that the Agencies are addressing both through this rulemaking and through consultation with the CSBS and the SRR. The OCC, on behalf of the Agencies, has entered into an agreement with the SRR that will provide for appropriate consultation between the Agencies and the Registry concerning Federal registrant information requirements and fees, system functionality and security, and other operational matters. The issuance of this final rule establishing the requirements for Federal registrants will enable the Agencies and SRR to complete modifications that will enable the system to accept Federal registrations. As described in the SUPPLEMENTARY INFORMATION section of the proposed rule, the Agencies will publicly announce the date on which the Registry will begin accepting Federal registrations, which will mark the beginning of the period during which employees of Agencyregulated institutions must complete the initial registration process. When fully operational, mortgage loan originators and their Agency-regulated institution employers are expected to have access to the Registry, seven days a week, to establish and maintain their registrations.[FN1] FN1 The Agencies note that some employees of Agency-regulated institutions also may be subject to the State licensing and registration regime. For example, employees who act as mortgage loan originators for a bank and a nondepository subsidiary of a bank holding company that is not a subsidiary of a depository institution would be subject to both the Federal and State regimes. FN1 Pursuant to section 1503(11) of the S.A.F.E. Act (12 U.S.C. 5102(11)), Agency-regulated institutions and their employees who are acting within the scope of their employment with the Agency-regulated institutions are not subject to State licensing or registration requirements for mortgage loan originators. II. Overview of the Proposal and Public Comments

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75 FR 44656 Registration of Mortgage Loan Originators.docx (Attachment 1 of 5)

The proposed rule required individuals employed by Agency-regulated institutions who act as mortgage loan originators and who do not qualify for the de minimis exception set forth in the proposal to register with the Registry, obtain unique identifiers, and maintain their registrations through updates and renewals. The proposal also directed Agency-regulated institutions to require compliance with these requirements, and to adopt and follow written policies and procedures to assure such compliance. The S.A.F.E. Act does not require the Registry to screen or approve registrations received from employees of Agency-regulated institutions and the Registry will not do so. Instead, the Registry will be the repository of, and conduit for, information on those employees who are mortgage loan originators at Agency-regulated institutions. Pursuant to .104(d) and (h) of the proposed rule, it would be the responsibility of each Agency-regulated institution to establish reasonable procedures for confirming the adequacy and accuracy of employee registrations as well as to establish a process for reviewing any criminal history background reports received from the Registry. The proposal provided for a 180-day period within which to complete initial registrations after the Registry is capable of accepting registrations from employees of Agency-regulated institutions. During this period, employees of Agency-regulated institutions would not be subject to sanctions if they originate residential mortgage loans without having completed their registration. The Agencies received over 140 different comment letters from financial institutions and holding companies, trade associations, Federal government agencies, a training company, and individuals. A number of Agency-regulated institutions objected to the registration requirement in general, suggesting that the registration *44658 requirement should not be applied to them because they were not involved in the abuses that led to the enactment of the S.A.F.E. Act. In addition, many of these commenters found the registration requirement overly burdensome, especially as they are subject to regular examinations by the Agencies and they already closely supervise the activities of their employees. Many commenters raised concerns related to the proposed de minimis exception from the registration requirement. Under the proposed de minimis exception, a mortgage loan originator would not have to register if he or she acted as a mortgage loan originator for five or fewer loans and the Agency-regulated institution employs mortgage loan originators who, while excepted from registration pursuant to the individual exception, in the aggregate acted as mortgage loan originators in connection with 25 or fewer residential mortgage loans. Commenters suggested raising the mortgage loan originator and institution loan limits or eliminating one of the limits. Community bank trade associations were particularly concerned that the narrowness of the exception would exclude most community banks. Some commenters suggested that the exception should be tied to an asset-based threshold in the range of $250 million to $1 billion. Most commenters objected to having employees who engage in loan modifications or assumptions register under the rule, noting that these activities are fundamentally different than the mortgage loan origination process in that loan modifications and assumptions: (1) Are loss mitigation activities, not loan originations; (2) provide loan modification or assumption personnel little to no discretion in negotiating the terms and conditions of any changes; and (3) are outside of the Congressional intent and the plain language of the S.A.F.E. Act. While some commenters found the 180-day initial registration period adequate, a number of commenters suggested alternative periods ranging up to one year. Some trade associations and institutions supported staggering registration periods in order to reduce system demands and to tailor an implementation schedule to the particular capacities of an institution or group of institutions, as long as the implementation period would still be 180 days for each institution. A number of commenters also raised issues related to the provision of fingerprints to the Registry. Commenters asserted that it was not appropriate to have an age limit on fingerprints as they tend not to change; that the Registry should be able to accept fingerprints in a variety of formats, such as paper and scanned digital prints; and that Agency-regulated institutions should

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be permitted to use existing channels to process fingerprints. Many commenters expressed privacy and security concerns regarding the types of personal information that mortgage loan originators would have to provide to the Registry and the ability of the public to have Internet access to such information. Trade associations and large Agency-regulated institutions overwhelmingly requested that the Registry accommodate batch processing of registrations in order to reduce the costs and burden of data input, reduce errors, and efficiently register bank employees. The Agencies have modified the proposal to take into account many of these comments. A detailed discussion of these comment letters and the Agencies' responses to them appears in the section-by-section description of the final rule that follows.[FN1] FN1 In addition to the changes described in this Supplementary Information section, the Agencies have replaced the cites in the proposed rule to sections of the S.A.F.E. Act with cites to the relevant provisions in the U.S. Code. III. Section-By-Section Description of the Final Rule Section .101Authority, Purpose, and Scope The Agencies adopt paragraphs (a) and (b) of .101 as proposed.[FN2] Paragraph (a) identifies the authority for this rule as the S.A.F.E. Act.[FN3] Paragraph (b) states that this rule implements the S.A.F.E. Act's Federal registration requirements, which apply to individuals who originate residential mortgage loans. This provision also describes the objectives of the S.A.F.E. Act, which are derived from section 1502 of the Act (12 U.S.C. 5101). FN2 Because each Agency's proposed rule will amend a different part of the Code of Federal Regulations, but will have similar numbering, relevant sections are cited as . followed by a number, unless otherwise noted. FN3 The Board and the OCC note that the authority in paragraph (a) of their respective rules supplements their authority to implement the S.A.F.E. Act, for example, Section 11 of the Federal Reserve Act (12 U.S.C. 248(a)) for the Board and section 5239A of the Revised Statutes (12 U.S.C. 93a) for the OCC. As in the proposal, paragraph (c)(1) of .101 of the final rule identifies the specific entities that employ individual mortgage loan originatorsentities referred to in this SUPPLEMENTARY INFORMATION section as Agency-regulated institutionsand that also are covered by this rule. Under the S.A.F.E. Act, a mortgage loan originator must be Federally-registered if that individual is an employee of a depository institution, an employee of any subsidiary owned and controlled by a depository institution and regulated by a Federal banking agency, or an employee of an institution regulated by the FCA.[FN1] Section 1503(2) of the S.A.F.E. Act (12 U.S.C. 5102(2)) provides that depository institution has the same meaning as in section 3 of the Federal Deposit Insurance Act (FDI Act),[FN2] and includes any credit union. As we noted in the proposal, the definition of depository institution in the FDI Act and in the S.A.F.E. Act does not include bank or savings association holding companies or their non-depository subsidiaries. Employees of these entities who act as mortgage loan originators are not covered by the Federal registration requirement and, therefore, must comply with State licensing and registration requirements. FN1 Agency-regulated institutions and their employees acting within the scope of their employment are subject only to the Federal registration requirements of the S.A.F.E. Act as implemented by the Agencies through this rulemaking, even if registration in the State system is available before Federal Registration. In consultation with the Agencies, CSBS/SRR are modifying

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the Registry so that it can accept registrations from employees of Agency-regulated institutions. An employee of an Agency-regulated institution may be engaged in activities outside the scope of his or her employment at an Agency-regulated institution that subject that employee to State licensing and registration requirements, such as dual employment at a non-Agency-regulated institution. FN2 Section 3 of the FDI Act defines depository institution as any bank or savings association. The term bank in section 3 of the FDI Act means any national bank, State bank, Federal branch, and insured branch and includes any former savings association. The term savings association means any Federal savings association, State savings association, and any corporation other than a bank that the FDIC and the OTS jointly determine to be operating in substantially the same manner as a savings association. 12 U.S.C. 1813. With respect to the OCC, this rule applies to national banks, Federal branches and agencies of foreign banks, their operating subsidiaries, and their employees who are mortgage loan originators.[FN3] For the Board, this rule applies to member banks of the Federal Reserve System (other than national banks); their respective subsidiaries that *44659 are not functionally regulated within the meaning of section 5(c)(5) of the Bank Holding Company Act, as amended (12 U.S.C. 1844(c)(5)); [FN1] branches and agencies of foreign banks (other than Federal branches, Federal agencies and insured State branches of foreign banks); commercial lending companies owned or controlled by foreign banks; [FN2] and their employees who act as mortgage loan originators. For the FDIC, this rule applies to insured State nonmember banks (including State-licensed insured branches of foreign banks) and their subsidiaries (except brokers, dealers, persons providing insurance, investment companies, and investment advisers) and their employees who are mortgage loan originators. For the OTS, this rule applies to savings associations and their operating subsidiaries, and their employees who are mortgage loan originators. For the FCA, this rule applies to FCS institutions that originate residential mortgage loans under sections 1.9(3), 1.11 and 2.4(a)(2) and (b) of the Farm Credit Act of 1971, as amended (12 U.S.C. 2017(3), 2019, and 2075(a)(2) and (b)), and their employees who are mortgage loan originators.[FN3] For the NCUA, this rule applies to credit unions and their employees who are mortgage loan originators. Because non-Federally insured credit unions generally are not Federally regulated institutions, special registration conditions apply to them as discussed below. FN3 The S.A.F.E. Act's definition of depository institution includes Federal branches of foreign banks but not Federal agencies of foreign banks. Federal agencies are authorized by sections 1(b)(1) and 4(b) of the International Banking Act of 1978 (12 U.S.C. 3101(b)(1) and 3102(b)) and 12 CFR 28.11(g) and 28.13(a)(1) of the OCC's regulations to lend money, which would include originating mortgage loans, subject to the same duties, restrictions, penalties, liabilities, conditions, and limitations that would apply to a national bank. Thus, the Federal registration requirements apply to Federal agencies of foreign banks to the extent the registration requirements apply to national banks. FN1 The S.A.F.E. Act, by its terms, applies the Federal registration requirements to employees of a subsidiary that is owned and controlled by a State member bank and regulated by the Board. For purposes of the scope of the Board's rules, these subsidiaries are described as those that are not functionally regulated within the meaning of section 5(c)(5) of the Bank Holding Company Act. Subsidiary has the meaning given that term in section 2 of the Bank Holding Company Act (12 U.S.C. 1841), as applied to State member banks. FN2 The Board notes that its final rule covers branches and agencies of foreign banks (other than Federal branches, Federal agencies, and insured State branches of foreign banks) and commercial lending companies owned or controlled by foreign banks pursuant to its authority under the International Banking Act (IBA) (Chapter 32 of Title 12) to issue such rules it deems necessary in order to perform its respective duties and functions under the chapter and to administer and carry out the provisions and purposes of the chapter and prevent evasions

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thereof. 12 U.S.C. 3108(a). The Board notes that the IBA provides, in relevant part, that the above entities shall conduct their operations in the United States in full compliance with provisions of any law of the United States which impose requirements that protect the rights of consumers in financial transactions, to the extent that the branch, agency, or commercial lending company engages in activities that are subject to such laws, and apply to State-chartered banks, doing business in the State in which such branch or agency or commercial lending company, as the case may be, is doing business. 12 U.S.C. 3106a(1). Under the Board's final rule, the above entities would be subject to the same Federal registration requirements as Federal branches, Federal agencies, and insured State branches of foreign banks, which are covered in the OCC and FDIC rules, respectively. FN3 Some FCS associations may not exercise their statutory authority to make residential mortgage loans, and FCS banks no longer engage in residential mortgage origination activities because they have transferred their direct lending authority to their affiliated associations. The FCA emphasizes that employees of FCS banks and associations that do not engage in residential mortgage loan origination activities are not subject to the registration requirements of the S.A.F.E. Act and these regulations. The Federal Agricultural Mortgage Corporation (Farmer Mac) is an FCS institution that among other activities operates a secondary market for rural residential mortgage loans. The FCA determines that Farmer Mac employees are not subject to the registration requirements of the S.A.F.E. Act and these implementing regulations because Farmer Mac does not engage in mortgage loan origination activities for rural residents. The Farmer Mac secondary market is modeled after Fannie Mae and Freddie Mac, and the provisions of the S.A.F.E. Act do not expressly apply to employees at Fannie Mae and Freddie Mac. As discussed in Section II, a number of commenters objected to the application of this registration requirement to employees of Agency-regulated depository institutions because, in general, they are subject to regular examinations, would be overly burdened by the registration requirement, and already closely supervise the activities of their employees. Some commenters noted that this registration requirement would penalize them for the inappropriate actions of other lenders that led to the enactment of the S.A.F.E. Act. The Agencies note that the registration of mortgage loan originators employed by Agencyregulated institutions is explicitly required by the S.A.F.E. Act. The statute imposes a registration requirement, rather than a licensing requirement, on the employees of Agency-regulated institutions. The Agencies note that such institutions (other than non-Federally insured credit unions) already are subject to a Federal regime of examination and supervision. The S.A.F.E. Act does not authorize the Agencies to create exceptions to the registration requirement other than the de minimis exception described below. Some credit union-related commenters discussed whether the final rule should apply to credit union service organizations (CUSOs). The NCUA notes that it answered these questions in a public legal opinion letter 08-0843, dated October 8, 2008, available on NCUA's Web site, http://www.ncua.gov. The S.A.F.E. Act treats employees of depository institution subsidiaries the same as employees of the depository institution, if the subsidiary is owned and controlled by the depository institution and regulated by a Federal banking agency.[FN1] In the case of CUSOs, however, NCUA does not have direct regulatory oversight or enforcement authority. Instead, NCUA regulation permits Federal credit unions to invest in or lend only to CUSOs that conform to the limits specified in the CUSO rule, 12 CFR Part 712.[FN2] NCUA has not, historically, asserted that CUSOs or their employees are exempt from applicable State licensing regimes, and the S.A.F.E. Act does not alter that approach. Nor do NCUA regulations have any applicability to CUSOs owned by State-chartered credit unions.[FN3] Accordingly, individuals employed by CUSOs that engage in residential mortgage loan origination activities, whether the CUSO is owned by a State or a Federal credit union, would need to be licensed in accordance with applicable State requirements. FN1 Section 1503(7)(A)(ii) of the S.A.F.E. Act (12 U.S.C. 5102(7)(A)(ii)).

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FN2 12 CFR part 712. FN3 In April 2008, the NCUA Board issued a proposed rule that would extend some provisions of the CUSO rule to State-chartered institutions. See 73 FR 23982 (May 1, 2008). The proposal has not yet been finalized. Some commenters also asked whether non-Federally insured credit unions must register with the Registry. NCUA's proposed rule applied to Federally insured credit unions and their employees who are mortgage loan originators but commenters requested NCUA include non-Federally insured credit unions and their employees who are mortgage loan originators in the scope of NCUA's final rule. The S.A.F.E. Act requires the Agencies to develop and maintain a system for registering employees of a depository institution, defined to include any credit union. [FN4] Consistent with the S.A.F.E. Act and in response to comments, NCUA's final rule provides for a system for registering employees of any credit union. NCUA's final rule applies to Federally insured credit unions and their employees who are mortgage loan originators and non-Federally insured credit unions and their employees who are mortgage loan originators when certain conditions are met and formal agreements reached. FN4 Sections 1507(a)(1) and 1503(1) and (2) of the S.A.F.E. Act (12 U.S.C. 5106(a)(1) and 5102(1) and (2)). When drafting its final rule, NCUA considered that, with the exception of non-Federally insured credit unions, entities covered by the Federal registration system are subject to Federal oversight. Entities subject to the Federal registration system are labeled throughout the rule as Agency-regulated institutions. Unlike Federal credit unions and Federally insured *44660 Statechartered credit unions, non-Federally insured credit unions are neither Federally insured nor subject to NCUA's oversight. In order for non-Federally insured credit unions and their employees who are mortgage loan originators to qualify for Federal registration, they must be subject to oversight for purposes of compliance with NCUA's rule. Therefore, due to the unique nature of non-Federally insured credit unions compared with all other credit unions, NCUA is working with State supervisory authorities in those States with non-Federally insured credit unions to implement an oversight program to enable them to participate in the Federal registration system. The oversight program will require a State supervisory authority seeking to allow non-Federally insured credit unions in its State to participate in the Federal registration system to enter into a memorandum of understanding (MOU) with NCUA. The MOU will need to address various requirements such as, but not limited to: The requirement for an applicable State supervisory authority to maintain such an MOU to allow non-Federally insured credit unions and their employees in its State to have continuous access to, and use of, the registry; examination of the non-Federally insured credit unions' compliance with the rule by either the State supervisory authority or NCUA; non-Federally insured credit unions' payment of examination fees and payment for any necessary Registry modifications; and enforcement authority and penalties for non-Federally insured credit unions for noncompliance. Any information provided by the Registry to the public about a non-Federally insured credit union and its employees must include a clear and conspicuous statement that the non-Federally insured credit union is not insured by the National Credit Union Share Insurance Fund. If any State supervisory authority where non-Federally insured credit unions are located fails to enter into or maintain an agreement with NCUA for this registration process and oversight, the non-Federally insured credit unions and their employees in that State cannot register or maintain an existing registration under the Federal system. They instead must use the appropriate State licensing and registration system, or if the State does not have such a system, the licensing and registration system established by the Department of Housing and Urban Department (HUD) for mortgage loan originators and their employees.[FN1] In addition, NCUA's final rule requires that the State supervisory authorities who seek to have non-Federally insured credit unions in their

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States participate in the Federal registration system enter into the applicable agreement with NCUA on or before the date the Agencies provide in a public notice that the Registry is accepting initial registrations. FN1 HUD published its proposed rule to establish this system on December 15, 2009. See 74 FR 66548. Finally, NCUA acknowledges that, while it is an added requirement for non-Federally insured credit unions to have their State supervisory authorities enter into an agreement with NCUA, this is necessary to have any oversight or enforcement authority at all over these entities. Absent any agreement, non-Federally insured credit unions cannot participate in the Federal registration system. They are not subject to a Federal regime of examination and supervision, and are unlike any other Agency-regulated depository institutions covered under this rule. Therefore, they are subject to a different procedure to participate in the same Federal registration system. Section 1507 of the S.A.F.E. Act (12 U.S.C. 5106) requires the Federal banking agencies to make such de minimis exceptions as may be appropriate to the Act's registration requirements.[FN1] Paragraph (c)(2) of .101 of the proposed rule provided a de minimis exception based on an individual's and, in the aggregate, an institution's total number of residential mortgage loans originated in a rolling 12-month period. Specifically, the proposal provided that the registration requirements would not apply to an employee of an Agency-regulated institution if, during the last 12 months: (1) The employee acted as a mortgage loan originator for 5 or fewer residential mortgage loans; and (2) the Agency-regulated institution employs mortgage loan originators who, while excepted from registration pursuant to this section, in the aggregate, acted as a mortgage loan originator in connection with 25 or fewer residential mortgage loans. FN1 See S.A.F.E. Act at sections 1507(c) (12 U.S.C. 5106(c)) (de minimis exceptions), 1504(a)(1)(A) (12 U.S.C. 5103(a)(1)(A)) (requirement to register), 1504(a)(2) (12 U.S.C. 5103(a)(2)) (requirement to obtain a unique identifier). As discussed in the Supplementary Information section of the proposed rule, the FCA has authority under section 5.17(a)(11) of the Farm Credit Act of 1971, as amended, 12 U.S.C. 2252(a)(11), to apply the de minimis exception to FCS institutions. Section 5.17(a)(11) of the Farm Credit Act authorizes the FCA to exercise such incidental powers as may be necessary or appropriate to fulfill its duties. * * * In this case, the FCA is exercising its incidental powers to fulfill the requirement in the S.A.F.E. Act that it work together with the Federal banking agencies to develop and maintain a system for registering residential mortgage loan originators at Agency-regulated institutions with the Registry. A coordinated and uniform approach to the de minimis exception among the Agencies is appropriate because it best fulfills the objectives of the S.A.F.E. Act. The Agencies received many, and varied, comments on this de minimis exception. Most commenters supported an exception to the rule's requirements. However, a majority of the commenters did not agree with the proposal's formulation of this exception, nor did they agree on an alternative. Specifically, some commenters requested that the Agencies raise the threshold number of loans originated by an individual mortgage loan originator and/or the institution so that more low-volume originators would qualify for the exception. These commenters indicated that, because of its narrowness, too few institutions would be able to use the exception as proposed and others would unnecessarily register employees solely to avoid accidental noncompliance with the rule. Some, however, thought that the proposed threshold numbers were too high, and could cause an institution to spread its originations over numerous employees to avoid registration. Still others said that the proposed de minimis exception would be fairer, and much easier to apply, if the threshold limitation applied only to the employee or to the institution, but not both. A Federal government agency commenter found that the proposed definition of de minimis would make the rule unduly burdensome on small community banks. A number of commenters also suggested that the final rule base a de minimis exception on a percentage of total loans or the total loan volume made at each institution, instead of the

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number of loans. Some trade associations and smaller institutions requested that the de minimis exception be based on an institution's asset-size, with suggestions ranging from the Home Mortgage Disclosure Act [FN1] threshold for institutions regulated by a Federal banking agency, currently set by the Board at $39 million in assets,[FN2] to $1 billion, which would be consistent with exceptions for small institutions in other provisions of law. Other commenters opposed an asset-based approach, with larger Agency-regulated institutions noting that the exceptions should not be structured to benefit only small institutions. FN1 12 U.S.C. 2801 et seq. FN2 See 12 CFR 203.2 (Regulation C). Other commenters wanted the exception to be applied to institutions *44661 with no prior history of mortgage origination fraud or to institutions with good performance histories from previous supervisory examinations, regardless of the number of loans originated. Some commenters also suggested that the exception should apply only to individuals who do not regularly or principally function as a mortgage loan originator. Some commenters noted that the exception could instead be based on the percentage of time an employee spends engaged in the origination of residential mortgage loans. The Agencies also received conflicting comments on whether to aggregate a subsidiary's loans with the parent institution for determining de minimis qualification. One commenter opposed such aggregation, while another stated that an institution should be required to aggregate its loan data with that of its subsidiaries so that institutions could not game the system by creating new subsidiaries each time a subsidiary approaches the de minimis limit. Still other commenters pointed out that it would be very time consuming and burdensome to game the de minimis limitrendering gaming opportunities essentially unrealistic. Many commenters noted the complexity of the proposed exception. One commenter stated that the de minimis exception would not have any significant effect because the complexity of complying with it would outweigh its benefits. Others noted that the proposed exception would be difficult for an institution to monitor and maintain. Some commenters appeared to misinterpret the proposed aggregate exception. The Agencies agree that the de minimis exception should be simplified, and, in particular, that it should be structured so that it may be utilized by an individual who does not regularly or principally function as a mortgage loan originator employed by any Agency-regulated institution, regardless of the size or loan volume of the institution. Therefore, the final rule eliminates the aggregate exception and includes only the first prong of the proposed de minimis exception, which applies only to individuals. The final rule also provides that this exception only applies if the employee has never before been registered or licensed through the Registry. Final .101(c)(2) thus provides that the registration requirements of this section do not apply to an employee of an Agency-regulated institution who has never been registered or licensed through the Registry as a mortgage loan originator and who has acted as a mortgage loan originator for 5 or fewer residential mortgage loans during the last 12 months. In order to prevent manipulation of the registration requirement by structuring this exception to apply to multiple employees who each would not meet the exception's threshold for registration, the final rule prohibits any Agency-regulated institution from engaging in any act or practice to evade the limits of the de minimis exception. The Agencies believe that replacing the proposed institution limit with this anti-evasion prohibition is appropriate and will discourage circumvention of registration requirements without increasing an institution's administrative burden. Monitoring compliance with the exception as revised should be less burdensome for Agencyregulated institutions. In addition, in the Agencies' view, this revised exception better balances the usefulness of the exception to Agency-regulated institutions and their mortgage loan

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originators with the consumer protection and fraud prevention purposes of the S.A.F.E. Act. Although the final rule specifically applies this anti-evasion provision to the de minimis exception, Agency-regulated institutions must not engage in any act or practice to evade any other requirement of the S.A.F.E. Act or this final rule. The Agencies note that, as with the proposal, an employee must register with the Registry prior to engaging in mortgage loan origination activity that exceeds the exception limit. In addition, the Agencies note that the de minimis exception contained in the final rule is voluntary; it does not prevent a mortgage loan originator who meets the criteria for the exception from registering with the Registry if the originator chooses to do so or if his or her employer requires registration. The Agencies note that the Federal Housing Finance Agency (FHFA) has directed Fannie Mae and Freddie Mac to require all mortgage loan applications to include the mortgage loan originator's unique identifier. For Agency regulated institutions, Fannie Mae and Freddie Mac have announced that this requirement will apply to applications dated on or after the date the Agencies require mortgage loan originators to obtain unique identifiers.[FN1] Agency-regulated institutions should be aware of this requirement and any future guidance that FHFA may issue to address the Agencies' implementation of the Federal registration process, including the de minimis exception. FN1 See FNMA LL 02-2009: New Mortgage Loan Data Requirements (02/13/09); Fannie Mae Announcement 09-11, Mortgage Loan Data Requirements Update (10/6/09) and Announcement 09-11, Mortgage Loan Data Requirements Related FAQs (2/4/10); and Freddie Mac Single-Family Seller/Servicer Guide Bulletin, No: 2009-27 (12/4/09). The Agencies contemplate that the Registry will provide aggregate public data on unique identifier information stored in the system to Fannie Mae and Freddie Mac for compliance purposes. The Agencies received a comment from one large financial institution requesting that we clarify whether the failure of a mortgage loan originator to register pursuant to this rulemaking has any substantive impact on a mortgage loan made by an institution that employs that originator. Neither the S.A.F.E. Act nor this final rule provides that a mortgage loan originator's failure to register as required affects the validity or enforceability of any mortgage loan contract made by the institution that employs the originator. A few commenters suggested that in addition to the registration requirements, the final rule should impose educational and testing requirements on mortgage loan originators, as the S.A.F.E. Act does for State-licensed originators. The Agencies decline to impose such requirements. The S.A.F.E. Act does not include educational or testing requirements for mortgage loan originators employed by Agency-regulated institutions. In addition, as noted previously, the statute imposes different requirements on mortgage loan originators employed by Agency-regulated institutions. The Agencies note that these institutions already are subject to extensive Federal oversight, including regular on-site examination of their mortgage lending activities. Section .102Definitions Section .102 defines the terms used in the final rule. If a term is defined in the S.A.F.E. Act, the Agencies generally have incorporated the same definition in the final rule. The final rule also includes other definitions currently used by the NMLS in order to promote consistency and comparability, insofar as is feasible, between Federal registration requirements and the States' licensing requirements. Annual renewal period. Proposed .102(a) required that a mortgage loan originator renew his or her registration annually during the annual renewal period and defined this period as November 1 through December 31 of each year. This is the same annual renewal period currently provided by the NMLS to mortgage loan originators regulated by a State.

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*44662 This time period for renewals generated many comments. A few commenters suggested that the renewal period for Agency-regulated institutions should be at a different time of year than for originators regulated by a State. Others stated that the renewal period should be based upon the original registration date or original hire date, noting that a staggered registration process would be less burdensome for the Registry. Another commenter suggested that the employing institution determine its own renewal period for its employees. Still other commenters requested that this renewal period be lengthened from 60 to 90 days. The Agencies decline to change the dates for the annual renewal period. As indicated above, the current system for originators regulated by a State is configured for an annual renewal period from November 1 through December 31. A different renewal period for originators employed by Agency-regulated institutions would involve functionality changes to the existing system, adding costs and lengthening the implementation time. In addition, the Agencies note that different renewal periods could cause confusion and added burden to those originators who may work for both a State-regulated and Agency-regulated institution or who may switch from a Stateregulated institution to an Agency-regulated institution during the year, and to employers of such originators, as well as for institutions that control both State- and Agency-regulated institutions. For these same reasons, the Agencies also decline to increase the renewal period from 60 to 90 days. Therefore, the final rule retains the proposed renewal period of November 1 through December 31 of each year. Mortgage loan originator. The proposed definition of mortgage loan originator was based on the definition of the term loan originator included in the S.A.F.E. Act at section 1503(3) ( U.S.C. 12 5102(3)). As defined by the S.A.F.E. Act, this term means an individual who takes a residential mortgage loan application and offers or negotiates terms of a residential mortgage loan for compensation or gain. The term does not include an individual who is not a mortgage loan originator and: (1) Performs purely administrative or clerical tasks on behalf of an individual who is a mortgage loan originator; (2) performs only real estate brokerage activities (as defined in section 1503(3)(D) of the S.A.F.E. Act (12 U.S.C. 5102(3)(D)) [FN1] and is licensed or registered as a real estate broker in accordance with applicable State law, unless the individual is compensated by a lender, a mortgage broker, or other loan originator or by any agent of such lender, mortgage broker, or other mortgage loan originator; or (3) is solely involved in extensions of credit related to timeshare plans, as that term is defined in 11 U.S.C. 101(53D).[FN1] FN1 The S.A.F.E. Act defines real estate brokerage activity to mean any activity that involves offering or providing real estate brokerage services to the public, including: (i) Acting as a real estate agent or real estate broker for a buyer, seller, lessor, or lessee of real property; (ii) bringing together parties interested in the sale, purchase, lease, rental, or exchange of real property; (iii) negotiating, on behalf of any party, any portion of a contract relating to the sale, purchase, lease, rental, or exchange of real property (other than in connection with providing financing with respect to any such transaction); (iv) engaging in any activity for which a person engaged in the activity is required to be registered or licensed as a real estate agent or real estate broker under any applicable law; and (v) offering to engage in any activity, or act in any capacity, described in clause (i), (ii), (iii), or (iv), above. S.A.F.E. Act at section 1503(3)(D) (12 U.S.C. 5102(3)(D)). Nothing in this rule would constitute an authorization for Agency-regulated institutions to engage in real estate brokerage, or any other activity, for which the institution does not have independent authority pursuant to Federal or State law, as applicable. FN1 Timeshare plan is defined in U.S.C. 101(53D) as an interest purchased in any 11 arrangement, plan, scheme, or similar device, but not including exchange programs, whether by membership, agreement, tenancy in common, sale, lease, deed, rental agreement, license, right to use agreement, or by any other means, whereby a purchaser, in exchange for consideration, receives a right to use accommodations, facilities, or recreational sites, whether improved or unimproved, for a specific period of time less than a full year during any given year, but not necessarily for consecutive years, and which extends for a period of more than three years. A

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timeshare interest is that interest purchased in a timeshare plan which grants the purchaser the right to use and occupy accommodations, facilities, or recreational sites, whether improved or unimproved, pursuant to a timeshare plan. For purposes of the definition of mortgage loan originator, section 1503(3)(C) of the S.A.F.E. Act (12 U.S.C. 5102(3)(C)) defines administrative or clerical tasks to mean: (1) The receipt, collection, and distribution of information common for the processing or underwriting of a loan in the mortgage industry; and (2) communication with a consumer to obtain information necessary for the processing or underwriting of a residential mortgage loan. The proposal included this definition as well, with one nonsubstantive differencethe proposal used the phrase residential mortgage industry instead of loan in the mortgage industry in the first prong of the definition. The Agencies included an appendix to the proposal that listed examples of the types of activities the Agencies consider to be both within and outside the scope of residential mortgage loan origination activities. The final rule retains this appendix with certain changes as discussed in this SUPPLEMENTARY INFORMATION section. Individuals who receive compensation or gain as used in the definition of mortgage loan originator and described in this appendix include individuals who earn salaries, commissions or other incentive, or any combination thereof. The Agencies specifically requested comment on whether the definition of mortgage loan originator should cover individuals who modify existing residential mortgage loans, engage in approving loan assumptions, or engage in refinancing transactions and, if so, whether these individuals should be excluded from the definition. While a few commenters believed the Agencies should cover individuals engaged in such transactions, the majority of commenters on this issue stated that this rulemaking should not cover these individuals. In general, they indicated that mortgage loan modifications and assumptions are very different from mortgage loan originations, and that employees engaged in these transactions do not meet the S.A.F.E. Act's definition of mortgage loan originator. Specifically, commenters indicated that these employees neither accept residential mortgage loan applications nor negotiate the terms of a new residential mortgage loan. Instead, they renegotiate an existing loan with the goals of mitigating any loss to the institution and, in the case of modifications, providing the borrower with a more affordable payment option or other type of modification, or, in the case of assumptions, replacing the party responsible for repaying the mortgage loan. Many commenters indicated that their employees who engage in modifications and assumptions do not ever originate mortgage loans, and that modifications and assumptions are performed in different departments of the institution. Many commenters also noted that applying the S.A.F.E. Act's registration requirements to employees engaged in loan modifications and assumptions could significantly hamper loan modification efforts. The determining factor in whether the S.A.F.E. Act applies to residential mortgage loan-related transactions is whether the employee engaged in the transaction meets the definition of mortgage loan originator. In general, neither modifications nor assumptions result in the extinguishment of an existing loan and the replacement by a new loan, but rather the terms of an existing loan are revised or the loan is assumed by a new obligor. Thus, Agency-regulated institution employees *44663 engaged in these activities typically do not take loan applications, within the meaning of the S.A.F.E. Act. Therefore, the Agencies conclude that the S.A.F.E. Act's definition of mortgage loan originator generally would not include employees engaged in loan modifications or assumptions because they typically would not meet the two-prong test of this definition. However, if an employee engaged in a transaction labeled a loan modification or assumption can be found to meet the definition of mortgage loan originator, due to the nature of the specific transaction in question, he or she would be subject to the S.A.F.E. Act and this final rule. The substance of a transaction, not the label attached to it, is determinative of whether the Agency-regulated institution employee associated with it is a mortgage loan originator for purposes of this rule. For example, the Agencies believe that Agency-regulated institution employees engaged solely in bona fide cost-free loss mitigation efforts that result in reduced and sustainable payments for the borrower generally would not meet the definition of

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mortgage loan originator. In this regard, it should be noted that third parties involved in foreclosure prevention activities for compensation or gain, although outside the scope of this rulemaking, may be subject to licensing and registration pursuant to State law. The Agencies sought comment on whether the individuals who engage in certain refinancing transactions, specifically cash-out refinancing with the same lender, should be excluded from the definition of residential mortgage loan originator. Some industry commenters did not believe that such an exclusion was appropriate primarily because of the nature of a refinancing as a new loan and the potential for consumer abuse in these transactions. Other commenters also requested that we exclude individuals engaged in refinancings from the final rule's definition of mortgage loan originator, and that refinancings be excluded from the final rule's definition of residential mortgage loan, if the refinancing involves the same lender and the borrower obtained no cash proceeds. We decline to make this change. Refinancings are new loans, regardless of the lender, the loan terms, or proceeds, that involve a new application and an offer or negotiation of new loan terms. If an individual engaged in a refinancing transaction of a residential mortgage loan meets the two prongs of the definition of mortgage loan originator, he or she must comply with the requirements of the S.A.F.E. Act and this final rule.[FN1] FN1 Some commenters noted that the Agencies should require only one mortgage loan originator for each mortgage loan. The Agencies decline to take this approach because the S.A.F.E. Act defines a mortgage loan originator according to the two-prong test set forth in the statute. Other commenters suggested that the Agencies exclude loan servicing personnel from the requirements of this rulemaking. We decline to take this suggested approach because the S.A.F.E. Act definition is based on the activities of mortgage loan origination, rather than the job classification of the individual. An individual, regardless of job title, is a mortgage loan originator if he or she engages in the activities of mortgage loan origination within the meaning of the S.A.F.E. Act. For example, if a loan servicing employee of an Agency-regulated institution mainly performs loan servicing activities but also occasionally engages in residential mortgage loan origination, that person is a mortgage loan originator, regardless of whether he or she is called servicing personnel. On the other hand, for example, as discussed above in connection with loan modifications, a loan servicing employee engaged solely in bona fide cost-free loss mitigation efforts which result in reduced and sustainable payments for the borrower generally would not meet the definition of mortgage loan originator. Loan servicing employees of Agencyregulated institutions must comply with the registration requirements of the final rule if they meet both prongs of the definition of mortgage loan originator, unless they qualify for the de minimis exception under .101(c)(2) of the final rule. Some commenters requested clarification that, when a servicing employee of an Agency-regulated institution works with a borrower to collect unpaid taxes or other costs pursuant to a repayment or collection plan, the employee is not acting as a mortgage loan originator under the Agencies' rules. The Agencies agree that such activities would generally not meet the two-prong test of this definition. Some commenters asked the Agencies to explain whether the S.A.F.E. Act and this rule apply to residential mortgage loan originations made through an automated underwriting system, whereby an applicant inquires about, applies for, and/or receives a decision on an application electronically through an institution's Web site.[FN1] Although some institutions may choose to establish an automated system to collect application information and make an initial decision on a loan application, from a risk management and compliance perspective, an institution is expected to set the system parameters and monitor system output for compliance with various laws, regulations, and guidance on an ongoing basis. Such institutions are expected to register employees involved in that process who meet the definition of mortgage loan originator, as appropriate. As indicated above, the Agencies note that Fannie Mae and Freddie Mac are requiring all residential mortgage loan applications dated on or after the compliance date for the unique identifier requirement to include the mortgage loan originator's unique identifier.[FN1] Institutions should keep apprised of any future guidance FHFA may issue to address this requirement.

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FN1 Section 107(5)(A)(x) of the Federal Credit Union Act (12 U.S.C. 1757(5)(A)(x)) requires all loans to be approved by a credit committee or loan officer. For all Federal credit unions, and to the extent State-chartered credit unions operate under a similar State law or regulation, the statutory and regulatory definition of mortgage loan originator is met and the S.A.F.E Act does apply. FN1 See footnote 26. For the reasons discussed above, the final rule includes the definition of mortgage loan originator as proposed, with one technical change to the definition of administrative or clerical tasks to make it identical to the definition of this term in section 1503(3)(C) of the S.A.F.E. Act (12 U.S.C. 5102(3)(C)). Nationwide Mortgage Licensing System and Registry or Registry. Section .102(c) of the proposed rule's definition of these terms is based on the definition included in section 1503(5) of the S.A.F.E. Act (12 U.S.C. 5102(5)). Specifically, these terms mean the system developed and maintained by CSBS and the AARMR for the State licensing and registration of State-licensed mortgage loan originators and the registration of mortgage loan originators pursuant to section 1507 of the S.A.F.E. Act (12 U.S.C. 5106). As explained above, CSBS and the AARMR have established an online system, NMLS, that currently supports the licensing and registration of mortgage loan originators regulated by a State. The Agencies are working with CSBS to modify the NMLS to support the registration of mortgage loan originators employed by Agency-regulated institutions, and will rename this system the Nationwide Mortgage Licensing System and Registry. The Agencies received no comments on this definition and adopt it as proposed. Registered mortgage loan originator. Pursuant to section 1503(7) of the S.A.F.E. Act (12 U.S.C. 5102(7)), the proposed rule defined this term to mean any individual who meets the definition *44664 of mortgage loan originator, is an employee of an Agency-regulated institution, and is registered pursuant to the requirements of this rule with, and maintains a unique identifier through, the Registry. This definition is the same as that included in the S.A.F.E. Act, except that the Agencies have modified it to apply only to individuals registered pursuant to regulations issued by the Agencies. The Agencies received no comments on this definition and adopt it as proposed. Residential mortgage loan. As in section 1503(8) of the S.A.F.E. Act, (12 U.S.C. 5102(8)), the proposal defined residential mortgage loan as any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling (as defined in section 103(v) of the Truth in Lending Act (TILA) (15 U.S.C. 1602(v)) [FN1] or residential real estate upon which is constructed or intended to be constructed a dwelling. In addition, the proposal specifically included refinancings, reverse mortgages, home equity lines of credit and other first and second lien loans secured by a dwelling in this definition in order to clarify that originators of these types of loans are covered by the rule's requirements. FN1 TILA defines dwelling as a residential structure or mobile home which contains one-to-four family housing units, or individual units of condominiums or cooperatives. 15 U.S.C. 1602(v). Board regulations and commentary include in this definition any residential structure that contains one to four units, whether or not that structure is attached to real property, and includes an individual condominium unit, cooperative unit, mobile home, and trailer, if it is used as a residence. See 12 CFR 226.2(a)(19) (Regulation Z). One commenter suggested that ancillary liens on an underlying mortgage loan or liens taken to provide consumers with potential tax advantages should not be considered residential mortgage loans. In addition, another commenter asked that the definition of residential mortgage loan include an exception to exclude seller-sponsored financing of the sale of lender-owned property.

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The Agencies decline to adopt these exclusions to the definition of residential mortgage loan and adopt this definition as proposed. These types of loans clearly fall within the statutory definition of residential mortgage loans, and the S.A.F.E. Act makes no exceptions for these two situations. We do clarify, however, that this definition does not include loans for business, commercial, or agricultural purposes that use as collateral property that meets the definition of a dwelling. As indicated in the SUPPLEMENTARY INFORMATION section to the proposed rule, the FCA emphasizes that section 1503(8) of the S.A.F.E. Act (12 U.S.C. 5102(8)) and .102(e) do not amend or supersede sections 1.11(b) and 2.4(b) of the Farm Credit Act of 1971, as amended (12 U.S.C. 2019(b) and 2075(b)), and their implementing regulation, 12 CFR 613.3030(c), which establish the purposes for which FCS institutions may originate residential mortgage loans for eligible rural home borrowers. Unique Identifier. The proposed rule's definition of this term was almost identical to that in section 1503(12) of the S.A.F.E. Act (12 U.S.C. 5102(12)). The Agencies received no comments on this definition and adopt it as proposed. Specifically, the final rule defines unique identifier to mean a number or other identifier that: (1) Permanently identifies a registered mortgage loan originator; (2) is assigned by protocols established by the Registry and the Agencies to facilitate electronic tracking of mortgage loan originators, and uniform identification of, and public access to, the employment history of and the publicly adjudicated disciplinary and enforcement actions against mortgage loan originators; and (3) must not be used for purposes other than those set forth in the S.A.F.E. Act. Other terms. The Agencies note that .103(d) of the proposed and final rule uses the terms control and financial services-related in the descriptions of the information that is required of an employee who is a mortgage loan originator. These terms are currently defined in the Webbased MU4 form collecting information on State-licensed mortgage loan originators. In order to promote consistency of the information collected for Agency-regulated and State-licensed mortgage loan originators, the Agencies reiterate that the MU4 form's definitions of those two terms also will be used in the Web-based form collecting information on Agency-regulated mortgage loan originators and, therefore have not defined them in this rulemaking.[FN1] FN1 The Registry currently defines control as the power, directly or indirectly, to direct the management or policies of a company, whether through ownership of securities, by contract, or otherwise. Any person that (i) is a general partner or executive officer, including Chief Executive, Chief Financial Officer, Chief Operations Officer, Chief Legal Officer, Chief Credit Officer, Chief Compliance Officer, Director, and individuals occupying similar positions or performing similar functions; (ii) directly or indirectly has the right to vote 10% or more of a class of a voting security or has the power to sell or direct the sale of 10% or more of a class of voting securities; or (iii) in the case of a partnership, has the right to receive upon dissolution, or has contributed, 10% or more of the capital, is presumed to control that company. The Registry's current definition of Financial services-related means pertaining to securities, commodities, banking, insurance, consumer lending, or real estate (including, but not limited to, acting as or being associated with a bank or savings association, credit union, Farm Credit System institution, mortgage lender, mortgage broker, real estate salesperson or agent, appraiser, closing agent, title company, or escrow agent). A number of commenters requested that the Agencies define employee for purposes of this rulemaking to provide more clarity regarding the individuals covered by the rule. Agencyregulated institutions must have a process for identifying which employees of the institution are required to be registered mortgage loan originators.[FN2] As the Supreme Court has explained, where Congress uses terms that have accumulated settled meaning under * * * the common law, a court must infer, unless the statute otherwise dictates, that Congress means to incorporate the established meaning of these terms * * *. In the past, when Congress has used the term employee without defining it, we have concluded that Congress intended to describe

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the conventional master-servant relationship as understood by common-law agency doctrine. [FN3] Section 7.07(3)(a) of the Restatement (Third) of Agency explains that an employee is an agent whose principal controls or has the right to control the manner and means of the agent's performance of work. [FN1] The Agencies thus intend that the meaning of employee under the S.A.F.E. Act and this rule is consistent with the right-to-control test under the common law agency doctrine. The Agencies note in this regard that the IRS uses the common law right-tocontrol test as its basis for classification of workers as employees.[FN2] The result of this test generally determines whether an institution files a W-2 or a 1099 for an individual. The Agencies therefore expect an Agency-regulated institution would identify a mortgage loan originator as an individual subject to this final rule if, following consideration of the relevant facts, the institution determines that the individual is an employee of the Agency-regulated institution.[FN3] FN2 See .104(a). FN3 Nationwide Mutual Ins. Co. v. Darden, 503 U.S. 318, 322-23 (1992) (citing Community for Creative Non-Violence v. Reid, 490 U.S. 730, 739-40 (1989) (other citations omitted). FN1 Restatement (Third) of Agency 7.07(3)(a) (2006). FN2 IRS Publication 1779; see also Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. FN3 Agency-regulated institutions that are credit unions sometimes rely upon volunteers to originate mortgage loans. The right-to-control test under the common law agency doctrine likewise applies to these credit unions. Credit union management establishes the policies, procedures, and practices that volunteers use in performing their functions. Therefore, these volunteers qualify as employees of the Agency-regulated institution for purposes of the S.A.F.E. Act and this rule. *44665 Section .103Registration of Mortgage Loan Originators Section 1504(a) of the S.A.F.E. Act (12 U.S.C. 5103(a)) prohibits an individual who is an employee of an Agency-regulated institution from engaging in the business of a loan originator without registering as a loan originator with the Registry, maintaining annually such registration, and obtaining a unique identifier through the Registry. As in the proposal and described more specifically below, .103 of the final rule imposes the responsibility for complying with these requirements on both the individual employee and the employing institution. In addition, both the employee and the employing institution must submit information to the Registry for each registration to be complete. The Agencies note that an employee of an Agency-regulated institution who is not actively engaged in residential mortgage loan activity is not prohibited from registering with the Registry. Employee registration requirement. In general, .103(a)(1) of the proposed rule required an employee of an Agency-regulated institution who acts as a mortgage loan originator to register with the Registry, obtain a unique identifier, and maintain his or her registration. This section further provided that any employee who is not in compliance with the registration and unique identifier requirements set forth in the proposed rule is in violation of the S.A.F.E. Act and this rule.[FN1] The Agencies note that this registration requirement would not apply if the employee qualifies for the de minimis exception. FN1 The OCC, Board, FDIC, and OTS have the authority to take enforcement actions against their respective Agency-regulated institutions and individual employees of those institutions who violate the S.A.F.E. Act and this final rule, pursuant to 12 U.S.C. 1818. The FCA has authority to take enforcement actions against Farm Credit System institutions and individual employees who violate the S.A.F.E. Act and this final rule pursuant to Title V, Part C of the Farm Credit Act of 1971, as amended, 12 U.S.C. 2261 et seq. The NCUA has the authority to take enforcement

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actions against Federally-insured credit unions and their employees who violate the S.A.F.E. Act and this final rule under 12 U.S.C. 1786. For privately insured credit unions, memoranda of understanding between NCUA and applicable State supervisory authorities will establish enforcement authority. The Agencies did not receive substantive comments specifically on this section and therefore adopt it as proposed. Institution requirement. Proposed paragraph (a)(2) of .103 provided that an Agencyregulated institution must require its employees who are mortgage loan originators to register with the Registry, maintain this registration, and obtain a unique identifier in compliance with this final rule. This provision also prohibited an Agency-regulated institution from permitting its employees to act as mortgage loan originators unless registered with the Registry pursuant to this final rule, after the applicable implementation periods specified in .103(a)(3) and (a)(4)(ii) expire. One commenter objected to this requirement as not being based on statutory language. Although the S.A.F.E. Act does not contain the same express prohibition as in the Agencies' proposed rule, determining the scope of mortgage loan origination activities that subject an individual or institution to the Act's requirements is well within the Agencies' authority to implement the statute. The imposition of this requirement on Agency-regulated institutions implements the purposes of the S.A.F.E. Act and ensures Agency-regulated institutions and their employees comply with all applicable laws. This commenter also stated that this requirement would be difficult to enforce because an employing institution may not know of the activities of its employees outside of their scope of employment at that institution. We agree with this commenter that the language in 103(a)(2)(ii) should be clarified so that an institution's oversight of a mortgage loan originator applies only to the extent the originator is acting within the scope of his or her employment at that institution. We therefore adopt .103(a)(2)(ii) with this one change. Implementation period for initial registrations. Proposed .103(a)(3) provided a 180-day implementation period for initial registrations beginning on the date the Agencies provide public notice that the Registry is accepting initial registrations. The Agencies have adopted this provision as proposed with one minor change to clarify that the implementation period begins on the date that the Agencies provide in their public notice, not the actual date of the public notice. Pursuant to the proposal, an employee could continue to originate residential mortgage loans without complying with the rule's registration requirement before and during this 180-day period. After this 180-day period expires, any existing employee or newly-hired employee of an Agencyregulated institution who is subject to the registration requirements would be prohibited from originating residential mortgage loans without first meeting such requirements. The Agencies specifically requested comment on whether this 180-day implementation period would provide Agency-regulated institutions and their employees with adequate time to complete the initial registration process. The Agencies also inquired as to whether an alternative schedule for implementation and initial registrations would be appropriate, what such an alternative schedule should be, and whether, and how, a staggered registration process should be developed. The Agencies received many comments on this implementation period. Some commenters supported a 180-day period. Others supported the proposed 180-day implementation period provided that certain conditions are met, such as excluding loan modification and mitigation employees from the registration requirements, allowing batch processing, simplifying the employer verification requirements, and immediate confirmation of registration without delay for fingerprint or background check results. Other commenters, however, stated that the proposed 180-day implementation period would not

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provide sufficient time to register the large number of employees subject to the registration requirement, properly train all employees, develop compliance policies, and program and implement system controls. Many noted that a longer period would prevent the Registry from being overwhelmed with registrations. Two commenters, including one Federal agency, stated that additional time will particularly benefit smaller financial institutions. Another commenter indicated that the time, effort, and resources required to meet new systems requirements can be extensive, and that a 180-day implementation period for such major changes would be extremely difficult for larger institutions. These commenters suggested an implementation period of nine months to one year. One commenter stated that each Agency should have the flexibility to grant additional time to register in the event the Registry becomes backlogged or inundated with a large volume of registrations. No commenter requested a shorter implementation period. The Agencies understand that Agency-regulated institutions and their mortgage loan originator employees will face certain implementation issues in complying with the registration requirements established by this rulemaking. However, as indicated above, due to various system *44666 modifications and enhancements required to make the existing system capable of accepting Federal registrants, the system is not expected to be available to accept Federal registrations before January 2011. The 180-day implementation period will not begin until the system is available to accept Federal registrations. This in effect provides institutions with an implementation period longer than 180 days as institutions and their employees can begin to implement the final rule's requirements before the Registry is operational, i.e., develop policies and procedures, train employees, gather information needed for registration, and program and implement system controls before registration is required. In addition, CSBS and SRR will provide information to, and assist Agency-regulated institutions in preparation for, registration during this period. The Agencies believe that this additional time will provide mortgage loan originators, and the Agency-regulated institutions that employ them, adequate opportunity to prepare for the registration requirements. Any extension of the 180-day implementation period provided in the final rule will only further delay the registration of residential mortgage loan originators and, as a result, the consumer protection benefits of the S.A.F.E. Act. In addition, as described below, batch processing of at least some information likely will be available, which should make the registration process more efficient for both the institution and the registering employee. For these reasons, the Agencies decline to provide an implementation period longer than the proposed 180 days. Many commenters indicated support for a staggered implementation period. Some noted that this could be based on institution size, loan origination volume, or employee qualifiers (such as birth date or last name). Some of these commenters, however, noted that they would support a staggered schedule only if it would provide a registration period of equal length for all registrants. Other commenters supported a staggered process that would give smaller institutions or institutions that do not originate many residential mortgage loans the greatest amount of time to comply with the requirements. The Agencies agree that a staggered implementation process for those institutions that prefer one would be useful. Such a process would allow institutions to register their employees within specific time periods during the implementation period with the assistance of dedicated staff. Staggered registration would limit the number of originators registering at any one time and spread the registration of originators throughout the implementation period. Although such a schedule mostly would benefit those institutions with the largest number of mortgage loan originators, it also should enable the Registry to accommodate all registrations in a more timely and efficient manner, thereby benefiting all institutions. Accordingly, the Agencies will work with CSBS and SRR to develop a staggered registration schedule for institutions, in particular those that are estimated to have a large number of mortgage loan originators subject to Federal registration, that request such a schedule. This staggered process would occur within the 180day implementation period in order not to delay the registration of mortgage loan originators and the ability of consumers to fully utilize the Registry. Because institutions that request a staggered registration process would have a dedicated period during which to register within the 180-day

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period, registration burdens may be eased for these institutions, lessening their need for the full 180-day registration period. Details on this staggered approach will be provided to applicable institutions when they have been finalized and may include the availability of this dedicated staff prior to the start of the registration period. Special rule for previously registered employees. Under paragraph (a)(4) of .103 of the proposed and final rule, properly registered or licensed mortgage loan originators would not have to register again with the Registry when they change employment by moving from one Agencyregulated institution to another or from a State-regulated institution to an Agency-regulated institution, regardless of whether the change in employment is made voluntarily, through an acquisition or merger of the employee's prior employer, or through a reorganization where previously State-licensed mortgage loan originators become subject to the registration requirements of Agency-regulated institutions. Instead, the employee and employing institution need only update information in the Registry and complete the required authorizations and attestation. Specifically, proposed paragraph (a)(4) of .103 provided that if a new employee of an Agency-regulated institution had previously registered with, and obtained a unique identifier from, the Registry prior to becoming an employee of that institution and has maintained that registration (or license, if previously employed by a non-Agency-regulated institution), the registration requirements of this final rule are deemed to be met provided that: (1) The employee's employment information in the Registry is updated and the employee has completed the required authorizations and attestation; (2) new fingerprints of the employee are provided to the Registry for a background check, except in the case of mergers, acquisitions or reorganizations; (3) information concerning the new employing institution is provided to the Registry pursuant to .103(e)(1)(i), to the extent the institution has not previously met these requirements, and .103(e)(2)(i); [FN1] and (4) the registration is maintained pursuant to the requirements of .103(b) and (e)(1)(ii) as of the date that the employee becomes employed by the institution. FN1 These provisions require: The institution's name; main office address; IRS Employer Tax Identification Number; Research Statistics Supervision Discount (RSSD) number; identification of the institution's primary Federal regulator; contact information for individuals at the institution for Registry purposes; applicable subsidiary information, and confirmation that it employs the registrant. Information regarding an institution's RSSD number is available from the Board. Some commenters requested that the Agencies reduce these requirements in order to further facilitate the movement of employees from one institution to another and prevent unnecessary interruption of mortgage origination activity. However, the Agencies believe that the current provision adequately reduces regulatory burden on Agency-regulated institutions as well as the residential mortgage industry when registered mortgage loan originators change employers and will allow a mortgage origination transaction in process at the time of the employment change to proceed smoothly. It requires less than what would be needed to complete a new registration and requires only that information necessary to update the employee's registration and confirm the identity of the originator and the employer, thereby preventing fraudulent information from being submitted to the Registry. However, we have amended .103(a)(4)(i)(B) to provide that new fingerprints are not required to be submitted, pursuant to .103(d)(1)(ix), if the registered loan originator has fingerprints on file with the Registry that are less than three years old. The Registry will use these existing prints for purposes of the background check. This threeyear age limit is consistent with the procedures to be used by SRR for mortgage loan originators licensed by a State. We note that, as proposed, the final rule does not *44667 require fingerprints or a new background check when the change in employers is due to an acquisition, merger, or reorganization because these transactions carry a lower risk of fraud and identity theft. The Agencies note that institutions should still conduct prudent screening of prospective employees to confirm their identities.

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In response to a comment, the Agencies note that paragraph (a)(4) of .103 applies when an employee of an Agency-regulated institution becomes an employee of another Agencyregulated institution, regardless of whether the entities are affiliated. Similarly, when an employee of a subsidiary of an Agency-regulated institution becomes an employee of the institution, the requirements of .103 apply. In order to reduce regulatory burden and to prevent an interruption in mortgage origination activity, the proposed .103(a)(4)(ii) provided a 60-day grace period to comply with the .103(a)(4)(i) requirements when a registered mortgage loan originator becomes an employee of an Agency-regulated institution as a result of an acquisition, merger, or reorganization. Some commenters agreed that this 60-day grace period is appropriate and provides the proper balance between implementing the purpose of the S.A.F.E. Act and protecting consumers. Other commenters, however, requested that this period be extended to 90 or 180 days due to the complexity and protracted nature of the merger and acquisition process. Some commenters also requested that a 60-day grace period apply to all changes in employment, regardless of whether the change is the result of a merger or acquisition transaction. Final .103(a)(4)(ii) retains the proposed 60-day grace period for a change in employers due to acquisitions, mergers, or reorganizations. The Agencies find that 60 days is an adequate time for institutions and their employees to update registrations in the case of these transactions and agree with the commenters who stated that this time period balances the purposes of the S.A.F.E. Act and consumer protection. Additionally, the Agencies find that a grace period is not necessary when a mortgage loan originator changes employers for other reasons. This situation does not raise the same compliance burden as does an acquisition, merger, or reorganization, in which a large number of employees are switching employers at the same time. Therefore, as proposed, the final rule requires that these registered mortgage loan originators comply with the requirements of .103(a)(4) before they may originate residential mortgage loans for their new employer. Another commenter requested that the Agencies permit an employer to submit one update concerning all affected employees in the case of an acquisition, merger, or reorganization, rather than having each individual employee submit what is largely identical information about their change in employer. The Agencies agree that this approach would reduce burden for the employee, institution, and the Registry. We specifically have instructed CSBS and SRR to develop a process for these transactions that would allow the bulk transfer of business location and contact information for all mortgage loan originators from one institution to another. However, each individual employee still must complete the authorization and attestation for their own updated registration record. The Agencies adopt proposed .103(a)(4) with the addition of the language discussed above related to fingerprints in .103(a)(4)(i)(B). The Agencies also have modified .103(a)(4) to clarify that an employee of a bank who has been properly registered or licensed as a mortgage loan originator need only update information in the Registry, and complete the required authorizations and attestation, whether that employee is a new employee of the Agency-regulated institution or becomes subject to this final rule while an employee of the institution. The Agencies note that the registration of a mortgage loan originator who leaves any employer will be recorded as inactive in the Registry until he or she is hired by another entity, his or her record is updated in accordance with the final rule's requirements, and the new employer acknowledges employing the mortgage loan originator through the Registry. The individual will be prohibited from acting as a mortgage loan originator at an Agency-regulated institution until such time as the registration is reactivated, unless covered by the 60-day grace period for acquisitions, mergers, and reorganizations.

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Maintaining Registration. Under proposed .103(b)(1)(i), a registered mortgage loan originator must renew his or her registration with the Registry during the annual renewal period, November 1 through December 31 of each year. To renew, the employee must confirm that the information previously submitted to the Registry remains accurate and complete, updating any information as appropriate. Any registration that is not renewed during this period will become inactive, and the individual will be prohibited from acting as a mortgage loan originator at an Agency-regulated institution until such time as the registration requirements are met. However, an individual who fails to update information during this period may renew his or her registration at any time and does not need to wait until the start of the next annual renewal period. Inactive mortgage loan originators will not be assigned a new unique identifier if they reactivate their registration. Some commenters opposed the requirement to renew registrations annually as overly burdensome and unnecessary. Some suggested alternatively that a registration remain valid until there is a change in employment status or other change that requires an update of database information. Others recommended that the renewal be every two, three, or five years, or based on the experience of the originator. The Agencies understand that an annual renewal process requires an expenditure of time and resources by individual originators and their employing Agency-regulated institutions. However, section 1504 of the S.A.F.E. Act (12 U.S.C. 5103), requires that mortgage loan originators maintain their registration annually. Therefore, the Agencies can not eliminate, or lengthen, the time between renewals. For this reason, the Agencies adopt .103(b)(1)(i) as proposed without revision. We note that the automated processing of annual renewals, as more fully described below, could lessen the impact on the resources needed for these renewals. One commenter suggested that the final rule not require a mortgage loan originator to renew his or her registration during this annual renewal period if registration was made less than six months prior to the end of the renewal period. The Agencies believe this change is reasonable and within the scope of the S.A.F.E. Act. We have amended the final rule accordingly by adding new paragraph (b)(3) to final .103. However, a mortgage loan originator still is required to update his or her registration during this six month period if any information provided to the Registry at the time of registration changes, pursuant to .103(b)(1)(ii), described below. In addition to the annual renewal, proposed .103(b)(1)(ii) provided that a registration must be updated within 30 days of the occurrence of any of the following events: (1) A change in the employee's name; (2) the registrant *44668 ceases to be an employee of the institution; or (3) any of the employee's responses to the information required for registration pursuant to paragraphs (d)(1)(iii) through (viii) of .103 become inaccurate. A few commenters requested that the Agencies increase this 30-day period for updates to 60 or 90 days. The Agencies believe that the Registry should be updated as soon as possible and therefore have not adopted this requested change. Updates are needed on only a case-by-case basis and therefore, unlike in the case of mergers and acquisitions, should not be burdensome to registrants or employing institutions. In addition, the 30-day updating period is consistent with what is required currently for State-licensed mortgage loan originators. Therefore, final .103(b)(1)(ii) includes a 30-day update requirement, as proposed. Proposed .103(b) also required any employee who registers with the Registry to maintain his or her registration unless the employee is no longer a mortgage loan originator. As a result of this provision, once an employee registers as a loan originator with the Registry, the employee will be required to continue this registration until he or she is no longer engaged in the activity of a mortgage loan originator, even if, in any subsequent 12-month period, the employee originates fewer mortgage loans than the number specified in the de minimis exception provision. The purpose of this requirement is to prevent the creation of a timing loophole that could allow mortgage loan originators to avoid registration requirements.

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As indicated in the proposal's SUPPLEMENTARY INFORMATION section, the Agencies have considered whether the rule should provide for a temporary waiver of the rule's registration requirements or for extension of the initial registration or renewal period, in case of emergency, system malfunction, or other event beyond the control of the Agency-regulated institution or the mortgage loan originator. One commenter expressed support for this concept but noted that such an exception should be narrowly drawn so as not to create a loophole in the registration requirement and suggested that each Agency select an official who has authority to designate an emergency deadline extension for good cause. Another commenter also supported a waiver when events beyond the institution's control made timely registration impossible. The Agencies agree that on rare occasions there may be exigent circumstances or situations when the Agencies may deem it appropriate to temporarily waive or suspend the requirements of this rule or extend the initial registration or renewal periods. The Agencies do not believe, however, that the final rule must include specific language to effectuate such waivers, suspensions, or extensions. As is the Agencies' practice in other supervisory contexts, if a situation arises that warrants such an action, such as a serious interruption of communication, computer, or fingerprint collection systems at one or more institution(s) caused by circumstances beyond the institution's control, or an extended interruption of Registry service, the Agencies will announce the availability of waivers, suspensions, or extensions of time. In addition, Agencyregulated institutions may contact their regulators to discuss possible relief on a case-by-case basis. Effective date of registrations and renewals. Proposed .103(c) provided that a registration is effective on the date that the registrant receives notification from the Registry that all employee and institution information required by paragraphs (d) and (e) of .103 has been submitted and the registration is complete, and that a renewal or update of a registration is effective on the date the registrant receives notification from the Registry that all applicable information required by paragraphs (b) and (e) of .103 has been submitted and the renewal or update is complete. We have made two changes to this provision in the final rule. Because the Registry is not technically capable of determining when a registrant actually receives its notification that the registration is complete, we have amended this provision to indicate that a registration is effective when the Registry transmits notification to the registrant that the registrant is registered. In addition, we have streamlined this provision to clarify that this notification of registration completes the registration process. We have made similar changes to .103(c)(2) regarding renewals and updates. We note that, except as provided by the 180-day implementation period in .103(a)(3) or the 60-day grace period provided in .103(a)(4), an employee must not engage in residential mortgage loan origination activity if his or her registration is not yet effective or has not been renewed or updated pursuant to this rule. A number of commenters requested further clarification of this effective date, and specifically requested that the effectiveness of the registration not be delayed for the processing of a registrant's fingerprints or receipt of a criminal background check. The Agencies did not intend to delay the effective date for fingerprint or criminal background check processing. There is no requirement for the processing of these fingerprints or the completion of a background check before a registration becomes effective. Nor, as indicated previously in this SUPPLEMENTARY INFORMATION section, is the effectiveness of a registration contingent on Agency or Registry review or approval of the information submitted to the Registry. Pursuant to the rule, in order to register, the information required by .103(d) and (e) must be submitted, and, in order to renew or update a registration, the information required by .103(b) must be submitted. The Registry will conduct a completeness check of the information submitted by or on behalf of the registrant. At the time the Registry determines all required information has been submitted

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and all Registry requirements have been met, such as payment of applicable fees charged by the Registry, it will transmit notification electronically to the registrant that he or she is registered or that his or her registration is renewed or updated, as applicable. The employing institution will be responsible for reviewing the criminal history background report once it is completed, and taking any necessary action based on the findings of this report, pursuant to the institution's policies and procedures, as required by this final rule. We note that the registrant will obtain a unique identifier during the registration process and not when the registration is complete. Section 1510 of the S.A.F.E. Act (12 U.S.C. 5109), expressly authorizes the Registry to charge reasonable fees to cover the costs of maintaining and providing access to information from the [Registry], to the extent that such fees are not charged to consumers for access to such [Registry]. We anticipate that the Registry will charge fees for registration, change in employment, renewal, and fingerprint processing and background checks. Although some commenters specifically requested information on the anticipated costs associated with registering with the Registry, the Agencies are at this time unable to provide this information as the fees have yet to be established by CSBS and SRR. The Agencies are consulting with the CSBS and SRR regarding the fees that the Registry expects to impose. One commenter specifically asked the Agencies to grant Agency-regulated institutions the opportunity to comment on fees. CSBS *44669 has indicated that it intends to provide an opportunity for the public to comment on these fees, and any future adjustments to such fees, before their imposition on Federal registrants and/or their employing institutions.[FN1] FN1 The agencies note that the NMLS currently charges fees for the licensing of State originators; however, fees for Federal registrants and their employing Agency-regulated institutions may differ from those currently imposed on State licensees. See the NMLS Web site at http://www.stateregulatoryregistry.org for information regarding fees imposed on State originators. Required employee information. Section 1507(a)(2) of the S.A.F.E. Act (12 U.S.C. 5106(a)(2)) specifically requires, in connection with the registration of a mortgage loan originator, the Agencies to furnish, or cause to be furnished, to the Registry information concerning an employee's identity, including fingerprints and personal history and experience. Final .103(d) implements this requirement and lists the categories of information that mortgage loan originators, or the employing Agency-regulated institution on behalf of the mortgage loan originator, will be required to submit to the Registry. Agency-regulated institutions may select one or more individuals to submit the employee information required by this paragraph to the Registry on behalf of each of their mortgage loan originators to facilitate the registration process. At the request of commenters, we have added a new paragraph (d)(3) to the final rule that specifically permits institutions to select such individuals to submit employee information on behalf of mortgage loan originators employed by the institution. The final rule specifically prohibits these selected individuals from acting as mortgage loan originators. We note that regardless of the manner that the information is provided to the Registry, the registering employee, and not the employing institution or other employees, must complete the authorizations and attestation required by .103(d)(2), and described below, for the registration to be complete. Under proposed .103(d), the employing Agency-regulated institution would have been required to have its registering employees submit, or to submit on behalf of its employees, information regarding the employee's identity (name and former names, social security number, gender, and date and place of birth) and home and business contact information; date the employee became an employee of the Agency-regulated institution; financial services-related employment and financial history for the past 10 years; criminal history involving certain felonies and misdemeanors; history of financial services-related civil actions, arbitrations and regulatory and disciplinary actions or orders; financial services-related professional license revocations or suspensions; voluntary or involuntary employment terminations based on violations of law or industry standards of conduct; and certain actions listed above that are pending against the

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employee. This information is similar to that required by the current NMLS data collection form for mortgage loan originators regulated by a State, form MU4. The information applies to employees but includes responsive information prior to their employment at the Agencyregulated institution. The Agencies received many comments on this provision. Although some supported the proposed list of information to be submitted to the Registry, many others requested that the Agencies narrow this list, stating that the extent of personal information required by the proposal is overbroad, intrusive, and burdensome. Commenters also requested that we clarify the information that is required to be submitted. Based on the comments received, the Agencies have carefully reviewed this list and agree that some of this information is more relevant for licensing purposes than for registration. In particular, we found that the collection of some of this information, which would not be publicly available to consumers, is not necessary to implement the purposes and requirements set forth in section 1502 of the S.A.F.E. Act (12 U.S.C. 5101). Based on this review, we have deleted proposed .103(d)(1)(iii) from the final rule, which would have required submission of the registrant's financial history information (such as bankruptcies, unsatisfied judgments, liens, paid-out bonds, etc.). This information would not be available to consumers under this rulemaking and is not required for registration by the statute. It therefore does not further the objectives of the S.A.F.E. Act. In addition, the submission of employment termination information to the Registry is more appropriate for the purpose of licensing, as a State regulator would use this information to make a decision on licensure, conducting further inquiry, if appropriate. Because this sensitive information would not be made public, we have deleted proposed .103(d)(1)(x), which required submission of information regarding employment terminations to the Registry, from the final rule. We also have not included in the final rule the requirement to provide information on pending matters. Because these matters are not final actions, requiring this information would effectively penalize mortgage loan originators before a decision had been rendered. We note that if a pending action does become final, it must be reported to the Registry and made publicly available within 30 days, pursuant to .103(b)(1)(ii). The Agencies also have revised the requirement in proposed .103(d)(1)(iv) to provide information on the mortgage loan originator's felony and misdemeanor criminal history. The proposal provided that the registrant supply information regarding felony convictions or other final criminal actions involving a felony against the employee or organizations controlled by the employee; or misdemeanor convictions or other final misdemeanor actions against the employee or organizations controlled by the employee involving financial services, a financial servicesrelated business, dishonesty, or breach of trust. After further review, the Agencies found the proposal's language too broad, and as a result, would have required the registrant to disclose convictions that are not directly relevant to his or her work as a mortgage loan originator. As such, this information is not necessary to meet the purposes or requirements of the S.A.F.E. Act. Final and redesignated .103(d)(1)(iii) removes the distinction between felonies and misdemeanors and narrows the category of final actions an employee must disclose to the Registry to final criminal actions that involve dishonesty or breach of trust or money laundering. In addition, to fully encompass all relevant final criminal actions, the final rule amends this category of information to include an agreement to enter into a pretrial diversion or similar program in connection with the prosecution for such offense.[FN1] This language derives from section 19(a)(1) of the FDI Act (12 U.S.C. 1829), which, in general, prohibits the participation of individuals convicted of such offenses from participating in the affairs of an insured depository institution. The Agencies intend to rely on FDIC rules and guidance interpreting section 19(a)(1)

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of the FDI Act with respect to the interpretation of criminal offenses *44670 covered under section 19 of the FDI Act.[FN2] Therefore, amending the proposal to include this language in the final rule provides clearer guidance to originators and their Agency-regulated institution employers of the types of criminal offenses required to be disclosed. For example, the FDIC excludes expunged, sealed and juvenile offenses and, therefore, the Agencies would not expect this information to be provided to the Registry.[FN3] The final rule also would not require acquittals to be reported. FN1 An agreement to enter into a pretrial diversion or similar program is defined by the FDIC as a suspension or eventual dismissal of charges or criminal prosecution upon agreement of the accused to treatment, rehabilitation, restitution, or other noncriminal or nonpunative alternatives. FDIC Statement of Policy for Section 19 of the FDIC Act, 63 FR 66177 (Dec. 1, 1998). FN2 See Id. and 12 CFR 303.220-223. FN3 Id. The Agencies find the remaining information required by the proposal to be submitted to the Registry relevant to the registration process and the purposes and requirements of the S.A.F.E. Act. Section 1507(a)(2) of the S.A.F.E. Act (12 U.S.C. 5106(a)(2)) specifically requires that information regarding the registrant's identity, including personal history and experience, be furnished to the Registry. Identifying information, such as name (and any other names used, such as a nickname, full legal name, or maiden name), home address, address of principal business location and business contact information (business phone number and e-mail address) and the registrant's prior financial services-related employment history (not all of which will be made public) is necessary to meet this requirement. In addition to this information, the registrant's social security number, gender, and date and place of birth are necessary to conduct the criminal history background check required by section 1507(a)(2)(A) of the S.A.F.E. Act (12 U.S.C. 5106(a)(2)(A)). Likewise, the required information concerning final criminal actions (as amended), financial services-related civil judicial actions, publicly-adjudicated regulatory and disciplinary actions or orders, financial services-related professional license revocations or suspensions, and financial services-related customer-initiated arbitration and civil actions will be made public on the Registry, and, therefore, further the purpose of the S.A.F.E. Act to provide consumers with easily accessible information on disciplinary and enforcement actions against the originator. The Agencies therefore adopt the final rule with the requirement to provide this information to the Registry. Pursuant to section 1507(a)(2)(A) of the S.A.F.E. Act (12 U.S.C. 5106(a)(2)(A)), proposed .103(d)(xii) (redesignated as .103(d)(ix) in the final rule) also required employees to provide fingerprints, in digital form if practicable, to the Registry for submission to the FBI and any governmental agency or entity authorized to receive such information for a State and national criminal history background check. The proposal permitted the use of fingerprints currently on file with the employing Agency-regulated institution if taken less than three years prior to the employee's registration with the Registry. This requirement elicited many comments. Some commenters requested that the Agencies permit institutions to continue accessing existing fingerprint channels recognized and supported by existing relations with the FBI. Some commenters also suggested that the final rule should deem background checks conducted by the institution during the hiring process as compliant with the S.A.F.E. Act's fingerprint and background check requirement. Commenters also requested that the final rule permit the submission of fingerprints collected 10 or 15 years prior to registration. Many of the commenters argued that an age limit is unnecessary as fingerprints do not change over time. In addition, commenters noted that allowing the use of existing fingerprints, no matter when collected, will reduce registration costs and delays.

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The S.A.F.E. Act specifically requires fingerprints to be furnished to the Registry for purposes of submission to the FBI, and any governmental agency or entity authorized to receive such information for a State and national criminal history background check.[FN1] The S.A.F.E. Act does not specifically require certain persons or entities to furnish these fingerprints, nor prohibit other entities from furnishing fingerprints to the Registry. However, the FBI only will accept fingerprints from entities authorized as channelers of this information. FN1 Section 1507(a)(2)(A) of the S.A.F.E. Act (12 U.S.C. 5106(a)(2)(A)). The Agencies note that, in the event that a mortgage loan originator is unable to provide fingerprints due to a physical condition, he or she should provide identifying information to the Registry consistent with FBI protocols. In order to ensure that fingerprints are up-to-date, we have amended the redesignated .103(d)(1)(ix) to provide that fingerprints that are less than three years old may be used to satisfy the requirement to furnish fingerprints to the Registry. As indicated previously, this threeyear age limit is consistent with the procedures to be used by SRR for mortgage loan originators licensed by a State. Institutions should consult their existing channelers regarding the furnishing of fingerprints that are less than three years old to the Registry. CSBS and SRR are currently modifying the NMLS to act as a channeler for fingerprints of State license applicants, pursuant to the S.A.F.E. Act, and Federal registrants may use this same fingerprinting process when the NMLS is modified to accept Federal registrations.[FN2] The Agencies anticipate that CSBS and SRR will provide guidance to Agency-regulated institutions and their mortgage loan originators on the availability and details of this fingerprint process. CSBS and SRR intend that this fingerprinting process will be convenient and efficient for both State licensees and Federal registrants.[FN1] FN2 Further information on the Registry's fingerprint and background check procedures can be found on the Registry's Web site at http://www.stateregulatoryregistry.org/NMLS/. FN1 SRR plans to contract with a nationwide vendor to take the fingerprints and forward them to the Registry, which will then obtain the criminal history background check based on these fingerprints. According to plans, this vendor will have locations throughout the country, may be made available on-site at institutions, and will provide a mail-in option for mortgage loan originators unable to provide their fingerprints in person. Some commenters asked the Agencies to clarify whether the Registry may collect fingerprints and submit a request for a background check before the Agency-regulated institution employs a mortgage loan originator rather than waiting until after that individual is hired to submit fingerprints to the Registry. The Agencies have no objection to the Registry processing a background check just prior to the employment of a mortgage loan originator, should the Registry provide this service, and believe this could satisfy the requirements of the rule. Some commenters also expressed the view that the Registry should have the capability to accept fingerprints in both paper and digital form. As in the proposed rule, the final rule does not require digital fingerprints, but does encourage the use of digital fingerprint submissions. If digital fingerprints are not available, the Registry will accept fingerprint cards, and will convert these cards to a digital format. The Agencies note that the rule's authorization to submit fingerprints in paper form is intended to assist smaller institutions for which compliance with a digital fingerprint requirement may not be feasible. Employee authorization and attestation. Paragraph (d)(2)(i) of .103 requires the employee to provide authorization for the Registry and the employing Agency-regulated *44671 institution to obtain information related to sanctions or findings in any administrative, civil, or criminal action, to which the employee is a party, and, in paragraph (d)(2)(ii) of this section, to attest to the correctness of all information submitted to the Registry pursuant to paragraph (d) of this

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section. In order to provide relevant information to consumers and to implement the purposes of the S.A.F.E. Act, paragraph (d)(2)(iii) requires the employee to authorize the Registry to make available to the public the information required to be submitted to the Registry pursuant to .103(d)(1)(i)(A) and (C) and (d)(1)(ii) through (viii) (his or her name, other names used, name of current employer(s), current principal business location(s) and business contact information, 10 years of relevant employment history, and publicly adjudicated disciplinary and enforcement actions and arbitrations against the employee). Although this rulemaking permits the employing institution or other institution employees to submit the information required by .103(d)(1) to the Registry on behalf of the registering employee, the employee, and not the employing institution or its other employees, must complete the attestation and authorizations required by .103(d)(2) for the registration to be complete. This task may not be delegated because it is necessary for the Registry to authenticate the employee's information. The Registry plans to make this information available to the public in two phases. The first phase, implemented at the end of the initial registration period, would provide for public accessibility of the employee's name; other names used; name of current employer(s); current principal business location(s) and business contact information; and employment history. The remaining categories of information (publicly adjudicated disciplinary and enforcement actions and arbitrations against the employee) would be made public at a later date, once the Registry, in consultation with the Agencies, has designed and implemented a system through which the registrant may provide additional explanatory information to accompany a positive response to any of the disclosure questions regarding criminal history or the other information requested in paragraphs (d)(1)(iii) through (viii). The Agencies note that once the Registry makes this enhancement, registered mortgage loan originators will be able to provide this explanatory information at any time, including during the annual renewal process, and that this explanatory language may be made public. Relevant nonpublic information submitted to the Registry will be only accessible to the Agencies and State regulators of mortgage originators, as appropriate, and the submitting mortgage loan originator and his or her employing institution.[FN1] FN1 SRR plans to make this public information stored on the Registry available on an aggregate basis to interested parties for compliance purposes. The Agencies received many comments on the public availability of personal information, particularly on how the Registry will store and prevent the unauthorized use of this personal information, and how nonpublic personal information will be appropriately protected. One commenter specifically stated that the final rule should take appropriate measures to ensure that the electronic submissions to the Registry are properly encrypted, authorized, and authenticated, and that the Registry complies with the FBI Criminal Justice Information Services Security Policy (CJIS Security Policy).[FN2] FN2 CJISD-ITS-DOC-08140-4.5, December 2008. The Agencies are well aware of the security concerns associated with providing personal information to the Registry and are contracting with SRR to ensure appropriate data protection elements are incorporated within the Registry to ensure compliance with the requirements of the Federal Information Security Management Act (FISMA) of 2002, PL 107-347; the CJIS Security Policy; and the related Security and Management Control Outsourcing Standard.[FN3] FISMA requires each Federal agency to develop, document, and implement an agency-wide program to provide information security for the information and information systems that support the operations and assets of the agency, including those provided or managed by another agency, contractor, or other source. Specifically, FISMA directed the promulgation of Federal standards for: (1) The security categorization of Federal information and information systems based on the

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objectives of providing appropriate levels of information security according to a range of risk levels; and (2) minimum security requirements for information and information systems in each such category.[FN1] FN3 See http://www.fbi.gov/hq/cjisd/webpage/pdf/05132009outsourcingstandard.pdf. FN1 See the National Institute of Standards and Technology (NIST) publications FIPS Pub 200, Minimum Security Requirements for Federal Information and Information Systems, March 2006 and NIST Special Publication 800-53, Recommended Security Controls for Federal Information Systems, as amended. These standards specify minimum management, operational, and technical safeguards in 17 security-related areas needed to protect the confidentiality, integrity, and availability of Federal information systems and the information processed, stored, and transmitted by those systems. These security-related areas are: (1) Access control; (2) awareness and training; (3) audit and accountability; (4) certification, accreditation, and security assessments; (5) configuration management; (6) contingency planning; (7) identification and authentication; (8) incident response; (9) maintenance; (10) media protection; (11) physical and environmental protection; (12) planning; (13) personnel security; (14) risk assessment; (15) systems and services acquisition; (16) system and communications protection; and (17) system and information integrity. As a channeler and outsourcer of fingerprints, the FBI requires the Registry to comply with its CJIS Security Policy. The CJIS provides the minimum level of information technology security requirements determined acceptable for the transmission, processing, and storage of the nation's criminal justice information systems data. The purpose of this policy is to establish uniformity and consistency in safeguarding criminal justice information security data which is accessed via networks throughout the Federal, State, and local user community. However, this policy does not prohibit more stringent security policies. The requirements for protecting the privacy and security of the personal information obtained from employees of Agency-regulated institutions, and the confidential information obtained from the institutions themselves, are essentially similar whether a particular mortgage loan originator is State licensed or Federally registered. SRR and CSBS will institute security protocols to protect the privacy and security of such information. The Agencies adopt .103(d)(2) as proposed, with the following conforming and clarifying changes. First, we have removed pending disciplinary and enforcement actions and arbitrations against the employee from the list of information the employee must authorize the Registry to make available to the public to conform with our amendment to .103(d)(1). Second, we have amended .103(d)(2)(ii) to require a registrant to attest to any update of their registration, in addition to their initial and renewal registrations. This requirement had inadvertently been left out of the proposed rule. Finally, we have added language to clarify that neither the employing institution, nor any of its other employees, may fulfill these attestation and authorization *44672 requirements on behalf of the registering employee. We also have added a new paragraph (d)(3) to clarify that an Agency-regulated institution may identify an employee or employees of the bank who may submit the employee information required by paragraph (d)(1)(i) to the Registry on behalf of the institution's employees, provided that this individual, and any employee delegated this authority, does not act as a mortgage loan originator, consistent with .103(e)(1)(i)(F). In addition, as more fully explained below, this new paragraph specifically authorizes an institution to submit to the Registry some or all of the employee information required by paragraph (d)(1)(i) and the institution's information required by .103(e)(2) for multiple employees in bulk through batch processing in a format to be specified by the Registry, to the extent such batch processing is made available by the Registry. Required Agency-regulated institution information. The Agencies adopt proposed .103(e)(1) with the following amendments, discussed below.

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Paragraph (e)(1) of .103 of the final rule requires the employing Agency-regulated institution to submit certain information to the Registry as a base record in connection with the registration of one or more mortgage loan originators. Specifically, the Agency-regulated institution must provide its name; main office address; business contact information, such as business phone number or e-mail address (not required by the proposed rule); primary Federal regulator; Employer Tax Identification Number (EIN) issued by the Internal Revenue Service; primary point of contact information; and contact information for system administrators. System administrators will have the authority to enter data required in paragraph (e) of this section on the Registry and will be responsible for keeping institution information and the list of employees registered with the Registry current. These individuals, however, may not act as mortgage loan originators. The Agencies recognize that some small institutions may not be able to comply with this latter requirement because all of their staff may be registered mortgage loan originators. Therefore, we have amended this provision to exempt institutions with 10 or fewer full time equivalent employees from the requirement that system administrators do not act as mortgage loan originators. However, this exemption does not apply to a subsidiary of an Agencyregulated institution as the staff at the parent institution could perform this function. In the Agencies' experience, institutions with more than 10 full time equivalent employees generally have sufficient staff resources to support the segregation of these functions. The system administrators may delegate their authority and assign as many additional system users as necessary to comply with the registration requirements of the S.A.F.E. Act and the final rule, provided the delegated administrators meet this paragraph's requirements. While the primary point of contact also can be one of the institution's system administrators, the institution's management is responsible for ensuring proper oversight of the system administrator's activities. In addition, paragraph (e)(1)(i)(C) of .103 requires an Agency-regulated institution to provide its Research Statistics Supervision Discount (RSSD) number as identifying data for validating the base record. The RSSD database is maintained by the Board. The Agencies will provide the Registry with an extract of the Board's database, indexed by RSSD number, to facilitate an Agency-regulated institution's authorized access to the Registry and its establishment of a new base record. Upon receiving the information for a new base record from an Agency-regulated institution, the Registry will confirm the information by comparing the application with RSSD data supplied by the Agencies. The Agencies will establish a mechanism by which Agency-regulated institutions that do not have an RSSD number will be added to the RSSD database. If the institution is a subsidiary of an Agency-regulated institution, the final rule requires the subsidiary to indicate that it is a subsidiary of the parent and to provide its parent institution's RSSD number in addition to its own RSSD number, if it has one. It is not required to obtain its own RSSD number. The proposal had required that the subsidiary provide its parent's name. We have revised this provision in the final rule to require the subsidiary instead to provide its parent's RSSD number, which is a more accurate method of identifying the parent institution than by name. Some Farm Credit System-affiliated commenters requested that the Agencies consider using the FCA's existing identification system as an alternative for the RSSD number for FCS institutions. The Agencies decline to make this modification. Validation of Agency-regulated institutions will be most efficient and complete if all institutions can be identified through a single identification system. The FCA will provide FCS institutions with information on how to obtain an RSSD number for the purposes of this rulemaking. The Agencies received no other significant comments on .103(e). We also have amended proposed .103(e)(1) to require system administrators to follow NMLS protocols to verify their own identity and to attest that they have the authority to enter data on behalf of the Agency-regulated institution, that the information submitted pursuant to

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paragraph (e) is correct, and that the Agency-regulated institution will keep the information required by paragraph (e) current and will file accurate supplementary information on a timely basis. In addition, we have amended this paragraph to require institutions to renew the information they have submitted to the Registry pursuant to .103(e) on an annual basis. We have added these two requirements to conform to system protocols identified by CSBS and SRR. As in the proposal, renumbered paragraph (e)(1)(iii) of .103 requires an Agency-regulated institution to update any information it has submitted within 30 days of the date that the information becomes inaccurate. As proposed, .103(e)(2) of the final rule requires an Agency-regulated institution to provide information to the Registry for each employee who acts as a mortgage loan originator. The Agency-regulated institution must: (1) Confirm that it employs the registrant, after all the information required by paragraph (d) of this section has been submitted to the Registry; and (2) within 30 days of the date the registrant ceases to be an employee of the institution, provide notification that it no longer employs the registrant and the date the registrant ceased being an employee. This information will link the registering mortgage loan originator to the Agencyregulated institution in order to confirm that the registration of the employee is valid and legitimate. The Agencies note that the Registry's system protocols will not permit the Agencyregulated institution to confirm that it employs the registrant unless all of the employee's information required by paragraph (d) of this section has been submitted to the Registry and the employee has attested to the accuracy of the information. As indicated below, batch processing of certain information for multiple employees will likely be available to facilitate compliance with this provision. Batch Processing of Registrations. The SUPPLEMENTARY INFORMATION section of *44673 the proposed rule sought comment on whether to permit a batch process for Agency-regulated institutions to submit to the Registry, in bulk, some or all of the required employee and institution information as a way to mitigate the initial and ongoing registration burden on Agencyregulated institutions and their employees. Commenters overwhelmingly supported the concept of batch processing, indicating that such a capability would make registration faster, simpler, more efficient, and less costly. They also stated that it would enable them to better control and manage the registration process, pursuant to the policies and procedures required by this rulemaking. The Agencies agree that some form of batch processing would be helpful for the registration process to run smoothly and efficiently and for all initial registrations to be completed within the 180-day initial registration period. Batch processing would be especially beneficial to larger institutions who must register tens of thousands of employees. The Agencies therefore are working with CSBS and SRR to ensure that the Registry supports the batch processing of large numbers of registrations by Agency-regulated institutions. As indicated above, we have added a new .103(d)(3) to specifically permit institutions to submit a portion of the information required by paragraphs (d)(1)(i) and (e)(2) of .103 for multiple employees in bulk through batch processing, to the extent such batch processing is made available by the Registry. Specifically, it is our intent that the Registry will be able to provide Agency-regulated institutions the capability to submit batch registration of a portion of the information for multiple mortgage loan originators and to electronically notify the originators of the need to complete the registration. The Agencies expect the batch file to contain at least enough information to establish a mortgage loan originator record (such as the institution's name and RSSD number and employee name, SSN, and e-mail address). We also expect that the Registry will provide the capability for an Agency-regulated institution to confirm its relationship with mortgage loan originators either individually or in bulk. The Agencies, CSBS, and SRR are in the process of specifying the details and means of this batch processing. Batch processing should be available for institutions at the start of the initial registration period, and we will provide further

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information on batch processing prior to that time. Section.104Policies and Procedures Proposed .104 required Agency-regulated institutions that employ mortgage loan originators to adopt and follow written policies and procedures designed to ensure compliance with the requirements of the final rule. The proposal stated that the policies and procedures must be appropriate to the nature, size, complexity, and scope of the mortgage lending activities of the Agency-regulated institution and must, at a minimum, include eight specified provisions. The Agencies received many comments on these required policies and procedures. Although some supported them, others found the requirement to have detailed written plans for how to comply with the final rule unnecessary and overly burdensome, especially in light of other regulatory requirements imposed on financial institutions. A few commenters suggested that the Agencies develop model guidelines for, or samples of, these policies and procedures to reduce implementation and compliance costs for Agency-regulated institutions and to reduce burden on examiners in monitoring compliance. Commenters also requested further clarification of specific provisions and an explanation as to the reason for the provision. The Agencies continue to believe that requiring Agency-regulated institutions to establish policies and procedures is an appropriate way to ensure and monitor compliance with this final rule. Appropriate policies and procedures provide an institution and its employees with the expectations of the institution's board and include the specific implementing guidance that is applicable to the activities of that institution. Furthermore, such policies and procedures are necessary to enable Agency examiners to evaluate the effectiveness of institutions' implementation of the S.A.F.E. Act requirements that apply to them. Institutions have the responsibility to adopt policies and procedures appropriate to their operations. The final rule therefore includes a policies and procedures requirement. Comments on specific provisions are addressed below. First, proposed .104(a) required policies and procedures to establish a process for identifying which employees of the institution are required to be registered mortgage loan originators. This provision highlights a basic and necessary action each institution must take to comply with the rulemaking. We did not receive specific substantive comments on this requirement and therefore adopt .104(a) as proposed. Second, proposed .104(b) required policies and procedures to require that all employees of the institution who are mortgage loan originators be informed of the registration requirements of the S.A.F.E. Act and the proposed rule and be instructed on how to comply with these requirements and procedures, including registering as a mortgage loan originator prior to engaging in any mortgage loan origination activity. As with the first provision, this action is necessary for Agency-regulated institutions to comply with the rule and facilitates employee compliance. We did not receive substantive comments addressing this requirement and therefore adopt .104(b) as proposed. Third, proposed .104(c) required that policies and procedures must establish procedures to comply with the unique identifier requirements in .105. Once again, this provision merely reiterates that Agency-regulated institutions must ensure compliance with a requirement of the rulemaking. We received no specific comments on this requirement and therefore adopt it as proposed. Fourth, proposed .104(d) required policies and procedures to establish reasonable procedures for confirming the adequacy and accuracy of employee registrations, including updates and renewals, by comparison with the institution's records. We adopt this provision as proposed. However, to address the many comments on this requirement, the Agencies clarify that they will consider an institution to have reasonable procedures if it confirms the information

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supplied to the Registry that is in the institution's personnel files. Typically this information would include the employee's identifying information, such as the employee's name; home address; business address and contact information; social security number; gender; date and place of birth; and financial services-related civil actions, arbitrations and regulatory actions taken against the institution's employee, if any. As noted in the SUPPLEMENTARY INFORMATION section of the proposed rule, to comply with this requirement, institutions need only compare the information supplied by the employee to the Registry with the information contained in the institution's own records. The final rule does not require, nor do the Agencies expect, Agencyregulated institutions to obtain private database searches on their employees to confirm employee registration information. Fifth, proposed .104(e) required institutions to establish reasonable *44674 procedures and tracking systems for monitoring compliance with registration requirements and procedures. Under this regulatory provision, Agency-regulated institutions will be expected to demonstrate compliance with the registration and renewal requirements of this final rule, such as by maintaining appropriate records. The action required by this provision is one that an institution must take to ensure compliance with the rule and may be done in a number of different ways, such as by using an institution's existing tracking systems. Having received no substantive comments on this requirement, the Agencies adopt it as proposed. Sixth, proposed .104(f) required policies and procedures that provide for periodic independent testing of the Agency-regulated institution's policies and procedures for compliance with the S.A.F.E. Act and the final rule and for such testing to be conducted by institution personnel or by an outside party. This compliance testing is standard procedure for Agencyregulated institutions as part of their internal controls, and we adopt it as proposed with one change. We have clarified that this compliance testing must be done on an annual basis, a necessary internal audit interval. Seventh, proposed .104(g) required policies and procedures to provide for appropriate disciplinary action against any employee who fails to comply with the registration requirements of the S.A.F.E. Act, this rule, or the related policies and procedures of the institution, including prohibiting such employees from acting as mortgage loan originators or other appropriate disciplinary actions. The action required by this provision is one that an institution would need to take to ensure compliance with the rule. Having received no substantive comments on this requirement, we adopt it as proposed. Finally, proposed .104(h) required policies and procedures to establish a process for reviewing the criminal history background reports on employees received from the FBI through the Registry, taking appropriate action consistent with applicable law and rules with respect to these reports, maintaining records of these reports, and documenting any action taken with respect to such employees consistent with applicable recordkeeping requirements, if any. A few commenters requested clarification on this requirement. As noted by other commenters, section 19 of the FDI Act (12 U.S.C. 1829), in general, prohibits insured depository institutions from employing a person who has been convicted of any criminal offense involving dishonesty or a breach of trust or money laundering or has entered into a pretrial diversion or similar program in connection with a prosecution for such offense. Similarly, section 5.65(d) of the Farm Credit Act (12 U.S.C. 2277a-14 (d)), states [e]xcept with the prior written consent of the Farm Credit Administration, it shall be unlawful for any person convicted of any criminal offense involving dishonesty or a breach of trust to serve as a director, officer, or employee of any System institution. For Federally insured credit unions, NCUA intends to rely upon U.S.C. 1786(i) and 12 12 CFR 741.3(c). We have revised this provision of the final rule to include references to the appropriate statutory provision. The Agencies have added a new provision to clarify the responsibilities of Agency-regulated institutions regarding their contracts relating to mortgage loan originations. Institutions must establish procedures designed to ensure that any third party with which it has arrangements

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related to mortgage loan origination has policies and procedures to comply with the S.A.F.E. Act, including appropriate licensing and/or registration of individuals acting as mortgage loan originators. Agency-regulated institutions should monitor third party entities' compliance with these policies and procedures. This provision will ensure that individuals acting as mortgage loan originators on behalf of an Agency-regulated institution are either State licensed and registered and/or Federally registered. One commenter requested that the final rule limit an institution's oversight of its employees' compliance with this rulemaking only to those activities of the employee that are within the scope of his or her employment at the institution. It is not our intention to require the institution to enforce the final rule's requirements with respect to activities of its employees that are conducted outside of the employee's scope of employment with that institution and beyond the institution's control, and we have added language to .104 to clarify this. This final rule's requirement to adopt these policies and procedures applies to all Agencyregulated institutions that employ individuals who act as mortgage loan originators, regardless of the application of any de minimis exception to their employees. These policies and procedures should be in place at an institution prior to the registration of its employees pursuant to this rule. Furthermore, the Agencies note that, consistent with the S.A.F.E. Act, the Registry will not screen or approve registrations received from employees of Agency-regulated institutions. Instead, it will be the repository of, and conduit for, information on those employees who are mortgage loan originators at Agency-regulated institutions. Pursuant to .104(d) and (h) of the final rule, it will be the responsibility of the Agency-regulated institution to establish reasonable procedures for confirming the adequacy and accuracy of employee registrations as well as to establish a process for reviewing any criminal history background reports received from the Registry. Section .105Use of Unique Identifier The Agencies proposed in .105(a) to require an Agency-regulated institution to make the unique identifier(s) of its registered mortgage loan originator(s) available to consumers in a manner and method practicable to the institution. Proposed .105(b) required a registered mortgage loan originator to provide the originator's unique identifier to a consumer upon request, before acting as a mortgage loan originator, and through the originator's initial written communication with a consumer, if any. Although a mortgage loan originator may change his or her name, change employment, or move, the unique identifier assigned to the originator by the Registry at the originator's original registration will remain the same. Once public access to the Registry is fully functional, the unique identifier will enable consumer access to an individual mortgage loan originator's profile stored in the Registry, including the mortgage loan originator's publicly available registration information, any State mortgage licenses held (active or inactive), employment history, and publicly adjudicated disciplinary and enforcement actions. If a mortgage loan originator is simultaneously employed by more than one State or Agency-regulated institution, that information also will be readily visible to the consumer. We received a number of comments on this requirementsome noting that it is cumbersome and of limited benefit to the consumer. However, the S.A.F.E. Act requires each mortgage loan originator to obtain a unique identifier to facilitate the electronic tracking of loan originators, and the uniform identification of, and public access to, the employment history and publicly adjudicated disciplinary and enforcement actions against a mortgage loan originator. In order to effectuate this requirement, a mortgage loan *44675 originator and the employing institution must ensure that the consumer has access to the originator's unique identifier. This access must be made available early enough in the relationship with the originator to enable the consumer to access the Registry before the consumer commits to the mortgage loan transaction. Because a

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consumer may not be aware of the Registry, it is important that both the institution and originator make this information available to the consumer, and not only just upon the consumer's request, as suggested by a number of commenters. Therefore, we adopt this requirement as proposed, with one clarifying change described below. As noted in the SUPPLEMENTARY INFORMATION section of the proposed rule, an Agencyregulated institution may comply with the .105(a) requirement in a number of ways. For example, the institution may choose to direct consumers to a listing of registered mortgage loan originators and their unique identifiers on its Web site; post this information prominently in a publicly accessible place, such as a branch office lobby or lending office reception area; and/or establish a process to ensure that institution personnel provide the unique identifier of a registered mortgage loan originator to consumers who request it from employees other than the mortgage loan originator. Furthermore, the Agencies intend .105(b)(3) of the rule to cover written communication from the originator specifically for his or her customers, such as a commitment letter, good faith estimate or disclosure statement, and not written materials or promotional items distributed by the Agency-regulated institution for general use by its customers. While, this provision does not require institutions to include the unique identifier on loan program descriptions, advertisements, business cards, stationary, notepads, and other similar materials, institutions are not prohibited from doing so. We also clarify that the requirement to provide the unique identifier to the consumer through the originator's initial written communication, if any, applies whether that communication is provided in writing on paper or through electronic means. We have clarified this requirement in the final rule. The Agencies also clarify that the unique identifier may be provided orally, except pursuant to paragraph (b)(3) under which the unique identifier would be provided with the written or electronic communication. We note that the Board has proposed amendments to 12 CFR 226 (Regulation Z) that would require disclosure of the unique identifier as part of TILA disclosures, which generally must be provided to a borrower within three business days of the residential mortgage loan application and seven business days before consummation of the transaction.[FN1] In addition, as indicated above, Fannie Mae and Freddie Mac are requiring all mortgage loan applications taken on or after the compliance date for the unique identifier requirement to include the mortgage loan originator's unique identifier.[FN1] We therefore believe that providing consumers with the originator's unique identifier will not be difficult or burdensome. FN1 See http://www.federalreserve.gov/newsevents/press/bcreg/20090723a.htm. FN1 See footnote 26. AppendixExamples of Mortgage Loan Originators The proposed Appendix included a nonexclusive list of examples of activities that fall within or outside the S.A.F.E. Act's definition of a mortgage loan originator. Specifically, the Appendix provided examples of activities that are, and are not, illustrative of taking an application, and offering or negotiating terms of a mortgage loan for compensation or gain. The Agencies note that an employee of an Agency-regulated institution is only subject to the S.A.F.E. Act to the extent that both prongs of the two-part test for acting as a mortgage loan originator are met, and that employees who take applications but do not offer or negotiate terms of a mortgage loan, or vice versa, do not meet the definition. Commenters generally asked the Agencies to provide more detail to the examples and to address whether specific activities of Agencyregulated institution employees would be covered by the two-prong test of a mortgage loan originator. The Agencies have made several modifications to the examples of taking an application. The modified examples clarify that taking an application occurs when the mortgage loan originator receives information in connection with a request for a mortgage loan that will be used to

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determine whether the consumer qualifies for a loan. The Agencies note that the information may be provided by another person on behalf of the consumer. Some commenters questioned whether an employee takes an application if that employee only collects limited data about the consumer or does not decide what data to collect. Another commenter suggested that when an employee collects the limited information about the consumer that is required by an automated loan approval system and quotes interest rates and fees for a specific mortgage loan product as generated by the system, that employee should not be considered to be engaged in taking an application. The Agencies disagree, as the limited information described by the commenter is sufficient to qualify the consumer for a specific mortgage product and terms. The example of taking an application was revised to address the receipt of information to be used to determine whether the consumer qualifies for a mortgage loan, which includes situations where there are limitations on the data collected or on the employee's discretion, as described by the commenter. Similarly, these commenters also requested clarification as to whether an employee takes an application when the employee enters information into an online application in the process of receiving information from the consumer. The Agencies have provided clarification that the example of taking an application applies even if the employee is inputting information into an online or other automated approval system on behalf of the consumer. The Agencies do not intend this example to address employees who are engaged in the clerical act of inputting information from a loan application into an automated approval system on behalf of a loan officer. Furthermore, contrary to the suggestions of some commenters, the Agencies have clarified that an employee may take an application even if the employee is not engaged in approval of the mortgage loan. An employee also may take an application even if the employee does not take an application fee. The Agencies also have clarified that, contrary to the suggestion of some commenters, an employee may take an application even if the employee has received the consumer's information indirectly in order to make an offer or negotiate terms of a mortgage loan. An employee may receive the consumer's information indirectly, for example, through another employee, a broker, or an automated system. The Agencies also have provided further detail regarding the examples of activities that do not constitute taking an application. In response to questions raised by commenters, the Agencies have further clarified that the following activities would not constitute taking an application: (1) Assisting a consumer who is filling out an application by explaining the qualifications or criteria necessary to obtain a mortgage loan product, (2) describing the steps that a *44676 consumer would need to take to provide information to be used to determine whether the consumer qualifies for a mortgage loan or otherwise explaining the mortgage loan application process, and (3) responding to an inquiry regarding a prequalified offer that a consumer has received from an Agency-regulated institution, collecting only basic identifying information about the consumer and forwarding the consumer to a mortgage loan originator. The Agencies also have revised the examples of offering or negotiating terms of a mortgage loan in response to the comments. The Agencies have revised one example to clarify that providing a disclosure of the mortgage loan terms after application pursuant to the Truth in Lending Act is included in presenting a mortgage loan offer. A number of commenters asked the Agencies to modify the examples to carve out employees who are limited in their ability to negotiate or finalize the terms of a mortgage loan. Some commenters posited that employees should be excluded if they only offer the loan rate to a consumer but are not permitted to negotiate the rate, or only quote a rate approved by an automated online system. Similarly, a commenter expressed the view that an employee would not offer or negotiate terms of a mortgage loan if involvement of a loan officer also was necessary to finalize the loan terms or otherwise conclude the mortgage loan approval process. The Agencies believe that many of these situations discussed by the commenters would involve an offer or a negotiation of a loan. Thus the revised

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examples clarify that presenting a mortgage loan offer to a consumer for acceptance, either verbally or in writing, is offering or negotiating terms of a mortgage loan even if other individuals must complete the mortgage loan process or if only the rate approved by the Agency-regulated institution's loan approval mechanism function for a specific loan product is communicated without authority to negotiate the rate. Similarly, one commenter suggested that an employee does not offer or negotiate terms of a mortgage loan if the employee does not lock the rate. The Agencies do not agree and declined to address this particular activity in the general example of offering or negotiating terms of a mortgage loan. The Agencies also have modified and added to the examples of activities that are not offering or negotiating terms of a mortgage loan. Some commenters noted that the S.A.F.E. Act excludes employees who are engaged in administrative and clerical activities. The Agencies have considered this exclusion in formulating the examples of mortgage loan origination. Specifically, with respect to offering and negotiating terms of a mortgage loan, the Agencies have added an example that an employee who communicates on behalf of a mortgage loan originator that a written offer has been sent to a consumer, without providing details of that offer, is not offering or negotiating a loan. In addition, in response to commenters' requests for more detail, the Agencies have clarified that providing descriptions, in addition to explanations, in response to consumer queries regarding qualification for a specific mortgage loan product or product-related service does not constitute offering or negotiating terms of a mortgage loan. In response to the suggestion of another commenter, the Agencies have provided another new example, specifying that offer or negotiate does not include explaining or describing the steps or process that a consumer would need to take in order to obtain a loan offer, including qualifications or criteria that would need to be met without providing guidance specific to the consumer's circumstances. Some commenters asked whether employees engaged solely in making underwriting decisions with respect to mortgage loans are offering terms of a mortgage loan. These employees, although they do not typically communicate directly with consumers, would appear to fall within the definition of taking an application. The Agencies have added, as an example of an activity that is not offering or negotiating terms of a mortgage loan, making an underwriting decision about whether the consumer qualifies for a loan. An employee engaged solely in this activity would not offer or negotiate terms of a loan, and would not, therefore, meet the two-prong test for acting as a loan originator. The Agencies, as described previously, understand from many commenters that numerous employees of Agency-regulated institutions are engaged solely in modifying loans, such as those which result in reduced and sustainable payments for a borrower who is in default. The Agencies have provided, as a new example of an activity that is not taking an application, receiving information in connection with a modification to the terms of an existing loan to a borrower as part of the institution's loss mitigation efforts, when the borrower is reasonably likely to default. An employee engaged solely in this activity does not receive a residential mortgage loan application, and would not, therefore, meet the two-prong test for acting as a loan originator. The Agencies note that modifying the terms of an existing loan to a borrower as part of the institution's loss mitigation efforts generally would not constitute acting as a mortgage loan originator for purposes of the S.A.F.E. Act. In addition, one commenter requested that the Agencies clarify that an employee acts as a mortgage loan originator when the employee renews an existing loan at maturity, thereby replacing the old loan with a new loan. The Agencies agree with this commenter. Finally, one commenter queried whether registration requirements apply to Agency-regulated institution employees who, in addition to a variety of customer service duties, only at times act as a mortgage loan originator and only with respect to a limited number of mortgage loan products. The Agencies note that an employee who meets the two-prong test is acting as a mortgage loan originator, even if that activity is not their primary job duty or the employee may

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only act as a mortgage loan originator for a limited number of products. As described previously, the Agencies have provided a de minimis exception to address employees who act as mortgage loan originators with respect to a small number of mortgage loans. In this light, the Agencies received comments that suggested that an employee would be engaged in offering the terms of a loan only if the employee's compensation was based on the number of loans closed or the employee's engagement in mortgage lending. The Agencies do not agree with this suggestion and have finalized the examples relating to compensation as proposed. Therefore, an employee offers or negotiates terms of a loan for compensation or gain even if the employee does not receive a referral fee or commission or other special compensation for the mortgage loan. IV. Regulatory Analysis A. Regulatory Flexibility Act OCC: The Regulatory Flexibility Act (RFA) [FN1] requires Federal agencies to prepare and make available to the public a Final Regulatory Flexibility Analysis (FRFA) for a final rule, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. See 5 U.S.C. 603-605. For purposes of the RFA, a small entity within the jurisdiction of the OCC is a national *44677 bank or a Federal branch or agency with assets of $175 million or less (small national bank).[FN2] In the NPRM, the OCC certified, pursuant to section 605(b) of the RFA, that the proposal would not have a significant economic impact on a substantial number of small entities.[FN3] The OCC's certification was based on an estimated average total compliance cost of $18,800 per small national bank and the impact of compliance costs as a percentage of labor costs, as well as compliance costs as a percent of noninterest expenses. The OCC received one commentfrom the Small Business Administration's Office of Advocacy (SBA Advocacy)on the certification. FN1 5 U.S.C. 601-612. FN2 13 CFR 121.201. FN3 In addition to the OCC, the Board, the FDIC, the OTS, the NCUA, and the FCA also certified in the proposed rule that the proposal would not have a significant economic impact on a substantial number of small entities. See 74 FR at 27398-27399. Based in part on this comment letter, the OCC has reevaluated the effect of this final rule on small national banks, and, for the reasons stated below, has determined that this rule will have a significant economic impact on a substantial number of small entities. Therefore, we have prepared the following FRFA in accordance with 5 U.S.C. 604. 1. Need for, and Objectives of, the Final Rule The need for, and objectives of, this final rule are described in detail in the SUPPLEMENTARY INFORMATION section. 2. Significant Issues Raised by Public Comments In the comment it submitted, SBA Advocacy expressed concern that the factual basis for the OCC's (and other Agencies') conclusion that the proposal would not have a significant economic impact on a substantial number of small entities may be insufficient, noting that the OCC's certification did not specify the assumptions used concerning labor costs or noninterest expenses. SBA Advocacy stated its concern that OCC's economic impact may be underestimated and sought clarification regarding the proposal's impact on the number of small national banks.[FN1] FN1 A discussion of SBA Advocacy's comments on other provisions of the proposed rule, namely,

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the de minimis exception and the proposed 6-month initial compliance period, is contained in the SUPPLEMENTARY INFORMATION section of this final rule. In part as a result of this comment letter, the OCC conducted further analysis of the effect of its rule on the banking industry as a whole and on small banks in particular. The OCC also obtained additional information about the impact of the proposal on national banks. As a result of this information we have modified our initial conclusions about the economic effect of the rule on small national banks. 3. Description and Estimate of Small Entities Affected by the Final Rule For purposes of OCC regulation, the final rule applies to national banks, Federal branches and agencies of foreign banks, their operating subsidiaries (collectively referred to as national banks), and their employees who act as mortgage loan originators. OCC estimates that 623 national banks with employees originating loans secured by residential real estate are small entities based on the SBA's general principles of affiliation (13 CFR 121.103(a)) and the size threshold for a small national bank. The OCC believes the final rule will have a significant impact on approximately 10 percent of these small national banks (65 banks).[FN1] We classify the impact of total costs on a small national bank as significant if the total costs in a single year are greater than 5 percent of total salaries and benefits, or greater than 2.5 percent of total non-interest expense. Mean total costs per bank in the group of small banks where compliance costs are significant is approximately $25,000 per bank.[FN2] FN1 The OCC estimated the impact on small banks both with and without employee turnover because it is the OCC's understanding that the turnover rate at small banks is significantly lower than the rate at large banks and there may be no turnover for several years in a row at some banks. However, even without employee turnover, the final rule appears to have a significant impact on a substantial number of small banks. FN2 The mean totals of the cost estimates (i.e., the higher cost estimate and the lower cost estimate) for all (623) small banks impacted by the final rule are $32,000 and $27,000 respectively. The mean total cost per small bank in the group of small banks where costs are significant is approximately $26,000 under the higher cost estimate, and $23,000 under the lower cost estimate. 4. Recordkeeping, Reporting, and Other Compliance Requirements The final rule imposes requirements on both national banks and their employees who engage in the business of mortgage loan origination, regardless of the size of the national bank. Typical recordkeeping, administrative, computer technology and bank management skills will be needed to comply with all of the rule's requirements. Reporting Requirements. Unless the de minimis exception applies, 34.103(a) of the final rule requires a mortgage loan originator employed by a national bank to register with the Registry, maintain such registration, and obtain a unique identifier. Under 34.103(b), a bank must require each mortgage loan originator employee to comply with these requirements. Section 34.103(d) describes the categories of information that an employee, or the employing bank on the employee's behalf, must submit to the Registry, along with the employee's attestation as to the correctness of the information supplied, and the employee's authorization to obtain further information and make public some of this information. This section also requires the submission of the mortgage loan originator's fingerprints to the Registry. Section 34.103(e) specifies bank and employee information that a bank must submit to the Registry in connection with the initial registration of one or more mortgage loan originators. The bank must annually renew this information and update this information if necessary between

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renewals. Authorized bank representatives must attest to the correctness of this information and that such information will be updated on a timely basis. Disclosure Requirements. Section 34.105(b) requires the mortgage loan originator to provide the unique identifier to a consumer: (i) Upon request; (2) before acting as a mortgage loan originator; and (3) through the originator's initial written communication with a consumer, if any, whether on paper or electronically. Section 34.105(a) requires the bank to make the unique identifier(s) of its mortgage loan originator(s) available to consumers in a manner and method practicable to the bank. Recordkeeping and Compliance Requirements. Section 34.104 requires a bank that employs one or more mortgage loan originators to adopt and follow written policies and procedures designed to assure compliance with this final rule. These policies and procedures must be appropriate to the nature, size, complexity, and scope of their mortgage lending activities and will apply only to those employees acting within their scope of employment at the bank. At a minimum, these policies and procedures must establish a process for: (i) Identifying which employees are required to register, (ii) communicating the registration requirements to employees, (iii) complying with the rule's unique identifier requirements, (iv) confirming the adequacy and accuracy of employee registrations though comparisons with bank records, (v) monitoring employee compliance with the rule, (vi) independent compliance testing, (vii) taking *44678 appropriate actions with respect to employees who fail to comply with the registration requirements, (viii) reviewing employee criminal history background checks received pursuant to this rule, and (ix) monitoring third party compliance with the S.A.F.E. Act. 5. Steps Taken To Address the Economic Impact on Small Entities The final rule reflects the consideration given by the OCC, along with the other Agencies, to the impact that its requirements would have on small entities. First, the Agencies have revised the rule's de minimis exception to reduce compliance burden. In the proposed rule, the Agencies established a de minimis exception that would have excepted from the registration requirements an employee of an Agency-regulated institution if, during the last 12 months: (1) The employee acted as a mortgage loan originator for 5 or fewer residential mortgage loans; and (2) the Agency-regulated institution employs mortgage loan originators who, while excepted from registration pursuant to this section, in the aggregate, acted as a mortgage loan originator in connection with 25 or fewer residential mortgage loans. Many commenters on this provision noted the complexity of the proposed exception. One commenter stated that the de minimis exception would not have any significant effect because its complexity would outweigh its benefits. Others noted that the proposed exception would be difficult for an institution to monitor and maintain. Still others said that the proposed de minimis exception would be fairer, and much easier to apply, if the threshold limitation applied only to the employee or to the institution, but not both. SBA Advocacy specifically commented that the proposed de minimis exception would make the rule unduly burdensome on small community banks. In response to these and other comments and upon further analysis, the Agencies removed the institution threshold from this de minimis exception. As a result, the final rule's de minimis exception only contains the individual threshold, as well as a prohibition on any Agencyregulated institution from engaging in any act or practice to evade the limits of the de minimis exception. This revised exception should simplify compliance and therefore impose the least burden overall for institutions, including small entities. The Agencies also considered, pursuant to section 1507(c) of the S.A.F.E. Act (12 U.S.C. 5106(c)), applying the requirements of the rule only to institutions above a certain asset threshold, such as the threshold for Home Mortgage Disclosure Act reporting. However, the

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Agencies agreed that this would not further the consumer protection purposes of the S.A.F.E. Act [FN1] in that customers of smaller banks would not have the same information on mortgage loan originators as customers of larger institutions. In addition, we believed the exception should be structured so that employees of institutions of all sizes could qualify. FN1 Among other things, the objectives of the S.A.F.E. Act include: Enhancing consumer protections and supporting anti-fraud measures; increasing accountability and tracking of loan originators; and providing consumers with easily accessible information at no charge regarding the employment history of, and publicly adjudicated disciplinary and enforcement actions against, loan originators. S.A.F.E. Act at section 1502 (12 U.S.C. 5101). The OCC also has reviewed alternatives for small entity compliance, including eliminating the requirement for small banks to adopt and follow written policies and procedures addressing all of the elements described in the final rule. For example, under such an approach, a small bank's risk based compliance program might include only such procedures as are necessary to enable the bank to demonstrate compliance with the registration and renewal requirements of the S.A.F.E. Act. Although such an approach may have reduced the compliance cost per small bank, the OCC does not believe that it would best serve the interests of national banks or the OCC. Appropriate policies and procedures provide an institution and its employees with the expectations of the institution's board and include the specific implementing guidance that is applicable to the activities of that institution. Furthermore, such policies and procedures are necessary to enable examiners to evaluate the effectiveness of institutions' implementation of the S.A.F.E. Act requirements that apply to them. In reviewing this alternative, we determined that applying the policies and procedures requirement in the same way to all institutions, regardless of size, is necessary to ensure consistency in implementation and enforcement of the S.A.F.E. Act and is, therefore, the most appropriate way to ensure that the purposes of the S.A.F.E Act are met. The OCC, and the other Agencies, also made changes to the final rule that reduce the impact that its requirements would have on all Agency-regulated financial institutions, including small entities. The final rule decreased the amount of information required for submission by a mortgage loan originator. Specifically, the final rule does not require submission of financial history information such as bankruptcies and liens; employment terminations; pending actions; and felonies unrelated to crimes of dishonesty. Furthermore, the Agencies declined to include loan modification activities in the final rule's definition of mortgage loan originator. Under the OCC's rule, Agency-regulated institution employees engaged solely in bona fide cost-free loss mitigation efforts which result in reduced and sustainable payments for the borrower generally would not meet the definition of mortgage loan originator. This reduces the number of bank employees subject to the final rule's requirements. Board: Pursuant to section 605(b) of the RFA, 5 U.S.C. 605(b), the regulatory flexibility analysis otherwise required under section 604 of the RFA is not required if the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities and publishes its certification and a short, explanatory statement in the Federal Register along with its rule. The final rule implements the S.A.F.E. Act's Federal registration requirements for mortgage loan originators. The S.A.F.E. Act states that the objectives of this registration include providing increased accountability and tracking of mortgage loan originators and providing consumers with easily accessible information at no charge regarding mortgage loan originators. The Board is not aware of other Federal rules which may duplicate, overlap, or conflict with the proposed rule. The final rule applies to all banks that are members of the Federal Reserve System (other than national banks) and certain of their respective subsidiaries, branches and Agencies of foreign banks (other than Federal branches, Federal agencies, and insured State branches of foreign banks), and commercial lending companies owned or controlled by foreign banks.

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Under the Board's final rule, employees of the above entities who act as residential mortgage loan originators must register with the Registry, obtain a unique identifier, and maintain this registration, consistent with the requirements of the S.A.F.E. Act. The above institutions must require their employees who act as residential mortgage loan originators to comply with the registration requirements and obtain a unique identifier. These institutions also must provide certain information to the Registry and must adopt and follow written policies and *44679 procedures designed to assure compliance with these requirements. The institutions and their employees must disclose the unique identifier of mortgage loan originators in compliance with the rule. Under regulations issued by the Small Business Administration,[FN1] a small entity includes a banking organization with assets of $175 million or less (a small banking organization). As of December 31, 2008, there were approximately 433 State member banks that are small banking organizations. The Agencies proposed the de minimis exception in an effort to reduce compliance costs on small businesses. FN1 See 13 CFR 121.201. The Board received comment from the Office of Advocacy of the U.S. Small Business Administration on its RFA analysis. This commenter expressed concern that the factual basis for the Board's (and other agencies') RFA analysis was insufficient and that the Board and other agencies may have underestimated the costs associated with the proposed rule. The commenter queried whether legal compliance costs and training and tracking costs should be estimated and included in the analysis. Specifically with respect to the Board's RFA analysis, the commenter recommended that the Board use revenue, rather than profits, in determining economic impact since revenue may be a more transparent indicator than profits. The Board notes that legal compliance costs, tracking compliance, and training have been included in the burden analyses for the rule. The Board estimates compliance costs to be $7.6 million in the aggregate for the 433 small State member banks. As of December 31, 2008, these institutions had $2.4 billion in revenues in the aggregate. Therefore, compliance costs would be less than 1% of revenues. The Board notes that it has adopted in the final rule alternatives to the proposed rule, which have reduced compliance costs of the rule. The final rule decreased the amount of information required for submission by a mortgage loan originator. For example, the final rule does not require submission of financial history information such as bankruptcies and liens; employment terminations; pending actions; and felonies unrelated to crimes of dishonesty. Furthermore, the Agencies declined to include loan modification activities in the definition of mortgage loan originator, after considering comments on this issue, including those regarding the burden and costs of compliance. Under the Board's rule, modifying the terms of an existing loan to a borrower as part of the institution's loss mitigation efforts would not constitute acting as a mortgage loan originator for purposes of the S.A.F.E. Act. In addition, the final rule simplifies the de minimis exception to registration requirements of the rule, thereby decreasing compliance costs and increasing the number of employees who will qualify for the individual limits required under the de minimis exception. Under the proposed rule, even if an employee was within the individual limit on mortgage loan origination activity, the employee still could not utilize the exception unless the institution itself was within the aggregate limit on unregistered mortgage loan originators. The Board notes that it has taken a conservative approach to estimating the compliance impact of the revised de minimis exception, assuming that at least as many small entities would not incur registration-related expenses under the final rule as the proposed rule. Further, the Board notes that small institutions typically do not originate a significant volume of mortgage loans.

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The Board has not adopted other significant alternatives to the proposed rule. For example, the final rule continues to include a mandate for Agency-regulated institutions to require their mortgage loan originator employees to meet registration requirements and adopt policies and procedures to assure compliance. These requirements remain in the final rule because the Board believes that these provisions are necessary to achieve the objectives of the statute and to assure compliance with the rule. Therefore, pursuant to section 605(b) of the RFA, the Board hereby certifies that this proposal will not have a significant economic impact on a substantial number of small entities. Although a regulatory flexibility analysis is not needed, the Board has voluntarily provided an analysis. FDIC: In accordance with the RFA, 5 U.S.C. 601-612, an agency must publish a final regulatory flexibility analysis with its final rule, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities (defined for purposes of the RFA to include banks with less than $175 million in assets). The FDIC hereby certifies that the final rule will not have a significant economic impact on a substantial number of small entities. Approximately 3,116 FDIC-supervised banks are small entities. In the RFA analysis for the proposed rule, the FDIC determined that approximately 2,255 of those small entities would incur only those costs related to adopting and following appropriate policies and procedures, not registration-related expenses, because they originate 25 or fewer residential mortgage loans annually and therefore would not have qualified for the aggregate institution limit of the proposed rule's de minimis exception. Since the aggregate institution limit has been eliminated in the final rule, the exception will apply to a greater number of employees than under the proposed rule. However, because it is difficult to estimate how many more employees would be covered by the revised de minimis exception, a more conservative approach would be to assume that at least as many small entities would not incur registration-related expenses under the final rule as under the proposed rule (i.e., 2,255 small entities). For those 2,255 small entities, the set up costs are estimated to be about 0.5% of total non-interest expense and annual costs are estimated to be about 0.2% of total non-interest expenses (based on a mean non-interest expense of $2.5 million reported by the 3,116 FDIC-supervised small entities for fourth quarter 2008). Given the foregoing assumptions, only approximately 861 small entities supervised by the FDICabout 28% of FDIC-supervised small entitieswill be subject to all of the requirements of the final rule. For those 861 small entities, the estimated initial costs for complying with the final rule would represent, on average, approximately 0.7% of total non-interest expenses, and the annual compliance costs would represent, on average, approximately 0.3% of total non-interest expenses (based on the aforementioned mean non-interest expense of $2.5 million). For the 861 FDIC supervised small entities that will be subject to all of the requirements of the final rule, the S.A.F.E. Act requirements will cost $17,395 for set up and $7,436 annually (based on an estimated 350 hours for set up, 113 hours for annual compliance, 11.435 mortgage loan originators per entity, and a weighted average labor cost of $49.70 per hour). For the 2,255 FDIC supervised small entities that will incur only those costs related to adopting and following appropriate policies and procedures, the S.A.F.E. Act requirements will cost $12,922 for set up (based on an estimated 260 labor hours and the aforementioned labor cost) and $4,473 annually (based on an estimated 90 labor hours and the aforementioned labor cost). *44680 OTS: The RFA[FN1] requires Federal agencies to prepare and make available to the public a Final Regulatory Flexibility Analysis (FRFA) for a final rule, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. See 5 U.S.C. 603-605. For purposes of the RFA and OTS-regulated entities, a small entity within the jurisdiction of the OTS is a savings association with assets of $175 million or less (small savings association). In the NPRM, the OTS certified, pursuant to section 605(b) of the RFA, that the regulatory flexibility analysis otherwise required under section 604 of the RFA

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was not required because the proposal would not have a significant economic impact on a substantial number of small entities.[FN1] The OTS's certification was based on an estimated average total compliance cost of $13,311 per small savings association and the impact of compliance costs as a percentage of labor costs, as well as compliance costs as a percent of noninterest expenses. The OTS received one commentfrom the Small Business Administration's Office of Advocacy (SBA Advocacy)on the certification. FN1 5 U.S.C. 601-612. FN1 In addition to the OTS, the Board, the OCC, the FDIC, the NCUA, and the FCA also certified in the proposed rule that the proposal would not have a significant economic impact on a substantial number of small entities. See 74 FR at 27398-27399. Based in part on this comment letter, the OTS has reevaluated the effect of this final rule on small savings associations, and, based on the information provided below, has reaffirmed that this rule will not have a significant economic impact on a substantial number of small entities. Therefore, OTS is not required to prepare an FRFA under 5 U.S.C. 604. However, OTS believes that the initial analysis included in the proposed rule should be slightly modified, and therefore, we have included in the final rule a description of the economic effect on small savings associations and additional information addressing the final rule and the comment letter on the certification. 1. Description and Estimate of Small Entities Affected by the Final Rule For purposes of the OTS regulation, the final rule applies to savings associations and their operating subsidiaries and their employees who act as mortgage loan originators. In determining the economic impact on small savings associations, OTS determined that 385 small savings associations would potentially be affected by the final rule. We estimate that 23 of these savings associations, or 6 percent, have no mortgage loan originator (MLO) employees, and therefore, will incur no costs under the final rule. The remaining 362 small savings associations can be expected to incur costs under the final rule. Specifically, OTS estimates the average cost of compliance for these 362 small savings associations to be $17,085. In order to determine whether the costs of compliance have a significant economic impact on this population of small savings associations, we compared each association's projected compliance costs to both its total annualized labor costs and to its total annualized noninterest expense. (Noninterest expense is typically used as a benchmark for overhead in financial firms.) If projected S.A.F.E. Act compliance costs exceeded 5 percent of a small saving association's total labor costs, or 2.5 percent of its noninterest expense, OTS considered the impact of compliance to be significant. These benchmarks have been used in the past by OTS and other Federal financial regulatory agencies. OTS estimates that 32 small savings associations, or 8.3 percent of the small savings association population, will experience a significant economic impact associated with compliance using the benchmarks described above. The average cost of compliance for these 32 savings associations is projected to be $17,441. Pursuant to 605(b) of the RFA, OTS therefore certifies that this final rule will not have a significant economic impact on a substantial number of small entities, and, accordingly, a FRFA is not required. 2. Need for, and Objectives of, the Final Rule As described in the SUPPLEMENTARY INFORMATION, the objectives of this final rule are to implement the requirements of the S.A.F.E. Act. Specifically, the final rule implements: Section 1504 of the S.A.F.E. Act (12 U.S.C. 5103(a)), which provides that subject to the existence of a registration regime, an individual who is an employee of a depository institution may not engage in the business of a loan originator without first: (i) Obtaining and maintaining annually a registration as a registered loan originator, and, (ii) obtaining a unique identifier; and,

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Section 1507 of the S.A.F.E. Act (12 U.S.C. 5106), which requires the Agencies to: (i) Jointly develop and maintain a system for registering employees of a depository institution and of a subsidiary that is owned and controlled by a depository institution and regulated by an Agency as registered loan originators with the National Mortgage License System and Registry (Registry); and (ii) furnish certain information, or cause it to be furnished, to the Registry. 3. Significant Issues Raised by Public Comments As indicated above, the OTS did not publish an IRFA with the proposed rule. We therefore did not receive any comments specifically directed at an analysis in an IRFA. However, in the comment the SBA Advocacy submitted, it expressed concern that the factual basis for the OTS's (and other Agencies') conclusion that the proposal would not have a significant economic impact on a substantial number of small entities may be insufficient, noting that the OTS's certification did not specify the assumptions used concerning labor costs or noninterest expenses. In addition, SBA Advocacy stated its concern that OTS's economic impact may be underestimated and sought clarification regarding the proposal's impact on the number of small savings associations.[FN1] SBA Advocacy recommended that the Agencies work with the industry to determine an accurate estimate of the economic impact of the rule on small entities and develop ways to minimize that burden. In part as a result of this comment letter and as noted above, the OTS conducted further analysis of the effect of our rule on the savings association industry as a whole and on small savings associations in particular. FN1 A discussion of SBA Advocacy's comments on other provisions of the proposed rule, namely, the de minimis exception and the proposed 6-month compliance period, is contained in the SUPPLEMENTARY INFORMATION section of this final rule. 4. Recordkeeping, Reporting, and Other Compliance Requirements The final rule applies to savings associations, their operating subsidiaries (collectively referred to as savings associations), and their employees who act as mortgage loan originators. Typical recordkeeping, administrative, computer technology and savings association management skills will be needed to comply with all of the rule's requirements. Reporting Requirements. Unless the de minimis exception applies, 563.103(a) of the final rule requires a mortgage loan originator employed by a savings association to register with the Registry, maintain such registration, and obtain an unique identifier. Under 563.103(b), an association must require each mortgage loan originator employee to comply with these *44681 requirements. Section 563.103(d) describes the categories of information that an employee, or the employing savings association on the employee's behalf, must submit to the Registry, along with the employee's attestation as to the correctness of the information supplied, and the employee's authorization to obtain further information and make public some of this information. This section also requires the submission of the mortgage loan originator's fingerprints to the Registry. Section 563.103(e) specifies savings association and employee information that an association must submit to the Registry in connection with the initial registration of one or more mortgage loan originators. The savings association must annually renew this information and update this information if necessary between renewals. Authorized savings association representatives must attest to the correctness of this information and that such information will be updated on a timely basis. Disclosure Requirements. Section 563.105(b) requires the mortgage loan originator to provide the unique identifier to a consumer: (i) Upon request; (2) before acting as a mortgage loan originator; and (3) through the originator's initial written communication with a consumer, if any, whether on paper or electronically.

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Section 563.105(a) requires the savings association to make the unique identifiers of its mortgage loan originators available to consumers in a manner and method practicable to the association. Recordkeeping and Compliance Requirements. Section 563.104 requires a savings association that employs one or more mortgage loan originators to adopt and follow written policies and procedures designed to assure compliance with this final rule. These policies and procedures must be appropriate to the nature, size, complexity, and scope of their mortgage lending activities and will apply only to those employees acting within their scope of employment at the savings association. At a minimum, these policies and procedures must establish a process for: (i) Identifying which employees are required to register, (ii) communicating the registration requirements to employees, (iii) complying with the rule's unique identifier requirements, (iv) confirming the adequacy and accuracy of employee registrations though comparisons with savings association records, (v) monitoring employee compliance with the rule, (vi) independent compliance testing, (vii) taking appropriate actions with respect to employees who fail to comply with the registration requirements, (viii) reviewing employee criminal history background checks received pursuant to this rule, and (ix) monitoring third party compliance with the S.A.F.E. Act. 5. Steps Taken To Address the Economic Impact on Small Entities The final rule reflects the consideration given by the OTS, along with the other Agencies, to the impact that its requirements would have on small entities. First, the Agencies have revised the rule's de minimis exception to reduce compliance burden. In the proposed rule, the Agencies established a de minimis exception that would have excepted from the registration requirements an employee of an Agency-regulated institution if, during the last 12 months: (1) The employee acted as a mortgage loan originator for 5 or fewer residential mortgage loans and (2) the Agencyregulated institution employs mortgage loan originators who, while excepted from registration pursuant to this section, in the aggregate, acted as a mortgage loan originator in connection with 25 or fewer residential mortgage loans. Many commenters on this provision noted the complexity of the proposed exception. One commenter stated that the de minimis exception would not have any significant effect because its complexity would outweigh its benefits. Others noted that the proposed exception would be difficult for an institution to monitor and maintain. Still others said that the proposed de minimis exception would be fairer, and much easier to apply, if the threshold limitation applied only to the employee or to the institution, but not both. SBA Advocacy specifically commented that the proposed de minimis exception would make the rule unduly burdensome on small community institutions. In response to these and other comments and upon further analysis, the Agencies removed the institution threshold from this de minimis exception. As a result, the final rule's de minimis exception only contains the individual threshold, as well as a prohibition on any Agency-regulated institution from engaging in any act or practice to evade the limits of the de minimis exception. This revised exception should simplify compliance and therefore impose the least burden overall for institutions, including small entities. The OTS also has reviewed alternatives for small entity compliance, including eliminating the requirement for small savings associations to adopt and follow written policies and procedures addressing all of the elements described in the final rule. For example, under such an approach, a small savings association's risk based compliance program might include only such procedures as are necessary to enable the association to demonstrate compliance with the registration and renewal requirements of the S.A.F.E. Act and the final rule. Although such an approach may have reduced the compliance cost per small savings association, the OTS does not believe that it would best serve the interests of savings associations or the OTS. Appropriate policies and procedures provide an institution and its employees with the expectations of the institution's board and include the specific implementing guidance that is applicable to the activities of that institution. Furthermore, such policies and procedures are necessary to enable examiners to evaluate the effectiveness of institutions' implementation of the S.A.F.E. Act requirements that apply to them. In reviewing this alternative, we determined that applying the policies and procedures requirement in the same way to all institutions, regardless of size, is necessary to

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ensure consistency in implementation and enforcement of the S.A.F.E. Act and is, therefore, the most appropriate way to ensure that the purposes of the S.A.F.E Act are met. The OTS, and the other Agencies, also made changes to the final rule that reduce the impact that its requirements would have on all Agency-regulated financial institutions, including small entities. The final rule decreased the amount of information required for submission by a mortgage loan originator. Specifically, the final rule does not require submission of financial history information such as bankruptcies and liens; employment and terminations; pending actions; and felonies unrelated to crimes of dishonesty. Furthermore, the Agencies declined to include loan modification activities in the final rule's definition of mortgage loan originator. Under the OTS's rule, Agency-regulated institution employees engaged solely in bona fide cost-free loss mitigation efforts, which result in reduced and sustainable payments for the borrower generally would not meet the definition of mortgage loan originator. This reduces the number of savings association employees subject to the final rule's requirements. FCA: Pursuant to section 605(b) of the RFA (5 U.S.C. 601 et seq.) the FCA certifies that the final rule will not have a significant economic impact on a substantial number of small entities. Each of the banks in the Farm Credit *44682 System, considered together with its affiliated associations, has assets and annual income in excess of the amounts that would qualify them as small entities. The comment letter from the Office of Advocacy in the Small Business Administration (SBA) stated that the FCA did not provide any information about the potential impact of the rule on FCS institutions. The RFA requires each agency to certify that a rulemaking will not have a significant economic impact on a significant number of small entities. The FCA observes that the RFA definition of small entity derives from the SBA's definition of small business concern, including size standards. According to section 3(a)(1) of the Small Business Act, as amended, a small business concern is independently owned and operated, and it is not dominant in its field of operation. Whether a business concern is independently owned and operated depends, in part, on its affiliation with other business entities. Generally, an affiliate is either controlled by, or has control over another entity. Businesses that are economically dependent on each other because of their ownership, management, and contractual relationships may be affiliates. FCS associations own and control their funding banks. Additionally, FCS associations borrow exclusively from their funding banks, and they pledge virtually all of their loans and other assets to these banks to secure their loans. For these reasons, the FCA has determined that the interrelated ownership, control, and contractual relationships are sufficient to treat FCS banks and associations as a single entity for the purposes of the RFA. SBA regulations also establish size categories to determine whether entities that engage in Credit Intermediation and Related Activities are small business concerns. These regulations categorize All Other Non-Depository Credit Intermediation institutions as small entities if their annual receipts are $7 million or less. As affiliated entities, the combined annual receipts of each Farm Credit bank and its affiliated associations exceed $7 million. For this reason, FCS institutions do not qualify as small entities under the RFA. NCUA: In accordance with the RFA, 5 U.S.C. 601-612, NCUA must publish a regulatory flexibility analysis with its final rule, unless NCUA certifies that the rule will not have a significant economic impact on a substantial number of small entities (defined for purposes of the RFA to include credit unions with less than $10 million in assets). Approximately 2,995 out of 7,554 Federally insured credit unions and 61 out of 156 non-Federally insured credit unions are small entities. NCUA hereby certifies that the final rule would not have a significant economic impact on a substantial number of these small entities. The final rule will apply to all Federally insured credit unions, non-Federally insured credit unions located in States where the State supervisory authorities enter into and maintain MOUs with NCUA, and employees who act as mortgage originators for these credit unions. The final rule

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imposes no requirements on credit unions not originating residential mortgages. This accounts for 1,923 of the 2,995 small, Federally insured credit unions and 45 of the 61 small, nonFederally insured credit unions. Under the final rule, all these credit unions, including small entities, originating any residential mortgages must have policies and procedures in place for mortgage loan origination registration. This currently includes only about 1,072 of the 2,995 small, Federally insured credit unions, and only about 16 of the 61 small, non-Federally insured credit unions. The policies and procedures must be appropriate to the nature, size, complexity, and scope of the credit unions' mortgage lending activities and will apply only to those employees acting within their scope of credit union employment. Approximately 2,716 of the 2,995 small, Federally insured credit unions, and 15 of the 16 small, non-Federally insured credit unions, would qualify for the final rule's de minimis exception to the registration requirements for mortgage loan originators because they originate fewer than five or no residential mortgage loans. Those credit unions not originating mortgages have no obligations under this final rule. Those small credit unions and their employees originating between one and four mortgages per year are not subject to the final rule's registration requirements and, thus, drafting and implementing the policies and procedures will not be burdensome. Accordingly, NCUA estimates only about 279 of the 2,995 small Federally insured credit unions, about 9.3% of them, and only one of the 61 small, non-Federally insured credit unions, about 1.6%, will be subject to the final rule's registration requirements and will establish policies and procedures for the registration. Therefore, for all of the above reasons, NCUA concludes the final rule would not have a significant economic impact on a substantial number of small credit unions. B. Paperwork Reduction Act In accordance with the requirements of the Paperwork Reduction Act of 1995, the agencies may not conduct or sponsor, and respondents are not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number. The information collection requirements contained in this joint final rule have been submitted by the OCC, FDIC, OTS, and NCUA to, and pre-approved by, OMB under section 3506 of the PRA and 1320.11 of OMB's implementing regulations (5 CFR part 1320). The FCA collects information from Farm Credit System institutions, which are Federal instrumentalities, in the FCA's capacity as their safety and soundness regulator, and, therefore, OMB approval is not required for this collection. The Board reviewed the proposed rule under the authority delegated to the Board by the Office of Management and Budget. The final rule contains requirements subject to the PRA. The requirements are found in 12 CFR .103(a)-(b), (d)-(e), .104, and .105. No comments concerning PRA were received in response to the notice of proposed rulemaking. Therefore, the hourly burden estimates for respondents noted in the proposed rule have not changed. The agencies have an ongoing interest in your comments. They should be sent to [Agency] Desk Officer, [OMB Control No.], by mail to U.S. Office of Management and Budget, 725 17th Street, NW., 10235, Washington, DC 20503, or by fax to (202) 395-6974. Written comments should address: (a) Whether the collection of information is necessary for the proper performance of the Federal banking agencies' functions, including whether the information has practical utility; (b) The accuracy of the estimates of the burden of the information collection, including the

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validity of the methodology and assumptions used; (c) Ways to enhance the quality, utility, and clarity of the information to be collected; (d) Ways to minimize the burden of the information collection on respondents, including through the use of automated collection techniques or other forms of information technology; and (e) Estimates of capital or start up costs and costs of operation, maintenance, and purchase of services to provide information. *44683 C. OCC Executive Order 12866 Determination Executive Order 12866 requires each Federal agency to provide to the Administrator of OMB's Office of Information and Regulatory Affairs (OIRA) a Regulatory Impact Analysis for agency actions that are found to be significant regulatory actions. Significant regulatory actions include, among other things, rulemakings that have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities. [FN1] Regulatory actions that satisfy one or more of these criteria are referred to as economically significant regulatory actions. In conducting this Regulatory Impact Analysis, Executive Order 12866 requires each Federal agency to provide to OIRA: FN1 Executive Order 12866 (September 30, 1993), 58 FR 51735 (October 4, 1993). For the complete text of the definition of significant regulatory action, see E.O. 12866 at 3(f). A regulatory action is any substantive action by an agency (normally published in the Federal Register) that promulgates or is expected to lead to the promulgation of a final rule or regulation, including notices of inquiry, advance notices of proposed rulemaking, and notices of proposed rulemaking. E.O. 12866 at 3(e). The text of the draft regulatory action, together with a reasonably detailed description of the need for the regulatory action and an explanation of how the regulatory action will meet that need; An assessment of the potential costs and benefits of the regulatory action, including an explanation of the manner in which the regulatory action is consistent with a statutory mandate and, to the extent permitted by law, promotes the President's priorities and avoids undue interference with State, local, and Tribal governments in the exercise of their governmental functions; An assessment, including the underlying analysis, of benefits anticipated from the regulatory action (such as, but not limited to, the promotion of the efficient functioning of the economy and private markets, the enhancement of health and safety, the protection of the natural environment, and the elimination or reduction of discrimination or bias) together with, to the extent feasible, a quantification of those benefits; An assessment, including the underlying analysis, of costs anticipated from the regulatory action (such as, but not limited to, the direct cost both to the government in administering the regulation and to businesses and others in complying with the regulation, and any adverse effects on the efficient functioning of the economy, private markets (including productivity, employment, and competitiveness), health, safety, and the natural environment), together with, to the extent feasible, a quantification of those costs; and An assessment, including the underlying analysis, of costs and benefits of potentially effective and reasonably feasible alternatives to the planned regulation, identified by the agencies or the public (including improving the current regulation and reasonably viable nonregulatory actions), and an explanation why the planned regulatory action is preferable to the identified potential

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alternatives. The OCC has concluded that the final rule exceeds the $100 million criterion and therefore is an economically significant regulatory action. As required by Executive Order 12866, the OCC prepared a Regulatory Impact Analysis, which was submitted to OIRA on January 8, 2010. The OCC's final set of revisions responding to OIRA comments was submitted on July 1, 2010. As discussed in more detail in the Regulatory Impact Analysis, the OCC determined that given the constraints imposed on the OCC by the S.A.F.E. Act, and based on the estimated mean cost, the rule was the least cost option available to the OCC. The OCC's Regulatory Impact Analysis in its entirety is available at http://www.regulations.gov, docket ID OCC-2010-0007. D. OTS Executive Order 12866 Determination Executive Order 12866 requires each Federal agency to provide the Administrator of OMB's OIRA a Regulatory Impact Analysis for agency actions that are found to be significant regulatory actions. Significant regulatory actions include, among other things, rulemakings that have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or Tribal governments or communities. [FN1] Regulatory actions that satisfy one or more of these criteria are referred to as economically significant regulatory actions. In conducting this Regulatory Impact Analysis, Executive Order 12866 requires each Federal agency to provide to OIRA: FN1 Executive Order 12866 (September 30, 1993), 58 FR 51735 (October 4, 1993). For the complete text of the definition of significant regulatory action, see E.O. 12866 at 3(f). A regulatory action is any substantive action by an agency (normally published in the Federal Register) that promulgates or is expected to lead to the promulgation of a final rule or regulation, including notices of inquiry, advance notices of proposed rulemaking, and notices of proposed rulemaking. E.O. 12866 at 3(e). The text of the draft regulatory action, together with a reasonably detailed description of the need for the regulatory action and an explanation of how the regulatory action will meet that need; An assessment of the potential costs and benefits of the regulatory action, including an explanation of the manner in which the regulatory action is consistent with a statutory mandate and, to the extent permitted by law, promotes the President's priorities and avoids undue interference with State, local, and Tribal governments in the exercise of their governmental functions; An assessment, including the underlying analysis, of benefits anticipated from the regulatory action (such as, but not limited to, the promotion of the efficient functioning of the economy and private markets, the enhancement of health and safety, the protection of the natural environment, and the elimination or reduction of discrimination or bias) together with, to the extent feasible, a quantification of those benefits; An assessment, including the underlying analysis, of costs anticipated from the regulatory action (such as, but not limited to, the direct cost both to the government in administering the regulation and to businesses and others in complying with the regulation, and any adverse effects on the efficient functioning of the economy, private markets (including productivity, employment, and competitiveness), health, safety, and the natural environment), together with, to the extent feasible, a quantification of those costs; and An assessment, including the underlying analysis, of costs and benefits of potentially effective and reasonably feasible alternatives to the planned regulation, identified by the agencies or the public (including improving the current regulation and reasonably viable nonregulatory actions),

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and an explanation why the planned regulatory action is preferable to the identified potential alternatives. The OTS has determined that this final rule is not a significant regulatory action under Executive Order 12866. We have concluded that the changes made by this final rule will not have an *44684 annual effect on the economy of $100 million or more. The OTS further concludes that this final rule does not meet any of the other standards for a significant regulatory action set forth in Executive Order 12866. As required by Executive Order 12866, the OTS prepared a Regulatory Impact Analysis, which was submitted to OIRA on March 9, 2010. The OTS's final revisions were submitted to OIRA on July 12, 2010. As discussed in more detail in the Regulatory Impact Analysis, the OTS determined that given the constraints imposed on the OTS by the S.A.F.E. Act, and based on the estimated cost, the rule was the least cost option available to the OTS. The OTS's Regulatory Impact Analysis in its entirety is available at http://www.regulations.gov, Docket No. OTS-2010-0021. E. OCC and OTS Unfunded Mandates Reform Act of 1995 Determination Section 202 of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1532), requires the OCC and OTS to prepare a budgetary impact statement before promulgating a rule that includes a Federal mandate that may result in the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector, of $133 million or more in any one year. However, this requirement does not apply to regulations that incorporate requirements specifically set forth in law. Because this proposed rule implements the S.A.F.E. Act, the OTS and OCC have not conducted an Unfunded Mandates Analysis for this rulemaking.[FN1] FN1 See 2 U.S.C. 1531. F. OCC and OTS Executive Order 13132 Determination E.O. 13132 sets forth certain Fundamental Federalism Principles and Federalism Policymaking Criteria that must be followed by the OCC and OTS in developing any regulation that has Federalism implications. A regulation has Federalism implications if it has substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. If a rule meets the test for Federalism implications, the executive order requires the agency, among other things, to prepare a Federalism summary impact statement for inclusion in the rule's SUPPLEMENTARY INFORMATION section and must consult with State and local officials about the rule. The OCC and OTS have determined that their respective portions of the final rule do not have a substantial direct effect on the States, on the connection between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, the final rule does not have any Federalism implications for purposes of Executive Order 13132. G. NCUA Executive Order 13132 Determination Executive Order 13132 encourages independent regulatory agencies to consider the impact of their actions on State and local interests. In adherence to fundamental Federalism principles, the NCUA, an independent regulatory agency as defined in 44 U.S.C. 3502(5) voluntarily complies with the Executive Order. The final rule applies to credit unions and would not have substantial direct effects on the States, on the connection between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. The NCUA has determined that the final rule does not constitute a policy that has Federalism implications for purposes of the Executive Order. H. NCUA: The Treasury and General Government Appropriations Act, 1999Assessment of Federal Regulations and Policies on Families

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The NCUA has determined that this final rule would not affect family well-being within the meaning of section 654 of the Treasury and General Government Appropriations Act, 1999, Public Law 105-277, 112 Stat. 2681 (1998). I. NCUA: Small Business Regulatory Enforcement Fairness Act The Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121) (SBREFA) provides generally for congressional review of agency rules. A reporting requirement is triggered in instances where NCUA issues a final rule as defined by section 551 of the Administrative Procedure Act. 5 U.S.C. 551. NCUA does not believe this final rule is a major rule within the meaning of the relevant sections of SBREFA. NCUA has submitted the rule to the Office of Management and Budget (OMB) for its determination and OMB concurred that the rule is not a major rule. List of Subjects 12 CFR Part 34 Mortgages, National banks, Reporting and recordkeeping requirements. 12 CFR Part 208 Accounting, Agriculture, Banks, banking, Confidential business information, Consumer protection, Crime, Currency, Insurance, Investments, Mortgages, Reporting and recordkeeping requirements, Securities. 12 CFR Part 211 Exports, Foreign banking, Holding companies, Investments, Reporting and recordkeeping requirements. 12 CFR Part 365 Banks, banking, Mortgages. 12 CFR Part 563 Accounting, Administrative practice and procedure, Advertising, Conflict of interests, Crime, Currency, Holding companies, Investments, Mortgages, Reporting and recordkeeping requirements, Savings associations, Securities, Surety bonds. 12 CFR Part 610 Banks, banking, Consumer protection, Loan programshousing and community development, Mortgages, Reporting and recordkeeping requirements, Rural areas. 12 CFR Part 741 Bank deposit insurance, Credit unions, Reporting and recordkeeping requirements. 12 CFR Part 761 Credit unions, Mortgages, Reporting and recordkeeping requirements. Office of the Comptroller of the Currency

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12 CFR Chapter I Authority and Issuance For the reasons set forth in the preamble, chapter I of title 12 of the Code of Federal Regulations is amended as follows: PART 34REAL ESTATE LENDING AND APPRAISALS 1. The authority citation for part 34 is revised to read as follows: Authority: 12 U.S.C. 1 et seq., 29, 93a, 371, 1701j-3, 1828(o), 3331 et seq., and 5101 et seq. 2. Add Subpart F to part 34 to read as follows: *44685 Subpart FRegistration of Residential Mortgage Loan Originators Sec. 34.101 Authority, purpose, and scope. 34.102 Definitions. 34.103 Registration of mortgage loan originators. 34.104 Policies and procedures. 34.105 Use of unique identifier. Appendix A to Subpart F of Part 34 Examples of Mortgage Loan Originator Activities Subpart FRegistration of Residential Mortgage Loan Originators 12 CFR 34.101 34.101 Authority, purpose, and scope. (a) Authority. This subpart is issued pursuant to the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, title V of the Housing and Economic Recovery Act of 2008 (S.A.F.E. Act) (Pub. L. 110-289, 122 Stat. 2654, 12 U.S.C. 5101 et seq.). (b) Purpose. This subpart implements the S.A.F.E. Act's Federal registration requirement for mortgage loan originators. The S.A.F.E. Act provides that the objectives of this registration include aggregating and improving the flow of information to and between regulators; providing increased accountability and tracking of mortgage loan originators; enhancing consumer protections; supporting anti-fraud measures; and providing consumers with easily accessible information at no charge regarding the employment history of, and publicly adjudicated disciplinary and enforcement actions against, mortgage loan originators. (c) Scope. (1) In general. This subpart applies to national banks, Federal branches and agencies of foreign banks, their operating subsidiaries (collectively referred to in this subpart as national banks), and their employees who act as mortgage loan originators. (2) De minimis exception. (i) This subpart and the requirements of 12 U.S.C. 5103(a)(1)(A) and (2) of the S.A.F.E. Act do not apply to any employee of a national bank who has never been

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registered or licensed through the Registry as a mortgage loan originator if during the past 12 months the employee acted as a mortgage loan originator for 5 or fewer residential mortgage loans. (ii) Prior to engaging in mortgage loan origination activity that exceeds the exception limit in paragraph (c)(2)(i) of this section, a national bank employee must register with the Registry pursuant to this subpart. (iii) Evasion. National banks are prohibited from engaging in any act or practice to evade the limits of the de minimis exception set forth in paragraph (c)(2)(i) of this section. 12 CFR 34.102 34.102 Definitions. For purposes of this subpart F, the following definitions apply: (a) Annual renewal period means November 1 through December 31 of each year. (b)(1) Mortgage loan originator [FN3] means an individual who: FN3 Appendix A of this subpart provides examples of activities that would, and would not, cause an employee to fall within this definition of mortgage loan originator. (i) Takes a residential mortgage loan application; and (ii) Offers or negotiates terms of a residential mortgage loan for compensation or gain. (2) The term mortgage loan originator does not include: (i) An individual who performs purely administrative or clerical tasks on behalf of an individual who is described in paragraph (b)(1) of this section; (ii) An individual who only performs real estate brokerage activities (as defined in 12 U.S.C. 5102(3)(D)) and is licensed or registered as a real estate broker in accordance with applicable State law, unless the individual is compensated by a lender, a mortgage broker, or other mortgage loan originator or by any agent of such lender, mortgage broker, or other mortgage loan originator, and meets the definition of mortgage loan originator in paragraph (b)(1) of this section; or (iii) An individual or entity solely involved in extensions of credit related to timeshare plans, as that term is defined in 11 U.S.C. 101(53D). (3) Administrative or clerical tasks means the receipt, collection, and distribution of information common for the processing or underwriting of a loan in the residential mortgage industry and communication with a consumer to obtain information necessary for the processing or underwriting of a residential mortgage loan. (c) Nationwide Mortgage Licensing System and Registry or Registry means the system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the State licensing and registration of State-licensed mortgage loan originators and the registration of mortgage loan originators pursuant to 12 U.S.C. 5107. (d) Registered mortgage loan originator or registrant means any individual who:

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(1) Meets the definition of mortgage loan originator and is an employee of a national bank; and (2) Is registered pursuant to this subpart with, and maintains a unique identifier through, the Registry. (e) Residential mortgage loan means any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling (as defined in section 103(v) of the Truth in Lending Act, 15 U.S.C. 1602(v)) or residential real estate upon which is constructed or intended to be constructed a dwelling, and includes refinancings, reverse mortgages, home equity lines of credit and other first and additional lien loans that meet the qualifications listed in this definition. (f) Unique identifier means a number or other identifier that: (1) Permanently identifies a registered mortgage loan originator; (2) Is assigned by protocols established by the Nationwide Mortgage Licensing System and Registry, the Federal banking agencies, and the Farm Credit Administration to facilitate: (i) Electronic tracking of mortgage loan originators; and (ii) Uniform identification of, and public access to, the employment history of and the publicly adjudicated disciplinary and enforcement actions against mortgage loan originators; and (3) Must not be used for purposes other than those set forth under the S.A.F.E. Act. 12 CFR 34.103 34.103 Registration of mortgage loan originators. (a) Registration requirement(1) Employee registration. Each employee of a national bank who acts as a mortgage loan originator must register with the Registry, obtain a unique identifier, and maintain this registration in accordance with the requirements of this subpart. Any such employee who is not in compliance with the registration and unique identifier requirements set forth in this subpart is in violation of the S.A.F.E. Act and this subpart. (2) National bank requirement(i) In general. A national bank that employs one or more individuals who act as a residential mortgage loan originator must require each such employee to register with the Registry, maintain this registration, and obtain a unique identifier in accordance with the requirements of this subpart. (ii) Prohibition. A national bank must not permit an employee of the bank who is subject to the registration requirements of this subpart to act as a mortgage loan originator for the bank unless such employee is registered with the Registry pursuant to this subpart. *44686 (3) Implementation period for initial registration. An employee of a national bank who is a mortgage loan originator must complete an initial registration with the Registry pursuant to this subpart within 180 days from the date that the OCC provides in a public notice that the Registry is accepting registrations. (4) Employees previously registered or licensed through the Registry(i) In general. If an employee of a national bank was registered or licensed through, and obtained a unique identifier from, the Registry and has maintained this registration or license before the employee becomes subject to this subpart at this bank, then the registration requirements of the S.A.F.E. Act and this subpart are deemed to be met, provided that:

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(A) The employment information in paragraphs (d)(1)(i)(C) and (d)(1)(ii) of this section is updated and the requirements of paragraph (d)(2) of this section are met; (B) New fingerprints of the employee are submitted to the Registry for a background check, as required by paragraph (d)(1)(ix) of this section, unless the employee has fingerprints on file with the Registry that are less than 3 years old; (C) The national bank information required in paragraphs (e)(1)(i) (to the extent the bank has not previously met these requirements) and (e)(2)(i) of this section is submitted to the Registry; and (D) The registration is maintained pursuant to paragraphs (b) and (e)(1)(ii) of this section, as of the date that the employee becomes subject to this subpart. (ii) Rule for certain acquisitions, mergers, or reorganizations. When registered or licensed mortgage loan originators become national bank employees as a result of an acquisition, merger, or reorganization, only the requirements of paragraphs (a)(4)(i)(A), (C), and (D) of this section must be met, and these requirements must be met within 60 days from the effective date of the acquisition, merger, or reorganization. (b) Maintaining registration. (1) A mortgage loan originator who is registered with the Registry pursuant to paragraph (a) of this section must: (i) Except as provided in paragraph (b)(3) of this section, renew the registration during the annual renewal period, confirming the responses set forth in paragraphs (d)(1)(i) through (viii) of this section remain accurate and complete, and updating this information, as appropriate; and (ii) Update the registration within 30 days of any of the following events: (A) A change in the name of the registrant; (B) The registrant ceases to be an employee of the national bank; or (C) The information required under paragraphs (d)(1)(iii) through (viii) of this section becomes inaccurate, incomplete, or out-of-date. (2) A registered mortgage loan originator must maintain his or her registration, unless the individual is no longer engaged in the activity of a mortgage loan originator. (3) The annual registration renewal requirement set forth in paragraph (b)(1) of this section does not apply to a registered mortgage loan originator who has completed his or her registration with the Registry pursuant to paragraph (a)(1) of this section less than 6 months prior to the end of the annual renewal period. (c) Effective dates(1) Registration. A registration pursuant to paragraph (a)(1) of this section is effective on the date the Registry transmits notification to the registrant that the registrant is registered. (2) Renewals or updates. A renewal or update pursuant to paragraph (b) of this section is effective on the date the Registry transmits notification to the registrant that the registration has been renewed or updated. (d) Required employee information(1) In general. For purposes of the registration required by this section, a national bank must require each employee who is a mortgage loan originator to submit to the Registry, or must submit on behalf of the employee, the following categories of information, to the extent this information is collected by the Registry:

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(i) Identifying information, including the employee's: (A) Name and any other names used; (B) Home address and contact information; (C) Principal business location address and business contact information; (D) Social security number; (E) Gender; and (F) Date and place of birth; (ii) Financial services-related employment history for the 10 years prior to the date of registration or renewal, including the date the employee became an employee of the bank; (iii) Convictions of any criminal offense involving dishonesty, breach of trust, or money laundering against the employee or organizations controlled by the employee, or agreements to enter into a pretrial diversion or similar program in connection with the prosecution for such offense(s); (iv) Civil judicial actions against the employee in connection with financial services-related activities, dismissals with settlements, or judicial findings that the employee violated financial services-related statutes or regulations, except for actions dismissed without a settlement agreement; (v) Actions or orders by a State or Federal regulatory agency or foreign financial regulatory authority that: (A) Found the employee to have made a false statement or omission or been dishonest, unfair or unethical; to have been involved in a violation of a financial services-related regulation or statute; or to have been a cause of a financial services-related business having its authorization to do business denied, suspended, revoked, or restricted; (B) Are entered against the employee in connection with a financial services-related activity; (C) Denied, suspended, or revoked the employee's registration or license to engage in a financial services-related activity; disciplined the employee or otherwise by order prevented the employee from associating with a financial services-related business or restricted the employee's activities; or (D) Barred the employee from association with an entity or its officers regulated by the agency or authority or from engaging in a financial services-related business; (vi) Final orders issued by a State or Federal regulatory agency or foreign financial regulatory authority based on violations of any law or regulation that prohibits fraudulent, manipulative, or deceptive conduct; (vii) Revocation or suspension of the employee's authorization to act as an attorney, accountant, or State or Federal contractor; (viii) Customer-initiated financial services-related arbitration or civil action against the employee that required action, including settlements, or which resulted in a judgment; and

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(ix) Fingerprints of the employee, in digital form if practicable, and any appropriate identifying information for submission to the Federal Bureau of Investigation and any governmental agency or entity authorized to receive such information in connection with a State and national criminal history background check; however, fingerprints provided to the Registry that are less than 3 years old may be used to satisfy this requirement. (2) Employee authorizations and attestation. An employee registering as a mortgage loan originator or renewing or updating his or her registration under this subpart, and not the employing *44687 national bank or other employees of the national bank, must: (i) Authorize the Registry and the employing institution to obtain information related to sanctions or findings in any administrative, civil, or criminal action, to which the employee is a party, made by any governmental jurisdiction; (ii) Attest to the correctness of all information required by paragraph (d) of this section, whether submitted by the employee or on behalf of the employee by the employing bank; and (iii) Authorize the Registry to make available to the public information required by paragraphs (d)(1)(i)(A) and (C), and (d)(1)(ii) through (viii) of this section. (3) Submission of information. A national bank may identify one or more employees of the bank who may submit the information required by paragraph (d)(1) of this section to the Registry on behalf of the bank's employees provided that this individual, and any employee delegated such authority, does not act as a mortgage loan originator, consistent with paragraph (e)(1)(i)(F) of this section. In addition, a national bank may submit to the Registry some or all of the information required by paragraphs (d)(1) and (e)(2) of this section for multiple employees in bulk through batch processing in a format to be specified by the Registry, to the extent such batch processing is made available by the Registry. (e) Required bank information. A national bank must submit the following categories of information to the Registry: (1) Bank record. (i) In connection with the registration of one or more mortgage loan originators: (A) Name, main office address, and business contact information; (B) Internal Revenue Service Employer Tax Identification Number (EIN); (C) Research Statistics Supervision and Discount (RSSD) number, as issued by the Board of Governors of the Federal Reserve System; (D) Identification of its primary Federal regulator; (E) Name(s) and contact information of the individual(s) with authority to act as the bank's primary point of contact for the Registry; (F) Name(s) and contact information of the individual(s) with authority to enter the information required by paragraphs (d)(1) and (e) of this section to the Registry and who may delegate this authority to other individuals. For the purpose of providing information required by paragraph (e) of this section, this individual and their delegates must not act as mortgage loan originators unless the bank has 10 or fewer full time or equivalent employees and is not a subsidiary; and (G) If a subsidiary of a national bank, indication that it is a subsidiary and the RSSD number of the parent bank. (ii) Attestation. The individual(s) identified in paragraphs (e)(1)(i)(E) and (F) of this section must

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comply with Registry protocols to verify their identity and must attest that they have the authority to enter data on behalf of the national bank, that the information provided to the Registry pursuant to this paragraph (e) is correct, and that the national bank will keep the information required by this paragraph (e) current and will file accurate supplementary information on a timely basis. (iii) A national bank must update the information required by this paragraph (e) of this section within 30 days of the date that this information becomes inaccurate. (iv) A national bank must renew the information required by paragraph (e) of this section on an annual basis. (2) Employee information. In connection with the registration of each employee who acts as a mortgage loan originator: (i) After the information required by paragraph (d) of this section has been submitted to the Registry, confirmation that it employs the registrant; and (ii) Within 30 days of the date the registrant ceases to be an employee of the bank, notification that it no longer employs the registrant and the date the registrant ceased being an employee. 12 CFR 34.104 34.104 Policies and procedures. A national bank that employs one or more mortgage loan originators must adopt and follow written policies and procedures designed to assure compliance with this subpart. These policies and procedures must be appropriate to the nature, size, complexity, and scope of the mortgage lending activities of the bank, and apply only to those employees acting within the scope of their employment at the bank. At a minimum, these policies and procedures must: (a) Establish a process for identifying which employees of the bank are required to be registered mortgage loan originators; (b) Require that all employees of the national bank who are mortgage loan originators be informed of the registration requirements of the S.A.F.E. Act and this subpart and be instructed on how to comply with such requirements and procedures; (c) Establish procedures to comply with the unique identifier requirements in 34.105; (d) Establish reasonable procedures for confirming the adequacy and accuracy of employee registrations, including updates and renewals, by comparisons with its own records; (e) Establish reasonable procedures and tracking systems for monitoring compliance with registration and renewal requirements and procedures; (f) Provide for independent testing for compliance with this subpart to be conducted at least annually by bank personnel or by an outside party; (g) Provide for appropriate action in the case of any employee who fails to comply with the registration requirements of the S.A.F.E. Act, this subpart, or the bank's related policies and procedures, including prohibiting such employees from acting as mortgage loan originators or other appropriate disciplinary actions; (h) Establish a process for reviewing employee criminal history background reports received pursuant to this subpart, taking appropriate action consistent with applicable Federal law,

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including section 19 of the Federal Deposit Insurance Act (12 U.S.C. 1829) and implementing regulations with respect to these reports, and maintaining records of these reports and actions taken with respect to applicable employees; and (i) Establish procedures designed to ensure that any third party with which the bank has arrangements related to mortgage loan origination has policies and procedures to comply with the S.A.F.E. Act, including appropriate licensing and/or registration of individuals acting as mortgage loan originators. 12 CFR 34.105 34.105 Use of unique identifier. (a) The national bank shall make the unique identifier(s) of its registered mortgage loan originator(s) available to consumers in a manner and method practicable to the institution. (b) A registered mortgage loan originator shall provide his or her unique identifier to a consumer: (1) Upon request; (2) Before acting as a mortgage loan originator; and (3) Through the originator's initial written communication with a consumer, if any, whether on paper or electronically. 12 CFR PT. 34, SUBPT. F, APP. A Appendix A to Subpart F of Part 34Examples of Mortgage Loan Originator Activities This Appendix provides examples to aid in the understanding of activities that would cause an employee of a national bank to fall within or outside the definition of mortgage loan originator. The examples in this *44688 Appendix are not all inclusive. They illustrate only the issue described and do not illustrate any other issues that may arise under this subpart. For purposes of the examples below, the term loan refers to a residential mortgage loan. (a) Taking a loan application. The following examples illustrate when an employee takes, or does not take, a loan application. (1) Taking an application includes: receiving information provided in connection with a request for a loan to be used to determine whether the consumer qualifies for a loan, even if the employee: (i) Has received the consumer's information indirectly in order to make an offer or negotiate a loan; (ii) Is not responsible for verifying information; (iii) Is inputting information into an online application or other automated system on behalf of the consumer; or (iv) Is not engaged in approval of the loan, including determining whether the consumer qualifies for the loan. (2) Taking an application does not include any of the following activities performed solely or in combination:

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(i) Contacting a consumer to verify the information in the loan application by obtaining documentation, such as tax returns or payroll receipts; (ii) Receiving a loan application through the mail and forwarding it, without review, to loan approval personnel; (iii) Assisting a consumer who is filling out an application by clarifying what type of information is necessary for the application or otherwise explaining the qualifications or criteria necessary to obtain a loan product; (iv) Describing the steps that a consumer would need to take to provide information to be used to determine whether the consumer qualifies for a loan or otherwise explaining the loan application process; (v) In response to an inquiry regarding a prequalified offer that a consumer has received from a bank, collecting only basic identifying information about the consumer and forwarding the consumer to a mortgage loan originator; or (vi) Receiving information in connection with a modification to the terms of an existing loan to a borrower as part of the bank's loss mitigation efforts when the borrower is reasonably likely to default. (b) Offering or negotiating terms of a loan. The following examples are designed to illustrate when an employee offers or negotiates terms of a loan, and conversely, what does not constitute offering or negotiating terms of a loan. (1) Offering or negotiating the terms of a loan includes: (i) Presenting a loan offer to a consumer for acceptance, either verbally or in writing, including, but not limited to, providing a disclosure of the loan terms after application under the Truth in Lending Act, even if: (A) Further verification of information is necessary; (B) The offer is conditional; (C) Other individuals must complete the loan process; or (D) Only the rate approved by the bank's loan approval mechanism function for a specific loan product is communicated without authority to negotiate the rate. (ii) Responding to a consumer's request for a lower rate or lower points on a pending loan application by presenting to the consumer a revised loan offer, either verbally or in writing, that includes a lower interest rate or lower points than the original offer. (2) Offering or negotiating terms of a loan does not include solely or in combination: (i) Providing general explanations or descriptions in response to consumer queries regarding qualification for a specific loan product, such as explaining loan terminology (i.e., debt-to-income ratio); lending policies (i.e., the loan-to-value ratio policy of the national bank); or productrelated services; (ii) In response to a consumer's request, informing a consumer of the loan rates that are publicly available, such as on the national bank's Web site, for specific types of loan products without communicating to the consumer whether qualifications are met for that loan product;

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(iii) Collecting information about a consumer in order to provide the consumer with information on loan products for which the consumer generally may qualify, without presenting a specific loan offer to the consumer for acceptance, either verbally or in writing; (iv) Arranging the loan closing or other aspects of the loan process, including communicating with a consumer about those arrangements, provided that communication with the consumer only verifies loan terms already offered or negotiated; (v) Providing a consumer with information unrelated to loan terms, such as the best days of the month for scheduling loan closings at the bank; (vi) Making an underwriting decision about whether the consumer qualifies for a loan; (vii) Explaining or describing the steps or process that a consumer would need to take in order to obtain a loan offer, including qualifications or criteria that would need to be met without providing guidance specific to that consumer's circumstances; or (viii) Communicating on behalf of a mortgage loan originator that a written offer, including disclosures provided pursuant to the Truth in Lending Act, has been sent to a consumer without providing any details of that offer. (c) Offering or negotiating a loan for compensation or gain. The following examples illustrate when an employee does or does not offer or negotiate terms of a loan for compensation or gain. (1) Offering or negotiating terms of a loan for compensation or gain includes engaging in any of the activities in paragraph (b)(1) of this Appendix in the course of carrying out employment duties, even if the employee does not receive a referral fee or commission or other special compensation for the loan. (2) Offering or negotiating terms of a loan for compensation or gain does not include engaging in a seller-financed transaction for the employee's personal property that does not involve the national bank. Board of Governors of the Federal Reserve System 12 CFR Chapter II Authority and Issuance For the reasons set forth in the preamble, chapter II of title 12 of the Code of Federal Regulations is amended as follows: PART 208MEMBERSHIP OF STATE BANKING INSTITUTIONS IN THE FEDERAL RESERVE SYSTEM (REGULATION H) 1. The authority citation for part 208 is revised to read as follows: Authority: 12 U.S.C. 24, 36, 92a, 93a, 248(a), 248(c), 321-338a, 371d, 461, 481-486, 601, 611, 1814, 1816, 1820(d)(9), 1823(j), 1828(o), 1831, 1831o, 1831p-1, 1831r-1, 1831w, 1831x, 1835a, 1882, 2901-2907, 3105, 3106a(1), 3108(a), 3310, 3331-3351, and 3906-3909, 5101 et seq., 15 U.S.C. 78b, 78l(b), 78l(g), 78l(i), 78o-4(c)(5), 78q, 78q-1, 78w, 1681s, 1681w, 6801 and 6805; 31 U.S.C. 5318, 42 U.S.C. 4012a, 4104a, 4104b, 4106, and 4128. 12 CFR 208.100

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12 CFR 208.101 12 CFR 208.110 12 CFR 208.111 2. Subpart I, consisting of 208.100 and 208.101, is redesignated as Subpart J, consisting of 208.110 and 208.111. 3. New subpart I is added to read as follows: Subpart IRegistration of Residential Mortgage Loan Originators Sec. 208.101 Authority, purpose, and scope. 208.102 Definitions. 208.103 Registration of mortgage loan originators. 208.104 Policies and procedures. 208.105 Use of unique identifier. Appendix A to Subpart I of Part 208Examples of Mortgage Loan Originator Activities Subpart IRegistration of Residential Mortgage Loan Originators 12 CFR 208.101 208.101 Authority, purpose, and scope. (a) Authority. This subpart is issued pursuant to the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, title V of the Housing and Economic Recovery Act of 2008 (S.A.F.E. Act) (Pub. L. 110-289, 122 Stat. 2654, 12 U.S.C. 5101 et seq.), 12 U.S.C. 248(a), 3106a(1), and 3108(a). (b) Purpose. This subpart implements the S.A.F.E. Act's Federal registration requirement for mortgage loan originators. The S.A.F.E. Act provides that the objectives of this registration include aggregating and improving the flow of information to and between regulators; providing increased accountability and tracking of mortgage loan originators; enhancing consumer protections; supporting anti-fraud measures; and providing consumers *44689 with easily accessible information at no charge regarding the employment history of, and publicly adjudicated disciplinary and enforcement actions against, mortgage loan originators. (c) Scope. (1) In general. This subpart applies to member banks of the Federal Reserve System (other than national banks); their respective subsidiaries that are not functionally regulated within the meaning of section 5(c)(5) of the Bank Holding Company Act, as amended (12 U.S.C. 1844(c)(5)); branches and agencies of foreign banks (other than Federal branches, Federal agencies and insured State branches of foreign banks); commercial lending companies owned or controlled by foreign banks (collectively referred to in this subpart as banks); and their employees who act as mortgage loan originators. (2) De minimis exception. (i) This subpart and the requirements of 12 U.S.C. 5103(a)(1)(A) and

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(2) of the S.A.F.E. Act do not apply to any employee of a bank who has never been registered or licensed through the Registry as a mortgage loan originator if during the past 12 months the employee acted as a mortgage loan originator for 5 or fewer residential mortgage loans. (ii) Prior to engaging in mortgage loan origination activity that exceeds the exception limit in paragraph (c)(2)(i) of this section, a bank employee must register with the Registry pursuant to this subpart. (iii) Evasion. Banks are prohibited from engaging in any act or practice to evade the limits of the de minimis exception set forth in paragraph (c)(2)(i) of this section. 12 CFR 208.102 208.102 Definitions. For purposes of this subpart I, the following definitions apply: (a) Annual renewal period means November 1 through December 31 of each year. (b)(1) Mortgage loan originator [FN7] means an individual who: FN7 Appendix A of this subpart provides examples of activities that would, and would not, cause an employee to fall within this definition of mortgage loan originator. (i) Takes a residential mortgage loan application; and (ii) Offers or negotiates terms of a residential mortgage loan for compensation or gain. (2) The term mortgage loan originator does not include: (i) An individual who performs purely administrative or clerical tasks on behalf of an individual who is described in paragraph (b)(1) of this section; (ii) An individual who only performs real estate brokerage activities (as defined in 12 U.S.C. 5102(3)(D)) and is licensed or registered as a real estate broker in accordance with applicable State law, unless the individual is compensated by a lender, a mortgage broker, or other mortgage loan originator or by any agent of such lender, mortgage broker, or other mortgage loan originator, and meets the definition of mortgage loan originator in paragraph (b)(1) of this section; or (iii) An individual or entity solely involved in extensions of credit related to timeshare plans, as that term is defined in 11 U.S.C. 101(53D). (3) Administrative or clerical tasks means the receipt, collection, and distribution of information common for the processing or underwriting of a loan in the residential mortgage industry and communication with a consumer to obtain information necessary for the processing or underwriting of a residential mortgage loan. (c) Nationwide Mortgage Licensing System and Registry or Registry means the system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the State licensing and registration of State-licensed mortgage loan originators and the registration of mortgage loan originators pursuant to 12 U.S.C. 5107. (d) Registered mortgage loan originator or registrant means any individual who:

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(1) Meets the definition of mortgage loan originator and is an employee of a bank; and (2) Is registered pursuant to this subpart with, and maintains a unique identifier through, the Registry. (e) Residential mortgage loan means any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling (as defined in section 103(v) of the Truth in Lending Act, 15 U.S.C. 1602(v)) or residential real estate upon which is constructed or intended to be constructed a dwelling, and includes refinancings, reverse mortgages, home equity lines of credit and other first and additional lien loans that meet the qualifications listed in this definition. (f) Unique identifier means a number or other identifier that: (1) Permanently identifies a registered mortgage loan originator; (2) Is assigned by protocols established by the Nationwide Mortgage Licensing System and Registry, the Federal banking agencies, and the Farm Credit Administration to facilitate: (i) Electronic tracking of mortgage loan originators; and (ii) Uniform identification of, and public access to, the employment history of and the publicly adjudicated disciplinary and enforcement actions against mortgage loan originators; and (3) Must not be used for purposes other than those set forth under the S.A.F.E. Act. 12 CFR 208.103 208.103 Registration of mortgage loan originators. (a) Registration requirement(1) Employee registration. Each employee of a bank who acts as a mortgage loan originator must register with the Registry, obtain a unique identifier, and maintain this registration in accordance with the requirements of this subpart. Any such employee who is not in compliance with the registration and unique identifier requirements set forth in this subpart is in violation of the S.A.F.E. Act and this subpart. (2) Bank requirement(i) In general. A bank that employs one or more individuals who act as a residential mortgage loan originator must require each such employee to register with the Registry, maintain this registration, and obtain a unique identifier in accordance with the requirements of this subpart. (ii) Prohibition. A bank must not permit an employee of the bank who is subject to the registration requirements of this subpart to act as a mortgage loan originator for the bank unless such employee is registered with the Registry pursuant to this subpart. (3) Implementation period for initial registration. An employee of a bank who is a mortgage loan originator must complete an initial registration with the Registry pursuant to this subpart within 180 days from the date that the Board provides in a public notice that the Registry is accepting registrations. (4) Employees previously registered or licensed through the Registry(i) In general. If an employee of a bank was registered or licensed through, and obtained a unique identifier from, the Registry and has maintained this registration or license before the employee becomes subject to this subpart at this bank, then the registration requirements of the S.A.F.E. Act and this subpart are deemed to be met, provided that:

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(A) The employment information in paragraphs (d)(1)(i)(C) and (d)(1)(ii) of this section is updated and the requirements of paragraph (d)(2) of this section are met; (B) New fingerprints of the employee are submitted to the Registry for a background check, as required by paragraph (d)(1)(ix) of this section, *44690 unless the employee has fingerprints on file with the Registry that are less than 3 years old; (C) The bank information required in paragraphs (e)(1)(i) (to the extent the bank has not previously met these requirements) and (e)(2)(i) of this section is submitted to the Registry; and (D) The registration is maintained pursuant to paragraphs (b) and (e)(1)(ii) of this section, as of the date that the employee becomes subject to this subpart. (ii) Rule for certain acquisitions, mergers, or reorganizations. When registered or licensed mortgage loan originators become bank employees as a result of an acquisition, merger, or reorganization, only the requirements of paragraphs (a)(4)(i)(A), (C), and (D) of this section must be met, and these requirements must be met within 60 days from the effective date of the acquisition, merger, or reorganization. (b) Maintaining registration. (1) A mortgage loan originator who is registered with the Registry pursuant to paragraph (a) of this section must: (i) Except as provided in paragraph (b)(3) of this section, renew the registration during the annual renewal period, confirming the responses set forth in paragraphs (d)(1)(i) through (viii) of this section remain accurate and complete, and updating this information, as appropriate; and (ii) Update the registration within 30 days of any of the following events: (A) A change in the name of the registrant; (B) The registrant ceases to be an employee of the bank; or (C) The information required under paragraphs (d)(1)(iii) through (viii) of this section becomes inaccurate, incomplete, or out-of-date. (2) A registered mortgage loan originator must maintain his or her registration, unless the individual is no longer engaged in the activity of a mortgage loan originator. (3) The annual registration renewal requirement set forth in paragraph (b)(1) of this section does not apply to a registered mortgage loan originator who has completed his or her registration with the Registry pursuant to paragraph (a)(1) of this section less than 6 months prior to the end of the annual renewal period. (c) Effective dates(1) Registration. A registration pursuant to paragraph (a)(1) of this section is effective on the date the Registry transmits notification to the registrant that the registrant is registered. (2) Renewals or updates. A renewal or update pursuant to paragraph (b) of this section is effective on the date the Registry transmits notification to the registrant that the registration has been renewed or updated. (d) Required employee information(1) In general. For purposes of the registration required by this section, a bank must require each employee who is a mortgage loan originator to submit to the Registry, or must submit on behalf of the employee, the following categories of information, to the extent this information is collected by the Registry:

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(i) Identifying information, including the employee's: (A) Name and any other names used; (B) Home address and contact information; (C) Principal business location address and business contact information; (D) Social security number; (E) Gender; and (F) Date and place of birth; (ii) Financial services-related employment history for the 10 years prior to the date of registration or renewal, including the date the employee became an employee of the bank; (iii) Convictions of any criminal offense involving dishonesty, breach of trust, or money laundering against the employee or organizations controlled by the employee, or agreements to enter into a pretrial diversion or similar program in connection with the prosecution for such offense(s); (iv) Civil judicial actions against the employee in connection with financial services-related activities, dismissals with settlements, or judicial findings that the employee violated financial services-related statutes or regulations, except for actions dismissed without a settlement agreement; (v) Actions or orders by a State or Federal regulatory agency or foreign financial regulatory authority that: (A) Found the employee to have made a false statement or omission or been dishonest, unfair or unethical; to have been involved in a violation of a financial services-related regulation or statute; or to have been a cause of a financial services-related business having its authorization to do business denied, suspended, revoked, or restricted; (B) Are entered against the employee in connection with a financial services-related activity; (C) Denied, suspended, or revoked the employee's registration or license to engage in a financial services-related activity; disciplined the employee or otherwise by order prevented the employee from associating with a financial services-related business or restricted the employee's activities; or (D) Barred the employee from association with an entity or its officers regulated by the agency or authority or from engaging in a financial services-related business; (vi) Final orders issued by a State or Federal regulatory agency or foreign financial regulatory authority based on violations of any law or regulation that prohibits fraudulent, manipulative, or deceptive conduct; (vii) Revocation or suspension of the employee's authorization to act as an attorney, accountant, or State or Federal contractor; (viii) Customer-initiated financial services-related arbitration or civil action against the employee that required action, including settlements, or which resulted in a judgment; and (ix) Fingerprints of the employee, in digital form if practicable, and any appropriate identifying

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information for submission to the Federal Bureau of Investigation and any governmental agency or entity authorized to receive such information in connection with a State and national criminal history background check; however, fingerprints provided to the Registry that are less than 3 years old may be used to satisfy this requirement. (2) Employee authorizations and attestation. An employee registering as a mortgage loan originator or renewing or updating his or her registration under this subpart, and not the employing bank or other employees of the bank, must: (i) Authorize the Registry and the employing institution to obtain information related to sanctions or findings in any administrative, civil, or criminal action, to which the employee is a party, made by any governmental jurisdiction; (ii) Attest to the correctness of all information required by paragraph (d) of this section, whether submitted by the employee or on behalf of the employee by the employing bank; and (iii) Authorize the Registry to make available to the public information required by paragraphs (d)(1)(i)(A) and (C), and (d)(1)(ii) through (viii) of this section. (3) Submission of information. A bank may identify one or more employees of the bank who may submit the information required by paragraph (d)(1) of this section to the Registry on behalf of the bank's employees provided that this individual, and any employee delegated such authority, does not act as a mortgage loan originator, consistent with paragraph (e)(1)(i)(F) of this section. In addition, a bank may submit *44691 to the Registry some or all of the information required by paragraphs (d)(1) and (e)(2) of this section for multiple employees in bulk through batch processing in a format to be specified by the Registry, to the extent such batch processing is made available by the Registry. (e) Required bank information. A bank must submit the following categories of information to the Registry: (1) Bank record. (i) In connection with the registration of one or more mortgage loan originators: (A) Name, main office address, and business contact information; (B) Internal Revenue Service Employer Tax Identification Number (EIN); (C) Research Statistics Supervision and Discount (RSSD) number, as issued by the Board of Governors of the Federal Reserve System; (D) Identification of its primary Federal regulator; (E) Name(s) and contact information of the individual(s) with authority to act as the bank's primary point of contact for the Registry; (F) Name(s) and contact information of the individual(s) with authority to enter the information required by paragraphs (d)(1) and (e) of this section to the Registry and who may delegate this authority to other individuals. For the purpose of providing information required by paragraph (e) of this section, this individual and their delegates must not act as mortgage loan originators unless the bank has 10 or fewer full time or equivalent employees and is not a subsidiary; and (G) If a subsidiary of a bank, indication that it is a subsidiary and the RSSD number of the parent bank. (ii) Attestation. The individual(s) identified in paragraphs (e)(1)(i)(E) and (F) of this section must comply with Registry protocols to verify their identity and must attest that they have the

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authority to enter data on behalf of the bank, that the information provided to the Registry pursuant to this paragraph (e) is correct, and that the bank will keep the information required by this paragraph (e) current and will file accurate supplementary information on a timely basis. (iii) A bank must update the information required by this paragraph (e) of this section within 30 days of the date that this information becomes inaccurate. (iv) A bank must renew the information required by paragraph (e) of this section on an annual basis. (2) Employee information. In connection with the registration of each employee who acts as a mortgage loan originator: (i) After the information required by paragraph (d) of this section has been submitted to the Registry, confirmation that it employs the registrant; and (ii) Within 30 days of the date the registrant ceases to be an employee of the bank, notification that it no longer employs the registrant and the date the registrant ceased being an employee. 12 CFR 208.104 208.104 Policies and procedures. A bank that employs one or more mortgage loan originators must adopt and follow written policies and procedures designed to assure compliance with this subpart. These policies and procedures must be appropriate to the nature, size, complexity, and scope of the mortgage lending activities of the bank, and apply only to those employees acting within the scope of their employment at the bank. At a minimum, these policies and procedures must: (a) Establish a process for identifying which employees of the bank are required to be registered mortgage loan originators; (b) Require that all employees of the bank who are mortgage loan originators be informed of the registration requirements of the S.A.F.E. Act and this subpart and be instructed on how to comply with such requirements and procedures; (c) Establish procedures to comply with the unique identifier requirements in 208.105; (d) Establish reasonable procedures for confirming the adequacy and accuracy of employee registrations, including updates and renewals, by comparisons with its own records; (e) Establish reasonable procedures and tracking systems for monitoring compliance with registration and renewal requirements and procedures; (f) Provide for independent testing for compliance with this subpart to be conducted at least annually by bank personnel or by an outside party; (g) Provide for appropriate action in the case of any employee who fails to comply with the registration requirements of the S.A.F.E. Act, this subpart, or the bank's related policies and procedures, including prohibiting such employees from acting as mortgage loan originators or other appropriate disciplinary actions; (h) Establish a process for reviewing employee criminal history background reports received pursuant to this subpart, taking appropriate action consistent with applicable Federal law, including section 19 of the Federal Deposit Insurance Act (12 U.S.C. 1829) and implementing regulations with respect to these reports, and maintaining records of these reports and actions

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taken with respect to applicable employees; and (i) Establish procedures designed to ensure that any third party with which the bank has arrangements related to mortgage loan origination has policies and procedures to comply with the S.A.F.E. Act, including appropriate licensing and/or registration of individuals acting as mortgage loan originators. 12 CFR 208.105 208.105 Use of unique identifier. (a) The bank shall make the unique identifier(s) of its registered mortgage loan originator(s) available to consumers in a manner and method practicable to the institution. (b) A registered mortgage loan originator shall provide his or her unique identifier to a consumer: (1) Upon request; (2) Before acting as a mortgage loan originator; and (3) Through the originator's initial written communication with a consumer, if any, whether on paper or electronically. 12 CFR PT. 208, SUBPT. I, APP. A Appendix A to Subpart I of Part 208Examples of Mortgage Loan Originator Activities This Appendix provides examples to aid in the understanding of activities that would cause an employee of a bank to fall within or outside the definition of mortgage loan originator. The examples in this Appendix are not all inclusive. They illustrate only the issue described and do not illustrate any other issues that may arise under this subpart. For purposes of the examples below, the term loan refers to a residential mortgage loan. (a) Taking a loan application. The following examples illustrate when an employee takes, or does not take, a loan application. (1) Taking an application includes: receiving information provided in connection with a request for a loan to be used to determine whether the consumer qualifies for a loan, even if the employee: (i) Has received the consumer's information indirectly in order to make an offer or negotiate a loan; (ii) Is not responsible for verifying information; (iii) Is inputting information into an online application or other automated system on behalf of the consumer; or (iv) Is not engaged in approval of the loan, including determining whether the consumer qualifies for the loan. (2) Taking an application does not include any of the following activities performed solely or in combination: (i) Contacting a consumer to verify the information in the loan application by obtaining

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documentation, such as tax returns or payroll receipts; *44692 (ii) Receiving a loan application through the mail and forwarding it, without review, to loan approval personnel; (iii) Assisting a consumer who is filling out an application by clarifying what type of information is necessary for the application or otherwise explaining the qualifications or criteria necessary to obtain a loan product; (iv) Describing the steps that a consumer would need to take to provide information to be used to determine whether the consumer qualifies for a loan or otherwise explaining the loan application process; (v) In response to an inquiry regarding a prequalified offer that a consumer has received from a bank, collecting only basic identifying information about the consumer and forwarding the consumer to a mortgage loan originator; or (vi) Receiving information in connection with a modification to the terms of an existing loan to a borrower as part of the bank's loss mitigation efforts when the borrower is reasonably likely to default. (b) Offering or negotiating terms of a loan. The following examples are designed to illustrate when an employee offers or negotiates terms of a loan, and conversely, what does not constitute offering or negotiating terms of a loan. (1) Offering or negotiating the terms of a loan includes: (i) Presenting a loan offer to a consumer for acceptance, either verbally or in writing, including, but not limited to, providing a disclosure of the loan terms after application under the Truth in Lending Act, even if: (A) Further verification of information is necessary; (B) The offer is conditional; (C) Other individuals must complete the loan process; or (D) Only the rate approved by the bank's loan approval mechanism function for a specific loan product is communicated without authority to negotiate the rate. (ii) Responding to a consumer's request for a lower rate or lower points on a pending loan application by presenting to the consumer a revised loan offer, either verbally or in writing, that includes a lower interest rate or lower points than the original offer. (2) Offering or negotiating terms of a loan does not include solely or in combination: (i) Providing general explanations or descriptions in response to consumer queries regarding qualification for a specific loan product, such as explaining loan terminology (i.e., debt-to-income ratio); lending policies (i.e., the loan-to-value ratio policy of the bank); or product-related services; (ii) In response to a consumer's request, informing a consumer of the loan rates that are publicly available, such as on the bank's Web site, for specific types of loan products without communicating to the consumer whether qualifications are met for that loan product; (iii) Collecting information about a consumer in order to provide the consumer with information

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on loan products for which the consumer generally may qualify, without presenting a specific loan offer to the consumer for acceptance, either verbally or in writing; (iv) Arranging the loan closing or other aspects of the loan process, including communicating with a consumer about those arrangements, provided that communication with the consumer only verifies loan terms already offered or negotiated; (v) Providing a consumer with information unrelated to loan terms, such as the best days of the month for scheduling loan closings at the bank; (vi) Making an underwriting decision about whether the consumer qualifies for a loan; (vii) Explaining or describing the steps or process that a consumer would need to take in order to obtain a loan offer, including qualifications or criteria that would need to be met without providing guidance specific to that consumer's circumstances; or (viii) Communicating on behalf of a mortgage loan originator that a written offer, including disclosures provided pursuant to the Truth in Lending Act, has been sent to a consumer without providing any details of that offer. (c) Offering or negotiating a loan for compensation or gain. The following examples illustrate when an employee does or does not offer or negotiate terms of a loan for compensation or gain. (1) Offering or negotiating terms of a loan for compensation or gain includes engaging in any of the activities in paragraph (b)(1) of this Appendix in the course of carrying out employment duties, even if the employee does not receive a referral fee or commission or other special compensation for the loan. (2) Offering or negotiating terms of a loan for compensation or gain does not include engaging in a seller-financed transaction for the employee's personal property that does not involve the bank. 12 CFR 208.111 4. Newly designated 208.111 is amended by redesignating footnotes 7 and 8 as footnotes 8 and 9, respectively, and by revising newly designated footnote 9 to read as follows: 12 CFR 208.111 208.111 Obligations concerning institutional customers. ***** [FN9] See footnote 8 in paragraph (d) of this section. PART 211INTERNATIONAL BANKING OPERATIONS (REGULATION K) 5. The authority citation for part 211 is revised to read as follows: Authority: 12 U.S.C. 221 et seq., 1818, 1835a, 1841 et seq., 3101 et seq., 3901 et seq., and 5101 et seq.; 15 U.S.C. 1681s, 1681w, 6801 and 6805. 12 CFR 211.24 6. Section 211.24 is amended by adding new paragraph (k) to read as follows:

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12 CFR 211.24 211.24 Approval of offices of foreign banks; procedures for applications; standards for approval; representative office activities and standards for approval; preservation of existing authority. ***** (k) Registration of residential mortgage loan originators. An uninsured State-licensed branch or agency of a foreign bank or commercial lending company owned or controlled by a foreign bank and any residential mortgage loan originator that it employs are subject to the requirements, including registration requirements, as applicable, of the Secure and Fair Enforcement for Mortgage Licensing Act (12 U.S.C. 5101 et seq.) and the Board's implementing regulation set forth in Regulation H at subpart I of part 208 of this chapter. Federal Deposit Insurance Corporation 12 CFR Chapter III Authority and Issuance For the reasons set forth in the preamble, the Federal Deposit Insurance Corporation amends part 365 of chapter III of title 12 of the Code of Federal Regulations as follows: PART 365REAL ESTATE LENDING STANDARDS 1. The authority citation for part 365 is revised to read as follows: Authority: 12 U.S.C. 1828(o) and 5101 et seq. 12 CFR 365.1 12 CFR 365.2 2. Sections 365.1 and 365.2 and Appendix A are placed under a new subpart A, and the heading for new subpart A is added to read as follows: Subpart AReal Estate Lending Standards 12 CFR 365.1 3. Section 365.1 is amended by removing part and adding subpart in its place. 4. Appendix A to Part 365 is redesignated as Appendix A to Subpart A of Part 365, and the heading is revised to read as follows: Appendix A to Subpart A of Part 365Interagency Guidelines for Real Estate Lending Policies 5. New subpart B is added to read as follows: Subpart BRegistration of Residential Mortgage Loan Originators Sec. 365.101 Authority, purpose, and scope.

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365.102 Definitions. 365.103 Registration of mortgage loan originators. 365.104 Policies and procedures. 365.105 Use of unique identifier. Appendix A to Subpart B of Part 365Examples of Mortgage Loan Originator Activities *44693 Subpart BRegistration of Residential Mortgage Loan Originators 12 CFR 365.101 365.101 Authority, purpose, and scope. (a) Authority. This subpart is issued pursuant to the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, title V of the Housing and Economic Recovery Act of 2008 (S.A.F.E. Act) (Pub. L. 110-289, 122 Stat. 2654, 12 U.S.C. 5101 et seq.). (b) Purpose. This subpart implements the S.A.F.E. Act's Federal registration requirement for mortgage loan originators. The S.A.F.E. Act provides that the objectives of this registration include aggregating and improving the flow of information to and between regulators; providing increased accountability and tracking of mortgage loan originators; enhancing consumer protections; supporting anti-fraud measures; and providing consumers with easily accessible information at no charge regarding the employment history of, and publicly adjudicated disciplinary and enforcement actions against, mortgage loan originators. (c) Scope(1) In general. This subpart applies to insured State nonmember banks (including State-licensed insured branches of foreign banks), their subsidiaries (except brokers, dealers, persons providing insurance, investment companies, and investment advisers) (collectively referred to in this subpart as insured State nonmember banks), and employees of such banks or subsidiaries who act as mortgage loan originators. (2) De minimis exception. (i) This subpart and the requirements of 12 U.S.C. 5103(a)(1)(A) and (2) of the S.A.F.E. Act do not apply to any employee of an insured State nonmember bank who has never been registered or licensed through the Registry as a mortgage loan originator if during the past 12 months the employee acted as a mortgage loan originator for 5 or fewer residential mortgage loans. (ii) Prior to engaging in mortgage loan origination activity that exceeds the exception limit in paragraph (c)(2)(i) of this section, an insured State nonmember bank employee must register with the Registry pursuant to this subpart. (iii) Evasion. Insured State nonmember banks are prohibited from engaging in any act or practice to evade the limits of the de minimis exception set forth in paragraph (c)(2)(i) of this section. 12 CFR 365.102 365.102 Definitions. For purposes of this subpart, the following definitions apply: (a) Annual renewal period means November 1 through December 31 of each year.

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(b)(1) Mortgage loan originator [FN1] means an individual who: FN1 Appendix A of this subpart provides examples of activities that would, and would not, cause an employee to fall within this definition of mortgage loan originator. (i) Takes a residential mortgage loan application; and (ii) Offers or negotiates terms of a residential mortgage loan for compensation or gain. (2) The term mortgage loan originator does not include: (i) An individual who performs purely administrative or clerical tasks on behalf of an individual who is described in paragraph (b)(1) of this section; (ii) An individual who only performs real estate brokerage activities (as defined in 12 U.S.C. 5102(3)(D)) and is licensed or registered as a real estate broker in accordance with applicable State law, unless the individual is compensated by a lender, a mortgage broker, or other mortgage loan originator or by any agent of such lender, mortgage broker, or other mortgage loan originator, and meets the definition of mortgage loan originator in paragraph (b)(1) of this section; or (iii) An individual or entity solely involved in extensions of credit related to timeshare plans, as that term is defined in 11 U.S.C. 101(53D). (3) Administrative or clerical tasks means the receipt, collection, and distribution of information common for the processing or underwriting of a loan in the residential mortgage industry and communication with a consumer to obtain information necessary for the processing or underwriting of a residential mortgage loan. (c) Nationwide Mortgage Licensing System and Registry or Registry means the system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the State licensing and registration of State-licensed mortgage loan originators and the registration of mortgage loan originators pursuant to 12 U.S.C. 5107. (d) Registered mortgage loan originator or registrant means any individual who: (1) Meets the definition of mortgage loan originator and is an employee of an insured State nonmember bank; and (2) Is registered pursuant to this subpart with, and maintains a unique identifier through, the Registry. (e) Residential mortgage loan means any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling (as defined in section 103(v) of the Truth in Lending Act, 15 U.S.C. 1602(v)) or residential real estate upon which is constructed or intended to be constructed a dwelling, and includes refinancings, reverse mortgages, home equity lines of credit and other first and additional lien loans that meet the qualifications listed in this definition. (f) Unique identifier means a number or other identifier that: (1) Permanently identifies a registered mortgage loan originator; (2) Is assigned by protocols established by the Nationwide Mortgage Licensing System and

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Registry, the Federal banking agencies, and the Farm Credit Administration to facilitate: (i) Electronic tracking of mortgage loan originators; and (ii) Uniform identification of, and public access to, the employment history of and the publicly adjudicated disciplinary and enforcement actions against mortgage loan originators; and (3) Must not be used for purposes other than those set forth under the S.A.F.E. Act. 12 CFR 365.103 365.103 Registration of mortgage loan originators. (a) Registration requirement(1) Employee registration. Each employee of an insured State nonmember bank who acts as a mortgage loan originator must register with the Registry, obtain a unique identifier, and maintain this registration in accordance with the requirements of this subpart. Any such employee who is not in compliance with the registration and unique identifier requirements set forth in this subpart is in violation of the S.A.F.E. Act and this subpart. (2) Insured State nonmember bank requirement(i) In general. An insured State nonmember bank that employs one or more individuals who act as a residential mortgage loan originator must require each such employee to register with the Registry, maintain this registration, and obtain a unique identifier in accordance with the requirements of this subpart. (ii) Prohibition. An insured State nonmember bank must not permit an employee of the bank who is subject to the registration requirements of this subpart to act as a mortgage loan originator for the bank unless such employee is registered with the Registry pursuant to this subpart. (3) Implementation period for initial registration. An employee of an insured State nonmember bank who is a *44694 mortgage loan originator must complete an initial registration with the Registry pursuant to this subpart within 180 days from the date that the FDIC provides in a public notice that the Registry is accepting registrations. (4) Employees previously registered or licensed through the Registry(i) In general. If an employee of an insured State nonmember bank was registered or licensed through, and obtained a unique identifier from, the Registry and has maintained this registration or license before the employee becomes subject to this subpart at this bank, then the registration requirements of the S.A.F.E. Act and this subpart are deemed to be met, provided that: (A) The employment information in paragraphs (d)(1)(i)(C) and (d)(1)(ii) of this section is updated and the requirements of paragraph (d)(2) of this section are met; (B) New fingerprints of the employee are submitted to the Registry for a background check, as required by paragraph (d)(1)(ix) of this section, unless the employee has fingerprints on file with the Registry that are less than 3 years old; (C) The insured State nonmember bank information required in paragraphs (e)(1)(i) (to the extent the bank has not previously met these requirements) and (e)(2)(i) of this section is submitted to the Registry; and (D) The registration is maintained pursuant to paragraphs (b) and (e)(1)(ii) of this section, as of the date that the employee becomes subject to this subpart. (ii) Rule for certain acquisitions, mergers, or reorganizations. When registered or licensed mortgage loan originators become insured State nonmember bank employees as a result of an acquisition, merger, or reorganization, only the requirements of paragraphs (a)(4)(i)(A), (C), and

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(D) of this section must be met, and these requirements must be met within 60 days from the effective date of the acquisition, merger, or reorganization. (b) Maintaining registration. (1) A mortgage loan originator who is registered with the Registry pursuant to paragraph (a) of this section must: (i) Except as provided in paragraph (b)(3) of this section, renew the registration during the annual renewal period, confirming the responses set forth in paragraphs (d)(1)(i) through (viii) of this section remain accurate and complete, and updating this information, as appropriate; and (ii) Update the registration within 30 days of any of the following events: (A) A change in the name of the registrant; (B) The registrant ceases to be an employee of the insured State nonmember bank; or (C) The information required under paragraphs (d)(1)(iii) through (viii) of this section becomes inaccurate, incomplete, or out-of-date. (2) A registered mortgage loan originator must maintain his or her registration, unless the individual is no longer engaged in the activity of a mortgage loan originator. (3) The annual registration renewal requirement set forth in paragraph (b)(1) of this section does not apply to a registered mortgage loan originator who has completed his or her registration with the Registry pursuant to paragraph (a)(1) of this section less than 6 months prior to the end of the annual renewal period. (c) Effective dates(1) Registration. A registration pursuant to paragraph (a)(1) of this section is effective on the date the Registry transmits notification to the registrant that the registrant is registered. (2) Renewals or updates. A renewal or update pursuant to paragraph (b) of this section is effective on the date the Registry transmits notification to the registrant that the registration has been renewed or updated. (d) Required employee information(1) In general. For purposes of the registration required by this section, an insured State nonmember bank must require each employee who is a mortgage loan originator to submit to the Registry, or must submit on behalf of the employee, the following categories of information to the extent this information is collected by the Registry: (i) Identifying information, including the employee's: (A) Name and any other names used; (B) Home address and contact information; (C) Principal business location address and business contact information; (D) Social security number; (E) Gender; and (F) Date and place of birth; (ii) Financial services-related employment history for the 10 years prior to the date of registration or renewal, including the date the employee became an employee of the bank;

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(iii) Convictions of any criminal offense involving dishonesty, breach of trust, or money laundering against the employee or organizations controlled by the employee, or agreements to enter into a pretrial diversion or similar program in connection with the prosecution for such offense(s); (iv) Civil judicial actions against the employee in connection with financial services-related activities, dismissals with settlements, or judicial findings that the employee violated financial services-related statutes or regulations, except for actions dismissed without a settlement agreement; (v) Actions or orders by a State or Federal regulatory agency or foreign financial regulatory authority that: (A) Found the employee to have made a false statement or omission or been dishonest, unfair or unethical; to have been involved in a violation of a financial services-related regulation or statute; or to have been a cause of a financial services-related business having its authorization to do business denied, suspended, revoked, or restricted; (B) Are entered against the employee in connection with a financial services-related activity; (C) Denied, suspended, or revoked the employee's registration or license to engage in a financial services-related activity; disciplined the employee or otherwise by order prevented the employee from associating with a financial services-related business or restricted the employee's activities; or (D) Barred the employee from association with an entity or its officers regulated by the agency or authority or from engaging in a financial services-related business; (vi) Final orders issued by a State or Federal regulatory agency or foreign financial regulatory authority based on violations of any law or regulation that prohibits fraudulent, manipulative, or deceptive conduct; (vii) Revocation or suspension of the employee's authorization to act as an attorney, accountant, or State or Federal contractor; (viii) Customer-initiated financial services-related arbitration or civil action against the employee that required action, including settlements, or which resulted in a judgment; and (ix) Fingerprints of the employee, in digital form if practicable, and any appropriate identifying information for submission to the Federal Bureau of Investigation and any governmental agency or entity authorized to receive such information in connection with a State and national criminal history background check; however, fingerprints provided to the Registry that are less than 3 years old may be used to satisfy this requirement. (2) Employee authorizations and attestation. An employee registering as a mortgage loan originator or renewing or updating his or her registration under this subpart, and not the employing *44695 insured State nonmember bank or other employees of the insured State nonmember bank, must: (i) Authorize the Registry and the employing institution to obtain information related to sanctions or findings in any administrative, civil, or criminal action, to which the employee is a party, made by any governmental jurisdiction; (ii) Attest to the correctness of all information required by paragraph (d) of this section, whether submitted by the employee or on behalf of the employee by the employing bank; and

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(iii) Authorize the Registry to make available to the public information required by paragraphs (d)(1)(i)(A) and (C), and (d)(1)(ii) through (viii) of this section. (3) Submission of information. An insured State nonmember bank may identify one or more employees of the bank who may submit the information required by paragraph (d)(1) of this section to the Registry on behalf of the bank's employees provided that this individual, and any employee delegated such authority, does not act as a mortgage loan originator, consistent with paragraph (e)(1)(i)(F) of this section. In addition, an insured State nonmember bank may submit to the Registry some or all of the information required by paragraphs (d)(1) and (e)(2) of this section for multiple employees in bulk through batch processing in a format to be specified by the Registry, to the extent such batch processing is made available by the Registry. (e) Required bank information. An insured State nonmember bank must submit the following categories of information to the Registry: (1) Bank record. (i) In connection with the registration of one or more mortgage loan originators: (A) Name, main office address, and business contact information; (B) Internal Revenue Service Employer Tax Identification Number (EIN); (C) Research Statistics Supervision and Discount (RSSD) number, as issued by the Board of Governors of the Federal Reserve System; (D) Identification of its primary Federal regulator; (E) Name(s) and contact information of the individual(s) with authority to act as the bank's primary point of contact for the Registry; (F) Name(s) and contact information of the individual(s) with authority to enter the information required by paragraphs (d)(1) and (e) of this section to the Registry and who may delegate this authority to other individuals. For the purpose of providing information required by paragraph (e) of this section, this individual and their delegates must not act as mortgage loan originators unless the bank has 10 or fewer full time or equivalent employees and is not a subsidiary; and (G) If a subsidiary of an insured State nonmember bank, indication that it is a subsidiary and the RSSD number of the parent bank. (ii) Attestation. The individual(s) identified in paragraphs (e)(1)(i)(E) and (F) of this section must comply with Registry protocols to verify their identity and must attest that they have the authority to enter data on behalf of the insured State nonmember bank, that the information provided to the Registry pursuant to this paragraph (e) is correct, and that the insured State nonmember bank will keep the information required by this paragraph (e) current and will file accurate supplementary information on a timely basis. (iii) An insured State nonmember bank must update the information required by this paragraph (e) of this section within 30 days of the date that this information becomes inaccurate. (iv) An insured State nonmember bank must renew the information required by paragraph (e) of this section on an annual basis. (2) Employee information. In connection with the registration of each employee who acts as a mortgage loan originator: (i) After the information required by paragraph (d) of this section has been submitted to the

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Registry, confirmation that it employs the registrant; and (ii) Within 30 days of the date the registrant ceases to be an employee of the bank, notification that it no longer employs the registrant and the date the registrant ceased being an employee. 12 CFR 365.104 365.104 Policies and procedures. An insured State nonmember bank that employs one or more mortgage loan originators must adopt and follow written policies and procedures designed to assure compliance with this subpart. These policies and procedures must be appropriate to the nature, size, complexity, and scope of the mortgage lending activities of the bank, and apply only to those employees acting within the scope of their employment at the bank. At a minimum, these policies and procedures must: (a) Establish a process for identifying which employees of the bank are required to be registered mortgage loan originators; (b) Require that all employees of the insured State nonmember bank who are mortgage loan originators be informed of the registration requirements of the S.A.F.E. Act and this subpart and be instructed on how to comply with such requirements and procedures; (c) Establish procedures to comply with the unique identifier requirements in 365.105; (d) Establish reasonable procedures for confirming the adequacy and accuracy of employee registrations, including updates and renewals, by comparisons with its own records; (e) Establish reasonable procedures and tracking systems for monitoring compliance with registration and renewal requirements and procedures; (f) Provide for independent testing for compliance with this subpart to be conducted at least annually by bank personnel or by an outside party; (g) Provide for appropriate action in the case of any employee who fails to comply with the registration requirements of the S.A.F.E. Act, this subpart, or the bank's related policies and procedures, including prohibiting such employees from acting as mortgage loan originators or other appropriate disciplinary actions; (h) Establish a process for reviewing employee criminal history background reports received pursuant to this subpart, taking appropriate action consistent with applicable Federal law, including section 19 of the Federal Deposit Insurance Act (12 U.S.C. 1829) and implementing regulations with respect to these reports, and maintaining records of these reports and actions taken with respect to applicable employees; and (i) Establish procedures designed to ensure that any third party with which the bank has arrangements related to mortgage loan origination has policies and procedures to comply with the S.A.F.E. Act, including appropriate licensing and/or registration of individuals acting as mortgage loan originators. 12 CFR 365.105 365.105 Use of unique identifier. (a) The insured State nonmember bank shall make the unique identifier(s) of its registered mortgage loan originator(s) available to consumers in a manner and method practicable to the

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institution. (b) A registered mortgage loan originator shall provide his or her unique identifier to a consumer: (1) Upon request; (2) Before acting as a mortgage loan originator; and (3) Through the originator's initial written communication with a consumer, if any, whether on paper or electronically. 12 CFR PT. 365, SUBPT. B, APP. A *44696 Appendix A to Subpart B of Part 365Examples of Mortgage Loan Originator Activities This Appendix provides examples to aid in the understanding of activities that would cause an employee of an insured State nonmember bank to fall within or outside the definition of mortgage loan originator. The examples in this Appendix are not all inclusive. They illustrate only the issue described and do not illustrate any other issues that may arise under this subpart. For purposes of the examples below, the term loan refers to a residential mortgage loan. (a) Taking a loan application. The following examples illustrate when an employee takes, or does not take, a loan application. (1) Taking an application includes: receiving information provided in connection with a request for a loan to be used to determine whether the consumer qualifies for a loan, even if the employee: (i) Has received the consumer's information indirectly in order to make an offer or negotiate a loan; (ii) Is not responsible for verifying information; (iii) Is inputting information into an online application or other automated system on behalf of the consumer; or (iv) Is not engaged in approval of the loan, including determining whether the consumer qualifies for the loan. (2) Taking an application does not include any of the following activities performed solely or in combination: (i) Contacting a consumer to verify the information in the loan application by obtaining documentation, such as tax returns or payroll receipts; (ii) Receiving a loan application through the mail and forwarding it, without review, to loan approval personnel; (iii) Assisting a consumer who is filling out an application by clarifying what type of information is necessary for the application or otherwise explaining the qualifications or criteria necessary to obtain a loan product; (iv) Describing the steps that a consumer would need to take to provide information to be used to determine whether the consumer qualifies for a loan or otherwise explaining the loan application process;

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(v) In response to an inquiry regarding a prequalified offer that a consumer has received from a bank, collecting only basic identifying information about the consumer and forwarding the consumer to a mortgage loan originator; or (vi) Receiving information in connection with a modification to the terms of an existing loan to a borrower as part of the bank's loss mitigation efforts when the borrower is reasonably likely to default. (b) Offering or negotiating terms of a loan. The following examples are designed to illustrate when an employee offers or negotiates terms of a loan, and conversely, what does not constitute offering or negotiating terms of a loan. (1) Offering or negotiating the terms of a loan includes: (i) Presenting a loan offer to a consumer for acceptance, either verbally or in writing, including, but not limited to, providing a disclosure of the loan terms after application under the Truth in Lending Act, even if: (A) Further verification of information is necessary; (B) The offer is conditional; (C) Other individuals must complete the loan process; or (D) Only the rate approved by the bank's loan approval mechanism function for a specific loan product is communicated without authority to negotiate the rate. (ii) Responding to a consumer's request for a lower rate or lower points on a pending loan application by presenting to the consumer a revised loan offer, either verbally or in writing, that includes a lower interest rate or lower points than the original offer. (2) Offering or negotiating terms of a loan does not include solely or in combination: (i) Providing general explanations or descriptions in response to consumer queries regarding qualification for a specific loan product, such as explaining loan terminology (i.e., debt-to-income ratio); lending policies (i.e., the loan-to-value ratio policy of the insured State nonmember bank); or product-related services; (ii) In response to a consumer's request, informing a consumer of the loan rates that are publicly available, such as on the insured State nonmember bank's Web site, for specific types of loan products without communicating to the consumer whether qualifications are met for that loan product; (iii) Collecting information about a consumer in order to provide the consumer with information on loan products for which the consumer generally may qualify, without presenting a specific loan offer to the consumer for acceptance, either verbally or in writing; (iv) Arranging the loan closing or other aspects of the loan process, including communicating with a consumer about those arrangements, provided that communication with the consumer only verifies loan terms already offered or negotiated; (v) Providing a consumer with information unrelated to loan terms, such as the best days of the month for scheduling loan closings at the bank; (vi) Making an underwriting decision about whether the consumer qualifies for a loan;

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(vii) Explaining or describing the steps or process that a consumer would need to take in order to obtain a loan offer, including qualifications or criteria that would need to be met without providing guidance specific to that consumer's circumstances; or (viii) Communicating on behalf of a mortgage loan originator that a written offer, including disclosures provided pursuant to the Truth in Lending Act, has been sent to a consumer without providing any details of that offer. (c) Offering or negotiating a loan for compensation or gain. The following examples illustrate when an employee does or does not offer or negotiate terms of a loan for compensation or gain. (1) Offering or negotiating terms of a loan for compensation or gain includes engaging in any of the activities in paragraph (b)(1) of this Appendix in the course of carrying out employment duties, even if the employee does not receive a referral fee or commission or other special compensation for the loan. (2) Offering or negotiating terms of a loan for compensation or gain does not include engaging in a seller-financed transaction for the employee's personal property that does not involve the insured State nonmember bank. Office of Thrift Supervision 12 CFR Chapter V Authority and Issuance For the reasons set forth in the preamble, chapter V of title 12 of the Code of Federal Regulations is amended as follows: PART 563SAVINGS ASSOCIATIONSOPERATIONS 1. The authority citation for part 563 is revised to read as follows: Authority: 12 U.S.C. 375b, 1462, 1462a, 1463, 1464, 1467a, 1468, 1817, 1820, 1828, 1831o, 3806, 5101 et seq.; 31 U.S.C. 5318; 42 U.S.C. 4106. 12 CFR PT. 563, SUBPT. D, APP. A 3. Add Subpart D to part 563 to read as follows: Subpart DRegistration of Residential Mortgage Loan Originators Sec. 563.101 Authority, purpose, and scope. 563.102 Definitions. 563.103 Registration of mortgage loan originators. 563.104 Policies and procedures. 563.105 Use of unique identifier.

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Appendix A to Subpart D of Part 563Examples of Mortgage Loan Originator Activities Subpart DRegistration of Residential Mortgage Loan Originators 12 CFR 563.101 563.101 Authority, purpose, and scope. (a) Authority. This subpart is issued pursuant to the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, title V of the Housing and Economic Recovery Act of 2008 (S.A.F.E. Act) (Pub. L. 110-289, 122 Stat. 2654, 12 U.S.C. 5101 et seq.). (b) Purpose. This subpart implements the S.A.F.E. Act's Federal registration requirement for mortgage loan originators. The S.A.F.E. Act provides that the objectives of this registration include aggregating and improving the flow of information to and between regulators; providing increased accountability and tracking of mortgage loan originators; enhancing consumer protections; supporting anti-fraud measures; and providing consumers with easily accessible information at no charge regarding the employment history of, and publicly adjudicated disciplinary and enforcement actions against, mortgage loan originators. *44697 (c) Scope(1) In general. This subpart applies to savings associations, their operating subsidiaries (collectively referred to in this subpart as savings associations), and their employees who act as mortgage loan originators. (2) De minimis exception. (i) This subpart and the requirements of 12 U.S.C. 5103(a)(1)(A) and (2) of the S.A.F.E. Act do not apply to any employee of a savings association who has never been registered or licensed through the Registry as a mortgage loan originator if during the past 12 months the employee acted as a mortgage loan originator for 5 or fewer residential mortgage loans. (ii) Prior to engaging in mortgage loan origination activity that exceeds the exception limit in paragraph (c)(2)(i) of this section, a savings association employee must register with the Registry pursuant to this subpart. (iii) Evasion. Savings associations are prohibited from engaging in any act or practice to evade the limits of the de minimis exception set forth in paragraph (c)(2)(i) of this section. 12 CFR 563.102 563.102 Definitions. For purposes of this subpart D, the following definitions apply: (a) Annual renewal period means November 1 through December 31 of each year. (b)(1) Mortgage loan originator [FN1] means an individual who: FN1 Appendix A of this subpart provides examples of activities that would, and would not, cause an employee to fall within this definition of mortgage loan originator. (i) Takes a residential mortgage loan application; and (ii) Offers or negotiates terms of a residential mortgage loan for compensation or gain. (2) The term mortgage loan originator does not include:

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(i) An individual who performs purely administrative or clerical tasks on behalf of an individual who is described in paragraph (b)(1) of this section; (ii) An individual who only performs real estate brokerage activities (as defined in 12 U.S.C. 5102(3)(D)) and is licensed or registered as a real estate broker in accordance with applicable State law, unless the individual is compensated by a lender, a mortgage broker, or other mortgage loan originator or by any agent of such lender, mortgage broker, or other mortgage loan originator, and meets the definition of mortgage loan originator in paragraph (b)(1) of this section; or (iii) An individual or entity solely involved in extensions of credit related to timeshare plans, as that term is defined in 11 U.S.C. 101(53D). (3) Administrative or clerical tasks means the receipt, collection, and distribution of information common for the processing or underwriting of a loan in the residential mortgage industry and communication with a consumer to obtain information necessary for the processing or underwriting of a residential mortgage loan. (c) Nationwide Mortgage Licensing System and Registry or Registry means the system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the State licensing and registration of State-licensed mortgage loan originators and the registration of mortgage loan originators pursuant to 12 U.S.C. 5107. (d) Registered mortgage loan originator or registrant means any individual who: (1) Meets the definition of mortgage loan originator and is an employee of a savings association; and (2) Is registered pursuant to this subpart with, and maintains a unique identifier through, the Registry. (e) Residential mortgage loan means any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling (as defined in section 103(v) of the Truth in Lending Act, 15 U.S.C. 1602(v)) or residential real estate upon which is constructed or intended to be constructed a dwelling, and includes refinancings, reverse mortgages, home equity lines of credit and other first and additional lien loans that meet the qualifications listed in this definition. (f) Unique identifier means a number or other identifier that: (1) Permanently identifies a registered mortgage loan originator; (2) Is assigned by protocols established by the Nationwide Mortgage Licensing System and Registry, the Federal banking agencies, and the Farm Credit Administration to facilitate: (i) Electronic tracking of mortgage loan originators; and (ii) Uniform identification of, and public access to, the employment history of and the publicly adjudicated disciplinary and enforcement actions against mortgage loan originators; and (3) Must not be used for purposes other than those set forth under the S.A.F.E. Act. 12 CFR 563.103 563.103 Registration of mortgage loan originators.

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(a) Registration requirement(1) Employee registration. Each employee of a savings association who acts as a mortgage loan originator must register with the Registry, obtain a unique identifier, and maintain this registration in accordance with the requirements of this subpart. Any such employee who is not in compliance with the registration and unique identifier requirements set forth in this subpart is in violation of the S.A.F.E. Act and this subpart. (2) Savings association requirement(i) In general. A savings association that employs one or more individuals who act as a residential mortgage loan originator must require each such employee to register with the Registry, maintain this registration, and obtain a unique identifier in accordance with the requirements of this subpart. (ii) Prohibition. A savings association must not permit an employee of the association who is subject to the registration requirements of this subpart to act as a mortgage loan originator for the association unless such employee is registered with the Registry pursuant to this subpart. (3) Implementation period for initial registration. An employee of a savings association who is a mortgage loan originator must complete an initial registration with the Registry pursuant to this subpart within 180 days from the date that the OTS provides in a public notice that the Registry is accepting registrations. (4) Employees previously registered or licensed through the Registry(i) In general. If an employee of a savings association was registered or licensed through, and obtained a unique identifier from, the Registry and has maintained this registration or license before the employee of the association becomes subject to this subpart at this association, then the registration requirements of the S.A.F.E. Act and this subpart are deemed to be met, provided that: (A) The employment information in paragraphs (d)(1)(i)(C) and (d)(1)(ii) of this section is updated and the requirements of paragraph (d)(2) of this section are met; (B) New fingerprints of the employee are submitted to the Registry for a background check, as required by paragraph (d)(1)(ix) of this section, unless the employee has fingerprints on file with the Registry that are less than 3 years old; (C) The savings association information required in paragraphs (e)(1)(i) (to the extent the association has not previously met these requirements) and (e)(2)(i) of this section is submitted to the Registry; and (D) The registration is maintained pursuant to paragraphs (b) and (e)(1)(ii) *44698 of this section, as of the date that the employee becomes subject to this subpart. (ii) Rule for certain acquisitions, mergers, or reorganizations. When registered or licensed mortgage loan originators become savings association employees as a result of an acquisition, merger, or reorganization, only the requirements of paragraphs (a)(4)(i)(A), (C), and (D) of this section must be met, and these requirements must be met within 60 days from the effective date of the acquisition, merger, or reorganization. (b) Maintaining registration. (1) A mortgage loan originator who is registered with the Registry pursuant to paragraph (a) of this section must: (i) Except as provided in paragraph (b)(3) of this section, renew the registration during the annual renewal period, confirming the responses set forth in paragraphs (d)(1)(i) through (viii) of this section remain accurate and complete, and updating this information, as appropriate; and (ii) Update the registration within 30 days of any of the following events:

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(A) A change in the name of the registrant; (B) The registrant ceases to be an employee of the savings association; or (C) The information required under paragraphs (d)(1)(iii) through (viii) of this section becomes inaccurate, incomplete, or out-of-date. (2) A registered mortgage loan originator must maintain his or her registration, unless the individual is no longer engaged in the activity of a mortgage loan originator. (3) The annual registration renewal requirement set forth in paragraph (b)(1) of this section does not apply to a registered mortgage loan originator who has completed his or her registration with the Registry pursuant to paragraph (a)(1) of this section less than 6 months prior to the end of the annual renewal period. (c) Effective dates(1) Registration. A registration pursuant to paragraph (a)(1) of this section is effective on the date the Registry transmits notification to the registrant that the registrant is registered. (2) Renewals or updates. A renewal or update pursuant to paragraph (b) of this section is effective on the date the Registry transmits notification to the registrant that the registration has been renewed or updated. (d) Required employee information(1) In general. For purposes of the registration required by this section, a savings association must require each employee who is a mortgage loan originator to submit to the Registry, or must submit on behalf of the employee, the following categories of information, to the extent this information is collected by the Registry: (i) Identifying information, including the employee's: (A) Name and any other names used; (B) Home address and contact information; (C) Principal business location address and business contact information; (D) Social security number; (E) Gender; and (F) Date and place of birth; (ii) Financial services-related employment history for the 10 years prior to the date of registration or renewal, including the date the employee became an employee of the savings association; (iii) Convictions of any criminal offense involving dishonesty, breach of trust, or money laundering against the employee or organizations controlled by the employee, or agreements to enter into a pretrial diversion or similar program in connection with the prosecution for such offense(s); (iv) Civil judicial actions against the employee in connection with financial services-related activities, dismissals with settlements, or judicial findings that the employee violated financial services-related statutes or regulations, except for actions dismissed without a settlement agreement;

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(v) Actions or orders by a State or Federal regulatory agency or foreign financial regulatory authority that: (A) Found the employee to have made a false statement or omission or been dishonest, unfair or unethical; to have been involved in a violation of a financial services-related regulation or statute; or to have been a cause of a financial services-related business having its authorization to do business denied, suspended, revoked, or restricted; (B) Are entered against the employee in connection with a financial services-related activity; (C) Denied, suspended, or revoked the employee's registration or license to engage in a financial services-related activity; disciplined the employee or otherwise by order prevented the employee from associating with a financial services-related business or restricted the employee's activities; or (D) Barred the employee from association with an entity or its officers regulated by the agency or authority or from engaging in a financial services-related business; (vi) Final orders issued by a State or Federal regulatory agency or foreign financial regulatory authority based on violations of any law or regulation that prohibits fraudulent, manipulative, or deceptive conduct; (vii) Revocation or suspension of the employee's authorization to act as an attorney, accountant, or State or Federal contractor; (viii) Customer-initiated financial services-related arbitration or civil action against the employee that required action, including settlements, or which resulted in a judgment; and (ix) Fingerprints of the employee, in digital form if practicable, and any appropriate identifying information for submission to the Federal Bureau of Investigation and any governmental agency or entity authorized to receive such information in connection with a State and national criminal history background check; however, fingerprints provided to the Registry that are less than 3 years old may be used to satisfy this requirement. (2) Employee authorizations and attestation. An employee registering as a mortgage loan originator or renewing or updating his or her registration under this subpart, and not the employing savings association or other employees of the savings association, must: (i) Authorize the Registry and the employing institution to obtain information related to sanctions or findings in any administrative, civil, or criminal action, to which the employee is a party, made by any governmental jurisdiction; (ii) Attest to the correctness of all information required by paragraph (d) of this section, whether submitted by the employee or on behalf of the employee by the employing savings association; and (iii) Authorize the Registry to make available to the public information required by paragraphs (d)(1)(i)(A) and (C), and (d)(1)(ii) through (viii) of this section. (3) Submission of information. A savings association may identify one or more employees of the association who may submit the information required by paragraph (d)(1) of this section to the Registry on behalf of the association's employees provided that this individual, and any employee delegated such authority, does not act as a mortgage loan originator, consistent with paragraph (e)(1)(i)(F) of this section. In addition, a savings association may submit to the Registry some or all of the information required by paragraphs (d)(1) and (e)(2) of this section for multiple employees in bulk through batch processing in a format to be specified by the Registry, to the

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extent such batch processing is made available by the Registry. *44699 (e) Required savings association information. A savings association must submit the following categories of information to the Registry: (1) Savings association record. (i) In connection with the registration of one or more mortgage loan originators: (A) Name, main office address, and business contact information; (B) Internal Revenue Service Employer Tax Identification Number (EIN); (C) Research Statistics Supervision and Discount (RSSD) number, as issued by the Board of Governors of the Federal Reserve System; (D) Identification of its primary Federal regulator; (E) Name(s) and contact information of the individual(s) with authority to act as the savings association's primary point of contact for the Registry; (F) Name(s) and contact information of the individual(s) with authority to enter the information required by paragraphs (d)(1) and (e) of this section to the Registry and who may delegate this authority to other individuals. For the purpose of providing information required by paragraph (e) of this section, this individual and their delegates must not act as mortgage loan originators unless the savings association has 10 or fewer full time or equivalent employees and is not a subsidiary; and (G) If a subsidiary of a savings association, indication that it is a subsidiary and the RSSD number of the parent association. (ii) Attestation. The individual(s) identified in paragraphs (e)(1)(i)(E) and (F) of this section must comply with Registry protocols to verify their identity and must attest that they have the authority to enter data on behalf of the savings association, that the information provided to the Registry pursuant to this paragraph (e) is correct, and that the savings association will keep the information required by this paragraph (e) current and will file accurate supplementary information on a timely basis. (iii) A savings association must update the information required by this paragraph (e) of this section within 30 days of the date that this information becomes inaccurate. (iv) A savings association must renew the information required by paragraph (e) of this section on an annual basis. (2) Employee information. In connection with the registration of each employee who acts as a mortgage loan originator: (i) After the information required by paragraph (d) of this section has been submitted to the Registry, confirmation that it employs the registrant; and (ii) Within 30 days of the date the registrant ceases to be an employee of the savings association, notification that it no longer employs the registrant and the date the registrant ceased being an employee. 12 CFR 563.104 563.104 Policies and procedures.

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A savings association that employs one or more mortgage loan originators must adopt and follow written policies and procedures designed to assure compliance with this subpart. These policies and procedures must be appropriate to the nature, size, complexity, and scope of the mortgage lending activities of the savings association, and apply only to those employees acting within the scope of their employment at the association. At a minimum, these policies and procedures must: (a) Establish a process for identifying which employees of the savings association are required to be registered mortgage loan originators; (b) Require that all employees of the savings association who are mortgage loan originators be informed of the registration requirements of the S.A.F.E. Act and this subpart and be instructed on how to comply with such requirements and procedures; (c) Establish procedures to comply with the unique identifier requirements in 563.105; (d) Establish reasonable procedures for confirming the adequacy and accuracy of employee registrations, including updates and renewals, by comparisons with its own records; (e) Establish reasonable procedures and tracking systems for monitoring compliance with registration and renewal requirements and procedures; (f) Provide for independent testing for compliance with this subpart to be conducted at least annually by savings association personnel or by an outside party; (g) Provide for appropriate action in the case of any employee who fails to comply with the registration requirements of the S.A.F.E. Act, this subpart, or the savings association's related policies and procedures, including prohibiting such employees from acting as mortgage loan originators or other appropriate disciplinary actions; (h) Establish a process for reviewing employee criminal history background reports received pursuant to this subpart, taking appropriate action consistent with applicable Federal law, including section 19 of the Federal Deposit Insurance Act (12 U.S.C. 1829) and implementing regulations with respect to these reports, and maintaining records of these reports and actions taken with respect to applicable employees; and (i) Establish procedures designed to ensure that any third party with which the savings association has arrangements related to mortgage loan origination has policies and procedures to comply with the S.A.F.E. Act, including appropriate licensing and/or registration of individuals acting as mortgage loan originators. 12 CFR 563.105 563.105 Use of unique identifier. (a) The savings association shall make the unique identifier(s) of its registered mortgage loan originator(s) available to consumers in a manner and method practicable to the institution. (b) A registered mortgage loan originator shall provide his or her unique identifier to a consumer: (1) Upon request; (2) Before acting as a mortgage loan originator; and

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(3) Through the originator's initial written communication with a consumer, if any, whether on paper or electronically. Appendix A to Subpart D of Part 563Examples of Mortgage Loan Originator Activities This Appendix provides examples to aid in the understanding of activities that would cause an employee of a savings association to fall within or outside the definition of mortgage loan originator. The examples in this Appendix are not all inclusive. They illustrate only the issue described and do not illustrate any other issues that may arise under this subpart. For purposes of the examples below, the term loan refers to a residential mortgage loan. (a) Taking a loan application. The following examples illustrate when an employee takes, or does not take, a loan application. (1) Taking an application includes: receiving information provided in connection with a request for a loan to be used to determine whether the consumer qualifies for a loan, even if the employee: (i) Has received the consumer's information indirectly in order to make an offer or negotiate a loan; (ii) Is not responsible for verifying information; (iii) Is inputting information into an online application or other automated system on behalf of the consumer; or (iv) Is not engaged in approval of the loan, including determining whether the consumer qualifies for the loan. (2) Taking an application does not include any of the following activities performed solely or in combination: (i) Contacting a consumer to verify the information in the loan application by obtaining documentation, such as tax returns or payroll receipts; (ii) Receiving a loan application through the mail and forwarding it, without review, to loan approval personnel; *44700 (iii) Assisting a consumer who is filling out an application by clarifying what type of information is necessary for the application or otherwise explaining the qualifications or criteria necessary to obtain a loan product; (iv) Describing the steps that a consumer would need to take to provide information to be used to determine whether the consumer qualifies for a loan or otherwise explaining the loan application process; (v) In response to an inquiry regarding a prequalified offer that a consumer has received from a savings association, collecting only basic identifying information about the consumer and forwarding the consumer to a mortgage loan originator; or (vi) Receiving information in connection with a modification to the terms of an existing loan to a borrower as part of the savings association's loss mitigation efforts when the borrower is reasonably likely to default. (b) Offering or negotiating terms of a loan. The following examples are designed to illustrate when an employee offers or negotiates terms of a loan, and conversely, what does not constitute

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offering or negotiating terms of a loan. (1) Offering or negotiating the terms of a loan includes: (i) Presenting a loan offer to a consumer for acceptance, either verbally or in writing, including, but not limited to, providing a disclosure of the loan terms after application under the Truth in Lending Act, even if: (A) Further verification of information is necessary; (B) The offer is conditional; (C) Other individuals must complete the loan process; or (D) Only the rate approved by the savings association's loan approval mechanism function for a specific loan product is communicated without authority to negotiate the rate. (ii) Responding to a consumer's request for a lower rate or lower points on a pending loan application by presenting to the consumer a revised loan offer, either verbally or in writing, that includes a lower interest rate or lower points than the original offer. (2) Offering or negotiating terms of a loan does not include solely or in combination: (i) Providing general explanations or descriptions in response to consumer queries regarding qualification for a specific loan product, such as explaining loan terminology (i.e., debt-to-income ratio); lending policies (i.e., the loan-to-value ratio policy of the savings association); or productrelated services; (ii) In response to a consumer's request, informing a consumer of the loan rates that are publicly available, such as on the savings association's Web site, for specific types of loan products without communicating to the consumer whether qualifications are met for that loan product; (iii) Collecting information about a consumer in order to provide the consumer with information on loan products for which the consumer generally may qualify, without presenting a specific loan offer to the consumer for acceptance, either verbally or in writing; (iv) Arranging the loan closing or other aspects of the loan process, including communicating with a consumer about those arrangements, provided that communication with the consumer only verifies loan terms already offered or negotiated; (v) Providing a consumer with information unrelated to loan terms, such as the best days of the month for scheduling loan closings at the savings association; (vi) Making an underwriting decision about whether the consumer qualifies for a loan; (vii) Explaining or describing the steps or process that a consumer would need to take in order to obtain a loan offer, including qualifications or criteria that would need to be met without providing guidance specific to that consumer's circumstances; or (viii) Communicating on behalf of a mortgage loan originator that a written offer, including disclosures provided pursuant to the Truth in Lending Act, has been sent to a consumer without providing any details of that offer. (c) Offering or negotiating a loan for compensation or gain. The following examples illustrate when an employee does or does not offer or negotiate terms of a loan for compensation or gain.

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(1) Offering or negotiating terms of a loan for compensation or gain includes engaging in any of the activities in paragraph (b)(1) of this Appendix in the course of carrying out employment duties, even if the employee does not receive a referral fee or commission or other special compensation for the loan. (2) Offering or negotiating terms of a loan for compensation or gain does not include engaging in a seller-financed transaction for the employee's personal property that does not involve the savings association. Farm Credit Administration 12 CFR Chapter VI Authority and Issuance For the reasons set forth in the preamble, chapter VI of title 12 of the Code of Federal Regulations is amended by adding a new part 610 to read as follows: PART 610REGISTRATION OF MORTGAGE LOAN ORIGINATORS Sec. 610.101 Authority, purpose, and scope. 610.102 Definitions. 610.103 Registration of mortgage loan originators. 610.104 Policies and procedures. 610.105 Use of unique identifier. Appendix A to Part 610Examples of Mortgage Loan Originator Activities Authority: Secs. 1.5, 1.7, 1.9, 1.10, 1.11, 1.13, 2.2, 2.4, 2.12, 5.9, 5.17, 7.2, 7.6, 7.8 of the Farm Credit Act (12 U.S.C. 2013, 2015, 2017, 2018, 2019, 2021, 2073, 2075, 2093, 2243, 2252, 2279a-2, 2279b, 2279c-10); and secs. 1501 et seq. of Pub. L. 110-289, 122 Stat. 2654. 12 CFR 610.101 610.101 Authority, purpose, and scope. (a) Authority. This part is issued pursuant to the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, title V of the Housing and Economic Recovery Act of 2008 (S.A.F.E. Act) (Pub. L. 110-289, 122 Stat. 2654, 12 U.S.C. 5101 et seq.). (b) Purpose. This part implements the S.A.F.E. Act's Federal registration requirement for mortgage loan originators. The S.A.F.E. Act provides that the objectives of this registration include aggregating and improving the flow of information to and between regulators; providing increased accountability and tracking of mortgage loan originators; enhancing consumer protections; supporting anti-fraud measures; and providing consumers with easily accessible information at no charge regarding the employment history of, and publicly adjudicated disciplinary and enforcement actions against, mortgage loan originators. (c) Scope(1) In general. This part applies to any Farm Credit System lending institution that

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actually originates residential mortgage loans pursuant to its authority under sections 1.9(3), 1.11, or 2.4(a) and (b) of the Farm Credit Act of 1971, as amended, and their employees who act as mortgage loan originators. (2) De minimis exception. (i) This part and the requirements of 12 U.S.C. 5103(a)(1)(A) and (2) of the S.A.F.E. Act do not apply to any employee of a Farm Credit System institution who has never been registered or licensed through the Registry as a mortgage loan originator if during the past 12 months the employee acted as a mortgage loan originator for 5 or fewer residential mortgage loans. (ii) Prior to engaging in mortgage loan origination activity that exceeds the exception limit in paragraph (c)(2)(i) of this section, a Farm Credit System institution employee must register with the Registry pursuant to this part. (iii) Evasion. Farm Credit System institutions are prohibited from engaging in any act or practice to evade the limits of the de minimis exception set forth in paragraph (c)(2)(i) of this section. 12 CFR 610.102 610.102 Definitions. For purposes of this part, the following definitions apply: (a) Annual renewal period means November 1 through December 31 of each year. (b)(1) Mortgage loan originator [FN1] means an individual who: FN1 Appendix A of this part provides examples of activities that would, and would not, cause an employee to fall within this definition of mortgage loan originator. (i) Takes a residential mortgage loan application; and *44701 (ii) Offers or negotiates terms of a residential mortgage loan for compensation or gain. (2) The term mortgage loan originator does not include: (i) An individual who performs purely administrative or clerical tasks on behalf of an individual who is described in paragraph (b)(1) of this section; (ii) An individual who only performs real estate brokerage activities (as defined in 12 U.S.C. 5102(3)(D)) and is licensed or registered as a real estate broker in accordance with applicable State law, unless the individual is compensated by a lender, a mortgage broker, or other mortgage loan originator or by any agent of such lender, mortgage broker, or other mortgage loan originator, and meets the definition of mortgage loan originator in paragraph (b)(1) of this section; or (iii) An individual or entity solely involved in extensions of credit related to timeshare plans, as that term is defined in 11 U.S.C. 101(53D). (3) Administrative or clerical tasks means the receipt, collection, and distribution of information common for the processing or underwriting of a loan in the residential mortgage industry and communication with a consumer to obtain information necessary for the processing or underwriting of a residential mortgage loan. (c) Nationwide Mortgage Licensing System and Registry or Registry means the system developed

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and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the State licensing and registration of State-licensed mortgage loan originators and the registration of mortgage loan originators pursuant to 12 U.S.C. 5107. (d) Registered mortgage loan originator or registrant means any individual who: (1) Meets the definition of mortgage loan originator and is an employee of a Farm Credit System institution; and (2) Is registered pursuant to this part with, and maintains a unique identifier through, the Registry. (e) Residential mortgage loan means any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling (as defined in section 103(v) of the Truth in Lending Act, 15 U.S.C. 1602(v)) or residential real estate upon which is constructed or intended to be constructed a dwelling, and includes refinancings, reverse mortgages, home equity lines of credit and other first and additional lien loans that meet the qualifications listed in this definition. This definition does not amend or supersede 613.3030(c) of this chapter. (f) Unique identifier means a number or other identifier that: (1) Permanently identifies a registered mortgage loan originator; (2) Is assigned by protocols established by the Nationwide Mortgage Licensing System and Registry, the Federal banking agencies, and the Farm Credit Administration to facilitate: (i) Electronic tracking of mortgage loan originators; and (ii) Uniform identification of, and public access to, the employment history of and the publicly adjudicated disciplinary and enforcement actions against mortgage loan originators; and (3) Must not be used for purposes other than those set forth under the S.A.F.E. Act. 12 CFR 610.103 610.103 Registration of mortgage loan originators. (a) Registration requirement(1) Employee registration. Each employee of a Farm Credit System institution who acts as a mortgage loan originator must register with the Registry, obtain a unique identifier, and maintain this registration in accordance with the requirements of this part. Any such employee who is not in compliance with the registration and unique identifier requirements set forth in this part is in violation of the S.A.F.E. Act and this part. (2) Farm Credit System institution requirement(i) In general. A Farm Credit System institution that employs one or more individuals who act as a residential mortgage loan originator must require each such employee to register with the Registry, maintain this registration, and obtain a unique identifier in accordance with the requirements of this part. (ii) Prohibition. A Farm Credit System institution must not permit an employee who is subject to the registration requirements of this part to act as a mortgage loan originator for the Farm Credit System institution unless such employee is registered with the Registry pursuant to this part. (3) Implementation period for initial registration. An employee of a Farm Credit System institution who is a mortgage loan originator must complete an initial registration with the

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Registry pursuant to this part within 180 days from the date that the Farm Credit Administration provides in a public notice that the Registry is accepting registrations. (4) Employees previously registered or licensed through the Registry(i) In general. If an employee of a Farm Credit System institution was registered or licensed through, and obtained a unique identifier from, the Registry and has maintained this registration or license before the employee becomes subject to this part at this Farm Credit System institution, then the registration requirements of the S.A.F.E. Act and this part are deemed to be met, provided that: (A) The employment information in paragraphs (d)(1)(i)(C) and (d)(1)(ii) of this section is updated and the requirements of paragraph (d)(2) of this section are met; (B) New fingerprints of the employee are submitted to the Registry for a background check, as required by paragraph (d)(1)(ix) of this section, unless the employee has fingerprints on file with the Registry that are less than 3 years old; (C) The Farm Credit System institution information required in paragraphs (e)(1)(i) (to the extent the Farm Credit System institution has not previously met these requirements) and (e)(2)(i) of this section is submitted to the Registry; and (D) The registration is maintained pursuant to paragraphs (b) and (e)(1)(ii) of this section, as of the date that the employee becomes subject to this part. (ii) Rule for certain acquisitions, mergers, or reorganizations. When registered or licensed mortgage loan originators become employees of another Farm Credit System institution as a result of a consolidation, merger, or reorganization, only the requirements of paragraphs (a)(4)(i)(A), (C), and (D) of this section must be met, and these requirements must be met within 60 days from the effective date of the consolidation, merger, or reorganization. (b) Maintaining registration. (1) A mortgage loan originator who is registered with the Registry pursuant to paragraph (a) of this section must: (i) Except as provided in paragraph (b)(3) of this section, renew the registration during the annual renewal period, confirming the responses set forth in paragraphs (d)(1)(i) through (viii) of this section remain accurate and complete, and updating this information, as appropriate; and (ii) Update the registration within 30 days of any of the following events: (A) A change in the name of the registrant; (B) The registrant ceases to be an employee of the Farm Credit System institution; or (C) The information required under paragraphs (d)(1)(iii) through (viii) of this section becomes inaccurate, incomplete, or out-of-date. *44702 (2) A registered mortgage loan originator must maintain his or her registration, unless the individual is no longer engaged in the activity of a mortgage loan originator. (3) The annual registration renewal requirement set forth in paragraph (b)(1) of this section does not apply to a registered mortgage loan originator who has completed his or her registration with the Registry pursuant to paragraph (a)(1) of this section less than 6 months prior to the end of the annual renewal period. (c) Effective dates(1) Registration. A registration pursuant to paragraph (a)(1) of this section is

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effective on the date the Registry transmits notification to the registrant that the registrant is registered. (2) Renewals or updates. A renewal or update pursuant to paragraph (b) of this section is effective on the date the Registry transmits notification to the registrant that the registration has been renewed or updated. (d) Required employee information(1) In general. For purposes of the registration required by this section, a Farm Credit System institution must require each employee who is a mortgage loan originator to submit to the Registry, or must submit on behalf of the employee, the following categories of information, to the extent this information is collected by the Registry: (i) Identifying information, including the employee's: (A) Name and any other names used; (B) Home address and contact information; (C) Principal business location address and business contact information; (D) Social security number; (E) Gender; and (F) Date and place of birth; (ii) Financial services-related employment history for the 10 years prior to the date of registration or renewal, including the date the employee became an employee of the Farm Credit System institution; (iii) Convictions of any criminal offense involving dishonesty, breach of trust, or money laundering against the employee or organizations controlled by the employee, or agreements to enter into a pretrial diversion or similar program in connection with the prosecution for such offense(s); (iv) Civil judicial actions against the employee in connection with financial services-related activities, dismissals with settlements, or judicial findings that the employee violated financial services-related statutes or regulations, except for actions dismissed without a settlement agreement; (v) Actions or orders by a State or Federal regulatory agency or foreign financial regulatory authority that: (A) Found the employee to have made a false statement or omission or been dishonest, unfair or unethical; to have been involved in a violation of a financial services-related regulation or statute; or to have been a cause of a financial services-related business having its authorization to do business denied, suspended, revoked, or restricted; (B) Are entered against the employee in connection with a financial services-related activity; (C) Denied, suspended, or revoked the employee's registration or license to engage in a financial services-related activity; disciplined the employee or otherwise by order prevented the employee from associating with a financial services-related business or restricted the employee's activities; or (D) Barred the employee from association with an entity or its officers regulated by the agency

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or authority or from engaging in a financial services-related business; (vi) Final orders issued by a State or Federal regulatory agency or foreign financial regulatory authority based on violations of any law or regulation that prohibits fraudulent, manipulative, or deceptive conduct; (vii) Revocation or suspension of the employee's authorization to act as an attorney, accountant, or State or Federal contractor; (viii) Customer-initiated financial services-related arbitration or civil action against the employee that required action, including settlements, or which resulted in a judgment; and (ix) Fingerprints of the employee, in digital form if practicable, and any appropriate identifying information for submission to the Federal Bureau of Investigation and any governmental agency or entity authorized to receive such information in connection with a State and national criminal history background check; however, fingerprints provided to the Registry that are less than 3 years old may be used to satisfy this requirement. (2) Employee authorizations and attestation. An employee registering as a mortgage loan originator or renewing or updating his or her registration under this part, and not the employing Farm Credit System institution or other employees of the Farm Credit System institution, must: (i) Authorize the Registry and the employing institution to obtain information related to sanctions or findings in any administrative, civil, or criminal action, to which the employee is a party, made by any governmental jurisdiction; (ii) Attest to the correctness of all information required by paragraph (d) of this section, whether submitted by the employee or on behalf of the employee by the employing Farm Credit System institution; and (iii) Authorize the Registry to make available to the public information required by paragraphs (d)(1)(i)(A) and (C), and (d)(1)(ii) through (viii) of this section. (3) Submission of information. A Farm Credit System institution may identify one or more employees of the Farm Credit System institution who may submit the information required by paragraph (d)(1) of this section to the Registry on behalf of the Farm Credit System institution's employees provided that this individual, and any employee delegated such authority, does not act as a mortgage loan originator, consistent with paragraph (e)(1)(i)(F) of this section. In addition, a Farm Credit System institution may submit to the Registry some or all of the information required by paragraphs (d)(1) and (e)(2) of this section for multiple employees in bulk through batch processing in a format to be specified by the Registry, to the extent such batch processing is made available by the Registry. (e) Required Farm Credit System institution information. A Farm Credit System institution must submit the following categories of information to the Registry: (1) Farm Credit System institution record. (i) In connection with the registration of one or more mortgage loan originators: (A) Name, main office address, and business contact information; (B) Internal Revenue Service Employer Tax Identification Number (EIN); (C) Research Statistics Supervision and Discount (RSSD) number, as issued by the Board of Governors of the Federal Reserve System;

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(D) Identification of its primary Federal regulator; (E) Name(s) and contact information of the individual(s) with authority to act as the Farm Credit System institution's primary point of contact for the Registry; (F) Name(s) and contact information of the individual(s) with authority to enter the information required by paragraphs (d)(1) and (e) of this section to the Registry and who may delegate this authority to other individuals. For *44703 the purpose of providing information required by paragraph (e) of this section, this individual and their delegates must not act as mortgage loan originators unless the Farm Credit System institution has 10 or fewer full time or equivalent employees and is not a subsidiary; and (G) If an operating subsidiary of an agricultural credit association, indication that it is a subsidiary and the RSSD number of the parent agricultural credit association. (ii) Attestation. The individual(s) identified in paragraphs (e)(1)(i)(E) and (F) of this section must comply with Registry protocols to verify their identity and must attest that they have the authority to enter data on behalf of the Farm Credit System institution, that the information provided to the Registry pursuant to this paragraph (e) is correct, and that the Farm Credit System institution will keep the information required by this paragraph (e) current and will file accurate supplementary information on a timely basis. (iii) A Farm Credit System institution must update the information required by this paragraph (e) of this section within 30 days of the date that this information becomes inaccurate. (iv) A Farm Credit System institution must renew the information required by paragraph (e) of this section on an annual basis. (2) Employee information. In connection with the registration of each employee who acts as a mortgage loan originator: (i) After the information required by paragraph (d) of this section has been submitted to the Registry, confirmation that it employs the registrant; and (ii) Within 30 days of the date the registrant ceases to be an employee of the Farm Credit System institution, notification that it no longer employs the registrant and the date the registrant ceased being an employee. 12 CFR 610.104 610.104 Policies and procedures. A Farm Credit System institution that employs one or more mortgage loan originators must adopt and follow written policies and procedures designed to assure compliance with this part. These policies and procedures must be appropriate to the nature, size, complexity, and scope of the mortgage lending activities of the Farm Credit System institution, and apply only to those employees acting within the scope of their employment at the Farm Credit System institution. At a minimum, these policies and procedures must: (a) Establish a process for identifying which employees of the Farm Credit System institution are required to be registered mortgage loan originators; (b) Require that all employees of the Farm Credit System institution who are mortgage loan originators be informed of the registration requirements of the S.A.F.E. Act and this part and be instructed on how to comply with such requirements and procedures;

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(c) Establish procedures to comply with the unique identifier requirements in 610.105; (d) Establish reasonable procedures for confirming the adequacy and accuracy of employee registrations, including updates and renewals, by comparisons with its own records; (e) Establish reasonable procedures and tracking systems for monitoring compliance with registration and renewal requirements and procedures; (f) Provide for independent testing for compliance with this part to be conducted at least annually by Farm Credit System institution personnel or by an outside party; (g) Provide for appropriate action in the case of any employee who fails to comply with the registration requirements of the S.A.F.E. Act, this part, or the Farm Credit System institution's related policies and procedures, including prohibiting such employees from acting as mortgage loan originators or other appropriate disciplinary actions; (h) Establish a process for reviewing employee criminal history background reports received pursuant to this part, taking appropriate action consistent with applicable Federal law, including section 5.65(d) of the Farm Credit Act of 1971, as amended, 12 U.S.C. 2277a-14(d) and implementing regulations with respect to these reports, and maintaining records of these reports and actions taken with respect to applicable employees; and (i) Establish procedures designed to ensure that any third party with which the Farm Credit System institution has arrangements related to mortgage loan origination has policies and procedures to comply with the S.A.F.E. Act, including appropriate licensing and/or registration of individuals acting as mortgage loan originators. 12 CFR 610.105 610.105 Use of unique identifier. (a) The Farm Credit System institution shall make the unique identifier(s) of its registered mortgage loan originator(s) available to consumers in a manner and method practicable to the institution. (b) A registered mortgage loan originator shall provide his or her unique identifier to a consumer: (1) Upon request; (2) Before acting as a mortgage loan originator; and (3) Through the originator's initial written communication with a consumer, if any, whether on paper or electronically. 12 CFR PT. 610, APP. A Appendix A to Part 610Examples of Mortgage Loan Originator Activities This Appendix provides examples to aid in the understanding of activities that would cause an employee of a Farm Credit System institution to fall within or outside the definition of mortgage loan originator. The examples in this Appendix are not all inclusive. They illustrate only the issue described and do not illustrate any other issues that may arise under this part. For purposes of the examples below, the term loan refers to a residential mortgage loan.

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(a) Taking a loan application. The following examples illustrate when an employee takes, or does not take, a loan application. (1) Taking an application includes: receiving information provided in connection with a request for a loan to be used to determine whether the consumer qualifies for a loan, even if the employee: (i) Has received the consumer's information indirectly in order to make an offer or negotiate a loan; (ii) Is not responsible for verifying information; (iii) Is inputting information into an online application or other automated system on behalf of the consumer; or (iv) Is not engaged in approval of the loan, including determining whether the consumer qualifies for the loan. (2) Taking an application does not include any of the following activities performed solely or in combination: (i) Contacting a consumer to verify the information in the loan application by obtaining documentation, such as tax returns or payroll receipts; (ii) Receiving a loan application through the mail and forwarding it, without review, to loan approval personnel; (iii) Assisting a consumer who is filling out an application by clarifying what type of information is necessary for the application or otherwise explaining the qualifications or criteria necessary to obtain a loan product; (iv) Describing the steps that a consumer would need to take to provide information to be used to determine whether the consumer qualifies for a loan or otherwise explaining the loan application process; (v) In response to an inquiry regarding a prequalified offer that a consumer has received from a Farm Credit System institution, collecting only basic identifying information about the consumer and forwarding the consumer to a mortgage loan originator; or (vi) Receiving information in connection with a modification to the terms of an existing loan to a borrower as part of the Farm Credit System institution's loss mitigation efforts when the borrower is reasonably likely to default. (b) Offering or negotiating terms of a loan. The following examples are designed to *44704 illustrate when an employee offers or negotiates terms of a loan, and conversely, what does not constitute offering or negotiating terms of a loan. (1) Offering or negotiating the terms of a loan includes: (i) Presenting a loan offer to a consumer for acceptance, either verbally or in writing, including, but not limited to, providing a disclosure of the loan terms after application under the Truth in Lending Act, even if: (A) Further verification of information is necessary; (B) The offer is conditional;

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(C) Other individuals must complete the loan process; or (D) Only the rate approved by the Farm Credit System institution's loan approval mechanism function for a specific loan product is communicated without authority to negotiate the rate. (ii) Responding to a consumer's request for a lower rate or lower points on a pending loan application by presenting to the consumer a revised loan offer, either verbally or in writing, that includes a lower interest rate or lower points than the original offer. (2) Offering or negotiating terms of a loan does not include solely or in combination: (i) Providing general explanations or descriptions in response to consumer queries regarding qualification for a specific loan product, such as explaining loan terminology (i.e., debt-to-income ratio); lending policies (i.e., the loan-to-value ratio policy of the Farm Credit System institution); or product-related services; (ii) In response to a consumer's request, informing a consumer of the loan rates that are publicly available, such as on the Farm Credit System institution's Web site, for specific types of loan products without communicating to the consumer whether qualifications are met for that loan product; (iii) Collecting information about a consumer in order to provide the consumer with information on loan products for which the consumer generally may qualify, without presenting a specific loan offer to the consumer for acceptance, either verbally or in writing; (iv) Arranging the loan closing or other aspects of the loan process, including communicating with a consumer about those arrangements, provided that communication with the consumer only verifies loan terms already offered or negotiated; (v) Providing a consumer with information unrelated to loan terms, such as the best days of the month for scheduling loan closings at the Farm Credit System institution; (vi) Making an underwriting decision about whether the consumer qualifies for a loan; (vii) Explaining or describing the steps or process that a consumer would need to take in order to obtain a loan offer, including qualifications or criteria that would need to be met without providing guidance specific to that consumer's circumstances; or (viii) Communicating on behalf of a mortgage loan originator that a written offer, including disclosures provided pursuant to the Truth in Lending Act, has been sent to a consumer without providing any details of that offer. (c) Offering or negotiating a loan for compensation or gain. The following examples illustrate when an employee does or does not offer or negotiate terms of a loan for compensation or gain. (1) Offering or negotiating terms of a loan for compensation or gain includes engaging in any of the activities in paragraph (b)(1) of this Appendix in the course of carrying out employment duties, even if the employee does not receive a referral fee or commission or other special compensation for the loan. (2) Offering or negotiating terms of a loan for compensation or gain does not include engaging in a seller-financed transaction for the employee's personal property that does not involve the Farm Credit System institution. National Credit Union Administration

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12 CFR Chapter VII Authority and Issuance For the reasons stated in the preamble, the National Credit Union Administration amends chapter VII of title 12 of the Code of Federal Regulations as follows: PART 741REQUIREMENTS FOR INSURANCE 1. The authority citation for part 741 continues to read as follows: Authority: 12 U.S.C. 1757, 1766, 1781-1790, and 1790d. 12 CFR 741.223 2. Add a new 741.223 to subpart B to read as follows: 12 CFR 741.223 741.223 Registration of residential mortgage loan originators. Any credit union which is insured pursuant to Title II of the Act must adhere to the requirements stated in part 761 of this chapter. 3. Add a new part 761 to subchapter A to read as follows: PART 761REGISTRATION OF RESIDENTIAL MORTGAGE LOAN ORIGINATORS Sec. 761.101 Authority, purpose, and scope. 761.102 Definitions. 761.103 Registration of mortgage loan originators. 761.104 Policies and procedures. 761.105 Use of unique identifier. Appendix A to Part 761Examples of Mortgage Loan Originator Activities. Authority: 12 U.S.C. 1751 et seq. and 5101 et seq. PART 761REGISTRATION OF RESIDENTIAL MORTGAGE LOAN ORIGINATORS 12 CFR 761.101 761.101 Authority, purpose, and scope. (a) Authority. This part is issued pursuant to the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, title V of the Housing and Economic Recovery Act of 2008 (S.A.F.E. Act) (Pub. L. 110-289, 122 Stat. 2654, 12 U.S.C. 5101 et seq.).

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(b) Purpose. This part implements the S.A.F.E. Act's Federal registration requirement for mortgage loan originators. The S.A.F.E. Act provides that the objectives of this registration include aggregating and improving the flow of information to and between regulators; providing increased accountability and tracking of mortgage loan originators; enhancing member protections; reducing fraud in the residential mortgage loan origination process; and providing members with easily accessible information at no charge regarding the employment history of, and publicly adjudicated disciplinary and enforcement actions against, mortgage loan originators. (c) Scope(1) In general. This part applies to any Federally insured credit union and its employees, including volunteers, who act as mortgage loan originators. This part also applies to non-Federally insured credit unions and their employees, including volunteers, who act as mortgage loan originators, subject to the conditions in paragraph (c)(3) of this section. (2) Exception. (i) This part and the requirements of 12 U.S.C. 5104(a)(1)(A) and (2) of the S.A.F.E. Act do not apply to any employee of a credit union who has never been registered or licensed through the Registry as a mortgage loan originator if during the past 12 months the employee acted as a mortgage loan originator for 5 or fewer residential mortgage loans. (ii) Prior to engaging in mortgage loan origination activity that exceeds the exception limit in paragraph (c)(2)(i) of this section, a credit union employee must register with the Registry pursuant to this part. (iii) Evasion. Credit unions are prohibited from engaging in any act or practice to evade the limits of the de minimis exception set forth in paragraph (c)(2)(i) of this section. (3) For non-Federally insured credit unions. Non-Federally insured credit unions and their employees who are mortgage loan originators may register under this rule only if: (i) The appropriate State supervisory authorities where non-Federally insured credit unions are located enter into a Memorandum of Understanding (MOU) with the National Credit Union Administration on or before the date NCUA provides in a public notice that the Registry is accepting initial registrations. (ii) The MOU may require non-Federally insured credit unions to pay various fees related to oversight costs and registration costs for the non- *44705 Federally insured credit unions' mortgage loan originators. (iii) Any Nationwide Mortgage Licensing System and Registry listing of a non-Federally insured credit union and its employees must contain a clear and conspicuous statement that the nonFederally insured credit union is not insured by the National Credit Union Share Insurance Fund. (iv) If any State supervisory authority where non-Federally insured credit unions are located fails to enter into or maintain an agreement with the National Credit Union Administration for this registration process and oversight, the non-Federally insured credit unions and their employees in that State cannot register or maintain registration under the Federal system. They instead must use the appropriate State licensing and registration system, or if the State does not have such a system, the licensing and registration system established by the Department of Housing and Urban Department (HUD) for mortgage loan originators and their employees. 12 CFR 761.102 761.102 Definitions. For purposes of this part, the following definitions apply: (a) Annual renewal period means November 1 through December 31 of each year.

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(b)(1) Mortgage loan originator [FN1] means an individual who: FN1 Appendix A of this part provides examples of activities that would, and would not, cause an employee to fall within the definition of mortgage loan originator. (i) Takes a residential mortgage loan application; and (ii) Offers or negotiates terms of a residential mortgage loan for compensation or gain. (2) The term mortgage loan originator does not include: (i) An individual who performs purely administrative or clerical tasks on behalf of an individual who is described in paragraph (b)(1) of this section; (ii) An individual who only performs real estate brokerage activities (as defined in 12 U.S.C. 5102(3)(D)) and is licensed or registered as a real estate broker in accordance with applicable State law, unless the individual is compensated by a lender, a mortgage broker, or other mortgage loan originator or by any agent of such lender, mortgage broker, or other mortgage loan originator, and meets the definition of mortgage loan originator in paragraph (b)(1) of this section; or (iii) An individual or entity solely involved in extensions of credit related to timeshare plans, as that term is defined in 11 U.S.C. 101(53D). (3) Administrative or clerical tasks means the receipt, collection, and distribution of information common for the processing or underwriting of a loan in the residential mortgage industry and communication with a member to obtain information necessary for the processing or underwriting of a residential mortgage loan. (c) Nationwide Mortgage Licensing System and Registry or Registry means the system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the State licensing and registration of State-licensed mortgage loan originators and the registration of mortgage loan originators pursuant to 12 U.S.C. 5107. (d) Registered mortgage loan originator or registrant means any individual who: (1) Meets the definition of mortgage loan originator and is an employee of a credit union; and (2) Is registered pursuant to this part with, and maintains a unique identifier through, the Registry. (e) Residential mortgage loan means any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling (as defined in section 103(v) of the Truth in Lending Act, 15 U.S.C. 1602(v)) or residential real estate upon which is constructed or intended to be constructed a dwelling, and includes refinancings, reverse mortgages, home equity lines of credit and other first and additional lien loans that meet the qualifications listed in this definition. (f) Unique identifier means a number or other identifier that: (1) Permanently identifies a registered mortgage loan originator; (2) Is assigned by protocols established by the Nationwide Mortgage Licensing System and Registry, the Federal banking agencies, and the Farm Credit Administration to facilitate:

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(i) Electronic tracking of mortgage loan originators; and (ii) Uniform identification of, and public access to, the employment history of and the publicly adjudicated disciplinary and enforcement actions against mortgage loan originators; and (3) Must not be used for purposes other than those set forth under the S.A.F.E. Act. 12 CFR 761.103 761.103 Registration of mortgage loan originators. (a) Registration requirement(1) Employee registration. Each employee of a credit union who acts as a mortgage loan originator must register with the Registry, obtain a unique identifier, and maintain this registration in accordance with the requirements of this part. Any such employee who is not in compliance with the registration and unique identifier requirements set forth in this part is in violation of the S.A.F.E. Act and this part. (2) Credit union requirement(i) In general. A credit union that employs one or more individuals who act as a residential mortgage loan originator must require each employee who is a mortgage loan originator to register with the Registry, maintain this registration, and obtain a unique identifier in accordance with the requirements of this part. (ii) Prohibition. A credit union must not permit an employee of the credit union who is subject to the registration requirements of this part to act as a mortgage loan originator for the credit union unless such employee is registered with the Registry pursuant to this part. (3) Implementation period for initial registration. An employee of a credit union who is a mortgage loan originator must complete an initial registration with the Registry pursuant to this part within 180 days from the date that the NCUA provides in a public notice that the Registry is accepting registrations. (4) Employees previously registered or licensed through the Registry(i) In general. If an employee of a credit union was registered or licensed through, and obtained a unique identifier from, the Registry and has maintained this registration or license before the employee becomes subject to this part at this credit union, then the registration requirements of the S.A.F.E. Act and this part are deemed to be met, provided that: (A) The employment information in paragraphs (d)(1)(i)(C) and (d)(1)(ii) of this section is updated and the requirements of paragraph (d)(2) of this section are met; (B) New fingerprints of the employee are submitted to the Registry for a background check, as required by paragraph (d)(1)(ix) of this section, unless the employee has fingerprints on file with the Registry that are less than 3 years old; (C) The credit union information required in paragraphs (e)(1)(i) (to the extent the credit union has not previously met these requirements) and (e)(2)(i) of this section is submitted to the Registry; and (D) The registration is maintained pursuant to paragraphs (b) and (e)(1)(ii) of this section, as of the date that the *44706 employee is employed by the credit union. (ii) Rule for certain acquisitions, mergers, or reorganizations. When registered or licensed mortgage loan originators become credit union employees as a result of an acquisition, merger, or reorganization, the requirements of paragraphs (a)(4)(i)(A), (C), and (D) of this section must be met within 60 days from the effective date of the acquisition, merger, or reorganization.

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(b) Maintaining registration. (1) A mortgage loan originator who is registered with the Registry pursuant to paragraph (a) of this section must: (i) Except as provided in paragraph (b)(3) of this section, renew the registration during the annual renewal period, confirming the responses set forth in paragraphs (d)(1)(i) through (viii) of this section remain accurate and complete, and updating this information, as appropriate; and (ii) Update the registration within 30 days of any of the following events: (A) A change in the name of the registrant; (B) The registrant ceases to be an employee of the credit union; or (C) The information required under paragraphs (d)(1)(iii) through (viii) of this section becomes inaccurate, incomplete, or out-of-date. (2) A registered mortgage loan originator must maintain his or her registration, unless the individual is no longer engaged in the activity of a mortgage loan originator. (3) The annual registration renewal requirement set forth in paragraph (b)(1) of this section does not apply to a registered mortgage loan originator who has completed his or her registration with the Registry pursuant to paragraph (a)(1) of this section less than 6 months prior to the end of the annual renewal period. (c) Effective dates(1) Registration. A registration pursuant to paragraph (a)(1) of this section is effective on the date the Registry transmits notification to the registrant that the registrant is registered. (2) Renewals or updates. A renewal or update pursuant to paragraph (b) of this section is effective on the date the Registry transmits notification to the registrant that the registration has been renewed or updated. (d) Required employee information(1) In general. For purposes of the registration required by this section, a credit union must require each employee who is a mortgage loan originator to submit to the Registry, or must submit on behalf of the employee, the following categories of information, to the extent this information is collected by the Registry: (i) Identifying information, including the employee's: (A) Name and any other names used; (B) Home address and contact information; (C) Principal business location address and business contact information; (D) Social security number; (E) Gender; and (F) Date and place of birth; (ii) Financial services-related employment history for the 10 years prior to the date of registration or renewal, including the date the employee became an employee of the credit union;

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(iii) Convictions of any criminal offense involving dishonesty, breach of trust, or money laundering against the employee or organizations controlled by the employee, or agreements to enter into a pretrial diversion or similar program in connection with the prosecution for such offense(s); (iv) Civil judicial actions against the employee in connection with financial services-related activities, dismissals with settlements, or judicial findings that the employee violated financial services-related statutes or regulations, except for actions dismissed without a settlement agreement; (v) Actions or orders by a State or Federal regulatory agency or foreign financial regulatory authority that: (A) Found the employee to have made a false statement or omission or been dishonest, unfair or unethical; to have been involved in a violation of a financial services-related regulation or statute; or to have been a cause of a financial services-related business having its authorization to do business denied, suspended, revoked, or restricted; (B) Are entered against the employee in connection with a financial services-related activity; (C) Denied, suspended, or revoked the employee's registration or license to engage in a financial services-related activity; disciplined the employee or otherwise by order prevented the employee from associating with a financial services-related business or restricted the employee's activities; or (D) Barred the employee from association with an entity or its officers regulated by the agency or authority or from engaging in a financial services-related business; (vi) Final orders issued by a State or Federal regulatory agency or foreign financial regulatory authority based on violations of any law or regulation that prohibits fraudulent, manipulative, or deceptive conduct; (vii) Revocation or suspension of the employee's authorization to act as an attorney, accountant, or State or Federal contractor; (viii) Customer-initiated financial services-related arbitration or civil action against the employee that required action, including settlements, or which resulted in a judgment; and (ix) Fingerprints of the employee, in digital form if practicable, and any appropriate identifying information for submission to the Federal Bureau of Investigation and any governmental agency or entity authorized to receive such information in connection with a State and national criminal history background check; however, fingerprints provided to the Registry that are less than 3 years old may be used to satisfy this requirement. (2) Employee authorization and attestation. An employee registering as a mortgage loan originator or renewing or updating his or her registration under this part, and not the employing credit union or other employees of the credit union, must: (i) Authorize the Registry and the employing institution to obtain information related to sanctions or findings in any administrative, civil, or criminal action, to which the employee is a party, made by any governmental jurisdiction; (ii) Attest to the correctness of all information required by paragraph (d) of this section, whether submitted by the employee or on behalf of the employee by the employing credit union; and (iii) Authorize the Registry to make available to the public information required by paragraphs

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(d)(1)(i)(A) and (C), and (d)(1)(ii) through (viii) of this section. (3) Submission of information. A credit union may identify one or more employees of the credit union who may submit the information required by paragraph (d)(1) of this section to the Registry on behalf of the credit union's employees provided that this individual, and any employee delegated such authority, does not act as a mortgage loan originator, consistent with (e)(1)(i)(F) of this section. In addition, a credit union may submit to the Registry some or all of the information required by paragraphs (d)(1) and (e)(2) of this section for multiple employees in bulk through batch processing in a format to be specified by the Registry, to the extent such batch processing is made available by the Registry. (e) Required credit union information. A credit union must submit the following categories of information to the Registry: *44707 (1) Credit union record. (i) In connection with the registration of one or more mortgage loan originators: (A) Name, main office address, and business contact information; (B) Internal Revenue Service Employer Tax Identification Number (EIN); (C) Research Statistics Supervision and Discount (RSSD) number, as issued by the Board of Governors of the Federal Reserve System; (D) Identification of its primary Federal regulator; (E) Name(s) and contact information of the individual(s) with authority to act as the credit union's primary point of contact for the Registry; (F) Name(s) and contact information of the individual(s) with authority to enter the information required by paragraphs (d)(1) and (e) of this section to the Registry and who may delegate this authority to other individuals. For the purpose of providing information required by paragraph (e) of this section, this individual and their delegates must not act as mortgage loan originators unless the credit union has 10 or fewer full time or equivalent employees. (ii) Attestation. The individual(s) identified in paragraphs (e)(1)(i)(E) and (F) of this section must comply with Registry protocols to verify their identity and must attest that they have the authority to enter data on behalf of the credit union, that the information provided to the Registry pursuant to this paragraph (e) is correct, and that the credit union will keep the information required by this paragraph (e) current and will file accurate supplementary information on a timely basis. (iii) A credit union must update the information required by this paragraph (e) of this section within 30 days of the date that this information becomes inaccurate. (iv) A credit union must renew the information required by paragraph (e) of this section on an annual basis. (2) Employee information. In connection with the registration of each employee who acts as a mortgage loan originator: (i) After the information required by paragraph (d) of this section has been submitted to the Registry, confirmation that it employs the registrant; and (ii) Within 30 days of the date the registrant ceases to be an employee of the credit union, notification that it no longer employs the registrant and the date the registrant ceased being an

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employee. 761.104 Policies and procedures.

12 CFR 761.104

A credit union that employs one or more mortgage loan originators must adopt and follow written policies and procedures designed to assure compliance with this part. These policies and procedures must be appropriate to the nature, size, complexity, and scope of the mortgage lending activities of the credit union, and apply only to those employees acting within the scope of their employment at the credit union. At a minimum, these policies and procedures must: (a) Establish a process for identifying which employees of the credit union are required to be registered mortgage loan originators; (b) Require that all employees of the credit union who are mortgage loan originators be informed of the registration requirements of the S.A.F.E. Act and this part and be instructed on how to comply with such requirements and procedures; (c) Establish procedures to comply with the unique identifier requirements in 761.105; (d) Establish reasonable procedures for confirming the adequacy and accuracy of employee registrations, including updates and renewals, by comparisons with its own records; (e) Establish reasonable procedures and tracking systems for monitoring compliance with registration and renewal requirements and procedures; (f) Provide for independent testing for compliance with this part to be conducted at least annually by credit union personnel or by an outside party; (g) Provide for appropriate action in the case of any employee who fails to comply with the registration requirements of the S.A.F.E. Act, this part, or the credit union's related policies and procedures, including prohibiting such employees from acting as mortgage loan originators or other appropriate disciplinary actions; (h) Establish a process for reviewing employee criminal history background reports received pursuant to this part, taking appropriate action consistent with applicable Federal law, including section 206 of the Federal Credit Union Act (12 U.S.C. 1786(i)) and implementing regulations with respect to these reports, and maintaining records of these reports and actions taken with respect to applicable employees; and (i) Establish procedures designed to ensure that any third party with which the credit union has arrangements related to mortgage loan origination has policies and procedures to comply with the S.A.F.E. Act, including appropriate licensing and/or registration of individuals acting as mortgage loan originators. 12 CFR 761.105 761.105 Use of unique identifier. (a) The credit union shall make the unique identifier(s) of its registered mortgage loan originator(s) available to members in a manner and method practicable to the credit union. (b) A registered mortgage loan originator shall provide his or her unique identifier to a member: (1) Upon request;

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(2) Before acting as a mortgage loan originator; and (3) Through the originator's initial written communication with a member, if any, whether on paper or electronically. 12 CFR PT. 761, APP. A Appendix A to Part 761Examples of Mortgage Loan Originator Activities This Appendix provides examples to aid in the understanding of activities that would cause an employee of a credit union to fall within or outside the definition of mortgage loan originator. The examples in this Appendix are not all inclusive. They illustrate only the issue described and do not illustrate any other issues that may arise under this part. For the purposes of the examples below, the term loan refers to a residential mortgage loan. (a) Taking a loan application. The following examples illustrate when an employee takes, or does not take, a loan application. (1) Taking an application includes: receiving information provided in connection with a request for a loan to be used to determine whether the member qualifies for a loan, even if the employee: (i) Has received the member's information indirectly in order to make an offer or negotiate a loan; (ii) Is not responsible for further verification of information; (iii) Is inputting information into an online application or other automated system on behalf of the member; or (iv) Is not engaged in approval of the loan, including determining whether the member qualifies for the loan. (2) Taking an application does not include any of the following activities performed solely or in combination: (i) Contacting a member to verify the information in the loan application by obtaining documentation, such as tax returns or payroll receipts; (ii) Receiving a loan application through the mail and forwarding it, without review, to loan approval personnel; (iii) Assisting a member who is filling out an application by clarifying what type of information is necessary for the application or otherwise explaining the qualifications or criteria necessary to obtain a loan product; (iv) Describing the steps that a member would need to take to provide information to be used to determine whether the member qualifies for a loan or otherwise explaining the loan application process; (v) In response to an inquiry regarding a prequalified offer that a member has received from a credit union, collecting only basic identifying information about the member *44708 and forwarding the member to a loan originator; or (vi) Receiving information in connection with a modification to the terms of an existing loan to a

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borrower as part of the credit union's loss mitigation efforts when the borrower is reasonably likely to default. (b) Offering or negotiating terms of a loan. The following examples are designed to illustrate when an employee offers or negotiates terms of a loan, and conversely, what does not constitute offering or negotiating terms of a loan. (1) Offering or negotiating the terms of a loan includes: (i) Presenting a loan offer to a member for acceptance, either verbally or in writing, including, but not limited to, providing a disclosure of the loan terms after application under the Truth in Lending Act, even if: (A) Further verification of information is necessary; (B) The offer is conditional; (C) Other individuals must complete the loan process; or (D) Only the rate approved by the credit union's loan approval mechanism function for a specific loan product is communicated without authority to negotiate the rate. (ii) Responding to a member's request for a lower rate or lower points on a pending loan application by presenting to the member a revised loan offer, either verbally or in writing, that includes a lower interest rate or lower points than the original offer. (2) Offering or negotiating terms of a loan does not include solely or in combination: (i) Providing general explanations or descriptions in response to member queries regarding qualification for a specific loan product, such as explaining loan terminology (i.e., debt-to-income ratio); lending policies (i.e., the loan-to-value ratio policy of the credit union); or product-related services; (ii) In response to a member's request, informing a member of the loan rates that are publicly available, such as on the credit union's Web site, for specific types of loan products without communicating to the member whether qualifications are met for that loan product; (iii) Collecting information about a member in order to provide the member with information on loan products for which the member generally may qualify, without presenting a specific loan offer to the member for acceptance, either verbally or in writing; (iv) Arranging the loan closing or other aspects of the loan process, including communicating with a member about those arrangements, provided that communication with the member only verifies loan terms already offered or negotiated; (v) Providing a member with information unrelated to loan terms, such as the best days of the month for scheduling loan closings at the credit union; (vi) Making an underwriting decision about whether the member qualifies for a loan; (vii) Explaining or describing the steps or process that a member would need to take in order to obtain a loan offer, including qualifications or criteria that would need to be met without providing guidance specific to that member's circumstances; or (viii) Communicating on behalf of a mortgage loan originator that a written offer, including disclosures provided pursuant to the Truth in Lending Act, has been sent to a member without

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providing any details of that offer. (c) Offering or negotiating a loan for compensation or gain. The following examples illustrate when an employee does or does not offer or negotiate terms of a loan for compensation or gain. (1) Offering or negotiating terms of a loan for compensation or gain includes engaging in any of the activities in paragraph (b)(1) of this Appendix in the course of carrying out employment duties, even if the employee does not receive a referral fee or commission or other special compensation for the loan. (2) Offering or negotiating terms of a loan for compensation or gain does not include engaging in a seller-financed transaction for the employee's personal property that does not involve the credit union. Dated: December 23, 2009. John C. Dugan, Comptroller of the Currency. By order of the Board of Governors of the Federal Reserve System, July 13, 2010. Jennifer J. Johnson, Secretary of the Board. By order of the Board of Directors. Dated at Washington, DC the 14th day of July, 2010. Robert E. Feldman, Executive Secretary, Federal Deposit Insurance Corporation. Dated: May 12, 2010. By the Office of Thrift Supervision. John E. Bowman, Acting Director. Dated: April 15, 2010. Roland E. Smith, Secretary, Farm Credit Administration Board.

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Dated: April 10, 2010. Mary F. Rupp, Secretary to the Board, National Credit Union Administration. Editorial Note: This document was received in the Office of the Federal Register on July 20, 2010.

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PROPOSED RULES DEPARTMENT OF THE TREASURY Office of the Comptroller of the Currency 12 CFR Part 34 [Docket ID OCC-2009-0005] RIN 1557-AD23 FEDERAL RESERVE SYSTEM 12 CFR Part 208 [Docket No. R-1357] FEDERAL DEPOSIT INSURANCE CORPORATION 12 CFR Part 365 RIN 3064-AD43 DEPARTMENT OF THE TREASURY Office of Thrift Supervision 12 CFR Part 563 [Docket No. 2009-0004] RIN 1550-AC33 FARM CREDIT ADMINISTRATION 12 CFR Part 610 RIN 3052-AC52 NATIONAL CREDIT UNION ADMINISTRATION 12 CFR Part 761 RIN 3133-AD59 Registration of Mortgage Loan Originators Tuesday, June 9, 2009 AGENCIES: Office of the Comptroller of the Currency, Treasury (OCC); Board of Governors of the Federal Reserve System (Board); Federal Deposit Insurance Corporation (FDIC); Office of Thrift Supervision, Treasury (OTS); Farm Credit Administration (FCA); and National Credit Union Administration (NCUA).

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*27386 ACTION: Joint notice of proposed rulemaking. SUMMARY: The OCC, Board, FDIC, OTS, FCA, and NCUA (collectively, the Agencies) are proposing amendments to their rules to implement the Secure and Fair Enforcement for Mortgage Licensing Act (the S.A.F.E. Act). The S.A.F.E. Act requires an employee of a bank, savings association, credit union or other depository institution and their subsidiaries regulated by a Federal banking agency or an employee of an institution regulated by the FCA (collectively, Agency-regulated institutions) who acts as a residential mortgage loan originator to register with the Nationwide Mortgage Licensing System and Registry (Registry), obtain a unique identifier, and maintain this registration. This proposal implements these requirements. It also provides that Agency-regulated institutions must require their employees who act as residential mortgage loan originators to comply with the S.A.F.E. Act's requirements to register and obtain a unique identifier and must adopt and follow written policies and procedures designed to assure compliance with these requirements. DATES: Comments must be received on or before July 9, 2009. Comments on the Paperwork Reduction Act analysis set forth in Part II of the Regulatory Analysis Section of this Federal Register notice must be received on or before August 10, 2009. ADDRESSES: Commenters that direct comments to more than one Agency may send comments to any of the Agencies and need not send copies of the same comment letter to all of the Agencies. Commenters are encouraged to use the title Registration of Mortgage Loan Originators to facilitate the organization and distribution of comments among the Agencies. Interested parties are invited to submit written comments to: Office of the Comptroller of the Currency: Because paper mail in the Washington, DC area and at the OCC is subject to delay, commenters are encouraged to submit comments by the Federal eRulemaking Portal or e-mail, if possible. Please use the title Registration of Mortgage Loan Originators to facilitate the organization and distribution of the comments. You may submit comments by any of the following methods: Federal eRulemaking PortalRegulations.gov: Go to http:// www.regulations.gov, under the More Search Options tab click next to the Advanced Docket Search option where indicated, select Comptroller of the Currency from the agency drop-down menu, then click Submit. In the Docket ID column, select OCC-2009-0005 to submit or view public comments and to view supporting and related materials for this proposal. The How to Use This Site link on the Regulations.gov home page provides information on using Regulations.gov, including instructions for submitting or viewing public comments, viewing other supporting and related materials, and viewing the docket after the close of the comment period. E-mail: regs.comments@occ.treas.gov. Mail: Office of the Comptroller of the Currency, 250 E Street, SW., Mail Stop 2-3, Washington, DC 20219. Fax: (202) 874-5274. Hand Delivery/Courier: 250 E Street, SW., Mail Stop 2-3, Washington, DC 20219. Instructions: You must include OCC as the agency name and Docket Number OCC-2009-0005 in your comment. In general, OCC will enter all comments received into the docket and publish them on the Regulations.gov Web site without change, including any business or personal information that you provide such as name and address information, e-mail addresses, or phone numbers. Comments received, including attachments and other supporting materials, are part of the public record and subject to public disclosure. Do not enclose any information in your comment or supporting materials that you consider confidential or inappropriate for public disclosure.

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You may review comments and other related materials that pertain to this proposal by any of the following methods: Viewing Comments Electronically: Go to http://www.regulations.gov, under the More Search Options tab click next to the Advanced Document Search option where indicated, select Comptroller of the Currency from the agency drop-down menu, then click Submit. the In Docket ID column, select OCC-2009-0005 to view public comments for this rulemaking action. Viewing Comments Personally: You may personally inspect and photocopy comments at the OCC, 250 E Street, SW., Washington, DC. For security reasons, the OCC requires that visitors make an appointment to inspect comments. You may do so by calling (202) 874-4700. Upon arrival, visitors will be required to present valid government-issued photo identification and submit to security screening in order to inspect and photocopy comments. Docket: You may also view or request available background documents and project summaries using the methods described above. Board of Governors of the Federal Reserve System: You may submit comments, identified by Docket No. R-1357, by any of the following methods: Agency Web Site: http://www.federalreserve.gov. Follow the instructions for submitting comments at http:// www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm. *27387 Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments. E-mail: regs.comments@federalreserve.gov. Include the docket number in the subject line of the message. Fax: (202) 452-3819 or (202) 452-3102. Mail: Address to Jennifer J. Johnson, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, NW., Washington, DC 20551. All public comments will be made available on the Board's Web site at http:// www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as submitted, unless modified for technical reasons. Accordingly, comments will not be edited to remove any identifying or contact information. Public comments may also be viewed electronically or in paper in Room MP-500 of the Board's Martin Building (20th and C Streets, NW.) between 9 a.m. and 5 p.m. on weekdays. Federal Deposit Insurance Corporation: You may submit comments, identified by RIN number, by any of the following methods: Agency Web site: http://www.FDIC.gov/regulations/laws/federal/notices.html. Follow instructions for submitting comments on the Agency Web site. E-mail: Comments@FDIC.gov. Include the RIN number on the subject line of the message. Mail: Robert E. Feldman, Executive Secretary, Attention: Comments, Federal Deposit Insurance Corporation, 550 17th Street, NW., Washington, DC 20429. Hand Delivery: Comments may be hand delivered to the guard station at the rear of the 550 17th Street Building (located on F Street) on business days between 7 a.m. and 5 p.m.

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Instructions: All comments received must include the agency name and RIN for this rulemaking and will be posted without change to http:// www.fdic.gov/regulations/laws/federal/propose.html, including any personal information provided. Office of Thrift Supervision: You may submit comments, identified by OTS-2009-0004, by any of the following methods: Federal eRulemaking PortalRegulations.gov: Go to http:// www.regulations.gov, under the more Search Options tab click next to the Advanced Docket Search option where indicated, select Office of Thrift Supervision from the agency drop-down menu, then click Submit. In the Docket ID column, select OTS-2009-0004 to submit or view public comments and to view supporting and related materials for this proposed rulemaking. The How to Use This Site link on the Regulations.gov home page provides information on using Regulations.gov, including instructions for submitting or viewing public comments, viewing other supporting and related materials, and viewing the docket after the close of the comment period. E-mail address: regs.comments@ots.treas.gov. Please include OTS-2009-0004 in the subject line of the message and include your name and telephone number in the message. Mail: Regulation Comments, Chief Counsel's Office, Office of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552, Attention: OTS-2009-0004. Facsimile: (202) 906-6518. Hand Delivery/Courier: Guard's Desk, East Lobby Entrance, 1700 G Street, NW., from 9 a.m. to 4 p.m. on business days, Attention: Regulation Comments, Chief Counsel's Office, Attention: OTS-2009-0004. Instructions: All submissions received must include the agency name and docket number for this rulemaking. All comments received will be entered into the docket and posted on Regulations.gov without change, including any personal information provided. Comments, including attachments and other supporting materials received, are part of the public record and subject to public disclosure. Do not enclose any information in your comment or supporting materials that you consider confidential or inappropriate for public disclosure. Viewing Comments On-Site: You may inspect comments at the Public Reading Room, 1700 G Street, NW., by appointment. To make an appointment for access, call (202) 906-5922, send an e-mail to public.info@ots.treas.gov, or send a facsimile transmission to (202) 906-6518. (Prior notice identifying the materials you will be requesting will assist us in serving you.) We schedule appointments on business days between 10 a.m. and 4 p.m. In most cases, appointments will be available the next business day following the date we receive a request. Farm Credit Administration: We offer a variety of methods to receive your comments. For accuracy and efficiency reasons, commenters are encouraged to submit comments by e-mail or through the FCA's Web site or the Federal eRulemaking Portal. As faxes are difficult for us to process and achieve compliance with section 508 of the Rehabilitation Act, we are no longer accepting comments submitted by fax. Regardless of the method you use, please do not submit your comment multiple times via different methods. You may submit comments by any of the following methods: E-mail: Send us an e-mail at reg-comm@fca.gov. FCA Web site: http://www.fca.gov. Select Public Commenters, then Public Comments, and follow the directions for Submitting a Comment.

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Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments. Mail: Gary K. Van Meter, Deputy Director, Office of Regulatory Policy, Farm Credit Administration, 1501 Farm Credit Drive, McLean, VA 22102-5090. You may review copies of comments we received at our office in McLean, Virginia, or from our Web site at http: //www.fca.gov. Once you are in the Web site, select Public Commenters, then Public Comments, and follow the directions for Reading Submitted Public Comments. We will show your comments as submitted, but for technical reasons we may omit items such as logos and special characters. Identifying information that you provide, such as phone numbers and addresses, will be publicly available. However, we will attempt to remove e-mail addresses to help reduce Internet spam. National Credit Union Administration: You may submit comments by any of the following methods (please send comments by one method only): Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments. NCUA Web Site: http://www.ncua.gov/RegulationsOpinionsLaws/proposedregs/proposedregs.html. Follow the instructions for submitting comments. E-mail: Address to regcomments@ncua.gov. Include [Your name] Comments on Notice of Proposed Rulemaking Part 761, Registration of Mortgage Loan Originators in the e-mail subject line. Fax: (703) 518-6319. Use the subject line described above for e-mail. Mail: Address to Mary Rupp, Secretary of the Board, National Credit Union Administration, 1775 Duke Street, Alexandria, VA 22314-3428. Hand Delivery/Courier: Address to Mary Rupp, Secretary of the Board, National Credit Union Administration. Deliver to guard station in the lobby of 1775 Duke Street, Alexandria, VA 223143428, on business days between 8 a.m. and 5 p.m. *27388 Public inspection: All public comments are available on the agency's Web site at http://www.ncua.gov/RegulationsOpinionsLaws/comments as submitted, except as may not be possible for technical reasons. Public comments will not be edited to remove any identifying or contact information. Paper copies of comments may be inspected in NCUA's law library, at 1775 Duke Street, Alexandria, VA 22314, by appointment weekdays between 9 a.m. and 3 p.m. To make an appointment, call (703) 518-6546 or send an e-mail to OGCMail@ncua.gov. FOR FURTHER INFORMATION CONTACT: OCC: Michele Meyer, Assistant Director, and Heidi Thomas, Special Counsel, Legislative and Regulatory Activities, (202) 874-5090, and Nan Goulet, Senior Advisor, Large Bank Supervision, (202) 874-5224, Office of the Comptroller of the Currency, 250 E Street, SW., Washington, DC 20219. BOARD: Anne Zorc, Counsel, Legal Division, (202) 452-3876, Virginia Gibbs, Senior Supervisory Analyst, (202) 452-2521, and Stanley Rediger, Supervisory Financial Analyst, (202) 452-2629, Division of Banking Supervision and Regulation, Board of Governors of the Federal Reserve System, 20th and C Streets, NW., Washington, DC 20551. FDIC: Thomas F. Lyons, Examination Specialist, (202) 898-6850, Victoria Pawelski, Policy

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Analyst, (202) 898-3571, or John P. Kotsiras, Financial Analyst, (202) 898-6620, Division of Supervision and Consumer Protection; or Richard Foley, Counsel, (202) 898-3784, or Kimberly A. Stock, Counsel, (202) 898-3815, Legal Division, Federal Deposit Insurance Corporation, 550 17th Street, NW., Washington, DC 20429. OTS: Charlotte M. Bahin, Special Counsel (Special Projects), (202) 906-6452, Vicki HawkinsJones, Special Counsel, Regulations and Legislation Division, (202) 906-7034, Debbie Merkle, Project Manager, Credit Risk, (202) 906-5688, and Rhonda Daniels, Senior Compliance Program Analyst, Consumer Regulations, (202) 906-7158, Office of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552. FCA: Gary K. Van Meter, Deputy Director, Office of Regulatory Policy, Farm Credit Administration, 1501 Farm Credit Drive, McLean, VA, (703) 883-4414, TTY (703) 883-4434; Richard A. Katz, Senior Counsel, Office of General Counsel, Farm Credit Administration, McLean, VA 22102-5090, (703) 883-4020, TTY (703) 883-4020; or Jennifer Cohn, Senior Counsel, Office of General Counsel, Farm Credit Administration, McLean, VA 22102-5090, (703) 883-4020, TTY (703) 883-4020. NCUA: Regina Metz, Staff Attorney, Office of General Counsel, at the above address or 703-5186561; or Roger Blake, Program Officer, Division of Supervision, Examination & Insurance, at the above address or 703-518-6385. SUPPLEMENTARY INFORMATION: I. Background A. Statutory Requirements The S.A.F.E. Act,[FN1] enacted on July 30, 2008, mandates a nationwide licensing and/or registration system for mortgage loan originators. Specifically, the Act requires all States to provide for a licensing regime for mortgage loan originators within one year of enactment (or two years for States whose legislatures meet biennially) and prohibits an individual employed by a State-regulated institution from engaging in the business of residential mortgage loan origination without first obtaining and maintaining a license and registration and obtaining a unique identifier (State licensing).[FN2] FN1 The S.A.F.E. Act was enacted as part of the Housing and Economic Recovery Act of 2008, Public Law 110-289, Division A, Title V, sections 1501-1517, 122 Stat. 2654, 2810-2824 (July 30, 2008), codified at 12 U.S.C. 5101-5116. Citations in this preamble are to the S.A.F.E. Act by section number in the public law. FN2 If the Secretary of Housing and Urban Development (HUD) determines that any State fails, within the statutorily prescribed time frame, to establish a licensing regime that meets the requirements of the S.A.F.E. Act, the Secretary is required to establish a system for the licensing and registration of mortgage loan originators in that State. S.A.F.E. Act at section 1508. HUD has reviewed the model legislation developed by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators to assist States in meeting the minimum requirements of the S.A.F.E. Act and found it to meet these requirements. See 74 FR 312 (Jan. 5, 2009) and http:// www.hud.gov/offices/hsg/sfh/mps/smlicact.cfm. With respect to mortgage loan originators employed by Agency-regulated institutions, the Act requires the OCC, Board, FDIC, OTS and NCUA,[FN3] through the Federal Financial Institutions Examination Council (FFIEC), and the FCA to develop and maintain a Federal registration system, and to implement this system by July 29, 2009 (Federal registration). The S.A.F.E. Act specifically prohibits an individual employed by an Agency-regulated institution from engaging in the business of residential mortgage loan origination without first obtaining and maintaining

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annually a registration as a registered mortgage loan originator and obtaining a unique identifier. This rulemaking implements these requirements for Agency-regulated institutions. FN3 The OCC, Board, FDIC, OTS, and NCUA are referred to both in the S.A.F.E. Act and in this rulemaking as the Federal banking agencies. The S.A.F.E. Act requires that Federal registration and State licensing and registration must be accomplished through the Registry. The S.A.F.E. Act provides that the objectives of the Registry, among other things, are to aggregate and improve the flow of information to and between regulators; provide increased accountability and tracking of mortgage loan originators; enhance consumer protections; reduce fraud in the residential mortgage loan origination process; and provide consumers with easily accessible information at no charge regarding the employment history of, and publicly adjudicated disciplinary and enforcement actions against, mortgage loan originators.[FN4] FN4 See S.A.F.E. Act at section 1502. The S.A.F.E. Act specifically requires the Agencies to jointly develop and maintain a system for registering mortgage loan originators employed by Agency-regulated institutions with the Registry. In connection with this registration, the Agencies at a minimum must furnish or cause to be furnished to the Registry information concerning the mortgage loan originator's identity, including: (1) Fingerprints for submission to the Federal Bureau of Investigation (FBI) and any other relevant governmental agency for a State and national criminal background check; and (2) personal history and experience, including authorization for the Registry to obtain information related to any administrative, civil, or criminal findings by any governmental jurisdiction.[FN5] FN5 Id. at section 1507(a). B. Implementing the Requirements for Federal Registration The Registry is a Web-based system developed and maintained by the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR). The Registry was launched in January of 2008 for State licensing and registration purposes in participating States.[FN6] Mortgage loan originators in *27389 those States complete a single uniform form (known as the MU4) electronically. The data provided on the form is stored electronically in a secure, centralized repository available to State mortgage regulators who use it to process license applications and for supervisory purposes. FN6 As of the date of this proposal, 26 States use this system to manage the processing of their mortgage licenses. This system is owned and operated by the State Regulatory Registry LLC (SRR), a limited-liability company established by CSBS as a wholly-owned subsidiary to develop and operate nationwide systems for State regulators in the financial services industry, and has been built and is maintained by the Financial Industry Regulatory Authority (FINRA), which operates similar systems in the securities industry. To obtain more information on this system, see http:// www.stateregulatoryregistry.org. (For purposes of this rulemaking, reference to the Registry refers, as applicable, to the system itself and to CSBS and SRR.) The Federal banking agencies, through the FFIEC, and the FCA are working with CSBS to modify the Registry so that it can accept registrations from mortgage loan originators employed by Agency-regulated institutions. As indicated above, the Registry currently supports the licensing of State mortgage lending institutions and their mortgage loan originators, a process that involves State authorization of individuals to engage in mortgage loan origination. It was not originally designed to support the Federal registration of Agency-regulated institution employees, who do not need additional authorization from the appropriate Federal agency to engage in mortgage loan origination activities. Furthermore, the S.A.F.E. Act requires new enhancements to the current system, such as public access to certain mortgage loan originator data and processing of

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fingerprints through the Registry. These differences between the current Registry and the Federal registration system required by the S.A.F.E. Act, as well as the resulting modifications necessary to support both State licensing and Federal registration functions, require careful analysis and raise complex legal and system development issues that the Agencies are addressing through both this rulemaking and modifications to the Registry. These issues include: Consistency of data requirements for mortgage loan originators subject to Agency jurisdiction and those subject to State jurisdiction; modification to Web-page navigation in the current system; registration functionality for the anticipated hundreds of thousands of Federal registrants; Federal procurement and contracting issues; data privacy and security requirements; and protocols for submitting mortgage loan originators' fingerprints to the FBI. Furthermore, the modified system is expected to support mortgage loan originators who move between the Federal registration and the State licensing regimes due to employment changes or who are licensed under one or more State regimes and also registered under the Federal regime.[FN7] The Agencies and CSBS have made substantial progress in resolving these issues, and the Agencies expect to enter into an agreement with the Registry that will provide for appropriate consultation between the Agencies and the Registry concerning registrant information requirements and fees, system functionality and security, and other operational matters. However, final determination of system costs, funding, design, development and deployment will not be completed until after the Agencies adopt a final rule establishing registration requirements. FN7 The Agencies note that some employees of Agency-regulated institutions may also be subject to the State licensing and registration regime. For example, employees who act as mortgage loan originators for a bank and a nondepository subsidiary of a bank holding company would be subject to both regimes. This proposal provides for a 180-day period within which to complete initial registrations after the Registry is capable of accepting registrations from employees of Agency-regulated institutions. During this period, employees of Agency-regulated institutions would not be subject to sanctions if they originate residential mortgage loans without having completed their registration. The Agencies expect that this time period would provide mortgage loan originators and the Agency-regulated institutions that employ them adequate opportunity to prepare for the registrations required under this proposal. The Agencies intend to make a formal public announcement, in advance, of the date when the Registry will begin accepting registrations from employees of Agency-regulated institutions. When fully operational, mortgage loan originators and their Agency-regulated institution employers are expected to have access to the Registry, seven days a week, to establish and maintain their registrations. Furthermore, the CSBS plans to phase-in system enhancements to provide consumers with access to certain information from the Registry in order for them to obtain information on State-licensed and Federally-registered mortgage loan originators. As indicated above, and consistent with the S.A.F.E. Act, the Registry will not screen or approve registrations received from employees of Agency-regulated institutions. Instead, it will be the repository of, and conduit for, information on those employees who are mortgage loan originators at Agency-regulated institutions. As provided in .104(d) and (h) of the proposed rule, it will be the responsibility of the Agency-regulated institution to review its employees' submissions as well as any reports received from the Registry. II. Overview of the Proposal The proposed rule implements the S.A.F.E. Act's requirements with respect to Agency-regulated institutions. It requires individuals employed by these institutions who act as mortgage loan originators to register with the Registry, obtain unique identifiers, and maintain their registrations. The proposal also directs Agency-regulated institutions to require compliance with these requirements. Furthermore, the proposal requires Agency-regulated institutions to adopt and follow written policies and procedures to assure such compliance.

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A detailed section-by-section description of this proposal with a request for comments is set forth below. III. Section-by-Section Description of the Proposed Rule Section .101Authority, Purpose, and Scope Section .101 [FN8] states that this rule implements the S.A.F.E. Act's Federal registration requirements, which apply to individuals who originate residential mortgage loans, and describes the objectives of the S.A.F.E. Act's registration mandate. This section also identifies the entities that employ individual mortgage loan originatorsentities referred to in this preamble discussion as Agency-regulated institutionsand that also are covered by this proposal. Under the S.A.F.E. Act, a mortgage loan originator must be Federally-registered if that individual is an employee of a depository institution, an employee of any subsidiary owned and controlled by a depository institution and regulated by a Federal banking agency, or an employee of an institution regulated by the FCA. Collectively, the Agencies' proposed rule applies to a depository institution, any subsidiary of a depository institution that is regulated by a Federal banking agency, and an institution regulated by the FCA. Section 1503(2) of the S.A.F.E. Act provides that depository institution has the same meaning as in section 3 of the Federal Deposit Insurance Act (FDI Act),[FN9] and *27390 includes any credit union. The Agencies note that because the definition of depository institution in the FDI Act and in the S.A.F.E. Act does not include bank or savings association holding companies or their non-depository subsidiaries, employees of these entities who act as mortgage loan originators are not covered by the Federal registration requirement and, therefore, must comply with State registration and licensing requirements. FN8 Because each Agency's proposed rule will amend a different part of the Code of Federal Regulations but will have a similar numbering, relevant sections are cited, for example, as .101 unless otherwise noted. FN9 Section 3 of the FDI Act defines depository institution as any bank or savings association. The term bank in section 3 of the FDI Act means any national bank, State bank, Federal branch, and insured branch and includes any former savings association. The term savings association means any Federal savings association, state savings association, and any corporation other than a bank that the FDIC and the OTS jointly determine to be moperating in substantially the same manner as a savings association. 12 U.S.C. 1813. Each Agency's proposed rule indicates the specific entities covered by the proposal. With respect to the OCC, this rule applies to national banks, Federal branches and agencies of foreign banks, their operating subsidiaries, and their employees who are mortgage loan originators.[FN10] For the Board, this rule applies to member banks of the Federal Reserve System (other than national banks), their respective subsidiaries that are not functionally regulated within the meaning of section 5(c)(5) of the Bank Holding Company Act, as amended (12 U.S.C. 1844(c)(5)); and branches and agencies of foreign banks (other than Federal branches, Federal agencies and insured State branches of foreign banks) and commercial lending companies owned or controlled by foreign banks [FN11] and their employees who act as mortgage loan originators. For the FDIC, this rule applies to insured State nonmember banks (including State-licensed insured branches of foreign banks) and their subsidiaries (except brokers, dealers, persons providing insurance, investment companies, and investment advisers) and their employees who are mortgage loan originators. For the OTS, this rule applies to savings associations and their operating subsidiaries, and their employees who are mortgage loan originators. For the FCA, this rule applies to Farm Credit System (FCS or System) institutions that originate residential mortgage loans under sections 1.9(3), 1.11 and 2.4(a)(2) and (b) of the Farm Credit Act of 1971, as amended, 12 U.S.C. 2017(3), 2019, and 2075(a)(2) and (b), and their employees who are mortgage loan originators.[FN12] For the NCUA, this rule applies to Federally-insured credit unions and their employees who are mortgage loan originators.

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FN10 The S.A.F.E. Act's definition of depository institution includes Federal branches of foreign banks but not Federal agencies of foreign banks. However, the OCC has applied the Federal registration requirements to these entities because they are Federally regulated and have the authority to originate residential mortgage loans and, therefore, should not be treated differently from other Federally regulated or Federally insured institutions. FN11 The Board notes that it proposes to cover branches and agencies of foreign banks (other than Federal branches, Federal agencies and insured State branches of foreign banks); and commercial lending companies owned or controlled by foreign banks pursuant to its authority under the International Banking Act (IBA) (Chapter 32 of Title 12) to issue such rules it deems necessary in order to perform its respective duties and functions under the chapter and to administer and carry out the provisions and purposes of the chapter and prevent evasions thereof. 12 U.S.C. 3108(a). The Board notes that the IBA provides, in relevant part, that the above entities shall conduct their operations in the United States in full compliance with provisions of any law of the United States which imposes requirements that protect the rights of consumers in financial transactions, to the extent that the branch, agency, or commercial lending company engages in activities that are subject to such laws, and apply to State-chartered banks, doing business in the State in which such branch or agency or commercial lending company, as the case may be, is doing business. 12 U.S.C. 3106a(b)(1). Under the Board's proposal the above entities would be subject to the same Federal registration requirements as Federal branches, Federal agencies and insured State branches of foreign banks, which are covered in the OCC and FDIC rules, respectively. FN12 Some FCS associations may not exercise their statutory authority to make residential mortgage loans, and FCS banks no longer engage in residential mortgage origination activities because they have transferred their direct lending authority to their affiliated associations. The FCA emphasizes that employees of FCS banks and associations that do not engage in residential mortgage loan origination activities are not subject to the registration requirements of the S.A.F.E. and these regulations. The Federal Agricultural Mortgage Corporation (Farmer Mac) is an FCS institution that among other activities operates a secondary market for rural residential mortgage loans. The FCA determines that Farmer Mac employees are not subject to the registration requirements of the S.A.F.E. Act and these implementing regulations because Farmer Mac does not engage in mortgage loan origination activities for rural residents. The Farmer Mac secondary market is modeled after Fannie Mae and Freddie Mac, and the provisions of the S.A.F.E. Act do not expressly apply to employees at Fannie Mae and Freddie Mac. Section 1507 of the S.A.F.E. Act requires the Federal banking agencies to make such de minimis exceptions as may be appropriate to the Act's requirements to register and obtain a unique identifier.[FN13] Section .101(c)(2) of the proposed rule states that these registration requirements do not apply to an employee of an Agency-regulated institution if during the last 12 months: (1) The employee acted as a mortgage loan originator for 5 or fewer residential mortgage loans; and (2) the Agency-regulated institution employs mortgage loan originators who, while excepted from registration pursuant to this section, in the aggregate, acted as a mortgage loan originator in connection with 25 or fewer residential mortgage loans.[FN14] An employee must register with the Registry prior to engaging in mortgage loan origination activity that exceeds either the individual or aggregate limit. The Agencies solicit comment on whether the proposed exception adequately and appropriately covers circumstances that are truly de minimis and whether any de minimis exception is appropriate. [FN15] FN13 See S.A.F.E. Act at sections 1507(c) (de minimis exceptions), 1504(a)(1)(A) (requirement to register), 1504(a)(2) (requirement to obtain a unique identifier). FN14 For example, assume an Agency-regulated institution has six employees, A, B, C, D, E, and F who are not registered loan originators for an Agency-regulated institution. Employees A, B, C, and D have acted as mortgage loan originators on five mortgage loans each during the same 12-

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month period, while employee E has acted as a mortgage loan originator with respect to four mortgage loans during this same time. Employee F has not acted as a mortgage loan originator during this 12-month period. The institution has not exceeded its aggregate exception limit of 25 mortgage loans. Employees A, B, C, and D must register before acting as a mortgage loan originator with respect to any additional mortgage loan during this 12-month period because any one of them would exceed the individual exception limit of five mortgage loans each. Employee E, who has acted as a mortgage loan originator with respect to four loans may act as a mortgage loan originator with respect to one more loan because he or she would not exceed the individual exception limit of five mortgage loans and the institution would not exceed the aggregate exception limit of 25 mortgage loans. After employee E acts as a mortgage loan originator with respect to his or her fifth loan, and the 25th loan for the institution, the exception in .101(c) is no longer available to any employee (A, B, C, D, E, or F) who acts as a mortgage loan originator at the institution during this 12-month period. FN15 The FCA joins the Federal banking agencies in proposing a de minimis exception pursuant to its authority under section 5.17(a)(11) of the Farm Credit Act of 1971, as amended, 12 U.S.C. 2252(a)(11) to exercise such incidental powers as may be necessary or appropriate to fulfill its duties * * * In this case, the FCA is exercising its incidental powers to fulfill the requirement in the S.A.F.E. Act that it work together the Federal banking agencies to develop and maintain a system for registering residential mortgage loan originators at Agency-regulated institutions with the Registry. A coordinated and uniform approach to the de minimis exception among the Agencies is appropriate because it best fulfills the objectives of the S.A.F.E. Act. In addition, the Agencies specifically invite comment on: whether the individual and institutionwide limits on the number of residential mortgage loans for which employees may act as a mortgage loan originator without registering and obtaining a unique identifier are appropriate; whether the proposed exception is adequately structured to prevent manipulation or gaming of the registration requirements; whether an institution should aggregate its residential mortgage loans with its subsidiaries when calculating the number of mortgage loans originated for purposes of this exception; whether monitoring for compliance with the proposed exception would be unduly burdensome for Agency-regulated institutions, and if so, how such burden could be minimized; and whether the proposed exception is consistent with the *27391 consumer protection and fraud prevention purposes of the S.A.F.E. Act. The Agencies also solicit comment on whether an asset-based threshold is appropriate or whether other types of limits or thresholds, or other ways of structuring a de minimis exception, would be more appropriate. For example, should the proposed de minimis exception be applicable only to Agency-regulated institutions with total assets that do not exceed the amount that the Board establishes annually for banks, savings associations, and credit unions as an exception from the Home Mortgage Disclosure Act (HMDA)? [FN16] FN16 For 2009, that amount is $39 million. See 73 FR 78616 (Dec. 23, 2008). Pursuant to the HMDA (12 U.S.C. 2808) and Board Regulation C (12 CFR 203.2(e)(1)(i)), the asset-size threshold is adjusted annually based on year-to-year changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers. Furthermore, please provide comment on whether alternatively, or in addition to the foregoing, a de minimis exception should be crafted to be event specific. For example, a de minimis exception might provide that the registration requirements would not apply to an employee who does not regularly function as a mortgage loan originator and who originates no more than a small number of loans within a 12-month period during the absence (such as vacation or illness) of the individual that regularly functions as the Agency-regulated institution's mortgage loan originator. The Agencies note that the de minimis exception contained in the proposed rule would be voluntary; it would not prevent a mortgage loan originator who meets the criteria for the exception from registering with the Registry if the originator chooses to do so or if his or her

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employer requires registration. Section .102Definitions Section .102 defines the various terms used in the proposal. If a term is defined in the S.A.F.E. Act, the proposal generally incorporates that definition. The proposal has adopted other definitions used by the Registry in order to promote consistency and comparability, insofar as is feasible, between Federal registration requirements and the States' licensing requirements. Annual renewal period. The proposal requires that a mortgage loan originator renew his or her registration annually during the annual renewal period. The annual renewal period is November 1 through December 31 of each calendar year and a registered mortgage loan originator must renew during this period regardless of the date of the initial registration. For example, an employee who registered in October 2010 would have to renew between November 1, 2010 and December 31, 2010. This is the same annual renewal period provided to State mortgage loan originators by the Registry. However, the Agencies and the Registry are discussing whether an alternate annual renewal period for Agency-regulated institutions at a different time of year from the annual renewal period of the State mortgage loan originators may be more desirable from a technical and operational standpoint. For example the final rule may designate the annual renewal period during another two-month time period during the year instead of the proposed renewal period. Furthermore, the Agencies are considering whether the rule should provide for a method in which the rule's registration requirements may be temporarily waived, or the initial registration or renewal period extended, in case of emergency, systems malfunction, or other event beyond the control of the Agency-regulated institution or the mortgage loan originator. Mortgage loan originator. The proposed definition of mortgage loan originator is based on the definition of the term loan originator included in the S.A.F.E. Act at section 1503(3). Specifically, this term means an individual who takes a residential mortgage loan application and offers or negotiates terms of a residential mortgage loan for compensation or gain. The term does not include: (1) Any individual who performs purely administrative or clerical tasks on behalf of an individual who is a mortgage loan originator; (2) any individual performing only real estate brokerage activities (as defined in section 1503(3)(D) of the S.A.F.E. Act) [FN17] and is licensed or registered as a real estate broker in accordance with applicable State law, unless the individual is compensated by a lender, a mortgage broker, or other loan originator or by any agent of such lender, mortgage broker, or other mortgage loan originator, and meets the definition of mortgage loan originator; or (3) any individual or entity solely involved in extensions of credit related to timeshare plans, as that term is defined in 11 U.S.C. 101(53D).[FN18] For purposes of this definition, the proposal defines administrative or clerical tasks to mean: (1) The receipt, collection, and distribution of information common for the processing or underwriting of a residential mortgage loan; and (2) communication with a consumer to obtain information necessary for the processing or underwriting of a residential mortgage loan. The Agencies note that the appendix to the proposal includes examples of the types of activities the Agencies consider to be both within and outside the scope of residential mortgage loan origination activities. FN17 The S.A.F.E. Act defines real estate brokerage activity to mean any activity that involves offering or providing real estate brokerage services to the public, including: (i) Acting as a real estate agent or real estate broker for a buyer, seller, lessor, or lessee of real property; (ii) bringing together parties interested in the sale, purchase, lease, rental, or exchange of real property; (iii) negotiating, on behalf of any party, any portion of a contract relating to the sale, purchase, lease, rental, or exchange of real property (other than in connection with providing financing with respect to any such transaction); (iv) engaging in any activity for which a person engaged in the activity is required to be registered or licensed as a real estate agent or real estate broker under any applicable law; and (v) offering to engage in any activity, or act in any capacity, described in clause (i), (ii), (iii), or (iv). S.A.F.E. Act at 1503(3)(D). Nothing in this proposal would constitute an authorization for Agency-regulated institutions to engage in real

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estate brokerage, or any other activity, for which the institution does not have independent authority pursuant to Federal or State law, as applicable. FN18 Timeshare plan is defined in U.S.C. 101 (53D) as an interest purchased in any 11 arrangement, plan, scheme, or similar device, but not including exchange programs, whether by membership, agreement, tenancy in common, sale, lease, deed, rental agreement, license, right to use agreement, or by any other means, whereby a purchaser, in exchange for consideration, receives a right to use accommodations, facilities, or recreational sites, whether improved or unimproved, for a specific period of time less than a full year during any given year, but not necessarily for consecutive years, and which extends for a period of more than three years. A timeshare interest is that interest purchased in a timeshare plan which grants the purchaser the right to use and occupy accommodations, facilities, or recreational sites, whether improved or unimproved, pursuant to a timeshare plan. To the extent it is within the scope of the S.A.F.E. Act, the Agencies are requesting comment on whether the definition of mortgage loan originator should cover individuals who modify existing residential mortgage loans. If so, the Agencies seek comment on whether these individuals should be excluded from the definition. For example, the Agencies are considering whether the final rule should exclude from this definition persons who modify an existing residential mortgage loan, pursuant to applicable law, provided this modification does not constitute a refinancing (that is, the satisfaction or extinguishment of the original obligation and replacement by a new obligation) and is completed in accordance with a contract between the parties, including any workout agreement. *27392 The Agencies seek comment on whether an exclusion for individuals who modify existing residential mortgage loans would be appropriate in light of the S.A.F.E. Act's objectives of providing increased accountability and tracking of the mortgage loan originators, enhancing consumer protection, reducing fraud in the residential mortgage loan origination process, and providing consumers with easily accessible information at no charge regarding the employment history of, and publicly adjudicated disciplinary and enforcement actions against, mortgage loan originators. Comment is also requested on whether the final rule should delay the registration requirement for individuals engaged in loan modifications for only a specified period in light of current economic conditions and the national importance of encouraging mortgage lenders to engage in foreclosure mitigation activities. Moreover, the Agencies solicit comment on whether individuals who engage in approving mortgage loan assumptions should be excluded from the proposed definition of mortgage loan originator and whether such approach is consistent with the S.A.F.E. Act's objectives. In particular, commenters are encouraged to: (1) Describe the extent to which loan modification and assumption activities are staffed and managed separately from loan origination activities within the institution; (2) provide the number of employees who engage in loan modifications or assumptions and do not otherwise act as mortgage loan originators; (3) describe the types of contact that staff engaged only in modifications or assumptions has with customers and the extent to which such staff initiate contact with customers; (4) discuss whether loan modification staff ever process loan refinancings; and (5) discuss the extent of the information that is gathered from customers in the context of the loan modifications and assumptions. With respect to loan modifications, describe what staff would handle the transaction if the modification process becomes a refinancing of a loan or if a new borrower is added in addition to the original borrower (i.e., adding a cosigner). With respect to assumptions, describe: (1) Whether the loan transactions offered by your institution are typically assumable; (2) the types of assumptions that are permitted, if any; (3) the type of contact between the employee and the new borrower; and (4) differences, if any, between underwriting practices for a loan assumption transaction and a new loan origination. Comment is also specifically requested on whether the exclusion of personnel solely engaged in

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loan modifications and loan assumptions affects a consumer's ability to assess the competency and credentials of these personnel, keeping in mind the consumer protection and fraud prevention purposes of the S.A.F.E. Act. To the extent it is within the scope of the S.A.F.E. Act, the Agencies also seek comment on whether individuals who engage in certain refinancing transactions should be excluded from the definition of mortgage loan originator (and, correspondingly whether certain types of refinancing transactions should be excluded from the definition of residential mortgage loan). Specifically, should an individual who engages in refinancings that do not involve a cash-out and are with the same lender be excluded from the definition of mortgage loan originator? With respect to these specific types of refinancing transactions, the Agencies request comment on: (1) Whether such transactions have similar results for borrowers as loan modifications; (2) whether employees engaged in such refinancing transactions also engage in other mortgage loan origination activities; (3) the types of contact that employees who engage in these types of refinancings have with customers; (4) the extent to which such staff initiate contact with customers; and (5) the extent of the information that is gathered from customers in the context of these types of refinancing transactions. Furthermore, the Agencies seek comment on whether individuals who engage in loan modification and limited refinancing activities should be excluded from the definition of mortgage loan originator only if the transactions meet additional criteria. For example, should an individual who engages only in loan modification activities be excluded from the definition of mortgage loan originator only if the modification meets specific criteria such as a lower interest rate, reduced payment, elimination of an impending adjustment to the rate, or reduction in principal? Comment is requested on criteria that should be considered by the Agencies, if any. Nationwide Mortgage Licensing System and Registry or Registry. The proposal's definition of these terms is based on the definition included in the S.A.F.E. Act. Specifically, these terms mean the system developed and maintained by the CSBS and the AARMR for the State licensing and registration of State-licensed mortgage loan originators and the registration of mortgage loan originators pursuant to section 1507 of the S.A.F.E. Act. The Registry currently supports the licensing and registration of State mortgage loan originators. As explained above, the Agencies are working with the CSBS to modify the Registry to support the registration of mortgage loan originators employed by Agency-regulated institutions. Registered mortgage loan originator. Pursuant to section 1503(7) of the S.A.F.E. Act, the proposal defines this term to mean any individual who meets the definition of mortgage loan originator and is an employee of an Agency-regulated institution and is registered pursuant to the requirements of this rule with, and maintains a unique identifier through, the Registry. This definition is the same as that included in the S.A.F.E. Act, except that the Agencies have modified it to apply only to individuals registered pursuant to regulations issued by the Agencies. Residential mortgage loan. As in the S.A.F.E. Act, the proposal defines residential mortgage loan as any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling (as defined in section 103(v) of the Truth in Lending Act (TILA) [FN19] or residential real estate upon which is constructed or intended to be constructed a dwelling. In addition, the proposal specifically includes in this definition refinancings, reverse mortgages, home equity lines of credit and other first and second lien loans secured by a dwelling in order to clarify that originators of these types of loans are covered by the rule's requirements. FN19 TILA defines dwelling as a residential structure or mobile home which contains one-tofour family housing units, or individual units of condominiums or cooperatives. 15 U.S.C. 1602(v). Board regulations and commentary include in this definition any residential structure that contains one to four units, whether or not that structure is attached to real property, and includes an individual condominium unit, cooperative unit, mobile home, trailer, and boat if they

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are in fact used as a residence. See 12 CFR 226.2(a)(19) (Regulation Z). The FCA emphasizes that section 1503(8) of the S.A.F.E. Act and .102(f) do not amend or supersede sections 1.11(b) and 2.4(b) of the Farm Credit Act of 1971, as amended, 12 U.S.C. 2019(b) and 2075(b), and their implementing regulation, 12 CFR 613.3030(c), which establish the purposes for which FCS institutions may originate residential mortgage loans for eligible rural home borrowers. *27393 Unique Identifier. The proposal's definition of this term is identical to that included in section 1503(12) of the S.A.F.E. Act. Specifically, the proposal defines unique identifier to mean a number or other identifier that: (1) Permanently identifies a registered mortgage loan originator; (2) is assigned by protocols established by the Registry and the Agencies to facilitate electronic tracking of mortgage loan originators, and uniform identification of, and public access to, the employment history of, and the publicly adjudicated disciplinary and enforcement actions against, mortgage loan originators; and (3) must not be used for purposes other than those set forth in the S.A.F.E. Act. In section .103(d), the proposal uses the terms control and financial services-related in the descriptions of the information that is required of an employee who is a mortgage loan originator. These terms are currently defined in the web-based form collecting information on State-licensed mortgage loan originators. In order to promote consistency of the information collected for Agency-regulated and State-licensed mortgage loan originators, the Agencies intend that the Registry's definitions of those terms will also be used in the web-based form collecting information on Agency-regulated mortgage loan originators and, therefore have not defined them in this rulemaking.[FN20] FN20 The Registry currently defines control as the power, directly or indirectly, to direct the management or policies of a company or business, whether through ownership of securities, by contract, or otherwise. Any person who is a general partner or executive officer, including Chief Executive Officer, Chief Financial Officer, Chief Operations Officer, Chief Legal Officer, Chief Compliance Officer, Director and individuals with similar status or functions; directly or indirectly has the right to vote 10 percent or more of a class of a voting security or has the power to sell or direct the sale of 10 percent or more of a class of voting securities; or, in the case of a partnership, has the right to receive upon dissolution, or has contributed, 10 percent or more of the capital, is presumed to control that company. The Agencies have requested that this definition be revised to include Chief Credit Officer. The Registry's current definition of Financial services-related means pertaining to securities, commodities, banking, insurance, consumer lending, or real estate (including, but not limited to, acting or being associated with a bank or savings association, credit union, mortgage lender, mortgage broker, real estate salesperson or agent, closing agent, title company, or escrow agent). The Agencies have requested that this definition be revised to include Farm Credit System institution and appraiser. Section .103Registration of Mortgage Loan Originators The S.A.F.E. Act specifically prohibits an individual who is an employee of an Agency-regulated institution from engaging in the business of a loan originator without registering as a loan originator with the Registry, maintaining annually such registration, and obtaining a unique identifier through the Registry.[FN21] As described more specifically below, under .103 of the proposal, both the individual employee and the employing institution are responsible for complying with these requirements. In addition, the proposal requires that both the employee and the employing institution must submit information to the Registry for each registration to be complete. FN21 See S.A.F.E. Act at section 1504(a).

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Employee registration requirement. In general, proposed .103(a)(1) requires employees of Agency-regulated institutions who act as a mortgage loan originator to register with the Registry, maintain their registration, and obtain a unique identifier. The Agencies note that this requirement would not apply if the employee is subject to a de minimis exception. This section further provides that any employee who is not in compliance with the registration and unique identifier requirements set forth in this subpart, by the expiration of the implementation periods specified in .103(a)(3) and (a)(4)(ii), as applicable, is in violation of the S.A.F.E. Act and this rule. The OCC, Board, FDIC, and OTS have the authority to take enforcement actions against their respective Agency-regulated institutions and individual employees of those institutions who violate the S.A.F.E. Act and the final rule, pursuant to 12 U.S.C. 1818. The FCA has authority to take enforcement actions against Farm Credit System institutions and individual employees who violate the S.A.F.E. Act and the final rule pursuant to title V, Part C of the Farm Credit Act of 1971, as amended, 12 U.S.C. 2261 et seq. The NCUA has the authority to take enforcement actions against federally-insured credit unions and their employees who violate the S.A.F.E. Act and the final rule under 12 U.S.C. 1786. Institution requirement. Unless the de minimis exception applies, paragraph (a)(2) of .103 provides that an Agency-regulated institution must require its employees who are mortgage loan originators to register with the Registry, maintain this registration, and obtain a unique identifier in compliance with this subpart. This provision also prohibits an Agency-regulated institution from permitting its employees to act as mortgage loan originators unless registered with the Registry pursuant to this subpart, after the implementation periods specified in .103(a)(3) and (a)(4)(ii), as applicable, expire. Implementation period for initial registrations. The proposal provides a grace period for initial registrations. Pursuant to paragraph (a)(3) of this section, an employee is not required to register, and therefore can continue to originate residential mortgage loans without complying with the rule's registration requirement, for 180 days from the date the Agencies provide public notice that the Registry is accepting initial registrations. After this 180-day period expires, any existing employee or newly hired employee of an Agency-regulated institution who is subject to the registration requirements is prohibited from originating residential mortgage loans without first meeting the registration requirements. The Registry, in consultation with the Agencies, is considering a staggered registration process for some of the larger Agency-regulated institutions in order to spread out the registration of mortgage loan originators throughout this implementation period. This could reduce the number of originators registering at any one time, thereby enabling the Registry to accommodate all registrations in a timely and efficient manner. The Agencies seek comment on whether the 180-day implementation period will provide Agencyregulated institutions and their employees with adequate time to complete the initial registration process. The Agencies also inquire as to whether an alternative schedule for implementation and initial registrations would be appropriate, what such an alternative schedule should be, and why it is more appropriate than the implementation period proposed by the Agencies. In addition, the Agencies request comment on whether, and how, a staggered registration process should be developed. The Agencies recognize that Agency-regulated institutions and mortgage loan originators need certainty as to when the Registry is available to start accepting registrations and the date that the 180-day clock starts to run. Therefore, the Agencies will provide a coordinated and simultaneous advance notice to Agency-regulated institutions of when the Registry will begin accepting Federal registrations through appropriate means, such as a Federal Register publication, Web-site notice, or agency bulletin. Special rule for previously registered employees. Under paragraph (a)(4) of .103, properly registered or licensed mortgage loan originators will not have to re-register when they change employment by moving from one Agency-regulated institution to another or from a Stateregulated institution to *27394 an Agency-regulated institution, regardless of whether the

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change in employment is made voluntarily, through an acquisition or merger of the employee's prior employer, or through a reorganization where previously State-licensed mortgage loan originators become subject to the registration requirements of Agency-regulated institutions. Specifically, this provision provides that if a new employee of an Agency-regulated institution had previously registered with, and obtained a unique identifier from, the Registry prior to becoming an employee of that institution and has maintained that registration (or license, if previously employed by a State-regulated entity), the registration requirements of this subpart are deemed to be met provided that: (1) The employee's employment information in the Registry is updated; (2) new fingerprints of the employee are provided to the Registry for a new background check, except in the case of mergers, acquisitions or reorganizations; (3) information concerning the new employing institution is provided to the Registry pursuant to .103(e)(1)(i), to the extent the institution has not previously met these requirements, and (e)(2)(i) ; [FN22] and (4) the registration is maintained pursuant to the requirements of paragraph (b) of this section as of the date that the employee is employed by the institution. FN22 These provisions require: The institution's name, main office address, IRS Employer Tax Identification Number, Research Statistics Supervision Discount (RSSD) number; primary Federal regulator, contact information for individuals at the institution for Registry purposes; and confirmation that it employs the registrant. Information regarding an institution's RSSD number is available from the Board. In order to reduce regulatory burden and to prevent an interruption in mortgage origination activity, this provision provides a 60-day grace period to comply with these requirements when a registered mortgage loan originator becomes an employee of an Agency-regulated institution as a result of an acquisition, merger, or reorganization. The Agencies seek comment on whether this grace period is appropriate. Continuing a mortgage loan originator's registration from one employer to another will reduce regulatory burden on Agency-regulated institutions as well as the residential mortgage industry. In addition, because an employee's unique identifier and background information in the Registry will remain the same, consumers will be able to locate a mortgage loan originator who has changed employers. The Agencies note that the registration of a mortgage loan originator who leaves any employer will be inactive until he or she is hired by a new institution, his or her record is updated in accordance with the final rule's requirements, and the new employer acknowledges employing the mortgage loan originator through the Registry. The individual will be prohibited from acting as a mortgage loan originator at an Agency-regulated institution until such time as the registration is reactivated, unless covered by the 60-day grace period. Maintaining Registration. Under .103(b), a registered mortgage loan originator must renew his or her registration with the Registry during the annual renewal period (November 1December 31). To renew, the employee must confirm that the information previously submitted to the Registry remains accurate and complete, updating any information as needed. Any registration that is not renewed during this period will become inactive and the individual will be prohibited from acting as a mortgage loan originator at an Agency-regulated institution until such time as the registration requirements are met. All employee data that has been provided to the Registry about the employee will remain in the Registry even when the employee is in inactive status. Inactive mortgage loan originators will not be assigned a new unique identifier if they reregister. In addition to the annual renewal, a registration must be updated within 30 days of the occurrence of any of the following events: (1) A change in the employee's name, (2) the registrant ceases to be an employee of the institution; or (3) any of the employee's responses to the information required for registration pursuant to paragraphs (d)(1)(iii) through (xi) become inaccurate. These annual renewal and updating requirements are similar to what is required currently for State-licensed mortgage loan originators.

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This paragraph also provides that any employee who registers with the Registry must maintain his or her registration unless the employee is no longer a mortgage loan originator. As a result of this provision, once an employee registers as a loan originator with the Registry, the employee will be required to continue this registration until he or she is no longer engaged in the activity of a mortgage loan originator, even if, in any particular year, the employee originates fewer mortgage loans than the number specified in the de minimis exception provision. The purpose of this requirement is to avoid the creation of a timing loophole that could allow mortgage loan originators to avoid registration requirements. The Agencies specifically request comment on whether the proposed initial registration requirements as well as the requirements for maintaining registration are adequate and feasible for Agency-regulated institutions and their employees who are mortgage loan originators, yet serve the consumer protection purposes enumerated in the S.A.F.E. Act. Effective date of registrations and renewals. Paragraph (c) of this section provides that an initial registration is effective on the date that the registrant receives notification from the Registry that all employee and institution information required by paragraphs (d) and (e) of this section has been submitted and the registration is complete. A renewal or update pursuant to paragraph (b) is effective on the date the registrant receives notification from the Registry that all applicable information required by paragraphs (b) and (e) of this section has been submitted and the renewal or update is complete. Except as provided by the 180-day implementation period in .103(a)(3) or the 60-day grace period provided in .103(a)(4), an employee must not engage in mortgage origination if his or her registration is not yet effective or has not been renewed pursuant to this rule. Required employee information. Paragraph (d) of .103 lists the categories of information that mortgage loan originators, or the employing Agency-regulated institution on behalf of the mortgage loan originator, will be required to submit to the Registry. The Registry's registration form will more specifically identify the information required. Specifically, the proposal requires the employee to submit information regarding his or her identity (name and former names, Social Security number, gender, date of birth, and place of birth) and home and business contact information; date the employee became an employee of the Agency-regulated institution; financial services-related employment and financial history for the past 10 years; criminal history involving felonies and certain misdemeanors; history of financial services-related civil actions, arbitrations and regulatory and disciplinary actions or orders; financial services-related professional license revocations or suspensions; voluntary or involuntary employment terminations based on violations of law or industry standards of conduct; and certain actions listed above that are pending *27395 against the employee. As explained below, the Agency-regulated institution must have policies and procedures in place for confirming the adequacy and accuracy of employee registrations. The employee also must provide fingerprints, in digital form if practicable, and any appropriate identifying information to the Registry for submission to the FBI and any other Federal or State governmental agency or entity authorized to do a criminal history background check.[FN23] The Agencies expect that the Registry will submit fingerprints to the FBI for a criminal history background check in connection with the registration of each mortgage loan originator of an Agency-regulated institution. The Agencies, however, are not requiring employees to obtain new fingerprints for submission to the Registry if the employing Agency-regulated institution has the employee's fingerprints on file, provided that the fingerprints submitted to the Registry were taken less than three years prior to the employee's registration with the Registry. If the Agencyregulated institution has such fingerprints on file, the Registry plans to use these fingerprints to run the required criminal history background check on the mortgage loan originator.

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FN23 Further information on the Registry's fingerprint and background check procedures may be found on the Registry's Web site at http:// www.stateregulatoryregistry.org/NMLS/. It is the Agencies' understanding that the Registry plans to support digital fingerprinting by October 2009 and likely before the initiation of the proposed rule's implementation period. As digital fingerprints are preferable to paper fingerprints, the proposed rule provides that registrants should submit digital fingerprints to the Registry, if practicable. If digital fingerprints are not available, the Registry will accept fingerprint cards, and will convert these cards to a digital format. The Agencies encourage the use of digital fingerprints and note that the proposal's permission to submit fingerprints in paper form is intended to enable smaller institutions without the capability or feasibility to obtain digital fingerprints to comply with this requirement. The Agencies specifically seek comment on whether the three-year age limit for existing fingerprints is appropriate and whether Agency-regulated institutions currently have fingerprints of their employees on file, and if so, whether they are in digital or paper form. Employee authorization and attestation. Paragraph (d)(2) of .103 requires the employee, not the employing Agency-regulated institution, to attest to the correctness of all such information submitted to the Registry pursuant to paragraph (d)(1), and to provide authorization for the Registry and the employing Agency-regulated institution to obtain information related to any administrative, civil or criminal findings to which the employee is a party. In order to provide relevant information to consumers and to implement the purposes of the S.A.F.E. Act, paragraph (d)(2) requires the employee, not the employing Agency-regulated institution, to authorize the Registry to make available to the public the following information submitted to the Registry: His or her name; other names used; name of current employer(s); current principal business location(s) and business contact information; 10 years of relevant employment history; and publicly adjudicated or pending disciplinary and enforcement actions and arbitrations against the employee. The Agencies envision that this information will be made public in two phases. The first phase, implemented at the time the Registry begins accepting Federal registrations, would provide for public accessibility of the employee's name; other names used; name of current employer(s); current principal business location(s) and business contact information; and employment history. The remaining categories of information (publicly adjudicated or pending disciplinary and enforcement actions and arbitrations against the employee) would be made public at a later date, once the Registry, in consultation with the Agencies, has designed and implemented a system through which the registrant may provide additional explanatory information to accompany a positive response to any of the disclosure questions regarding criminal history or the other information requested in paragraphs (d)(1)(iii) through (xi). The Agencies note that once the Registry makes this enhancement, registered mortgage loan originators can provide this explanatory language at any time or during the annual renewal process, and that this explanatory language may be made public. Additionally, relevant nonpublic information submitted to the Registry will be accessible to the Agencies and State mortgage regulators, as appropriate. The institution may provide the employee information required under .103(d)(1) to the Registry or require the employee to provide the information to the Registry. Regardless of the manner that the information is provided, the requirements of the rule remain the same: The employee must attest to the correctness of the information required by .103(d) and the institution must implement policies and procedures to confirm the adequacy and accuracy of employee registrations, including updates and renewals. The Agencies have limited the required information to what is necessary to meet the objectives of the S.A.F.E. Act for the registration of residential mortgage loan originators employed by Agency-regulated institutions and to what is required by the Registry's current data collection form for State mortgage loan originators, Form MU4. The Agencies believe that both the Statelicensing and Agency-registration requirements should collect similar information from mortgage

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loan originators in order to effectively track loan originators, reduce regulatory burden on mortgage loan originators who move between institutions with differing charters and regulators, and permit consumers to review similar information on mortgage loan originators regardless of the originator's regulator. The Agencies and CSBS have worked together to identify what information should be required for registration and will continue to do so going forward. The Agencies seek comment on the employee data that is proposed to be collected, the employee data that is proposed to be made public, and whether any other additional data should be collected or made public. Required Agency-regulated institution information. Paragraph (e)(1) of . 103 requires the employing Agency-regulated institution to submit certain information to the Registry as a base record in connection with the initial registration of one or more mortgage loan originators. Specifically, the Agency-regulated institution must provide its name, main office address, primary Federal regulator, Employer Identification Number (EIN) issued by the Internal Revenue Service, primary point of contact information, and contact information for system administrators. If the Agency-regulated institution is a subsidiary, it also must indicate that it is a subsidiary and provide the name of its parent institution, as explained further below. System administrators will have the authority to enter data required in paragraph (e) of this section on the Registry and will be responsible for keeping institution information and the list of employees registered with the Registry current, provided these individuals do not act as mortgage loan originators. The system administrators *27396 may delegate their authority and assign as many additional system users as necessary to comply with the registration requirements of the S.A.F.E. Act and the final rule, provided the delegated administrators meet this paragraph's requirements. The primary point of contact also can be one of the system administrators. In addition, paragraph (e)(1) requires an Agency-regulated institution to provide its Research Statistics Supervision Discount (RSSD) number. The RSSD database is maintained by the Board. The Agencies expect to provide the Registry with an extract of the Board's database, indexed by RSSD number, to facilitate an Agency-regulated institution's authorized access to the Registry and its establishment of a new base record. Upon receiving the information for a new base record from an Agency-regulated institution, the Registry will confirm the information by comparing the application with data supplied by the Agencies. The Agencies will establish a mechanism by which Agency-regulated institutions that do not have an RSSD number will be added to the RSSD database. However, an operating subsidiary of an Agency-regulated institution will not be required to obtain an RSSD number. Instead, if an operating subsidiary does not have an RSSD number, the operating subsidiary will provide its parent institution's RSSD number and indicate that it is an operating subsidiary of the parent. The Agencies seek comment on the proposal to require Agency-regulated institutions to submit their RSSD number, and operating subsidiaries, if necessary, to submit their parent institution's RSSD number, to facilitate an Agency-regulated institution's authorized access to the Registry and its establishment of a base record, and as identifying data for validating the base record. Paragraph (e)(1)(ii) of this section requires the Agency-regulated institution to update any information it has submitted within 30 days of the date that the information becomes inaccurate. Paragraph (e)(2) of this section requires an Agency-regulated institution to provide information to the Registry for each employee who acts as a mortgage loan originator. The Agency-regulated institution must: (1) After all the information required by paragraph (d) of this section has been submitted to the Registry, confirm that it employs the registrant; and (2) within 30 days of the date the registrant ceases to be an employee of the institution, provide notification that it no longer employs the registrant and the date the registrant ceased being an employee. This information will link the registering mortgage loan originator to the Agency-regulated institution in order to confirm that the registration of the employee is valid and legitimate. The Agencies

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note that the Registry's system protocols will not permit the Agency-regulated institution to confirm that it employs the registrant unless all of the employee's information required by paragraph (d) of this section has been submitted to the Registry. The Agencies anticipate that some Agency-regulated institutions may select one or more individuals to submit the required employee information on behalf of each of their mortgage loan originators to facilitate this registration process. The Agencies also recognize the initial volume of new registrants could be burdensome on both the registrants and on the staff charged with completing the registrations. To mitigate this burden, the Agencies are considering whether to modify the Registry to permit a batch process for Agency-regulated institutions to submit, in bulk, some or all of the required employee and institution data. However, such a process would not eliminate completely an individual employee's role in the registration process or the employee's responsibility to attest to the accuracy of the data submitted on the employee's behalf. Typical automated human resources systems likely will not contain all of the employee information required to be submitted to the Registry Under .103(d) of this proposed rule. As a result, the institution would need to gather the missing information from each potential registrant and then format it for the batch processing, which may create some registration burden on administrative staff and lead to possible delays, errors, or omissions. Alternatively, if the Agencies specify a limited set of standard data elements that are likely to be contained in an institution's automated human resources system, such as name and employment date, for the batch file, individual employees would still be required to access the Registry to provide any missing information and complete the registration process. In either case, employees would still be responsible for accessing their record in the Registry to attest to the accuracy of the information submitted on their behalf by the employing institution and authorize background checks and public access to certain employee information. The Agencies seek comment on batch processing and welcome suggestions for workable alternative approaches that could mitigate the initial registration burden on Agency-regulated institutions and their employees. Comment is also sought on the appropriateness of having one employee input registration information into the Registry on another employee's behalf. Section .104 Policies and Procedures Proposed .104 requires Agency-regulated institutions that employ mortgage loan originators to adopt and follow written policies and procedures designed to assure compliance with the requirements of the final rule. This requirement applies to all Agency-regulated institutions that employ individuals who act as mortgage loan originators, regardless of the application of any de minimis exception to their employees. This section requires that these policies and procedures must be appropriate to the nature, size, complexity and scope of the mortgage lending activities of the Agency-regulated institution and must at a minimum include the following eight provisions. First, these policies and procedures must establish a process for identifying which employees of the institution are required to be registered mortgage loan originators. Second, the policies and procedures must require that all employees of the institution who are mortgage loan originators be informed of the registration requirements of the S.A.F.E. Act and this rule and be instructed on how to comply with these requirements and procedures, including registering as a mortgage loan originator prior to engaging in any mortgage loan origination activity. Third, the policies and procedures must establish procedures to comply with the unique identifier requirements in .105. Fourth, these policies and procedures must establish reasonable procedures for confirming the adequacy and accuracy of employee registrations, including updates and renewals, by

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comparison with the institution's records. The Agencies do not expect Agency-regulated institutions, however, to obtain private database searches on their pre-existing employees to confirm employee information. Instead, institutions should compare the information supplied by the employee for purposes of registering with the Registry with the information contained in the institution's own records. Fifth, these policies and procedures must establish reasonable procedures and tracking systems for monitoring compliance with registration requirements and procedures. Agency- *27397 regulated institutions will be expected to be able to demonstrate compliance with the requirements of the S.A.F.E. Act and the final rule, such as by maintaining appropriate records. Sixth, the policies and procedures must provide for periodic independent testing of the Agencyregulated institution's policies and procedures for compliance with the S.A.F.E. Act and the final rule, including the registration and renewal requirements, and for such testing to be conducted by institution personnel or by an outside party. Seventh, the policies and procedures must provide for appropriate action in the case of any employee who fails to comply with the registration requirements of the S.A.F.E. Act, this rule, or the related policies and procedures of the institution, including prohibiting such employees from acting as mortgage loan originators or other appropriate disciplinary actions. Eighth, the policies and procedures must establish a process for reviewing the criminal background history reports on employees received from the FBI through the Registry and taking appropriate action consistent with applicable law and rules with respect to these reports. Moreover, an Agency-regulated institution must maintain such records or reports and document any action taken with respect to applicable employees. Institutions should maintain these records consistent with applicable recordkeeping requirements, if any. The Agencies specifically request comment on the difficulty of establishing suitable policies and procedures including the amount of time and resources needed for their adoption and implementation. The Agencies note that these policies and procedures should be in place at an institution prior to the registration of its employees pursuant to this rule. Section .105 Use of Unique Identifier Section .105(a) of the proposal requires an Agency-regulated institution to make the unique identifier(s) of its registered mortgage loan originator(s) available to consumers in a manner and method practicable to the institution. The Agencies note that an Agency-regulated institution may comply with this requirement in a number of ways. For example, the institution may choose to direct consumers to a listing of registered mortgage loan originators and their unique identifiers on its Web site; post this information prominently in a publicly accessible place, such as a branch office lobby or lending office reception area; or establish a process to ensure that institution personnel provide the unique identifier of a registered mortgage loan originator to consumers who request it from employees other than the mortgage loan originator.[FN24] FN24 The Agencies note that the Federal Housing Finance Agency (FHFA) has directed Fannie Mae and Freddie Mac to require all mortgage loan applications taken on and after January 1, 2010 to include the mortgage loan originator's unique identifier. See FNMA LL 02-2009: New Mortgage Loan Data Requirements (02/13/09). Section .105(b) requires a registered mortgage loan originator to provide the originator's unique identifier to a consumer upon request, before acting as a mortgage loan originator, and through the originator's initial written communication with a consumer, if any. The Agencies intend .105(b)(3) of the rule to cover written communication from the originator specifically for his or her customers and not written materials distributed by the Agencyregulated institution for general use by its customers.

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Although a mortgage loan originator may change his or her name, change employment, or move, the unique identifier assigned to the originator by the Registry at the originator's initial registration will remain the same. Once public access to the Registry is fully functional, the unique identifier will enable consumer access to an individual mortgage loan originator's profile stored in the Registry, including the mortgage loan originator's registration information, any State licenses held (active or inactive), employment history and other information of interest to the consumer. If a mortgage loan originator is simultaneously employed by more than one State or Agency-regulated institution, that information also will be readily visible to the consumer. Therefore, as this unique identifier will enable a consumer to obtain important information concerning a mortgage loan originator from the Registry, a mortgage loan originator and the employing institution must ensure that the consumer has access to it. The Agencies seek comment regarding the adequacy and appropriateness of these unique identifier requirements with respect to the consumer protection and anti-fraud purposes of the S.A.F.E. Act. The Agencies also seek comment on whether the proposed rule adequately ensures that consumers will be made aware that they have the opportunity to access information about the employment history of, and publicly adjudicated disciplinary and enforcement actions against, a prospective, current, or former mortgage loan originator. Furthermore, the Agencies seek comment on the specific difficulties that an institution or its employees may have in complying with these requirements and whether there may be circumstances when a registered mortgage loan originator would not be able to provide the unique identifier to a consumer before acting as a mortgage loan originator. AppendixExamples of Mortgage Loan Originators As an aid in the understanding, and to provide examples of the definition of mortgage loan originator, the proposed rule includes an Appendix that provides examples of the type of activities that would cause an employee to fall within or outside the definition of mortgage loan originator. The examples in this Appendix are not all inclusive; they illustrate only the issue described and do not illustrate any other issues that may arise in this proposal. The Agencies request comment on whether the examples are helpful, and if other examples should be added to this Appendix or provided to the public by other means. The Agencies also request comment on whether there are mortgage loans for which there may be no mortgage loan originator. Are there situations where a consumer applies for and is offered a loan through an automated process (such as a prescreened offer extended to a consumer as part of a mass mailing or an automated loan approval in response to an online application) without contact with a mortgage loan originator? To the extent there are such situations, please describe the contact and communication that a consumer would have with the institution and its employees. The Agencies also seek comment on: (1) The activities conducted by employees with respect to mortgage loan pre-approval; and (2) the typical duties of fulfillment staff that do not involve mortgage loan origination activities. IV. Request for Comments The Agencies encourage comment on any aspect of this proposal and especially on those issues specifically noted in this preamble. Agency-regulated institutions are encouraged to identify how many of their employees would qualify as residential mortgage loan originators under this definition, and therefore, would be required to register under this proposed rule. Please provide specific information on the number of employees engaged in mortgage loan origination, with both actual count and as a percentage of total employees, and *27398 the number of full-time equivalents (FTEs) engaged in this activity as reported on an institution's Consolidated Reports of Condition and Income (Call reports) or Thrift Financial Reports, as applicable. It would also be very helpful for Agency-

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regulated institutions to identify the internal departments to which these employees are assigned, and whether they are engaged in activities other than residential mortgage loan origination. Specifically, please discuss the estimated numbers of employees who act as mortgage loan originators who work in the mortgage loan function and those that work in divisions outside of the mortgage loan origination function. Please also describe any activities related to mortgage loan origination in which the staff outside the mortgage loan function engages. Please describe whether fulfillment staff or other employees who are not loan officers act as mortgage loan originators, and the estimated numbers of such employees that the institution would need to register under the proposed rule. This information will enable the Agencies to estimate the number of employees who will seek registration for purposes of evaluating system administration needs and determining if the proposed 180-day implementation period is adequate to allow for initial registration. This information will also assist the Agencies in preparing final analyses of the impact of these registrations under the Regulatory Flexibility Act, Paperwork Reduction Act, Executive Order 12866, and the Unfunded Mandates Reform Act of 1995, as applicable. Solicitation of Comments on Use of Plain Language Section 722 of the Gramm-Leach-Bliley Act, Public Law 106-102, sec. 722, 113 Stat. 1338, 1471 (Nov. 12, 1999), requires the Federal banking agencies to use plain language in all proposed and final rules published after January 1, 2000. The Agencies invite your comments on how to make this proposal easier to understand. For example: Have we organized the material to suit your needs? If not, how could this material be better organized? Are the requirements in the proposed regulation clearly stated? If not, how could the regulation be more clearly stated? Does the proposed regulation contain language or jargon that is not clear? If so, which language requires clarification? Would a different format (grouping and order of sections, use of headings, paragraphing) make the regulation easier to understand? If so, what changes to the format would make the regulation easier to understand? What else could we do to make the regulation easier to understand? Regulatory Analysis A. Regulatory Flexibility Act OCC: Pursuant to 605(b) of the Regulatory Flexibility Act, 5 U.S.C. 605(b) (RFA), the regulatory flexibility analysis otherwise required under 604 of the RFA is not required if the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities and publishes its certification and a short, explanatory statement in the Federal Register along with its rule. We have estimated that this proposal will not have a significant economic impact on a substantial number of small entities. Specifically, we estimate that 653 small national banks are likely to be impacted by the NPRM, with an average total compliance cost per bank estimated at $18,800. We base this analysis using the impact of the proposed rule on compliance costs as a percent of labor costs, as well as compliance costs as a percent of noninterest expenses. Therefore, pursuant to 605(b) of the RFA, the OCC hereby certifies that this proposal will not have a significant economic impact on a substantial number of small entities. Accordingly, a regulatory flexibility analysis is not needed.

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Board: Pursuant to 605(b) of the Regulatory Flexibility Act, 5 U.S.C. 605(b) (RFA), the regulatory flexibility analysis otherwise required under 603 of the RFA is not required if the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities and publishes its certification and a short, explanatory statement in the Federal Register along with its rule. The proposed rule applies to all banks that are members of the Federal Reserve System (other than national banks) and certain of their respective subsidiaries, branches and Agencies of foreign banks (other than Federal branches, Federal agencies, and insured State branches of foreign banks), and commercial lending companies owned or controlled by foreign banks. Under regulations issued by the Small Business Administration,[FN25] a small entity includes banking organizations with assets of $175 million or less (a small banking organization). As of December 31, 2008, there were approximately 501 of the institutions listed above that are small banking organizations. The Board believes that there is no significant economic impact. Compliance costs are estimated to be less than 4% of profits for state member banks. For the other small banking organizations, the Board believes these entities would fall below the de miminis exceptions in Section .101(c)(2) of the proposed rule since originating residential mortgages is not part of their primary business. The agencies proposed the de minimis exception in an effort to reduce compliance costs on small businesses. Therefore, pursuant to 605(b) of the RFA, the Board hereby certifies that this proposal will not have a significant economic impact on a substantial number of small entities. Accordingly, a regulatory flexibility analysis is not needed. FN25 See 13 CFR 121.201. FDIC: In accordance with the Regulatory Flexibility Act, 5 U.S.C. 601-612 (RFA), an agency must publish an initial regulatory flexibility analysis with its proposed rule, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities (defined for purposes of the RFA to include banks with less than $175 million in assets). The FDIC hereby certifies that the proposed rule would not have a significant economic impact on a substantial number of small entities. Approximately 3,274 FDIC-supervised banks are small entities. However, the proposed rule would not apply to approximately 2,430 of those small entities because they originate 25 or fewer residential mortgage loans annually and therefore would qualify for the de minimis exception. Only approximately 844 small entities supervised by the FDICabout 26% of FDICsupervised small entitieswould be subject to the requirements of the proposed rule. For those 844 small entities, the estimated initial costs for complying with the proposed rule would represent, on average, approximately 0.7% of total non-interest expenses, and the annual compliance costs would represent, on average, approximately 0.3% of total non-interest expenses. OTS: Pursuant to 605(b) of the Regulatory Flexibility Act, 5 U.S.C. 605(b) (RFA), the regulatory flexibility analysis otherwise required under 604 of the RFA is not required if the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities and publishes its certification and a short, explanatory statement in the Federal Register along with its rule. *27399 We have estimated that this proposal will not have a significant economic impact on a substantial number of small entities. Specifically, we estimate that 385 small savings associations are likely to be impacted by the NPRM, with an average total compliance cost per savings association estimated at $13,311. Therefore, pursuant to 605(b) of the RFA, the OTS hereby certifies that this proposal will not have a significant economic impact on a substantial number of small entities. Accordingly, a regulatory flexibility analysis is not needed. FCA: Pursuant to section 605(b) of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., FCA

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hereby certifies that the proposed rule will not have a significant economic impact on a substantial number of small entities. Each of the banks in the Farm Credit System, considered together with its affiliated associations, has assets and annual income in excess of the amounts that would qualify them as small entities. Therefore, System institutions are not small entities as defined in the Regulatory Flexibility Act. NCUA: In accordance with the Regulatory Flexibility Act, 5 U.S.C. 601-612 (RFA), an agency must publish an initial regulatory flexibility analysis with its proposed rule, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities (defined for purposes of the RFA to include federally insured credit unions with less than $10 million in assets). NCUA hereby certifies that the proposed rule would not have a significant economic impact on a substantial number of small entities. Approximately 3,231 federally insured credit unions are small entities. However, the proposed rule would not apply to approximately 3,190 of those small entities because they originate 25 or fewer residential mortgage loans annually and therefore would qualify for the de minimis exception. Only approximately 41 small federally insured credit unions, about 1.3% of small entities, would be subject to the requirements of the proposed rule. B. Paperwork Reduction Act Request for Comment on Proposed Information Collection In accordance with section 3512 of the Paperwork Reduction Act of 1995, 44 U.S.C. 3501-3521 ( PRA), the Federal banking agencies may not conduct or sponsor, and the respondent is not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number. The information collection requirements contained in this joint notice of proposed rulemaking have been submitted by the OCC, FDIC, OTS, and NCUA to OMB for review and approval under section 3506 of the PRA and 1320.11 of OMB's implementing regulations (5 CFR part 1320). The FCA collects information from Farm Credit System institutions, which are Federal instrumentalities, in the FCA's capacity as their safety and soundness regulator, and, therefore, OMB approval is not required for this collection. The Board reviewed the proposed rule under the authority delegated to the Board by the Office of Management and Budget. The proposed rule contains requirements subject to the PRA. The requirements are found in 12 CFR . 103(a)-(b), (d)-(e), .104, and .105. Comments are invited on: (a) Whether the collection of information is necessary for the proper performance of the Federal banking agencies' functions, including whether the information has practical utility; (b) The accuracy of the estimates of the burden of the information collection, including the validity of the methodology and assumptions used; (c) Ways to enhance the quality, utility, and clarity of the information to be collected; (d) Ways to minimize the burden of the information collection on respondents, including through the use of automated collection techniques or other forms of information technology; and (e) Estimates of capital or startup costs and costs of operation, maintenance, and purchase of services to provide information. NCUA: Request for comments related to the number of respondents who are mortgage loan originatorsSome federally insured credit unions use a credit committee comprised of unpaid volunteers to make lending decisions, including decisions on mortgage loans to members. NCUA requests comments on whether these credit committee members who work for a credit union in

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an unpaid capacity and approve mortgage loans must register. In addition, NCUA requests comments on whether only some of these credit committee members must register, and if so, which ones and why. All comments will become a matter of public record. Comments should be addressed to: OCC: Communications Division, Office of the Comptroller of the Currency, Public Information Room, Mailstop 1-5, Attention: 1557-AD23, 250 E Street, SW., Washington, DC 20219. In addition, comments may be sent by fax to (202) 874-5274, or by electronic mail to regs.comments@occ.treas.gov. You can inspect and photocopy comments at the OCC, 250 E Street, SW., Washington, DC 20219. For security reasons, the OCC requires that visitors make an appointment to inspect comments. You may do so by calling (202) 874-4700. Upon arrival, visitors will be required to present valid government-issued photo identification and submit to security screening in order to inspect and photocopy comments. Board: You may submit comments, identified by Docket No. R-1357, by any of the following methods: Agency Web Site: http://www.federalreserve.gov. Follow the instructions for submitting comments on the http:// www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm. Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments. E-mail: regs.comments@federalreserve.gov. Include docket number in the subject line of the message. FAX: 202-452-3819 or 202-452-3102. Mail: Jennifer J. Johnson, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, NW., Washington, DC 20551. All public comments are available from the Board's Web site at http:// www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as submitted, unless modified for technical reasons. Accordingly, your comments will not be edited to remove any identifying or contact information. Public comments may also be viewed electronically or in paper in Room MP-500 of the Board's Martin Building (20th and C Streets, NW.) between 9 a.m. and 5 p.m. on weekdays. FDIC: You may submit written comments, identified by the RIN, by any of the following methods: Agency Web Site: http://www.fdic.gov/regulations/laws/federal/propose.html. Follow the instructions for submitting comments on the FDIC Web site. Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments. E-mail: Comments@FDIC.gov. Include RIN 3064-AD43 on the subject line of the message. Mail: Robert E. Feldman, Executive Secretary, Attention: Comments, FDIC, 550 17th Street, NW., Washington, DC 20429. Hand Delivery/Courier: Guard station at the rear of the 550 17th Street *27400 Building (located on F Street) on business days between 7 a.m. and 5 p.m. Instructions: All comments received will be posted generally without change to http://www.fdic.gov/regulations/laws/federal/propose/html including any personal information

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provided. OTS: Information Collection Comments, Chief Counsel's Office, Office of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552; send a facsimile transmission to (202) 906-6518; or send an e-mail to infocollection.comments @ots.treas.gov. OTS will post comments and the related index on the OTS Internet site at http://www.ots.treas.gov. In addition, interested persons may inspect the comments at the Public Reading Room, 1700 G Street, NW., by appointment. To make an appointment, call (202) 906-5922, send an e-mail to public.info@ots.treas.gov, or send a facsimile transmission to (202) 906-7755. NCUA: You may submit comments by any of the following methods (Please send comments by one method only): Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments. NCUA Web Site: http:// www.ncua.gov/RegulationsOpinionsLaws/proposedregs/proposedregs.html. Follow the instructions for submitting comments. E-mail: Address to regcomments@ncua.gov. Include [Your name] Comments on Notice of Proposed Rulemaking Part 761 Registration of Mortgage Loan Originators in the e-mail subject line. Fax: (703) 518-6319. Use the subject line described above for e-mail. Mail: Address to Jeryl Fish, Deputy Chief Information Officer, National Credit Union Administration, 1775 Duke Street, Alexandria, VA 22314-3428. Hand Delivery/Courier: Same as mail address. Additionally, you should send a copy of your comments to the OMB Desk Officer for the Federal banking agencies, by mail to U.S. Office of Management and Budget, 725 17th Street, NW., 10235, Washington, DC 20503, or by fax to (202) 395-6974. Proposed Information Collection Title of Information Collection: Registration of Mortgage Loan Originators. Frequency of Response: On occasion; Annual. Affected Public: OCC: National banks, Federal branches and agencies of foreign banks, their operating subsidiaries, and employees who are loan originators. Board: Member banks of the Federal Reserve System (other than national banks), their respective subsidiaries that are not functionally regulated within the meaning of section 5(c)(5) of the Bank Holding Company Act; and branches and agencies of foreign banks (other than Federal branches, Federal agencies and insured State branches of foreign banks) and commercial lending companies owned or controlled by foreign banks and their employees who act as mortgage loan originators. FDIC: State nonmember banks (including State-licensed insured branches of foreign banks) and their subsidiaries (except brokers, dealers, persons providing insurance, investment companies, and investment advisers) and their employees who are mortgage loan originators.

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OTS: Savings associations and their operating subsidiaries, and their employees who are mortgage loan originators. NCUA: Federally chartered credit unions and their employees who are mortgage loan originators. Abstract: Unless the de minimis exception or a different implementation period applies, .103(a) would require an employee of a depository institution who engages in the business of a mortgage loan originator (MLO) to register with the Registry, maintain such registration, and obtain an unique identifier. Under .103(b), a depository institution would require each such registration to be renewed annually and updated within 30 days of the occurrence of specified events. Section .103(d) describes the categories of information that an employee, or the employing depository institution on the employee's behalf, must submit to the Registry, with the employee's attestation as to the correctness of the information supplied, and his/her authorization to obtain further information. Section .103(e) specifies institution and employee information that a depository institution would submit to the Registry in connection with the initial registration of one or more MLOs, and thereafter to update. Section .104 would require that an agencyregulated institution employing MLOs adopt and follow written policies and procedures, at a minimum addressing certain specified areas, but otherwise appropriate to the nature, size and complexity of their mortgage lending activities. Section . 105 would require a depository institution to make the unique identifier(s) of its registered MLO(s) available to consumers in a manner and method practicable to the institution. It would also require a registered MLO to provide his or her unique identifier to a consumer upon request, before acting as a MLO, and through the originator's initial written communication with a consumer, if any. Estimated Burden: OCC Number of Bank Respondents: 1,771 (1,464 national banks; 307 operating subsidiaries). Burden per Bank for Initial Set up: 351 hours (220 hours to implement policies and procedures and establish tracking and compliance systems; 131 hours to establish reporting, filing, and information dissemination systems). Total Bank Burden for Initial Set up: 621,621. Number of MLO Employees for Initial Set up: 117,772. Burden per MLO Employee for Initial Set up: 3.50 hours (2.50 hours to provide information to Registry, and 1 hour to provide Unique Identifier to a consumer, upon request and at initial contact). Total Burden for MLO Employees for Initial Set up: 412,202 hours. Number of MLO Employees for Registration Update: 58,886. Burden per MLO Employee for Registration Update: 0.25 hours. Total Burden for MLO Employees for Registration Update: 14,721.5 hours. Total OCC Annual Burden: 1,048,544.5 hours. Board

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Number of Bank Respondents: 2,382. Burden per Bank for Initial Set up: 351 hours (220 hours to implement policies and procedures and establish tracking and compliance systems; 131 hours to establish reporting, filing, and information dissemination systems). Total Bank Burden for Initial Set up: 836,082 hours. Number of MLO Employees for Initial Set up: 27,000. Burden per MLO Employee for Initial Set up: 3.50 hours (2.50 hours to provide information to Registry, and 1 hour to provide Unique Identifier to a consumer). Total Burden for MLO Employees for Initial Set up: 94,500 hours. Number of MLO Employees for Registration Update: 13,500. Burden per MLO Employee for Registration Update: 0.25 hours. Total Burden for MLO Employees for Registration Update: 3,375 hours. Total Board Annual Burden: 933,957 hours. *27401 FDIC Number of Bank Respondents: 5,371. Burden per Bank for Initial Set up: 351 hours (220 hours to implement policies and procedures and establish tracking and compliance systems; 131 hours to establish reporting, filing, and information dissemination systems). Total Bank Burden for Initial Set up: 1,885,221 hours. Number of MLO Employees for Initial Set up: 49,719. Burden per MLO Employee for Initial Set up: 3.50 hours (2.50 hours to provide information to Registry, and 1 hour to provide Unique Identifier to a consumer, upon request and at initial contact). Total Burden for MLO Employees for Initial Set up: 174,016.5 hours. Number of MLO Employees for Registration Update: 24,860. Burden per MLO Employee for Registration Update: 0.25 hours. Total Burden for MLO Employees for Registration Update: 6,215 hours. Total FDIC Annual Burden: 2,065,452.5 hours. OTS Number of Savings Association Respondents: 1,022 (802 savings associations; 220 operating subsidiaries). Burden per Savings Association for Initial Set up: 351 hours (220 hours to implement policies and procedures and establish tracking and compliance systems; 131 hours to establish reporting,

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filing, and information dissemination systems). Total Savings Association Burden for Initial Set up: 358,722. Number of MLO Employees for Initial Set up: 48,958. Burden per MLO Employee for Initial Set up: 3.50 hours (2.50 hours to provide information to Registry, and 1 hour to provide Unique Identifier to a consumer, upon request and at initial contact). Total Burden for MLO Employees for Initial Set up: 171,353 hours. Number of MLO Employees for Registration Update: 24,479. Burden per MLO Employee for Registration Update: 0.25 hours. Total Burden for MLO Employees for Registration Update: 6,120 hours. Total OTS Annual Burden: 536,195 hours. NCUA Number of Credit Union Respondents: 2,834 credit unions. Burden per Credit Union for Initial Set up: 351 hours (220 hours to implement policies and procedures and establish tracking and compliance systems; 131 hours to establish reporting, filing, and information dissemination systems). Total Credit Union Burden for Initial Set up: 994,734 hours. Number of MLO Employees for Initial Set up: 23,539. Burden per MLO Employee for Initial Set up: 3.50 hours (2.25 hours to provide information to Registry, and 1 hour to provide Unique Identifier to a consumer, upon request and at initial contact). Total Burden for MLO Employees for Initial Set up: 82,386.5 hours. Number of MLO Employees for Registration Update: 11,770. Burden per MLO Employee for Registration Update: 0.25 hours. Total Burden for MLO Employees for Registration Update: 2,942.50 hours. Total NCUA Annual Burden: 1,080,063 hours. C. OCC AND OTS Executive Order 12866 Determination The OCC and the OTS have determined that this proposal is not a significant regulatory action under Executive Order 12866. We have concluded that the changes made by this rule will not have an annual effect on the economy of $100 million or more. The OCC and the OTS further conclude that this proposal does not meet any of the other standards for a significant regulatory action set forth in Executive Order 12866. D. OCC and OTS Unfunded Mandates Reform Act of 1995 Determination

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Section 202 of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1532), requires the OCC and OTS to prepare a budgetary impact statement before promulgating a rule that includes a Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year. However, this requirement does not apply to regulations that incorporate requirements specifically set forth in law. Because this proposed rule implements the S.A.F.E. Act, the OTS and OCC have not conducted an Unfunded Mandates Analysis for this rulemaking. E. NCUA Executive Order 13132 Determination Executive Order 13132 encourages independent regulatory agencies to consider the impact of their actions on state and local interests. In adherence to fundamental federalism principles, the NCUA, an independent regulatory agency as defined in 44 U.S.C. 3502(5) voluntarily complies with the Executive Order. The proposed rule applies to federally insured credit unions and would not have substantial direct effects on the states, on the connection between the national government and the states, or on the distribution of power and responsibilities among the various levels of government. The NCUA has determined that the proposed rule does not constitute a policy that has federalism implications for purposes of the Executive Order. F. NCUA: The Treasury and General Government Appropriations Act, 1999Assessment of Federal Regulations and Policies on Families The NCUA has determined that this proposed rule would not affect family well-being within the meaning of section 654 of the Treasury and General Government Appropriations Act, 1999, Public Law 105-277, 112 Stat. 2681 (1998). List of Subjects 12 CFR Part 34 Mortgages, National banks, Reporting and recordkeeping requirements. 12 CFR Part 208 Accounting, Agriculture, Banks, Banking, Confidential business information, Consumer protection, Crime, Currency, Insurance, Investments, Mortgages, Reporting and recordkeeping requirements, Securities. 12 CFR Part 365 Banks, Banking, Mortgages. 12 CFR Part 563 Accounting, Administrative practice and procedure, Advertising, Conflict of interests, Crime, Currency, Holding companies, Investments, Mortgages, Reporting and recordkeeping requirements, Savings associations, Securities, Surety bonds. 12 CFR Part 610 Banks, Banking, Consumer protection, Loan programshousing and community development, Mortgages, Reporting and recordkeeping requirements, Rural areas. 12 CFR Part 761 Credit unions, Mortgages, Reporting and recordkeeping requirements.

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*27402 Office of the Comptroller of the Currency 12 CFR Chapter I Authority and Issuance For the reasons set forth in the preamble, chapter I of title 12 of the Code of Federal Regulations is proposed to be amended as follows: PART 34REAL ESTATE LENDING AND APPRAISALS 1. The authority citation for part 34 is revised to read as follows: Authority: 12 U.S.C. 1 et seq., 29, 93a, 371, 1701j-3, 1828(o), 3331 et seq., and 5101 et seq. 2. Add Subpart F to part 34 to read as follows: Subpart FRegistration of Residential Mortgage Loan Originators Sec. 34.101 Authority, purpose, and scope. 34.102 Definitions. 34.103 Registration of mortgage loan originators. 34.104 Policies and procedures. 34.105 Use of unique identifier. Appendix A to Subpart F of Part 34Examples of Mortgage Loan Originator Activities Subpart FRegistration of Residential Mortgage Loan Originators 12 CFR 34.101 34.101 Authority, purpose, and scope. (a) Authority. This subpart is issued pursuant to the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, title V of the Housing and Economic Recovery Act of 2008 (S.A.F.E. Act) (Pub. L. 110-289, 122 Stat. 2654, 12 U.S.C. 5101 et seq.). (b) Purpose. This subpart implements the S.A.F.E. Act's Federal registration requirement for mortgage loan originators. The S.A.F.E. Act provides that the objectives of this registration include aggregating and improving the flow of information to and between regulators; providing increased accountability and tracking of mortgage loan originators; enhancing consumer protections; reducing fraud in the residential mortgage loan origination process; and providing consumers with easily accessible information at no charge regarding the employment history of, and publicly adjudicated disciplinary and enforcement actions against, mortgage loan originators. (c) Scope(1) In general. This subpart applies to national banks, Federal branches and agencies of foreign banks, their operating subsidiaries (collectively referred to in this subpart as national banks), and their employees who act as mortgage loan originators.

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(2) Exception. (i) This subpart and the requirements of sections 1504(a)(1)(A) and (2) of the S.A.F.E. Act do not apply to any employee of a national bank if during the past 12 months: (A) The employee acted as a mortgage loan originator for 5 or fewer residential mortgage loans; and (B) The national bank employs mortgage loan originators who, while excepted from registration pursuant to paragraph (c)(2)(i)(A) of this section, in the aggregate, acted as a mortgage loan originator in connection with 25 or fewer residential mortgage loans. (ii) Prior to engaging in mortgage loan origination activity that exceeds either the individual or the aggregate exception limit, a national bank employee must register with the Registry pursuant to this subpart. 12 CFR 34.102 34.102 Definitions. For purposes of this subpart F, the following definitions apply: (a) Annual renewal period means November 1 through December 31 of each year. (b)(1) Mortgage loan originator [FN3] means an individual who: FN3 The Appendix to this subpart provides examples of activities that would, and would not, cause an employee to fall within this section's definition of mortgage loan originator. (i) Takes a residential mortgage loan application; and (ii) Offers or negotiates terms of a residential mortgage loan for compensation or gain. (2) The term mortgage loan originator does not include: (i) An individual who performs purely administrative or clerical tasks on behalf of an individual who is described in paragraph (b)(1) of this section; (ii) An individual who only performs real estate brokerage activities (as defined in section 1503(3)(D) of the S.A.F.E. Act) and is licensed or registered as a real estate broker in accordance with applicable State law, unless the individual is compensated by a lender, a mortgage broker, or other mortgage loan originator or by any agent of such lender, mortgage broker, or other mortgage loan originator, and meets the definition of mortgage loan originator in paragraph (b)(1) of this section; or (iii) An individual or entity solely involved in extensions of credit related to timeshare plans, as that term is defined in 11 U.S.C. 101(53D). (3) Administrative or clerical tasks means the receipt, collection, and distribution of information common for the processing or underwriting of a residential mortgage loan and communication with a consumer to obtain information necessary for the processing or underwriting of a residential mortgage loan. (c) Nationwide Mortgage Licensing System and Registry or Registry means the system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the State licensing and registration of State-licensed mortgage loan originators and the registration of mortgage loan originators pursuant to section 1507 of the S.A.F.E. Act.

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(d) Registered mortgage loan originator or registrant means any individual who: (1) Meets the definition of mortgage loan originator and is an employee of a national bank; and (2) Is registered pursuant to this subpart with, and maintains a unique identifier through, the Registry. (e) Residential mortgage loan means any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling (as defined in section 103(v) of the Truth in Lending Act, 15 U.S.C. 1602(v)) or residential real estate upon which is constructed or intended to be constructed a dwelling, and includes refinancings, reverse mortgages, home equity lines of credit and other first and second lien loans that meet the qualifications listed in this definition. (f) Unique identifier means a number or other identifier that: (1) Permanently identifies a registered mortgage loan originator; (2) Is assigned by protocols established by the Nationwide Mortgage Licensing System and Registry, the Federal banking agencies, and the Farm Credit Administration to facilitate: (i) Electronic tracking of mortgage loan originators; and (ii) Uniform identification of, and public access to, the employment history of and the publicly adjudicated disciplinary and enforcement actions against mortgage loan originators; and (3) Must not be used for purposes other than those set forth under the S.A.F.E. Act. 12 CFR 34.103 34.103 Registration of mortgage loan originators. (a) Registration requirement(1) Employee registration. Each employee of a national bank who acts as a mortgage loan originator must register with the Registry, obtain a unique identifier, and maintain this registration in accordance with the requirements of this subpart. Any such employee who is not in compliance with the registration and *27403 unique identifier requirements set forth in this subpart is in violation of the S.A.F.E. Act and this subpart. (2) National bank requirement(i) In general. A national bank that employs one or more individuals who act as a residential mortgage loan originator must require each employee who is a mortgage loan originator to register with the Registry, maintain this registration, and obtain a unique identifier in accordance with the requirements of this subpart. (ii) Prohibition. A national bank must not permit an employee of the bank who is subject to the registration requirements of this subpart to act as a mortgage loan originator unless such employee is registered with the Registry pursuant to this subpart. (3) Implementation period for initial registration. An employee of a national bank who is a mortgage loan originator must complete an initial registration with the Registry pursuant to this subpart within 180 days from the date that the OCC provides public notice that the Registry is accepting registrations. (4) Employees previously registered or licensed through the Registry(i) In general. If an employee of a national bank was registered or licensed through, and obtained a unique identifier from, the Registry prior to becoming an employee of the bank and has maintained this

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registration or license, the registration requirements of the S.A.F.E. Act and this subpart are deemed to be met, provided that: (A) The employment information in paragraphs (d)(1)(i)(C) and (d)(1)(ii) of this section is updated and the requirements of paragraph (d)(2) of this section are met; (B) New fingerprints of the employee are submitted to the Registry for a background check, as required by paragraph (d)(1)(xii) of this section; (C) The national bank information required in paragraphs (e)(1)(i) (to the extent the bank has not previously met these requirements) and (e)(2)(i) of this section is submitted to the Registry; and (D) The registration is maintained pursuant to paragraphs (b) and (e)(1)(ii) of this section, as of the date that the employee is employed by the bank. (ii) Implementation period for certain acquisitions, mergers or reorganizations. When registered or licensed mortgage loan originators become national bank employees as a result of an acquisition, merger or reorganization transaction, the bank and employees must comply with the requirements of paragraphs (a)(4)(i)(A), (C), and (D) of this section within 60 days from the effective date of the acquisition, merger, or reorganization. (b) Maintaining registration. (1) A mortgage loan originator who is registered with the Registry pursuant to paragraph (a) of this section must: (i) Renew the registration during the annual renewal period, confirming the responses set forth in paragraphs (d)(1)(i) through (xi) of this section remain accurate and complete, and updating this information, as appropriate; and (ii) Update the registration within 30 days of any of the following events: (A) A change in the name of the registrant; (B) The registrant ceases to be an employee of the national bank; or (C) The information required under paragraphs (d)(1)(iii) through (xi) of this section becomes inaccurate, incomplete, or out-of-date. (2) A registered mortgage loan originator must maintain his or her registration, notwithstanding the originator's subsequent qualification for the exception set forth in 34.101(c)(2), unless the individual is no longer engaged in the activity of a mortgage loan originator. (c) Effective dates(1) Initial registration. An initial registration pursuant to paragraph (a) of this section is effective on the date the registrant receives notification from the Registry that all information required by paragraphs (d) and (e) of this section has been submitted and the registration is complete. (2) Renewals or updates. A renewal or update pursuant to paragraph (b) of this section is effective on the date the registrant receives notification from the Registry that all applicable information required by paragraphs (b) and (e) of this section has been submitted and the renewal or update is complete. (d) Required employee information(1) In general. For purposes of the registration required by this section, a national bank must require each employee who is a mortgage loan originator to submit to the Registry, or must submit on behalf of the employee, the following categories of information to the extent this information is collected by the Registry:

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(i) Identifying information, including the employee's: (A) Name and any other names used; (B) Home address; (C) Address of the employee's principal business location and business contact information; (D) Social security number; (E) Gender; and (F) Date and place of birth; (ii) Financial services-related employment history for the 10 years prior to the date of registration or renewal, including the date the employee became an employee of the bank; (iii) Financial information for the 10 years prior to the date of registration or renewal constituting a history of any personal bankruptcy; business bankruptcy based upon events that occurred while the employee exercised control over an organization; denied, paid out, or revoked bonds; or unsatisfied judgments or liens against the employee; (iv) Felony convictions or other final criminal actions involving a felony against the employee or organizations controlled by the employee; or misdemeanor convictions or other final misdemeanor actions against the employee or organizations controlled by the employee involving financial services, a financial services-related business, dishonesty, or breach of trust; (v) Civil judicial actions against the employee in connection with financial services-related activities, dismissals with settlements, judicial findings that the employee violated financial services-related statutes or regulations, except for actions dismissed without a settlement agreement; (vi) Actions or orders by a State or Federal regulatory agency or foreign financial regulatory authority that: (A) Found the employee to have made a false statement or omission or been dishonest, unfair or unethical; to have been involved in a violation of a financial services-related regulation or statute; or to have been a cause of a financial services-related business having its authorization to do business denied, suspended, revoked or restricted; (B) Are entered against the employee in connection with a financial services-related activity; (C) Denied, suspended, or revoked the employee's registration or license to engage in a financial services-related activity; disciplined the employee or otherwise by order prevented the employee from associating with a financial services-related business or restricted the employee's activities; or (D) Barred the employee from association with an entity regulated by the agency or authority or from engaging in a financial services-related business; (vii) Final orders issued by a State or Federal regulatory agency or foreign financial regulatory authority based on violations of any law or regulation that prohibits fraudulent, manipulative or deceptive conduct; (viii) Revocation or suspension of the employee's authorization to act as an attorney, accountant,

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or State or Federal contractor; *27404 (ix) Customer-initiated financial services-related arbitration or civil action against the employee that required action, including settlements; (x) Disclosure of any voluntary or involuntary employment terminations resulting from allegations accusing the employee of violating a statute, regulation, or industry standard of conduct; fraud; dishonesty; theft; or the wrongful taking of property; (xi) Any pending actions against the employee that could result in an action listed in paragraphs (d)(1)(iii) through (ix) of this section; and (xii) Fingerprints of the employee, in digital form if practicable, collected by the employing institution less than three years prior to registration and any appropriate identifying information for submission to the Federal Bureau of Investigation and any governmental agency or entity authorized to receive such information in connection with a State and national criminal history background check. (2) Employee authorization and attestation. An employee registering as a mortgage loan originator or renewing his or her registration under this subpart must: (i) Authorize the Registry and the employing institution to obtain information related to any administrative, civil or criminal findings, to which the employee is a party, made by any governmental jurisdiction; (ii) Attest to the correctness of all information required by paragraph (d) of this section, whether submitted by the employee or on behalf of the employee by the employing bank; and (iii) Authorize the Registry to make available to the public information required by paragraphs (d)(1)(i)(A) and (C), (d)(1)(ii), (iv)-(ix) and (xi) of this section. (e) Required bank information. A national bank must submit the following information to the Registry. (1) Bank record. (i) In connection with the initial registration of one or more mortgage loan originators: (A) Name and main office address; (B) Internal Revenue Service Employer Tax Identification Number (EIN); (C) Research Statistics Supervision and Discount (RSSD) number, as issued by the Board of Governors of the Federal Reserve System; (D) Identification of its primary Federal regulator; (E) Name(s) and contact information of the individual(s) with authority to act as the bank's primary point of contact for the Registry; (F) Name(s) and contact information of the individual(s) with authority to enter data required in paragraph (e) of this section on the Registry and who may delegate this authority to other bank employees, provided this individual and any delegated employee does not act as a mortgage loan originator; and (G) If a subsidiary of a national bank, indication that it is a subsidiary and the name of its parent bank.

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(ii) A national bank must update the information required by this paragraph (e) within 30 days of the date that this information becomes inaccurate. (2) Employee information. In connection with the registration of each employee who acts as a mortgage loan originator: (i) After the information required by paragraph (d) of this section has been submitted to the Registry, confirmation that it employs the registrant; and (ii) Within 30 days of the date the registrant ceases to be an employee of the bank, notification that it no longer employs the registrant and the date the registrant ceased being an employee. 12 CFR 34.104 34.104 Policies and procedures. A national bank that employs mortgage loan originators must adopt and follow written policies and procedures designed to assure compliance with this subpart. These policies and procedures must be appropriate to the nature, size, complexity and scope of the mortgage lending activities of the bank. At a minimum, these policies and procedures must: (a) Establish a process for identifying which employees of the bank are required to be registered mortgage loan originators; (b) Require that all employees of the national bank who are mortgage loan originators be informed of the registration requirements of the S.A.F.E. Act and this subpart and be instructed on how to comply with such requirements and procedures; (c) Establish procedures to comply with the unique identifier requirements in 34.105; (d) Establish reasonable procedures for confirming the adequacy and accuracy of employee registrations, including updates and renewals, by comparisons with its own records; (e) Establish reasonable procedures and tracking systems for monitoring compliance with registration and renewal requirements and procedures; (f) Provide for independent testing for compliance with this subpart to be conducted by bank personnel or by an outside party; (g) Provide for appropriate action in the case of any employee who fails to comply with the registration requirements of the S.A.F.E. Act, this subpart, or the bank's related policies and procedures, including prohibiting such employees from acting as mortgage loan originators or other appropriate disciplinary actions; and (h) Establish a process for reviewing employee criminal history background reports received from the Registry in connection with 34.103(d)(1)(xii), taking appropriate action consistent with applicable law and rules with respect to these reports, and for maintaining records of these reports and actions taken with respect to applicable employees. 12 CFR 34.105 34.105 Use of unique identifier. (a) The national bank shall make the unique identifier(s) of its registered mortgage loan originator(s) available to consumers in a manner and method practicable to the institution.

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(b) A registered mortgage loan originator shall provide his or her unique identifier to a consumer: (1) Upon request; (2) Before acting as a mortgage loan originator; and (3) Through the originator's initial written communication with a consumer, if any. 12 CFR Pt. 34, Subpt. F, App. A Appendix A to Subpart F of Part 34Examples of Mortgage Loan Originator Activities This Appendix provides examples to aid in the understanding of activities that would cause an employee of a national bank to fall within or outside the definition of mortgage loan originator. The examples in this Appendix are not all inclusive. They illustrate only the issue described and do not illustrate any other issues that may arise under this subpart. For the purposes of the examples below, the term loan refers to a residential mortgage loan. (a) Taking a loan application: The following examples illustrate when an employee takes or does not take, a loan application. (1) Taking an application includes: Receiving information that is sufficient to determine whether the consumer qualifies for a loan, even if the employee has had no contact with the consumer and is not responsible for further verification of information. (2) Taking an application does not include any of the following activities performed solely or in combination: (i) Contacting a consumer to verify the information in the loan application by obtaining documentation, such as tax returns or payroll receipts; (ii) Receiving a loan application through the mail and forwarding it, without review, to loan approval personnel; or (iii) Assisting a consumer who is filling out an application by clarifying what type of *27405 information is necessary for the application or otherwise explaining the loan application process in response to consumer inquiries. (b) Offering or negotiating terms of a loan: The following examples are designed to illustrate when an employee offers or negotiates terms of a loan, and conversely, what does not constitute offering or negotiating terms of a loan. (1) Offering or negotiating the terms of a loan includes: (i) Presenting a loan offer to a consumer for acceptance, either verbally or in writing, even if further verification of information is necessary and the offer is conditional; or (ii) Responding to a consumer's request for a lower rate or lower points on a pending loan application by presenting to the consumer a revised loan offer, either verbally or in writing, that includes a lower interest rate or lower points than the original offer. (2) Offering or negotiating terms of a loan does not include solely or in combination: (i) Providing general explanations in response to consumer queries regarding qualification for a

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specific loan product, such as explaining loan terminology (i.e., debt-to-income ratio) or lending policies (i.e., the loan-to-value ratio policy of the national bank); (ii) In response to a consumer's request, informing a consumer of the loan rates that are publicly available such as on the national bank's Web site for specific types of loan products without communicating to the consumer whether qualifications are met for that loan product; (iii) Collecting information about a consumer in order to provide the consumer with information on loan products for which the consumer generally may qualify, without presenting a specific loan offer to the consumer for acceptance, either verbally or in writing; (iv) Arranging the loan closing or other aspects of the loan process, including communicating with a consumer about those arrangements, provided that communication with the consumer only verifies loan terms already offered or negotiated; or (v) Providing a consumer with information unrelated to loan terms, such as the best days of the month for scheduling loan closings at the bank. (c) The following examples illustrate when an employee does or does not offer or negotiate terms of a loan for compensation or gain. (1) Offering or negotiating terms of a loan for compensation or gain includes engaging in any of the activities in paragraph (b)(1) of this Appendix in the course of carrying out employment duties, even if the employee does not receive a referral fee or commission or other special compensation for the loan. (2) Offering or negotiating terms of a loan for compensation or gain does not include engaging in a seller-financed transaction for the employee's personal property that does not involve the national bank. Federal Reserve System 12 CFR Chapter II Authority and Issuance For the reasons set forth in the preamble, chapter II of title 12 of the Code of Federal Regulations is proposed to be amended as follows: PART 208MEMBERSHIP OF STATE BANKING INSTITUTIONS IN THE FEDERAL RESERVE SYSTEM (REGULATION H) 1. The authority citation for part 208 is revised to read as follows: Authority: 12 U.S.C. 24, 36, 92a, 93a, 248(a), 248(c), 321-338a, 371d, 461, 481-486, 601, 611, 1814, 1816, 1820(d)(9), 1823(j), 1828(o), 1831, 1831o, 1831p-1, 1831r-1, 1831w, 1831x, 1835a, 1882, 2901-2907, 3105, 3106a(b)(1), 3108(a), 3310, 3331-3351, and 3906-3909, 5101 et seq., 15 U.S.C. 78b, 78l(b), 78l(g), 78l(i), 780-4(c)(5), 78q, 78q-1, 78w, 1681s, 1681w, 6801 and 6805; 31 U.S.C. 5318, 42 U.S.C. 4012a, 4104a, 4104b, 4106, and 4128. 12 CFR 208.100 12 CFR 208.101 12 CFR 208.110 12 CFR 208.111

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2. Subpart I, consisting of 208.100 and 208.101, is redesignated as Subpart J, consisting of 208.110 and 208.111. 3. New subpart I is added to read as follows: Subpart IRegistration of Residential Mortgage Loan Originators Sec. 208.101 Authority, purpose, and scope. 208.102 Definitions. 208.103 Registration of mortgage loan originators. 208.104 Policies and procedures. 208.105 Use of unique identifier. Appendix A to Subpart I of Part 208Examples of Mortgage Loan Originator Activities Subpart IRegistration of Residential Mortgage Loan Originators 12 CFR 208.101 208.101 Authority, purpose, and scope. (a) Authority. This subpart is issued by the Board of Governors of the Federal Reserve System (Board) pursuant to the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, title V of the Housing and Economic Recovery Act of 2008 (S.A.F.E. Act) (Pub. L. 110-289, 122 Stat. 2654, 12 U.S.C. 5101 et seq.), 12 U.S.C. 248(a), 3106a(b)(1), and 3108(a). (b) Purpose. This subpart implements the S.A.F.E. Act's Federal registration requirement for mortgage loan originators. The S.A.F.E. Act provides that the objectives of this registration include aggregating and improving the flow of information to and between regulators; providing increased accountability and tracking of mortgage loan originators; enhancing consumer protections; reducing fraud in the residential mortgage loan origination process; and providing consumers with easily accessible information at no charge regarding the employment history of, and publicly adjudicated disciplinary and enforcement actions against, mortgage loan originators. (c) Scope(1) In general. This subpart applies to member banks of the Federal Reserve System (other than national banks); their respective subsidiaries that are not functionally regulated within the meaning of section 5(c)(5) of the Bank Holding Company Act, as amended (12 U.S.C. 1844(c)(5)); branches and agencies of foreign banks (other than federal branches, Federal agencies and insured state branches of foreign banks), and commercial lending companies owned or controlled by foreign banks (collectively referred to in this subpart as banks), and their employees who act as mortgage loan originators. (2) Exception. (i) This subpart and the requirements of sections 1504(a)(1)(A) and (2) of the S.A.F.E. Act do not apply to any employee of a bank if during the past 12 months: (A) The employee acted as a mortgage loan originator for 5 or fewer residential mortgage loans; and

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(B) The bank employs mortgage loan originators who, while excepted from registration pursuant to paragraph (c)(2)(i)(A) of this section, in the aggregate, acted as a mortgage loan originator in connection with 25 or fewer residential mortgage loans. (ii) Prior to engaging in mortgage loan origination activity that exceeds either the individual or the aggregate exception limit, a bank employee must register with the Registry pursuant to this subpart. 12 CFR 208.102 208.102 Definitions. For purposes of this subpart, the following definitions apply: (a) Annual renewal period means November 1 through December 31 of each year. (b)(1) Mortgage loan originator [FN7] means an individual who: FN7 The Appendix to this subpart provides examples of activities that would, and would not, cause an employee to fall within this section's definition of mortgage loan originator. (i) Takes a residential mortgage loan application; and (ii) Offers or negotiates terms of a residential mortgage loan for compensation or gain. (2) The term mortgage loan originator does not include: (i) An individual who performs purely administrative or clerical tasks on behalf of an individual who is described in paragraph (b)(1) of this section; (ii) An individual who only performs real estate brokerage activities (as defined in section 1503(3)(D) of the S.A.F.E. Act) and is licensed or registered as a real estate broker in accordance with applicable State law, unless the individual is compensated by *27406 a lender, a mortgage broker, or other mortgage loan originator or by any agent of such lender, mortgage broker, or other mortgage loan originator, and meets the definition of mortgage loan originator in paragraph (b)(1) of this section; or (iii) An individual or entity solely involved in extensions of credit related to timeshare plans, as that term is defined in 11 U.S.C. 101(53D). (3) Administrative or clerical tasks means the receipt, collection, and distribution of information common for the processing or underwriting of a residential mortgage loan and communication with a consumer to obtain information necessary for the processing or underwriting of a residential mortgage loan. (c) Nationwide Mortgage Licensing System and Registry or Registry means the system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the State licensing and registration of State-licensed mortgage loan originators and the registration of mortgage loan originators pursuant to section 1507 of the S.A.F.E. Act. (d) Registered mortgage loan originator or registrant means any individual who: (1) Meets the definition of mortgage loan originator and is an employee of a bank; and (2) Is registered pursuant to this subpart with, and maintains a unique identifier through, the

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Registry. (e) Residential mortgage loan means any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling (as defined in section 103(v) of the Truth in Lending Act, 15 U.S.C. 1602(v)) or residential real estate upon which is constructed or intended to be constructed a dwelling, and includes refinancings, reverse mortgages, home equity lines of credit and other first and second lien loans that meet the qualifications listed in this definition. (f) Unique identifier means a number or other identifier that: (1) Permanently identifies a registered mortgage loan originator; (2) Is assigned by protocols established by the Nationwide Mortgage Licensing System and Registry, the Federal banking agencies, and the Farm Credit Administration to facilitate: (i) Electronic tracking of mortgage loan originators; and (ii) Uniform identification of, and public access to, the employment history of and the publicly adjudicated disciplinary and enforcement actions against mortgage loan originators; and (3) Must not be used for purposes other than those set forth under the S.A.F.E. Act. 12 CFR 208.103 208.103 Registration of mortgage loan originators. (a) Registration requirement(1) Employee registration. Each employee of a bank who acts as a mortgage loan originator must register with the Registry, obtain a unique identifier, and maintain this registration in accordance with the requirements of this subpart. Any such employee who is not in compliance with the registration and unique identifier requirements set forth in this subpart is in violation of the S.A.F.E. Act and this subpart. (2) Bank requirement(i) In general. A bank that employs one or more individuals who act as a residential mortgage loan originator must require each employee who is a mortgage loan originator to register with the Registry, maintain this registration, and obtain a unique identifier in accordance with the requirements of this subpart. (ii) Prohibition. A bank must not permit an employee of the bank who is subject to the registration requirements of this subpart to act as a mortgage loan originator unless such employee is registered with the Registry pursuant to this subpart. (3) Implementation period for initial registration. An employee of a bank who is a mortgage loan originator must complete an initial registration with the Registry pursuant to this subpart within 180 days from the date that the Board provides public notice that the Registry is accepting registrations. (4) Employees previously registered or licensed through the Registry(i) In general. If an employee of a bank was registered or licensed through, and obtained a unique identifier from, the Registry prior to becoming an employee of the bank and has maintained this registration or license, the registration requirements of the S.A.F.E. Act and this subpart are deemed to be met, provided that: (A) The employment information in paragraphs (d)(1)(i)(C) and (d)(1)(ii) of this section is updated and the requirements of paragraph (d)(2) of this section are met;

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(B) New fingerprints of the employee are submitted to the Registry for a background check, as required by paragraph (d)(1)(xii) of this section; (C) The bank information required in paragraphs (e)(1)(i) (to the extent the bank has not previously met these requirements) and (e)(2)(i) of this section is submitted to the Registry; and (D) The registration is maintained pursuant to paragraphs (b) and (e)(1)(ii) of this section, as of the date that the employee is employed by the bank. (ii) Implementation period for certain acquisitions, mergers or reorganizations. When registered or licensed mortgage loan originators become bank employees as a result of an acquisition, merger or reorganization transaction, the bank and employees must comply with the requirements of paragraphs (a)(4)(i)(A), (C), and (D) of this section within 60 days from the effective date of the acquisition, merger, or reorganization. (b) Maintaining registration. (1) A mortgage loan originator who is registered with the Registry pursuant to paragraph (a) of this section must: (i) Renew the registration during the annual renewal period, confirming the responses set forth in paragraphs (d)(1)(i) through (xi) of this section remain accurate and complete, and updating this information, as appropriate; and (ii) Update the registration within 30 days of any of the following events: (A) A change in the name of the registrant; (B) The registrant ceases to be an employee of the bank; or (C) The information required under paragraphs (d)(1)(iii) through (xi) of this section becomes inaccurate, incomplete, or out-of-date. (2) A registered mortgage loan originator must maintain his or her registration, notwithstanding the originator's subsequent qualification for the exception set forth in 208.101(c)(2), unless the individual is no longer engaged in the activity of a mortgage loan originator. (c) Effective dates(1) Initial registration. An initial registration pursuant to paragraph (a) of this section is effective on the date the registrant receives notification from the Registry that all information required by paragraphs (d) and (e) of this section has been submitted and the registration is complete. (2) Renewals or updates. A renewal or update pursuant to paragraph (b) of this section is effective on the date the registrant receives notification from the Registry that all applicable information required by paragraphs (b) and (e) of this section has been submitted and the renewal or update is complete. (d) Required employee information(1) In general. For purposes of the registration required by this section, a bank must require each employee who is a mortgage loan originator to submit to the Registry, or must submit on behalf of the employee, the following categories of information to the extent *27407 this information is collected by the Registry: (i) Identifying information, including the employee's: (A) Name and any other names used; (B) Home address;

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(C) Address of the employee's principal business location and business contact information; (D) Social security number; (E) Gender; and (F) Date and place of birth; (ii) Financial services-related employment history for the 10 years prior to the date of registration or renewal, including the date the employee became an employee of the bank; (iii) Financial information for the 10 years prior to the date of registration or renewal constituting a history of any personal bankruptcy; business bankruptcy based upon events that occurred while the employee exercised control over an organization; denied, paid out, or revoked bonds; or unsatisfied judgments or liens against the employee; (iv) Felony convictions or other final criminal actions involving a felony against the employee or organizations controlled by the employee; or misdemeanor convictions or other final misdemeanor actions against the employee or organizations controlled by the employee involving financial services, a financial services-related business, dishonesty, or breach of trust; (v) Civil judicial actions against the employee in connection with financial services-related activities, dismissals with settlements, judicial findings that the employee violated financial services-related statutes or regulations, except for actions dismissed without a settlement agreement; (vi) Actions or orders by a State or Federal regulatory agency or foreign financial regulatory authority that: (A) Found the employee to have made a false statement or omission or been dishonest, unfair or unethical; to have been involved in a violation of a financial services-related regulation or statute; or to have been a cause of a financial services-related business having its authorization to do business denied, suspended, revoked or restricted; (B) Are entered against the employee in connection with a financial services-related activity; (C) Denied, suspended, or revoked the employee's registration or license to engage in a financial services-related activity; disciplined the employee or otherwise by order prevented the employee from associating with a financial services-related business or restricted the employee's activities; or (D) Barred the employee from association with an entity regulated by the agency or authority or from engaging in a financial services-related business; (vii) Final orders issued by a State or Federal regulatory agency or foreign financial regulatory authority based on violations of any law or regulation that prohibits fraudulent, manipulative or deceptive conduct; (viii) Revocation or suspension of the employee's authorization to act as an attorney, accountant, or State or Federal contractor; (ix) Customer-initiated financial services-related arbitration or civil action against the employee that required action, including settlements; (x) Disclosure of any voluntary or involuntary employment terminations resulting from allegations accusing the employee of violating a statute, regulation, or industry standard of

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conduct; fraud; dishonesty; theft; or the wrongful taking of property; (xi) Any pending actions against the employee that could result in an action listed in paragraphs (d)(1)(iii) through (ix) of this section; and (xii) Fingerprints of the employee, in digital form if practicable, collected by the employing institution less than three years prior to registration and any appropriate identifying information for submission to the Federal Bureau of Investigation and any governmental agency or entity authorized to receive such information in connection with a State and national criminal history background check. (2) Employee authorization and attestation. An employee registering as a mortgage loan originator or renewing his or her registration under this subpart must: (i) Authorize the Registry and the employing institution to obtain information related to any administrative, civil or criminal findings, to which the employee is a party, made by any governmental jurisdiction; (ii) Attest to the correctness of all information required by paragraph (d) of this section, whether submitted by the employee or on behalf of the employee by the employing bank; and (iii) Authorize the Registry to make available to the public information required by paragraphs (d)(1)(i)(A) and (C), (d)(1)(ii), (iv)-(ix) and (xi) of this section. (e) Required bank information. A bank must submit the following information to the Registry. (1) Bank record. (i) In connection with the initial registration of one or more mortgage loan originators: (A) Name and main office address; (B) Internal Revenue Service Employer Tax Identification Number (EIN); (C) Research Statistics Supervision and Discount (RSSD) number, as issued by the Board; (D) Identification of its primary Federal regulator; (E) Name(s) and contact information of the individual(s) with authority to act as the bank's primary point of contact for the Registry; (F) Name(s) and contact information of the individual(s) with authority to enter data required in paragraph (e) of this section on the Registry and who may delegate this authority to other bank employees, provided this individual and any delegated employee does not act as a mortgage loan originator; and (G) If a subsidiary of a bank, indication that it is a subsidiary and the name of its parent bank. (ii) A bank must update the information required by this paragraph (e) within 30 days of the date that this information becomes inaccurate. (2) Employee information. In connection with the registration of each employee who acts as a mortgage loan originator: (i) After the information required by paragraph (d) of this section has been submitted to the Registry, confirmation that it employs the registrant; and

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(ii) Within 30 days of the date the registrant ceases to be an employee of the bank, notification that it no longer employs the registrant and the date the registrant ceased being an employee. 12 CFR 208.104 208.104 Policies and procedures. A bank that employs mortgage loan originators must adopt and follow written policies and procedures designed to assure compliance with this subpart. These policies and procedures must be appropriate to the nature, size, complexity and scope of the mortgage lending activities of the bank. At a minimum, these policies and procedures must: (a) Establish a process for identifying which employees of the bank are required to be registered mortgage loan originators; (b) Require that all employees of the bank who are mortgage loan originators be informed of the registration requirements of the S.A.F.E. Act and this subpart and be instructed on how to comply with such requirements and procedures; *27408 (c) Establish procedures to comply with the unique identifier requirements in 208.105; (d) Establish reasonable procedures for confirming the adequacy and accuracy of employee registrations, including updates and renewals, by comparisons with its own records; (e) Establish reasonable procedures and tracking systems for monitoring compliance with registration and renewal requirements and procedures; (f) Provide for independent testing for compliance with this subpart to be conducted by bank personnel or by an outside party; (g) Provide for appropriate action in the case of any employee who fails to comply with the registration requirements of the S.A.F.E. Act, this subpart, or the bank's related policies and procedures, including prohibiting such employees from acting as mortgage loan originators or other appropriate disciplinary actions; and (h) Establish a process for reviewing employee criminal history background reports received from the Registry in connection with 208.103(d)(1)(xii), taking appropriate action consistent with applicable law and rules with respect to these reports, and for maintaining records of these reports and actions taken with respect to applicable employees. 12 CFR 208.105 208.105 Use of unique identifier. (a) The bank shall make the unique identifier(s) of its registered mortgage loan originator(s) available to consumers in a manner and method practicable to the institution. (b) A registered mortgage loan originator shall provide his or her unique identifier to a consumer: (1) Upon request; (2) Before acting as a mortgage loan originator; and (3) Through the originator's initial written communication with a consumer, if any.

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12 CFR Pt. 208, Subpt. I, App. A Appendix A to Subpart I of Part 208Examples of Mortgage Loan Originator Activities This Appendix provides examples to aid in the understanding of activities that would cause an employee of a bank to fall within or outside the definition of mortgage loan originator. The examples in this Appendix are not all inclusive. They illustrate only the issue described and do not illustrate any other issues that may arise under this subpart. For the purposes of the examples below, the term loan refers to a residential mortgage loan. (a) Taking a loan application: The following examples illustrate when an employee takes, or does not take, a loan application. (1) Taking an application includes: receiving information that is sufficient to determine whether the consumer qualifies for a loan, even if the employee has had no contact with the consumer and is not responsible for further verification of information. (2) Taking an application does not include any of the following activities performed solely or in combination: (i) Contacting a consumer to verify the information in the loan application by obtaining documentation, such as tax returns or payroll receipts; (ii) Receiving a loan application through the mail and forwarding it, without review, to loan approval personnel; or (iii) Assisting a consumer who is filling out an application by clarifying what type of information is necessary for the application or otherwise explaining the loan application process in response to consumer inquiries. (b) Offering or negotiating terms of a loan: The following examples are designed to illustrate when an employee offers or negotiates terms of a loan, and conversely, what does not constitute offering or negotiating terms of a loan. (1) Offering or negotiating the terms of a loan includes: (i) Presenting a loan offer to a consumer for acceptance, either verbally or in writing, even if further verification of information is necessary and the offer is conditional; or (ii) Responding to a consumer's request for a lower rate or lower points on a pending loan application by presenting to the consumer a revised loan offer, either verbally or in writing, that includes a lower interest rate or lower points than the original offer. (2) Offering or negotiating terms of a loan does not include solely or in combination: (i) Providing general explanations in response to consumer queries regarding qualification for a specific loan product, such as explaining loan terminology (i.e., debt-to-income ratio) or lending policies (i.e., the loan-to-value ratio policy of the bank); (ii) In response to a consumer's request, informing a consumer of the loan rates that are publicly available such as on the bank's Web site for specific types of loan products without communicating to the consumer whether qualifications are met for that loan product; (iii) Collecting information about a consumer in order to provide the consumer with information on loan products for which the consumer generally may qualify, without presenting a specific

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loan offer to the consumer for acceptance, either verbally or in writing; (iv) Arranging the loan closing or other aspects of the loan process, including communicating with a consumer about those arrangements, provided that communication with the consumer only verifies loan terms already offered or negotiated; or (v) Providing a consumer with information unrelated to loan terms, such as the best days of the month for scheduling loan closings at the bank. (c) The following examples illustrate when an employee does or does not offer or negotiate terms of a loan for compensation or gain. (1) Offering or negotiating terms of a loan for compensation or gain includes engaging in any of the activities in paragraph (b)(1) of this Appendix in the course of carrying out employment duties, even if the employee does not receive a referral fee or commission or other special compensation for the loan. (2) Offering or negotiating terms of a loan for compensation or gain does not include engaging in a seller-financed transaction for the employee's personal property that does not involve the bank. 12 CFR 208.111 4. Section 208.111 is amended by redesignating footnotes 7 and 8 as footnotes 8 and 9, respectively, and by revising newly designated footnote 9 to read as follows: 12 CFR 208.111 208.111 Obligations concerning institutional customers. ***** [FN9] See footnote 8 in paragraph (d) of this section. Federal Deposit Insurance Corporation 12 CFR Chapter III Authority and Issuance For the reasons set forth in the preamble, the Federal Deposit Insurance Corporation proposes to amend subchapter B of chapter III of title 12 of the Code of Federal Regulations by amending part 365 as follows: PART 365REAL ESTATE LENDING STANDARDS 1. The authority citation for part 365 is revised to read as follows: Authority: 12 U.S.C. 1828(o) and 5101 et seq. 12 CFR 365.1 12 CFR 365.2 2. Sections 365.1 and 365.2 and Appendix A are placed under a new subpart A, and the heading for new subpart A is added to read as follows:

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Subpart AReal Estate Lending Standards 12 CFR 365.1 365.1 [Amended] 12 CFR 365.1 3. Section 365.1 is amended by removing part and adding subpart in its place. 12 CFR Pt. 365, App. A 12 CFR Pt. 365, Subpt. A, App. A 4. Appendix A to Part 365 is redesignated as Appendix A to Subpart A of Part 365, and the heading is revised to read as follows: Appendix A to Subpart A of Part 365Interagency Guidelines for Real Estate Lending Policies 5. New subpart B is added to read as follows: Subpart BRegistration of Mortgage Loan Originators Sec. 365.101 Authority, purpose, and scope. 365.102 Definitions. 365.103 Registration of mortgage loan originators. *27409 365.104 Policies and procedures. 365.105 Use of unique identif ier. Appendix A to Subpart B of Part 365Examples of Mortgage Loan Originator Activities. Subpart BRegistration of Residential Mortgage Loan Originators 12 CFR 365.101 365.101 Authority, purpose, and scope. (a) Authority. This subpart is issued pursuant to the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, title V of the Housing and Economic Recovery Act of 2008 (S.A.F.E. Act) (Pub. L. 110-289, 122 Stat. 2654, 12 U.S.C. 5101 et seq.). (b) Purpose. This subpart implements the S.A.F.E. Act's Federal registration requirement for mortgage loan originators. The S.A.F.E. Act provides that the objectives of this registration include aggregating and improving the flow of information to and between regulators; providing increased accountability and tracking of mortgage loan originators; enhancing consumer protections; reducing fraud in the residential mortgage loan origination process; and providing consumers with easily accessible information at no charge regarding the employment history of, and publicly adjudicated disciplinary and enforcement actions against, mortgage loan originators.

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(c) Scope(1) In general. This subpart applies to insured state nonmember banks (including state-licensed insured branches of foreign banks) and their subsidiaries (except brokers, dealers, persons providing insurance, investment companies, and investment advisers) (collectively referred to in this subpart as insured state nonmember banks), and their employees who act as mortgage loan originators. (2) Exception. (i) This subpart and the requirements of sections 1504(a)(1)(A) and (2) of the S.A.F.E. Act do not apply to any employee of an insured state nonmember bank if during the past 12 months: (A) The employee acted as a mortgage loan originator for 5 or fewer residential mortgage loans; and (B) The insured state nonmember bank employs mortgage loan originators who, while excepted from registration pursuant to paragraph (c)(2)(i)(A) of this section, in the aggregate, acted as a mortgage loan originator in connection with 25 or fewer residential mortgage loans. (ii) Prior to engaging in mortgage loan origination activity that exceeds either the individual or the aggregate exception limit, an insured state nonmember bank employee must register with the Registry pursuant to this subpart. 12 CFR 365.102 365.102 Definitions. For purposes of this subpart, the following definitions apply: (a) Annual renewal period means November 1 through December 31 of each year. (b)(1) Mortgage loan originator [FN1] means an individual who: FN1 The Appendix to this subpart provides examples of activities that would, and would not, cause an employee to fall within this section's definition of mortgage loan originator. (i) Takes a residential mortgage loan application; and (ii) Offers or negotiates terms of a residential mortgage loan for compensation or gain. (2) The term mortgage loan originator does not include: (i) An individual who performs purely administrative or clerical tasks on behalf of an individual who is described in paragraph (b)(1) of this section; (ii) An individual who only performs real estate brokerage activities (as defined in section 1503(3)(D) of the S.A.F.E. Act) and is licensed or registered as a real estate broker in accordance with applicable State law, unless the individual is compensated by a lender, a mortgage broker, or other mortgage loan originator or by any agent of such lender, mortgage broker, or other mortgage loan originator, and meets the definition of mortgage loan originator in paragraph (b)(1) of this section; or (iii) An individual or entity solely involved in extensions of credit related to timeshare plans, as that term is defined in 11 U.S.C. 101(53D). (3) Administrative or clerical tasks means the receipt, collection, and distribution of information common for the processing or underwriting of a residential mortgage loan and communication with a consumer to obtain information necessary for the processing or underwriting of a

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residential mortgage loan. (c) Nationwide Mortgage Licensing System and Registry or Registry means the system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the State licensing and registration of State-licensed mortgage loan originators and the registration of mortgage loan originators pursuant to section 1507 of the S.A.F.E. Act. (d) Registered mortgage loan originator or registrant means any individual who: (1) Meets the definition of mortgage loan originator and is an employee of an insured state nonmember bank; and (2) Is registered pursuant to this subpart with, and maintains a unique identifier through, the Registry. (e) Residential mortgage loan means any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling (as defined in section 103(v) of the Truth in Lending Act, 15 U.S.C. 1602(v)) or residential real estate upon which is constructed or intended to be constructed a dwelling, and includes refinancings, reverse mortgages, home equity lines of credit and other first and second lien loans that meet the qualifications listed in this definition. (f) Unique identifier means a number or other identifier that: (1) Permanently identifies a registered mortgage loan originator; (2) Is assigned by protocols established by the Nationwide Mortgage Licensing System and Registry, the Federal banking agencies, and the Farm Credit Administration to facilitate: (i) Electronic tracking of mortgage loan originators; and (ii) Uniform identification of, and public access to, the employment history of and the publicly adjudicated disciplinary and enforcement actions against mortgage loan originators; and (3) Must not be used for purposes other than those set forth under the S.A.F.E. Act. 12 CFR 365.103 365.103 Registration of mortgage loan originators. (a) Registration requirement(1) Employee registration. Each employee of an insured state nonmember bank who acts as a mortgage loan originator must register with the Registry, obtain a unique identifier, and maintain this registration in accordance with the requirements of this subpart. Any such employee who is not in compliance with the registration and unique identifier requirements set forth in this subpart is in violation of the S.A.F.E. Act and this subpart. (2) Insured state nonmember bank requirement(i) In general. An insured state nonmember bank that employs one or more individuals who act as a residential mortgage loan originator must require each employee who is a mortgage loan originator to register with the Registry, maintain this registration, and obtain a unique identifier in accordance with the requirements of this subpart. (ii) Prohibition. An insured state nonmember bank must not permit an employee of the bank who is subject to the registration requirements of this subpart to act as a mortgage loan *27410 originator unless such employee is registered with the Registry pursuant to this subpart.

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(3) Implementation period for initial registration. An employee of an insured state nonmember bank who is a mortgage loan originator must complete an initial registration with the Registry pursuant to this subpart within 180 days from the date that the FDIC provides public notice that the Registry is accepting registrations. (4) Employees previously registered or licensed through the Registry(i) In general. If an employee of an insured state nonmember bank was registered or licensed through, and obtained a unique identifier from, the Registry prior to becoming an employee of the bank and has maintained this registration or license, the registration requirements of the S.A.F.E. Act and this subpart are deemed to be met, provided that: (A) The employment information in paragraphs (d)(1)(i)(C) and (d)(1)(ii) of this section is updated and the requirements of paragraph (d)(2) of this section are met; (B) New fingerprints of the employee are submitted to the Registry for a background check, as required by paragraph (d)(1)(xii) of this section; (C) The insured state nonmember bank information required in paragraphs (e)(1)(i) (to the extent the bank has not previously met these requirements) and (e)(2)(i) of this section is submitted to the Registry; and (D) The registration is maintained pursuant to paragraphs (b) and (e)(1)(ii) of this section, as of the date that the employee is employed by the bank. (ii) Implementation period for certain acquisitions, mergers or reorganizations. When registered or licensed mortgage loan originators become insured state nonmember bank employees as a result of an acquisition, merger or reorganization transaction, the bank and employees must comply with the requirements of paragraphs (a)(4)(i)(A), (C), and (D) of this section within 60 days from the effective date of the acquisition, merger, or reorganization. (b) Maintaining registration. (1) A mortgage loan originator who is registered with the Registry pursuant to paragraph (a) of this section must: (i) Renew the registration during the annual renewal period, confirming the responses set forth in paragraphs (d)(1)(i) through (xi) of this section remain accurate and complete, and updating this information, as appropriate; and (ii) Update the registration within 30 days of any of the following events: (A) A change in the name of the registrant; (B) The registrant ceases to be an employee of the insured state nonmember bank; or (C) The information required under paragraphs (d)(1)(iii) through (xi) of this section becomes inaccurate, incomplete, or out-of-date. (2) A registered mortgage loan originator must maintain his or her registration, notwithstanding the originator's subsequent qualification for the exception set forth in 365.101(c)(2), unless the individual is no longer engaged in the activity of a mortgage loan originator. (c) Effective dates(1) Initial registration. An initial registration pursuant to paragraph (a) of this section is effective on the date the registrant receives notification from the Registry that all information required by paragraphs (d) and (e) of this section has been submitted and the registration is complete.

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(2) Renewals or updates. A renewal or update pursuant to paragraph (b) of this section is effective on the date the registrant receives notification from the Registry that all applicable information required by paragraphs (b) and (e) of this section has been submitted and the renewal or update is complete. (d) Required employee information(1) In general. For purposes of the registration required by this section, an insured state nonmember bank must require each employee who is a mortgage loan originator to submit to the Registry, or must submit on behalf of the employee, the following categories of information to the extent this information is collected by the Registry: (i) Identifying information, including the employee's: (A) Name and any other names used; (B) Home address; (C) Address of the employee's principal business location and business contact information; (D) Social security number; (E) Gender; and (F) Date and place of birth; (ii) Financial services-related employment history for the 10 years prior to the date of registration or renewal, including the date the employee became an employee of the bank; (iii) Financial information for the 10 years prior to the date of registration or renewal constituting a history of any personal bankruptcy; business bankruptcy based upon events that occurred while the employee exercised control over an organization; denied, paid out, or revoked bonds; or unsatisfied judgments or liens against the employee; (iv) Felony convictions or other final criminal actions involving a felony against the employee or organizations controlled by the employee; or misdemeanor convictions or other final misdemeanor actions against the employee or organizations controlled by the employee involving financial services, a financial services-related business, dishonesty, or breach of trust; (v) Civil judicial actions against the employee in connection with financial services-related activities, dismissals with settlements, judicial findings that the employee violated financial services-related statutes or regulations, except for actions dismissed without a settlement agreement; (vi) Actions or orders by a State or Federal regulatory agency or foreign financial regulatory authority that: (A) Found the employee to have made a false statement or omission or been dishonest, unfair or unethical; to have been involved in a violation of a financial services-related regulation or statute; or to have been a cause of a financial services-related business having its authorization to do business denied, suspended, revoked or restricted; (B) Are entered against the employee in connection with a financial services-related activity; (C) Denied, suspended, or revoked the employee's registration or license to engage in a financial services-related activity; disciplined the employee or otherwise by order prevented the employee from associating with a financial services-related business or restricted the employee's activities; or

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(D) Barred the employee from association with an entity regulated by the agency or authority or from engaging in a financial services-related business; (vii) Final orders issued by a State or Federal regulatory agency or foreign financial regulatory authority based on violations of any law or regulation that prohibits fraudulent, manipulative or deceptive conduct; (viii) Revocation or suspension of the employee's authorization to act as an attorney, accountant, or State or Federal contractor; (ix) Customer-initiated financial services-related arbitration or civil action against the employee that required action, including settlements; (x) Disclosure of any voluntary or involuntary employment terminations resulting from allegations accusing the employee of violating a statute, regulation, or industry standard of conduct; fraud; dishonesty; theft; or the wrongful taking of property; (xi) Any pending actions against the employee that could result in an action *27411 listed in paragraphs (d)(1)(iii) through (ix) of this section; and (xii) Fingerprints of the employee, in digital form if practicable, collected by the employing institution less than three years prior to registration and any appropriate identifying information for submission to the Federal Bureau of Investigation and any governmental agency or entity authorized to receive such information in connection with a State and national criminal history background check. (2) Employee authorization and attestation. An employee registering as a mortgage loan originator or renewing his or her registration under this subpart must: (i) Authorize the Registry and the employing institution to obtain information related to any administrative, civil or criminal findings, to which the employee is a party, made by any governmental jurisdiction; (ii) Attest to the correctness of all information required by paragraph (d) of this section, whether submitted by the employee or on behalf of the employee by the employing bank; and (iii) Authorize the Registry to make available to the public information required by paragraphs (d)(1)(i)(A) and (C), (d)(1)(ii), (iv)-(ix) and (xi) of this section. (e) Required bank information. An insured state nonmember bank must submit the following information to the Registry. (1) Bank record. (i) In connection with the initial registration of one or more mortgage loan originators: (A) Name and main office address; (B) Internal Revenue Service Employer Tax Identification Number (EIN); (C) Research Statistics Supervision and Discount (RSSD) number, as issued by the Board of Governors of the Federal Reserve System; (D) Identification of its primary Federal regulator; (E) Name(s) and contact information of the individual(s) with authority to act as the bank's

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primary point of contact for the Registry; (F) Name(s) and contact information of the individual(s) with authority to enter data required in paragraph (e) of this section on the Registry and who may delegate this authority to other bank employees, provided this individual and any delegated employee does not act as a mortgage loan originator; and (G) If a subsidiary of an insured state nonmember bank, indication that it is a subsidiary and the name of its parent bank. (ii) An insured state nonmember bank must update the information required by this paragraph (e) within 30 days of the date that this information becomes inaccurate. (2) Employee information. In connection with the registration of each employee who acts as a mortgage loan originator: (i) After the information required by paragraph (d) of this section has been submitted to the Registry, confirmation that it employs the registrant; and (ii) Within 30 days of the date the registrant ceases to be an employee of the bank, notification that it no longer employs the registrant and the date the registrant ceased being an employee. 12 CFR 365.104 365.104 Policies and procedures. An insured state nonmember bank that employs mortgage loan originators must adopt and follow written policies and procedures designed to assure compliance with this subpart. These policies and procedures must be appropriate to the nature, size, complexity and scope of the mortgage lending activities of the bank. At a minimum, these policies and procedures must: (a) Establish a process for identifying which employees of the bank are required to be registered mortgage loan originators; (b) Require that all employees of the insured state nonmember bank who are mortgage loan originators be informed of the registration requirements of the S.A.F.E. Act and this subpart and be instructed on how to comply with such requirements and procedures; (c) Establish procedures to comply with the unique identifier requirements in 365.105; (d) Establish reasonable procedures for confirming the adequacy and accuracy of employee registrations, including updates and renewals, by comparisons with its own records; (e) Establish reasonable procedures and tracking systems for monitoring compliance with registration and renewal requirements and procedures; (f) Provide for independent testing for compliance with this subpart to be conducted by bank personnel or by an outside party; (g) Provide for appropriate action in the case of any employee who fails to comply with the registration requirements of the S.A.F.E. Act, this subpart, or the bank's related policies and procedures, including prohibiting such employees from acting as mortgage loan originators or other appropriate disciplinary actions; and (h) Establish a process for reviewing employee criminal history background reports received from the Registry in connection with 365.103(d)(1)(xii), taking appropriate action consistent with

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applicable law and rules with respect to these reports, and for maintaining records of these reports and actions taken with respect to applicable employees. 12 CFR 365.105 365.105 Use of unique identifier. (a) An insured state nonmember bank shall make the unique identifier(s) of its registered mortgage loan originator(s) available to consumers in a manner and method practicable to the institution. (b) A registered mortgage loan originator shall provide his or her unique identifier to a consumer: (1) Upon request; (2) Before acting as a mortgage loan originator; and (3) Through the originator's initial written communication with a consumer, if any. 12 CFR Pt. 365, Subpt. B, App. A Appendix A to Subpart B of Part 365Examples of Mortgage Loan Originator Activities This Appendix provides examples to aid in the understanding of activities that would cause an employee of an insured state nonmember bank to fall within or outside the definition of mortgage loan originator. The examples in this Appendix are not all inclusive. They illustrate only the issue described and do not illustrate any other issues that may arise under this subpart. For the purposes of the examples below, the term loan refers to a residential mortgage loan. (a) Taking a loan application: The following examples illustrate when an employee takes or does not take, a loan application. (1) Taking an application includes: Receiving information that is sufficient to determine whether the consumer qualifies for a loan, even if the employee has had no contact with the consumer and is not responsible for further verification of information. (2) Taking an application does not include any of the following activities performed solely or in combination: (i) Contacting a consumer to verify the information in the loan application by obtaining documentation, such as tax returns or payroll receipts; (ii) Receiving a loan application through the mail and forwarding it, without review, to loan approval personnel; or (iii) Assisting a consumer who is filling out an application by clarifying what type of information is necessary for the application or otherwise explaining the loan application process in response to consumer inquiries. (b) Offering or negotiating terms of a loan: The following examples are designed to illustrate when an employee offers or negotiates terms of a loan, and conversely, what does not constitute offering or negotiating terms of a loan. (1) Offering or negotiating the terms of a loan includes:

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*27412 (i) Presenting a loan offer to a consumer for acceptance, either verbally or in writing, even if further verification of information is necessary and the offer is conditional; or (ii) Responding to a consumer's request for a lower rate or lower points on a pending loan application by presenting to the consumer a revised loan offer, either verbally or in writing, that includes a lower interest rate or lower points than the original offer. (2) Offering or negotiating terms of a loan does not include solely or in combination: (i) Providing general explanations in response to consumer queries regarding qualification for a specific loan product, such as explaining loan terminology (i.e., debt-to-income ratio) or lending policies (i.e., the loan-to-value ratio policy of the insured state nonmember bank); (ii) In response to a consumer's request, informing a consumer of the loan rates that are publicly available such as on the insured state nonmember bank's Web site for specific types of loan products without communicating to the consumer whether qualifications are met for that loan product; (iii) Collecting information about a consumer in order to provide the consumer with information on loan products for which the consumer generally may qualify, without presenting a specific loan offer to the consumer for acceptance, either verbally or in writing; (iv) Arranging the loan closing or other aspects of the loan process, including communicating with a consumer about those arrangements, provided that communication with the consumer only verifies loan terms already offered or negotiated; or (v) Providing a consumer with information unrelated to loan terms, such as the best days of the month for scheduling loan closings at the bank. (c) The following examples illustrate when an employee does or does not offer or negotiate terms of a loan for compensation or gain. (1) Offering or negotiating terms of a loan for compensation or gain includes engaging in any of the activities in paragraph (b)(1) of this Appendix in the course of carrying out employment duties, even if the employee does not receive a referral fee or commission or other special compensation for the loan. (2) Offering or negotiating terms of a loan for compensation or gain does not include engaging in a seller-financed transaction for the employee's personal property that does not involve the insured state nonmember bank. Office of Thrift Supervision 12 CFR Chapter V Authority and Issuance For the reasons set forth in the preamble, chapter V of title 12 of the Code of Federal Regulations is proposed to be amended as follows: PART 563SAVINGS ASSOCIATIONSOPERATIONS 1. The authority citation for part 563 is revised to read as follows: Authority: 12 U.S.C. 375b, 1462, 1462a, 1463, 1464, 1467a, 1468, 1817, 1820, 1828, 1831o, 3806, 5101 et seq.; 31 U.S.C. 5318; 42 U.S.C. 4106.

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2. Add Subpart D to part 563 to read as follows: Subpart DRegistration of Residential Mortgage Loan Originators Sec. 563.101 Authority, purpose, and scope. 563.102 Definitions. 563.103 Registration of mortgage loan originators. 563.104 Policies and procedures. 563.105 Use of unique identifier. Appendix A to Subpart D of Part 563Examples of Mortgage Loan Originator Activities. Subpart DRegistration of Residential Mortgage Loan Originators 12 CFR 563.101 563.101 Authority, purpose, and scope. (a) Authority. This subpart is issued pursuant to the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, title V of the Housing and Economic Recovery Act of 2008 (S.A.F.E. Act) (Pub. L. 110-289, 122 Stat. 2654, 12 U.S.C. 5101 et seq.). (b) Purpose. This subpart implements the S.A.F.E. Act's Federal registration requirement for mortgage loan originators. The S.A.F.E. Act provides that the objectives of this registration include aggregating and improving the flow of information to and between regulators; providing increased accountability and tracking of mortgage loan originators; enhancing consumer protections; reducing fraud in the residential mortgage loan origination process; and providing consumers with easily accessible information at no charge regarding the employment history of, and publicly adjudicated disciplinary and enforcement actions against, mortgage loan originators. (c) Scope(1) In general. This subpart applies to savings associations and their operating subsidiaries (collectively referred to in this subpart as savings associations), and their employees who act as mortgage loan originators. (2) Exception. (i) This subpart and the requirements of section 1504(a)(1)(A) and (2) of the S.A.F.E. Act do not apply to any employee of a savings association if during the past 12 months: (A) The employee acted as a mortgage loan originator for 5 or fewer residential mortgage loans; and (B) The savings association does not employ mortgage loan originators who, while excepted from registration pursuant to paragraph (c)(2)(i)(A) of this section, in the aggregate, acted as a mortgage loan originator in connection with more than 25 residential mortgage loans. (ii) Prior to engaging in mortgage loan origination activity that exceeds either the individual or the aggregate exception limit, a savings association employee must register with the Registry pursuant to this subpart. 12 CFR 563.102

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563.102 Definitions. For purposes of this subpart D, the following definitions apply: (a) Annual renewal period means November 1 through December 31 of each year. (b)(1) Mortgage loan originator [FN1] means an individual who: FN1 The Appendix to this subpart provides examples of activities that would, and would not, cause an employee to fall within this section's definition of mortgage loan originator. (i) Takes a residential mortgage loan application; and (ii) Offers or negotiates terms of a residential mortgage loan for compensation or gain. (2) The term mortgage loan originator does not include: (i) An individual who performs purely administrative or clerical tasks on behalf of an individual who is described in paragraph (b)(1) of this section; (ii) An individual who only performs real estate brokerage activities (as defined in section 1503(3)(D) of the S.A.F.E. Act) and is licensed or registered as a real estate broker in accordance with applicable State law, unless the individual is compensated by a lender, a mortgage broker, or other mortgage loan originator or by any agent of such lender, mortgage broker, or other mortgage loan originator, and meets the definition of mortgage loan originator in paragraph (b)(1) of this section; or (iii) An individual or entity solely involved in extensions of credit related to timeshare plans, as that term is defined in 11 U.S.C. 101(53D). (3) Administrative or clerical tasks means the receipt, collection, and distribution of information common for the processing or underwriting of a residential mortgage loan and communication with a consumer to obtain information necessary for the processing or underwriting of a residential mortgage loan. (c) Nationwide Mortgage Licensing System and Registry or Registry means the system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the State licensing and registration of State-licensed mortgage loan originators and the registration of mortgage loan originators pursuant to section 1507 of the S.A.F.E. Act. *27413 (d) Registered mortgage loan originator or registrant means any individual who: (1) Meets the definition of mortgage loan originator and is an employee of a savings association; and (2) Is registered pursuant to this subpart with, and maintains a unique identifier through, the Registry. (e) Residential mortgage loan means any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling (as defined in section 103(v) of the Truth in Lending Act) or residential real estate upon which is constructed or intended to be constructed a dwelling, and includes refinancings, reverse mortgages, home equity lines of credit and other first and second lien loans that meet the qualifications listed in this definition.

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(f) Unique identifier means a number or other identifier that: (1) Permanently identifies a registered mortgage loan originator; (2) Is assigned by protocols established by the Nationwide Mortgage Licensing System and Registry, the Federal banking agencies, and the Farm Credit Administration to facilitate: (i) Electronic tracking of mortgage loan originators; and (ii) Uniform identification of, and public access to, the employment history of and the publicly adjudicated disciplinary and enforcement actions against mortgage loan originators; and (3) Must not be used for purposes other than those set forth under the S.A.F.E. Act. 12 CFR 563.103 563.103 Registration of mortgage loan originators. (a) Registration requirement(1) Employee registration. Each employee of a savings association who acts as a mortgage loan originator must register with the Registry, obtain a unique identifier, and maintain this registration in accordance with the requirements of this subpart. Any such employee who is not in compliance with the registration and unique identifier requirements set forth in this subpart is in violation of the S.A.F.E. Act and this subpart. (2) Savings association requirement(i) In general. A savings association that employs one or more individuals who act as a residential mortgage loan originator must require each employee who is a mortgage loan originator to register with the Registry, maintain this registration, and obtain a unique identifier in accordance with the requirements of this subpart. (ii) Prohibition. A savings association must not permit an employee of the association who is subject to the registration requirements of this subpart to act as a mortgage loan originator unless such employee is registered with the Registry pursuant to this subpart. (3) Implementation period for initial registration. An employee of a savings association who is a mortgage loan originator must complete an initial registration with the Registry pursuant to this subpart within 180 days from the date that the OTS provides public notice that the Registry is accepting registrations. (4) Employees previously registered or licensed through the Registry(i) In general. If an employee of a savings association was registered or licensed through, and obtained a unique identifier from, the Registry prior to becoming an employee of the association and has maintained this registration or license, the registration requirements of the S.A.F.E. Act and this subpart are deemed to be met, provided that: (A) The employment information in paragraphs (d)(1)(i)(C) and (d)(1)(ii) of this section is updated and the requirements of paragraph (d)(2) of this section are met; (B) New fingerprints of the employee are submitted to the Registry for a background check, as required by paragraph (d)(1)(xii); (C) The savings association information required in paragraphs (e)(1)(i) (to the extent the association has not previously met these requirements) and (e)(2)(i) of this section is submitted to the Registry; and (D) The registration is maintained pursuant to paragraphs (b) and (e)(1)(ii) of this section, as of

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the date that the employee is employed by the association. (ii) Implementation period for certain acquisitions, mergers or reorganizations. When registered or licensed mortgage loan originators become savings association employees as a result of an acquisition, merger or reorganization transaction, the association and employees must comply with the requirements of paragraphs (a)(4)(i)(A), (C), and (D) of this section within 60 days from the effective date of the acquisition, merger, or reorganization. (b) Maintaining registration. (1) A mortgage loan originator who is registered with the Registry pursuant to paragraph (a) of this section must: (i) Renew the registration during the annual renewal period, confirming the responses set forth in paragraphs (d)(1)(i) through (xi) of this section remain accurate and complete, and updating this information, as appropriate; and (ii) Update the registration within 30 days of any of the following events: (A) A change in the name of the registrant; (B) The registrant ceases to be an employee of the savings association; or (C) The information required under paragraphs (d)(1)(iii) through (xi) of this section becomes inaccurate, incomplete, or out-of-date. (2) A registered mortgage loan originator must maintain his or her registration, notwithstanding the originator's subsequent qualification for the exception set forth in 563.101(c)(2), unless the individual is no longer engaged in the activity of a mortgage loan originator. (c) Effective dates(1) Initial registration. An initial registration pursuant to paragraph (a) of this section is effective on the date the registrant receives notification from the Registry that all information required by paragraphs (d) and (e) of this section has been submitted and the registration is complete. (2) Renewals or updates. A renewal or update pursuant to paragraph (b) of this section is effective on the date the registrant receives notification from the Registry that all applicable information required by paragraphs (b) and (e) and of this section has been submitted and the renewal or update is complete. (d) Required employee information(1) In general. For purposes of the registration required by this section, a savings association must require each employee who is a mortgage loan originator to submit to the Registry, or must submit on behalf of the employee, the following categories of information to the extent this information is collected by the Registry: (i) Identifying information, including the employee's: (A) Name and any other names used; (B) Home address; (C) Address of the employee's principal business location and business contact information; (D) Social security number; (E) Gender; and (F) Date and place of birth;

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(ii) Financial services-related employment history for the 10 years prior to the date of registration or renewal, including the date the employee became an employee of the association; (iii) Financial information for the 10 years prior to the date of registration or renewal constituting a history of any personal bankruptcy; business bankruptcy based upon events that occurred while the employee exercised control over an organization; denied, paid out, or revoked bonds; or *27414 unsatisfied judgments or liens against the employee; (iv) Felony convictions or other final criminal actions involving a felony against the employee or organizations controlled by the employee; or misdemeanor convictions or other final misdemeanor actions against the employee or organizations controlled by the employee involving financial services, a financial services-related business, dishonesty, or breach of trust; (v) Civil judicial actions against the employee in connection with financial services-related activities, dismissals with settlements, judicial findings that the employee violated financial services-related statutes or regulations, except for actions dismissed without a settlement agreement; (vi) Actions or orders by a State or Federal regulatory agency or foreign financial regulatory authority that: (A) Found the employee to have made a false statement or omission or been dishonest, unfair or unethical; to have been involved in a violation of a financial services-related regulation or statute; or to have been a cause of a financial services-related business having its authorization to do business denied, suspended, revoked or restricted; (B) Are entered against the employee in connection with a financial services-related activity; (C) Denied, suspended, or revoked the employee's registration or license to engage in a financial services-related activity; disciplined the employee or otherwise by order prevented the employee from associating with a financial services-related business or restricted the employee's activities; or (D) Barred the employee from association with an entity regulated by the agency or authority or from engaging in a financial services-related business; (vii) Final orders issued by a State or Federal regulatory agency or foreign financial regulatory authority based on violations of any law or regulation that prohibits fraudulent, manipulative or deceptive conduct; (viii) Revocation or suspension of the employee's authorization to act as an attorney, accountant, or State or Federal contractor; (ix) Customer-initiated financial services-related arbitration or civil action against the employee that required action, including settlements; (x) Disclosure of any voluntary or involuntary employment terminations resulting from allegations accusing the employee of violating a statute, regulation, or industry standard of conduct; fraud; dishonesty; theft; or the wrongful taking of property; (xi) Any pending actions against the employee that could result in an action listed in paragraphs (d)(1)(iii) through (ix) of this section; and (xii) Fingerprints of the employee, in digital form if practicable, collected by the employing savings association less than three years prior to registration and any appropriate identifying

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information for submission to the Federal Bureau of Investigation and any governmental agency or entity authorized to receive such information in connection with a State and national criminal history background check; (2) Employee authorization and attestation. An employee registering as a mortgage loan originator or renewing his or her registration under this subpart must: (i) Authorize the Registry and the employing institution to obtain information related to any administrative, civil or criminal findings, to which the employee is a party, made by any governmental jurisdiction; (ii) Attest to the correctness of all information required by paragraph (d) of this section, whether submitted by the employee or on behalf of the employee by the employing savings association; and (iii) Authorize the Registry to make available to the public information required by paragraphs (d)(1)(i)(A) and (C), (d)(1)(ii), (iv), (v), (vi), (vii), (viii), (ix), and (xi) of this section. (e) Required savings association information. A savings association must submit the following information to the Registry. (1) Savings association record. (i) In connection with the initial registration of one or more mortgage loan originators: (A) Name and main office address; (B) Internal Revenue Service Employer Tax Identification Number (EIN); (C) Research Statistics Supervision and Discount (RSSD) number, as issued by the Board of Governors of the Federal Reserve System; (D) Identification of its primary Federal regulator; (E) Name(s) and contact information of the individual(s) with authority to act as the savings association's primary point of contact for the Registry; (F) Name(s) and contact information of the individual(s) with authority to enter data required in paragraph (e) of this section on the Registry and who may delegate this authority to other savings association employees, provided this individual and any delegated employee does not act as a mortgage loan originator; (G) If an operating subsidiary of a savings association, indication that it is a subsidiary and the name of its parent savings association. (ii) A savings association must update the information required by this paragraph (e) within 30 days of the date that this information becomes inaccurate. (2) Employee information. In connection with the registration of each employee who acts as a mortgage loan originator: (i) After the information required by paragraph (d) of this section has been submitted to the Registry, confirmation that it employs the registrant; and (ii) Within 30 days of the date the registrant ceases to be an employee of the savings association, notification that it no longer employs the registrant and the date the registrant ceased being an employee.

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12 CFR 563.104 563.104 Policies and procedures. A savings association that employs mortgage loan originators must adopt and follow written policies and procedures designed to assure compliance with this subpart. These policies and procedures must be appropriate to the nature, size, complexity and scope of the mortgage lending activities of the savings association. At a minimum, these policies and procedures must: (a) Establish a process for identifying which employees of the savings association are required to be registered mortgage loan originators; (b) Require that all employees of the savings association who are mortgage loan originators be informed of the registration requirements of the S.A.F.E. Act and this subpart and be instructed on how to comply with such requirements and procedures; (c) Establish procedures to comply with the unique identifier requirements in 563.105; (d) Establish reasonable procedures for confirming the adequacy and accuracy of employee registrations, including updates and renewals, by comparisons with its own records; (e) Establish reasonable procedures and tracking systems for monitoring compliance with registration and renewal requirements and procedures; (f) Provide for independent testing for compliance with this subpart to be conducted by savings association personnel or by an outside party; (g) Provide for appropriate action in the case of any employee who fails to comply with the registration requirements of the S.A.F.E. Act, this subpart, or the savings association's related policies and procedures, *27415 including prohibiting such employees from acting as mortgage loan originators or other appropriate disciplinary actions; and (h) Establish a process for reviewing employee criminal history background reports received from the Registry in connection with 563.103(d)(1)(xii) of this section, taking appropriate action consistent with applicable law and rules with respect to these reports, and for maintaining records of these reports and actions taken with respect to applicable employees. 12 CFR 563.105 563.105 Use of unique identifier. (a) The savings association shall make the unique identifier(s) of its registered mortgage loan originator(s) available to consumers in a manner and method practicable to the institution. (b) A registered mortgage loan originator shall provide his or her unique identifier to a consumer: (1) Upon request; (2) Before acting as a mortgage loan originator; and (3) Through the originator's initial written communication with a consumer, if any. 12 CFR Pt. 563, Subpt. D, App. A Appendix A to Subpart D of Part 563Examples of Mortgage Loan Originator Activities

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This Appendix provides examples to aid in the understanding of activities that would cause an employee of a savings association to fall within or outside the definition of mortgage loan originator. The examples in this Appendix are not all inclusive. They illustrate only the issue described and do not illustrate any other issues that may arise under this subpart. For the purposes of the examples below, the term loan refers to a residential mortgage loan. (a) Taking a loan application: The following examples illustrate when an employee takes or does not take, a loan application. (1) Taking an application includes: receiving information that is sufficient to determine whether the consumer qualifies for a loan, even if the employee has had no contact with the consumer and is not responsible for further verification of information. (2) Taking an application does not include any of the following activities performed solely or in combination: (i) Contacting a consumer to verify the information in the loan application by obtaining documentation, such as tax returns or payroll receipts; (ii) Receiving a loan application through the mail and forwarding it, without review, to loan approval personnel; or (iii) Assisting a consumer who is filling out an application by clarifying what type of information is necessary for the application or otherwise explaining the loan application process in response to consumer inquiries. (b) Offering or negotiating terms of a loan: The following examples are designed to illustrate when an employee offers or negotiates terms of a loan, and conversely, what does not constitute offering or negotiating terms of a loan. (1) Offering or negotiating the terms of a loan includes: (i) Presenting a loan offer to a consumer for acceptance, either verbally or in writing, even if further verification of information is necessary and the offer is conditional; or (ii) Responding to a consumer's request for a lower rate or lower points on a pending loan application by presenting to the consumer a revised loan offer, either verbally or in writing, that includes a lower interest rate or lower points than the original offer. (2) Offering or negotiating terms of a loan does not include solely or in combination: (i) Providing general explanations in response to consumer queries regarding qualification for a specific loan product, such as explaining loan terminology (i.e., debt-to-income ratio) or lending policies (i.e., the loan-to-value ratio policy of the savings association); (ii) In response to a consumer's request, informing a consumer of the loan rates that are publicly available such as on the savings association's Web site for specific types of loan products without communicating to the consumer whether qualifications are met for that loan product; (iii) Collecting information about a consumer in order to provide the consumer with information on loan products for which the consumer generally may qualify, without presenting a specific loan offer to the consumer for acceptance, either verbally or in writing; (iv) Arranging the loan closing or other aspects of the loan process, including communicating

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with a consumer about those arrangements, provided that communication with the consumer only verifies loan terms already offered or negotiated; or (v) Providing a consumer with information unrelated to loan terms, such as the best days of the month for scheduling loan closings at the savings association. (c) The following examples illustrate when an employee does or does not offer or negotiate terms of a loan for compensation or gain. (1) Offering or negotiating terms of a loan for compensation or gain includes engaging in any of the activities in paragraph (b)(1) of this Appendix in the course of carrying out employment duties, even if the employee does not receive a referral fee or commission or other special compensation for the loan. (2) Offering or negotiating terms of a loan for compensation or gain does not include engaging in a seller-financed transaction for the employee's personal property that does not involve the savings association. Farm Credit Administration 12 CFR Chapter VI Authority and Issuance For the reasons set forth in the preamble, chapter VI of title 12 of the Code of Federal Regulations is proposed to be amended by adding new part 610 to chapter VI to read as follows: PART 610REGISTRATION OF MORTGAGE LOAN ORIGINATORS Sec. 610.101 Authority, purpose, and scope. 610.102 Definitions. 610.103 Registration of mortgage loan originators. 610.104 Policies and procedures. 610.105 Use of unique identifier. Appendix A to Part 610Examples of Mortgage Loan Originator Activities Authority: Secs. 1.5, 1.7, 1.9, 1.10, 1.11, 1.13, 2.2, 2.4, 2.12, 5.9, 5.17, 7.2, 7.6, 7.8 of the Farm Credit Act (12 U.S.C. 2013, 2015, 2017, 2018, 2019, 2021, 2073, 2075, 2093, 2243, 2252, 2279a-2, 2279b, 2279c-10); and Secs. 1501 et seq. of the S.A.F.E. Act (12 U.S.C. 5101 et seq.) 12 CFR 610.101 610.101 Authority, purpose, and scope. (a) Authority. This part is issued pursuant to the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, title V of the Housing and Economic Recovery Act of 2008 (S.A.F.E. Act) (Pub. L. 110-289, 122 Stat. 2654 (2008), 12 U.S.C. 5101 et seq.).

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(b) Purpose. This part implements the S.A.F.E. Act's Federal registration requirement for mortgage loan originators. The S.A.F.E. Act provides that the objectives of this registration include aggregating and improving the flow of information to and between regulators; providing increased accountability and tracking of mortgage loan originators; enhancing consumer protections; reducing fraud in the residential mortgage loan origination process; and providing consumers with easily accessible information at no charge regarding the employment history of, and publicly adjudicated disciplinary and enforcement actions against, mortgage loan originators. (c) Scope(1) In general. This part applies to any Farm Credit System lending institution that actually originates residential mortgage loans pursuant to its authority under sections 1.9(3), 1.11, or 2.4(a) and (b) of the Farm Credit Act of 1971, as amended, and their employees who act as mortgage loan originators. (2) Exception. (i) This part and the requirements of sections 1504(a)(1)(A) and (2) of the S.A.F.E. Act do not apply to any employee of a Farm Credit System institution if during the past 12 months: (A) The employee acted as a mortgage loan originator for 5 or fewer residential mortgage loans; and (B) The Farm Credit System institution employs mortgage loan originators who, while excepted from registration pursuant to paragraph (c)(2)(i)(A) of this section, in the *27416 aggregate, acted as a mortgage loan originator in connection with 25 or fewer residential mortgage loans. (ii) Prior to engaging in mortgage loan origination activity that exceeds either the individual or the aggregate exception limit, a Farm Credit System institution employee must register with the Registry pursuant to this part. 12 CFR 610.102 610.102 Definitions. For purposes of this part, the following definitions apply: (a) Annual renewal period means November 1 through December 31 of each year. (b)(1) Mortgage loan originator [FN1] means an individual who: FN1 The Appendix to this part provides examples of activities that would, and would not, cause an employee to fall within this section's definition of mortgage loan originator. (i) Takes a residential mortgage loan application; and (ii) Offers or negotiates terms of a residential mortgage loan for compensation or gain. (2) The term mortgage loan originator does not include: (i) An individual who performs purely administrative or clerical tasks on behalf of an individual who is described in paragraph (b)(1) of this section; (ii) An individual who only performs real estate brokerage activities (as defined in section 1503(3)(D) of the S.A.F.E. Act) and is licensed or registered as a real estate broker in accordance with applicable State law, unless the individual is compensated by a lender, a mortgage broker, or other mortgage loan originator or by any agent of such lender, mortgage broker, or other mortgage loan originator, and meets the definition of mortgage loan originator in paragraph (b)(1) of this section; or

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(iii) An individual or entity solely involved in extensions of credit related to timeshare plans, as that term is defined in 11 U.S.C. 101(53D). (3) Administrative or clerical tasks means the receipt, collection, and distribution of information common for the processing or underwriting of a residential mortgage loan and communication with a consumer to obtain information necessary for the processing or underwriting of a residential mortgage loan. (c) Nationwide Mortgage Licensing System and Registry or Registry means the system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the State licensing and registration of State-licensed mortgage loan originators and the registration of mortgage loan originators pursuant to section 1507 of the S.A.F.E. Act. (d) Registered mortgage loan originator or registrant means any individual who: (1) Meets the definition of mortgage loan originator and is an employee of a Farm Credit System institution; and (2) Is registered pursuant to this part with, and maintains a unique identifier through, the Registry. (e) Residential mortgage loan means any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling (as defined in section 103(v) of the Truth in Lending Act, 15 U.S.C. 1602(v)) or residential real estate upon which is constructed or intended to be constructed a dwelling, and includes refinancings, reverse mortgages, home equity lines of credit and other first and second lien loans that meet the qualifications listed in this definition. This definition does not amend or supersede 613.3030(c) of this chapter. (f) Unique identifier means a number or other identifier that: (1) Permanently identifies a registered mortgage loan originator; (2) Is assigned by protocols established by the Nationwide Mortgage Licensing System and Registry, the Federal banking agencies, and the Farm Credit Administration to facilitate: (i) Electronic tracking of mortgage loan originators; and (ii) Uniform identification of, and public access to, the employment history of and the publicly adjudicated disciplinary and enforcement actions against mortgage loan originators; and (3) Must not be used for purposes other than those set forth under the S.A.F.E. Act. 12 CFR 610.103 610.103 Registration of mortgage loan originators. (a) Registration requirement(1) Employee registration. Each employee of a Farm Credit System institution who acts as a mortgage loan originator must register with the Registry, obtain a unique identifier, and maintain this registration in accordance with the requirements of this part. Any such employee who is not in compliance with the registration and unique identifier requirements set forth in this part is in violation of the S.A.F.E. Act and this part. (2) Farm Credit System institution requirement(i) In general. A Farm Credit System institution

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that employs one or more individuals who act as a residential mortgage loan originator must require each employee who is a mortgage loan originator to register with the Registry, maintain this registration, and obtain a unique identifier in accordance with the requirements of this part. (ii) Prohibition. A Farm Credit System institution must not permit an employee who is subject to the registration requirements of this part to act as a mortgage loan originator unless such employee is registered with the Registry pursuant to this part. (3) Implementation period for initial registration. An employee of a Farm Credit System institution who is a mortgage loan originator must complete an initial registration with the Registry pursuant to this part within 180 days from the date that the Farm Credit Administration provides public notice that the Registry is accepting registrations. (4) Employees previously registered or licensed through the Registry(i) In general. If an employee of a Farm Credit System institution was registered or licensed through, and obtained a unique identifier from, the Registry prior to becoming an employee of the Farm Credit System institution and has maintained this registration or license, the registration requirements of the S.A.F.E. Act and this part are deemed to be met, provided that: (A) The employment information in paragraphs (d)(1)(i)(C) and (d)(1)(ii) of this section is updated and the requirements of paragraph (d)(2) of this section are met; (B) New fingerprints of the employee are submitted to the Registry for a background check, as required by paragraph (d)(1)(xii) of this section; (C) The Farm Credit System institution information required in paragraphs (e)(1)(i) (to the extent the Farm Credit System institution has not previously met these requirements) and (e)(2)(i) of this section is submitted to the Registry; and (D) The registration is maintained pursuant to paragraphs (b) and (e)(1)(ii) of this section, as of the date that the employee is employed by the Farm Credit System institution. (ii) Implementation period for certain acquisitions, mergers or reorganizations. When registered or licensed mortgage loan originators become employees of another Farm Credit System institution as a result of a consolidation, merger or reorganization transaction, the Farm Credit System institution and employee must comply with the requirements of paragraphs (a)(4)(i)(A), (C), and (D) of this section within 60 days from the effective date of the consolidation, merger, or reorganization. *27417 (b) Maintaining registration. (1) A mortgage loan originator who is registered with the Registry pursuant to paragraph (a) of this section must: (i) Renew the registration during the annual renewal period, confirming the responses set forth in paragraphs (d)(1)(i) through (xi) of this section remain accurate and complete, and updating this information, as appropriate; and (ii) Update the registration within 30 days of any of the following events: (A) A change in the name of the registrant; (B) The registrant ceases to be an employee of the Farm Credit System institution; or (C) The information required under paragraphs (d)(1)(iii) through (xi) of this section becomes inaccurate, incomplete, or out-of-date. (2) A registered mortgage loan originator must maintain his or her registration, notwithstanding

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the originator's subsequent qualification for the exception set forth in 610.101(c)(2), unless the individual is no longer engaged in the activity of a mortgage loan originator. (c) Effective dates(1) Initial registration. An initial registration pursuant to paragraph (a) of this section is effective on the date the registrant receives notification from the Registry that all information required by paragraphs (d) and (e) of this section has been submitted and the registration is complete. (2) Renewals or updates. A renewal or update pursuant to paragraph (b) of this section is effective on the date the registrant receives notification from the Registry that all applicable information required by paragraphs (b) and (e) of this section has been submitted and the renewal or update is complete. (d) Required employee information(1) In general. For purposes of the registration required by this section, a Farm Credit System institution must require each employee who is a mortgage loan originator to submit to the Registry, or must submit on behalf of the employee, the following categories of information to the extent this information is collected by the Registry: (i) Identifying information, including the employee's: (A) Name and any other names used; (B) Home address; (C) Address of the employee's principal business location and business contact information; (D) Social security number; (E) Gender; and (F) Date and place of birth; (ii) Financial services-related employment history for the 10 years prior to the date of registration or renewal, including the date the employee became an employee of the Farm Credit System institution; (iii) Financial information for the 10 years prior to the date of registration or renewal constituting a history of any personal bankruptcy; business bankruptcy based upon events that occurred while the employee exercised control over an organization; denied, paid out, or revoked bonds; or unsatisfied judgments or liens against the employee; (iv) Felony convictions or other final criminal actions involving a felony against the employee or organizations controlled by the employee; or misdemeanor convictions or other final misdemeanor actions against the employee or organizations controlled by the employee involving financial services, a financial services-related business, dishonesty, or breach of trust; (v) Civil judicial actions against the employee in connection with financial services-related activities, dismissals with settlements, judicial findings that the employee violated financial services-related statutes or regulations, except for actions dismissed without a settlement agreement; (vi) Actions or orders by a State or Federal regulatory agency or foreign financial regulatory authority that: (A) Found the employee to have made a false statement or omission or been dishonest, unfair or unethical; to have been involved in a violation of a financial services-related regulation or statute; or to have been a cause of a financial services-related business having its authorization to do business denied, suspended, revoked or restricted;

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(B) Are entered against the employee in connection with a financial services-related activity; (C) Denied, suspended, or revoked the employee's registration or license to engage in a financial services-related activity; disciplined the employee or otherwise by order prevented the employee from associating with a financial services-related business or restricted the employee's activities; or (D) Barred the employee from association with an entity regulated by the agency or authority or from engaging in a financial services-related business; (vii) Final orders issued by a State or Federal regulatory agency or foreign financial regulatory authority based on violations of any law or regulation that prohibits fraudulent, manipulative or deceptive conduct; (viii) Revocation or suspension of the employee's authorization to act as an attorney, accountant, or State or Federal contractor; (ix) Customer-initiated financial services-related arbitration or civil action against the employee that required action, including settlements; (x) Disclosure of any voluntary or involuntary employment terminations resulting from allegations accusing the employee of violating a statute, regulation, or industry standard of conduct; fraud; dishonesty; theft; or the wrongful taking of property; (xi) Any pending actions against the employee that could result in an action listed in paragraphs (d)(1)(iii) through (ix) of this section; and (xii) Fingerprints of the employee, in digital form if practicable, collected by the employing institution less than three years prior to registration and any appropriate identifying information for submission to the Federal Bureau of Investigation and any governmental agency or entity authorized to receive such information in connection with a State and national criminal history background check. (2) Employee authorization and attestation. An employee registering as a mortgage loan originator or renewing his or her registration under this part must: (i) Authorize the Registry and the employing institution to obtain information related to any administrative, civil or criminal findings, to which the employee is a party, made by any governmental jurisdiction; (ii) Attest to the correctness of all information required by paragraph (d) of this section, whether submitted by the employee or on behalf of the employee by the employing Farm Credit System institution; and (iii) Authorize the Registry to make available to the public information required by paragraphs (d)(1)(i)(A) and (C), (d)(1)(ii), (iv)-(ix) and (xi) of this section. (e) Required information. A Farm Credit System institution must submit the following information to the Registry. (1) Farm Credit System institution record. (i) In connection with the initial registration of one or more mortgage loan originators: (A) Name and main office address;

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(B) Internal Revenue Service Employer Tax Identification Number (EIN); (C) Research Statistics Supervision and Discount (RSSD) number, as issued by the Board of Governors of the Federal Reserve System; (D) Identification of its primary Federal regulator; *27418 (E) Name(s) and contact information of the individual(s) with authority to act as the Farm Credit System institution's primary point of contact for the Registry; (F) Name(s) and contact information of the individual(s) with authority to enter data required in paragraph (e) of this section on the Registry and who may delegate this authority to other employees of the Farm Credit System institution, provided this individual and any delegated employee does not act as a mortgage loan originator; and (G) If an operating subsidiary of an agricultural credit association, indication that it is a subsidiary and the name of its parent agricultural credit association. (ii) A Farm Credit System institution must update the information required by this paragraph (e) within 30 days of the date that this information becomes inaccurate. (2) Employee information. In connection with the registration of each employee who acts as a mortgage loan originator: (i) After the information required by paragraph (d) of this section has been submitted to the Registry, confirmation that it employs the registrant; and (ii) Within 30 days of the date the registrant ceases to be an employee of the Farm Credit System institution, notification that it no longer employs the registrant and the date the registrant ceased being an employee. 12 CFR 610.104 610.104 Policies and procedures. A Farm Credit System institution that employs mortgage loan originators must adopt and follow written policies and procedures designed to assure compliance with this part. These policies and procedures must be appropriate to the nature, size, complexity and scope of the mortgage lending activities of the Farm Credit System institution. At a minimum, these policies and procedures must: (a) Establish a process for identifying which employees of the Farm Credit System institution are required to be registered mortgage loan originators; (b) Require that all employees of the Farm Credit System institution who are mortgage loan originators be informed of the registration requirements of the S.A.F.E. Act and this part and be instructed on how to comply with such requirements and procedures; (c) Establish procedures to comply with the unique identifier requirements in 610.105; (d) Establish reasonable procedures for confirming the adequacy and accuracy of employee registrations, including updates and renewals, by comparisons with its own records; (e) Establish reasonable procedures and tracking systems for monitoring compliance with registration and renewal requirements and procedures;

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(f) Provide for independent testing for compliance with this part to be conducted by Farm Credit System institution personnel or by an outside party; (g) Provide for appropriate action in the case of any employee who fails to comply with the registration requirements of the S.A.F.E. Act, this part, or the Farm Credit System institution's related policies and procedures, including prohibiting such employees from acting as mortgage loan originators or other appropriate disciplinary actions; and (h) Establish a process for reviewing employee criminal history background reports received from the Registry in connection with 610.103(d)(1)(xii), taking appropriate action consistent with applicable law and rules with respect to these reports, and for maintaining records of these reports and actions taken with respect to applicable employees. 12 CFR 610.105 610.105 Use of unique identifier. (a) The Farm Credit System institution shall make the unique identifier(s) of its registered mortgage loan originator(s) available to consumers in a manner and method practicable to the institution. (b) A registered mortgage loan originator shall provide his or her unique identifier to a consumer: (1) Upon request; (2) Before acting as a mortgage loan originator; and (3) Through the originator's initial written communication with a consumer, if any. 12 CFR Pt. 610, App. A Appendix A to Part 610Examples of Mortgage Loan Originator Activities This Appendix provides examples to aid in the understanding of activities that would cause an employee of a Farm Credit System institution to fall within or outside the definition of mortgage loan originator. The examples in this Appendix are not all inclusive. They illustrate only the issue described and do not illustrate any other issues that may arise under this part. For the purposes of the examples below, the term loan refers to a residential mortgage loan. (a) Taking a loan application: The following examples illustrate when an employee takes or does not take, a loan application. (1) Taking an application includes: receiving information that is sufficient to determine whether the consumer qualifies for a loan, even if the employee has had no contact with the consumer and is not responsible for further verification of information. (2) Taking an application does not include any of the following activities performed solely or in combination: (i) Contacting a consumer to verify the information in the loan application by obtaining documentation, such as tax returns or payroll receipts; (ii) Receiving a loan application through the mail and forwarding it, without review, to loan approval personnel; or

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(iii) Assisting a consumer who is filling out an application by clarifying what type of information is necessary for the application or otherwise explaining the loan application process in response to consumer inquiries. (b) Offering or negotiating terms of a loan: The following examples are designed to illustrate when an employee offers or negotiates terms of a loan, and conversely, what does not constitute offering or negotiating terms of a loan. (1) Offering or negotiating the terms of a loan includes: (i) Presenting a loan offer to a consumer for acceptance, either verbally or in writing, even if further verification of information is necessary and the offer is conditional; or (ii) Responding to a consumer's request for a lower rate or lower points on a pending loan application by presenting to the consumer a revised loan offer, either verbally or in writing, that includes a lower interest rate or lower points than the original offer. (2) Offering or negotiating terms of a loan does not include solely or in combination: (i) Providing general explanations in response to consumer queries regarding qualification for a specific loan product, such as explaining loan terminology (i.e., debt-to-income ratio) or lending policies (i.e., the loan-to-value ratio policy of the Farm Credit System institution); (ii) In response to a consumer's request, informing a consumer of the loan rates that are publicly available such as on the Farm Credit System institution's Web site for specific types of loan products without communicating to the consumer whether qualifications are met for that loan product; (iii) Collecting information about a consumer in order to provide the consumer with information on loan products for which the consumer generally may qualify, without presenting a specific loan offer to the consumer for acceptance, either verbally or in writing; (iv) Arranging the loan closing or other aspects of the loan process, including communicating with a consumer about those arrangements, provided that communication with the consumer only verifies loan terms already offered or negotiated; or (v) Providing a consumer with information unrelated to loan terms, such as the best days of the month for scheduling loan closings at the Farm Credit System institution. (c) The following examples illustrate when an employee does or does not offer or negotiate terms of a loan for compensation or gain. (1) Offering or negotiating terms of a loan for compensation or gain includes engaging in any of the activities in paragraph (b)(1) of this Appendix in the course of carrying out *27419 employment duties, even if the employee does not receive a referral fee or commission or other special compensation for the loan. (2) Offering or negotiating terms of a loan for compensation or gain does not include engaging in a seller-financed transaction for the employee's personal property that does not involve the Farm Credit System institution. National Credit Union Administration 12 CFR Chapter VII Authority and Issuance

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For the reasons stated in the preamble, the National Credit Union Administration proposes to amend chapter VII of title 12 of the Code of Federal Regulations to add a new part 761 as follows: PART 761REGISTRATION OF RESIDENTIAL MORTGAGE LOAN ORIGINATORS Sec. 761.101 Authority, purpose, and scope. 761.102 Definitions. 761.103 Registration of mortgage loan originators. 761.104 Policies and procedures. 761.105 Use of unique identifier. Appendix A to Part 761Examples of Mortgage Loan Originator Activities. Authority: 12 U.S.C. 1751 et seq. and 5101 et seq. 12 CFR 761.101 761.101 Authority, purpose, and scope. (a) Authority. The National Credit Union Administration is issuing part 761 under the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, title V of the Housing and Economic Recovery Act of 2008 (S.A.F.E. Act) (Pub. L. 110-289, 122 Stat. 2654, 12 U.S.C. 5101 et seq.). (b) Purpose. This part implements the S.A.F.E. Act's federal registration requirement for mortgage loan originators. The S.A.F.E. Act provides that the objectives of this registration include aggregating and improving the flow of information to and between regulators; providing increased accountability and tracking of loan originators; enhancing member protections; reducing fraud in the residential mortgage loan origination process; and providing members with easily accessible information at no charge regarding the employment history of, and publicly adjudicated disciplinary and enforcement actions against, loan originators. (c) Scope(1) In general. This part applies to federally insured credit unions and their employees who act as mortgage loan originators. (2) Exception. (i) This part and the requirements of section 1504(a)(1)(A) and (2) of the S.A.F.E. Act do not apply to any employee of a federally insured credit union if during the past 12 months: (A) The employee acted as a mortgage loan originator for 5 or fewer residential mortgage loans; and (B) The credit union employs mortgage loan originators who, while excepted from registration under paragraph (c)(2)(i)(A) of this section, in the aggregate, acted as a mortgage loan originator in connection with 25 or fewer residential mortgage loans. (ii) Prior to engaging in mortgage loan origination activity that exceeds either the individual or the aggregate exception limit, a credit union employee must register with the Registry under this part.

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12 CFR 761.102 761.102 Definitions. For purposes of this part, the following definitions apply: (a) Annual renewal period means November 1 through December 31 of each year. (b)(1) Mortgage loan originator [FN1] means an individual who: FN1 The Appendix to this part provides examples of activities that would, and would not, cause an employee to fall within this section's definition of mortgage loan originator. (i) Takes a residential mortgage loan application; and (ii) Offers or negotiates terms of a residential mortgage loan for compensation or gain. (2) The term mortgage loan originator does not include: (i) An individual who performs purely administrative or clerical tasks on behalf of an individual who is described in paragraph (b)(1) of this section; (ii) An individual who only performs real estate brokerage activities (as defined in section 1503(3)(D) of the S.A.F.E. Act) and is licensed or registered as a real estate broker in accordance with applicable state law, unless the individual is compensated by a lender, a mortgage broker, or other mortgage loan originator or by any agent of such lender, mortgage broker, or other mortgage loan originator, and meets the definition of mortgage loan originator in paragraph (b)(1) of this section; or (iii) An individual or entity solely involved in extensions of credit related to timeshare plans, as that term is defined in 11 U.S.C. 101(53D). (3) Administrative or clerical tasks means the receipt, collection, and distribution of information common for the processing or underwriting of a residential mortgage loan and communication with a member to obtain information necessary for the processing or underwriting of a residential mortgage loan. (c) Nationwide Mortgage Licensing System and Registry or Registry means the system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the state licensing and registration of state-licensed mortgage loan originators and the registration of mortgage loan originators under section 1507 of the S.A.F.E. Act. (d) Registered mortgage loan originator or registrant means any individual who: (1) Meets the definition of mortgage loan originator and is a credit union employee; and (2) Is registered under this part with, and maintains a unique identifier through, the Registry. (e) Residential mortgage loan means any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling (as defined in section 103(v) of the Truth in Lending Act (15 U.S.C. 1602(v))) or residential real estate upon which is constructed or intended to be constructed a dwelling, and includes refinancings, reverse mortgages, home equity lines of credit and other first and second lien loans that meet the qualifications listed in this definition.

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(f) Unique identifier means a number or other identifier that: (1) Permanently identifies a registered mortgage loan originator; (2) Is assigned by protocols established by the Nationwide Mortgage Licensing System and Registry, the Federal banking agencies, and the Farm Credit Administration to facilitate: (i) Electronic tracking of mortgage loan originators; and (ii) Uniform identification of, and public access to, the employment history of and the publicly adjudicated disciplinary and enforcement actions against mortgage loan originators; and (3) Must not be used for purposes other than those under the S.A.F.E. Act. 12 CFR 761.103 761.103 Registration of mortgage loan originators. (a) Registration requirement(1) Employee registration. Each credit union employee who acts as a mortgage loan originator must register with the Registry, obtain a unique identifier, and maintain this registration in accordance with the requirements of this part. Any such employee who is not in compliance with the registration and unique identifier requirements in this part is in violation of the S.A.F.E. Act and this part. *27420 (2) Credit union requirement(i) In general. A credit union that employs one or more individuals who act as a residential mortgage loan originator must require each employee who is a mortgage loan originator to register with the Registry, maintain this registration, and obtain a unique identifier in accordance with the requirements of this part. (ii) Prohibition. A credit union must not permit its employee who is subject to this part's registration requirements to act as a mortgage loan originator unless such employee is registered with the Registry under this part. (3) Implementation period for initial registration. A credit union employee who is a mortgage loan originator must complete an initial registration with the Registry under this part within 180 days from the date that the National Credit Union Administration provides public notice that the Registry is accepting registrations. (4) Employees previously registered or licensed through the Registry(i) In general. If a credit union employee was registered or licensed through, and obtained a unique identifier from, the Registry prior to becoming a credit union employee and has maintained this registration or license, the registration requirements of the S.A.F.E. Act and this part are deemed to be met, provided that: (A) The employment information in paragraphs (d)(1)(i)(C) and (d)(1)(ii) of this section is updated and the requirements of paragraph (d)(2) of this section are met; (B) New fingerprints of the employee are submitted to the Registry for a background check, as required by paragraph (d)(1)(xii) of this section; (C) The credit union information required in paragraphs (e)(1)(i) (to the extent the credit union has not previously met these requirements) and (e)(2)(i) of this section is submitted to the Registry; and (D) The registration is maintained under paragraphs (b) and (e)(1)(ii) of this section, as of the

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date that the employee is employed by the credit union. (ii) Implementation period for certain acquisitions, mergers or reorganizations. When registered or licensed mortgage loan originators become credit union employees as a result of an acquisition, merger or reorganization transaction, the credit union and employee must comply with the requirements of paragraphs (a)(4)(i)(A), (C), and (D) of this section within 60 days from the effective date of the acquisition, merger, or reorganization. (b) Maintaining registration. (1) A mortgage loan originator who is registered with the Registry under paragraph (a) of this section must: (i) Renew the registration during the annual renewal period, confirming the responses set forth in paragraphs (d)(1)(i) through (xi) of this section remain accurate and complete, and updating this information, as appropriate; and (ii) Update the registration within 30 days of any of the following events: (A) A change in the name of the registrant; (B) The registrant ceases to be a credit union employee; or (C) The information required under paragraphs (d)(1)(iii) through (xi) of this section becomes inaccurate, incomplete, or out of date. (2) A registered mortgage loan originator must maintain his or her registration, notwithstanding the originator's subsequent qualification for the exception in 761.101(c)(2), unless the individual is no longer engaged in the activity of a mortgage loan originator. (c) Effective dates(1) Initial registration. An initial registration under paragraph (a) of this section is effective on the date the registrant receives notification from the Registry that all information required by paragraphs (d) and (e) of this section has been submitted and the registration is complete. (2) Renewals or updates. A renewal or update under paragraph (b) of this section is effective on the date the registrant receives notification from the Registry that all applicable information required by paragraphs (b) and (e) of this section has been submitted and the renewal or update is complete. (d) Required employee information(1) In general. For purposes of the registration required by this section, a credit union must require each employee who is a mortgage loan originator to submit to the Registry, or must submit on behalf of the employee, the following categories of information to the extent this information is collected by the Registry: (i) Identifying information, including the employee's: (A) Name and any other names used; (B) Home address; (C) Address of the employee's principal business location and business contact information; (D) Social security number; (E) Gender; and (F) Date and place of birth;

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(ii) Financial services-related employment history for the 10 years prior to the date of registration or renewal, including the date the employee became a credit union employee; (iii) Financial information for the 10 years prior to the date of registration or renewal constituting a history of any personal bankruptcy; business bankruptcy based upon events that occurred while the employee exercised control over an organization; denied, paid out, or revoked bonds; or unsatisfied judgments or liens against the employee; (iv) Felony convictions or other final criminal actions involving a felony against the employee or organizations controlled by the employee; or misdemeanor convictions or other final misdemeanor actions against the employee or organizations controlled by the employee involving financial services, a financial services-related business, dishonesty, or breach of trust; (v) Civil judicial actions against the employee in connection with financial services-related activities, dismissals with settlements, judicial findings that the employee violated financial services-related statutes or regulations, except for actions dismissed without a settlement agreement; (vi) Actions or orders by a state or federal regulatory agency or foreign financial regulatory authority that: (A) Found the employee to have made a false statement or omission or been dishonest, unfair or unethical; to have been involved in a violation of a financial services-related regulation or statute; or to have been a cause of a financial services-related business having its authorization to do business denied, suspended, revoked or restricted; (B) Are entered against the employee in connection with a financial services-related activity; (C) Denied, suspended, or revoked the employee's registration or license to engage in a financial services-related activity; disciplined the employee or otherwise by order prevented the employee from associating with a financial services-related business or restricted the employee's activities; or (D) Barred the employee from association with an entity regulated by the agency or authority or from engaging in a financial services-related business; (vii) Final orders issued by a state or federal regulatory agency or foreign financial regulatory authority based on violations of any law or regulation that prohibits fraudulent, manipulative or deceptive conduct; (viii) Revocation or suspension of the employee's authorization to act as an attorney, accountant, or state or federal contractor; *27421 (ix) Customer-initiated financial services-related arbitration or civil action against the employee that required action, including settlements; (x) Disclosure of any voluntary or involuntary employment terminations resulting from allegations accusing the employee of violating a statute, regulation, or industry standard of conduct; fraud; dishonesty; theft; or the wrongful taking of property; (xi) Any pending actions against the employee that could result in an action listed in paragraphs (d)(1)(iii) through (ix) of this section; and (xii) Fingerprints of the employee, in digital form if practicable, collected by the employing credit union less than three years prior to registration and any appropriate identifying information for

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submission to the Federal Bureau of Investigation and any governmental agency or entity authorized to receive such information in connection with a state and national criminal history background check; (2) Employee authorization and attestation. An employee registering as a mortgage loan originator or renewing his or her registration under this part must: (i) Authorize the Registry and the employing credit union to obtain information related to any administrative, civil or criminal findings, to which the employee is a party, made by any governmental jurisdiction; (ii) Attest to the correctness of all information required by paragraph (d) of this section, whether submitted by the employee or on behalf of the employee by the employing credit union; and (iii) Authorize the Registry to make available to the public information required by paragraphs (d)(1)(i)(A) and (C), (d)(1)(ii), (iv)-(ix) and (xi) of this section. (e) Required credit union information. A credit union must submit the following information to the Registry: (1) Credit union record. (i) In connection with the initial registration of one or more mortgage loan originators: (A) Name and main office address; (B) Internal Revenue Service Employer Tax Identification Number (EIN); (C) Research Statistics Supervision and Discount (RSSD) number, as issued by the Board of Governors of the Federal Reserve System; (D) Identification of the National Credit Union Administration as its primary Federal regulator; (E) Name(s) and contact information of the individual(s) with authority to act as the credit union's primary point of contact for the Registry; (F) Name(s) and contact information of the individual(s) with authority to enter data required in paragraph (e) of this section on the Registry and who may delegate this authority to other credit union employees, provided this individual and any delegated employee does not act as a mortgage loan originator. (ii) A credit union must update the information required by this paragraph (e) within 30 days of the date that this information becomes inaccurate. (2) Employee information. In connection with the registration of each employee who acts as a mortgage loan originator: (i) After the information required by paragraph (d) of this section has been submitted to the Registry, confirmation that it employs the registrant; and (ii) Within 30 days of the date the registrant ceases to be a credit union employee, notification that it no longer employs the registrant and the date the registrant ceased being an employee. 12 CFR 761.104 761.104 Policies and procedures.

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A credit union that employs mortgage loan originators must adopt and follow written policies and procedures designed to assure compliance with this part. These policies and procedures must be appropriate to the nature, size, complexity and scope of the mortgage lending activities of the credit union. At a minimum, these policies and procedures must: (a) Establish a process for identifying which credit union employees are required to be registered mortgage loan originators; (b) Require that all credit union employees who are mortgage loan originators be informed of the registration requirements of the S.A.F.E. Act and this part and be instructed on how to comply with such requirements and procedures; (c) Establish procedures to comply with the unique identifier requirements in 761.105; (d) Establish reasonable procedures for confirming the adequacy and accuracy of employee registrations, including updates and renewals, by comparisons with its own records; (e) Establish reasonable procedures and tracking systems for monitoring compliance with registration and renewal requirements and procedures; (f) Provide for independent testing for compliance with this part to be conducted by credit union personnel or by an outside party; (g) Provide for appropriate action in the case of any employee who fails to comply with the registration requirements of the S.A.F.E. Act, this part, or the credit union's related policies and procedures, including prohibiting such employees from acting as mortgage loan originators or other appropriate disciplinary actions; and (h) Establish a process for reviewing employee criminal history background reports received from the Registry in connection with 761.103(d)(1)(xii), taking appropriate action consistent with applicable law and rules with respect to these reports, and for maintaining records of these reports and actions taken with respect to applicable employees. 12 CFR 761.105 761.105 Use of unique identifier. (a) The credit union shall make the unique identifier(s) of its registered mortgage loan originator(s) available to members in a manner and method practicable to the credit union. (b) A registered mortgage loan originator shall provide his or her unique identifier to a member: (1) Upon request; (2) Before acting as a mortgage loan originator; and (3) Through the originator's initial written communication with a member, if any. 12 CFR Pt. 761, App. A Appendix A to Part 761Examples of Mortgage Loan Originator Activities This Appendix provides examples to aid in the understanding of activities that would cause a credit union employee to fall within or outside the definition of mortgage loan originator. The examples in this Appendix are not all inclusive. They illustrate only the issue described and do not illustrate any other issues that may arise under this part. For the purposes of the examples

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below, the term loan refers to a residential mortgage loan. (a) Taking a loan application: The following examples illustrate when an employee takes or does not take, a loan application. (1) Taking an application includes: receiving information that is sufficient to determine whether the member qualifies for a loan, even if the employee has had no contact with the member and is not responsible for further verification of information. (2) Taking an application does not include any of the following activities performed solely or in combination: (i) Contacting a member to verify the information in the loan application by obtaining documentation, such as tax returns or payroll receipts; (ii) Receiving a loan application through the mail and forwarding it, without review, to loan approval personnel; or (iii) Assisting a member who is filling out an application by clarifying what type of information is necessary for the application or otherwise explaining the loan application process in response to member inquiries. *27422 (b) Offering or negotiating terms of a loan: The following examples are designed to illustrate when an employee offers or negotiates terms of a loan, and conversely, what does not constitute offering or negotiating terms of a loan. (1) Offering or negotiating the terms of a loan includes: (i) Presenting a loan offer to a member for acceptance, either verbally or in writing, even if further verification of information is necessary and the offer is conditional; or (ii) Responding to a member's request for a lower rate or lower points on a pending loan application by presenting to the member a revised loan offer, either verbally or in writing, that includes a lower interest rate or lower points than the original offer. (2) Offering or negotiating terms of a loan does not include solely or in combination: (i) Providing general explanations in response to member queries regarding qualification for a specific loan product, such as explaining loan terminology (i.e., debt-to-income ratio) or lending policies (i.e., the loan-to-value ratio policy of the credit union); (ii) In response to a member's request, informing a member of the loan rates that are publicly available such as on the credit union's Web site for specific types of loan products without communicating to the member whether qualifications are met for that loan product; (iii) Collecting information about a member in order to provide the member with information on loan products for which the member generally may qualify, without presenting a specific loan offer to the member for acceptance, either verbally or in writing; (iv) Arranging the loan closing or other aspects of the loan process, including communicating with a member about those arrangements, provided that communication with the member only verifies loan terms already offered or negotiated; or (v) Providing a member with information unrelated to loan terms, such as the best days of the month for scheduling loan closings at the credit union.

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(c) The following examples illustrate when an employee does or does not offer or negotiate terms of a loan for compensation or gain: (1) Offering or negotiating terms of a loan for compensation or gain includes engaging in any of the activities in paragraph (b)(1) of this Appendix in the course of carrying out employment duties, even if the employee does not receive a referral fee or commission or other special compensation for the loan. (2) Offering or negotiating terms of a loan for compensation or gain does not include engaging in a seller-financed transaction for the employee's personal property that does not involve the credit union. Dated: May 27, 2009. John C. Dugan, Comptroller of the Currency. By the order of the Board of Governors of the Federal Reserve System, May 28, 2009. Robert deV. Frierson, Deputy Secretary of the Board. By order of the Board of Directors. Dated at Washington, DC, the 29th day of May 2009. Federal Deposit Insurance Corporation. Robert E. Feldman, Executive Secretary. Dated: May 28, 2009. By the Office of Thrift Supervision, John E. Bowman, Acting Director. Dated: May 28, 2009. Roland E. Smith, Secretary, Farm Credit Administration Board. By the National Credit Union Administration Board on May 26, 2009. Mary Rupp,

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Secretary of the Board. [FR Doc. E9-13058 Filed 6-8-09; 8:45 am]

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73 FR 52528 Implementation of Form 990.docx (Attachment 3 of 5)

FOR EDUCATIONAL USE ONLY 73 FR 52528-01, 2008-43 I.R.B. 966, 2008 WL 4125973 (F.R.) RULES and REGULATIONS DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Parts 1 and 602 [TD 9423] RIN 1545-BH85 Implementation of Form 990 Tuesday, September 9, 2008 AGENCY: Internal Revenue Service (IRS), Treasury. *52528 ACTION: Final and temporary regulations. SUMMARY: This document contains final and temporary regulations necessary to implement the redesigned Form 990, Return of Organization Exempt From Income Tax. The final regulations contained in this document make only nonsubstantive revisions to comply with Federal Register requirements. The temporary regulations make revisions to the regulations under section 6033 and section 6043 to allow for new threshold amounts for reporting compensation, to require that compensation be reported on a calendar year basis, and to modify the scope of organizations subject to information reporting requirements upon a substantial contraction. The temporary regulations also eliminate the advance ruling process for new organizations, change the public support computation period for organizations described in sections 170(b)(1)(A)(vi) and 509(a)(1) and in section 509(a)(2) to five years, consistent with the revised Form 990, and clarify that support must be reported using the organization's overall method of accounting. All tax-exempt organizations required under section 6033 of the Internal Revenue Code (Code) to file annual information returns are affected by these temporary regulations. The text of these temporary regulations also serves as the text of the proposed regulations (REG-142333-07) published in the Proposed Rules section in this issue of the Federal Register. DATES: Effective Date: These regulations are effective on September 9, 2008. Applicability Date: These regulations apply to taxable years beginning on or after January 1, 2008. FOR FURTHER INFORMATION CONTACT: Terri Harris at (202) 622-6070 (not a toll-free number). SUPPLEMENTARY INFORMATION: Paperwork Reduction Act The collection of information contained in these temporary regulations has been reviewed and approved by the Office of Management and Budget in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) under control number 1545-2117. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by the Office of Management and Budget. Books or

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records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103. Background Form 990 Under section 6033 of the Code, organizations that are exempt from Federal income tax under section 501(a) are generally required to file an annual information return reporting gross income, receipts, disbursements and such other information as the IRS requires. Certain exceptions to this filing requirement apply. For example, churches are not required to file annual information returns. The Treasury regulations direct that the annual information return shall be filed on Form 990, Return of Organization Exempt From Income Tax or Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust Treated as a Private Foundation. The regulations further specify certain information to be reported on the return. The IRS revises forms and instructions on an annual basis to reflect changes in the law and evolving tax administration needs. On December 20, 2007, the IRS released a redesigned Form 990. The Form 990 had not been significantly revised since 1979, and both the IRS and stakeholders regarded the form as needing major revision to keep pace with changes in the law and with the increasing size, diversity, and complexity of the exempt sector. The new form incorporates many recommendations made in public comments on the discussion draft released on June 14, 2007. With the exception of certain smaller organizations for which there is a graduated transition period, organizations must begin using the new form for the 2008 tax year (returns filed in 2009). The current Form 990 will be used for tax year 2007 (returns filed in 2008) but will be replaced with the redesigned Form 990 beginning with the 2008 tax year. Earlier this year, the IRS released draft instructions for the new form and schedules for public comment. These regulations make the revisions that must be made to the regulations under sections 6033 and 6043 of the Code to implement the Form 990 redesign. For example, the regulation that currently gives organizations a choice of using either the calendar year or the organization's annual accounting period as the basis for reporting compensation of officers, directors, trustees and certain employees and contractors is revised to require calendar year reporting. Revisions are also made to allow for new threshold amounts for reporting compensation and to expand the scope of organizations subject to information reporting requirements upon a substantial contraction. In addition, as discussed in further detail in this preamble, these regulations eliminate the advance ruling process and change the public support computation period for organizations described in sections 170(b)(1)(A)(vi) and 509(a)(1) and in section 509(a)(2) to five years, consistent with the revised Schedule A, Public Charity Status and Public Support to the redesigned Form 990. These regulations also clarify that support must be reported using the organization's overall method of accounting. Private Foundation Status and Advance Rulings Public Support Tests Under present law, as established in the Tax Reform Act of 1969, an organization described in section 501(c)(3) of the Code is a private foundation unless it meets one of the exceptions described in sections 509(a)(1) through 509(a)(4). Organizations that are described in section 509(a)(1), (2), (3) or (4) are classified as public charities, and are not subject to various excise taxes in Chapter 42 that apply to private foundations. The Code defines two major categories of organizations that are considered public charities and not private foundations because they are

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broadly publicly supported: (1) Organizations described in section 170(b)(1)(A)(vi), which are not private foundations because they are referenced in section 509(a)(1); and (2) organizations described in section 509(a)(2). Section 170(b)(1)(A)(vi) encompasses organizations that normally receive a substantial part of their support from a governmental unit or from direct or indirect contributions from the general public. The regulations under section 170 provide that an organization will be described in section 170(b)(1)(A)(vi) if it *52529 normally receives at least 33 1/3 percent of its support from governmental units or from the general public. See 1.170A-9(f). Alternatively, an organization can meet a facts and circumstances test, under which it may qualify as a section 170(b)(1)(A)(vi) organization if it normally receives at least 10 percent of its support from governmental units or the general public, and can establish that, under all the facts and circumstances, it normally receives a substantial part of its support from governmental units or the general public. Section 509(a)(2) encompasses organizations that normally receive more than one-third of their support from a combination of gifts, grants, contributions, membership fees, and gross receipts from performing exempt function activities, and normally receive not more than one-third of their support from investment income and unrelated business taxable income. The major difference between the section 509(a)(2) and section 170(b)(1)(A)(vi) tests is that the former includes in support gross receipts from exempt function activities, for example, admission proceeds for a museum or ticket sales for a symphony, while the latter does not. As noted, section 509(a)(2) also includes an investment income limitation. For ease of reference, the tests in sections 170(b)(1)(A)(vi) and 509(a)(2) will be referred to collectively as the public support tests. The statute does not define, for either provision, the meaning of normally. The current regulations for both public support tests generally use a rolling four-year computation period, with two exceptions: New organizations and organizations that experience substantial and material changes in their sources of support for the current year are permitted to use a fiveyear computation period. For any particular taxable year, the four-year computation period is the four years immediately preceding the current taxable year. For example, for taxable year 1998, the computation period would be taxable years 1994, 1995, 1996, and 1997. The regulations further provide that if the public support test is met for the four-year computation period, the organization will be considered to meet the public support test for the taxable year being tested and the immediately succeeding taxable year. In the example above, a section 170(b)(1)(A)(vi) organization would meet the public support test for 1998 and 1999 if the support it received from the general public and from governmental units for the years 1994 through 1997 exceeded 33 1/3 percent of the total support it received for those years. The effect of the current rule regarding the subsequent taxable year is that an organization must fail to meet a public support test two years in a row to become a private foundation. In the example above, the organization met the public support test for 1998 and 1999, based on support received during the four-year computation period 1994 through 1997. If the organization does not meet a public support test for the 1995 through 1998 computation period, it is still a public charity in 1999 because it met a support test for taxable year 1998. However, if the organization again does not meet a public support test for the 1996 through 1999 computation period, the organization becomes a private foundation effective at the beginning of its taxable year 2000. Advance Rulings In its application for recognition of tax-exempt status (Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code a section 501(c)(3) ), organization also requests a determination of its private foundation status, that is, whether it is a private foundation and, if not, the Code provision excepting it from private foundation

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classification. Under the current statute and regulations, an organization can request either an advance ruling or a definitive ruling addressing the organization's exemption under section 501(c)(3) and its private foundation status under section 509(a). Under the current regulations, a new organization applying for exemption can request a definitive ruling as to its foundation status only if it has completed its first tax year consisting of at least eight full months. In lieu of the general four-year computation period for public support, a new organization requesting a definitive ruling tests its public support based on the years it has been in existence. If an organization qualifies as an organization described in section 509(a)(1) or (2) based on the support received in its initial year(s) of existence, the IRS issues a definitive ruling stating that the organization is recognized as exempt under section 501(c)(3) and classified as a public charity. If a new organization has not yet completed its first tax year consisting of at least eight full months at the time it applies for recognition of tax exemption, or if the organization so elects, it requests an advance ruling regarding its private foundation status in its application for exemption. Current regulations provide for an advance ruling period of two or three years, depending on the length of the organization's first tax year, and an additional extended advance ruling period of three more years if the organization requests. These current regulations have been overridden. In the conference report to the Tax Reform Act of 1984, Congress directed that the advance ruling period in all cases be five years. See H.R. Rep. No. 98-861, 98th Cong., 2d Sess. 1 (1984), 1984-3 CB (Vol. 2) 1090. The advance ruling period gives new organizations time to build up broad public support in the first few years of their existence. In lieu of the general four-year computation period for public support, a new organization requesting an advance ruling tests its public support over the first five years of its existence as an organization described in section 501(c)(3). If an organization demonstrates to the IRS's satisfaction that it can reasonably be expected to meet a public support test during its first five years, the IRS issues an advance ruling stating that the organization is recognized as exempt under section 501(c)(3) and classified as a public charity during its first five years. With limited exceptions, donors can rely on this advance ruling as to public charity status. At the end of the initial five-year advance ruling period, the organization is required to file Form 8734, Support Schedule for Advance Ruling Period to establish that it actually met a public support test. As noted above, for this purpose, public support is calculated over the five-year advance ruling period, rather than over a four-year period. If the organization meets a public support test for its advance ruling period, the IRS issues a definitive ruling letter classifying the organization as a public charity. If the organization does not meet a public support test for its advance ruling period, or the organization fails to submit Form 8734, the IRS reclassifies the organization as a private foundation as of its first taxable year and publishes notice of the change in status in the Internal Revenue Bulletin and Publication 78, Cumulative List of Organizations described in Section 170(c) of the Internal Revenue Code of 1986, which can be searched at www.irs.gov. Once notice of a change in status is published, donors can no longer automatically rely on the advance ruling for charitable contribution deduction purposes and must assume that the organization is a private foundation. See 601.601(d)(2)(ii)(b). An organization that is reclassified as a private foundation is subject to the *52530 section 4940 investment income tax and the section 507 termination tax for its five-year advance ruling period. The other Chapter 42 excise taxes applicable to private foundations do not apply during the five-year advance ruling period. In year six, the reclassified organization is subject to all Chapter 42 excise taxes that apply to private foundations. The advance ruling process is complex and burdensome for both taxpayers and the IRS and provides little tax administration or compliance benefit. While statistics vary from year to year, approximately 95 percent of the organizations that receive advance rulings later receive definitive rulings that the organizations are public charities at the end of the advance ruling period. The current regulations governing advance rulings are complex, and, as discussed above,

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were overridden in part by the Tax Reform Act of 1984. Moreover, the public support information that is reported on Form 8734 will be captured on Schedule A of the redesigned Form 990. For these reasons, in its 2003 report, the IRS Advisory Committee for Tax Exempt and Governmental Entities, a group that includes representatives of exempt organizations and practitioners, recommended that the advance ruling process be eliminated. The IRS believes that it can more effectively deploy its compliance resources by eliminating the advance ruling process and Form 8734 and instead monitoring public charity status based on public support information reported on the revised Schedule A, to the redesigned Form 990. The revised Schedule A sets forth easier-to-follow rules for calculating public support and captures all of the information necessary for the IRS to monitor and verify compliance with the public support tests. Explanation of Provisions Private Foundation Status and Advance Rulings The temporary regulations eliminate the advance ruling process and provide instead that an organization will be a public charity in its first five years if it can show, in its application for exemption, that it can reasonably be expected to receive the requisite public support during such period. The temporary regulations also change the public support computation period for purposes of sections 170(b)(1)(A)(vi) and 509(a)(1) and section 509(a)(2) from a four-year period prior to the tested year to a five-year period that includes the current year. The temporary regulations also eliminate the substantial and material changes exception, which is made obsolete by the establishment of a general five-year computation period. In addition, 1.170A-9T(f), which corresponds to 1.170A-9(e) of the prior regulations and governs section 170(b)(1)(A)(vi) organizations, has been revised throughout to simplify some of the language and to provide a better road map of what the provisions are designed to do. Elimination of Advance Ruling Process The temporary regulations eliminate advance rulings and the Form 8734 filing requirement for all new section 501(c)(3) organizations. Under the temporary regulations, if, at the time of the initial application for exemption, an organization can establish to the satisfaction of the IRS that the organization can reasonably be expected to meet a public support test during its first five years, the organization qualifies as publicly supported for its first five years as a section 501(c)(3) organization. The IRS will issue a determination letter stating that the organization is exempt under section 501(c)(3) and is classified as a public charity. The organization will be a public charity for its first five years, regardless of the level of public support it in fact receives during this period. In addition, unlike a new organization's public charity status under an advance ruling, which was conditioned on its ultimate satisfaction of a public support test on a Form 8734 filed with the IRS, under the temporary regulations a new organization that can show it can reasonably be expected to meet a public support test will be classified as a public charity for all purposes during its first five years. The organization will not owe any section 4940 tax or section 507 termination tax with respect to its first five years. Beginning with the organization's sixth year, if the organization cannot establish that it is not a private foundation, such as a public charity or a supporting organization under section 509(a)(3), it will be liable for the section 4940 excise tax and other Chapter 42 excise taxes applicable to private foundations for any year for which it cannot establish that it is not a private foundation. The standards for whether an organization can reasonably be expected to be publicly supported are drawn from the existing regulations. A new organization required to file Form 990 or Form 990-EZ, Short Form Return of Organization Exempt From Income Tax, will be required to report its support on Schedule A every year, but it will not be required to file Form 8734 after its first five years. Organizations will be required to meet a public support test using the general fiveyear computation period beginning in their sixth taxable years. The five-year computation period

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is discussed in detail in this preamble. Computation Period for Public Support The temporary regulations change the computation period for public support from a four-year period comprised of the four years prior to the tested year to a five-year period that includes the current year. Because all organizations will use a five-year computation period under the temporary regulations, the temporary regulations eliminate the substantial and material change exception, which allowed organizations to use a five-year computation period rather than the four-year computation period under certain circumstances. An organization that meets a public support test for the current taxable year is treated as publicly supported for the current taxable year and the immediately succeeding taxable year. Thus, for example, a calendar year organization that meets a public support test for taxable year 2011, based on the five-year computation period 2007 through 2011, is a public charity for taxable years 2011 and 2012. If the organization cannot meet a public support test for taxable year 2012 (based on the five-year computation period 2008 through 2012), it still will be a public charity for taxable year 2012, because it met the public support test for taxable year 2011 (based on the five-year computation period 2007 through 2011). If, however, the organization cannot meet a public support test for taxable year 2013 as well, based on the computation period 2009 through 2013, the organization will be classified as a private foundation as of the beginning of taxable year 2013. Because an organization that cannot meet a public support test for the current taxable year is at risk of private foundation classification as of the first day of the subsequent taxable year, organizations may wish to carefully monitor their public support calculations. The IRS and the Treasury Department recognize that an organization may not be able to compute its public support for the current taxable year until some time in the subsequent taxable year. In the example above, taxable year 2013 may have already begun by the time the calendar year organization computes its public support for taxable year 2012 and realizes (perhaps for the first time) that it is at risk of being classified as a private foundation as of January 1, 2013. *52531 Moreover, the organization may not know definitively that it is a private foundation for taxable year 2013 until some time in 2014, when it is able to definitively calculate its public support. Accordingly, the IRS will not assert private foundation excise taxes and/or penalties for all or part of the first taxable year in which an organization is reclassified as a private foundation due to failure to satisfy a public support test in cases where the imposition of such taxes would lead to unfair or inequitable results, such as where the change in the organization's public support was unforeseeable or due to circumstances beyond the organization's control. Organizations that believe that the imposition of private foundation excise taxes and/or penalties against them for all or part of the first year in which they are reclassified as a private foundation would be unfair or inequitable should contact the IRS, Exempt Organizations, Rulings and Agreements, Washington, DC, at (202) 283-4905. An organization will be required to provide to the IRS all of the relevant facts and circumstances establishing that the imposition of private foundation taxes would be unfair or inequitable. Comments are requested regarding the specific circumstances that may warrant relief. The existing regulations contain numerous examples reflecting the four-year computation period. The temporary regulations update the examples to reflect the new computation period. These examples are in 1.170A-9T(f)(9), 1.509(a)-3T(c)(6) and 1.509(a)-3T(e)(3). Method of Accounting Previously, when a section 501(c)(3) organization computed its public support, it was required to use the cash method of accounting to report the amount of public support it received on Schedule A, even if it used the accrual method of accounting in keeping its books under section 446, and in otherwise reporting on Form 990. Under these temporary regulations, when a section

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501(c)(3) organization computes its public support and reports the information on Schedule A, it must use the same accounting method that it uses in keeping its books under section 446 and that it otherwise uses to report on its Form 990. An organization that uses the accrual method will not be able to use the support information reported on Form 990 for prior years (because that support was reported using the cash method) to compute its public support for the current year, and instead must report all support for the computation period on the accrual method. Reliance These temporary regulations provide that donors may rely on an organization's ruling that the organization is described in sections 170(b)(1)(A)(vi) and 509(a)(1) or in section 509(a)(2) until notice of a change in status is provided to the public (such as by publication in the Internal Revenue Bulletin), unless the donor was responsible for or aware of the act or failure to act that results in the organization's loss of public charity status. This rule is substantively the same as the rules contained in the current regulations. The regulations further provide that donors may rely on advance rulings that expire on or after June 9, 2008, until notice of a change in status is provided to the public (such as by publication in the Internal Revenue Bulletin). Effective/Applicability Date and Transition Rules These temporary regulations are effective on September 9, 2008, and apply to taxable years beginning on or after January 1, 2008. All organizations, including organizations that received a definitive ruling prior to the effective date of these regulations, must use the new five-year computation period to calculate public support for their first taxable year beginning on or after January 1, 2008 and for all subsequent taxable years. These regulations provide a transition rule under which an organization that cannot meet a public support test for its first taxable year beginning on or after January 1, 2008, using the five-year computation period will continue to qualify as a public charity for its 2008 taxable year if it satisfied a public support test for its 2007 taxable year, based on public support received over the four-year period 2003 through 2006. These regulations also provide a transition rule under which organizations that received advance rulings that expire on or after June 9, 2008, are treated as new public charities under the new regulations, that is, public charities for all purposes without regard to public support in fact received during the first five years of their existence as section 501(c)(3) organizations. This rule effectively applies the temporary regulations to all organizations that are in their advance ruling period as of the effective date of these temporary regulations. As such, these organizations will not have to file Form 8734 at the end of the advance ruling period. Grantors and contributors can rely upon these organizations' advance ruling letter as if it were a definitive ruling letter. The IRS plans to send follow-up letters to such organizations explaining the new rules. An organization that did not timely file Form 8734 at the expiration of its advance ruling period is not covered by the transition rule. Such an organization must file information with the IRS establishing that it met a public support test during its advance ruling period in order to qualify as a public charity during its first five years. Forms 1023 filed prior to the effective date of these regulations that have not yet been processed by the IRS will be processed under the new regulations. The IRS will issue definitive rulings regarding private foundation status to such organizations. Community Trust Rules Sections 1.170A-9(f)(10) through 1.170A-9(f)(14), which establish rules for when multiple trusts can be treated as a single entity for purposes of the public support tests, provide old transition rules that are obsolete, and, therefore, the transition rules are being deleted in these temporary regulations.

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Compensation Reporting Current 1.6033-2(a)(2)(ii)(g) requires that exempt organizations report on Form 990 the names and addresses of all officers, directors, trustees, and persons having responsibilities or powers similar to those of officers, directors or trustees, of the organization. The reference to a person having responsibilities and powers similar to those of officers, directors or trustees is meant to capture those persons who function as officers, directors or trustees of the organization, regardless of title, as well as the key employees of the organization. The redesigned Form 990 expanded the definition of key employee to cover not only persons having responsibilities or powers similar to those of officers, directors or trustees, but also persons who manage a discrete segment or activity of the organization that represents a substantial portion of the activities, assets, income, or expenses of the organization. The redesigned Form 990 requires reporting for only those key employees whose compensation exceeds $150,000. These temporary regulations add key employees to the list of persons in 1.6033-2T(a)(2)(ii)(g) who may be required to be reported on Form 990, as prescribed by publication, form or instructions. Current 1.6033-2(a)(2)(ii)(g) requires that exempt organizations that make payments of more than $30,000 annually to employees and independent contractors report these persons' names *52532 and addresses on Form 990. Current 1.6033-2(a)(2)(ii)(h) requires a schedule showing the compensation or other payments made to the persons listed in paragraph (a)(2)(ii)(g). The redesigned Form 990 requires an organization to report, for each person listed (other than a key employee or a former director or trustee of the organization), compensation and other payments totaling more than $100,000 annually paid by the organization and its related organizations to the person. For key employees, the redesigned Form 990 requires an organization to report compensation and other payments totaling more than $150,000 annually paid by the organization and its related organizations to the person. For former directors and trustees, the redesigned Form 990 requires an organization to report compensation and other payments totaling more than $10,000 annually paid by the organization and its related organizations to the person solely on account of the person's past services as a director or trustee of the organization. As amended in these temporary regulations, 1.6033-2T(a)(2)(ii)(g) gives the Commissioner discretion to revise the threshold amount for reporting by form and instruction. Furthermore, the current rule in 1.6033-2(a)(2)(ii)(h), which requires generally the reporting of compensation paid by an organization during its annual accounting period (or during the calendar year ending within such period), imposes no requirement that the compensation reported on Form 990 be consistent with what is reported on Form W-2, Wage and Tax Statement, or Form 1099-MISC, Miscellaneous Income. The current rule permits, but does not require, a fiscal year organization to report paid compensation on a calendar year basis. The redesigned Form 990 (Part VII and Schedule J) requires that compensation reported as paid to officers and other employees be consistent with Form W-2 (box 5) and that compensation reported as paid to directors, individual trustees, and independent contractors be consistent with Form 1099-MISC (box 7). As amended by these temporary regulations, 1.6033-2T(a)(2)(ii)(h) requires an organization to report compensation it has paid during the calendar year ending with or within the organization's annual accounting period, or during such other period as specified by form or form instructions. The rule in these temporary regulations will ensure consistency in compensation reporting, provide greater certainty about what compensation is to be reported, and reduce the reporting burden for most filing organizations. A fiscal year organization will continue to be required to use fiscal year accounting when reporting aggregate compensation as an expense item (Form 990, Part IX). In addition, an organization will not be required to reconcile compensation for individuals reported in Part VII with compensation for such individuals included in its Part IX statement of expenses. Asset Disposition Reporting

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Schedule N, Liquidation, Termination, Dissolution, or Significant Disposition of Assets, of the redesigned Form 990 requires information about organizations that liquidate, terminate, or dissolve, or sell, exchange, dispose of or otherwise transfer more than 25 percent of the organization's assets. The collection of this information is authorized by section 6033, the general authorization for the collection of information on Form 990. The collection of information with respect to liquidations, dissolutions, terminations and substantial contractions is also authorized by section 6043(b). While section 6043(b) and its companion penalty provision section 6652(c) contemplate a separate return, since 1981 this information has been collected on Form 990. In order to eliminate the potential for inconsistency and confusion by taxpayers, the regulations under section 6043(b) have been amended so that they are consistent with section 6033 and the redesigned Schedule N. Generally, current 1.6043-3(b)(8) excuses from the information reporting requirement of section 6043(b) organizations other than former section 501(c)(3) organizations. The IRS believes that this exception is too broad, because information reporting from other exempt organizations may facilitate sound tax administration. Therefore, these temporary regulations amend 1.6043-3(b)(8) to provide discretion to narrow the exception and require reporting from organizations exempt under other Code sections by form or form instructions. In addition, these temporary regulations remove the definition of substantial contraction in 1.6043-3(d(1), leaving this term to be defined by form or form instructions. ) Private Foundation Termination Section 1.507-2, which addresses private foundation terminations under section 507(b), contains references to the four-year computation period for public support and old transition rules related to 12-month terminations that are obsolete. These temporary regulations revise 1.507-2 to delete references to the four-year computation period and the transition rules related to 12month terminations. Revisions To Comply With Federal Register The final regulations make various nonsubstantive revisions to comply with Federal Register requirements. For example, the undesignated flush language preceding prior 1.170A-9(a) was designated as paragraph (a), and all following paragraphs were redesignated accordingly. Special Analyses It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It has also been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply. It is hereby certified that the collection of information in this regulation will not have a significant economic impact on a substantial number of small entities. This certification is based on the fact that burden on tax-exempt entities will be reduced by (1) eliminating the separate advance ruling process and the additional process for subsequently seeking a definitive ruling, (2) clarifying rules regarding the method of accounting and period for reporting certain items, and (3) providing discretion for the IRS to narrow or clarify circumstances under which reporting is required. Accordingly, a Regulatory Flexibility Analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required. Pursuant to section 7805(f) of the Code, these regulations have been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business. Drafting Information The principal author of this regulation is Terri Harris, Office of Associate Chief Counsel (Tax Exempt and Government Entities). However, other personnel from the IRS and the Treasury Department participated in their development.

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List of Subjects 26 CFR Part 1 Income taxes, Reporting and recordkeeping requirements. 26 CFR Part 602 Reporting and recordkeeping requirements. *52533 Amendments to the Regulations Accordingly, 26 CFR parts 1 and 602 are amended as follows: PART 1INCOME TAXES Paragraph 1. The authority citation for part 1 continues to read in part as follows: Authority: 26 U.S.C. 7805 * * * 26 CFR 1.170A-9

Par. 2. Section 1.170A-9 is amended as follows: 1. Paragraphs (a), (b), (c), (d), (e), (f), (g), (h) and (i) are redesignated as paragraphs (b), (c), (d), (e), (f), (g), (h), (i) and (j), respectively. 2. The undesignated text following the section heading is designated as paragraph (a). 3. The newly-designated paragraphs (a) and (d) are revised. 4. New paragraph (k) is added. The addition and revisions read as follows: 26 CFR 1.170A-9 1.170A-9 Definition of section 170(b)(1)(A) organization. (a) The term section 170(b)(1)(A) organization as used in the regulations under section 170 means any organization described in paragraphs (b) through (j) of this section, effective with respect to taxable years beginning after December 31, 1969, except as otherwise provided. Section 1.170-2(b) shall continue to be applicable with respect to taxable years beginning prior to January 1, 1970. The term one or more organizations described in section 170(b)(1)(A) (other than clauses (vii) and (viii)) as used in sections 507 and 509 of the Internal Revenue Code (Code) and the regulations means one or more organizations described in paragraphs (b) through (f) of this section, except as modified by the regulations under part II of subchapter F of chapter 1 or under chapter 42. ***** (d) Hospitals and medical research organizations(1) Hospitals. An organization (other than one described in paragraph (d)(2) of this section) is described in section 170(b)(1)(A)(iii) if (i) It is a hospital; and

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(ii) Its principal purpose or function is the providing of medical or hospital care or medical education or medical research. (A) The term hospital includes (1) Federal hospitals; and (2) State, county, and municipal hospitals which are instrumentalities of governmental units referred to in section 170(c)(1) and otherwise come within the definition. A rehabilitation institution, outpatient clinic, or community mental health or drug treatment center may qualify as a hospital within the meaning of paragraph )(1)(i) of this section if its principal purpose or (d function is the providing of hospital or medical care. For purposes of this paragraph (d)(1)(ii), the term medical care shall include the treatment of any physical or mental disability or condition, whether on an inpatient or outpatient basis, provided the cost of such treatment is deductible under section 213 by the person treated. An organization, all the accommodations of which qualify as being part of a skilled nursing facility within the meaning of U.S.C. 1395x(j), may 42 qualify as a hospital within the meaning of paragraph (d)(1)(of this section if its principal i) purpose or function is the providing of hospital or medical care. For taxable years ending after June 28, 1968, the term hospital also includes cooperative hospital service organizations which meet the requirements of section 501(e) and 1.501(e)-1. (B) The term hospital does not, however, include convalescent homes or homes for children or the aged, nor does the term include institutions whose principal purpose or function is to train handicapped individuals to pursue some vocation. An organization whose principal purpose or function is the providing of medical education or medical research will not be considered a hospital within the meaning of paragraph (d(1)(i) of this section, unless it is also actively ) engaged in providing medical or hospital care to patients on its premises or in its facilities, on an inpatient or outpatient basis, as an integral part of its medical education or medical research functions. See, however, paragraph (d)(2) of this section with respect to certain medical research organizations. (2) Certain medical research organizations(i) Introduction. A medical research organization is described in section 170(b)(1)(A)(iii) if the principal purpose or functions of such organization are medical research and if it is directly engaged in the continuous active conduct of medical research in conjunction with a hospital. In addition, for purposes of the 50 percent limitation of section 170(b)(1)(A) with respect to a contribution, during the calendar year in which the contribution is made such organization must be committed to spend such contribution for such research before January 1 of the fifth calendar year which begins after the date such contribution is made. An organization need not receive contributions deductible under section 170 to qualify as a medical research organization and such organization need not be committed to spend amounts to which the limitation of section 170(b)(1)(A) does not apply within the 5-year period referred to in this paragraph (d)(2)(i). However, the requirement of continuous active conduct of medical research indicates that the type of organization contemplated in this paragraph (d)(2) is one which is primarily engaged directly in the continuous active conduct of medical research, as compared to an inactive medical research organization or an organization primarily engaged in funding the programs of other medical research organizations. As in the case of a hospital, since an organization is ordinarily not described in section 170(b)(1)(A)(iii) as a hospital unless it functions primarily as a hospital, similarly a medical research organization is not so described unless it is primarily engaged directly in the continuous active conduct of medical research in conjunction with a hospital. Accordingly, the rules of this paragraph (d)(2) shall only apply with respect to such medical research organizations. (ii) General rule. An organization (other than a hospital described in paragraph (d)(1) of this section) is described in section 170(b)(1)(A)(iii) only if within the meaning of this paragraph (d)(2):

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(A) The principal purpose or functions of such organization are to engage primarily in the conduct of medical research; and (B) It is primarily engaged directly in the continuous active conduct of medical research in conjunction with a hospital which is (1) Described in section 501(c)(3); (2) A Federal hospital; or (3) An instrumentality of a governmental unit referred to in section 170(c)(1). (C) In order for a contribution to such organization to qualify for purposes of the 50 percent limitation of section 170(b)(1)(A), during the calendar year in which such contribution is made or treated as made, such organization must be committed (within the meaning of paragraph (d)(2)(viii) of this section) to spend such contribution for such active conduct of medical research before January 1 of the fifth calendar year beginning after the date such contribution is made. For the meaning of the term medical research see paragraph )(2)(iii) of this section. For the (d meaning of the term principal purpose or functions see paragraph )(2)(iv) of this section. For (d the meaning of the term primarily engaged directly in the continuous active conduct of medical research see*52534 paragraph (d)(2)(v) of this section. For the meaning of the term medical research in conjunction with a hospital see paragraph (d(2)(vii) of this section. ) (iii) Definition of medical research. Medical research means the conduct of investigations, experiments, and studies to discover, develop, or verify knowledge relating to the causes, diagnosis, treatment, prevention, or control of physical or mental diseases and impairments of man. To qualify as a medical research organization, the organization must have or must have continuously available for its regular use the appropriate equipment and professional personnel necessary to carry out its principal function. Medical research encompasses the associated disciplines spanning the biological, social and behavioral sciences. Such disciplines include chemistry (biochemistry, physical chemistry, bioorganic chemistry, etc.), behavioral sciences (psychiatry, physiological psychology, neurophysiology, neurology, neurobiology, and social psychology, etc.), biomedical engineering (applied biophysics, medical physics, and medical electronics, for example, developing pacemakers and other medically related electrical equipment), virology, immunology, biophysics, cell biology, molecular biology, pharmacology, toxicology, genetics, pathology, physiology, microbiology, parasitology, endocrinology, bacteriology, and epidemiology. (iv) Principal purpose or functions. An organization must be organized for the principal purpose of engaging primarily in the conduct of medical research in order to be an organization meeting the requirements of this paragraph (d)(2). An organization will normally be considered to be so organized if it is expressly organized for the purpose of conducting medical research and is actually engaged primarily in the conduct of medical research. Other facts and circumstances, however, may indicate that an organization does not meet the principal purpose requirement of this paragraph (d)(2)(iv) even where its governing instrument so expressly provides. An organization that otherwise meets all of the requirements of this paragraph (d)(2) (including this paragraph (d)(2)(iv)) to qualify as a medical research organization will not fail to so qualify solely because its governing instrument does not specifically state that its principal purpose is to conduct medical research. (v) Primarily engaged directly in the continuous active conduct of medical research(A) In order for an organization to be primarily engaged directly in the continuous active conduct of medical research, the organization must either devote a substantial part of its assets to, or expend a significant percentage of its endowment for, such purposes, or both. Whether an organization devotes a substantial part of its assets to, or makes significant expenditures for, such continuous

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active conduct depends upon the facts and circumstances existing in each specific case. An organization will be treated as devoting a substantial part of its assets to, or expending a significant percentage of its endowment for, such purposes if it meets the appropriate test contained in paragraph (d)(2)(v)(B) of this section. If an organization fails to satisfy both of such tests, in evaluating the facts and circumstances, the factor given most weight is the margin by which the organization failed to meet such tests. Some of the other facts and circumstances to be considered in making such a determination are (1) If the organization fails to satisfy the tests because it failed to properly value its assets or endowment, then upon determination of the improper valuation it devotes additional assets to, or makes additional expenditures for, such purposes, so that it satisfies such tests on an aggregate basis for the prior year in addition to such tests for the current year; (2) The organization acquires new assets or has a significant increase in the value of its securities after it had developed a budget in a prior year based on the assets then owned and the then current values; (3) The organization fails to make expenditures in any given year because of the interrelated aspects of its budget and long-term planning requirements, for example, where an organization prematurely terminates an unsuccessful program and because of long-term planning requirements it will not be able to establish a fully operational replacement program immediately; and (4) The organization has as its objective to spend less than a significant percentage in a particular year but make up the difference in the subsequent few years, or to budget a greater percentage in an earlier year and a lower percentage in a later year. (B) For purposes of this section, an organization which devotes more than one half of its assets to the continuous active conduct of medical research will be considered to be devoting a substantial part of its assets to such conduct within the meaning of paragraph (d)(2)(v)(A) of this section. An organization which expends funds equaling 3.5 percent or more of the fair market value of its endowment for the continuous active conduct of medical research will be considered to have expended a significant percentage of its endowment for such purposes within the meaning of paragraph (d)(2)(v)(A) of this section. (C) Engaging directly in the continuous active conduct of medical research does not include the disbursing of funds to other organizations for the conduct of research by them or the extending of grants or scholarships to others. Therefore, if an organization's primary purpose is to disburse funds to other organizations for the conduct of research by them or to extend grants or scholarships to others, it is not primarily engaged directly in the continuous active conduct of medical research. (vi) Special rules. The following rules shall apply in determining whether a substantial part of an organization's assets are devoted to, or its endowment is expended for, the continuous active conduct of medical research activities: (A) An organization may satisfy the tests of paragraph (d)(2)(v)(B) of this section by meeting such tests either for a computation period consisting of the immediately preceding taxable year, or for the computation period consisting of the immediately preceding four taxable years. In addition, for taxable years beginning in 1970, 1971, 1972, 1973, and 1974, if an organization meets such tests for the computation period consisting of the first four taxable years beginning after December 31, 1969, an organization will be treated as meeting such tests, not only for the taxable year beginning in 1974, but also for the preceding four taxable years. Thus, for example, if a calendar year organization failed to satisfy such tests for a computation period consisting of 1969, 1970, 1971, and 1972, but on the basis of a computation period consisting of the years 1970 through 1973, it expended funds equaling 3.5 percent or more of the fair market value of

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its endowment for the continuous active conduct of medical research, such organization will be considered to have expended a significant percentage of its endowment for such purposes for the taxable years 1970 through 1974. In applying such tests for a four-year computation period, although the organization's expenditures for the entire four-year period shall be aggregated, the fair market value of its endowment for each year shall be summed, even though, in the case of an asset held throughout the four-year period, the fair market value of such an asset will be counted four times. *52535 Similarly, the fair market value of an organization's assets for each year of a four-year computation period shall be summed. (B) Any property substantially all the use of which is substantially related (within the meaning of section 514(b)(1)(A)) to the exercise or performance of the organization's medical research activities will not be treated as part of its endowment. (C) The valuation of assets must be made with commonly accepted methods of valuation. A method of valuation made in accordance with the principles stated in the regulations under section 2031 constitutes an acceptable method of valuation. Assets may be valued as of any day in the organization's taxable year to which such valuation applies, provided the organization follows a consistent practice of valuing such asset as of such date in all taxable years. For purposes of paragraph (d)(2)(v) of this section, an asset held by the organization for part of a taxable year shall be taken into account by multiplying the fair market value of such asset by a fraction, the numerator of which is the number of days in such taxable year that the organization held such asset and the denominator of which is the number of days in such taxable year. (vii) Medical research in conjunction with a hospital. The organization need not be formally affiliated with a hospital to be considered primarily engaged directly in the continuous active conduct of medical research in conjunction with a hospital, but in any event there must be a joint effort on the part of the research organization and the hospital pursuant to an understanding that the two organizations will maintain continuing close cooperation in the active conduct of medical research. For example, the necessary joint effort will normally be found to exist if the activities of the medical research organization are carried on in space located within or adjacent to a hospital, the organization is permitted to utilize the facilities (including equipment, case studies, etc.) of the hospital on a continuing basis directly in the active conduct of medical research, and there is substantial evidence of the close cooperation of the members of the staff of the research organization and members of the staff of the particular hospital or hospitals. The active participation in medical research by members of the staff of the particular hospital or hospitals will be considered to be evidence of such close cooperation. Because medical research may involve substantial investigation, experimentation and study not immediately connected with hospital or medical care, the requisite joint effort will also normally be found to exist if there is an established relationship between the research organization and the hospital which provides that the cooperation of appropriate personnel and the use of facilities of the particular hospital or hospitals will be required whenever it would aid such research. (viii) Commitment to spend contributions. The organization's commitment that the contribution will be spent within the prescribed time only for the prescribed purposes must be legally enforceable. A promise in writing to the donor in consideration of his making a contribution that such contribution will be so spent within the prescribed time will constitute a commitment. The expenditure of contributions received for plant, facilities, or equipment, used solely for medical research purposes (within the meaning of paragraph (d)(2)(ii) of this section), shall ordinarily be considered to be an expenditure for medical research. If a contribution is made in other than money, it shall be considered spent for medical research if the funds from the proceeds of a disposition thereof are spent by the organization within the five-year period for medical research; or, if such property is of such a kind that it is used on a continuing basis directly in connection with such research, it shall be considered spent for medical research in the year in which it is first so used. A medical research organization will be presumed to have made the commitment required under this paragraph (d)(2)(viii) with respect to any contribution if its governing instrument or by-laws require that every contribution be spent for medical research before

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January 1 of the fifth year which begins after the date such contribution is made. (ix) Organizational period for new organizations. A newly created organization, for its organizational period, shall be considered to be primarily engaged directly in the continuous active conduct of medical research in conjunction with a hospital within the meaning of paragraphs (d)(2)(v) and (d)(2)(vii) of this section if during such period the organization establishes to the satisfaction of the Commissioner that it reasonably can be expected to be so engaged by the end of such period. The information to be submitted shall include detailed plans showing the proposed initial medical research program, architectural drawings for the erection of buildings and facilities to be used for medical research in accordance with such plans, plans to assemble a professional staff and detailed projections showing the timetable for the expected accomplishment of the foregoing. The organizational period shall be that period which is appropriate to implement the proposed plans, giving effect to the proposed amounts involved and the magnitude and complexity of the projected medical research program, but in no event in excess of three years following organization. (x) Examples. The application of this paragraph (d)(2) may be illustrated by the following examples: Example 1. N, an organization referred to in section 170(c)(2), was created to promote human knowledge within the field of medical research and medical education. All of N's assets were contributed to it by A and consist of a diversified portfolio of stocks and bonds. N's endowment earns 3.5 percent annually, which N expends in the conduct of various medical research programs in conjunction with Y hospital. N is located adjacent to Y hospital, makes substantial use of Y's facilities, and there is close cooperation between the staffs of N and Y. N is directly engaged in the continuous active conduct of medical research in conjunction with a hospital, meets the principal purpose test described in paragraph (d)(2)(iv) of this section, and is therefore an organization described in section 170(b)(1)(A)(iii). Example 2. O, an organization referred to in section 170(c)(2), was created to promote human knowledge within the field of medical research and medical education. All of O's assets consist of a diversified portfolio of stocks and bonds. O's endowment earns 3.5 percent annually, which O expends in the conduct of various medical research programs in conjunction with certain hospitals. However, in 1974, O receives a substantial bequest of additional stocks and bonds. O's budget for 1974 does not take into account the bequest and as a result O expends only 3.1 percent of its endowment in 1974. However, O establishes that it will expend at least 3.5 percent of its endowment for the active conduct of medical research for taxable years 1975 through 1978. O is therefore directly engaged in the continuous active conduct of medical research in conjunction with a hospital for taxable year 1975. Since O also meets the principal purpose test described in paragraph (d)(2)(iv) of this section, it is therefore an organization described in section 170(b)(1)(A)(iii) for taxable year 1975. Example 3. M, an organization referred to in section 170(c)(2), was created to promote human knowledge within the field of medical research and medical education. M's activities consist of the conduct of medical research programs in conjunction with various hospitals. Under such programs, researchers employed by M engage in research at laboratories set aside for M within the various hospitals. Substantially all of M's assets consist of 100 percent of the stock of X corporation, which has a fair market value of approximately 100 million dollars. X pays M approximately 3.3 million dollars in dividends annually, which M expends in the *52536 conduct of its medical research programs. Since M expends only 3.3 percent of its endowment, which does not constitute a significant percentage, in the active conduct of medical research, M is not an organization described in section 170(b)(1)(A)(iii) because M is not engaged in the continuous active conduct of medical research. (xi) Special rule for organizations with existing ruling. This paragraph (d)(2)(xi) shall apply to an organization that prior to January 1, 1970, had received a ruling or determination letter which

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has not been expressly revoked holding the organization to be a medical research organization described in section 170(b)(1)(A)(iii) and with respect to which the facts and circumstances on which the ruling was based have not substantially changed. An organization to which this paragraph (d)(2)(xi) applies shall be treated as an organization described in section 170(b)(1)(A)(iii) for a period not ending prior to 90 days after February 13, 1976 (or where appropriate, for taxable years beginning before such 90th day). In addition, with respect to a grantor or contributor under sections 170, 507, 545(b)(2), 556(b)(2), 642(c), 4942, 4945, 2055, 2106(a)(2), and 2522, the status of an organization to which this paragraph (d)(2)(xi) applies will not be affected until notice of change of status under section 170(b)(1)(A)(iii) is made to the public (such as by publication in the Internal Revenue Bulletin). The preceding sentence shall not apply if the grantor or contributor had previously acquired knowledge that the Internal Revenue Service had given notice to such organization that it would be deleted from classification as a section 170(b)(1)(A)(iii) organization. ***** (k) Effective/applicability date. This section shall apply to taxable years beginning after December 31, 1969. The applicability of paragraph (f) of this section shall be limited to taxable years beginning before January 1, 2008. 26 CFR 1.170A-9T Par. 3. Section 1.170A-9T is added to read as follows: 26 CFR 1.170A-9T 1.170A-9T Definition of section 170(b)(1)(A) organization (temporary). (a) through (e) [Reserved]. For further guidance, see 1.170A-9(a) through (e). (f) Definition of section 170(b)(1)(A)(vi) organization(1) In general. An organization is described in section 170(b)(1)(A)(vi) if it (i) Is referred to in section 170(c)(2) (other than an organization specifically described in paragraphs (b) through (e) of this section); and (ii) Normally receives a substantial part of its support from a governmental unit referred to in section 170(c)(1) or from direct or indirect contributions from the general public (publicly supported). For purposes of this paragraph (f )(1)(ii), an organization is publicly supported if it meets the requirements of either paragraph (f)(2) of this section (33 1/3 percent support test) or paragraph (f)(3) of this section (facts and circumstances test). Paragraph (f)(4) of this section defines normally for purposes of the 33 1/3 percent support test, the facts and circumstances test and for new organizations in the first 5 years of the organization's existence as a section 501(c)(3) organization. Paragraph (f)(5) of this section provides for determinations of foundation classification and rules for reliance by donors and contributors. Paragraphs (f)(6), (7), and (8) of this section list the items that are included and excluded from the term support. Paragraph (f)(9) of this section provides examples of the application of this paragraph. Types of organizations that, subject to the provisions of this paragraph, generally qualify under section 170(b)(1)(A)(vi) as publicly supported are publicly or governmentally supported museums of history, art, or science, libraries, community centers to promote the arts, organizations providing facilities for the support of an opera, symphony orchestra, ballet, or repertory drama or for some other direct service to the general public. (2) Determination whether an organization is publicly supported; 33 1/3 percent support test. An organization is publicly supported if the total amount of support (see paragraphs (f)(6), (7), and (8) of this section) that the organization normally (see paragraph (f)(4)(i) of this section)

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receives from governmental units referred to in section 170(c)(1), from contributions made directly or indirectly by the general public, or from a combination of these sources, equals at least 33 1/3 percent of the total support normally received by the organization. See paragraph (f)(9) Example 1 of this section. (3) Determination whether an organization is publicly supported; facts and circumstances test. Even if an organization fails to meet the 33 1/3 percent support test, it is publicly supported if it normally receives a substantial part of its support from governmental units, from contributions made directly or indirectly by the general public, or from a combination of these sources, and meets the other requirements of this paragraph (f)(3). In order to satisfy the facts and circumstances test, an organization must meet the requirements of paragraphs (f)(3)(i) and (f)(3)(ii) of this section. In addition, the organization must be in the nature of an organization that is publicly supported, taking into account all relevant facts and circumstances, including the factors listed in paragraphs (f)(3)(iii)(A) through (E) of this section. (i) Ten percent support limitation. The percentage of support (see paragraphs (f)(6), (7) and (8) of this section) normally (see paragraph (f)(4) of this section) received by an organization from governmental units, from contributions made directly or indirectly by the general public, or from a combination of these sources, must be substantial. For purposes of this paragraph (f)(3), an organization will not be treated as normally receiving a substantial amount of governmental or public support unless the total amount of governmental and public support normally received equals at least 10 percent of the total support normally received by such organization. (ii) Attraction of public support. An organization must be so organized and operated as to attract new and additional public or governmental support on a continuous basis. An organization will be considered to meet this requirement if it maintains a continuous and bona fide program for solicitation of funds from the general public, community, or membership group involved, or if it carries on activities designed to attract support from governmental units or other organizations described in section 170(b)(1)(A)(i) through (vi). In determining whether an organization maintains a continuous and bona fide program for solicitation of funds from the general public or community, consideration will be given to whether the scope of its fundraising activities is reasonable in light of its charitable activities. Consideration will also be given to the fact that an organization may, in its early years of existence, limit the scope of its solicitation to persons deemed most likely to provide seed money in an amount sufficient to enable it to commence its charitable activities and expand its solicitation program. (iii) In addition to the requirements set forth in paragraphs (f)(3)(i) and (ii) of this section that must be satisfied, all pertinent facts and circumstances, including the following factors, will be taken into consideration in determining whether an organization is publicly supported within the meaning of paragraph (f)(1) of this section. However, an organization is not generally required to satisfy all of the factors in paragraphs (f)(3)(iii)(A) through (E) of this section. The factors relevant to each case and the weight *52537 accorded to any one of them may differ depending upon the nature and purpose of the organization and the length of time it has been in existence. (A) Percentage of financial support. The percentage of support received by an organization from public or governmental sources will be taken into consideration in determining whether an organization is publicly supported. The higher the percentage of support above the 10 percent requirement of paragraph (f)(3)(i) of this section from public or governmental sources, the lesser will be the burden of establishing the publicly supported nature of the organization through other factors described in this paragraph (f)(3), while the lower the percentage, the greater will be the burden. If the percentage of the organization's support from public or governmental sources is low because it receives a high percentage of its total support from investment income on its endowment funds, such fact will be treated as evidence of compliance with this subdivision if such endowment funds were originally contributed by a governmental unit or by the general public. However, if such endowment funds were originally contributed by a few individuals or

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members of their families, such fact will increase the burden on the organization of establishing compliance with the other factors described in paragraph (f)(3)(iii) of this section. (B) Sources of support. The fact that an organization meets the requirement of paragraph (f)(3)(i) of this section through support from governmental units or directly or indirectly from a representative number of persons, rather than receiving almost all of its support from the members of a single family, will be taken into consideration in determining whether an organization is publicly supported. In determining what a representative number of is persons,consideration will be given to the type of organization involved, the length of time it has been in existence, and whether it limits its activities to a particular community or region or to a special field which can be expected to appeal to a limited number of persons. (C) Representative governing body. The fact that an organization has a governing body which represents the broad interests of the public, rather than the personal or private interests of a limited number of donors (or persons standing in a relationship to such donors which is described in section 4946(a)(1)(C) through (G)), will be taken into account in determining whether an organization is publicly supported. An organization will be treated as meeting this requirement if it has a governing body (whether designated in the organization's governing instrument or bylaws as a Board of Directors, Board of Trustees, etc.) which is comprised of public officials acting in their capacities as such; of individuals selected by public officials acting in their capacities as such; of persons having special knowledge or expertise in the particular field or discipline in which the organization is operating; of community leaders, such as elected or appointed officials, clergymen, educators, civic leaders, or other such persons representing a broad cross-section of the views and interests of the community; or, in the case of a membership organization, of individuals elected pursuant to the organization's governing instrument or bylaws by a broadly based membership. (D) Availability of public facilities or services; public participation in programs or policies. (1) The fact that an organization is of the type which generally provides facilities or services directly for the benefit of the general public on a continuing basis (such as a museum or library which holds open its building or facilities to the public, a symphony orchestra which gives public performances, a conservation organization which provides educational services to the public through the distribution of educational materials, or an old age home which provides domiciliary or nursing services for members of the general public) will be considered evidence that such organization is publicly supported. (2) The fact that an organization is an educational or research institution which regularly publishes scholarly studies that are widely used by colleges and universities or by members of the general public will also be considered evidence that such organization is publicly supported. (3) Similarly, the following factors will also be considered evidence that an organization is publicly supported: (i) The participation in, or sponsorship of, the programs of the organization by members of the public having special knowledge or expertise, public officials, or civic or community leaders. (ii) The maintenance of a definitive program by an organization to accomplish its charitable work in the community, such as combating community deterioration in an economically depressed area that has suffered a major loss of population and jobs. (iii) The receipt of a significant part of its funds from a public charity or governmental agency to which it is in some way held accountable as a condition of the grant, contract, or contribution. (E) Additional factors pertinent to membership organizations. The following are additional factors to be considered in determining whether a membership organization is publicly supported:

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(1) Whether the solicitation for dues-paying members is designed to enroll a substantial number of persons in the community or area, or in a particular profession or field of special interest (taking into account the size of the area and the nature of the organization's activities). (2) Whether membership dues for individual (rather than institutional) members have been fixed at rates designed to make membership available to a broad cross section of the interested public, rather than to restrict membership to a limited number of persons. (3) Whether the activities of the organization will be likely to appeal to persons having some broad common interest or purpose, such as educational activities in the case of alumni associations, musical activities in the case of symphony societies, or civic affairs in the case of parent-teacher associations. See Examples 2 through 5 contained in paragraph (f)(9) of this section for illustrations of this paragraph (f)(3). (4) Definition of normally; general rule(i) Normally; 33 1/3 percent support test. An organization meets the 33 1/3 percent support test for its current taxable year and the taxable year immediately succeeding its current year, if, for the current taxable year and the 4 taxable years immediately preceding the current taxable year, the organization meets the 33 1/3 percent support test on an aggregate basis. (ii) Normally; facts and circumstances test. An organization meets the facts and circumstances test for its current taxable year and the taxable year immediately succeeding its current year, if, for the current taxable year and the 4 taxable years immediately preceding the current taxable year, the organization meets the facts and circumstances test on an aggregate basis. In the case of paragraphs (f)(3)(iii)(A) and (B) of this section, facts pertinent to the 5-year period may also be taken into consideration. The combination of factors set forth in paragraphs (f)(3)(iii)(A) through (E) of this section that an organization normally must meet does not have to be the same for each 5-year period so long as there exists a sufficient combination of factors to show compliance with the facts and circumstances test. *52538 (iii) Special rule. The fact that an organization has normally met the requirements of the 33 1/3 percent support test for a current taxable year, but is unable normally to meet such requirements for a succeeding taxable year, will not in itself prevent such organization from meeting the facts and circumstances test for such succeeding taxable year. (iv) Example. The application of paragraphs (f)(4)(i), (ii), and (iii) of this section may be illustrated by the following example: Example. (i) X is recognized as an organization described in section 501(c)(3). On the basis of support received during taxable years 2008, 2009, 2010, 2011 and 2012, it meets the 33 1/3 percent support test for taxable year 2012 (the current taxable year). X also meets the 33 1/3 support test for 2013, as the immediately succeeding taxable year. (ii) In taxable years 2009, 2010, 2011, 2012 and 2013, in the aggregate, X does not receive at least 33 1/3 percent of its support from governmental units referred to in section 170(c)(1), from contributions made directly or indirectly by the general public, or from a combination of these sources. X still meets the 33 1/3 percent support test for taxable year 2013 based on the aggregate support received for taxable years 2008 through 2012. (iii) In taxable years 2010, 2011, 2012, 2013 and 2014, in the aggregate, X does not receive at least 33 1/3 percent of its support from governmental units referred to in section 170(c)(1), from contributions made directly or indirectly by the general public, or from a combination of these sources. X does not meet the 33 1/3 percent support test for taxable year 2014. (iv) Based on the aggregate support and other factors listed in paragraphs (f)(3)(iii)(A) through (E) of this section for taxable years 2009, 2010, 2011, 2012, and 2013, X meets the facts and

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circumstances test for taxable year 2013 and for taxable year 2014 (as the immediately succeeding taxable year). Therefore, X is still an organization described in section 170(b)(1)(A)(vi) for taxable year 2014, even though X did not meet the 33 1/3 percent support test for that year. (v) Normally; first five years of an organization's existence. (A) An organization meets the 33 1/3 public support test or the facts and circumstances test during its first five taxable years as a section 501(c)(3) organization if the organization can reasonably be expected to meet the requirements of the 33 1/3 percent support test or the facts and circumstances test during that period. With respect to such organization's sixth taxable year, the organization shall be described in section 170(b)(1)(A)(vi) if it meets the 33 1/3 percent support test or the facts and circumstances test under the definitions of normally set forth in paragraphs (f)(4)(i) through (iii) of this section for its sixth taxable year (based on support received in its second through sixth taxable years), or for its fifth taxable year (based on support received in its first through fifth taxable years). (B) Basic consideration. In determining whether an organization can reasonably be expected (within the meaning of paragraph (f)(4)(v)(A) of this section) to meet the requirements of the 33 1/3 percent support test or the facts and circumstances test during its first five taxable years, the basic consideration is whether its organizational structure, current or proposed programs or activities, and actual or intended method of operation are such as can reasonably be expected to attract the type of broadly based support from the general public, public charities, and governmental units that is necessary to meet such tests. The factors that are relevant to this determination, and the weight accorded to each of them, may differ from case to case, depending on the nature and functions of the organization. The information to be considered for this purpose shall consist of all pertinent facts and circumstances relating to the requirements set forth in paragraph (f)(3) of this section. (vi) Example. The application of paragraph (f)(4)(v) of this section may be illustrated by the following example: Example. (i) Organization Y was formed in January 2008, and uses a December 31 taxable year. After September 9, 2008, and before December 31, 2008, Organization Y filed Form 1023 requesting recognition of exemption as an organization described in section 501(c)(3) and in sections 170(b)(1)(A)(vi) and 509(a)(1). In its application, Organization Y established that it can reasonably be expected to operate as a public charity under paragraph (f)(4)(v) of this section. Subsequently, Organization Y received a ruling or determination letter that it is an organization described in section 501(c)(3) and sections 170(b)(1)(A)(vi) and 509(a)(1) effective as of the date of its formation. (ii) Organization Y is described in sections 170(b)(1)(A)(vi) and 509(a)(1) for its first 5 taxable years (the taxable years ending December 31, 2008, through December 31, 2012). (iii) Organization Y can qualify as a public charity beginning with the taxable year ending December 31, 2013, if Organization Y can meet the requirements of paragraphs (f)(2) through (3) of this section or 1.509(a)-3T(a) through (b) for the taxable years ending December 31, 2009, through December 31, 2013, or for the taxable years ending December 31, 2008, through December 31, 2012. (5) Determinations on foundation classification and reliance. (i) A ruling or determination letter that an organization is described in section 170(b)(1)(A)(vi) may be issued to an organization. Such determination may be made in conjunction with the recognition of the organization's taxexempt status or at such other time as the organization believes it is described in section 170(b)(1)(A)(vi). The ruling or determination letter that the organization is described in section 170(b)(1)(A)(vi) may be revoked if, upon examination, the organization has not met the requirements of paragraph (f) of this section. The ruling or determination letter that the

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organization is described in section 170(b)(1)(A)(vi) also may be revoked if the organization's application for a ruling or determination contained one or more material misstatements of fact or if such application was part of a scheme or plan to avoid or evade any provision of the Internal Revenue Code. The revocation of the determination that an organization is described in section 170(b)(1)(A)(vi) does not preclude revocation of the determination that the organization is described in section 501(c)(3). (ii) Status of grantors or contributors. For purposes of sections 170, 507, 545(b)(2), 642(c), 4942, 4945, 2055, 2106(a)(2), and 2522, grantors or contributors may rely upon a determination letter or ruling that an organization is described in section 170(b)(1)(A)(vi) until the Internal Revenue Service publishes notice of a change of status (for example, in the Internal Revenue Bulletin or Publication 78, Cumulative List of Organizations described in Section 170(c) of the Internal Revenue Code of 1986, which can be searched at www.irs.gov). For this purpose, grantors or contributors also may rely on an advance ruling that expires on or after June 9, 2008. However, a grantor or contributor may not rely on such an advance ruling or any determination letter or ruling if the grantor or contributor was responsible for, or aware of, the act or failure to act that resulted in the organization's loss of classification under section 170(b)(1)(A)(vi) or acquired knowledge that the Internal Revenue Service had given notice to such organization that it would be deleted from such classification. (6) Definition of support; meaning of general public(i) In general. In determining whether the 33 1/3 percent support test or the 10 percent support limitation described in paragraph (f)(3)(i) of this section is met, contributions by an individual, trust, or corporation shall be taken into account as support from direct or indirect contributions from the general public only to the extent that the total amount of the contributions by any such *52539 individual, trust, or corporation during the period described in paragraphs (f)(4)(i) or (ii) of this section does not exceed 2 percent of the organization's total support for such period, except as provided in paragraph (f)(6)(ii) of this section. Therefore, any contribution by one individual will be included in full in the denominator of the fraction determining the 33 1/3 percent support or the 10 percent support limitation, but will be includible in the numerator of such fraction only to the extent that such amount does not exceed 2 percent of the denominator. In applying the 2 percent limitation, all contributions made by a donor and by any person or persons standing in a relationship to the donor that is described in section 4946(a)(1)(C) through (G) and the regulations relating to section 4946(a)(1)(C) through (G) shall be treated as made by one person. The 2 percent limitation shall not apply to support received from governmental units referred to in section 170(c)(1) or to contributions from organizations described in section 170(b)(1)(A)(vi), except as provided in paragraph (f)(6)(v) of this section. For purposes of paragraphs (f)(2), (f)(3)(i) and (f)(7)(iii)(A)(2) of this section, the term indirect contributions from the general public includes contributions received by the organization from organizations (such as section 170(b)(1)(A)(vi) organizations) that normally receive a substantial part of their support from direct contributions from the general public, except as provided in paragraph (f)(6)(v) of this section. See the examples in paragraph (f)(9) of this section for the application of this paragraph (f)(6)(i). For purposes of this paragraph (f), the term contributions includes qualified sponsorship payments (as defined in 1.513-4) in the form of money or property (but not services). (ii) Exclusion of unusual grants. (A) For purposes of applying the 2 percent limitation described in paragraph (f)(6)(i) of this section to determine whether the 33 1/3 percent support test or the 10 percent support limitation in paragraph (f)(3)(i) of this section is satisfied, one or more contributions may be excluded from both the numerator and the denominator of the applicable support fraction if such contributions meet the requirements of paragraph (f)(6)(iii) of this section. The exclusion provided by this paragraph (f)(6)(ii) is generally intended to apply to substantial contributions or bequests from disinterested parties, which contributions or bequests (1) Are attracted by reason of the publicly supported nature of the organization;

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(2) Are unusual or unexpected with respect to the amount thereof; and (3) Would, by reason of their size, adversely affect the status of the organization as normally being publicly supported for the applicable period described in paragraph (f)(4) of this section. (B) In the case of a grant (as defined in 1.509(a)-3(g)) that meets the requirements of this paragraph (f)(6)(ii), if the terms of the granting instrument (whether executed before or after 1969) require that the funds be paid to the recipient organization over a period of years, the amount received by the organization each year pursuant to the terms of such grant may be excluded for such year. However, no item of gross investment income may be excluded under this paragraph (f)(6). The provisions of this paragraph (f)(6) shall apply to exclude unusual grants made during any of the applicable periods described in paragraph (f)(4) or (f)(6) of this section. See paragraph (f)(6)(iv) of this section as to reliance by a grantee organization upon an unusual grant ruling under this paragraph (f)(6). (iii) Determining factors. In determining whether a particular contribution may be excluded under paragraph (f)(6)(ii) of this section all pertinent facts and circumstances will be taken into consideration. No single factor will necessarily be determinative. For some of the factors similar to the factors to be considered, see 1.509(a)-3T(c)(4). (iv) Grantors and contributors. Prior to the making of any grant or contribution that will allegedly meet the requirements for exclusion under paragraph (f)(6)(ii) of this section, a potential grantee organization may request a determination whether such grant or contribution may be so excluded. Requests for such determination may be filed by the grantee organization. The issuance of such determination will be at the sole discretion of the Commissioner. The organization must submit all information necessary to make a determination on the factors referred to in paragraph (f)(6)(iii) of this section. If a favorable ruling is issued, such ruling may be relied upon by the grantor or contributor of the particular contribution in question for purposes of sections 170, 507, 545(b)(2), 642(c), 4942, 4945, 2055, 2106(a)(2), and 2522 and by the grantee organization for purposes of paragraph (f)(6)(ii) of this section. (v) Grants from public charities. Pursuant to paragraph (f)(6)(i) of this section, contributions received from a governmental unit or from a section 170(b)(1)(A)(vi) organization are not subject to the 2 percent limitation described in paragraph (f)(6)(i) of this section unless such contributions represent amounts which have been expressly or impliedly earmarked by a donor to such governmental unit or section 170(b)(1)(A)(vi) organization as being for, or for the benefit of, the particular organization claiming section 170(b)(1)(A)(vi) status. See 1.509(a)3(j)(3) for examples illustrating the rules of this paragraph (f)(6)(v). (7) Definition of support; special rules and meaning of terms(i) Definition of support. For purposes of this paragraph (f)(7), the term support shall be as defined in section 509(d) (without regard to section 509(d)(2)). The term support does not include (A) Any amounts received from the exercise or performance by an organization of its charitable, educational, or other purpose or function constituting the basis for its exemption under section 501(a). In general, such amounts include amounts received from any activity the conduct of which is substantially related to the furtherance of such purpose or function (other than through the production of income); or (B) Contributions of services for which a deduction is not allowable. (ii) For purposes of the 33 1/3 percent support test and the 10 percent support limitation in paragraph (f)(3)(i) of this section, all amounts received that are described in paragraphs (f)(7)(i)(A) or (B) of this section are to be excluded from both the numerator and the denominator of the fractions determining compliance with such tests, except as provided in paragraph (f)(7)(iii) of this section.

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(iii) Organizations dependent primarily on gross receipts from related activities. (A) Notwithstanding the provisions of paragraph (f)(7)(i) of this section, an organization will not be treated as satisfying the 33 1/3 percent support test or the 10 percent support limitation in paragraph (f)(3)(i) of this section if it receives (1) Almost all of its support (as defined in section 509(d)) from gross receipts from related activities; and (2) An insignificant amount of its support from governmental units (without regard to amounts referred to in paragraph (f)(7)(i)(A) of this section) and contributions made directly or indirectly by the general public. (B) Example. The application of this paragraph (f)(7)(iii) may be illustrated by the following example: Example. Z, an organization described in section 501(c)(3), is controlled by A, its *52540 president. Z received $500,000 during the period consisting of the current taxable year and the four immediately preceding taxable years under a contract with the Department of Transportation, pursuant to which Z has engaged in research to improve a particular vehicle used primarily by the Federal government. During this same period, the only other support received by Z consisted of $5,000 in small contributions primarily from Z's employees and business associates. The $500,000 amount constitutes support under sections 509(d)(2) and 509(a)(2)(A). Under these circumstances, Z meets the conditions of paragraphs (f)(7)(iii)(A)(1) and (2) of this section and will not be treated as meeting the requirements of either the 33 1/3 percent support test or the facts and circumstances test. As to the rules applicable to organizations that fail to qualify under section 170(b)(1)(A)(vi) because of the provisions of this paragraph (f)(7)(ii), see section 509(a)(2) and the accompanying regulations. For the distinction between gross receipts (as referred to in section 509(d)(2)) and gross investment income (as referred to in section 509(d)(4)), see 1.509(a)-3(m). (iv) Membership fees. For purposes of this paragraph (f)(7), the term support shall include membership fees within the meaning of 1.509(a)-3(h) (that is, if the basic purpose for making a payment is to provide support for the organization rather than to purchase admissions, merchandise, services, or the use of facilities). (8) Support from a governmental unit. (i) For purposes of the 33 1/3 percent support test and the 10 percent support limitation described in paragraph (f)(3)(i) of this section, the term support from a governmental unit includes any amounts received from a governmental unit, including donations or contributions and amounts received in connection with a contract entered into with a governmental unit for the performance of services or in connection with a government research grant. However, such amounts will not constitute support from a governmental unit for such purposes if they constitute amounts received from the exercise or performance of the organization's exempt functions as provided in paragraph (f)(7)(i)(A) of this section. (ii) For purposes of paragraph (f)(8)(i) of this section, any amount paid by a governmental unit to an organization is not to be treated as received from the exercise or performance of its charitable, educational, or other purpose or function constituting the basis for its exemption under section 501(a) (within the meaning of paragraph (f)(7)(i)(A) of this section) if the purpose of the payment is primarily to enable the organization to provide a service to, or maintain a facility for, the direct benefit of the public (regardless of whether part of the expense of providing such service or facility is paid for by the public), rather than to serve the direct and immediate needs of the payor. For example (A) Amounts paid for the maintenance of library facilities which are open to the public;

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(B) Amounts paid under government programs to nursing homes or homes for the aged in order to provide health care or domiciliary services to residents of such facilities; and (C) Amounts paid to child placement or child guidance organizations under government programs for services rendered to children in the community, are considered payments the purpose of which is primarily to enable the recipient organization to provide a service or maintain a facility for the direct benefit of the public, rather than to serve the direct and immediate needs of the payor. Furthermore, any amount received from a governmental unit under circumstances such that the amount would be treated as a grant within the meaning of 1.509(a)-3(g) will generally constitute support from a governmental unit described in this paragraph)(8), (f rather than an amount described in paragraph (f)(7)(i)(A) of this section. (9) Examples. The application of paragraphs (f)(1) through (8) of this section may be illustrated by the following examples: Example 1. (i) M is recognized as an organization described in section 501(c)(3). For the years 2008 through 2012 (the applicable period with respect to the taxable year 2012 under paragraph (f)(4) of this section), M received support (as defined in paragraphs (f)(6) through (8) of this section) of $600,000 from the following sources: Investment income $300,00 0 City R (a 40,000 governmental unit described in section 170(c)(1)) United Fund (an 40,000 organization described in section 170(b)(1)(A)(vi)) Contributions 220,000 Total support $600,00 0 (ii) With respect to the taxable year 2012, M's public support is computed as follows: Support from a governmental unit described in section 170(c)(1) Indirect contributions from the general public (United Fund) Contributions by various donors (no one having made contributions that total in excess of $12,0002 $40,000

40,000

50,000

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percent of total support) Six contributions (each in excess of $12,0002 percent total support) 6 x $12,000

72,000

$202,00 0

(iii) M's support from governmental units referred to in section 170(c)(1) and from direct and indirect contributions from the general public (as defined in paragraph (f)(6) of this section) with respect to the taxable year 2012 normally exceeds 33 1/3 percent of M's total support ($202,000/$600,000 = 33.67 percent) for the applicable period (2008 through 2012). M meets the 33 1/3 percent support test with respect to 2012 and is therefore publicly supported for the taxable years 2012 and 2013. Example 2. N is recognized as an organization described in section 501(c)(3). It was created to maintain public gardens containing botanical specimens and displaying statuary and other art objects. The facilities, works of art, and a large endowment were all contributed by a single contributor. The members of the governing body of the organization are unrelated to its creator. The gardens are open to the public without charge and attract a substantial number of visitors each year. For the current taxable year and the four taxable years immediately preceding the current taxable year, 95 percent of the organization's total support was received from investment income from its original endowment. N also maintains a membership society that is supported by members of the general public who wish to contribute to the upkeep of the gardens by paying a small annual membership fee. Over the 5-year period in question, these fees from the general public constituted the remaining 5 percent of the organization's total support for such period. Under these circumstances, N does not meet the 33 1/3 percent support test for its current taxable year. Furthermore, because only 5 percent of its total support is, with respect to the current taxable year, normally received from the general public, N does not satisfy the 10 percent support limitation described in paragraph (f)(3)(i) of this section and therefore does not qualify as publicly supported under the facts and circumstances test. Because N has failed to satisfy the 10 percent support limitation under paragraph (f)(3)(i) of this section, none of the other requirements or factors set forth in paragraphs (f)(3)(iii)(A) through (E) of this section can be considered in determining whether N qualifies as a publicly supported organization. For its current taxable year, N therefore is not an organization described in section 170(b)(1)(A)(vi). Example 3. (i) O, an art museum, is recognized as an organization described in section 501(c)(3). In 1930, O was founded in S City by the members of a single family to collect, preserve, interpret, and display to the public important works of art. O is governed by a Board of Trustees that originally consisted almost entirely of members of the founding family. However, since 1945, members of the founding family or persons standing in a relationship to the members of such family described in section 4946(a)(1)(C) through (G) have annually constituted less than one-fifth of the Board of Trustees. The remaining board members are citizens of S City from a variety of professions and occupations who represent the interests and views of the people of S City in the activities carried on by the *52541 organization rather than the personal or private interests of the founding family. O solicits contributions from the general public and for the current taxable year and each of the four taxable years immediately preceding the current taxable year, O has received total contributions (in small sums of less than $100, none of which exceeds 2 percent of O's total support for such period) in excess of $10,000. These contributions from the general public (as defined in paragraph (f)(6) of this section) represent 25 percent of the organization's total support for such 5-year period. For this same

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period, investment income from several large endowment funds has constituted 75 percent of O's total support. O expends substantially all of its annual income for its exempt purposes and thus depends upon the funds it annually solicits from the public as well as its investment income in order to carry out its activities on a normal and continuing basis and to acquire new works of art. O has, for the entire period of its existence, been open to the public and more than 300,000 people (from S City and elsewhere) have visited the museum in each of the current taxable year and the four most recent taxable years. (ii) Under these circumstances, O does not meet the 33 1/3 percent support test for its current year because it has received only 25 percent of its total support for the applicable 5-year period from the general public. However, under the facts set forth above, O has met the 10 percent support limitation under paragraph (f)(3)(i) of this section, as well as the requirements of paragraph (f)(3)(ii) of this section. Under all of the facts set forth in this example, O is considered as meeting the requirements of the facts and circumstances test on the basis of satisfying paragraphs (f)(3)(i) and (ii) of this section and the factors set forth in paragraphs (f)(3)(iii)(A) through (D) of this section. O is therefore publicly supported for its current taxable year and the immediately succeeding taxable year. Example 4. (i) In 1960, the P Philharmonic Orchestra was organized in T City through the combined efforts of a local music society and a local women's club to present to the public a wide variety of musical programs intended to foster music appreciation in the community. P is recognized as an organization described in section 501(c)(3). The orchestra is composed of professional musicians who are paid by the association. Twelve performances open to the public are scheduled each year. A small admission fee is charged for each of these performances. In addition, several performances are staged annually without charge. During the current taxable year and the four taxable years immediately preceding the current taxable year, P has received separate contributions of $200,000 each from A and B (not members of a single family) and support of $120,000 from the T Community Chest, a public federated fundraising organization operating in T City. P depends on these funds in order to carry out its activities and will continue to depend on contributions of this type to be made in the future. P has also begun a fundraising campaign in an attempt to expand its activities for the coming years. P is governed by a Board of Directors comprised of 5 individuals. A faculty member of a local college, the president of a local music society, the head of a local banking institution, a prominent doctor, and a member of the governing body of the local chamber of commerce currently serve on P's Board and represent the interests and views of the community in the activities carried on by P. (ii) With respect to P's current taxable year, P's sources of support are computed on the basis of the current taxable year and the four taxable years immediately preceding the current taxable year, as follows: Contributions Receipts from performances Total support Less: Receipts from performances (excluded under paragraph (f)(7)(i)(A) of this section) Total support $520,00 0 100,000 $620,00 0 100,000

$520,00

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for purposes of paragraphs (f)(2) and (f)(3)(i) of this section

(iii) For purposes of paragraphs (f)(2) and (f)(3)(i) of this section, P's support is computed as follows: T Community $120,00 Chest (indirect 0 support from the general public) Two 20,800 contributions (each in excess of $10,4002 percent of total support) 2 x $10,400 Total $140,80 0 (iv) P's support from the direct and indirect contributions from the general public does not meet the 33 1/3 percent support test ($140,800/$520,000 = 27 percent of total support). However, because P receives 27 percent of its total support from the general public, it meets the 10 percent support limitation under paragraph (f)(3)(i) of this section. P also meets the requirements of paragraph (f)(3)(ii) of this section. As a result of satisfying these requirements and the factors set forth in paragraphs (f)(3)(iii)(A) through (D) of this section, P is considered to meet the facts and circumstances test and therefore qualifies as a publicly supported organization under paragraph (f)(1) of this section for its current taxable year and the immediately succeeding taxable year. Example 5. (i) Q is recognized as an organization described in section 501(c)(3). It is a philanthropic organization founded in 1965 by C for the purpose of making annual contributions to worthy charities. C created Q as a charitable trust by the transfer of appreciated securities worth $500,000 to Q. Pursuant to the trust agreement, C and two other members of his family are the sole trustees of Q and are vested with the right to appoint successor trustees. In each of the current taxable year and the four taxable years immediately preceding the current taxable year, Q received $15,000 in investment income from its original endowment. Each year Q makes a solicitation for funds by operating a charity ball at C's residence. Guests are invited and requested to make contributions of $100 per couple. During the 5-year period at issue, $15,000 was received from the proceeds of these events. C and his family have also made contributions to Q of $25,000 over the 5-year period at issue. Q makes disbursements each year of substantially all of its net income to the public charities chosen by the trustees. (ii) Q's sources of support for the current taxable year and the four taxable years immediately preceding the current taxable year as follows: Investment income $60,000

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Contributions Total support

40,000 $100,00 0

(iii) For purposes of paragraphs (f)(2) and (f)(3)(i) of this section, Q's support is computed as follows: Contributions $15,00 from the 0 general public One 2,000 contribution (in excess of $2,0002 percent of total support) 1 x $2,000 Total $17,00 0 (iv) Q's support from the general public does not meet the 33 1/3 percent support test ($17,000/$100,000 = 17 percent of total support). Thus, Q's classification as a publicly supported organization depends on whether it meets the requirements of the facts and circumstances test. Even though it satisfies the 10 percent support limitation under paragraph (f)(3)(i) of this section, its method of solicitation makes it questionable whether Q satisfies the requirements of paragraph (f)(3)(ii) of this section. Because of its method of operating, Q also has a greater burden of establishing its publicly supported nature under paragraph (f)(3)(iii)(A) of this section. Based upon the foregoing and upon Q's failure to receive favorable consideration under the remaining factors set forth in paragraphs (f)(3)(iii)(B), (C) and (D) of this section, Q does not satisfy the facts and circumstances test. (10) Community trust; introduction. Community trusts have often been established to attract large contributions of a capital or endowment nature for the benefit of a particular community or area, and often such contributions have come initially from a small number of donors. While the community trust generally has a governing body comprised of representatives of the particular community or area, its contributions are often received and maintained in the form of separate trusts or funds, which are subject to varying degrees of control by the governing body. To qualify as a publicly supported organization, a community trust must meet the 33 1/3 percent support test, or, if it cannot meet that test, be organized and operated so as to attract new and additional public or governmental support on a continuous basis sufficient to meet the facts and circumstances test. Such facts and circumstances test includes a requirement of attraction of public *52542 support in paragraph (f)(3)(ii) of this section which, as applied to community trusts, generally will be satisfied if they seek gifts and bequests from a wide range of potential donors in the community or area served, through banks or trust companies, through attorneys or other professional persons, or in other appropriate ways that call attention to the community trust as a potential recipient of gifts and bequests made for the benefit of the community or area served. A community trust is not required to engage in periodic, community-wide, fundraising campaigns directed toward attracting a large number of small contributions in a manner similar to campaigns conducted by a community chest or united fund. Paragraph (f)(11) of this section provides rules for determining the extent to which separate trusts or funds may be treated as component parts of a community trust, fund or foundation (herein collectively referred to as a community trust, and sometimes referred to as an organization) for purposes of meeting the requirements of this paragraph for classification as a publicly supported organization. Paragraph (f)(12) of this section contains rules for trusts or funds that are prevented from qualifying as

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component parts of a community trust by paragraph (f)(11) of this section. (11) Community trusts; requirements for treatment as a single entity(i) General rule. For purposes of sections 170, 501, 507, 508, 509, and Chapter 42, any organization that meets the requirements contained in paragraphs (f)(11)(iii) through (iv) of this section will be treated as a single entity, rather than as an aggregation of separate funds, and except as otherwise provided, all funds associated with such organization (whether a trust, not-for-profit corporation, unincorporated association, or a combination thereof) which meet the requirements of paragraph (f)(11)(ii) of this section will be treated as component parts of such organization. (ii) Component part of a community trust. In order to be treated as a component part of a community trust referred to in this paragraph (f)(11) (rather than as a separate trust or not-forprofit corporation or association), a trust or fund: (A) Must be created by a gift, bequest, legacy, devise, or other transfer to a community trust which is treated as a single entity under this paragraph (f)(11); and (B) May not be directly or indirectly subjected by the transferor to any material restriction or condition (within the meaning of 1.507-2T(a)(7)) with respect to the transferred assets. For purposes of this paragraph (f)(11)(ii)(B), if the transferor is not a private foundation, the provisions of 1.507-2T(a)(7) shall be applied to the trust or fund as if the transferor were a private foundation established and funded by the person establishing the trust or fund and such foundation transferred all its assets to the trust or fund. Any transfer made to a fund or trust which is treated as a component part of a community trust under this paragraph (f)(11)(ii) will be treated as a transfer made to a publicly supported community trust for purposes of section 170(b)(1)(A) and 507(b)(1)(A) if such community trust meets the requirements of section 170(b)(1)(A)(vi) as a publicly supported organization at the time of the transfer, except as provided in paragraph (f)(4)(v)(B) of this section or 1.508-1(b)(4) and (6) (relating, generally, to reliance by grantors and contributors). See also paragraphs (f)(12)(ii) and (iii) of this section for special provisions relating to split-interest trusts and certain private foundations described in section 170(b)(1)(F)(iii). (iii) Name. The organization must be commonly known as a community trust, fund, foundation or other similar name conveying the concept of a capital or endowment fund to support charitable activities (within the meaning of section 170(c)(1) or (2)(B)) in the community or area it serves. (iv) Common instrument. All funds of the organization must be subject to a common governing instrument or a master trust or agency agreement (herein referred to as the governing instrument), which may be embodied in a single document or several documents containing common language. Language in an instrument of transfer to the community trust making a fund subject to the community trust's governing instrument or master trust or agency agreement will satisfy the requirements of this paragraph (f)(11)(iv). In addition, if a community trust adopts a new governing instrument (or creates a corporation) to put into effect new provisions (applying to future transfers to the community trust), the adoption of such new governing instrument (or creation of a corporation with a governing instrument) which contains common language with the existing governing instrument shall not preclude the community trust from meeting the requirements of this paragraph (f)(11)(iv). (v) Common governing body. (A) The organization must have a common governing body or distribution committee (herein referred to as the governing body) which either directs or, in the case of a fund designated for specified beneficiaries, monitors the distribution of all of the funds exclusively for charitable purposes (within the meaning of section 170(c)(1) or (2)(B)). For purposes of this paragraph (f)(11)(v), a fund is designated for specified beneficiaries only if no person is left with the discretion to direct the distribution of the fund. (B) Powers of modification and removal. The fact that the exercise of any power described in this

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paragraph (f)(11)(v)(B) is reviewable by an appropriate State authority will not preclude the community trust from meeting the requirements of this paragraph (f)(11)(v)(B). Except as provided in paragraph (f)(11)(v)(C) of this section, the governing body must have the power in the governing instrument, the instrument of transfer, the resolutions or by-laws of the governing body, a written agreement, or otherwise (1) To modify any restriction or condition on the distribution of funds for any specified charitable purposes or to specified organizations if in the sole judgment of the governing body (without the necessity of the approval of any participating trustee, custodian, or agent), such restriction or condition becomes, in effect, unnecessary, incapable of fulfillment, or inconsistent with the charitable needs of the community or area served; (2) To replace any participating trustee, custodian, or agent for breach of fiduciary duty under State law; and (3) To replace any participating trustee, custodian, or agent for failure to produce a reasonable (as determined by the governing body) return of net income (within the meaning of paragraph (f)(11)(v)(F) of this section) over a reasonable period of time (as determined by the governing body). (C) Transitional rule(1) Notwithstanding paragraph (f)(11)(v)(B) of this section, if a community trust meets the requirements of paragraph (f)(11)(v)(C)(3) of this section, then in the case of any instrument of transfer which is executed before July 19, 1977, and is not revoked or amended thereafter (with respect to any dispositive provision affecting the transfer to the community trust), and in the case of any instrument of transfer which is irrevocable on January 19, 1982, the governing body must have the power to cause proceedings to be instituted (by request to the appropriate State authority): (i) To modify any restriction or condition on the distribution of funds for any specified charitable purposes or to specified organizations if in the *52543 judgment of the governing body such restriction or condition becomes, in effect, unnecessary, incapable of fulfillment, or inconsistent with the charitable needs of the community or area served; and (ii) To remove any participating trustee, custodian, or agent for breach of fiduciary duty under State law. (2) The necessity for the governing body to obtain the approval of a participating trustee to exercise the powers described in paragraph (f)(11)(v)(C)(1) of this section shall be treated as not preventing the governing body from having such power, unless (and until) such approval has been (or is) requested by the governing body and has been (or is) denied. (3) Paragraph (f)(11)(v)(C)(1) of this section shall not apply unless the community trust meets the requirements of paragraph (f)(11)(v)(B) of this section, with respect to funds other than those under instruments of transfer described in the first sentence of such paragraph (f)(11)(v)(C)(1) of this section, by January 19, 1978, or such later date as the Commissioner may provide for such community trust, and unless the community trust does not, once it so complies, thereafter solicit for funds that will not qualify under the requirements of paragraph (f)(11)(v)(B) of this section. (D) Inconsistent State law(1) For purposes of paragraphs (f)(11)(v)(B)(1), (2), or (3), (f)(11)(v)(C)(1)(i) or (ii) or (f)(11)(v)(E) of this section, if a power described in such a provision is inconsistent with State law even if such power were expressly granted to the governing body by the governing instrument and were accepted without limitation under an instrument of transfer, then the community trust will be treated as meeting the requirements of such a provision if it meets such requirements to the fullest extent possible consistent with State law (if such power is or had been so expressly granted).

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(2) For example, if, under the conditions of paragraph (f)(11)(v)(D)(1) of this section, the power to modify is inconsistent with State law, but the power to institute proceedings to modify, if so expressly granted, would be consistent with State law, the community trust will be treated as meeting such requirements to the fullest extent possible if the governing body has the power (in the governing instrument or otherwise) to institute proceedings to modify a condition or restriction. On the other hand, if in such a case the community trust has only the power to cause proceedings to be instituted to modify a condition or restriction, it will not be treated as meeting such requirements to the fullest extent possible. (3) In addition, if, for example, under the conditions of paragraph (f)(11)(v)(D)(1) of this section, the power to modify and the power to institute proceedings to modify a condition or restriction is inconsistent with State law, but the power to cause such proceedings to be instituted would be consistent with State law, if it were expressly granted in the governing instrument and if the approval of the State Attorney General were obtained, then the community trust will be treated as meeting such requirements to the fullest extent possible if it has the power (in the governing instrument or otherwise) to cause such proceedings to be instituted, even if such proceedings can be instituted only with the approval of the State Attorney General. (E) Exercise of powers. The governing body shall (by resolution or otherwise) commit itself to exercise the powers described in paragraphs (f)(11)(v)(B), (C) and (D) of this section in the best interests of the community trust. The governing body will be considered not to be so committed where it has grounds to exercise such a power and fails to exercise it by taking appropriate action. Such appropriate action may include, for example, consulting with the appropriate State authority prior to taking action to replace a participating trustee. (F) Reasonable return. In addition to the requirements of paragraphs (f)(11)(v)(B), (C), (D) or (E) of this section, the governing body shall (by resolution or otherwise) commit itself to obtain information and take other appropriate steps with the view to seeing that each participating trustee, custodian, or agent, with respect to each restricted trust or fund that is, and with respect to the aggregate of the unrestricted trusts or funds that are, a component part of the community trust, administers such trust or fund in accordance with the terms of its governing instrument and accepted standards of fiduciary conduct to produce a reasonable return of net income (or appreciation where not inconsistent with the community trust's need for current income), with due regard to safety of principal, in furtherance of the exempt purposes of the community trust (except for assets held for the active conduct of the community trust's exempt activities). In the case of a low return of net income (and, where appropriate, appreciation), the Internal Revenue Service will examine carefully whether the governing body has, in fact, committed itself to take the appropriate steps. For purposes of this paragraph (f)(11)(v)(F), any income that has been designated by the donor of the gift or bequest to which such income is attributable as being available only for the use or benefit of a broad charitable purpose, such as the encouragement of higher education or the promotion of better health care in the community, will be treated as unrestricted. However, any income that has been designated for the use or benefit of a named charitable organization or agency or for the use or benefit of a particular class of charitable organizations or agencies, the members of which are readily ascertainable and are less than five in number, will be treated as restricted. (vi) Common reports. The organization must prepare periodic financial reports treating all of the funds which are held by the community trust, either directly or in component parts, as funds of the organization. (12) Community trusts; treatment of trusts and not-for-profit corporations and associations not included as components. (i) For purposes of sections 170, 501, 507, 508, 509 and Chapter 42, any trust or not-for-profit corporation or association that is alleged to be a component part of a community trust, but that fails to meet the requirements of paragraph (f)(11)(ii) of this section, shall not be treated as a component part of a community trust and, if a trust, shall be treated as

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a separate trust and be subject to the provisions of section 501 or section 4947(a)(1) or (2), as the case may be. If such organization is a not-for-profit corporation or association, it will be treated as a separate entity, and, if it is described in section 501(c)(3), it will be treated as a private foundation unless it is described in section 509(a)(1), (2), (3), or (4). In the case of a fund that is ultimately treated as not being a component part of a community trust pursuant to this paragraph (f)(12), if the Forms 990 filed annually by the community trust included financial information with respect to such fund and treated such fund in the same manner as other component parts thereof, such returns filed by the community trust prior to the taxable year in which the Commissioner notifies such fund that it will not be treated as a component part will be treated as its separate return for purpose of Subchapter A of Chapter 61 of Subtitle F, and the first such return filed by the community trust will be treated as the notification required of the separate entity for purposes of section 508(a). (ii) If a transfer is made in trust to a community trust to make income or *52544 other payments for a period of a life or lives in being or a term of years to any individual or for any noncharitable purpose, followed by payments to or for the use of the community trust (such as in the case of a charitable remainder annuity trust or a charitable remainder unitrust described in section 664 or a pooled income fund described in section 642(c)(5)), such trust will be treated as a component part of the community trust upon the termination of all intervening noncharitable interests and rights to the actual possession or enjoyment of the property if such trust satisfies the requirements of paragraph (f)(11) of this section at such time. Until such time, the trust will be treated as a separate trust. If a transfer is made in trust to a community trust to make income or other payments to or for the use of the community trust, followed by payments to any individual or for any noncharitable purpose, such trust will be treated as a separate trust rather than as a component part of the community trust. See section 4947(a)(2) and the regulations relating to section 4947(a)(2) for the treatment of such split-interest trusts. The provisions of this paragraph (f)(12)(ii) provide rules only for determining when a charitable remainder trust or pooled income fund may be treated as a component part of a community trust and are not intended to preclude a community trust from maintaining a charitable remainder trust or pooled income fund. For purposes of grantors and contributors, a pooled income fund of a publicly supported community trust shall be treated no differently than a pooled income fund of any other publicly supported organization. (iii) An organization described in section 170(b)(1)(F)(iii) will not ordinarily satisfy the requirements of paragraph (f)(11)(ii) of this section because of the unqualified right of the donor to designate the recipients of the income and principal of the trust. Such organization will therefore ordinarily be treated as other than a component part of a community trust under paragraph (f)(12)(i) of this section. However, see section 170(b)(1)(F)(iii) and the regulations relating to section 170(b)(1)(F)(iii) with respect to the treatment of contributions to such organizations. (13) Method of accounting. For purposes of section 170(b)(1)(A)(vi), an organization's support will be determined under the method of accounting on the basis of which the organization regularly computes its income in keeping its books under section 446. For example, if a grantor makes a grant to an organization payable over a term of years, such grant will be includible in the support fraction of the grantee organization under the method of accounting on the basis of which the grantee organization regularly computes its income in keeping its books under section 446. (14) Transition rules. (i) An organization that received an advance ruling, that expires on or after June 9, 2008, that it will be treated as an organization described in sections 170(b)(1)(A)(vi) and 509(a)(1) or in section 509(a)(2) will be treated as meeting the requirements of paragraph (f)(4)(v) of this section for the first five taxable years of its existence as a section 501(c)(3) organization unless the Internal Revenue Service issued the organization a proposed determination prior to September 9, 2008, that the organization is not described in sections 170(b)(1)(A)(vi) and 509(a)(1) or in section 509(a)(2).

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(ii) Paragraph (f)(4)(v) of this section shall not apply to an organization that received an advance ruling that expired prior to June 9, 2008, and that did not timely file with the Internal Revenue Service the required information to establish that it is an organization described in sections 170(b)(1)(A)(vi) and 509(a)(1) or in section 509(a)(2). (iii) An organization that fails to meet a public support test for its first taxable year beginning on or after January 1, 2008, under the regulations in this section may use the prior test set forth in 1.170A-9(e)(4)(i) and (ii) or 1.509(a)-3(c)(1) as in effect before September 9, 2008, (as contained in 26 CFR part 1 revised April 1, 2008) to determine whether the organization may be publicly supported for its 2008 taxable year based on its satisfaction of a public support test for taxable year 2007, computed over the period 2003 through 2006. (iv) Examples. The application of this paragraph (f)(14) may be illustrated by the following examples: Example 1. (i) Organization X was formed in January 2004 and uses a June 30 taxable year. Organization X received an advance ruling letter that it is recognized as an organization described in section 501(c)(3) effective as of the date of its formation and that it is treated as a public charity under sections 170(b)(1)(A)(vi) and 509(a)(1) during the five-year advance ruling period that will end on June 30, 2008. This date is within 90 days before September 9, 2008. (ii) Under the transition rule, Organization X is a public charity described in sections 170(b)(1)(A)(vi) and 509(a)(1) for the taxable years ending June 30, 2004, through June 30, 2008. Organization X does not need to establish within 90 days after June 30, 2008, that it met a public support test under 1.170A-9(e) or 1.509(a)-3, as in effect prior September 9, 2008, (as contained in 26 CFR part 1 revised April 1, 2008), for its advance ruling period. (iii) Organization X can qualify as a public charity beginning with the taxable year ending June 30, 2009, if Organization X can meet the requirements of paragraphs (f)(4)(i) or (ii) of this section or 1.509(a)-3T(c)(1) for the taxable years ending June 30, 2005, through June 30, 2009, or for the taxable years ending June 30, 2004, through June 30, 2008. In addition, for its taxable year ending June 30, 2009, Organization X may qualify as a public charity by availing itself of the transition rule contained in paragraph (f)(14)(iii) of this section, which looks to support received by X in the taxable years ending June 30, 2004, through June 30, 2007. Example 2. (i) Organization Y was formed in January 2000, and uses a December 31 taxable year. Organization Y received a final determination that it was recognized as tax-exempt under section 501(c)(3) and as a public charity prior to September 9, 2008. (ii) For taxable year 2008, Organization Y will qualify as publicly supported if it meets the requirements under either paragraphs (f)(4)(i) or (ii) of this section or 1.509(a)-3T(c)(1) for the five-year period January 1, 2004, through December 31, 2008. Organization Y will also qualify as publicly supported for taxable year 2008 if it meets the requirements under either 1.170A-9(e)(4)(i) or (ii) or 1.509(a)-3(c)(1) as in effect prior to September 9, 2008, (as contained in 26 CFR part 1 revised April 1, 2008) for taxable year 2007, using the four-year period from January 1, 2003, through December 31, 2006. (g) through (j) [Reserved]. For further guidance, see 1.170A-9(g) through (j). (k) Effective/applicability date(1) Effective date. These regulations are effective on September 9, 2008. (2) Applicability date. The regulations in paragraph (f) of this section shall apply to tax years beginning on or after January 1, 2008.

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(3) Expiration date. The applicability of this section expires on September 8, 2011. 26 CFR 1.507-2 Par. 4. Section 1.507-2 is amended by adding new paragraph (h) to read as follows: 26 CFR 1.507-2 1.507-2 Special rules; transfer to, or operation as, public charity. ***** (h) Effective/applicability date. This section shall apply to tax years beginning before January 1, 2008. 26 CFR 1.507-2T Par. 5. Section 1.507-2T is added to read as follows: 26 CFR 1.507-2T 1.507-2T Special rules; transfer to, or operation as, public charity (temporary). (a) Transfer to public charities(1) General rule. Under section 507(b)(1)(A) a private foundation, with respect to which there have not been either willful repeated acts (or failures to act) or a willful and flagrant act (or failure to act) *52545 giving rise to liability for tax under chapter 42, may terminate its private foundation status by distributing all of its net assets to one or more organizations described in section 170(b)(1)(A) (other than in clauses (vii) and (viii)) each of which has been in existence and so described for a continuous period of at least 60 calendar months immediately preceding such distribution. Because section 507(a) does not apply to such a termination, a private foundation which makes such a termination is not required to give the notification described in section 507(a)(1). A private foundation that terminates its private foundation status under section 507(b)(1)(A) does not incur tax under section 507(c) and, therefore, no abatement of such tax under section 507(g) is required. (2) Effect of current ruling. A private foundation seeking to terminate its private foundation status pursuant to section 507(b)(1)(A) may rely on a ruling or determination letter issued to a potential distributee organization that such distributee organization is an organization described in section 170(b)(1)(A)(i), (ii), (iii), (iv), (v) or (vi) in accordance with the provisions of 1.509(a)-7. (3) Organizations described in more than one clause of section 170(b)(1)(A). For purposes of this paragraph and section 507(b)(1)(A), the parenthetical term other than in clauses (vii) and (viii) shall refer only to an organization that is described only in section 170(b)(1)(A)(vii) or (viii). Thus, an organization described in section 170(b)(1)(A)(i), (ii), (iii), (iv), (v), or (vi) will not be precluded from being a distributee described in section 507(b)(1)(A) merely because it also appears to meet the description of an organization described in section 170(b)(1)(A) (vii) or (viii). (4) Applicability of chapter 42 to foundations terminating under section 507(b)(1)(A). An organization that terminates its private foundation status pursuant to section 507(b)(1)(A) will remain subject to the provisions of chapter 42 until the distribution of all of its net assets to distributee organizations described in section 507(b)(1)(A) has been completed. (5) Return required from organizations terminating private foundation status under section 507(b)(1)(A).

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(i) An organization that terminates its private foundation status under section 507(b)(1)(A) is required to file a return under the provisions of section 6043(b), rather than under the provisions of section 6050. (ii) An organization that terminates its private foundation status under section 507(b)(1)(A) is not required to comply with section 6104(d) for the taxable year in which such termination occurs. (6) Distribution of net assets. A private foundation will meet the requirement that it distribute all of its net assets within the meaning of section 507(b)(1)(A) only if it transfers all of its right, title, and interest in and to all of its net assets to one or more organizations referred to in section 507(b)(1)(A). (7) Effect of restrictions and conditions upon distributions of net assets(i) In general. In order to effectuate a transfer of all of its right, title, and interest in and to all of its net assets within the meaning of paragraph (a)(6) of this section, a transferor private foundation may not impose any material restriction or condition that prevents the transferee organization referred to in section 507(b)(1)(A) (herein sometimes referred to as the public charity) from freely and effectively employing the transferred assets, or the income derived therefrom, in furtherance of its exempt purposes. Whether or not a particular condition or restriction imposed upon a transfer of assets is material (within the meaning of this paragraph (a)(7)) must be determined from all of the facts and circumstances of the transfer. Some of the more significant facts and circumstances to be considered in making such a determination are (A) Whether the public charity (including a participating trustee, custodian, or agent in the case of a community trust) is the owner in fee of the assets it receives from the private foundation; (B) Whether such assets are to be held and administered by the public charity in a manner consistent with one or more of its exempt purposes; (C) Whether the governing body of the public charity has the ultimate authority and control over such assets, and the income derived therefrom; and (D) Whether, and to what extent, the governing body of the public charity is organized and operated so as to be independent from the transferor. (ii) Independent governing body. As provided in paragraph (a)(7)(i)(D) of this section, one of the more significant facts and circumstances to be considered in making the determination whether a particular condition or restriction imposed upon a transfer of assets is material within the meaning of this paragraph (a)(7) is whether, and the extent to which, the governing body is organized and operated so as to be independent from the transferor. In turn, the determination as to such factor must be determined from all of the facts and circumstances. Some of the more significant facts and circumstances to be considered in making such a determination are (A) Whether, and to what extent, members of the governing body are comprised of persons selected by the transferor private foundation or disqualified persons with respect thereto, or are themselves such disqualified persons; (B) Whether, and to what extent, members of the governing body are selected by public officials acting in their capacities as such; and (C) How long a period of time each member of the governing body may serve as such. In the case of a transfer that is to a community trust, the community trust shall meet this paragraph (a)(7)(ii)(C) if, with respect to terms of office beginning after the date of transfer:

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(1) its governing body is comprised of members who may serve a period of not more than ten consecutive years; and (2) Upon completion of a period of service (beginning before or after the date of transfer), no member may serve again within a period consisting of the lesser of 5 years or the number of consecutive years the member has immediately completed serving. (iii) Factors not adversely affecting determination. The presence of some or all of the following factors will not be considered as preventing the transferee from freely and effectively employing the transferred assets, or the income derived therefrom, in furtherance of its exempt purposes (within the meaning of paragraph (a)(7)(i) of this section): (A) Name. The fund is given a name or other designation which is the same as or similar to that of the transferor private foundation or otherwise memorializes the creator of the foundation or his family. (B) Purpose. The income and assets of the fund are to be used for a designated purpose or for one or more particular section 509(a)(1), (2), or (3) organizations, and such use is consistent with the charitable, educational, or other basis for the exempt status of the public charity under section 501(c)(3). (C) Administration. The transferred assets are administered in an identifiable or separate fund, some or all of the principal of which is not to be distributed for a specified period, if the public charity (including a participating trustee, custodian, or agent in the case of a community trust) is the legal and equitable owner of the fund and the governing body exercises ultimate and direct authority and control over such *52546 fund, as, for example, a fund to endow a chair at a university or a medical research fund at a hospital. In the case of a community trust, the transferred assets must be administered in or as a component part of the community trust within the meaning of 1.170A-9T(f)(11). (D) Restrictions on disposition. The transferor private foundation transfers property the continued retention of which by the transferee is required by the transferor if such retention is important to the achievement of charitable or other similar purposes in the community because of the peculiar features of such property, as, for example, where a private foundation transfers a woodland preserve which is to be maintained by the public charity as an arboretum for the benefit of the community. Such a restriction does not include a restriction on the disposition of an investment asset or the distribution of income. (iv) Adverse factors. The presence of any of the following factors will be considered as preventing the transferee from freely and effectively employing the transferred assets, or the income derived therefrom, in furtherance of its exempt purposes (within the meaning of paragraph (a)(7)(i) of this section): (A) Distributions. (1) With respect to distributions made after April 19, 1977, the transferor private foundation, a disqualified person with respect thereto, or any person or committee designated by, or pursuant to the terms of an agreement with, such a person (hereinafter referred to as donor), reserves the right, directly or indirectly, to name (other than by designation in the instrument of transfer of particular section 509(a)(1), (2), or (3) organizations) the persons to which the transferee public charity must distribute, or to direct the timing of such distributions (other than by direction in the instrument of transfer that some or all of the principal, as opposed to specific assets, not be distributed for a specified period) as, for example, by a power of appointment. The Internal Revenue Service will examine carefully whether the seeking of advice by the transferee from, or the giving of advice by, any donor after the assets have been transferred to the transferee constitutes an indirect reservation of a right to direct such distributions. In any such case, the reservation of such a right will be considered to exist where the only criterion considered by the public charity in making a distribution of income

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or principal from a donor's fund is advice offered by the donor. Whether there is a reservation of such a right will be determined from all of the facts and circumstances, including, but not limited to, the factors contained in paragraphs (a)(7)(iv)(A)(2) and (3) of this section. (2) The presence of some or all of the following factors will indicate that the reservation of such a right does not exist: (i) There has been an independent investigation by the staff of the public charity evaluating whether the donor's advice is consistent with specific charitable needs most deserving of support by the public charity (as determined by the public charity). (ii) The public charity has promulgated guidelines enumerating specific charitable needs consistent with the charitable purposes of the public charity and the donor's advice is consistent with such guidelines. (iii) The public charity has instituted an educational program publicizing to donors and other persons the guidelines enumerating specific charitable needs consistent with the charitable purposes of the public charity. (iv) The public charity distributes funds in excess of amounts distributed from the donor's fund to the same or similar types of organizations or charitable needs as those recommended by the donor. (v) The public charity's solicitations (written or oral) for funds specifically state that such public charity will not be bound by advice offered by the donor. (3) The presence of some or all of the following factors will indicate the reservation of such a right does exist: (i) The solicitations (written or oral) of funds by the public charity state or imply, or a pattern of conduct on the part of the public charity creates an expectation, that the donor's advice will be followed. (ii) The advice of a donor (whether or not restricted to a distribution of income or principal from the donor's trust or fund) is limited to distributions of amounts from the donor's fund, and the factors described in paragraph (a)(7)(iv)(A)(2)(i) or (ii) of this section are not present. (iii) Only the advice of the donor as to distributions of such donor's fund is solicited by the public charity and no procedure is provided for considering advice from persons other than the donor with respect to such fund. (iv) For the taxable year and all prior taxable years the public charity follows the advice of all donors with respect to their funds substantially all of the time. (B) Other action or withholding of action. The terms of the transfer agreement, or any expressed or implied understanding, required the public charity to take or withhold action with respect to the transferred assets which is not designed to further one or more of the exempt purposes of the public charity, and such action or withholding of action would, if performed by the transferor private foundation with respect to such assets, have subjected the transferor to tax under chapter 42 (other than with respect to the minimum investment return requirement of section 4942(e)). (C) Assumption of leases, contractual obligations, or liabilities. The public charity assumes leases, contractual obligations, or liabilities of the transferor private foundation, or takes the assets thereof subject to such liabilities (including obligations under commitments or pledges to donees of the transferor private foundation), for purposes inconsistent with the purposes or best

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interests of the public charity, other than the payment of the transferor's chapter 42 taxes incurred prior to the transfer to the public charity to the extent of the value of the assets transferred. (D) Retention of investment assets. The transferee public charity is required by any restriction or agreement (other than a restriction or agreement imposed or required by law or regulatory authority), express or implied, to retain any securities or other investment assets transferred to it by the private foundation. In a case where such transferred assets consistently produce a low annual return of income, the Internal Revenue Service will examine carefully whether the transferee is required by any such restriction or agreement to retain such assets. (E) Right of first refusal. An agreement is entered into in connection with the transfer of securities or other property which grants directly or indirectly to the transferor private foundation or any disqualified person with respect thereto a right of first refusal with respect to the transferred securities or other property when and if disposed of by the public charity, unless such securities or other property was acquired by the transferor private foundation subject to such right of first refusal prior to October 9, 1969. (F) Relationships. An agreement is entered into between the transferor private foundation and the transferee public charity which establishes irrevocable relationships with respect to the maintenance or management of assets transferred to the public charity, such as continuing relationships with banks, brokerage firms, investment counselors, or other advisors with regard to the investments or other property transferred to the public charity (other than a relationship with a trustee, custodian, or agent for a *52547 community trust acting as such). The transfer of property to a public charity subject to contractual obligations which were established prior to November 11, 1976, between the transferor private foundation and persons other than disqualified persons with respect to such foundation will not be treated as prohibited under the preceding sentence, but only if such contractual obligations were not entered into pursuant to a plan to terminate the private foundation status of the transferor under section 507(b)(1)(A) and if the continuation of such contractual obligations is in the best interests of the public charity. (G) Other conditions. Any other condition is imposed on action by the public charity which prevents it from exercising ultimate control over the assets received from the transferor private foundation for purposes consistent with its exempt purposes. (v) Examples. The provisions of this paragraph (a)(7) may be illustrated by the following examples: Example 1. The M Private Foundation transferred all of its net assets to the V Cancer Institute, a public charity described in section 170(b)(1)(A)(iii). Prior to the transfer, M's activities consisted of making grants to hospitals and universities to further research into the causes of cancer. Under the terms of the transfer, V is required to keep M's assets in a separate fund and use the income and principal to further cancer research. Although the assets may be used only for a limited purpose, this purpose is consistent with and in furtherance of V's exempt purposes, and does not prevent the transfer from being a distribution for purposes of section 507(b)(1)(A). Example 2. The N Private Foundation transferred all of its net assets to W University, a public charity described in section 170(b)(1)(A)(ii). Under the terms of the transfer, W is required to use the income and principal to endow a chair at the university to be known as the John J. Doe Memorial Professorship, named after N's creator. Although the transferred assets are to be used for a specified purpose by W, this purpose is in furtherance of W's exempt educational purposes, and there are no conditions on investment or reinvestment of the principal or income. The use of the name of the foundation's creator for the chair is not a restriction which would prevent the transfer from being a distribution for purposes of section 507(b)(1)(A). Example 3. The O Private Foundation transferred all of its net assets to X Bank as trustee for the

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Q Community Trust, a community trust that is a public charity described in section 170(b)(1)(A)(vi). Under the terms of the transfer, X is to hold the assets in trust for Q and is directed to distribute the income annually to the Y Church, a public charity described in section 170(b)(1)(A)(i). The distribution of income to Y Church is consistent with Q's exempt purposes. If the trust created by this transfer otherwise meets the requirements of 1.170A-9T(f)(11) as a component part of the Q Community Trust, the assets transferred by O to X will be treated as distributed to one or more public charities within the meaning of section 507(b)(1)(A). The direction to distribute the income to Y Church meets the conditions of paragraph (a)(7)(iii)(B) of this section and will therefore not disqualify the transfer under section 507(b)(1)(A). Example 4. (i) The P Private Foundation transferred all of its net assets to Z Bank as trustee for the R Community Trust, a community trust that is a public charity described in section 170(b)(1)(A)(vi). Under the terms of the transfer, Z is to hold the assets in trust for R and distribute the income to those public charities described in section 170(b)(1)(A)(i) through (vi) that are designated by B, the creator of P. R's governing body has no authority during B's lifetime to vary B's direction. Under the terms of the transfer, it is intended that Z retain the transferred assets in their present form for a period of 20 years, or until the date of B's death if it occurs before the expiration of such period. Upon the death of B, R will have the power to distribute the income to such public charities as it selects and may dispose of the corpus as it sees fit. (ii) Under paragraph (a)(7)(iv)(A) or (D) of this section, as a result of the restrictions imposed with respect to the transferred assets, there has been no distribution of all P's net assets within the meaning of section 507(b)(1)(A) at the time of the transfer. In addition, P has not transferred its net assets to a component part of R Community Trust, but rather to a separate trust described in 1.170A-9T(f)(12). (b) Operation as a public charity(1) In general. Under section 507(b)(1)(B), an organization can terminate its private foundation status if the organization (i) Meets the requirements of section 509(a)(1), (2) or (3) for a continuous period of 60 calendar months beginning with the first day of any taxable year that begins after December 31, 1969; (ii) In compliance with section 507(b)(1)(B)(ii) and paragraph (b)(3) of this section, properly notifies the Internal Revenue Service, in such manner as may be provided by published guidance, publication, form or instructions, before the commencement of such 60-month period, that it is terminating its private foundation status; and (iii) Properly establishes immediately after the expiration of such 60-month period that such organization has complied with the requirements of section 509(a)(1), (2) or (3) during the 60month period, in the manner described in paragraph (b)(4) of this section. (2) Relationship of section 507(b)(1)(B) to section 507(a), (c), and (g). Because section 507(a) does not apply to a termination described in section 507(b)(1)(B), a private foundation's notification that it is commencing a termination pursuant to section 507(b)(1)(B) will not be treated as a notification described in section 507(a) even if the private foundation does not successfully terminate its private foundation status pursuant to section 507(b)(1)(B). A private foundation that terminates its private foundation status under section 507(b)(1)(B) does not incur tax under section 507(c) and, therefore, no abatement of such tax under section 507(g) is required. (3) Notification of termination. In order to comply with the requirements under section 507(b)(1)(B)(ii), an organization shall before the commencement of the 60-month period under section 507(b)(1)(B)(i) notify the Internal Revenue Service, in such manner as may be provided by published guidance, publication, form or instructions, of its intention to terminate its private foundation status. Such notification shall contain the following information:

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(i) The name and address of the private foundation. (ii) Its intention to terminate its private foundation status. (iii) The Code section under which it seeks classification (section 509(a)(1), (2) or (3)). (iv) If section 509(a)(1) is applicable, the clause of section 170(b)(1)(A) involved. (v) The date its regular taxable year begins. (vi) The date of commencement of the 60-month period. (4) Establishment of termination. In order to comply with the requirements under section 507(b)(1)(B)(iii), an organization shall within 90 days after the expiration of the 60-month period file such information with the Internal Revenue Service, in such manner as may be provided by published guidance, publication, form or instructions, as is necessary to make a determination as to the organization's status as an organization described under section 509(a)(1), (2) or (3) and the accompanying regulations. See paragraph (c) of this section as to the information required to be submitted under this paragraph (b)(4). (5) Incomplete information. The failure to supply, within the required time, all of the information required by paragraph (b)(3) or (4) of this section is not alone sufficient to constitute a failure to satisfy the requirements of section 507(b)(1)(B). If the information that is submitted within the required time is incomplete and the organization supplies the necessary additional information at the request of the *52548 Commissioner within the additional time period allowed by him, the original submission will be considered timely. (6) Application of special rules and filing requirements. An organization that has terminated its private foundation status under section 507(b)(1)(B) is not required to comply with the special rules set forth in section 508(a) and (b). Such organization is also not required to file a return under the provisions of section 6043(b) or 6050 by reason of termination of its private foundation status under the provisions of section 507(b)(1)(B). (7) Extension of time to assess deficiencies. If a private foundation files a notification (defined in paragraph (b)(3) of this section) that it intends to begin a 60-month termination pursuant to section 507(b)(1)(B) and does not file a request for an advance ruling pursuant to paragraph (d) of this section, such private foundation may file with the notification described in paragraph (b)(3) of this section a consent under section 6501(c)(4) to the effect that the period of limitation upon assessment under section 4940 for any taxable year within the 60-month termination period shall not expire prior to one year after the date of expiration of the time prescribed by law for the assessment of a deficiency for the last taxable year within the 60month period. Such consents, if filed, will ordinarily be accepted by the Commissioner. See paragraph (e)(3) of this section for an illustration of the procedure required to obtain a refund of the tax imposed by section 4940 in a case where such a consent is not in effect. (c) Sixty-month terminations(1) Method of determining normal sources of support. (i) In order to meet the requirements of section 507(b)(1)(B) for the 60-month termination period as a section 509(a)(1) or (2) organization, an organization must meet the requirements of section 509(a)(1) or (2), as the case may be, for a continuous period of at least 60 calendar months. In determining whether an organization seeking status under section 509(a)(1) as an organization described in section 170(b)(1)(A)(iv) or (vi) or under section 509(a)(2) normally meets the requirements set forth under such sections, support received in taxable years prior to the commencement of the 60-month period shall not be taken into consideration, except as otherwise provided in this section.

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(ii) For purposes of section 507(b)(1)(B), an organization will be considered to be a section 509(a)(1) organization described in section 170(b)(1)(A)(vi) for a continuous period of 60 calendar months only if the organization satisfies the provisions of 1.170A-9T(f), other than 1.170A-9T(f)(4)(v), based upon aggregate data for such entire period. The calculation of public support shall be made over the period beginning with the date of the commencement of the 60month period, and ending with the last day of the 60-month period. (iii) For purposes of section 507(b)(1)(B), an organization will be considered to be a section 509(a)(2) organization only if such organization meets the support requirements set forth in section 509(a)(2)(A) and (B) and the accompanying regulations, other than 1.509(a)-3T(d), for the continuous period of 60 calendar months prescribed under section 507(b)(1)(B). The calculation of public support shall be made over the period beginning with the date of the commencement of the 60-month period, and ending with the last day of the 60-month period. (2) Organizational and operational tests. In order to meet the requirements of section 507(b)(1)(B) for the 60-month termination period as an organization described in section 170(b)(1)(A)(i), (ii), (iii), (iv), or (v) or section 509(a)(3), as the case may be, an organization must meet the requirements of the applicable provisions for a continuous period of at least 60 calendar months. For purposes of section 507(b)(1)(B), an organization will be considered to be such an organization only if it satisfies the requirements of the applicable provision (including with respect to section 509(a)(3), the organizational and operational test set forth in subparagraph (A) thereof) at the commencement of such 60-month period and continuously thereafter during such period. (d) Advance rulings for 60-month terminations(1) In general. An organization that files the notification required by section 507(b)(1)(B)(ii) that it is commencing a 60-month termination may obtain an advance ruling from the Commissioner that it can be expected to satisfy the requirements of section 507(b)(1)(B)(i) during the 60-month period. Such an advance ruling may be issued if the organization can reasonably be expected to meet the requirements of section 507(b)(1)(B)(i) during the 60-month period. The issuance of a ruling will be discretionary with the Commissioner. (2) Basic consideration. In determining whether an organization can reasonably be expected (within the meaning of paragraph (d)(1) of this section) to meet the requirements of section 507(b)(1)(B)(i) for the 60-month period, the basic consideration is whether its organizational structure (taking into account any revisions made prior to the beginning of the 60-month period), current or proposed programs or activities, actual or intended method of operation, and current or projected sources of support are such as to indicate that the organization is likely to satisfy the requirements of section 509(a)(1), (2), or (3) and paragraph (d) of this section during the 60-month period. In making such a determination, all pertinent facts and circumstances shall be considered. (3) Reliance by grantors and contributors. For purposes of sections 170, 545(b)(2), 642(c), 4942, 4945, 2055, 2106(a)(2), and 2522, grants or contributions to an organization which has obtained a ruling referred to in this paragraph will be treated as made to an organization described in section 509(a)(1), (2), or (3), as the case may be, until the Internal Revenue Service publishes notice that such advance ruling is being revoked (such as by publication in the Internal Revenue Bulletin). However, a grantor or contributor may not rely on such an advance ruling if the grantor or contributor was responsible for, or aware of, the act or failure to act that resulted in the organization's failure to meet the requirements of section 509(a)(1), (2), or (3), or acquired knowledge that the Internal Revenue Service had given notice to such organization that its advance ruling would be revoked. Prior to the making of any grant or contribution which allegedly will not result in the grantee's failure to meet the requirements of section 509(a)(1), (2), or (3), a potential grantee organization may request a ruling whether such grant or contribution may be made without such failure. A request for such ruling may be filed by the grantee organization with the Internal Revenue Service. The issuance of such ruling will be at the

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sole discretion of the Commissioner. The organization must submit all information necessary to make a determination on the factors referred to in paragraph (d)(2) of this section. If a favorable ruling is issued, such ruling may be relied upon by the grantor or contributor of the particular contribution in question for purposes of sections 170, 507, 545(b)(2), 642(c), 4942, 4945, 2055, 2106(a)(2), and 2522. (4) Reliance by organization. An organization obtaining an advance ruling pursuant to this paragraph cannot rely on such a ruling. Consequently, if the organization does not pay the tax imposed by section 4940 for any taxable year or years during the 60-month period, and it is subsequently determined that such tax is due for such *52549 year or years (because the organization did not in fact complete a successful termination pursuant to section 507(b)(1)(B) and was not treated as an organization described in section 509(a)(1), (2), or (3) for such year or years), the organization is liable for interest in accordance with section 6601 if any amount of tax under section 4940 has not been paid on or before the last date prescribed for payment. However, because any failure to pay such tax during the 60-month period (or prior to the revocation of such ruling) is due to reasonable cause, the penalty under section 6651 with respect to the tax imposed by section 4940 shall not apply. (5) Extension of time to assess deficiencies. The advance ruling described in paragraph (d)(1) of this section shall be issued only if such organization's request for an advance ruling is filed with a consent under section 6501(c)(4) to the effect that the period of limitation upon assessment under section 4940 for any taxable year within the advance ruling period shall not expire prior to 1 year after the date of the expiration of the time prescribed by law for the assessment of a deficiency for the last taxable year within the 60-month period. (e) Effect on grantors or contributors and on the organization itself(1) Effect of satisfaction of requirements for termination; treatment during the termination period. In the event that an organization satisfies the requirements of section 507(b)(1)(B) for termination of its private foundation status during the continuous 60-month period, such organization shall be treated for such entire 60-month period in the same manner as an organization described in section 509(a)(1), (2) or (3), as the case may be. (2) Failure to meet termination requirements(i) In general. Except as otherwise provided in paragraphs (e)(2)(ii) and (d) of this section, any organization that fails to satisfy the requirements of section 507(b)(1)(B) for termination of its private foundation status during the continuous 60-month period shall be treated as a private foundation for the entire 60-month period, for purposes of sections 507 through 509 and chapter 42, and grants or contributions to such an organization shall be treated as made to a private foundation for purposes of sections 170, 507(b)(1)(A), 4942, and 4945. (ii) Certain 60-month terminations. Notwithstanding paragraph (e)(2)(i) of this section, if an organization fails to satisfy the requirements of section 509(a)(1), (2) or (3) for the continuous 60-month period but does satisfy the requirements of section 509(a)(1), (2) or (3), as the case may be, for any taxable year or years during such 60-month period, the organization shall be treated as a section 509(a)(1), (2) or (3) organization for such taxable year or years and grants or contributions made during such taxable year or years shall be treated as made to an organization described in section 509(a)(1), (2) or (3). In addition, sections 507 through 509 and chapter 42 shall not apply to such organization for any taxable year within such 60-month period for which it does meet such requirements. For purposes of determining whether an organization satisfies the requirements of section 509(a)(1), (2) or (3) for any taxable year in the 60-month period, the calculation of public support shall be made over the period beginning with the date of the commencement of the 60-month period, and ending with the last day of the taxable year being tested. The organization shall not be treated as a section 509(a)(1) or (2) organization for any taxable year during the 60-month period solely by reason of having met a public support test for the preceding year. In addition, the transition rules in 1.1709T(f)(14)(iii) and 1.509(a)-3T(n)(iii) shall not apply.

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(iii) Aggregate tax benefit. For purposes of section 507(d), the organization's aggregate tax benefit resulting from the organization's section 501(c)(3) status shall continue to be computed from the date from which such computation would have been made, but for the notice filed under section 507(b)(1)(B)(ii), except that any taxable year within such 60-month period for which such organization meets the requirements of section 509(a)(1), (2), or (3) shall be excluded from such computations. (iv) Excess business holdings. See section 4943 and the accompanying regulations for rules relating to decreases in a private foundation's holdings in a business enterprise which are caused by the foundation's failure to terminate its private foundation status after giving the notification for termination under section 507(b)(1)(B)(ii). (3) Example. The provisions of this paragraph (e) may be illustrated by the following example: Example. Y, a calendar year private foundation, notifies the Internal Revenue Service that it intends to terminate its private foundation status by converting into a publicly supported organization described in section 170(b)(1)(A)(vi) and that its 60-month termination period will commence on January 1, 2010. Y does not obtain a ruling described in paragraph (d) of this section. Based upon its support for 2010, Y does not qualify as a publicly supported organization within the meaning of 1.170A-9T(f) and this paragraph for 2010. Consequently, in order to avoid the risks of penalties and interest if Y fails to terminate within the 60-month period, Y files its 2010 return as a private foundation and pays the tax imposed by section 4940. Because a consent (described in paragraph (b)(7) of this section), which would prevent the period of limitations for all years in the 60-month period from expiring, is not in effect, in order to be able to file a claim for refund, Y and the Internal Revenue Service must agree to extend the period of limitation for all taxes imposed under chapter 42 for 2010. Based on the aggregate data for the entire 60-month period (2010 through 2014), Y does qualify as a publicly-supported organization for the entire 60-month period. Consequently, Y is treated as a publicly-supported organization for the entire 60-month period. Y files a claim for refund for the taxes paid under section 4940 for 2010, and such taxes are refunded. (f) Effective/applicability date(1) Effective date. These regulations are effective on September 9, 2008. (2) Applicability date. The regulations in this section shall apply to taxable years beginning on or after January 1, 2008. (3) Expiration date. The applicability of this section expires on September 8, 2011. 26 CFR 1.509(a)-3 Par. 6. Section 1.509(a)-3 is amended by adding new paragraph (n) to read as follows: 26 CFR 1.509(a)-3 1.509(a)-3 Broadly, publicly supported organizations. ***** (n) Effective/applicability date. This section shall apply to taxable years beginning after December 31, 1969. The applicability of paragraphs (a)(2), (a)(3)(i), (c), (d), (e) and (k) of this section shall be limited to taxable years beginning before January 1, 2008. 26 CFR 1.509(a)-3T

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Par. 7. Section 1.509(a)-3T is added to read as follows: 26 CFR 1.509(a)-3T 1.509(a)-3T Broadly, publicly supported organizations (temporary). (a)(1) [Reserved]. For further guidance see 1.509(a)-3(a)(1). (2) One-third support test. An organization will meet the one-third support test if it normally (within the meaning of paragraph (c) or (d) of this section) receives more than one-third of its support in each taxable year from any combination of (i) Gifts, grants, contributions, or membership fees; and (ii) Gross receipts from admissions, sales of merchandise, performance of services, or furnishing of facilities, in an activity that is not an unrelated trade or business (within the meaning of section 513), subject to certain limitations *52550 described in paragraph (b) of this section, from permitted sources. For purposes of this section, governmental units, organizations described in section 509(a)(1) and persons other than disqualified persons with respect to the organization shall be referred to as permitted sources. For purposes of this section, the amount of support received from the sources described in paragraph (a)(2)(i) of this section and this paragraph (a)(2)(ii) (subject to the limitations referred to in this paragraph (a)(2)) will be referred to as the numerator of the one-third support fraction, and the total amount of support received (as defined in section 509(d)) will be referred to as the denominator of the one-third support fraction. For purposes of section 509(a)(2), 1.509(a)-3(f) distinguishes gifts and contributions from gross receipts; 1.509(a)-3(g) distinguishes grants from gross receipts; 1.509(a)-3(h) defines membership fees; 1.509(a)-3(i) defines any bureau or similar agency of a governmental unit; 1.509(a)-3(j) describes the treatment of certain indirect forms of support; paragraph (k) of this section describes the method of accounting for support; 1.509(a)-3(l) describes the treatment of gross receipts from section 513(a)(1), (2), or (3) activities; and 1.509(a)-3(m) distinguishes gross receipts from gross investment income. (3) Not-more-than-one-third support test(i) In general. An organization will meet the not-morethan-one-third support test under section 509(a)(2)(B) if it normally (within the meaning of paragraph (c) or (d) of this section) receives not more than one-third of its support in each taxable year from the sum of its gross investment income (as defined in section 509(e)) and the excess (if any) of the amount of its unrelated business taxable income (as defined in section 512) derived from trades or businesses that were acquired by the organization after June 30, 1975, over the amount of tax imposed on such income by section 511. For purposes of this section the amount of support received from items described in section 509(a)(2)(B) will be referred to as the numerator of the not-more-than-one-third support fraction, and the total amount of support (as defined in section 509(d)) will be referred to as the denominator of the not-more-than-one-third support fraction. For purposes of section 509(a)(2), paragraph (m) of this section distinguishes gross receipts from gross investment income. For purposes of section 509(e), gross investment income includes the items of investment income described in 1.512(b)-1(a). (a)(3)(ii) through (b) [Reserved]. For further guidance, see 1.509(a)-3(a)(3)(ii) through (b). (c) Normally(1) In general(i) Definition. The support tests set forth in section 509(a)(2) are to be computed on the basis of the nature of the organization's normal sources of support. An organization will be considered as normally receiving one third of its support from any combination of gifts, grants, contributions, membership fees, and gross receipts from permitted sources (subject to the limitations described in 1.509(a)-3(b)) and not more than one third of its support from items described in section 509(a)(2)(B) for its current taxable year and the taxable year immediately succeeding its current year, if, for the current taxable year and the four

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taxable years immediately preceding the current taxable year, the aggregate amount of the support received during the applicable period from gifts, grants, contributions, membership fees, and gross receipts from permitted sources (subject to the limitations described in 1.509(a)3(b)) is more than one third, and the aggregate amount of the support received from items described in section 509(a)(2)(B) is not more than one third, of the total support of the organization for such 5-year period. (ii) First five years of an organization's existence. See paragraph (d)(1) of this section for the definition of normally for organizations in the first five years of their existence. (2) Terminations under section 507(b)(1)(B). For the special rules applicable to the term normally as applied to private foundations that elect to terminate their private foundation status pursuant to the 60-month procedure provided in section 507(b)(1)(B), see the regulations under such section. (3) Exclusion of unusual grants. For purposes of applying the 5-year aggregation test for support set forth in paragraph (c)(1) of this section, one or more contributions may be excluded from the numerator of the one-third support fraction and from the denominator of both the one-third support and not-more-than-one-third support fractions only if such a contribution meets the requirements of this paragraph (c)(3). The exclusion provided by this paragraph (c)(3) is generally intended to apply to substantial contributions and bequests from disinterested parties, which contributions or bequests (i) Are attracted by reason of the publicly supported nature of the organization; (ii) Are unusual or unexpected with respect to the amount thereof; and (iii) Would by reason of their size, adversely affect the status of the organization as normally meeting the one-third support test for any of the applicable periods described in this paragraph (c) or paragraph (d) of this section. In the case of a grant (as defined in 1.509(a)-3(g)) that meets the requirements of this paragraph (c)(3), if the terms of the granting instrument (whether executed before or after 1969) require that the funds be paid to the recipient organization over a period of years, the amount received by the organization each year pursuant to the terms of such grant may be excluded for such year. However, no item described in section 509(a)(2)(B) may be excluded under this paragraph (c)(3). The provisions of this paragraph (c)(3) shall apply to exclude unusual grants made during any of the applicable periods described in this paragraph (c) or paragraph (d) of this section. See paragraph (c)(5)(ii) of this section as to reliance by a grantee organization upon an unusual grant ruling under this paragraph (c)(3). (4) Determining factors. In determining whether a particular contribution may be excluded under paragraph (c)(3) of this section, all pertinent facts and circumstances will be taken into consideration. No single factor will necessarily be determinative. Among the factors to be considered are (i) Whether the contribution was made by any person (or persons standing in a relationship to such person which is described in section 4946(a)(1)(C) through (G)) who created the organization, previously contributed a substantial part of its support or endowment, or stood in a position of authority, such as a foundation manager (within the meaning of section 4946(b)), with respect to the organization. A contribution made by a person other than those persons described in this paragraph (c)(4)(i) will ordinarily be given more favorable consideration than a contribution made by a person described in this paragraph (c)(4)(i); (ii) Whether the contribution was a bequest or an inter vivos transfer. A bequest will ordinarily be given more favorable consideration than an inter vivos transfer; (iii) Whether the contribution was in the form of cash, readily marketable securities, or assets

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which further the exempt purposes of the organization, such as a gift of a painting to a museum; (iv) Except in the case of a new organization, whether, prior to the receipt of the particular contribution, *52551 the organization has carried on an actual program of public solicitation and exempt activities and has been able to attract a significant amount of public support; (v) Whether the organization may reasonably be expected to attract a significant amount of public support subsequent to the particular contribution. In this connection, continued reliance on unusual grants to fund an organization's current operating expenses (as opposed to providing new endowment funds) may be evidence that the organization cannot reasonably be expected to attract future support from the general public; (vi) Whether, prior to the year in which the particular contribution was received, the organization met the one-third support test described in paragraph (c)(1) of this section without the benefit of any exclusions of unusual grants pursuant to paragraph (c)(3) of this section; (vii) Whether neither the contributor nor any person standing in a relationship to such contributor which is described in section 4946(a)(1)(C) through (G) continues directly or indirectly to exercise control over the organization; (viii) Whether the organization has a representative governing body as described in 1.509(a)3(d)(3)(i); and (ix) Whether material restrictions or conditions (within the meaning of 1.507-2T(a)(7)) have been imposed by the transferor upon the transferee in connection with such transfer. (5) Grantors and contributors. Prior to the making of any grant or contribution expected to meet the requirements for exclusion under paragraph (c)(3) of this section, a potential grantee organization may request a ruling whether such grant or contribution may be so excluded. Requests for such ruling may be filed by the grantee organization. The issuance of such determination will be at the sole discretion of the Commissioner. The organization must submit all information necessary to make a determination of the applicability of paragraph (c)(3) of this section, including all information relating to the factors described in paragraph (c)(4) of this section. If a favorable ruling is issued, such ruling may be relied upon by the grantor or contributor of the particular contribution in question for purposes of sections 170, 507, 545(b)(2), 642(c), 4942, 4945, 2055, 2106(a)(2), and 2522 and by the grantee organization for purposes of paragraph (c)(3) of this section. (6) Examples. The application of the principles set forth in this paragraph are illustrated by the examples as follows. For purposes of these examples, the term general public is defined as persons other than disqualified persons and other than persons from whom the foundation received gross receipts in excess of the greater of $5,000 or 1 percent of its support in any taxable year, the term gross investment income is as defined in section 509(e), and the term gross receipts is limited to receipts from activities which are not unrelated trades or businesses (within the meaning of section 513). Example 1. (i) For the years 2008 through 2012, X, an organization exempt under section 501(c)(3) that makes scholarship grants to needy students of a particular city, received support from the following sources: 2008: Gross receipts (general public) Contributions

$35,000 36,000

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(substantial contributors) Gross investment income Total support 2009: Gross receipts (general public) Contributions (substantial contributors) Gross investment income Total support 2010: Gross receipts (general public) Contributions (substantial contributors) Gross investment income Total support 2011: Gross receipts (general public) Contributions (substantial contributors) Gross investment income Total support 2012: Gross receipts (general public) Contributions (substantial contributors) Gross investment income Total support

29,000 100,000 34,000 35,000 31,000 100,000 35,000 30,000 35,000 100,000 33,000 32,000 35,000 100,000 31,000 39,000 30,000 $100,00 0

(ii) In applying section 509(a)(2) to the taxable year 2012, on the basis of paragraph (c)(1)(i) of this section, the total amount of support from gross receipts from the general public ($168,000)

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for the period 2008 through 2012, was more than one third, and the total amount of support from gross investment income ($160,000) was less than one third, of X's total support for the same period ($500,000). For the taxable years 2012 and 2013, X is therefore considered normally to receive more than one third of its support from the public sources described in section 509(a)(2)(A) and less than one third of its support from items described in section 509(a)(2)(B). The fact that X received less than one third of its support from section 509(a)(2)(A) sources in 2012 and more than one third of its support from items described in section 509(a)(2)(B) in 2011 does not affect its status because it met the normally test over a 5year period. Example 2. Assume the same facts as in Example 1 except that in 2012, X also received an unexpected bequest of $50,000 from A, an elderly widow who was interested in encouraging the work of X, but had no other relationship to it. Solely by reason of the bequest, A became a disqualified person. X used the bequest to create 5 new scholarships. Its operations otherwise remained the same. Under these circumstances X could not meet the 5-year support test because the total amount received from gross receipts from the general public ($168,000) would not be more than one-third of its total support for the 5-year period ($550,000). Because A is a disqualified person, her bequest cannot be included in the numerator of the one-third support test under section 509(a)(2)(A). However, based on the factors set forth in paragraph (c)(4) of this section, A's bequest may be excluded as an unusual grant under paragraph (c)(3) of this section. Therefore, X will be considered to have met the support test for the taxable years 2012 and 2013. Example 3. Y, an organization described in section 501(c)(3), was created by A, the holder of all the common stock in M corporation, B, A's wife, and C, A's business associate. The purpose of Y was to sponsor and equip athletic teams for underprivileged children in the community. Each of the three creators makes small cash contributions to Y. A, B, and C have been active participants in the affairs of Y since its creation. Y regularly raises small amounts of contributions through fundraising drives and selling admission to some of the sponsored sporting events. The operations of Y are carried out on a small scale, usually being restricted to the sponsorship of two to four baseball teams of underprivileged children. In 2009, M recapitalizes and creates a first and second class of 6 percent nonvoting preferred stock, most of which is held by A and B. In 2010, A contributes 49 percent of his common stock in M to Y. A's contribution of M's common stock was substantial and constitutes 90 percent of Y's total support for 2010. A combination of the facts and circumstances described in paragraph (c)(4) of this section preclude A's contribution of M's common stock in 2010 from being excluded as an unusual grant under paragraph (c)(3) of this section for purposes of determining whether Y meets the one-third support test under section 509(a)(2). Example 4. (i) M is organized in 2009 to promote the appreciation of ballet in a particular region of the United States. Its principal activities consist of erecting a theater for the performance of ballet and the organization and operation of a ballet company. M receives a determination letter that it is an organization described in section 501(c)(3) and that it is a public charity described in section 509(a)(2). The governing body of M consists of 9 prominent unrelated *52552 citizens residing in the region who have either an expertise in ballet or a strong interest in encouraging appreciation of the art form. (ii) In 2010, Z, a private foundation, proposes to makes a grant of $500,000 in cash to M to provide sufficient capital for M to commence its activities. Although A, the creator of Z, is one of the nine members of M's governing body, was one of M's original founders, and continues to lend his prestige to M's activities and fund raising efforts, A does not, directly or indirectly, exercise any control over M. M also receives a significant amount of support from a number of smaller contributions and pledges from other members of the general public. M charges admission to the ballet performances to the general public. (iii) Although the support received in 2010 will not impact M's status as a public charity for its

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first 5 taxable years, it will be relevant to the determination of whether M meets the one-third support test under section 509(a)(2) for the 2014 taxable year, using the computation period 2010 through 2014. Within the appropriate timeframe, M may submit a request for a private letter ruling that the $500,000 contribution from Z qualifies as an unusual grant. (iv) Under the above circumstances, even though A was a founder and member of the governing body of M, M may exclude Z's contribution of $500,000 in 2010 as an unusual grant under paragraph (c)(3) of this section for purposes of determining whether M meets the one-third support test under section 509(a)(2) for 2014. Example 5. (i) Assume the same facts as Example 4. In 2013, B, a widow, passes away and bequeaths $4 million to M. During 2009 through 2013, B made small contributions to M, none exceeding $10,000 in any year. During 2009 through 2013, M received approximately $550,000 from receipts for admissions and contributions from the general public. At the time of B's death, no person standing in a relationship to B described in section 4946(a)(1)(C) through (G) was a member of M's governing body. B's bequest was in the form of cash and readily marketable securities. The only condition placed upon the bequest was that it be used by M to advance the art of ballet. (ii) Although the support received in 2013 will not impact M's status as a public charity for its first five taxable years, it will be relevant to the determination of whether M meets the one-third support test under section 509(a)(2) for future years. Within the appropriate timeframe, M may submit a request for a private letter ruling that the $4 million bequest from B qualifies as an unusual grant. (iii) Under the above circumstances, M may exclude B's bequest of $4 million in 2013 as an unusual grant under paragraph (c)(3) of this section for purposes of determining whether M meets the one-third support test under section 509(a)(2) for 2014 and subsequent years. Example 6. (i) N is a research organization that was created by A in 2009 for the purpose of carrying on economic studies primarily through persons receiving grants from N and engaging in the sale of economic publications. N received a determination letter that it is described in section 501(c)(3) and that it is a public charity described in 509(a)(2). N's five-member governing body consists of A, A's sons, B and C, and two unrelated economists. In 2009, A made a contribution to N of $100,000 to help establish the organization. During 2009 through 2013, A made annual contributions to N averaging $20,000 a year. During the same period, N received annual contributions from members of the general public averaging $15,000 per year and receipts from the sale of its publications averaging $50,000 per year. In 2013, B made an inter vivos contribution to N of $600,000 in cash and readily marketable securities. (ii) Although the support received in 2013 will not impact N's status as a public charity for its first 5 taxable years, it will be relevant to the determination of whether N meets the one-third support test under section 509(a)(2) for future years. In determining whether B's contribution of $600,000 in 2013 may be excluded as an unusual grant, the support N received in 2009 through 2013 is relevant in considering the factor described in paragraph (c)(4)(vi) of this section, notwithstanding that N received a determination letter that it is described in section 509(a)(2). (iii) Based on the application of the factors in paragraphs (c)(4)(i) through (ix) of this section to N's circumstances, in particular the facts that B is a disqualified person described in section 4946(a)(1)(D) and N does not have a representative governing body as described in paragraphs (c)(4)(viii) and (d)(3)(i) of this section, N cannot exclude B's contribution of $600,000 in 2013 as an unusual grant under paragraph (c)(3) of this section for purposes of determining whether N meets the one-third support test under section 509(a)(2) for 2014 and future years. Example 7. (i) O is an educational organization created in 2009. O received a determination letter that it is described in section 501(c)(3) and that it is a public charity described in section

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509(a)(2). The governing body of O has 9 members, consisting of A, a prominent civic leader and 8 other unrelated civic leaders and educators in the community, all of whom participated in the creation of O. During 2009 through 2013, the principal source of income for O has been receipts from the sale of its educational periodicals. These sales have amounted to $200,000 for this period. Small contributions amounting to $50,000 have also been received during the same period from members of the governing body, including A, as well as other members of the general public. (ii) In 2013, A contributed $750,000 of the nonvoting stock of S, a closely held corporation, to O. A retained a substantial portion of the voting stock of S. By a majority vote, the governing body of O decided to retain the S stock for a period of at least 5 years. (iii) Although the support received in 2013 will not impact O's status as a public charity for its first 5 taxable years, it will be relevant to the determination of whether O meets the one-third support test under section 509(a)(2) for future years. In determining whether A's contribution of the S stock in 2013 may be excluded as an unusual grant, the support O received in 2009 through 2013 is relevant in considering the factor described in paragraph (c)(4)(vi) of this section, notwithstanding that O received a determination letter that it is described in section 509(a)(2). (iv) Based on the application of the factors in paragraphs (c)(4)(i) through (ix) of this section to O's circumstances, in particular the facts that A is a foundation manager within the meaning of section 4946(b) and A's contribution is in the form of closely held stock, O cannot exclude A's contribution of the S stock in 2013 as an unusual grant under paragraph (c)(3) of this section for purposes of determining whether O meets the one-third support test under section 509(a)(2) for 2014 and future years. (d) Definition of normallyfirst five years of an organization's existence(1) In general. An organization meets the one-third support test and the not-more-than-one-third support test during its first five taxable years as a section 501(c)(3) organization if the organization can reasonably be expected to meet the requirements of the one-third support test and the not-morethan-one-third support test during that period. With respect to such organization's sixth taxable year, the organization shall be described in section 509(a)(2) if it meets the one-third support test and the not-more-than-one-third support test under the definition of normally set forth in paragraph (c)(1)(i) of this section for its sixth taxable year (based on support received in its second through sixth taxable years), or for its fifth taxable year (based on support received in its first through fifth taxable years). (2) Basic consideration. In determining whether an organization can reasonably be expected (within the meaning of paragraph (c)(1)(i) of this section) to meet the one-third support test under section 509(a)(2)(A) and the not-more-than-one-third support test under section 509(a)(2)(B) described in paragraph (c) of this section during its first 5 taxable years, the basic consideration is whether its organizational structure, current or proposed programs or activities, and actual or intended method of operation are such as to attract the type of broadly based support from the general public, public charities, and governmental units that is necessary to meet such tests. The factors that are relevant to this determination, and the weight accorded to each of them, may differ from case to case, depending on the nature and functions of the organization. An organization cannot reasonably be expected to meet the one-third support test and the not-more-than-one-third support test where the facts indicate that an organization is likely during its *52553 first five taxable years to receive less than one-third of its support from permitted sources (subject to the limitations of paragraph (b) of this section) or to receive more than one-third of its support from items described in section 509(a)(2)(B). (3) Factors taken into account. All pertinent facts and circumstances shall be taken into account under paragraph (d)(2) of this section in determining whether the organizational structure, programs or activities, and method of operation of an organization are such as to enable it to

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meet the tests under section 509(a)(2) during its first five taxable years. Some of the pertinent factors are: (i) Whether the organization has or will have a governing body which is comprised of public officials, or individuals chosen by public officials acting in their capacity as such, of persons having special knowledge in the particular field or discipline in which the organization is operating, of community leaders, such as elected officials, clergymen, and educators, or, in the case of a membership organization, of individuals elected pursuant to the organization's governing instrument or bylaws by a broadly based membership. This characteristic does not exist if the membership of the organization's governing body is such as to indicate that it represents the personal or private interests of disqualified persons, rather than the interests of the community or the general public. (ii) Whether a substantial portion of the organization's initial funding is to be provided by the general public, by public charities, or by government grants, rather than by a limited number of grantors or contributors who are disqualified persons with respect to the organization. The fact that the organization plans to limit its activities to a particular community or region or to a special field which can be expected to appeal to a limited number of persons will be taken into consideration in determining whether those persons providing the initial support for the organization are representative of the general public. On the other hand, the subsequent sources of funding which the organization can reasonably expect to receive after it has become established and fully operational will also be taken into account. (iii) Whether a substantial proportion of the organization's initial funds are placed, or will remain, in an endowment, and whether the investment of such funds is unlikely to result in more than one-third of its total support being received from items described in section 509(a)(2)(B). (iv) In the case of an organization that carries on fundraising activities, whether the organization has developed a concrete plan for solicitation of funds from the general public on a community or area-wide basis; whether any steps have been taken to implement such plan; whether any firm commitments of financial or other support have been made to the organization by civic, religious, charitable, or similar groups within the community; and whether the organization has made any commitments to, or established any working relationships with, those organizations or classes of persons intended as the future recipients of its funds. (v) In the case of an organization that carries on community services, such as combating community deterioration in an economically depressed area that has suffered a major loss of population and jobs, whether the organization has a concrete program to carry out its work in the community; whether any steps have been taken to implement that program; whether it will receive any part of its funds from a public charity or governmental agency to which it is in some way held accountable as a condition of the grant or contribution; and whether it has enlisted the sponsorship or support of other civic or community leaders involved in community service programs similar to those of the organization. (vi) In the case of an organization that carries on educational or other exempt activities for, or on behalf of, members, whether the solicitation for dues-paying members is designed to enroll a substantial number of persons in the community, area, profession, or field of special interest (depending on the size of the area and the nature of the organization's activities); whether membership dues for individual (rather than institutional) members have been fixed at rates designed to make membership available to a broad cross-section of the public rather than to restrict membership to a limited number of persons; and whether the activities of the organization will be likely to appeal to persons having some broad common interest or purpose, such as educational activities in the case of alumni associations, musical activities in the case of symphony societies, or civic affairs in the case of parent-teacher associations. (vii) In the case of an organization that provides goods, services, or facilities, whether the

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organization is or will be required to make its services, facilities, performances, or products available (regardless of whether a fee is charged) to the general public, public charities, or governmental units, rather than to a limited number of persons or organizations; whether the organization will avoid executing contracts to perform services for a limited number of firms or governmental agencies or bureaus; and whether the service to be provided is one which can be expected to meet a special or general need among a substantial portion of the general public. (4) Example. The application of this paragraph (d) may be illustrated by the following example: Example. (i) Organization X was formed in January 2008 and uses a December 31 taxable year. After September 9, 2008, and before December 31, 2008, Organization X filed Form 1023 requesting recognition of exemption as an organization described in section 501(c)(3) and in section 509(a)(2). In its application, Organization X established that it can reasonably be expected to operate as a public charity under this paragraph (d). Subsequently, Organization X received a ruling or determination letter that it is an organization described in sections 501(c)(3) and 509(a)(2) effective as of the date of its formation. (ii) Organization X is described in section 509(a)(2) for its first 5 taxable years (for the taxable years ending December 31, 2008, through December 31, 2012). (iii) Organization X can qualify as a public charity beginning with the taxable year ending December 31, 2013, if Organization X can meet the requirements of 1.170A-9T(f)(4)(i) through (iii) or paragraphs (a) through (b) of this section for the taxable years ending December 31, 2009, through December 31, 2013, or for the taxable years ending December 31, 2008, through December 31, 2012. (e) Determinations on foundation classification and reliance. (1) A ruling or determination letter that an organization is described in section 509(a)(2) may be issued to an organization. Such determination may be made in conjunction with the recognition of the organization's tax-exempt status or at such other time as the organization believes it is described in section 509(a)(2). The ruling or determination letter that the organization is described in section 509(a)(2) may be revoked if, upon examination, the organization has not met the requirements of this section. The ruling or determination letter that the organization is described in section 509(a)(2) also may be revoked if the organization's application for a ruling or determination contained one or more material misstatements of fact or such application was part of a scheme or plan to avoid or evade any provision of the Internal Revenue Code. The revocation of the determination that an *52554 organization is described in section 509(a)(2) does not preclude revocation of the determination that the organization is described in section 501(c)(3). (2) Status of grantors or contributors. For purposes of sections 170, 507, 545(b)(2), 642(c), 4942, 4945, 2055, 2106(a)(2), and 2522, grantors and contributors may rely upon a determination letter or ruling that an organization is described in section 509(a)(2) until the Internal Revenue Service publishes notice of a change of status (for example, in the Internal Revenue Bulletin or Publication 78, Cumulative List of Organizations described in Section 170(c) of the Internal Revenue Code of 1986, which can be searched at www.irs.gov). For this purpose, grantors or contributors may also rely on an advance ruling that expires on or after June 9, 2008. However, a grantor or contributor may not rely on such an advance ruling or any determination letter or ruling if the grantor or contributor was responsible for, or aware of, the act or failure to act that resulted in the organization's loss of classification under section 509(a)(2) or acquired knowledge that the Internal Revenue Service had given notice to such organization that it would be deleted from such classification. (3) Examples. The provisions of this paragraph (e) may be illustrated by the following examples: Example 1. Y, a calendar year organization described in section 501(c)(3), is created in February 2008 for the purpose of displaying African art. On its exemption application Y shows, under

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penalties of perjury, that it can reasonably, in accordance with the requirements of paragraph (d) of this section, expect to receive support from the public in 2008 through 2012 that will satisfy the one-third support and not-more-than-one-third support tests described in section 509(a)(2) for its first 5 taxable years, 2008 through 2012. Y may therefore receive a determination that it meets the requirements of paragraph (a) of this section. Pursuant to such determination, Y will be a public charity for its first five taxable years (2008, 2009, 2010, 2011, and 2012), regardless of the public support Y in fact receives during this period. Example 2. Z, a calendar year organization described in section 501(c)(3), is created in July 2008. On its exemption application Z shows, under penalties of perjury, that it can reasonably, in accordance with the requirements of paragraph (d) of this section, expect to receive support from the public in 2008 through 2012 that will satisfy the one-third support and not-more-thanone-third support tests described in section 509(a)(2) for its first 5 taxable years, 2008 through 2012. Z receives a determination that it is described in section 509(a)(2). However, the support actually received from the public over Z's first 5 taxable years (2008 through 2012) does not satisfy the one-third support and not-more-than-one-third support tests described in section 509(a)(2), nor does the support Z receives from 2009 through and including its sixth taxable year, 2013, meet the one-third support and not-more-than-one-third support tests described in section 509(a)(2). Z is described in section 509(a)(2) during its first five years for all purposes. But, because Z has not met the requirements of paragraph (a) of this section either for 2008 through 2012 or 2009 through 2013, Z is not described in section 509(a)(2) for its taxable year 2013. If Z is not described in section 509(a)(1), (3), or (4), then Z is a private foundation as of 2013, and Z will be treated as a private foundation for all purposes (except as provided in paragraph (e)(2) of this section with respect to grantors and contributors). (f) through (j) [Reserved]. For further guidance, see 1.509(a)-3(f) through (j). (k) Method of accounting. For purposes of section 509(a)(2), an organization's support will be determined under the method of accounting on the basis of which the organization regularly computes its income in keeping its books under section 446. For example, if a grantor makes a grant to an organization payable over a term of years, such grant will be includible in the support fraction of the grantee organization under the method of accounting on the basis of which it regularly computes its income in keeping its books under section 446. (l) and (m) [Reserved]. For further guidance, see 1.509(a)-3(l) and (m). (n) Transition rules. (i) An organization that received an advance ruling, that expires on or after June 9, 2008, that it will be treated as an organization described in sections 170(b)(1)(A)(vi) and 509(a)(1) or in section 509(a)(2) will be treated as meeting the requirements of paragraph (d)(1) of this section for the first five taxable years of its existence as a section 501(c)(3) organization unless the Internal Revenue Service issued to the organization a proposed determination prior to September 9, 2008, that the organization is not described in sections 170(b)(1)(A)(vi) and 509(a)(1) or in section 509(a)(2). (ii) Paragraph (d)(1) of this section shall not apply to an organization that received an advance ruling that expired prior to June 9, 2008, and that did not timely file with the Internal Revenue Service the required information to establish that it is an organization described in sections 170(b)(1)(A)(vi) and 509(a)(1) or in section 509(a)(2). (iii) An organization that fails to meet a public support test for its first taxable year beginning on or after January 1, 2008, under the regulations in this section may use the prior test set forth in 1.509(a)-3(c)(1) or 1.170A-9(e)(4)(i) or (ii) as in effect before September 9, 2008, (as contained in 26 CFR part 1 revised April 1, 2008) to determine whether the organization may be publicly supported for its 2008 taxable year based on its satisfaction of a public support test for taxable year 2007, computed over the period 2003 through 2006.

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(iv) Examples. The application of this paragraph (n) may be illustrated by the following examples: Example 1. (i) Organization M was formed in January 2004, and uses a June 30 taxable year. Organization M received an advance ruling letter that it is recognized as an organization described in section 501(c)(3) effective as of the date of its formation and that it is treated as a public charity under section 509(a)(2) during the five-year advance ruling period that will end on June 30, 2008. This date is within 90 days before September 9, 2008. (ii) Under the transition rule, Organization M is a public charity described in section 509(a)(2) for the taxable years ending June 30, 2004, through June 30, 2008. Organization M does not need to establish within 90 days after June 30, 2008, that it met a public support test under 1.170A9(e) or 1.509(a)-3, as in effect prior to September 9, 2008, (as contained in 26 CFR part 1 revised April 1, 2008) for its advance ruling period. (iii) Organization M can qualify as a public charity beginning with the taxable year ending June 30, 2009, if Organization M can meet the requirements of 1.170A-9T(f)(4)(i) or (ii) or paragraph (c)(1) of this section for the taxable years ending June 30, 2005, through June 30, 2009, or for the taxable years ending June 30, 2004, through June 30, 2008. In addition, for its taxable year ending June 30, 2009, Organization M may qualify as a public charity by availing itself of the transition rule contained in paragraph (n)(iii) of this section, which looks to support received by M in the taxable years ending June 30, 2004, through June 30, 2007. Example 2. (i) Organization N was formed in January 2000 and uses a December 31 taxable year. Organization N received a final determination that it was recognized as tax-exempt under section 501(c)(3) and as a public charity prior to September 9, 2008. (ii) For taxable year 2008, Organization N will qualify as publicly supported if it meets the requirements under either 1.170A-9T(f)(4)(i) or (ii) or paragraph (c)(1) of this section for the five-year period January 1, 2004, through December 31, 2008. Organization N will also qualify as publicly supported for taxable year 2008 if it meets the requirements under either 1.170A9(e)(4)(i) or (ii) or 1.509(a)-3(c)(1) as in effect prior to September 9, 2008, (as contained in 26 CFR part 1 revised April 1, 2008) for taxable year 2007, using the four-year period from January 1, 2003, through December 31, 2006. (o) Effective/applicability date(1) Effective date. These regulations are effective on September 9, 2008. *52555 (2) Applicability date. The regulations in paragraphs (a)(2), (a)(3)(i), (c), (d), (e) and (k) of this section shall apply to taxable years beginning on or after January 1, 2008. (3) Expiration date. The applicability of this section expires on September 8, 2011. 26 CFR 1.6033-2 Par. 8. Section 1.6033-2 is amended by revising paragraph (k) to read as follows: 26 CFR 1.6033-2 1.6033-2 Returns by exempt organizations (taxable years beginning after December 31, 1969) and returns by certain nonexempt organizations (taxable years beginning after December 31, 1980). ***** (k) Effective/applicability date. The provisions of this section shall apply with respect to returns

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filed for taxable years beginning after December 31, 1969. The applicability of paragraphs (a)(2)(ii)(g) and (a)(2)(ii)(h) of this section shall be limited to taxable years beginning before January 1, 2008. 26 CFR 1.6033-2T Par. 9. Section 1.6033-2T is added to read as follows: 26 CFR 1.6033-2T 1.6033-2T Returns by exempt organizations (taxable years beginning after December 31, 1969) and returns by certain nonexempt organizations (taxable years beginning after December 31, 1980) (temporary). (a)(1) through (a)(2)(ii)(f) [Reserved]. For further guidance, see 1.6033-2(a)(1) through (a)(2)(ii)(f). (g) The names and addresses of all officers, directors, or trustees (or any person having responsibilities or powers similar to those of officers, directors or trustees) of the organization, and, in the case of a private foundation, all persons who are foundation managers, within the meaning of section 4946(b)(1). Organizations must also attach a schedule showing the names and addresses and/or total numbers of key employees, highly compensated employees and independent contractors as prescribed by publication, form or instructions. (h) A schedule showing the compensation and other payments made to each person whose name is required to be listed in paragraph (a)(2)(ii)(g) of this section during the calendar year ending within the organization's annual accounting period, or during such other period as prescribed by publication, form or instructions (a)(2)(ii)(i) through (j) [Reserved]. For further guidance, see 1.6033-2(a)(2)(ii)(i) through (j). (k) Effective/applicability date(1) Effective date. These regulations are effective on September 9, 2008. (2) Applicability date. The regulations in paragraphs (a)(2)(ii)(g) and (a)(2)(ii)(h) of this section shall apply to taxable years beginning on or after January 1, 2008. (3) Expiration date. The applicability of this section expires September 8, 2011. 26 CFR 1.6043-3 Par. 10. Section 1.6043-3 is amended as follows: 1. The undesignated text following paragraph (b)(8) is designated as paragraph (b)(9). 2. Paragraph (d)(3) is revised. 3. New paragraph (e) is added. The addition and revision read as follows: 26 CFR 1.6043-3 1.6043-3 Returns regarding liquidation, dissolution, termination, or substantial contraction of organizations exempt from taxation under section 501(a). *****

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(d)(3) For the definition of the term integrated auxiliaries as used in paragraph )(1) of this (b section, see 1.6033-2(h). (e) Effective/applicability date. The provisions of this section shall apply with respect to returns filed for taxable years beginning after December 31, 1969. The applicability of paragraphs (b)(8) and (d) of this section shall be limited to returns filed for taxable years beginning before January 1, 2008. 26 CFR 1.6043-3T Par. 11. Section 1.6043-3T is added to read as follows: 26 CFR 1.6043-3T 1.6043-3T Returns regarding liquidation, dissolution, termination, or substantial contraction of organizations exempt from taxation under section 501(a) (temporary). (a) through (b)(7) [Reserved]. For further guidance, see 1.6043-3(a) through (b)(7). (b)(8) Any organization no longer exempt from taxation under section 501(a) and that during the period of its exemption under such section was not an organization described in section 501(c)(3), a corporation described in section 501(c)(2) that held title to property for an organization described in section 501(c)(3), or an organization described in such other section as prescribed by publication, form or instructions. (b)(9) and (c) [Reserved]. For further guidance, see 1.6043-3(b)(9) and (c). (d) Definitions. (1) For the definition of the term normally as used in paragraph (b)(2) of this section, see 1.6033-2(g)(3). (2) For the definition of the term integrated auxiliaries as used in paragraph )(1) of this (b section, see 1.6033-2(h). (e) Effective/applicability date(1) Effective date. The regulations in this section are effective on September 9, 2008. (2) Applicability date. Paragraphs (b)(8) and (d) of this section shall apply to returns filed for taxable years beginning on or after January 1, 2008. (3) Expiration date. The applicability of this section expires on September 8, 2011. PART 602OMB CONTROL NUMBER UNDER THE PAPERWORK REDUCTION ACT Par. 12. The authority citation for part 602 continues to read as follows: Authority: 26 U.S.C. 7805 * * * 26 CFR 602.101

Par. 13. In 602.101, paragraph (b) is amended by adding the following entry in numerical order to the table to read as follows: 26 CFR 602.101 602.101 OMB Control numbers.

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***** (b) * * * CFR part or Curren section t OMB where control identified No. and described ***** 1.6033-2T 15452117 *****

Linda E. Stiff, Deputy Commissioner for Services and Enforcement. Approved: August 21, 2008. Eric Solomon, Assistant Secretary of the Treasury (Tax Policy). [FR Doc. E8-20560 Filed 9-8-08; 8:45 am]

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65 FR 60246 Federal Crimes Enforcement Network.docx (Attachment 4 of 5)

FOR EDUCATIONAL USE ONLY 65 FR 60246-02, 2000 WL 1482483 (F.R.) NOTICES DEPARTMENT OF THE TREASURY Financial Crimes Enforcement Network Proposed Collection; Comment Request Tuesday, October 10, 2000 *60246 AGENCY: Financial Crimes Enforcement Network (FinCEN), Treasury. ACTION: Notice and request for comments. SUMMARY: As part of its continuing effort to reduce paperwork and respondent burden, FinCEN invites the general public and other Federal agencies to comment on a proposed information collection contained in a new form, Registration of Money Services Business. The form will be used by check cashers, currency exchangers, money order and traveler's check businesses, and money transmitters to register with the Department of the Treasury as required by statute. This request for comments is being made pursuant to the Paperwork Reduction Act of 1995, Public Law 104-13 (44 U.S.C. 3506(c)(2)(A)). DATES: Written comments should be received on or before December 11, 2000 to be assured of consideration. ADDRESSES: Direct all written comments to: Office of Chief Counsel, Financial Crimes Enforcement Network, Department of the Treasury, Suite 200, 2070 Chain Bridge Road, Vienna, VA 22182-2536, Attention: PRA CommentsRegistration of Money Services Business. Comments also may be submitted by electronic mail to the following Internet address: regcomments@fincen.treas.gov with the caption in the body of the text, Attention: PRA CommentsRegistration of Money Services Business. FOR FURTHER INFORMATION CONTACT: Requests for additional information should be directed to Eileen Mayer, Special Assistant to the Director, (202) 354-6400, or Cynthia Clark, Deputy Chief Counsel, FinCEN, and Christine Schuetz, Attorney-Advisor, FinCEN, at 703-905-3590. A copy of the form may be obtained through the Internet at http://www.treas.gov/fincen. SUPPLEMENTARY INFORMATION: Title: Registration of Money Services Business. *60247 OMB Number: Unassigned. Form Number: TD F 90-22.55. Abstract: 31 U.S.C. 5330, a part of the Bank Secrecy Act,[FN1] requires money services businesses to register with the Department of the Treasury and maintain a list of their agents.[FN2] Money services businesses include certain (i) check cashers, (ii) currency exchangers, (iii) issuers, sellers, and redeemers of money orders, (iv) issuers, sellers, and redeemers of traveler's checks, and (v) money transmitters. See 31 CFR 103.11(uu). FN1 The Bank Secrecy Act, Titles I and II of Pub. L. 91-508, as amended, codified at 12 U.S.C.

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1829b, 12 U.S.C. 1951-1959, and 31 U.S.C. 5311-5330, authorizes the Secretary of the Treasury, inter alia, to issue regulations requiring records and reports that are determined to have a high degree of usefulness in criminal, tax, and regulatory matters. Regulations implementing Title II of the Bank Secrecy Act (codified at 31 U.S.C. 5311-5330) appear at 31 CFR part 103. The authority of the Secretary to administer Title II of the Bank Secrecy Act has been delegated to the Director of FinCEN. FN2 Section 5330 was added to the Bank Secrecy Act by section 408 of the Money Laundering Suppression Act of 1994, Title IV of the Riegle Community Development and Regulatory Improvement Act of 1994, Public Law 103-325 (September 23, 1994). On August 20, 1999, the Department of the Treasury issued a final rule regarding the registration of money services businesses (64 FR 4538). Under the final rule, money services businesses must register with the Department of the Treasury and renew their registration every two years. 31 CFR 103.41. Registration will be made by filing a new form TD F 90-22.55, Registration of Money Services Business. Agents of money services businesses are not required to register regardless of the dollar volume of their money services activities unless they engage in money service activities both on their own behalf and as an agent of others. The information collected on the new form is required to comply with 31 U.S.C. 5330 and its implementing regulations. The information will be used to assist supervisory and law enforcement agencies in the enforcement of criminal, tax, and regulatory laws and to prevent money services businesses from use by those engaging in money laundering. The collection of information is mandatory. Money services businesses are advised that the draft form that appears at the end of this notice is presented only for purposes of soliciting public comment on the form. They should not try to use the draft form to register with Treasury. A final version of the form will be made available at a later date to be used for registration. Type of Review: New information collection. Affected Public: Business or other for-profit institutions. Estimated Number of Respondents: 8500. Estimated Total Annual Responses: 8500.[FN3] FN3 The estimated number of responses is for the year in which a registration form must be filed; because the form is generally required to be filed only every other year, the estimated annual number of responses would be lower. Estimated Total Annual Burden Hours: Reporting average of 30 minutes per response; recordkeeping average of 15 minutes per response. Estimated total annual burden hours: Reporting burden of 4250 hours; recordkeeping burden of 2125 hours, for an estimated combined total of 6375 hours.[FN4] FN4 The estimated burden is for the year in which a registration form must be filed; because the form is generally required to be filed only every other year, the estimated annual burden would be lower. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Records required to be retained under the Bank Secrecy Act must be retained for five years. Generally, information collected pursuant to the Bank Secrecy Act is confidential, but may be shared as provided by law with regulatory and law enforcement authorities.

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Request for Comments Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval. All comments will become a matter of public record. Comments are invited on: (a) Whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden of the collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology; and (e) estimates of capital or start-up costs and costs of operation, maintenance and purchase of services to provide information. Dated: September 29, 2000. James F. Sloan, Director, Financial Crimes Enforcement Network. Attachment: Registration of Money Services Business Form TD F 90-22.55 BILLING CODE 4820-03-P

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64 FR 45438 Financial Crimes Enforcement Network.docx (Attachment 5 of 5)

FOR EDUCATIONAL USE ONLY 64 FR 45438-01, 1999 WL 631524 (F.R.) RULES and REGULATIONS DEPARTMENT OF THE TREASURY Financial Crimes Enforcement Network 31 CFR Part 103 RIN 1506-AA09 Amendment to the Bank Secrecy Act RegulationsDefinitions Relating to, and Registration of, Money Services Businesses Friday, August 20, 1999 *45438 AGENCY: Financial Crimes Enforcement Network (FinCEN), Treasury. ACTION: Final rule. SUMMARY: This document contains amendments to the regulations implementing the statute generally referred to as the Bank Secrecy Act. The amendments revise the definitions of certain non-bank financial institutions for purposes of the Bank Secrecy Act and group the revised definitions together in a separate category called money services businesses. The amendments also require certain money services businesses to register with the Department of the Treasury and to maintain a current list of their agents for examination, on request, by any appropriate law enforcement agency. The amendments regarding registration and maintenance of agent lists by money services businesses reflect changes to the law made by the Money Laundering Suppression Act of 1994. DATES: Effective Date: September 20, 1999. Applicability Date: Registration of money services businesses will not be required prior to December 31, 2001, and maintenance of the agent list will not be required prior to January 1, 2002. See 103.41(f) of the final rule contained in this document. FOR FURTHER INFORMATION CONTACT: Peter Djinis, Associate Director, FinCEN, (703) 9053930; Charles Klingman, Financial Institutions Policy Specialist, FinCEN, (703) 905-3602; Stephen R. Kroll, Chief Counsel, Cynthia L. Clark, Deputy Chief Counsel, and Albert R. Zarate and Christine L. Schuetz, Attorney-Advisors, Office of Chief Counsel, FinCEN, (703) 905-3590. SUPPLEMENTARY INFORMATION: I. Statutory ProvisionsGeneral The Bank Secrecy Act, Titles I and II of Public Law 91-508, as amended, codified at 12 U.S.C. 1829b, 12 U.S.C. 1951-1959, and 31 U.S.C. 5311-5330, authorizes the Secretary of the Treasury, inter alia, to issue regulations requiring financial institutions to keep records and file reports that are determined to have a high degree of usefulness in criminal, tax, and regulatory matters, and to implement counter-money laundering programs and compliance procedures. Regulations implementing Title II of the Bank Secrecy Act (codified at 31 U.S.C. 5311-5330) appear at 31 CFR Part 103. The authority of the Secretary to administer Title II of the Bank Secrecy Act has been delegated to the Director of FinCEN.

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31 U.S.C. 5312. The Bank Secrecy Act generally applies to financial institutions, a term broadly defined in 31 U.S.C. 5312(a)(2)(A-Z). The statutory definition includes, inter alia: ***** (J) a currency exchange; (K) an issuer, redeemer, or cashier of travelers' checks, checks, money orders, or similar instruments; ***** (R) a licensed sender of money; ***** (Y) any business or agency which engages in any activity which the Secretary of the Treasury determines, by regulation, to be an activity which is similar to, related to, or a substitute for any activity in which any business described in this paragraph is authorized to engage; or (Z) any other business designated by the Secretary whose cash transactions have a high degree of usefulness in criminal, tax, or regulatory matters. 31 U.S.C. 5330. 31 U.S.C. 5330 was added to the Bank Secrecy Act by section 408 of the Money Laundering Suppression Act of 1994 (the Money Laundering Suppression Act), Title IV of the Riegle Community Development and Regulatory Improvement Act of 1994, Public Law 103-325 (September 23, 1994). Under that section, any person who owns or controls a money services business (which the statute refers to as a money transmitting business[FN1] ), whether or not the business is licensed as a money services business in any State, must register the business with the Secretary of the Treasury. 31 U.S.C. 5330(a). (A money services business required to be registered under 31 U.S.C. 5330 remains subject to any State law requirements relating to the operation of the business in the State. 31 U.S.C. 5330(a)(3).) The form and manner of registration must be prescribed by regulations. FN1 The statute uses the term money transmitting business to name those businesses subject to registration. See 31 U.S.C. 5330(a)(1) and (d)(1). However, FinCEN believes that the statute's use of this term to refer to all the types of businesses subject to registration and its later use of the nearly identical term money transmitting service to refer to a particular type of business subject to registration, compare 31 U.S.C. 5330(d)(1)(A) with 31 U.S.C. 5330(d)(2), may lead to confusion. Therefore, FinCEN has adopted the term money services business in place of the term money transmitting business throughout this document and under the final rule. The purpose of the registration requirement is to assist supervisory and law enforcement agencies in the enforcement of criminal, tax, and regulatory laws and to prevent money services businesses from engaging in illegal activities. See, section 408(a), of the Money Laundering Suppression Act. 31 U.S.C. 5311 (Note). In requiring the registration of money services businesses, Congress found that such businesses are largely unregulated and are frequently used in sophisticated schemes to transfer large amounts of money that are the proceeds of unlawful enterprises and to evade the *45439 requirements of Title II of the Bank Secrecy Act, the Internal Revenue Code of 1986, and other laws of the United States. Congress also found that information on the identity of each money services business and the names of the persons who own or control, or are officers or employees of, a money services business would have a high degree of usefulness in criminal, tax, or regulatory investigations and proceedings. Id.

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64 FR 45438 Financial Crimes Enforcement Network.docx (Attachment 5 of 5)

The statute defines a money transmitting business[FN2] as any business, other than the United States Postal Service, that is required to file reports under 31 U.S.C. 5313 and that provides check cashing, currency exchange, or money transmitting or remittance services,[FN3], or issues or redeems money orders, traveler's checks or other similar instruments. 31 U.S.C. 5330(d)(1). Depository institutions (as defined in 31 U.S.C. 5313(g)), however, are not within the classes of institutions required to register under the statute. 31 U.S.C. 5330(d)(1)(C). FN2 Although the statutory term is money transmitting business, FinCEN has decided to use the term money services business in this rule. See footnote 1, supra. FN3 The term money transmitting service includes accepting currency or funds denominated in the currency of any country and transmitting the currency or funds, or the value of the currency or funds, by any means through a financial agency or institution, a Federal Reserve Bank or other facility of the Board of Governors of the Federal Reserve System, or an electronic funds transfer network. 31 U.S.C. 5330(d)(2). Section 5330 specifies the information that must be included as part of the registration. 31 U.S.C. 5330(b). The required information is (1) The name and location of the business; (2) The name and address of each person who owns or controls the business, is a director or officer of the business, or otherwise participates in the conduct of the affairs of the business; (3) The name and address of any depository institution at which the business maintains a transaction account (as defined in section 19(b)(1)(C) of the Federal Reserve Act); (4) An estimate of the volume of business in the coming year, which shall be reported annually to the Secretary; and (5) Such other information as the Secretary of the Treasury may require. Section 5330 contains two provisions directed explicitly at agents of money services businesses. First, a money services business must maintain a list containing the names and addresses of its agents and such other information about the agents as the Secretary may require, and the list must be made available on request to any appropriate law enforcement agency. See 31 U.S.C. 5330(c)(1). Second, the Secretary is to establish by regulation, on the basis of such criteria as the Secretary deems appropriate, a threshold point for treating an agent of a money services business as itself a money services business for purposes of section 5330. Section 5330 prescribes a civil penalty for any person who fails to comply with any requirement of 31 U.S.C. 5330 or the regulations thereunder. The penalty is $5,000 for each violation; each day a violation of 31 U.S.C. 5330 or the regulations thereunder continues constitutes a separate violation. 31 U.S.C. 5330(e). A failure to comply with 31 U.S.C. 5330 or the regulations under section 5330 may also result in a criminal penalty under 18 U.S.C. 1960. Under section 5330, a money services business must be registered not later than the end of the 180-day period beginning on the later of the date of enactment of the Money Laundering Suppression Act of 1994 (September 23, 1994), and the date on which the business is established. 31 U.S.C. 5330(a). On May 18, 1995, FinCEN issued a notice explaining that regulations prescribing the form and manner of registration would not require initial registration of money services businesses before the 90th day following the effective date of the implementing regulations. FinCEN Notice 95-1. The notice further explained that no penalty or other compliance sanction would be imposed under the provisions of the Bank Secrecy Act on account of the failure of any money services business to register before the last date for initial registration specified by the implementing regulation.

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II. Money Services BusinessesGeneral The rulemaking of which this final rule is a part deals with a number of aspects of the application of the Bank Secrecy Act to money services businesses. In conducting the rulemaking, FinCEN and the Department of the Treasury are not only following the mandate of Congress in the Money Laundering Suppression Act and the Annunzio-Wylie Anti-Money Laundering Act, Title XV of the Housing and Community Development Act of 1992, Public Law 102-550, but are more generally responding to the need to update and more carefully tailor the application of the Bank Secrecy Act to a major, if little understood, part of the financial sector in the United States.[FN4] FN4 The Congress has long-recognized the need generally to address problems of abuse by money launderers of non-bank financial institutions. See, e.g., Permanent Subcommittee on Investigations, Senate Comm. on Governmental Affairs, Current Trends in Money Laundering, S. Rep. No. 123, 102d Cong., 2d Sess. (1992). The term money services business refers to five distinctive types of financial services providers: currency dealers or exchangers; check cashers; issuers of traveler's checks, money orders, or stored value; sellers or redeemers of traveler's checks, money orders, or stored value; and money transmitters. (The five types of financial services are complementary and are often provided together at a common location.) These businesses are quite numerous; based on a study performed for FinCEN by Coopers & Lybrand LLP (now a part of PriceWaterhouse Coopers LLP), they comprise approximately 158,000[FN5] outlets or selling locations, and provide financial services involving approximately $200 billion annually. To some significant extent, the customer base for such businesses lies in that part of the population that does not use traditional financial institutions, primarily banks. FN5 The number does not include Post Offices (which sell money orders and other money services business financial products), participants in stored value product trials, or sellers of various stored value or smart cards in use in, e.g., public transportation systems. Money services businesses, like banks, can be large or small. It is estimated that approximately eight business enterprises account for the bulk of money services business financial products (that is, money transmissions, money orders, traveler's checks, and check cashing and currency exchange availability) sold within the United States, and also account, through systems of agents, for the bulk of locations at which these financial products are sold. Members of this first group include large firms, with significant capitalization, that are publicly traded on major securities exchanges. A far larger group of (on average) far smaller enterprises competes with the eight largest firms in a highly bifurcated market for money services. In some cases, these small enterprises are based in one location with two to four employees. Moreover, the members of this second group may provide both financial services and unrelated products or services to the same sets of customers.[FN6] Far less is known about this *45440 second tier of firms than about the major providers of money service products.[FN7] FN6 Members of the second group may include, for example, a travel agency, courier service, convenience store, grocery or liquor store. FN7 For example, according to the Coopers & Lybrand study, at the time of that study, two money transmitters and two traveler's check issuers made up approximately 97 per cent of their respective known markets for non-bank money services. Three enterprises made up approximately 88 per cent of the $100 billion in money orders sold annually (through approximately 146,000 locations). The retail foreign currency exchange sector was found by Coopers & Lybrand to be somewhat less concentrated, with the top two non-bank market participants accounting for 40 per cent of a known market that accounts for $10 billion. Check

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cashing is the least concentrated of the business sectors; the two largest non-bank check cashing businesses make up approximately 20 per cent of the market, with a large number of competitors. Because money services businesses primarily serve individuals, they have grown to provide a set of financial products, albeit in large part for non-depository customers, that others look to banks to provide. For example, a money services business customer who receives a paycheck can take his or her check to a check casher to have it converted to cash. He or she can then purchase money orders to pay his or her bills. Finally, he or she may choose to send funds to relatives abroad, using the services of a money transmitter. III. Notice of Proposed Rulemaking On May 21, 1997, FinCEN published a notice of proposed rulemaking, 62 FR 2789027900 (the Notice), that described several proposed changes to the Bank Secrecy Act rules of the Department of the Treasury. First, the Notice proposed amendment of 31 CFR 103.11 to revise definitions of certain non-bank financial services businesses that had been treated as financial institutions for purposes of the Bank Secrecy Act (or in the case of stored value, to add a definition of a product whose issuers, sellers, and redeemers would be so treated) and to group the revised and new definitions together under the heading money services business; the businesses involved generally provide check cashing, currency exchange, or money transmitting services, or issue, sell, or redeem money orders, traveler's checks, or other similar instruments. Second, the Notice proposed the addition to 31 CFR part 103 of a set of new rules to require certain money services businesses to register with the Department of the Treasury and, as part of the registration requirement, to maintain a current list of their agents in a central location for examination by appropriate law enforcement agencies.[FN8] The rules proposed in this portion of the Notice were designed to implement the terms of 31 U.S.C. 5330. FN8 The Notice proposed to place section 103.41 in a new subpart D, Special Rules for Money Services Businesses, of Part 103, and to redesignate existing subparts D through F as subparts E through G of Part 103. The sections in redesignated subparts E through G were to be redesignated to reflect the addition of new subpart D, and corresponding changes were to be made to the references to such redesignated sections in other portions of part 103. The Notice was one of three notices of proposed rulemaking dealing with money services businesses issued on May 21, 1997. The second notice, 62 FR 2790027909, proposed to amend the Bank Secrecy Act rules to require money transmitters, and issuers, sellers, and redeemers of money orders and traveler's checks, to report suspicious transactions to the Department of the Treasury. The third notice, 62 FR 27909-27917, proposed to add a special currency transaction reporting requirementand related customer verification requirementsfor money transmitters involved in the transmission or other transfer of funds to persons outside of the United States. The proposed rules were designed as part of a coordinated approach to dealing with abuse of money services businesses by criminals and to strengthening the application of general Bank Secrecy Act concepts to this part of the nation's payment system. The decision to deal with each rule separately, rather than finalizing the rules as a group, reflects a number of practical and policy considerations, most importantly the desire to allow time for the construction of the necessary administrative and compliance structures by both the Department of the Treasury and the money services businesses subject to the rules. As indicated in greater detail below, following the Section-by-Section Analysis, the Department of the Treasury is planning next to issue the rule relating to the reporting of suspicious transactions, and will be working with interested parties, independently of the rulemaking itself, to advance the preparation of guidance about particular patterns of suspicious activity of which money services businesses must be aware.

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FinCEN held five public meetings during the summer of 1997, in order to provide interested parties with the opportunity to present their views about the potential effects of the three proposed regulations, as well as to provide FinCEN with additional information useful in preparing the final rule.[FN9] Transcripts of these meetings were then made available by FinCEN to requesting parties. FN9 These public meetings were held in Vienna, Virginia, on July 22, 1997; New York, New York, on July 28, 1997; San Jose, California, on August 1, 1997; Chicago, Illinois, on August 15, 1997; and Vienna, Virginia, on September 3, 1997. The first of the five meetings, which was held in Vienna, Virginia, dealt particularly with issues raised by the Notice, and the San Jose, California, meeting dealt with the Notice's treatment of stored value. The final meeting, also held in Vienna, Virginia, dealt with the details of the various prototype compliance forms designed in connection with the issuance of both the Notice and the two related notices of proposed rulemaking and produced further discussion of the money services business registration requirements. The comment period for the three notices of proposed rulemaking originally ended on August 19, 1997, but it was extended to September 30, 1997, by a notice published on July 30, 1997 (62 FR 40779). FinCEN received a total of 82 comment letters on the three notices of proposed rulemaking; 60 comment letters dealt in whole or in part with issues raised by the Notice. Of these, 17 were submitted by money services businesses and their affiliates, 11 by banks or bank holding companies, 17 by financial institution trade associations, 5 by law firms, 5 by agencies of the United States government, 2 by credit unions, and 3 by private individuals. IV. Summary of Comments and Revisions A. Introduction The format of the final rule is generally consistent with the Notice. The terms of the final rule, however, differ from the terms of the Notice in the following significant respects: Definitions - The definition of money services business has been revised to exclude from treatment as money services businesses for any purpose banks and persons registered with, and regulated or examined by, the Securities and Exchange Commission or the Commodity Futures Trading Commission. - The definition of money transmitter has been revised to make plain that the activity that makes one a money transmitter must be carried on as a business and to provide a general limitation to the definition. - The dollar thresholds for treatment of persons as money services businesses on account of activities related to check cashing, currency exchange, and money order, traveler's checks, and stored value transactions has been raised from $500 to $1,000. *45441 Registration - Registration will not be required prior to December 31, 2001. - Persons are excluded from the registration requirements to the extent that they are issuers, sellers, or redeemers of stored value products.[FN10] FN10 Although the final rule expressly excludes redeemers of stored value products, it should be noted that as with redeemers of traveler's checks and money orders, FinCEN did not intend that

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the Notice would apply to redeemers of stored value products to the extent the products are taken in exchange for goods or general services. - The requirement that agents whose gross transaction amount exceeds $50,000 for any month must register has been eliminated; registration by a person that is a money services business solely because that person serves as an agent of another money services business is indefinitely deferred. - The agent list maintained by each money services business that offers its products or services through agents must include an indication of each month in the preceding 12 months in which the gross transaction amount of an agent exceeded $100,000. - A money services business is not required to keep records required by section 103.41 in a centralized location so long as the records are maintained in the United States and are readily available at the request of FinCEN or any appropriate law enforcement agency; the agent list, however, must be maintained in a central location in the United States. - Certain publicly traded businesses are not required to re-register before the end of their renewal period when there is a 10-per cent or more change in the ownership of such businesses. - Agent lists must be updated annually, as of January 1 of each year, rather than quarterly. - For any agent that is an agent of the money services business maintaining the list before the first day of the month beginning after February 16, 2000, the agent list need not include information about the year in which the agent first became an agent and the agent's branches or subagents, but such information must be readily available at the request of FinCEN or any appropriate law enforcement agency. - The effective date of the registration rule is September 20, 1999; the initial registration must be filed, by December 31, 2001, and the initial agent list must be prepared by January 1, 2002. B. Comments on the NoticeOverview and General Issues Definitions Comments on the proposed changes to the Bank Secrecy Act definitions relating to money services businesses concentrated on five matters: (i) The relationship between the general Bank Secrecy Act definitions and the language of 31 U.S.C. 5330(d)(1) and (2), defining the businesses required to register as money services businesses; (ii) whether the Notice properly invoked the authority required for a change in the general Bank Secrecy Act definitions; (iii) the proposed inclusion of businesses issuing, selling, or redeeming stored value within the definition of financial institution for Bank Secrecy Act purposes; (iv) the treatment under the Notice of financial businesses subject to other federal regulatory systems; and (v) the application of the money services business definition to various kinds of businesses whose activities include the transmission of funds.[FN11] FN11 A related issue, whether and the extent to which it was necessary to define the term agent as used both in the definition of money services business and the registration provisions, is discussed below. 1. Relationship between 31 U.S.C. 5312 and 31 U.S.C. 5330. Several commenters argued that the Department of the Treasury mistakenly relied upon the terms of 31 U.S.C. 5330, in seeking to revise the definition of financial institution, as part of proposed 31 CFR 103.11(uu). These commenters asserted that the Notice reflected a misunderstanding of the relationship of the general Bank Secrecy Act definitional provision, 31 U.S.C. 5312, and the registration provisions. In their view, the definition of the sorts of businesses required to be registered under 31 U.S.C.

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5330 bore no relationship to the definition of the financial institutions covered by the remainder of the Bank Secrecy Act, and the designation of registrable businesses in 31 U.S.C. 5330 provides no independent authority for making such businesses otherwise subject to the Bank Secrecy Act. In support of this argument, the commenters cited the language at the beginning of 31 U.S.C. 5330(d) that the definitions of a money transmitting business and money transmitting service apply [f]or purposes of this section. In addition, they cited the requirement that the definition be limited only to a business that is required to file reports under 31 U.S.C.] section [ 5313. Thus, according to the commenters, the broad definitional language in section 5330 cannot be used to define a financial institution for a Bank Secrecy Act purpose other than registration. This language further suggests, according to the commenters, that the class of registrable money services businesses is necessarily larger than the class of money services businesses that were both registrable and otherwise subject to the Bank Secrecy Act's reporting and recordkeeping rules. FinCEN believes that this argument misperceives both the relationship of the registration provisions to the remainder of the Bank Secrecy Act and the basis for the redefinition of money services business proposed in the Notice. In enacting 31 U.S.C. 5330, Congress made a direct finding that: Money transmitting businesses are subject to the recordkeeping and reporting requirements of subchapter II of chapter 53 of title 31. * * * Section 408(a)(1)(A) of the Money Laundering Suppression Act, 31 U.S.C. 5330 (Note). Thus, Congress assumed that the sorts of businesses for which it was requiring registration were precisely the sorts that would be (and indeed that were already) subject to the Bank Secrecy Act's rules. FinCEN therefore believes that Congress intended the definition of money transmitting business to describe that class of enterprises that were both financial institutions and required to register as money transmitting services (or money services businesses) and that the harmonized definitions could not be read to include any businesses that were not otherwise eligible for treatment as financial institutions under 31 U.S.C. 5311. The purpose of the changes to the definitions of financial institution was, in accordance with this understanding of Congress' intent and as stated in the Notice (62 FR 27890 and 27891), to harmonize the two sets of rules by modernizing the definitions of money transmitter and the other terms included as components in the new money services business subcategory of the general definition of financial institution. While the final definition of money transmitter tracks to some extent the language used in 31 U.S.C. 5330, this in no way indicates a reliance upon that section for authority, but instead indicates the Department of the Treasury's desire to follow Congress' lead in construing the term money transmitter in a way that reflects technological advances, and the need to adapt the application of the Bank Secrecy Act to the continually evolving nature of the industry that comprehends financial institutions. 31 U.S.C. 5312 does provide such authority, there is every reason for the definitions to be the same, and the language of the preamble to the Notice, although not perhaps ideal, was sufficient to put the public on notice *45442 that both matters were at issue in the rulemaking. 2. Authority for Revisions to the Definition of Financial Institution. Commenters argued that the Notice gave insufficient indication that a general exercise of Treasury's authority to define financial institution for purposes of the Bank Secrecy Act in proposing 31 CFR 103.11(uu) was a subject of the rulemaking. They also argued that no findings had been made, or suggested by the Notice, that the changes were required to fight money laundering, and that there was no basis in the record in any event for such findings. Combining the new registration requirements with the rewriting of provisions of the financial institution definition in a single document may have led to a misunderstanding of the reasons or

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basis for the definitional changes. However, as indicated above, FinCEN believes that the Notice made it clear that the revision of existing Bank Secrecy Act definitions involved in the components of money services business was proposed under the authority of 31 U.S.C. 5312 and for all purposes of the Bank Secrecy Act. See 62 FR 27890, 27893, and 27897. In addition, the changes made to the definitions, with the exception of the addition of stored value, discussed separately below, merely clarified the scope of the coverage already inherent in the existing language of the Bank Secrecy Act definitions. For example, the definition of money transmitter contained in 31 CFR 103.11(n)(5) (revised as of July 1, 1999), which section 103.11(uu)(5) of the final rule will replace, stated that the term financial institution included: (5) A licensed transmitter of funds, or other person engaged in the business of transmitting funds. In adopting the revised definition, FinCEN is clarifying the meaning of the term person engaged in the business of transmitting funds within the scope of the interpretive range of the existing language of the rule; in that context, adoption of the language provided by the Congress in the registration provisions is appropriateif not mandatedin light of the Congress' view that it was itself simply explicating the scope of the existing regulatory language in requiring registration of certain types of financial institutions. Treasury, indeed, explicitly sought (and received) comments on whether it is necessary or appropriate specifically to exclude certain activities from the scope of registration of money services businesses (and perhaps as well from the definition of money transmitter for purposes of the Bank Secrecy Act regulations generally). 62 FR 27893. Other commenters argued that the definitional changes could not be made in any event without specific findings showing that the changes were required to fight money laundering. The purposes of the Bank Secrecy Act are not so narrowly set. The statute is aimed at assuring the maintenance of records constituting a financial trail, and the reporting of certain transactions, in each case because the records and reports have a high degree of usefulness in criminal, tax, or regulatory investigations and proceedings. The Congressional findings underlying the money services business registration rules adopt the same objective.[FN12] FN12 Information about the identity and ownership of money services businesses would have a high degree of usefulness in criminal, tax, or regulatory investigations or proceedings; the registration requirement will assist federal and other law enforcement and supervisory authorities effectively enforce the criminal tax, [sic] and regulatory laws and prevent such money to services businesses from engaging in illegal activities. See section 408(a)(1)(C) and (a)(2) of the Money Laundering Suppression Act, 31 U.S.C. 5330 (Note). 3. Stored Value. The final rule continues to treat stored value as a financial instrument whose issuers and sellers are financial institutions for purposes of the Bank Secrecy Act. However, the final rule revises the Notice to exempt stored value issuers and sellers from any money services business registration obligation. Under the circumstances, the only immediate consequence of the rule will be to make clear that currency transactions in excess of $10,000 by stored value issuers and sellers require reporting under the Bank Secrecy Act (rather than under section 6050I of the Internal Revenue Code) and that businesses that participate as financial intermediaries in transactions in which stored value is transferred electronically may, if otherwise covered, be subject to the rules requiring the maintenance of records for funds transfers of $3,000 or more. This limited treatment of stored valuewhich frees the industry from registration requirements to which issuers and sellers of money orders and traveler's checks will be subjecteliminates the chilling effect on the technology industry to which commenters objected. The limited step that is being taken should create certainty as to the outlines of the Bank Secrecy Act's application to electronic funds equivalents, while allowing further development prior to any rulemaking that

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deals with more specific issues such as, for example, exemptions for closed system or small denomination stored value devices or the terms for possible tailored application of the registration or other Bank Secrecy Act requirements to aspects of these emerging payment products. 4. Other Regulated Financial Businesses. A number of commenters argued that the final rule should eliminate any possible application to other classes of financial institutions, of rules aimed at money services businesses; the argument was made by banks, securities businesses subject to the jurisdiction of the Securities and Exchange Commission, and futures commission merchants and other businesses regulated by the Commodity Futures Trading Commission. (Banks and brokers and dealers in securities are, of course, already subject to the Bank Secrecy Act.) Congress characterized money services businesses as largely unregulated, and FinCEN believes that Congress generally did not find a need for the money services business regime under the Bank Secrecy Act to extend to other federally regulated financial services providers. Accordingly, under the final rule, depository institutions, or securities brokers and dealer, futures commission merchants, or other persons registered with and regulated or examined by, the Securities and Exchange Commission or the Commodity Futures Trading Commission are explicitly excluded from the money services business definition. (For further discussion, see Section-by-Section Analysis, below.) 5. Application of Money Transmitter Definition to Other Businesses Whose Activities Include Transmission of Funds. A number of commenters sought clarification of the definition of money transmitter and objected to any interpretation of the definition that would cause to be classed as money transmitters particular businesses that simply transmit funds as part of their other business activities. Commenters raising such issues included, for example, operators of hedge funds and public and private investment companies, representatives of financial professionals, persons involved in real estate closing activities, bank credit card systems, clearing corporations and associations, insurance companies, and bank holding companies and subsidiaries. All of these commenters sought assurance that their businesses could not fall within the definition of money transmitter in the Notice. FinCEN agrees that the breadth of the definition of money transmitter proposed in the Notice requires limitation to avoid both unnecessary *45443 burden and the extension of the Bank Secrecy Act to businesses whose money transmission activities either do not involve significant intermediation or are ancillary to the completion of other transactions. But the varieties of methods by which funds are transmitted and remitted by persons performing the function of financial intermediary for that purpose, as well as the pace of financial change, make any rigid definition both impossible and inadvisable. Ultimately, the question of whether a particular person is in the business of transmitting funds is a question of facts and circumstances. The final rule attempts to respond to the comments, as described in more detail below, by providing a limitation on the scope of the definition to make clear that the acceptance and transmission of funds as an integral part of the execution and settlement of a transaction other than the funds transmission or transfer, for example, a bona fide sale of securities or other property, will not cause a person to be a money transmitter for purposes of the Bank Secrecy Act. Registration Comments on the proposed registration requirements concentrated on four matters: (i) exclusions from those requirements, (ii) agent registration, (iii) registration procedures, and (iv) the content and terms of the agent list. 1. Exclusions from the Registration Requirements. The Notice excluded the following persons from the registration requirements: the United States Postal Service, depository institutions (as defined in 31 U.S.C. 5313(g)), the United States, a State or political subdivision of a State, or a

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person registered with, and regulated or examined by, the Securities and Exchange Commission or the Commodity Futures Trading Commission. In response to a specific request for comment in the preamble to the Notice, FinCEN received comments suggesting that other persons should be excluded from the registration requirements. A number of commenters asked that issuers, sellers, or redeemers of stored value products be so excluded. Those commenters were concerned that the application of the registration requirements to issuers of stored value products would cause the issuers to defer the development of such products, or limit their design in commercially undesirable ways simply in order to avoid the registration requirements. They were also concerned that businesses that might otherwise wish to sell or redeem stored value products would not do so if they might be required to comply with the registration requirements, and that the manner in which the new products would be marketed was not sufficiently settled to permit the design of a reasonable registration system. Some commenters, however, agreed with the inclusion of businesses engaged in issuing or selling stored value products within the scope of the registration requirements. In general, these commenters believed it was appropriate to subject non-bank providers of electronic payment systems to Bank Secrecy Act requirements in order to treat purveyors of competing financial services in the same manner. The final rule excludes issuers, sellers, or redeemers of stored value products from the registration requirements. Although the final rule expressly excludes redeemers of stored value products, it should be noted that as with redeemers of traveler's checks and money orders, FinCEN did not intend that the Notice would apply to redeemers of stored value products to the extent the products are taken in exchange for goods or general services. One commenter recommended that a money services business should not be required to register if it would qualify as an exempt person under the currency transaction reporting rules (31 CFR 103.22(d)). The final rule does not adopt this suggestion. The suggestion would exclude from registration, and consequently the agent list requirement, publicly traded money services businesses that could qualify as exempt persons under 31 CFR 103.22(d). Because these publicly traded money services businesses operate through extensive networks of agents, which may not be exempt from currency transaction reporting, the suggestion would seriously limit information about agents of money services businesses. Several commenters were concerned that because some credit unions provide money transmitting services to their customers, and some banks might be acting as agents of a money services business, these depository institutions could be subject to the registration rules in 103.41. The commenters asked for clarification that banks and credit unions are not required to be registered. Paragraph (a)(1) of 103.41 of the Notice provided that the section did not apply to depository institutions. The final rule goes further and expressly excepts banks from the definition of money services business so that the sentence in proposed paragraph (a)(1) relating to depository institutions is no longer necessary. Under the final rule, all of section 103.41 is inapplicable to depository institutions such as banks and credit unions. Several commenters asked that non-bank affiliates and subsidiaries of banks be excluded from the registration requirements.[FN13] One commenter argued that because these companies are subject to regulation by the Federal Reserve Board under the Bank Holding Company Act, they should be excluded. Another commenter recommended excluding a bank's non-bank affiliates and subsidiaries if they can demonstrate that they have some type of Bank Secrecy Act compliance program in place. FN13 The preamble to the Notice clarified that if a bank has a non-bank subsidiary or affiliate (e.g. a brother-sister subsidiary owned by the bank's holding company) that itself engages in a money services business (or a broker-dealer has a non-broker-dealer affiliate that engages in a

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money services business), the affiliate must register even though the bank (or broker-dealer) is not required to register. The Bank Secrecy Act rules, in general, do not adopt a consolidated group approach to determining whether a company is or is not subject to particular Bank Secrecy Act provisions. That is, the Bank Secrecy Act rules do not look to the status of a parent company in a bank holding company group for the purpose of determining what rules a company owned by the parent must apply. For example, the Bank Secrecy Act regulations do not generally treat nonbank subsidiaries as falling within the definition of bank for purposes of the Bank Secrecy Act regulations. Thus, the final rule continues to require non-bank affiliates and subsidiaries to register and maintain a list of their agents. One commenter suggested that issuers of monetary instruments that are sold only through banks should be excluded from the registration requirements. In light of 31 CFR 103.29, which requires banks to keep records of certain transactions, the commenter believed there would be little informational value gained by requiring such issuers to register. The final rule does not adopt this suggestion. The registration requirements are designed to create a comprehensive picture of money services businesses, which will provide law enforcement agencies with information either currently not available or not available in an accessible format. Excluding an issuer whose products are sold exclusively through banks would eliminate information about a segment of this industry. One commenter questioned the sufficiency of the rulemaking record *45444 with respect to the registration of check cashers. According to the commenter, nothing in the record, including the New York enforcement operations and geographic targeting orders discussed in the May 21, 1997 notices of proposed rulemaking, supports the proposition that the check cashing function has been or is being abused by the illicit drug industry and criminal money laundering. The comment fails to take into account the fact that Congress specifically included check cashers among those businesses that are required to register with the Department of the Treasury when it enacted 31 U.S.C. 5330. A commenter also recommended that check cashers should not be required to register if they engage in other money services business activities, for example, money transmitting, as an agent for others. The commenter indicated that approximately 90 per cent of check cashers are also agents for money transmitters and would be included on the agent lists of the transmitters. The final rule does not adopt this recommendation. Section 5330 does not contemplate that businesses that conduct money services activities on their own behalf will be excluded from registration simply because they also act as agents for other money services businesses. One commenter suggested that, in the future, wire transmitters should be exempt from state registration requirements if the transmitters comply with federal registration requirements. FinCEN is interested in sharing information, and otherwise coordinating with, state regulators to reduce administrative burden, but 31 U.S.C. 5330(a)(3) states that the federal registration requirements shall not be construed as superseding any requirement of State law relating to money [services] businesses operating in such State. 2. Agent Registration. Commenters raised a number of issues about agent registration. Most of the comments sought a clarification of the meaning of the term agent, sought an increase in the dollar amount of the registration threshold, and questioned the need for agent registration. The Notice did not contain a specific definition of the term agent for purposes of the money services business registration rules, including the requirement that a list of agents be maintained by each money services business as part of its registration requirement. Instead the Notice spoke simply of agents. Commenters recommended that the term agent be defined or that the term be replaced with a more neutral term such as selling outlet. A number of commenters argued that they did not believe that the terms of the contracts under which they authorize

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persons to sell their money services products should be read to treat those persons as agents. FinCEN believes that the relationship between issuers or service providers and persons at the point of sale for particular products is governed by the law of agency, and that in most (if not all) cases the businesses at which these products or services are sold to the public are non-servant agents of the issuers or service providers[FN14]; thus, such businesses must be included on the agent lists required to be maintained with respect to agents by U.S.C. 5330(c)(1)(A). As 31 indicated elsewhere in this preamble, Congress's use of the term agent in U.S.C. 5330 31 indicates a similar understanding. Thus, it is expected that a money services business will include on the agent list any businesses it authorizes to sell its money services or money products. FN14 Of course, in cases in which the products or services are offered at branches of the issuers or providers, the individuals involved are likely servants of the issuers or providers. (It has long been clear that an agent of a financial institution is itself a financial institution. See, CFR 31 103.11(n).) FinCEN is aware of few, if any, claims prior to the issuance of the Notice, that the language in section 103.11(n) does not fully comprehend businesses at which money services products were sold to the public. The bulk of the comments on the registration requirement concerned the registration of businesses whose status as money services businesses derived solely from the fact that they sold products or services issued or performed by others. The Notice had required independent registration of such agent businesses if the volume of money services products or services sold or performed through such businesses was $50,000 in any month. Commenters questioned the level of the proposed registration threshold. Most of these commenters believed that the threshold was too low and recommended increasing the threshold to at least $100,000 a month or preferably $500,000 a month (or $500,000 a month, annualized). One commenter, however, recommended lowering the threshold to $25,000 a month or even zero. Another commenter suggested that a threshold based on an annual rather than a monthly amount would be less likely to cause agents to meet the threshold because of seasonal or holiday sales. As explained below, the final rule defers agent registration and thus eliminates the registration threshold. Commenters argued that because a money services business includes information about its agents on its agent list, no agent should be required to register independently with Treasury. Instead, several of these commenters argued, a money services business should register its agents with Treasury, or as one commenter suggested, should simply submit its agent lists to the Treasury Department. This registration requirement for agents reflected the terms of 31 U.S.C. 5330(c)(2). That paragraph states that: The Secretary of the Treasury shall prescribe regulations establishing, on the basis of such criteria as the Secretary determines to be appropriate, a threshold point for treating an agent of a money transmitting business as a money transmitting business for purposes of [section 5330]. The mandate to require registration of large agents was tempered both by the grant to the Secretary of discretion to fix the criteria defining registrable agents, and by a Congressional statement, in the Conference Report accompanying the bill, that: The intent of the Conferees is to eliminate the need for all agents of money transmitting businesses to register with the Secretary. Such massive registration of thousands of agents would only create another needless and costly administrative burden. This legislation is designed to reduce unnecessary paperwork, not create additional administrative burdens for law enforcement.

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The statute's agent registration requirement permits the identification of significant points for the movement of funds into the financial system, especially points at which one or more money services business products or services are grouped together (as, for example, in so-called giro houses). But selecting criteria that will further that objective in a cost efficient manner is difficult at best. Money services business volume levels are unlikely to be uniform throughout the nation, and even within particular areas variations can reflect the size of an agent's other business rather than any absolute variation from a theoretical norm. Rather than attempting to set criteria on the basis of imperfect knowledge, the Department of the Treasury has decided to defer any implementation of the agent registration provisions. Instead, money services businesses are asked simply to note on the agent lists they are required to maintain the months in the preceding twelve month period in which every agent generated a volume of money services business products of more than $100,000. Thus, under the final rule, a firm that is a money services business solely *45445 because it offers products or services on behalf of another money services business need not now register with the Department of the Treasury. It should be noted that a firm that both offers products or services on behalf of another money services business and in addition offers its own money services products or services (that is, exchanges currency, cashes checks, or transmits funds for customers through channels or mechanisms of its own) is required independently to register under this rule (and, to the extent that it is an agent, must be carried on the agent list of another money services business as well). 3. Registration Procedures. The Notice set forth the general requirement to register a money services business and to report on the registration form the information required by section 5330(b) and any other information required by the form. In the preamble to the Notice, FinCEN noted its understanding that information required to be included on the registration form (and on the agent list) might include privileged and confidential trade secrets, commercial, and financial information. FinCEN also explained that while Congress affirmed in the legislative history that confidential proprietary or trade secret information provided by registrants may be disclosed only subject to applicable law, Congress anticipated that certain information derived from the registration material would be made available to the public, but in a manner that balances the need to protect confidential business information and the need for the public to have access to information about businesses on which the public relies. H.R. Conf. Rep. No. 652, 103 Cong., 2d Sess. 192-93 (1994). FinCEN specifically invited comment on how to make certain information provided by registrants available to the public without revealing confidential business information. Several commenters expressed concerns about the need, for competitive reasons, to avoid disclosure to the public of confidential information on the registration form or agent list, particularly information about business volume and the dollar size of transactions. FinCEN will not release confidential information on the registration form or agent list except as required or permitted by law. Moreover, before FinCEN releases any other information that may be included on the registration form or agent list, FinCEN will work with money services businesses to establish specific procedures for release of such information to the public. FinCEN anticipates that such procedures would exclude the release of information (other than perhaps limited statistical information) about agents of money services businesses. 4. Agent List. Most of the commenters addressing the agent list requirement recommended that a money services business be permitted to provide less information than the Notice required. The commenters argued that information not now on agent lists prepared for state licensing purposesespecially information about the year in which an agent first became an agent and about the agent's transaction accountswould be difficult to provide. The commenters indicated they would either have to compile the rest of the information from other records (which might not be in electronic format, or in a format, electronic or otherwise, that was easily retrievable) or request the necessary information from their agents. Some commenters suggested that money

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services businesses be permitted to provide all the requested information prospectively rather than trying to gather the information for existing agents. Alternatively, commenters suggested that the information required to be included on the agent list should be limited to the same information that a money services business must provide about its agents for state licensing purposes. Generally this information includes only the name of the agent, the agent's locations, and the services the agent provides.[FN15] FN15 More than one commenter argued that requiring the information requested on the agent list exceeds FinCEN's authority under 31 U.S.C. 5330. According to the commenters, FinCEN may ask for the agent's name and address only. Although section 5330 specifically requires the agent's name and address, the section does not constrain FinCEN's authority in the manner suggested by the commenters. Section 5330 authorizes FinCEN to request, in addition to the name and address, such other information about such agents as the Secretary may require. 31 U.S.C. 5330(c)(1)(A). The final rule continues generally to require that the information requested by the Notice must be included on the agent list. In response to the comments, however, the final rule provides that with respect to any agent that is an agent of the money services business maintaining the list before the first day of the month beginning after February 16, 2000, the list need not include information about the year in which the agent first became an agent and the agent's branches or subagents. Such information must be made available, however, upon the request of FinCEN or any other appropriate law enforcement agency (including, without limitation, the examination function of the Internal Revenue Service in its capacity as delegee of Bank Secrecy Act examination authority). With respect to any agent that becomes an agent on or after the first day of the month beginning after February 16, 2000, the list must include all of the requested information, including the date the agent first becomes an agent and the agent's branches or subagents. As indicated above, one additional element is added to the information required to be included in the agent list. That element is the notation of each month in the 12-month period immediately preceding January 1, 2002, and each January 1 thereafter, in which the gross transaction amount of the agent's sale of products or services offered by the money services business maintaining the list exceeded $100,000. Setting the requirement at $100,000 generally limits it to agents doing more than $1 million of money services business transactions annually, is an amount suggested in the comments as a threshold for agent registration, and gives knowledge about agent volume which can be evaluated to determine whether the implementation of agent registration should continue to be deferred. That requirement is prospective, does not take effect for at least 18 months, and involves a single recordkeeping threshold. Moreover, the requirement involves only information that must flow to each money services business in the performance of its normal business functions, and the addition of this element to the agent list derives from the elimination from the rule of the most heavily criticized element of the original proposal, the agent registration requirement. V. Section-by-Section Analysis A. 103.11Meaning of Terms 1. 31 CFR 103.11(c)(7)Definition of Bank One component of the definition of bank in CFR 103.11(c) speaks of [a]ny other 31 organization chartered under the banking laws of any State and subject to the supervision of the bank supervisory authorities of a State. In many states, various money services businesses are licensed or examined by state banking departments. In order to avoid any confusion about the interaction of the bank and money services business definitions, the phrase (except a money services business) has been added to CFR 103.11(c)(7). 31 2. 31 CFR 103.11(n)(3)Definition of Financial Institution to Include Money Services Business

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The final rule retains the addition of a new category called money services *45446 business to the definition of financial institution. The new category includes the financial institutions previously defined at 31 CFR 103.11(n)(3), (4), (5), and (10), and will permit these institutions to be referred to, when necessary, by one convenient term. FinCEN believes this restructuring of the definition of financial institution will clarify, and facilitate flexibility in the administration of, the Bank Secrecy Act regulations. (As a result of this restructuring, 31 CFR 103.11(n)(4), (5), and (10) will be deleted, and 31 CFR 103.11(n)(6), (7), (8) and (9) will be redesignated as 31 CFR 103.11(n)(4), (5), (6) and (7)). 3. 31 CFR 103.11(uu)Definition of Money Services Business This section defines money services business. The term includes each agent, agency, branch, or office within the United States of any person doing business, whether or not on a regular basis or as an organized business concern, in one or more of the capacities listed in (1)-(6) below. (It should be noted that only one registration form per money services business is required.) Regulated Businesses. The definition of money services business excludes persons registered with, and regulated or examined by, the Securities and Exchange Commission or the Commodity Futures Trading Commission. This provision excludes from the new regulatory structure for money services businesses the financial services businesses regulated by those agencies. The exclusion from the definition does not apply to issuers whose securities offerings are registered with the SEC under the Securities Act of 1933 or companies whose securities are registered with the Commission under the Securities Exchange Act of 1934. The companies themselves are not registered with the SEC, and these entities are not intended to be excluded from the rule's definition of money services businesses because the Commission neither regulates nor examines the business activities of those companies. Instead, it establishes, by regulation, disclosure, accounting, and other related standards for them. Accordingly, businesses that engage in the activities described in 31 CFR 103.11(uu) are not excluded from the definition merely because their shares are publicly held and registered with the SEC. Several commenters asked that any exemption for depository institutions or other regulated businesses be extended to holding companies or subsidiaries of those businessesfor example to bank holding companies or bank operating subsidiaries. As explained in greater detail at Exclusion from the Registration Requirement above, the Bank Secrecy Act rules at present operate on an individual entity rather than a consolidated group basis; so long as that is so, each corporation in a controlled group must be analyzed separately to determine its characterization under the Bank Secrecy Act and its rules. Thresholds. The Notice contained a threshold of $500 for any person any day at or below which a business otherwise included within the definition of a currency dealer or exchanger, a check casher, or an issuer, seller, or redeemer of money orders, traveler's checks or stored value would not be a money services business. In the final rule that threshold has been raised in each case to $1,000 for any person any day in one or more transactions. The addition of explicit floors in the definitions relating to currency exchange and check cashing businesses is an attempt to eliminate from Bank Secrecy Act treatment those businesses, such as grocery stores and hotels, that cash checks or exchange currency as an accommodation to customers who are otherwise purchasing goods, services, or lodging from the businesses involved. (Of course, currency exchange and check cashing businesses that exceed the threshold become subject to the general Bank Secrecy Act reporting and recordkeeping requirements if the amounts involved are sufficiently high to implicate particular reporting or recordkeeping thresholds, for example, the $10,000 threshold for currency transaction reporting.) In determining whether the $1,000 definitional floor is met in the case of a particular definition,

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different money services provided by the same business are not aggregated. Thus, for example, a hotel that in fact limits its check cashing services to $650 for a customer on any day and in fact limits its currency exchange services to $600 for a customer on any day does not meet the $1,000 definitional floor for check cashers or for currency exchangers. (1) Currency dealer or exchanger. The definition of currency dealer or exchanger is unchanged, other than for the increase of the $500 threshold to $1,000. The Notice invited comment on whether the old definition of currency dealer or exchanger appearing at 31 CFR 103.11(i) was still necessary in light of the carve out of banks from the recordkeeping requirements of 31 CFR 103.37. In response to comments, that definition is removed from 31 CFR 103.11(i), but the language of the recordkeeping rules of 31 CFR 103.37 is being amended specifically to exclude banks that offer services in dealing or exchanging currency to their customers as an adjunct to their regular services. (2) Check casher. The definition of check casher is also unchanged, other than for the increase of the $500 threshold to $1,000. Several commenters suggested that the threshold should be lowered rather than raised; however, the registration of businesses that only cash checks, especially those that do so as an accommodation for customers and then in an amount of $1,000 or less per day, is not necessary at this time to accomplish the Congressional intent behind section 5330. (3) Issuer of traveler's checks, money orders, or stored value. The definition of issuer of traveler's checks or money orders or stored value is also unchanged other than for the increase of the $500 threshold to $1,000.[FN16] FN16 The definition eliminates the phrase similar instruments in response to comments that said the phrase was too vague. The phrase has also been eliminated from the definition of seller or redeemers. (4) Seller or redeemer of traveler's checks, money orders, or stored value. The definition of seller or redeemer of traveler's checks or money orders or stored value is also unchanged other than for the increase of the $500 threshold to $1,000. The $1,000 floor in 31 CFR 103.11(uu)(4) replaces the definitional floor (of $150,000 sold in instruments per 30-day period) for selling agents in 31 CFR 103.11(n)(4). The $150,000 limitation produces a great deal of unnecessary complexity (dealing with the movement of particular businesses into or out of the scope of the Bank Secrecy Act) and does not, in FinCEN's view, any longer provide a meaningful threshold for distinguishing between businesses that ought to, or that need not, incorporate appropriate Bank Secrecy Act rules into their operations (or the operations they undertake on behalf of their principals). Moreover, the operation of the $150,000 limitation would exclude from Bank Secrecy Act treatment particular transactions (for example purchases of money orders of more than $3,000 under the customer verification and recordkeeping rules of 31 CFR 103.29, or transactions in excess of $10,000 under the currency transaction reporting rules of 31 CFR 103.22) that ought not be so excluded, regardless of the overall volume of sales of a particular business. The definition in 31 CFR 103.11(uu)(4) extends to redeemers of money orders and traveler's checks only insofar as the instruments involved are *45447 redeemed for monetary valuethat is, for currency or monetary or other negotiable or other instruments. The taking of the instruments in exchange for goods or general services is not a redemption for purposes of these rules. (See, however, 26 CFR 1.6050I-1(c)(1)(ii)(B) for situations in which certain traveler's checks or money orders (among other instruments) may be treated as currency, if taken in exchange for certain goods or services, for purposes of the requirement that businesses not subject to the rules in 31 CFR part 103 report transactions in currency in excess of $10,000.) (5) Money transmitter. The definition of money transmitter continues to reflect the determination

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that the definitions of that term for purposes of the general Bank Secrecy Act rules and the registration rules should be the same. As noted above, a limitation on the definition has been added to clarify insofar as possible the reach of the definition, when it is combined with the general limitation on the scope of money services business.[FN17] Particular classes or subclasses of money transmitters can be excluded from the operation of the definition for particular substantive rules (as for example the proposed rule relating to the reporting of suspicious activities by money transmitters excluded from its coverage sellers or transmitters of stored value or other advanced electronic payment system products). FN17 The term money transmitter in CFR 103.11(uu)(5) is not necessarily synonymous with 31 the term transmittor's financial institution in existing CFR 103.11(mm). The term 31 transmittor's financial institution in existing CFR 103.11(mm) was designed with a narrower 31 purpose in mindto preserve as much uniformity as possible between the special rules for recordkeeping for wire transfers and the language of Article 4A of the Uniform Commercial Code. See 60 FR 220 (January 3, 1995). (6) United States Postal Service. The definition of United States Postal Service has not been changed. Thus, unlike the prior regulation, which treated the United States Postal Service as a financial institution only with respect to the sale of money orders, the final rule treats the Postal Service as a financial institution with respect to its provision of any money services products. The Postal Service, in its comments, requested clarification of the status of an international postal money order under the rules. FinCEN believes that that topic is not appropriate for treatment in a general rule.[FN18] FN18 This comment, like a number of other comments, concerns the application of these rules in specific situations, for example, armored car companies. FinCEN does not believe it is appropriate to resolve those fact specific situations in the context of a general rulemaking, but is willing to consider them in the context of specific, fact based inquiries. 4. 31 CFR 103.11(vv)Definition of Stored Value The definition of stored value is unchanged. Given the determination to exclude stored value from the registration requirements, FinCEN does not believe that it is necessary now to exclude particular closed systems from the limited application of the Bank Secrecy Act to such instruments, or to issue a threshold exclusion based upon the maximum value capable of storage on particular media. It agrees that consideration of both such steps would be appropriate if the treatment of stored value under the Bank Secrecy Act were to be expanded at a future date. B. 103.41Registration of Money Services Businesses 1. 31 CFR 103.41(a)(1)Registration Requirement; In General The final rule continues to provide that a money services business (whether or not licensed as a money services business by any State) must register with the Department of the Treasury and, as part of that registration, must maintain a list of its agents. The final rule expressly excludes from the registration and list requirements the following persons: the United States Postal Service, an agency of the United States, of any State, or of any political subdivision of a State, and any person to the extent that the person is an issuer, seller, or redeemer of stored value. Unlike the Notice, the final rule does not expressly exclude from the registration and list requirements a depository institution (as defined in 31 U.S.C. 5313(g)) or a person registered with, and regulated or examined by, the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC). Such an express exclusion in paragraph (a)(1) of section 103.41 is unnecessary because the final rule revises the definition of money services businesses to exclude those persons. 2. 103.41(a)(2)Agent Registration

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As noted above, the final rule defers indefinitely implementation of a requirement that a money services business that offers products or services as an agent on behalf of another money services business register with the Department of the Treasury if the former firm exceeds a threshold point set by the Secretary. If, however, a firm in addition to offering products or services on behalf of another money services business, offers its own money services products or services (that is, exchanges currency, cashes checks, or transmits funds for customers through channels or mechanisms of its own), the firm must register independently. 3. 31 CFR 103.41(a)(3)Agent Status. The final rule provides that the determination of whether a person is an agent depends on all the facts and circumstances. 4. 31 CFR 103.41(b)(1)Registration Procedures; In General The Notice set forth the general requirement to register a money services business and to report on the registration form the information required by 31 U.S.C. 5330 and any other information required by the form. A draft of the registration form was discussed at a public meeting in September 1997. Although this section of the preamble discusses comments on the draft form, money services businesses should bear in mind that FinCEN expects to continue to work with the money services business industry to develop the registration form. As part of that process, FinCEN will publish in the Federal Register a separate notice regarding the form. A commenter pointed out that for certain items, for example, the name and address of directors, the instructions to the draft form discussed at the September 1997 public meeting request a more limited set of information than could be required under section 5330(b). The commenter asked that the information requested by the final rule be limited in the same manner as in the instructions to the form. Accordingly, the final rule continues to set forth the general requirement to register and report the information required by 31 U.S.C. 5330, but the words to the extent required by the form have been added after the words the information required by U.S.C. 31 5330. A similar change has been made regarding the identity of the person who is responsible for filing the registration form. Section 5330(b) provides that the registration shall include an estimate of the volume of business in the coming year (which shall be reported annually to the Secretary). The instructions to the draft form thus require an estimate of business volume. Several comments objected to the business volume requirement, and one commenter asked for clarification of how an annual estimate would be made when the form is filed only every other year. Because section 5330 specifically requires, as part of the registration information, that a money services *45448 business make an estimate of its business volume, FinCEN anticipates that the form will continue to require the estimate. Although a money services business is required to make an annual estimate of its business volume, FinCEN anticipates that the registration form will not require the estimate to be reported on the form itself but will permit the business to retain the estimate in its records and make it available upon request. Thus, the annual estimate requirement may be satisfied even though the registration form is required to be filed only every other year. One commenter urged that money services businesses be permitted to file the registration form electronically. FinCEN will consider this recommendation as it works to finalize the form and the filing procedures for the form. The Notice required a money services business to retain, at a central location in the United States, a copy of any registration form the business files and to report that location on the form. One commenter recommended that as an alternative to the requirement to keep information in a

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centralized file, a money services business be required only to have access to information within a reasonable period of time. One commenter requested that money services businesses be permitted to keep records concerning registration outside the United States, provided that the information was readily available at the request of FinCEN or any appropriate law enforcement agency. The final rule continues to require records concerning registration to be maintained in the United States. The final rule does not require a money services business to keep records in a central location so long as information is readily available at the request of FinCEN or any appropriate law enforcement agency; however, the agent list must be maintained in a central location in the United States. 5. 31 CFR 103.41(b)(2)Registration Period Paragraph (b)(2) of the final rule continues to provide that after an initial registration period of two calendar years, the registration must be renewed every two years. One commenter asked that the registration and renewal periods be increased to five years. Given the frequency of change in this segment of the financial industry and law enforcement's need for relatively current information about these businesses, FinCEN does not believe the registration and renewal periods should be increased from two years to five years. 6. 31 CFR 103.41(b)(3)Due Date Paragraph (b)(3) of the final rule sets forth the due date for filing the registration form for the initial registration period and each renewal period. The Notice would have required the registration form for the initial registration period to be filed by the end of the 180-day period beginning on the later of (i) the date on which the final rules are published in the Federal Register, and (ii) the date the business is established. Commenters asked for more time to file the initial registration form. The final rule does not require the initial registration form to be filed until December 31, 2001. 7. 31 CFR 103.41(b)(4)Events Requiring Reregistration Paragraph (b)(4) of the final rule continues to provide that a money services business must be reregistered before the end of a renewal period upon the occurrence of certain events. That paragraph requires re-registration if the money services business experiences a change in ownership or control that requires re-registration under a State law registration program for money services businesses, more than 10 per cent of its voting power or equity interests is transferred (except in the case of certain publicly-traded businesses, as explained below), or the number of its agents increases by more than 50 per cent during any registration period. One commenter argued that publicly-traded companies should not be required to re-register when required by state law or when there is a more than 50 per cent increase in the their agents. The final rule continues to require publicly-traded companies to register in these situations. Several commenters suggested that re-registration was unnecessary in the case of a 10 per cent change in ownership of publicly-traded companies. One of the commenters suggested that because a 10 per cent change in ownership of a publicly-traded company would require a filing with the Securities and Exchange Commission, law enforcement agencies could get information about the ownership change from the filing. The final rule provides that a money services business is not required to re-register before the end of its regular registration or renewal period on account of a 10 per cent ownership change if that change must be reported to the Securities and Exchange Commission. One commenter suggested that for smaller businesses, a 50 per cent change in ownership

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(rather than 10 per cent) would be a more appropriate standard for requiring re-registration. The final rule does not adopt this suggestion because it would permit significant changes in the ownership of smaller money services businesses, which are generally subject to little federal oversight, to take place between renewal periods without Treasury's knowledge. One commenter recommended that wire transmitters be exempted from the re-registration requirements if the transmitters are required to re-register by state law. The final rule does not adopt this recommendation. FinCEN believes that it is important to establish uniform, national registration requirements for money services businesses. 8. 31 CFR 103.41(c)Persons Required to File Registration Form The Notice provided that, as required by 31 U.S.C. 5330(a), any person who owns or controls a money services business shares the responsibility for seeing that the business is registered. (Only one registration form, however, is required to be filed for each registration period.) Commenters pointed out that the instructions to the draft form take a more limited approach, requiring only certain owners or controlling persons to register. Paragraph (c) of the final rule addresses this difference by adding the language to the extent provided by the form after the language any person who owns or controls. 9. 31 CFR 103.41(d)(1)List of Agents; In General Paragraph (d)(1) of the final rule provides that a money services business must prepare and maintain a list of its agents, and must revise the agent list to contain current information. The Notice required the agent list to be revised each quarter. Several commenters objected to the requirement to make quarterly updates of the agent list, arguing that annual updates are more reasonable. One commenter, however, stated that quarterly updates of internal records of seller information could be required without any additional burden. The final rule requires annual updates of the agent list. The Notice provided that the list of agents is not filed with the registration form but is maintained at the location in the United States reported on the registration form. Several commenters asked that the final rule clarify that an agent list need not be kept in the United States so long as the list is readily available. As indicated above, the agent list must be maintained in the United States. *45449 Upon request, a money services business must make its list of agents available to FinCEN and any other appropriate law enforcement agency (including, without limitation, the examination function of the Internal Revenue Service in its capacity as delegee of Bank Secrecy Act examination authority). One commenter stated that the requirement to make the agent list available to law enforcement is vague and potentially burdensome. This commenter suggested that it would be preferable to route all law enforcement requests for the lists through FinCEN, which would then evaluate both the appropriateness of the requests and the bona fides of the law enforcement agency. The maintenance and ready availability of agent lists and other information is a crucial part of the scheme of 31 U.S.C. 5330. But it is equally true that a system in which money services businesses are overrun by duplicative or otherwise burdensome requests is in no one's interest. In response to the comment, and in light of the fact that 31 U.S.C. 5330(c)(1)(B) authorizes the Secretary of the Treasury to issue rules defining the terms of law enforcement access to agent list information, the final rule states that requests for agent list information shall be coordinated through FinCEN in the manner and to the extent determined by FinCEN. Such coordination will (i) avoid the imposition of unnecessary burden on money services businesses, (ii) ensure the confidentiality of sensitive business information, and (iii) facilitate the orderly administration of the agent list requirement.

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The same commenter also suggested that agent lists could voluntarily be filed by money services businesses with the Department of the Treasury, under a system in which law enforcement agencies obtain access through Treasury, rather than by seeking information from the money services businesses that chose to file such lists. FinCEN believes that such a system has merit, and it intends to work with the affected businesses to develop such a system, during the period provided for implementation of this rule prior to January 1, 2002. The Notice provided that the original list of agents and any revised list must be retained for five years, as specified in 31 CFR 103.38(d). Commenters objected to the requirement to retain lists of agents for five years. As indicated above, the requirement to update agent lists has been relaxed from quarterly updates to annual updates. Further, the Bank Secrecy Act rules generally require Bank Secrecy Act information to be retained for five years. Thus, the final rule continues to require agent lists to be maintained for five years. One commenter recommended that FinCEN allow past lists to be substituted, in the discretion of the money services business, with any readily accessible records of the information no longer on the current list. The final rule does not adopt this recommendation. The revisions the final rule makes regarding the information on the agent list and the decrease from quarterly to annual revisions to the agent list will reduce the amount of information that has to be retained. 10. 31 CFR 103.41(d)(2)Information Included on the List of Agents The final rule provides that the following information must be included on the agent list (i) The name of the agent, including any trade names or doing-business-as names, (ii) The address of the agent, including street address, city, state, and ZIP code, (iii) The telephone number of the agent, (iv) The type of service or services (sale or redemption of money orders, traveler's checks, check sales, check cashing, currency exchange, and money transmitting) the agent provides, (v) A listing of the months in the 12 months immediately preceding the date of the most recent agent list in which the gross transaction amount of the agent with respect to financial products or services issued by the money services business maintaining the agent list exceeded $100,000. For this purpose, the money services gross transaction amount is the agent's gross amount (excluding fees and commission) received from transaction of one or more businesses described in 103.11(uu), (vi) The name and address of any depository institution at which the agent maintains a transaction account (as defined in 12 U.S.C. 461(b)(1)(C)) for all or part of the funds received in or for its money services business whether in the name of the agent or of the money services business for which the agent acts or whose products it sells, (vii) The year in which the agent first became an agent of the money services business, and (viii) The number of branches or subagents the agent has. As noted above, the final rule requires a money services business to include information about the months in the preceding 12-month period in which its agent's gross transaction amount exceeded $100,000. Again, the $100,000 need reflect only business done for the particular prinicipal. Thus, money services business are not expected to obtain information about the gross transaction amount for business their agents may conduct for other principals or to disaggregate information about the gross transaction amount of any agent that conducts business for more than one principal and provides a principal with an aggregate figure reflecting

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business conducted for both principals. To allow time to intregrate information, the final rule provides that information about agent volume must be current within 45 days of the due date of the list. For any agent that is an agent of the money services business maintaining the list before the first day of the month beginning after February 16, 2000, the final rule does not require the following information to be included on the list: the year in which the agent first became an agent and the agent's branches or subagents. Such information must be made available upon the request of FinCEN and any other appropriate law enforcement agency (including, without limitation, the examination function of the Internal Revenue Service in its capacity as delegee of Bank Secrecy Act examination authority). Several commenters asked that the final rule clarify that a money services business is not required to include on its agent list any agent that is a depository institution. The final rule expressly excepts banks from the definition of money services business. Thus, a money services business is not required to include on its agent list any agent that is a depository institution. Another commenter suggested that only agents in the United States should be included on the agent list. FinCEN agrees that only agents doing business in the United States should be included on the agent list. Commenters indicated that because of the way they currently maintain information about their agents and the need to devote computer programming resources to the Year 2000 problem in general, they would need more time than allowed by the Notice to prepare the initial list of their agents. The final rule does not require the preparation of the initial agent list to be completed until January 1, 2002. This change should provide sufficient time for money services businesses to prepare their agent lists. VI. Other Pending Notices of Proposed Rulemaking Concerning Money Services Businesses The second rule proposed on May 21, 1997 (the Proposed SAR Rule), would require money transmitters, and issuers, *45450 sellers, and redeemers of money orders and traveler's checks to report suspicious transactions to the Department of the Treasury. See 62 FR 27900-27909. Suspicious activity reporting by all classes of financial institutions covered by the Bank Secrecy Act is an essential part of the government's counter-money laundering efforts generally and its efforts to strengthen counter-money laundering controls at money services businesses in particular. The Department of the Treasury is committed to producing the most cost-effective reporting regime, for both law enforcement and the industries involved. To permit effective implementation, suspicious activity reporting by the relevant classes of money services businesses will not begin until the initial registration process is complete. The Department also believes that it is critical to provide written guidance about what must be reported, at the time the final rule is issued. It intends to work with the money transmission, money order, and traveler's check industries to shape that guidance, independent of the rulemaking itself. That work should be assisted by the information gathered during initial stages of implementation of the registration rule. The third rule proposed on May 21, 1997 (the Proposed Special CTR Rule), would add a special currency transaction reporting requirementand related customer verification requirementsfor money transmitters involved in the transmission or other transfer of funds to persons outside the United States. See 62 FR 27909-27917. Action on the Proposed Special CTR Rule is being deferred, but it is not being withdrawn at this time. VII. Executive Order 12866 The Department of the Treasury has determined that this final rule is not a significant regulatory

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action under Executive Order 12866. VIII. Unfunded Mandates Act of 1995 Statement Section 202 of the Unfunded Mandates Reform Act of 1995 (Unfunded Mandates Act), Public Law 104-4 (March 22, 1995), requires that an agency prepare a budgetary impact statement before promulgating a rule that includes a federal mandate that may result in expenditure by state, local and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year. If a budgetary impact statement is required, section 202 of the Unfunded Mandates Act also requires an agency to identify and consider a reasonable number of regulatory alternatives before promulgating a rule. FinCEN has determined that it is not required to prepare a written statement under section 202 and has concluded that on balance this final rule provides the most cost-effective and least burdensome alternative to achieve the objectives of the rule. IX. Regulatory Flexibility Act FinCEN certifies that this rule will not have a significant economic impact on a substantial number of small entities. FinCEN anticipates that the provisions of the rule generally excluding agents of money services businesses from registration will limit the impact of the rule on small businesses. Further, most of the recordkeeping and reporting requirements that would be imposed by the rule concern information already found in routine business records. For example, as part of their business records, money services businesses (to the extent such businesses are small entities) will generally have information needed for the required agent list, such as the name and addresses of their agents and agent transaction account information, because such information is necessary to establish and maintain the relationship between the businesses and their agents. In addition to recordkeeping and reporting requirements, other requirements of the rule may also be satisfied with information that is currently available. For example, many businesses currently have policies in place regarding the maximum dollar amount of a money service transaction they will perform for a customer, such as the maximum amount for which a business will cash a check, which may help (assuming the policy is observed) them determine whether they have exceeded the $1,000 floor in several of the definitions in the rule. X. Paperwork Reduction Act The collection of information contained in this final regulation has been reviewed and approved by the Office of Management and Budget (OMB) in accordance with the requirements of the Paperwork Reduction Act (44 U.S.C. 3507(d)) under control number 1506-0013. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by OMB. The collection of information in this final rule is in 31 CFR 103.41(d). This information is required to be provided pursuant to 31 U.S.C. 5330. This information will be used to locate agents of money services businesses to ensure that they are complying with the provisions of the Bank Secrecy Act. The information will also be used by law enforcement agencies in the enforcement of criminal, tax, and regulatory laws and to prevent money services businesses from engaging in illegal activities. The collection of information is mandatory. The likely recordkeepers are businesses. The estimated average burden associated with the collection of information in this final rule is 130 hours per recordkeeper. Comments concerning the accuracy of this burden estimate and suggestions for reducing this burden should be directed to the Financial Crimes Enforcement Network, Department of the Treasury, 2070 Chain Bridge Road, Suite 200, Vienna, VA 22187, and to OMB, Attention: Desk Officer for the Department of Treasury, FinCEN, Office of Information and Regulatory Affairs, Washington, D.C. 20503.

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List of Subjects in 31 CFR Part 103 Administrative practice and procedure, Authority delegations (Government agencies), Banks and banking, Currency, Foreign banking, Foreign currencies, Gambling, Investigations, Law enforcement, Penalties, Reporting and recordkeeping requirements, Securities, Taxes. Amendment For the reasons set forth above in the preamble, 31 CFR part 103 is amended as follows: PART 103FINANCIAL RECORDKEEPING AND REPORTING OF CURRENCY AND FOREIGN TRANSACTIONS 1. The authority citation for part 103 continues to read as follows: Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5330. 31 CFR 103.11 2. Section 103.11 is amended by a. Revising paragraph (c)(7), b. Removing and reserving paragraph (i), c. Revising paragraph (n)(3), d. Removing paragraphs (n)(4), (n)(5), and (n)(10), e. Redesignating paragraphs (n)(6), (n)(7), (n)(8), and (n)(9) as paragraphs (n)(4), (n)(5), (n)(6), and (n)(7) respectively, f. In newly redesignated paragraphs (n)(5) and (n)(6), removing the period at the end of the paragraph and adding a semicolon in its place, g. In newly redesignated paragraph (n)(7), removing ;. and adding a period in its place, and *45451 h. Adding new paragraphs (uu) and (vv). The revised and added paragraphs read as follows: 31 CFR 103.11 103.11 Meaning of terms. ***** (c) Bank. * * * (7) Any other organization (except a money services business) chartered under the banking laws of any state and subject to the supervision of the bank supervisory authorities of a State; *****

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(n) Financial institution. * * * (3) A money services business as defined in paragraph (uu) of this section; ***** (uu) Money services business. Each agent, agency, branch, or office within the United States of any person doing business, whether or not on a regular basis or as an organized business concern, in one or more of the capacities listed in paragraphs (uu)(1) through (uu)(6) of this section. Notwithstanding the preceding sentence, the term money services business shall not include a bank, nor shall it include a person registered with, and regulated or examined by, the Securities and Exchange Commission or the Commodity Futures Trading Commission. (1) Currency dealer or exchanger. A currency dealer or exchanger (other than a person who does not exchange currency in an amount greater than $1,000 in currency or monetary or other instruments for any person on any day in one or more transactions). (2) Check casher. A person engaged in the business of a check casher (other than a person who does not cash checks in an amount greater than $1,000 in currency or monetary or other instruments for any person on any day in one or more transactions). (3) Issuer of traveler's checks, money orders, or stored value. An issuer of traveler's checks, money orders, or, stored value (other than a person who does not issue such checks or money orders or stored value in an amount greater than $1,000 in currency or monetary or other instruments to any person on any day in one or more transactions). (4) Seller or redeemer of traveler's checks, money orders, or stored value. A seller or redeemer of traveler's checks, money orders, or stored value (other than a person who does not sell such checks or money orders or stored value in an amount greater than $1,000 in currency or monetary or other instruments to or redeem such instruments for an amount greater than $1,000 in currency or monetary or other instruments from, any person on any day in one or more transactions). (5) Money transmitter(i) In general. Money transmitter: (A) Any person, whether or not licensed or required to be licensed, who engages as a business in accepting currency, or funds denominated in currency, and transmits the currency or funds, or the value of the currency or funds, by any means through a financial agency or institution, a Federal Reserve Bank or other facility of one or more Federal Reserve Banks, the Board of Governors of the Federal Reserve System, or both, or an electronic funds transfer network; or (B) Any other person engaged as a business in the transfer of funds. (ii) Facts and circumstances; Limitation. Whether a person engages as a business in the activities described in paragraph (uu)(5)(i) of this section is a matter of facts and circumstances. Generally, the acceptance and transmission of funds as an integral part of the execution and settlement of a transaction other than the funds transmission itself (for example, in connection with a bona fide sale of securities or other property), will not cause a person to be a money transmitter within the meaning of paragraph (uu)(5)(i) of this section. (6) United States Postal Service. The United States Postal Service, except with respect to the sale of postage or philatelic products. (vv) Stored value. Funds or monetary value represented in digital electronics format (whether or not specially encrypted) and stored or capable of storage on electronic media in such a way as to be retrievable and transferable electronically.

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3. Part 103 is further amended by redesignating the following subparts and sections as follows: Old New subparts subpart and s and sections sections subpart D subpart E 103.41 103.51 103.42 103.52 103.43 103.53 103.44 103.54 103.45 103.55 103.46 103.56 103.47 103.57 103.48 103.58 103.49 103.59 103.50 103.60 103.51 103.61 103.52 103.62 103.53 103.63 103.54 103.64 Subpart E Subpart F 103.61 103.71 103.62 103.72 103.63 103.73 103.64 103.74 103.65 103.75 103.66 103.76 103.67 103.77 Subpart F Subpart G 103.70 103.80 103.71 103.81 103.72 103.82 103.73 103.83 103.74 103.84 103.75 103.85 103.76 103.86 103.77 103.87

4. Add a new subpart D to part 103 to read as follows: Subpart DSpecial Rules for Money Services Businesses Sec. 103.41 Registration of money services businesses. Subpart DSpecial Rules for Money Services Businesses 31 CFR 103.41 103.41 Registration of money services businesses.

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(a) Registration requirement(1) In general. Except as provided in paragraph (a)(2) of this section, relating to agents, each money services business (whether or not licensed as a money services business by any State) must register with the Department of the Treasury and, as part of that registration, maintain a list of its agents as required by 31 U.S.C. 5330 and this section. This section does not apply to the United States Postal Service, to agencies of the United States, of any State, or of any political subdivision of a State, or to a person to the extent that the person is an issuer, seller, or redeemer of stored value. (2) Agents. A person that is a money services business solely because that person serves as an agent of another money services business, see 103.11(uu), is not required to register under this section, but a money services business that engages in activities described in 103.11(uu) both on its own behalf and as an agent for others must register under this section. For example, a supermarket corporation that acts as an agent for an issuer of money orders and performs no other services of a nature and value that would cause the corporation to be a money services business, is not required to register; the answer would be the same if the supermarket corporation served as an agent both of a money order issuer and of a money transmitter. However, registration would be required if the *45452 supermarket corporation, in addition to acting as an agent of an issuer of money orders, cashed checks or exchanged currencies (other than as an agent for another business) in an amount greater than $1,000 in currency or monetary or other instruments for any person on any day, in one or more transactions. (3) Agency status. The determination whether a person is an agent depends on all the facts and circumstances. (b) Registration procedures(1) In general. (i) A money services business must be registered by filing such form as FinCEN may specify with the Detroit Computing Center of the Internal Revenue Service (or such other location as the form may specify). The information required by 31 U.S.C. 5330(b) and any other information required by the form must be reported in the manner and to the extent required by the form. (ii) A branch office of a money services business is not required to file its own registration form. A money services business must, however, report information about its branch locations or offices as provided by the instructions to the registration form. (iii) A money services business must retain a copy of any registration form filed under this section and any registration number that may be assigned to the business at a location in the United States and for the period specified in 103.38(d). (2) Registration period. A money services business must be registered for the initial registration period and each renewal period. The initial registration period is the two-calendar-year period beginning with the calendar year in which the money services business is first required to be registered. However, the initial registration period for a money services business required to register by December 31, 2001 (see paragraph (b)(3) of this section) is the two-calendar year period beginning 2002. Each two-calendar-year period following the initial registration period is a renewal period. (3) Due date. The registration form for the initial registration period must be filed on or before the later of December 31, 2001, and the end of the 180-day period beginning on the day following the date the business is established. The registration form for a renewal period must be filed on or before the last day of the calendar year preceding the renewal period. (4) Events requiring re-registration. If a money services business registered as such under the laws of any State experiences a change in ownership or control that requires the business to be re-registered under State law, the money services business must also be re-registered under this

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section. In addition, if there is a transfer of more than 10 percent of the voting power or equity interests of a money services business (other than a money services business that must report such transfer to the Securities and Exchange Commission), the money services business must be re-registered under this section. Finally, if a money services business experiences a more than 50-per cent increase in the number of its agents during any registration period, the money services business must be re-registered under this section. The registration form must be filed not later than 180 days after such change in ownership, transfer of voting power or equity interests, or increase in agents. The calendar year in which the change, transfer, or increase occurs is treated as the first year of a new two-year registration period. (c) Persons required to file the registration form. Under 31 U.S.C. 5330(a), any person who owns or controls a money services business is responsible for registering the business; however, only one registration form is required to be filed for each registration period. A person is treated as owning or controlling a money services business for purposes of filing the registration form only to the extent provided by the form. If more than one person owns or controls a money services business, the owning or controlling persons may enter into an agreement designating one of them to register the business. The failure of the designated person to register the money services business does not, however, relieve any of the other persons who own or control the business of liability for the failure to register the business. See paragraph (e) of this section, relating to consequences of the failure to comply with 31 U.S.C. 5330 or this section. (d) List of agents(1) In general. A money services business must prepare and maintain a list of its agents. The initial list of agents must be prepared by January 1, 2002, and must be revised each January 1, for the immediately preceding 12 month period; for money services businesses established after December 31, 2001, the initial agent list must be prepared by the due date of the initial registration form and must be revised each January 1 for the immediately preceding 12month period. The list is not filed with the registration form but must be maintained at the location in the United States reported on the registration form under paragraph (b)(1) of this section. Upon request, a money services business must make its list of agents available to FinCEN and any other appropriate law enforcement agency (including, without limitation, the examination function of the Internal Revenue Service in its capacity as delegee of Bank Secrecy Act examination authority). Requests for information made pursuant to the preceding sentence shall be coordinated through FinCEN in the manner and to the extent determined by FinCEN. The original list of agents and any revised list must be retained for the period specified in 103.38(d). (2) Information included on the list of agents(i) In general. Except as provided in paragraph (d)(2)(ii) of this section, a money services business must include the following information with respect to each agent on the list (including any revised list) of its agents (A) The name of the agent, including any trade names or doing-business-as names; (B) The address of the agent, including street address, city, state, and ZIP code; (C) The telephone number of the agent; (D) The type of service or services (money orders, traveler's checks, check sales, check cashing, currency exchange, and money transmitting) the agent provides; (E) A listing of the months in the 12 months immediately preceding the date of the most recent agent list in which the gross transaction amount of the agent with respect to financial products or services issued by the money services business maintaining the agent list exceeded $100,000. For this purpose, the money services gross transaction amount is the agent's gross amount (excluding fees and commissions) received from transactions of one or more businesses described in 103.11(uu); (F) The name and address of any depository institution at which the agent maintains a

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transaction account (as defined in 12 U.S.C. 461(b)(1)(C)) for all or part of the funds received in or for the financial products or services issued by the money services business maintaining the list, whether in the agent's or the business principal's name; (G) The year in which the agent first became an agent of the money services business; and (H) The number of branches or subagents the agent has. (ii) Special rules. Information about agent volume must be current within 45 days of the due date of the agent list. The information described by paragraphs (d)(2)(i)(G) and (d)(2)(i)(H) of this section is not required to be included in an agent list with respect to *45453 any person that is an agent of the money services business maintaining the list before the first day of the month beginning after February 16, 2000 so long as the information described by paragraphs (d)(2)(i)(G) and (d)(2)(i)(H) of this section is made available upon the request of FinCEN and any other appropriate law enforcement agency (including, without limitation, the examination function of the Internal Revenue Service in its capacity as delegee of Bank Secrecy Act examination authority). (e) Consequences of failing to comply with 31 U.S.C. 5330 or the regulations thereunder. It is unlawful to do business without complying with 31 U.S.C. 5330 and this section. A failure to comply with the requirements of 31 U.S.C 5330 or this section includes the filing of false or materially incomplete information in connection with the registration of a money services business. Any person who fails to comply with any requirement of 31 U.S.C. 5330 or this section shall be liable for a civil penalty of $5,000 for each violation. Each day a violation of 31 U.S.C. 5330 or this section continues constitutes a separate violation. In addition, under 31 U.S.C. 5320, the Secretary of the Treasury may bring a civil action to enjoin the violation. See 18 U.S.C. 1960 for a criminal penalty for failure to comply with the registration requirements of 31 U.S.C. 5330 or this section. (f) Effective date. This section is effective September 20, 1999. Registration of money services businesses under this section will not be required prior to December 31, 2001. 31 CFR 103.36 103.36 [Amended] 31 CFR 103.36 5. Paragraph (b)(10) of 103.36 is amended by removing the language 103.54(a) and adding the language 103.64(a) in its place. 31 CFR 103.37 6. Section 103.37 is amended by adding a new paragraph (c) to read as follows: 31 CFR 103.37 103.37 Additional records to be made and retained by currency dealers or exchangers. ***** (c) This section does not apply to banks that offer services in dealing or changing currency to their customers as an adjunct to their regular service. 31 CFR 103.56 103.56 [Amended]

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31 CFR 103.56 7. Paragraph (b)(7) of newly redesignated 103.56 is amended by removing the language 03.48 and adding the language 103.58 in its place. 1 31 CFR 103.57 103.57 [Amended] 31 CFR 103.57 8. Newly redesignated 103.57 is amended by: a. In paragraph (d) removing the language 103.48 and adding the language 103.58 in its place. b. In the first sentence of paragraph (e) removing the language 103.53 and adding the language 103.63 in its place. 31 CFR 103.72 103.72 [Amended] 31 CFR 103.72 9. Newly redesignated 103.72 is amended by removing the language 103.61 from the introductory text and adding the language 103.71 in its place. 31 CFR 103.73 103.73 [Amended] 31 CFR 103.73 10. Newly redesignated 103.73 is amended by: a. In paragraph (a) introductory text removing the language 103.61 and adding the language 03.71 in its place. 1 b. In paragraph (a)(1) removing the language 103.62 and adding the language 103.72in its place. c. In paragraph (b) introductory text removing the language 103.61 and adding the language 03.71 in its place. 1 d. In paragraph (b)(1) removing the language 103.62 and adding the language 103.72in its place. 31 CFR 103.74 103.74 [Amended] 31 CFR 103.74

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11. Newly redesignated 103.74 is amended by removing the language 103.62 from paragraph (a) and adding the language 103.72in its place. 31 CFR 103.75 103.75 [Amended] 31 CFR 103.75 12. Newly redesignated 103.75 is amended by: a. In the first sentence of paragraph (a) removing the language 103.62 and adding the language 103.72in its place. b. In paragraph (c) introductory text removing the language 103.62(a) and adding the language 103.72(a) in its place and removing the language 103.62 (b) or (c) and adding the language 103.72 (b) or (c)in its place. 31 CFR 103.76 103.76 [Amended] 31 CFR 103.76 13. Newly redesignated 103.76 is amended by: a. In the first sentence removing the language 103.62 and adding the language 103.72in its place. b. In the second sentence removing the language 103.62(a) and adding the language 103.72(a)in its place. 31 CFR 103.82 103.82 [Amended] 31 CFR 103.82 14. Newly redesignated 103.82 is amended by removing the language 103.71 from the first sentence and adding the language 103.81 in its place. 31 CFR 103.83 103.83 [Amended] 31 CFR 103.83 15. Paragraph (b) of newly redesignated 103.83 is amended by: a. In the first sentence removing the language 103.71 and adding the language 103.81 in its place. b. In the last sentence removing the language 103.71 and adding the language 103.81 in its place. 31 CFR 103.85

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103.85 [Amended] 31 CFR 103.85 16. Newly redesignated 103.85 is amended by removing the language 103.71 from the first sentence and adding the language 103.81 in its place. 31 CFR 103.86 103.86 [Amended] 31 CFR 103.86 17. Newly redesignated 103.86 is amended by: a. In paragraph (a) introductory text removing the language 103.75and adding the language 103.85in its place. b. In the second sentence of paragraph (b) removing the language 103.71 and adding the language 103.81 in its place. Dated: August 17, 1999. James F. Sloan, Director, Financial Crimes Enforcement Network.

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From:

To: Cc:

Howard, Jennifer (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=howardje> _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands> Adamske, Steven </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=adamskes>; Moore, Megan </o=ustreasury/ou=do/cn=recipients/cn=mooreme>; Hunt, Anita Maria </o=ustreasury/ou=do/cn=recipients/cn=hunta>; Wallace, Kim </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=wallacek>; Wolin, Neal </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=wolinn>; Warren, Elizabeth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=warrene>; Fitzpayne, Alastair </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=fitzpaynea>; LeCompte, Jenni </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=engebretsenj>; Murray, Colleen </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=murrayco>; Coloretti, Nani </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=colorettin> Press Clips 5.11.11 Wed May 11 2011 14:02:27 EDT

Bcc: Subject: Date: Attachments:

Press Clips 5.11.2011

Index

Click publication title to find its location in this e-mail. Click article title to go to its source website.

Congress and the CFPB

MassLive.com- Dont let Congress block new Consumer Financial Protection Bureau American Banker- Johnson Says GOP Asking 'Too Much' on CFPB

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Housing Wire- Senate banking chair won't allow dismantling of Dodd-Frank

Consumer Financial Protection Bureau

Market Watch- Crisis panel head eyes full Dodd-Frank rollout Credit Union Times- Trades Urge Changes in Complaint Process for New Consumer Bureau

Consumer Credit

Sacramento Bee- Prepaid Cards for Unemployed Workers: Who Holds the Winning Hand? U.S. News & World Report- Student Credit Card Use Could Cause Problems Later

Housing

American Banker- State AGs Offer New Settlement Terms to Mortgage Servicers

TheStreet.Com- Foreclosure Settlement Avoids Banks' Biggest Problem

Forbes Blog- So Much For Tough Stance On Robo-Signing, States May Ease Foreclosure Settlement

Bloomberg- Banks Said to Offer $5 Billion to Resolve Probe of Foreclosures

Forbes- Delaware bills aimed at reducing foreclosures

New York Times- Federal Retreat on Bigger Loans Rattles Housing

Other

CNN Money- Barney Frank takes on the Federal Reserve Fayetteville Observer- Holly Petraeus speaks at Methodist commencement

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Market Watch Crisis panel head eyes full Dodd-Frank rollout May 10, 2011, 2:51 p.m. EDT By Tania Chen of Medill News Service

WASHINGTON (MarketWatch) Strong federal oversight is necessary to curb excess risk and insure stability in the securities industry, the head of the Federal Crisis Inquiry Commission told Congress on Tuesday. In the wake of this crisis, it is critical that the Dodd-Frank law be fully implemented, FCIC Chairman Phil Angelides told the Senate Banking Committee. I believe that the laws financial reforms are strong and needed, and that the law directly and forcefully addresses issues and conclusions identified in our report. Angelidess testimony follows efforts by Republicans in the House of Representatives to limit the power of the new consumer watchdog, the Consumer Financial Protection Bureau, and slow implementation of other provisions of the Dodd-Frank legislation. The FCIC report shows that repealing or undermining Dodd-Frank, as some have proposed would take us back to the same, weak financial system, said Sen. Tim Johnson, the South Dakota Democrat and chairman of the Senate Committee on Banking, Housing and Urban Affairs. We cannot allow DoddFrank to be dismantled. Repealing or undermining Dodd-Frank would be dangerous and irresponsible, Johnson said. We simply cannot afford to go back to the old financial system that destroyed millions of jobs and cost the economy trillions of dollars. Congress created the bipartisan investigative panel to examine the causes of the financial collapse. In the final report, which was released more than three months ago, the commission faulted previous administrations, the Federal Reserve and financial regulators. Read earlier story of FCIC panel. Congress enacted the Wall Street Reform and Consumer Protection Act, known as Dodd-Frank after its House and Senate sponsors, prior to the release of the commissions findings. Sen. Richard Shelby, the Alabama Republican who is ranking member, regarded the investigation as a missed opportunity. The Dodd-Frank legislation became a wish-list of reforms long sought by liberal activists, special interests and federal bureaucrats, said Shelby. Angelides who is a Democrat and former California state treasurer says that the private enterprise systems ability to take risks and succeed or fail is one of the greatest engines of the economy.

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Sacramento Bee Prepaid Cards for Unemployed Workers: Who Holds the Winning Hand? Tuesday, May. 10, 2011 WASHINGTON, May 10, 2011 -- National Consumer Law Center Reviews 40 States' Unemployment Compensation Prepaid Cards WASHINGTON, May 10, 2011 /PRNewswire-USNewswire/ -- Many of the 13 million Americans who are unemployed are getting stung with unnecessary and poorly disclosed fees in the 40 states that use prepaid cards for unemployment compensation (UC), according to a report released today by the National Consumer Law Center. At the same time, the best cards may benefit unbanked consumers and save states money, the survey finds. "Prepaid cards can help states eliminate the costs of paper checks and help unbanked workers avoid check cashing fees and the risks of carrying cash," said Lauren Saunders, managing attorney of the National Consumer Law Center in Washington, D.C. and the primary author of the report. "Yet prepaid card junk fees stack the deck against jobless Americans who need every dollar during a financially stressful time." Unemployment Compensation Prepaid Cards: States Can Deal Workers a Winning Hand by Discarding Junk Fees, analyses the payment options, fees, and access to account information available to workers in every state that uses UC prepaid cards. It also surveys the laws that do (or do not) protect workers and offers recommendations for how states can design a card that works well for both the state and its unemployed workers. The report singles out as especially problematic the $10 to $20 overdraft fees that U.S. Bank has on prepaid cards in five states: Arkansas, Idaho, Nebraska, Ohio, and Oregon. No other bank's UC prepaid card charges overdraft fees, which the U.S. Department of Labor (DOL) has found are "inconsistent with federal law." And the Tennessee card (issued by JP Morgan Chase) draws the two of clubs for the card with the most junk fees, including ATM, PIN debit, denied transaction, and balance inquiry fees. So who holds the winning hand? California and New Jersey currently have the best UC cards (both issued by Bank of America), although both could benefit from fees more clearly and prominently displayed on websites. The State of California loses one trick for not offering direct deposit. The report urges the new U.S. Consumer Financial Protection Bureau, which starts work in July, and DOL to work together to ban overdraft fees and other unfair fees and to improve transparency and competition by posting all fee schedules in one place so that states and consumers can compare who has the best hand. National Consumer Law Center cautions states not to see prepaid cards as a payment panacea. Workers with bank accounts should first be offered the choice of direct deposit, but they do not have that option in six states: California, Indiana, Kansas, Maryland, Nevada and Wyoming. This report adds to the body of research that National Consumer Law Center has done on banking and payment systems, including prepaid debit cards. "It took months of research to obtain this information, so now that we've laid the cards on the table, it should help states to cut a better prepaid card deal," said Saunders. "This issue also reinforces the need for the new Consumer Financial Protection Bureau, which will help safeguard consumers from unfair fees on prepaid cards, credit cards and other financial products." Back to Top

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MassLive.Com Dont let Congress block new Consumer Financial Protection Bureau Tuesday, May 10, 2011, 3:30 AM By The Republican Editorials masslive.com

Can the company that issued your credit card increase the interest rate it charges? If so, by how much, and under what circumstances? Do you fully understand all the terms and conditions relating to payments and fees, and how, exactly, finance charges are calculated?

Maybe. Beats me. Who knows. Thats how most would honestly answer those questions.

Credit cards, home mortgages, car loans and other financial agreements that are a part of everyday life have become too complex for most normal people to fully comprehend.

The reason? There is no centralized regulation. A crazy quilt of often-outdated federal and state laws has left consumers in the dark and on their own when it comes to too many financial transactions.

Help was finally on the way with the creation of a federal agency, modeled on the Consumer Product Safety Commission, that would oversee and regulate financial products -- home mortgages, car loans, credit cards, life insurance, annuities. Congress created the bureau as part of the finance overhaul that followed the housing crash, but fully 10 months after President Obama signed it into law, it is still without a director. The reason? Republicans in the Senate are standing in the way.

Theyve made it clear that no matter who President Obama names to head the new Consumer Financial Protection Bureau, theyll block the appointment. They dont want anyone named to the post because they oppose the agency. They believe we dont need more regulation. Anyone who thinks a new agency is unnecessary either hasnt been paying attention, or simply doesnt want the people to have a fair chance.

Consumers of financial products need protection and information. They need someone on their side.

The president should use his constitutional authority to name a head of the new agency while Congress

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is in recess.

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Credit Union Times Trades Urge Changes in Complaint Process for New Consumer Bureau May 10, 2011 By Claude R. Marx

CUNA and NAFCU want the complaint process at the new consumer bureau to be less burdensome for credit unions and not publicize unwarranted complaints against financial institutions. We are concerned that the burden on some institutions could be substantialparticularly given the Bureaus estimate that between one and three million forms will be completed annually, CUNA Assistant General Counsel Luke Martone wrote in a comment letter. It is therefore possible that this new intake method will increase the number of complaints credit unions received and result in new regulatory burdens. Martone also recommends that the bureau give credit unions the chance to directly respond to consumer complaints, while sending copies to the bureau, rather than requiring a response from the bureau. NAFCU President/CEO Fred Becker wrote that it isnt appropriate to publicize complaints made against particular financial institutions given that any consumer can file a complaint, regardless of the merits of the accusation. He also urged the bureau to minimize the amount of personal data it collects from people who file complaints to reduce the potential damage that could be caused by data breaches. In addition, Becker suggested that when requesting information from consumers filing complaints, the bureau should ask for documentation about whether they contacted the financial institution and what response they received. Consumers should also be able to attach documentation to the complaint form and explain what their desired outcome is. The Consumer Financial Protection Bureau, which was established by the financial overhaul bill passed by Congress last year, is scheduled to begin operation in July. It is now in the setup stage and determining the procedures for resolving complaints. CUNA and NAFCU want the complaint process at the new consumer bureau to be less burdensome for credit unions and not publicize unwarranted complaints against financial institutions. We are concerned that the burden on some institutions could be substantialparticularly given the Bureaus estimate that between one and three million forms will be completed annually, CUNA Assistant General Counsel Luke Martone wrote in a comment letter. It is therefore possible that this

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new intake method will increase the number of complaints credit unions received and result in new regulatory burdens. Martone also recommends that the bureau give credit unions the chance to directly respond to consumer complaints, while sending copies to the bureau, rather than requiring a response from the bureau. NAFCU President/CEO Fred Becker wrote that it isnt appropriate to publicize complaints made against particular financial institutions given that any consumer can file a complaint, regardless of the merits of the accusation. He also urged the bureau to minimize the amount of personal data it collects from people who file complaints to reduce the potential damage that could be caused by data breaches. In addition, Becker suggested that when requesting information from consumers filing complaints, the bureau should ask for documentation about whether they contacted the financial institution and what response they received. Consumers should also be able to attach documentation to the complaint form and explain what their desired outcome is. The Consumer Financial Protection Bureau, which was established by the financial overhaul bill passed by Congress last year, is scheduled to begin operation in July. It is now in the setup stage and determining the procedures for resolving complaints. For further information on the bureau, which will be an independent agency housed in the Federal Reserve, and to read comment letters, go to:http://www.consumerfinance.gov/

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CNN Money Barney Frank takes on the Federal Reserve May 11, 2011: 9:48 AM ET By Nin-Hai Tseng The Massachusetts Congressman sounds off on financial reform, the Fed and -- surprise! -Republicans FORTUNE -- U.S. Congressman Barney Frank took on Wall Street as one of the writers of the DoddFrank financial reform bill. Passed last year, the law intends to clean up the way America's biggest financial institutions conduct business following the nation's banking crisis. As he observes how financial regulators apply the new law, which will largely determine the legislation's success, Frank has a new target in his sites: The U.S. Federal Reserve. Last week, the Democratic congressman representing Massachusetts' 4th district unveiled a bill that would restructure the central bank's Federal Open Market Committee, a group that decides the direction of interest rates and other monetary policies that influences everything from credit conditions to unemployment and inflation. Over the past few months, the committee has undergone scrutiny, as

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millions remain jobless. All the while, many of the committee's 12 voting members have become increasingly vocalregional bank president Tom Hoenig of Kansas, in particular and divided over the right prescription to give the slow-growing economy a boost. Frank's bill, if passed, would downsize the committee by doing away with the five regional bank presidents. His main issue is that, unlike the seven Fed governors selected by elected officials, the bank presidents are selected by a board made up of community business leaders. Fortune caught up with Frank, who is known for his quick wit and sharp tongue, and he certainly has no qualms about finishing other people's sentences or, ahem, their questions. Up until this year, he served as chairman of the House Financial Services Committee that oversees Wall Street and its regulators. We chatted about his new proposal, the ongoing implementation of the Dodd-Frank Act, and the government's latest high-profile investigation into Wall Street. The following is an edited transcript of the interview. Why do you think we need to restructure the Federal Open Market Committee? First of all, it's a matter of democratic principle. You have people on the FOMC who are not elected and not appointed by people who are elected making important decisions. I think having Federal Reserve policies set in part by people who have no democratic sanction, no electable root reduces their legitimacy. Second, the Federal Reserve has a dual mandate for being concerned about unemployment and inflation. There is a tendency by members picked by regional business people to focus much more on inflation and not enough on unemployment. So the current structure biases the Federal Reserve away from one half of its duty. I want there to be equal attention to unemployment and inflation. Is the restructuring intended to reduce the influence from business? No. I believe it would diminish inappropriate sources of influences. In fact if you look at history, the Federal Reserve regional presidents have usually been lobbyists for higher interest rates. They have been critical of the Federal Reserve's efforts -- some of them -- to apply quantitative easing, which I think has been very helpful. You've mentioned that the bill would make the Fed's decision-making process democratic. But wouldn't it also reduce the number of voices included, potentially having the opposite effect that perhaps you intended? No. It would be undemocratic to have them voting on public policy matters. I think they should continue to go to the meetings and speak out. I just don't think they should have a vote. Some say it might be better to reform the selection process for regional bank presidents, rather than concentrate power in Washington. What do you think of that idea? That's something I'm open to but they would have to be appointed by the President and confirmed by the Senate. I must say, though, I think we have a fairly diverse group appointed to the Federal Reserve. They don't all come from Washington. Senators all work in Washington but they don't all come from Washington. Dodd-Frank passed last year. How do you think the implementation is going? I am very pleased with it. I think the regulators are doing a very good job. There's a lot of work to do, but I think they're moving along in a reasonable fashion. The problem is Republicans are trying to slow it down. For example, when we first considered the interim budget for 2011 the Republicans voted not to provide sufficient funding for the Securities and

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Exchange Commission and the Commodity Futures Trading Commission. However, the funding levels were increased in the compromise bill. They're also now trying to stop the anti-speculative rules (provisions which restrict speculative use of derivatives) and trying to weaken the Consumer Financial Protection Bureau. But given the concentration, power and scale of banks such as Goldman Sachs and and Citigroup, do you think it could reasonably be argued that America's financial system is more risky than ever before? No, not at all. In the first place the big banks will be subject to stricter rules. They will be given stricter capital requirements. Derivatives, for example, the kind of transactions you saw with American International Group and Goldman Sachs, can't happen again. There are margin requirements and capital requirements. Last week, the U.S. government sued Deutsche Bank AG for more than $1 billion, accusing the bank of fraud for lying to obtain federal guarantees on mortgages it issued. What kind of message, if any, does this send to Wall Street? Well, I'm not familiar specifically with the suit. But I would hope the message is to stop the irresponsible practices. By the way, we have outlawed the kind of mortgages that were an issue in that suit. And we have added a rule that says that if you were going to make mortgages, unless they're very solid, you can't securitize them. You have to keep part of the risk. Back to Top

TheStreet.Com Foreclosure Settlement Avoids Banks' Biggest Problem 05/11/11 - 12:43 PM EDT By Dan Freed

NEW YORK (TheStreet) -- A potential $5 billion settlement between the nation's largest mortgage servicers and state and federal authorities would be a small win for the banks, though they have larger mortgage-related concerns. The servicer group, which includes Bank of America(BAC_), JPMorgan Chase(symbol), Wells Fargo (WFC_), Citigroup (C_) and Ally Financial, has offered to pay a $5 billion settlement to resolve issues related to sloppy foreclosure practices, The Wall Street Journal reported Tuesday. The most notorious of these practices is popularly known as "robosigning," in which mid-level bank officials signed off on hundreds or even thousands of foreclosures per month, while falsely claiming to have personally reviewed each case in detail. While these cases have attracted lots of negative publicity for the banks, they aren't considered to be the area where banks are most vulnerable. "The servicing issue is more of a procedural issue," says Jeff Harte, analyst with Sandler O'Neill. "From

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everything we've been able to see, the vast majority of foreclosures, even if there was something procedurally wrong with the foreclosure, was still somebody that hadn't paid their mortgage in a couple of years." David Grais, a New York attorney pursuing several mortgage-related cases against the banks, told TheStreet he is "not particularly impressed," with banks' exposure related to mortgage servicing. A settlement of between $3-10 billion would have the greatest impact on Bank of America, costing the institution from between $1.11 billion and $3.69 billion, according to a report Wednesday from Nomura Securities analyst Glenn Schorr. Both Schorr and Sandler's Harte believes a $5 billion settlement would be a modest positive, since there had earlier been reports of a settlement as large as $20 billion. But Harte thinks the banks would not agree to so large a number without a fierce fight. "Some of the stronger hands in the banking industry are going to be very resistant to forced principal forgiveness or very large settlements from the perspective of creating the moral hazard, really, that it's okay not to pay your mortgage," he says.

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Forbes Blog So Much For Tough Stance On Robo-Signing, States May Ease Foreclosure Settlement May. 11 2011 - 12:49 am Halah Touryalai

The settlement terms in the foreclosure probe by 50 state Attorneys General appear to be getting weaker as the talks drag on. Late last fall when the nature of rushed foreclosure closures and so-called robo-signing came to a head, regulators and politicians alike seemed appalled by the alleged actions. A mere 7 months later, one group of federal regulators has hit the nations largest mortgage lenders with a mere slap on the wrist for their shoddy foreclosure procedures and now states are ready to back down on an argument that would reduce mortgage loan balances for homeowners. The states going after the nations largest mortgage lenders including Bank of America, JPMorgan Chase, Citigroup, Ally Financial and Wells Fargo revised their settlement proposal after banks and Republican attorneys general objected to the point about cuts to mortgage loan principals, according to a report in Bloomberg. They say the reductions would encourage defaults. Exactly what the revised version of the settlement says is unclear but would come as little surprise if the mortgage reduction portion of the settlement has been drastically weakened or taken away all together. From Blooomberg:

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During a recent call between states officials and the banks, some lenders said they opposed any settlement term that would reduce loan balances, according to one of the people familiar with the talks. The banks argued a principal writedown plan would encourage homeowners to default, a notion some attorneys general on the call disputed, the person said. Representatives of banks said they were open to other types of loan modifications, including changing interest payments, said the person. While the original term-sheet required a substantial portion of monetary relief go toward loan modifications including principal reductions, one of the people said the states may seek money to pay restitution to homeowners who were wrongly subjected to foreclosure. Its tough to argue in favor of mortgage reductions for troubled homeowners especially when folks from the American Bankers Association are the ones trying to convince us that it wont work. Bob Davis, an executive vice president with the American Bankers Association, told Bloomberg that loan balances must be reduced so much for borrowers struggling to make payments that it is a better deal for lenders to foreclose instead, he said. But remember, the ABA is the same group fighting hard to get rid of the proposed limits on debit card swipe fees that are lucrative for banks. The ABA president and Senata Dick Durbin had exchanged their differences in letters to one another recently. In one letter, Durbin kindly asks the ABA to stand down your massive misleading lobbying effort which is aimed at preventing the Federal Reserve from ever coming forward with reasonable financial regulations, and instead to let the regulatory process continue as Congress intended. Theres little indication that reducing mortgage principals would help troubled homeowners. But then again, there was little indication that billion dollar bailouts would help Wall Street get back on its feet and that worked out great (for the banks, at least.) So while the thought of reducing mortgage principals would gives the likes of Jamie Dimon and his peers nightmares, perhaps a fund to compensate those who were wrongly foreclosed on is a decent solution. The idea of such a fund is being kicked around by banks and regulators right now, and hopefully its one that doesnt get watered down like the every other mortgage-related resolution. Unfortunately, were not off to a great start. The Wall Street Journal reported that banks are proposing to put $5 billion in the fund collectively. Yes, $5 billion total. From the Journal: The banks intend to propose that as much as $5 billion be used to compensate any borrowers previously wronged in the foreclosure process and provide transition assistance for borrowers who are ousted from their homes, according to people familiar with the matter. One idea is that foreclosed borrowers could receive several months of free rent once they find new housing, one of these people said. Thats about $20 billion shy of what the Consumer Financial Protection Bureau says banks saved when were rushing the foreclosure process and allegedly improperly servicing mortgages. In a presentation to state attorneys general, the CFPB said BofA and Wells Fargo saved about $7 billion each by under-serving distressed home loans between 2007 and the 3rd quarter 2010. JPM saved about $5 billion in the same time period. Thats okay though because theyve promise to be good banks from here on in.

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Bloomberg Banks Said to Offer $5 Billion to Resolve Probe of Foreclosures May 11, 2011, 12:24 AM EDT By David McLaughlin and Dakin Campbell May 11 (Bloomberg) -- Bank of America Corp. and JPMorgan Chase & Co., along with three other U.S. mortgage servicers, proposed paying $5 billion to settle a probe of their foreclosure practices by state and federal officials, two people familiar with the matter said. The proposal made by banks yesterday during settlement talks in Washington came after state attorneys general and federal officials offered revised settlement terms and a proposal for banks to fund principal writedowns for homeowners. The probe by all 50 states was triggered by claims of faulty foreclosure practices after the housing collapse, which state officials said may violate their laws. The original settlement proposal offered by states and federal agencies drew criticism from banks and Republican attorneys general opposed to a deal that would reduce principal amounts for borrowers. In a new proposal, officials called for a fund, administered by state and federal officials, that would in part pay for principal writedowns, said Geoff Greenwood, a spokesman for Iowa Attorney General Tom Miller. Miller, a Democrat, is leading the negotiations for the states. Attorneys general havent made a proposal for a monetary payment by the banks, he said. The $5 billion payment proposed by the banks was reported earlier by the Wall Street Journal. Citigroup, Wells Fargo State and federal officials have been negotiating with the mortgage servicers, which also include Citigroup Inc., Wells Fargo & Co. and Ally Financial Inc. Miller has said the five companies service 59 percent of U.S. home loans. Rick Simon, a spokesman for Charlotte, North Carolina-based Bank of America, didnt return a call seeking comment after regular business hours yesterday. Teri Schrettenbrunner of San Franciscobased Wells Fargo and Mark Rodgers, a spokesman for New York-based Citigroup, didnt immediately return e-mails seeking comment. Gina Proia, a spokeswoman for Detroit-based Ally Financial, and New York-based JPMorgan Chase spokesman Thomas Kelly, declined to comment. The fund for principal reductions could potentially pay for restitution to borrowers whose homes were improperly foreclosed on, Greenwood said. State and federal officials yesterday also revised provisions of their original March term sheet offered to mortgage servicers. That term sheet included requirements for how banks service loans and conduct

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home foreclosures. The changes arent substantially different from the original proposal and incorporate negotiations with the banks, Greenwood said. Those talks continue in Washington this week, he said. Republican Meeting Republican attorneys general criticized the original settlement proposal, saying the plan for principal reductions would encourage borrowers to default on their loans to reduce their payments. Some of those attorneys general met yesterday in Atlanta to discuss the issue, said Adam Temple of the Republican State Leadership Committee. Bob Davis, an executive vice president with the American Bankers Association, spoke to the group in Atlanta, telling them principal reductions dont work, he said in an interview. Loan balances must be reduced so much for borrowers struggling to make payments that its a better deal for lenders to foreclose instead, he said. Principal reductions dont substantially improve the cash flow problem, Davis said. You cant lower principal enough to make it an attractive tool. Encouraging Defaults During a recent conference call between state officials and the banks, some lenders said they opposed any settlement terms that would reduce loan balances, according to one of the people familiar with the talks. The banks argued a writedown plan would encourage homeowners to default, a notion some attorneys general on the call disputed, the person said. Bank representatives said they were open to other types of loan modifications, including changing interest payments, said the person. Mortgage servicers have reached agreements with U.S. banking regulators to improve procedures for modifying loans and seizing homes. Oklahoma Attorney General Scott Pruitt, a Republican, said last month that he may negotiate an alternative accord with the banks if the national settlement turns out to be inconsistent with our conviction. Pruitt said in a letter to Miller in March that forcing lenders to reduce mortgage balances would take away incentives for banks to loan money and destroy an already devastated housing market. Some Changes Diane Clay, Pruitts spokeswoman, said in an interview that the latest settlement proposal incorporates some of the changes sought by the attorney general, although she said she hadnt seen the new terms. General Pruitts letter certainly helped move the negotiations along, said Clay, who previously said several industry representatives had been in contact with her office. Besides Oklahoma, state attorneys general who have criticized the proposal to reduce principal balances include those from Florida, Texas, South Carolina, Virginia, Alabama, Nebraska and Georgia. Attorneys general for Florida, Georgia and Alabama were among the officials meeting in Atlanta yesterday, Temple said. Lauren Kane, a spokeswoman for Georgia Attorney General Sam Olens, has said a bank, which she declined to identify, discussed with her office the federal regulator settlement. Adam Piper, a spokesman for South Carolina Attorney General Alan Wilson, said last month that two banking representatives shared research with his office and pointed out some concerns with certain provisions of the original settlement proposal.

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Jennifer Meale, a spokeswoman for Florida Attorney General Pam Bondi, said last month that her office has had general discussions with banks about how the matter might be resolved. --With assistance from Karen Freifeld in New York. Editors: Michael Hytha, Dan Reichl Back to Top

Forbes (via AP) Delaware bills aimed at reducing foreclosures May 211, 2011, 08:44 AM EDT RANDALL CHASE

DOVER, Del. -- House lawmakers on Tuesday unanimously approved two bills aimed at reducing the number of home foreclosures in Delaware. One of the bills requires that before a foreclosure can proceed, a representative of the bank must sign an affidavit affirming that the lender has provided the homeowner behind on his payments with information about federal loss mitigation programs for which he or she might qualify. Affidavits would not be required in cases where homeowners are ineligible for assistance programs or have reneged on their obligations under previous mortgage modifications. The bill also states that a foreclosure action cannot be filed until 45 days after a notice of intent to foreclose is sent by certified mail with detailed information about the mortgage in question, as well as information about Delaware's Emergency Mortgage Assistance ( MTGC.OB - news - people ) Program. Bill sponsor John Kowalko, D-Newark, said the bill would help increase awareness of assistance programs that are available for struggling homeowners but often underutilized. The other measure approved by the House on Tuesday requires that banks and homeowners engage in court-supervised mediation before any foreclosure can proceed. Supporters of the bills note that more than 22,000 homes in Delaware have been subject to foreclosure since the start of the housing crisis and 6,000 more are expected this year. Rep. Helene Keeley, chief sponsor of the mandatory mediation bill, said it can help reduce those numbers. "For the first time, we're actually giving homeowners the opportunity to sit face-to-face with their bank," she said, adding that lenders and borrowers facing foreclosure often don't connect. "A lot of people are very afraid," said Keeley, D-Wilmington. "They don't know what's coming down the pike." The mandatory mediation program would replace an existing voluntary program run by Superior Court and would remove financial qualification rules in the existing program.

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Keeley noted that the foreclosure prevention bills would expire two years after enactment. "We do not envision the foreclosure crisis to continue forever," she said. Georgetown Republican Ruth Briggs King, executive vice president of the Sussex County Association of Realtors, said that besides helping struggling homeowners, the measures could help stabilize communities by reducing the impact of foreclosures on surrounding properties. The bills now go to the Senate for consideration.

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U.S. News & World Report Student Credit Card Use Could Cause Problems Later Posted: May 11, 2011 By Equal Justice Works Students increasingly have been using credit cards to finance living expenses and education, a necessity for many given the rising cost of education. Despite the name, credit cards are in fact loans, requiring repayment with interest. Paying high interest on educational expenses means overpaying for college costs and the need for using credit cards must be balanced with the danger inherent therein. [See the best credit cards for new college grads.] Students appear to be experienced in using credit. In 2009, Sallie Mae reported that 92 percent of undergraduates charged direct costs for education like tuition and textbooks. Students appear also to be experienced in building debt. The same report shows close to 20 percent of seniors carrying credit card balances greater than $7,000. Added to $24,000 in educational loans, graduates on average owe close to $30,000 in debt. Therein lies the danger: spiraling debt. Student credit cards often have interest rates that start around 20 percent and multiply with late or missed payments. And those payments are generally due every month, with no deferment, forbearance, or forgiveness. The result is that students can easily slip into debt, destroying their credit ratings and the ability to use credit to secure basic needs like an apartment or a car. The Credit CARD Act of 2009 restricted companies' marketing on campus and required applicants under 21 years old to procure a co-signer or prove the ability to make payments. However, it may not be as simple as restricting access. Today's economy has many contradictions, and to buy on credit you must have established credit, which cannot be done without access to credit. Building credit during college may help procure future loans. It's much easier to rent that first apartment and secure that first car loan with good credit.

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[Learn more about the Credit CARD Act of 2009.] Bad credit, however, can obstruct your ability to do anything requiring a background check, including securing employment or a professional license. What should students do? Only use a credit card if you can pay the bill in full monthly. Carrying a balance means you pay interest on interest! [Get more money tips for college students.] Consider on a card with 24 percent interest: The $800 textbook bill: First month: $800 principal + $16 interest = $816 due - $100 payment = $716 forward Second month: $716 balance + $14.32 interest = $730.32 due - $100 payment = $630.32 forward Third month: $630.32 balance +$12.61 interest = $642.93 due - $100 payment = $542.93 forward Payments are due every month, even during school. With no additional purchases, it will take nine months to pay for your books and you will overpay! Consider, too, that $100 can be hard to pay monthly while in college. Here are some additional things to think about: Evaluate your options: Many student cards have high interest but your bank or smaller lenders may offer a lower rate. Also consider cards with lower limits so you don't overspend. Consider credit cards in conjunction with educational loans: In its 2010 "How America Pays for College" study, Sallie Mae reports an alarming 35 percent of those who used credit cards for direct educational expenses did so because they didn't think they were eligible for financial aid. More than two -thirds did so out of convenience. It's worth investigating whether you qualify for financial aid! Educational loans, especially federal loans, often have lower interest rates and typically defer payments during school. The current rate on an unsubsidized federal Stafford loan is 6.8 percent, compared to 20 percent on a student credit card. It may be wise to use student loans for textbook and tuition bills and credit cards for smaller bills and the occasional night out. [Learn more about financial aid and paying for college.] Read the fine print: This applies to both students and co-signers. Promotional rates expire and cosigners may be responsible as long as the line of credit is open, long after losing the ability to influence the practices of that promising student. Ultimately, the use of credit cards can be beneficial as long as you build creditnot debtand don't pay more for school than you already must! Radhika Singh Miller is a program manager for Educational Debt Relief and Outreach at Equal Justice Works. In 2008, she served on the Student Loans Team in the Negotiated Rulemaking for the College Cost Reduction and Access Act (CCRAA) and has extensive knowledge of this landmark educational debt relief legislation. Miller graduated from Loyola Law School Los Angeles and was most recently a staff attorney at the Partnership for Civil Justice, focusing on constitutional and civil rights litigation and advocacy.

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Fayetteville Observer Holly Petraeus speaks at Methodist commencement 12:00 AM, Sun May 08, 2011 Kathleen Ramsey, correspondent THE CEREMONY: Methodist University's 47th annual spring commencement ceremony, 2 p.m. Saturday, March F. Riddle Center. NUMBER OF DEGREES CONFERRED: 184 SPEAKER: Holly Petraeus, director of Servicemember Affairs at the Consumer Financial Protection Bureau. Petraeus, wife of Gen. David Petraeus, is known for her work helping service members finance their educations, as well as helping to ensure consumer protection for military families. THE MESSAGE TO GRADUATES: Petraeus, leaning on her military-life experiences, cautioned the graduates to be flexible to where life might take them. "That doesn't mean your life is ruined. ... Studying for a degree can train you for a specific job, to be sure. But it can also teach you collateral lessons that can come in very handy." WHAT YOU'LL NEVER FORGET ABOUT COLLEGE: "It took me 10 years to finish this. I took a break to go to Iraq and Afghanistan," said Melissa Trask, originally from Springfield, Mo. "But probably the learning experience. Everyone should try it." Trask earned her degree in political science. HUMOROUS MOMENT: Petraeus said she could not remember her commencement address. "When giving a commencement address, it's hard to say something meaningful that hasn't been already said, but during the next hour and a half, I'll do my best." After the crowd quit laughing, she stopped and said, "What, you think I'm not serious?" Petraeus' speech lasted slightly less than 15 minutes. GOOD ADVICE: "Never stop believing in yourself ... and never stop believing in something greater than yourself," Ben E. Hancock Jr., president of Methodist University, said during his closing remarks. A PROUD MOMENT: "Everything she's been through in her life, physically, and she's been able to get a higher education," said Howard Gillespie of Ohio. His wife, Michelle, added: "Because she's a kidney transplant patient." Their daughter, Gentry, was able to overcome her physical problems to earn a bachelor's degree in business administration. BIGGEST SURPRISE: A video message from Gen. Petraeus congratulating the graduates, as well as his wife, who received an honorary degree - doctorate of public service - from the university. NOW WHAT? "I'm going to apply to (physician's assistant) school. In the meantime, I'll work in a laboratory setting," said Stephanie Halbleib, originally from Beresford, S.D. Back to Top American Banker

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Johnson Says GOP Asking 'Too Much' on CFPB Wednesday, May 11, 2011 By Kate Davidson

WASHINGTON Sen. Tim Johnson, the chairman of the Senate Banking Committee, said Tuesday he was not willing to negotiate with Republicans on changes to the Consumer Financial Protection Bureau.

Forty-four GOP senators wrote a letter last week vowing to block the nomination of the agency's director until Congress makes significant changes to the bureau's structure.

"They ask too much," Johnson told reporters following a committee hearing. "Their demands are too steep, and it's up to the president to make the call."

Republicans said that before the Senate will clear any nominee, Congress must replace the agency's director with a board, subject the bureau to the appropriations process, and allow banking regulators the power to override the CFPB.

Asked whether he was worried that negotiating on CFPB would embolden Republicans to press for further changes to Dodd-Frank, Johnson responded, "That too."

"This forces the president's hand to do what he has to do," he added.

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American Banker State AGs Offer New Settlement Terms to Mortgage Servicers Wednesday, May 11, 2011 By Cheyenne Hopkins

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WASHINGTON After months of stalemate, the state attorneys general have proposed new terms to the top five mortgage servicers that drop some controversial provisions of their first attempt at a settlement, including a push to force banks to reduce principal on thousands of mortgages. The new offer, which was expected to be discussed at a meeting between the two sides on Tuesday, moves them closer to a final agreement, but does not detail how much state AGs are seeking in penalties for servicing issues uncovered by federal and state regulators. Banks have privately said that they will not agree to a fine above $10 billion far below a discredited $20 billion figure floated in the press two months ago arguing that regulators have not provided evidence that servicing problems led to wrongful foreclosures. The AGs are considering using whatever money they receive from banks to start a "cash for keys" program to help troubled borrowers move out of their homes and speed the foreclosure process by providing them cash incentives to leave. The funds are also expected to be used to promote mortgage counseling and offer some forebearance to troubled homeowners. While banks have not agreed to the new terms, they do appear much more beneficial than an offer made in February, which demanded sweeping changes across the servicing industry, including principal reductions. By dropping that requirement, banks have already scored a key victory, observers said. "It makes sense for principal reduction to be off the table because it creates a tremendous number of legal and logistical obstacles that in the context of a complex settlement are obviously difficult and distracting," said David Dunn, a partner at Hogan Lovells law firm. "It makes sense for that to come off the table for the parties to reach agreement on issues that are less difficult and controversial." But the term sheet would still require the servicers to enact substantial changes to their practices, and could potentially raise issues in new areas. Under the new terms, according to several sources, servicers would be required to allow borrowers that received a trial Treasury Home Affordable Mortgage Program modification but which were denied a permanent mod to reapply for the program. The state AGs are also continuing to insist that servicers stop pursuing loan modifications and foreclosures at the same time, a process known as dual tracking that has drawn complaints from confused consumers. The revised term sheet raised some new issues, including a proposed requirement for more documentation concerning the basis of knowledge for a foreclosure and notes and assignments. The state AGs are seeking to require documentation on the appropriate transfer and delivery of endorsed notes and deeds of trust at the formation of a mortgage-backed security. Essentially, servicers would have to document that they not only have positions with the MBS but document that the securitization was formed properly. The new term sheet would also expand protections provided by the Servicemembers Relief Act to prohibit foreclosures on servicemembers who have been permanently moved to a post in a different state. The new settlement also includes language that servicers must make borrowers aware of loss mitigation options prior to referral to foreclosure and facilitate loss mitigation applications. But the state AGs have dropped a demand that servicers provide to the Consumer Financial Protection Bureau their formulas for calculating the net present value of a home. It remains unclear if banks are amenable to the proposed new terms. Also unknown is whether the new requirements would be extended to the rest of the servicing industry.

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"I don't know where the banks are with this because they are working on their federal consent orders," said Lisa DeLessio, a partner at Hudson Cook LP. "I still think it's very unclear what this means. If the AGs reach a settlement with the banks, what will this mean for the rest of mortgage servicers? What will happen to them?" Despite the proposed new terms, many observers were pessimistic the two sides will reach a deal anytime soon. Fed up with the delay in the process, the banking regulators already moved forward in April with a cease and desist action against the top 14 mortgage servicers. The state AGs, meanwhile, have been beset by doubts on their own side after the initial release of their 27-page term sheet. Several Republican AGs said pursuing principal reductions were a mistake, while GOP members on Capitol Hill criticized the CFPB's involvement in the settlement process. Some said the process was liable to continue to drag out. "I do not believe the prospects of a full resolution in the short term are very high as there remain divergent views among all parties," said Andy Sandler, co-chair of BuckleySandler LLP. Others said the AGs will not force a settlement until they can provide more details on what exactly the banks did wrong. While the banking regulators released an 18-page report detailing deficiencies at the servicers, the state AGs have not spelled out what issues they uncovered. "There has to be some more due diligence and investigation before they have the credibility to enforce a settlement," said Josh Rosner, managing director of the research firm Graham Fisher & Co. "If they did a credible investigation of origination and servicing and detailed the findings of that investigation it would demonstrate how troubled the situation is and how deep the economic morass is."

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New York Times Federal Retreat on Bigger Loans Rattles Housing Published: May 10, 2011 By DAVID STREITFELD

MONTEREY, Calif. By summers end, buyers and sellers in some of the countrys most upscale housing markets are slated to lose one their biggest benefactors: the deep pockets of the federal government. In this seaside community of pricey homes, the dread of yet another housing shock is already spreading. Were looking at more price drops, more foreclosures, said Rick Del Pozzo, a loan broker. This snowball thats been rolling downhill is going to pick up some speed. For the last three years, federal agencies have backed new mortgages as large as $729,750 in

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desirable neighborhoods in high-cost states like California, New York, New Jersey, Connecticut and Massachusetts. Without the government covering the risk of default, many lenders would have refused to make the loans. With the economy in free fall, Congress broadened its traditionally generous support of housing to a substantial degree. But now Democrats and Republicans agree that the taxpayer should no longer be responsible for homes valued well above the national average, and are about to turn a top slice of the housing market into a testing ground for whether the private mortgage market can once again go it alone. The result, analysts say, will be higher-cost loans and fewer potential buyers for more expensive homes. Michael S. Barr, a former assistant Treasury secretary, said the federal governments retrenchment would be painful for many communities. Theres always going to be a line, and for the person just over it its always going to be an arbitrary line, said Mr. Barr, who teaches at the University of Michigan Law School. But there is no entitlement to living in a home that costs $750,000. As the housing market braces for more trouble, homeowners everywhere have been reduced to hoping things will someday stop getting worse. In some areas, foreclosures are the only thing selling. New home construction is nearly nonexistent. And CoreLogic, a data company, said Tuesday that house prices fell 7.5 percent over the last year. The federal government last year backed nine out of 10 new mortgages nationwide, and losses from soured loans are still mounting. Fannie Mae, which buys mortgages from lenders and packages them for investors, said last week it needed an additional $6.2 billion in aid, bringing the cost of its rescue to nearly $100 billion. Getting the government out of the mortgage business, however, is proving much more difficult than doling out new benefits. As regulators prepare to drop the level at which they will guarantee loans here in Monterey County, the level will drop by a third to $483,000 buyers and sellers are wondering why they should be punished simply for living in an expensive region. Sellers worry that the pool of potential buyers will shrink. Im glad to see theyre trying to rein in Fannie Mae, but I think Im being disproportionately penalized, said Rayn Random, who is trying to sell her house in the hills for $849,000 so she can move to Florida. Buyers might face less competition in the fall but are likely to see more demands from lenders, including higher credit scores and larger down payments. Steve McNally, a hotel manager from Vancouver, said he had only about 20 percent to put down on a new home in Monterey County. If a bigger deposit were required, Mr. McNally said, Id wait and rent. Even those who bought ahead of the changes, scheduled to take effect Sept. 30, worry about the effect on values. Greg Peterson recently purchased a house in Monterey for $700,000. That doesnt get you a palace, said Mr. Peterson, a flight attendant. He qualified for government insurance, which meant he needed only a small down payment. If that option is not available in the future, he said, home prices all around me will plummet. The National Association of Realtors, 8,000 of whom have gathered in Washington this week for their midyear legislative meeting, is making an extension of the loan guarantees a top lobbying priority. Reducing the limits will put more downward pressure on prices, said the N.A.R. president, Ron Phipps. I just dont think it makes a lot of sense. But he said that in contrast to last year, when a oneyear extension of the higher limits sailed through Congress, theres more resistance. Federal regulators acknowledge that mortgages will get more expensive in upscale neighborhoods but say the effect of the smaller guarantees on the overall housing market will be muted.

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A Federal Housing Administration spokeswoman declined to comment but pointed to the Obama administrations position paper on reforming the housing market. Larger loans for more expensive homes will once again be funded only through the private market, it declares. Brokers and agents here in Monterey said terms were much tougher for nonguaranteed loans since lenders were so wary. Borrowers are required to come up with down payments of 30 percent or more while showing greater assets, higher credit ratings and lower debt-to-income ratios. In the Federal Reserves quarterly survey of lenders, released last week, only two of the 53 banks said their credit standards for prime residential mortgages had eased. Another two said they had tightened. The other 49 said their standards were the same tough. The Mortgage Bankers Association has opposed letting the limits drop, although a spokesman said its members were studying the issue. I dont want to sugarcoat this, said Mr. Barr, the former Treasury official. The housing finance system of the future will be one in which borrowers pay more. The loan limits were $417,000 everywhere in the country before the economy swooned in 2008. The new limits will be determined by various formulas, including the median price in the county, but will not fall back to their precrisis levels. In many affected counties, the loan limit will fall about 15 percent, to $625,500. Monterey County, however, will see a much greater drop. The county is really two housing markets: the farming city of Salinas and the more affluent Monterey and Carmel. Real estate records show that 462 loans were made in Monterey County between the current limit and the new ceiling since the beginning of 2009, according to the research firm DataQuick. That was only about 1 percent of the loans made in the county. But it was a much higher percentage for Monterey and Carmel about a quarter of their sales. Heidi Daunt, with Treehouse Mortgage, said loans too large for a government guarantee currently carried interest rates of at least 6 percent, more than a point higher than government-backed loans. That can definitely blow a lot of people out of the water, Ms. Daunt said. Back to Top

Housing Wire Senate banking chair won't allow dismantling of Dodd-Frank Tuesday, May 10th, 2011, 11:30 am By JON PRIOR Senate Banking Committee Chairman Tim Johnson (D-S.D.) said in a hearing Tuesday he would counter any effort to repeal sections of the Dodd-Frank Act. The committee heard testimony from Financial Crisis Inquiry Commission Chairman Phil Angelides, as

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it reviews the report and determines if the Dodd-Frank Act sufficiently addresses the regulatory gaps that led up to the financial crisis. Republicans in the House say the reform goes too far and rolled out several repeals in March, and later three more to dilute the powers of the newly created Consumer Financial Protection Bureau. Earlier in the year, Rep. Michele Bachmann (R-Minn.) attempted to repeal the entire bill. But Johnson said such actions are "dangerous and irresponsible." He said some of the repeals proposed would take the financial system back to the same weaknesses that exposed investors and taxpayers to uncertain risk. "We cannot allow Dodd-Frank to be dismantled," Johnson said. "As costly as the Great Recession has been, we simply cannot afford to go back to the old financial system that destroyed millions of jobs and cost the economy trillions of dollars. Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act to address these problems, and it must be fully and carefully implemented." Angelides backed Johnson and so did, to an extent, Sen. Richard Shelby (R-Ala.), who recently led a GOP letter to President Obama pledging not vote for any CFPB director until Republican reforms of the agency were signed. "There were gaps," Angelides said. "The SEC could have reduced risk and increased capital and liquidity at investment banks. They did not do it. The New York Fed could have reigned in Citigroup risks, but they did not do it." Angelides pointed out how Dodd-Frank would have sealed those gaps for one company in particular: Countrywide. By 2007, 25% of Countrywide's portfolio was made up of option adjustable-rate mortgages, where the borrower didn't even have to cover the accruing interest in his or her monthly payments. "Those kind of loans were a recipe for disaster," Shelby said. "Did regulators fail the American people?" "The Fed looked the other way," Angelides said. "They had a lot of this information and did not act." Angelides added the Office of the Comptroller of the Currency Countrywide's initial regulator began raising concerns. He pointed to an internal email at Countrywide, noting that executives were wary of the OCC suspicions and decided to switch regulators. It shifted to the Office of Thrift Supervision, which under Dodd-Frank will be absorbed by the OCC this summer. "The OCC had concerns. The OTS did not," Angelides said. "Dodd-Frank got rid of that regulatory shopping."

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From:

To:

Glaser, Elizabeth (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=glasere> Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk>;
(b) (6)

Cc: Bcc: Subject: Date: Attachments:

FW: Bocce Team Wed May 11 2011 13:51:38 EDT

-----Original Message----From: Katie Janik (b) (6) Sent: Wednesday, May 11, 2011 1:50 PM To: Glaser, Elizabeth (CFPB) Subject: Re: Bocce Team Team name is below - in the instructions. ------Original Message-----From: Elizabeth.Glaser@treasury.gov To: Katie Subject: Re: Bocce Team Sent: May 11, 2011 1:14 PM Don't we need to know the team name? I forwarded to a bunch of folks ----- Original Message ----From: Katie Janik [mailto:(b) (6) Sent: Wednesday, May 11, 2011 12:15 PM To: tracy.hanlon@exim.gov <tracy.hanlon@exim.gov>; Glaser, Elizabeth (CFPB); Kristy McDaniel (b) (6) ; diane.marciniak@exim.gov <diane.marciniak@exim.gov> Subject: Bocce Team Hi Guys Below is the link to register for bocce ball at Vinoteca. Let me know if you have questions. Liz, will you forward to Peter, Chris, et al? I think my cousin is going to play with us as well. We do need a few more people, so please forward to anyone you think is interested. Thanks! Instructions: Click on Premier League Tuesday Click on Join a Team Our team name is "Bocce Ballers" The password is vino2011 http://www.premierleaguebocce.com/

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From:

To: Cc: Bcc: Subject: Date: Attachments: docx

Adeyemo, Adewale (Wally) (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=adeyemoa> _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands>

Staffing Announcements Wed May 11 2011 12:02:07 EDT 20110511 - CFPB Senior Hires Mullainathan and Ficklin - CLEARED 5 10 11 1040a.

I wanted to send you the attached press release that announce the fact that Patrice Ficklin will be joining the team as the head of our Fair Lending office and Sendhil Mullainathan will be joining the team as the head of our Research office.

I additionally wanted to make you aware of a number of other personnel changes that are currently in the works.

Alice Hrdy will be moving from serving as the acting lead of our fair lending office to serving as an acting deputy on our non-bank supervision team.

In addition to his work leading the procurement team, David Gragan will be leading our Operations & Facilities efforts.

David Forrest recently moved from leading the Consumer Engagement team to serve as our Chief Technology Officer. He also continues to serve as our acting CIO.

Thank you all for your continued commitment to building the consumer agency. Please feel free to contact me if you have any questions.

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20110511 - CFPB Senior Hires Mullainathan and Ficklin - CLEARED 5 10 11 1040a.docx (Attachment 1 of 1)

CLEARED (5 10 11 1040a)

U.S. Treasury Department Office of Public Affairs

FOR IMMEDIATE RELEASE: May 11, 2011 CONTACT: CFPB Public Affairs, (202) 435-7454 TREASURY DEPARTMENT ANNOUNCES SENIOR LEADERSHIP HIRES FOR THE CONSUMER FINANCIAL PROTECTION BUREAU WASHINGTON The U.S. Department of the Treasury today announced the hiring of senior leadership for the Consumer Financial Protection Bureau (CFPB). Elizabeth Warren, Assistant to the President and Special Advisor to the Secretary of the Treasury on the CFPB, highlighted the selection of Sendhil Mullainathan to serve as Assistant Director of Research and Patrice Ficklin to serve as Assistant Director of Fair Lending. Under Sendhil Mullainathan, the Office of Research will promote evidence-based policymaking at the CFPB. The Office will provide analytical support to the Bureau and strengthen its understanding of possible benefits and costs of potential CFPB policies,said Warren. With Patrice Ficklin at its head, the Office of Fair Lending will provide oversight and enforcement of Federal laws intended to ensure fair, equitable, and nondiscriminatory access to credit for both individuals and communities. The following individuals were announced today as joining the CFPB leadership team: Sendhil Mullainathan Sendhil Mullainathan will serve as Assistant Director of Research. He is Professor of Economics at Harvard University, and a Research Associate at the National Bureau of Economic Research. Prior to joining the CFPB, Mullainathan was a co-founder of the Abdul Latif Jameel Poverty Action Lab and a Board Member of the Bureau for Research and Economic Analysis of Development. He has received a MacArthur Foundation genius award,as well as numerous other grants and fellowships, including from the National Science Foundation, the Olin Foundation, the Sloan Foundation, and the Russell Sage Foundation. Mullainathan has published extensively in top economics journals including the American Economic Review, the Quarterly Journal of Economics, and the Journal of Political Economy. He holds a Ph.D. in Economics from Harvard University and received his undergraduate degree from Cornell University.

1
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20110511 - CFPB Senior Hires Mullainathan and Ficklin - CLEARED 5 10 11 1040a.docx (Attachment 1 of 1)

CLEARED (5 10 11 1040a)

Patrice Alexander Ficklin Patrice Ficklin will serve as Assistant Director of Fair Lending. She most recently practiced at the civil rights law firm of Relman, Dane & Colfax, advising on civil rights issues arising in lending, employment, and housing. Prior to that, Ficklin worked at Fannie Mae, where she provided fair lending, fair housing, and other consumer law advice regarding mortgage products, pricing, and servicing. During her tenure at Fannie Mae, she also directed the company s employee grievance department, conducted internal investigations, designed and implemented a mandatory non-binding arbitration program for employees, directed the corporate ethics program, and revamped officer and employee performance review standards. Ficklin specialized in financial institutions regulation, civil litigation, complex corporate transactions, and employment law at the Washington, D.C., law firm of Wilmer, Cutler & Pickering, now WilmerHale. She was appointed to the Maryland Higher Education Commission. She is a graduate of Georgetown University and Harvard Law School. ###

2
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From:

To: Cc: Bcc: Subject: Date: Attachments: Colleagues,

Harvey, Imani (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harveyi> _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands>

CFPB Job Vacancy Announcements Posted on USAJobs as of 5/11/11 Wed May 11 2011 11:31:38 EDT

The CFPB Human Capital Team has posted new vacancy announcements on the USAJobs website. Below, you will find the job title, grade level, and link for the new announcements. If you know great candidates who might be interested in joining our team, please share this information with them!

Executive Assistant, CN-303-4C Office: Office of the Director Vacancy Announcement No: 11-CFPB-218 Announcement Closes: Tuesday, May 17, 2011 Who May Apply: Candidates with permanent competitive service status, non-competitive eligibles, and special appointment eligibles Link: 11-CFPB-218

Executive Assistant, CN-303-4C Office: Office of the Director Vacancy Announcement No: 11-CFPB-219P Announcement Closes: Tuesday, May 17, 2011 Who May Apply: All US Citizens Link: 11-CFPB-219P

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Imani Harvey Special Assistant to the Chief Human Capital Officer Consumer Financial Protection Bureau Email: Imani.Harvey@treasury.gov Phone: 202-435-7513

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From:

To: Cc: Bcc: Subject: Date: Attachments: Colleagues,

Harvey, Imani (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harveyi> _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands>

CFPB Job Vacancy Announcements Posted on USAJobs as of 5/11/11 Wed May 11 2011 11:04:11 EDT

The CFPB Human Capital Team has posted new vacancy announcements on the USAJobs website. Below, you will find the job title, grade level, and link for the new announcements. If you know great candidates who might be interested in joining our team, please share this information with them!

Consumer Response Specialist, CN-301-5B/5C

Office: Response Center Vacancy Announcement #: 11-CFPB-223P Announcement Closes: Friday, May 24, 2011 Who May Apply: All U.S. citizens Link: 11-CFPB-223P

Consumer Response Specialist (Mortgage), CN-301-5C

Office: Response Center Vacancy Announcement #: 11-CFPB-187P Announcement Closes: Friday, May 25, 2011 Who May Apply: All U.S. citizens 11-CFPB-187P

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Imani Harvey Special Assistant to the Chief Human Capital Officer Consumer Financial Protection Bureau Email: Imani.Harvey@treasury.gov Phone: 202-435-7513

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From:

To:

Harvey, Imani (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harveyi> Keane, Micheal (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=keanem>; Kearney, Thomas (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=kearneyt>; Kennedy, Leonard (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=kennedyle>; Kern, Shaun (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=kerns>; Kim, Lynn </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=kiml>; Kitt, Brett (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=kittb>; Klein, Heather (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=kleinh>; Krafft, Nicholas (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=krafftn>; Kunin, Noah (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=kuninn>; Ladd, Christine </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=laddc>; Lauderdale, Steve (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lauderdales>; Leary, Jesse (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=learyje>; Leiss, Wayne (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=leissw>; Lepley, Richard (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=lepleyr>; Lev, Ori (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=ofac/cn=ofac users/cn=levo>; Lilly, Antona </o=ustreasury/ou=do/cn=recipients/cn=lillya>; Logan, Amanda (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=loganam>; Lombardo, Christopher </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lombardoc>; Lopez-Fernandini, Alejandra (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lopez-fernadinia>; Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk>; Mann, Benjamin </o=ustreasury/ou=do/cn=recipients/cn=mannb>; Mann, Seth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=manns>; Markus, Kent </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=marcusk>; Marshall, Mira (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=marshallm>; Martin, Alyssa (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=martinal>; Martinez, Adam (CFPB) </o=ustreasury/ou=exchange administrative group

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(fydibohf23spdlt)/cn=recipients/cn=martinezaz>; Martinez, Zixta (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=martinezz>; McCoy, Patricia (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=mccoyp>; McDonald, Alicia (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=mcdonalda>; McQueen, Suzanne (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=mcqueens>; Megee, Christine (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=megeec>; Mestre, Juan (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=mestrej>; Meyer, Erie (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=meyerer>; Michalosky, Martin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=michaloskym>; Middlebrook, Jack (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=middlebrookj>; Miller, Kimberly (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=millerki>; Morris, Lucy (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=morrislu>; Mosena, Lea (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=mosenal>; Munz, Daniel (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=munzd>; Nelson, Sheila </o=ustreasury/ou=do/cn=recipients/cn=nelsons>; Osborn, Meredith (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=osbornm>; Patross, Whitney (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=patrossw>; Pearl, Joanna (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=libermanj>; Perry, Vanessa (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=perryv1>; Petersen, Cara (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=petersenc>; Petraeus, Holly (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=petraeush>; Plunkett, Alexander (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=alexanderp>; Pluta, Scott (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=plutas>; Prince, Victor (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=princev>; Proctor, Althea </o=ustreasury/ou=do/cn=recipients/cn=proctora>; Puri, Angela (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=puria>; Reeder, Garry (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=reederg>; Reese, Angelique (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=reesea>; Reilly, Deb (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=reillyd>; Reilly, Elizabeth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=ericksone>; Rexroth, Mariana

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(CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=rexrothm>; Riley, Jeffrey (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=rileyje>; Royster, Felicia (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=roysterf>; Ruihley, Joshua (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=ruihleyj>; Sanford, Paul (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sanfordpa>; Scala, Courtney (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=scalac>; Scanlon, Thomas </o=ustreasury/ou=do/cn=recipients/cn=scanlont>; Scurlock, Angelika (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=scurlocka>; Sealy, William (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sealeyw>; Selden, R. Colgate (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=seldenr>; Sena, Theresa (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=senat>; Sensiba, Vicki (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sensibav>; Shue, Jeffrey (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=shuej>; Silberman, David (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=silbermand>; Skinner, Cathaleen (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=skinnerc>; Slagter, Dennis (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=slagterd>; Smith, Rorey (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=smithror>; Smullin, Rebecca (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=smullinr>; Smyth, Nick (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=smythn>; Sobczak, Greg </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sobczakg>; Sokolov, Dan </o=ustreasury/ou=do/cn=recipients/cn=sokolovd>; Stapleton, Claire (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=stapletonc>; Stark, Paula-Rose (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=starkp>; Starr, John (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=starrj>; Sterken, Nathan (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sterkenn>; Stone, Bayard (Corey) (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=stonec>; Suess, Robert (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=seussr>; Taiwo, Ebunoluwa (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=taiwoe>; Tamberrino, Mary (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tamberrinom>; Taylor, Doug

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(CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=taylord>; Tierney, Patrick (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tierneyp>; Tingwald, James (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tingwaldj>; Trueblood, Andrew (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=trueblooda>; Tucker, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tuckerke>; Turenne, Jeannine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=turennej>; Twohig, Peggy (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=twohigp>; Vail, Amber (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=vaila>; Vale, Elizabeth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=valee>; Van Loo, Rory (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=vanloor>; Vanderslice, Julie (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=vanderslicej>; VanMeter, Stephen (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=vanmeters>; Vinton, Merici (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=vintonm>; Wanderer, Agnes (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=wanderera>; Wang, Shou (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=wange>; West, Catherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=westca>; Williams, Anya (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=williamsany>; Williams, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=williamsk>; Witt, Michael (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=wittm>; Worthman, Katherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=worthmank>; Young, Christopher </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=youngc>; Yuda, John (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=yudaj>; Zapanta, Victor (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=zapantav>; Hillebrand, Gail (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=hillebrandg>; Antonakes, Steve (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=antonakess>; Antonellis, Sherry (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=antonelliss>; Assebab, Catherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=assebabc>; Bach, Mary (Stacey)(CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=bachs>; Bateman, Jon </o=ustreasury/ou=exchange administrative group

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(fydibohf23spdlt)/cn=recipients/cn=batemanj>; Black, Brad </o=ustreasury/ou=do/cn=recipients/cn=blackb>; Blanton, Mary </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=blantonm>; Blenkinsopp, Alexander (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=blenkinsoppa>; Blow, Marla (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=blowm>; Blumenthal, Pamela (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=blumenthalp>; Boenau, Susan (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=boenaus>; Botelho, Michael (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=botelhom>; Breslaw, April (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=breslawa>; Brown, Allison (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=brownall>; Brown, Charles (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=brownchar>; Brown, Robert (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=brownr>; Brown, Trina (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=browntri>; Burniston, Tim (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=burnistont>; Burton, Matthew (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=burtonm>; Callan, Nicole (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=callann>; Campbell, Michael (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=campbellmic>; Canfield, Anna (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=canfielda>; Cantrell, Diane (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cantrelld>; Chandler, Deidra (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=chandlerde>; Chanin, Leonard (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=chaninl>; Chow, Edwin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=chowe>; Chuhaj, Yuri J </o=ustreasury/ou=do/cn=recipients/cn=ots/cn=ch4970>; Cochran, Kelly (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cochrank>; Coleman, John (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=colemanjo>; Craft, Nadine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=craftn>; Cronan, Russell (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cronanr>; D'Amico, Christina </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=damicoc>; Darling, Eben (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=darlinge>; Date, Rajeev (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dater>; Davidson, Terri L

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</o=ustreasury/ou=do/cn=recipients/cn=ots/cn=da0037>; Decker, Sharon (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=deckers>; Deutsch, Rebecca (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=deutschr>; Dickman, Marilyn (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dickmanm>; DiPalma, Nikki (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dipalman>; Dokko, Jane (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dokkoj>; Donoghue, Kristen (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=donoghuek>; Duncan, Timothy (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=duncant>; Egerman, Mark (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=egermanm>; Elliott, Brandace (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=elliottbr>; English, Leandra (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=englistl>; Forrest, David (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=forrestda>; Frotman, Seth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=frotmans>; Galicki, Joshua (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=galickij>; Geary, John (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gearyj>; Geldon, Daniel (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=geldond>; Glaser, Elizabeth (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=glasere>; Gonzalez, Roberto (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gonzalezr>; Gorski, Stephanie (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=gorskis>; Granat, Rochelle </o=ustreasury/ou=do/cn=recipients/cn=granatr>; Gregorio, Laurie (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=gregol>; Hammonds, Jamice (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=hammondsj>; Hancock, Gary (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=hancockg>; Hart, Maria (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=hartm>; Haynes-Gholar, Tywana (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=haynes-gholat>; Herring, Maia </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=herringm>; Horan, Kathleen (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=horank>; Horn, Richard (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=hornr>; Howard, Jennifer (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=howardje>; Hrdy, Alice (CFPB) </o=ustreasury/ou=exchange administrative group

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(fydibohf23spdlt)/cn=recipients/cn=hrdya>; Jackson, Peter (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=jacksonpe> Cc: Bcc: Subject: Date: Attachments:

UPDATE: webTA Training for Supervisors (names K-Z) (makeup session See Location) Wed May 11 2011 09:31:06 EDT

When: Wednesday, May 11, 2011 1:00 PM-2:30 PM (UTC-05:00) Eastern Time (US & Canada). Where: Cr-1003 (10th floor) Note: The GMT offset above does not reflect daylight saving time adjustments. *~*~*~*~*~*~*~*~*~* Colleagues As you know, all Federal employees are required to track their time and attendance. Until now, CFPB employees have been tracking time manually through the use of spreadsheets. However, we will begin to use webTA, a Kronos time and attendance tracking system, to capture employee time and leave. This product will also provide managers the ability to approve leave and overtime in advance and to certify their employees' timesheets. Beginning with pay period 10 - May 8th thru May 21st, employees will begin entering their time and attendance information in webTA, and managers will start certifying employee time at the end of each pay period. Training has been designed to be just in time so that it's fresh in everyone's mind. On May 10th and 11th, members of the Bureau of Public Debt Administrative Resource Center will be on-site at 1801 to provide employee and manager training. They will be hosting 2 manager and 3 employee training sessions over the course of the 2 days. These sessions will last 1 - 1 hours. Everyone is strongly encouraged to participate in this training in order to ensure that proper timekeeping procedures are followed and to prevent payroll related issues from occurring. Please plan to attend one of the following sessions: Last Name Beginning with A through J, Room 7003 May 10: 8:30 - 10:00 - supervisor session 1:00 - 2:00 - employee session 2:30 - 3:30 - employee session Last Name Beginning with K through Z, Room 1003 May 11: 10:00 - 11:00 - employee session Room 1003 1:00 - 2:30 - supervisor session If you are unable to attend the session assigned to you, please advise Maria Hart as soon as practicable at Maria.Hart@treasury.gov Supervisors need only attend the supervisor session as it will cover both the employee and supervisor roles. If you have any questions, please contact Imani Harvey on 435-7513 or at Imani. Harvey@treasury.gov.

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Dennis Slagter Chief Human Capital Officer Consumer Financial Protection Bureau 202-435-7143 (1801 L St)
(b) (6)

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From:

To: Cc: Bcc: Subject: Date: Attachments: Hi Tom,

Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk> Scanlon, Thomas </o=ustreasury/ou=do/cn=recipients/cn=scanlont>

Re: Fine work Tue May 10 2011 18:09:42 EDT

Thank you so much for your kind note. It has been an absolute pleasure working with you and Elizabeth on this project. I have learned a tremendous amount, not just on the substance of these laws, but about regulatory procedure, interagency dynamics, and project management from you. This project has been one of the highlights of my professional development thus far, and I really appreciate the opportunity. I'm glad you'll be able to make it tomorrow. Thank you again. -Kevin

From: Scanlon, Thomas Sent: Tuesday, May 10, 2011 05:37 PM To: Lownds, Kevin (CFPB) Subject: Fine work

Kevin, Your work for our meeting yesterdaylike all of your work over the past several monthswas exceptional. My sense is that our colleagues at the meeting were able to easily follow the presentation that you and Elizabeth led, as evidenced by the good questions they asked throughout our discussion. Because of your diligence and attention to detail, you, Elizabeth and I were able to accelerate these projects and deliver solid products to our colleagues. In particular, I am grateful to you for working so smartly during those weeks when either Elizabeth or I (and sometimes both of us) were jammed up at our desks on other matters. Thank you. Ill be looking forward to seeing you tomorrow and congratulating you, personally.

Tom

Thomas E. Scanlon

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tel. (202) 622-8170

Page 693 of 2347

From:

To:

Cc:

Adeyemo, Adewale (Wally) (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=adeyemoa> Dickman, Marilyn (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dickmanm>; Slagter, Dennis (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=slagterd>; Glaser, Elizabeth (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=glasere> Tingwald, James (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tingwaldj>; Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk> RE: HUD Offer Letters Are Being Sent Out Now Tue May 10 2011 17:09:24 EDT

Bcc: Subject: Date: Attachments: Congrats team!

From: Dickman, Marilyn (CFPB) Sent: Tuesday, May 10, 2011 4:59 PM To: Slagter, Dennis (CFPB); Glaser, Elizabeth (CFPB); Adeyemo, Adewale (Wally) (CFPB) Cc: Tingwald, James (CFPB); Lownds, Kevin (CFPB) Subject: HUD Offer Letters Are Being Sent Out Now

Marilyn A. Dickman Deputy Chief Human Capital Officer Consumer Financial Protection Bureau 202-435-7157 (W)

This e-mail may contain Privacy Act/Sensitive Data, which is intended only for the individual to which it is addressed. It may contain information that is privileged, confidential, or otherwise protected from disclosure under applicable laws. Do not disclose sensitive data to others within or outside of CFPB unless they have a legitimate need for the information based on their official duties. If you are unsure of the appropriateness of information disclosure, please contact the General Counsel or the Privacy Team for guidance.

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From:

To:

Cc:

Adeyemo, Adewale (Wally) (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=adeyemoa> Canfield, Anna (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=canfielda>; _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands>; Ladd, Christine </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=laddc>; Lilly, Antona </o=ustreasury/ou=do/cn=recipients/cn=lillya>; Betts, Kristina (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=bettsk>; Worthman, Katherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=worthmank>; Leary, Jesse (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=learyje>; Donoghue, Kristen (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=donoghuek>; Starr, John (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=starrj>; Chanin, Leonard (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=chaninl> Grover, Eric (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=grovere>; Keane, Micheal (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=keanem>; Hillebrand, Gail (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=hillebrandg>; Gupta, Neeraj (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=guptan>; Deutsch, Rebecca (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=deutschr>; Healey, Jean (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=healeyj>; Brolin, John (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=brolinj>; Wanderer, Agnes (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=wanderera>; Selden, R. Colgate (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=seldenr>; Young, Christopher </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=youngc>; Petraeus, Holly (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=petraeush>; Blow, Marla (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=blowm>; Plunkett, Alexander (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=alexanderp>; Coleman, John (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=colemanjo>; Scala, Courtney (CFPB) </o=ustreasury/ou=exchange administrative group

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(fydibohf23spdlt)/cn=recipients/cn=scalac>; Gragan, David (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gragand>; Tingwald, James (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tingwaldj>; Shue, Jeffrey (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=shuej>; Bach, Mary (Stacey)(CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=bachs>; Turenne, Jeannine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=turennej>; Riley, Jeffrey (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=rileyje>; D'Amico, Christina </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=damicoc>; Reeder, Garry (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=reederg>; Petersen, Cara (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=petersenc>; West, Catherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=westca>; Sena, Theresa (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=senat>; Mosena, Lea (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=mosenal>; Gao, Jane (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gaoj>; Geldon, Daniel (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=geldond>; Pearl, Joanna (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=libermanj>; Boenau, Susan (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=boenaus>; Dickman, Marilyn (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dickmanm>; Mann, Seth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=manns>; Morris, Lucy (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=morrislu>; Herchen, Emily (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=herchene>; Silberman, David (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=silbermand>; DiPalma, Nikki (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dipalman>; McQueen, Suzanne (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=mcqueens>; Sanford, Paul (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sanfordpa>; Jackson, Peter (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=jacksonpe>; Hrdy, Alice (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=hrdya>; Date, Rajeev (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dater>; Michalosky, Martin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=michaloskym>; Cordray,

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Richard (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cordrayr>; Cumpiano, Flavio (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cumpianof>; Cochran, Kelly (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cochrank>; Stark, Paula-Rose (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=starkp>; English, Jared (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=englishjar>; Twohig, Peggy (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=twohigp>; Gordon, Michael (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gordonm>; Lev, Ori (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=ofac/cn=ofac users/cn=levo>; Chow, Edwin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=chowe>; Vanderslice, Julie (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=vanderslicej>; Smullin, Rebecca (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=smullinr>; McCoy, Patricia (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=mccoyp>; Lopez-Fernandini, Alejandra (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lopez-fernadinia>; Williams, Anya (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=williamsany>; Gorski, Stephanie (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=gorskis>; Fuchs, Meredith (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=fuchsm>; Geary, John (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gearyj>; Reilly, Deb (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=reillyd>; Fravel, Wesley (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=fravelw>; Abney, Wilson (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=abneyw>; Proctor, Althea </o=ustreasury/ou=do/cn=recipients/cn=proctora>; Cronin, Katherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cronink>; Lombardo, Christopher </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lombardoc>; Vail, Amber (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=vaila>; Rexroth, Mariana (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=rexrothm>; Breslaw, April (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=breslawa>; Suess, Robert (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=seussr>; Harvey, Imani (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harveyi>; Trueblood, Andrew (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=trueblooda>; Brown, Allison

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(CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=brownall>; VanMeter, Stephen (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=vanmeters>; Levisohn, Ethan (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=levisohne>; Alag, Sartaj </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=alags> Bcc: Subject: Date: Attachments: RE: All Hands Meeting Tue May 10 2011 13:11:26 EDT

We look forward to seeing you at today's all hands meeting. -----Original Appointment----From: Canfield, Anna (CFPB) Sent: Monday, May 09, 2011 9:21 AM To: Canfield, Anna (CFPB); _DL_CFPB_AllHands; Ladd, Christine; Lilly, Antona; Betts, Kristina (CFPB); Worthman, Katherine (CFPB); Leary, Jesse (CFPB); Donoghue, Kristen (CFPB); Starr, John (CFPB); Chanin, Leonard (CFPB) Cc: Grover, Eric (CFPB); Keane, Micheal (CFPB); Hillebrand, Gail (CFPB); Gupta, Neeraj (CFPB); Deutsch, Rebecca (CFPB); Healey, Jean (CFPB); Brolin, John (CFPB); Wanderer, Agnes (CFPB); Selden, R. Colgate (CFPB); Young, Christopher; Petraeus, Holly (CFPB); Blow, Marla (CFPB); Plunkett, Alexander (CFPB); Coleman, John (CFPB); Scala, Courtney (CFPB); Gragan, David (CFPB); Tingwald, James (CFPB); Shue, Jeffrey (CFPB); Bach, Mary (Stacey)(CFPB); Turenne, Jeannine (CFPB); Riley, Jeffrey (CFPB); D'Amico, Christina; Reeder, Garry (CFPB); Petersen, Cara (CFPB); West, Catherine (CFPB); Sena, Theresa (CFPB); Mosena, Lea (CFPB); Gao, Jane (CFPB); Geldon, Daniel (CFPB); Pearl, Joanna (CFPB); Boenau, Susan (CFPB); Dickman, Marilyn (CFPB); Mann, Seth (CFPB); Morris, Lucy (CFPB); Herchen, Emily (CFPB); Silberman, David (CFPB); DiPalma, Nikki (CFPB); McQueen, Suzanne (CFPB); Sanford, Paul (CFPB); Jackson, Peter (CFPB); Hrdy, Alice (CFPB); Date, Rajeev (CFPB); Michalosky, Martin (CFPB); Cordray, Richard (CFPB); Cumpiano, Flavio (CFPB); Cochran, Kelly (CFPB); Stark, Paula-Rose (CFPB); English, Jared (CFPB); Twohig, Peggy (CFPB); Gordon, Michael (CFPB); Lev, Ori (CFPB); Chow, Edwin (CFPB); Vanderslice, Julie (CFPB); Smullin, Rebecca (CFPB); McCoy, Patricia (CFPB); Lopez-Fernandini, Alejandra (CFPB); Williams, Anya (CFPB); Gorski, Stephanie (CFPB); Fuchs, Meredith (CFPB); Geary, John (CFPB); Reilly, Deb (CFPB); Fravel, Wesley (CFPB); Abney, Wilson (CFPB); Proctor, Althea; Cronin, Katherine (CFPB); Lombardo, Christopher; Vail, Amber (CFPB); Rexroth, Mariana (CFPB); Breslaw, April (CFPB); Suess, Robert (CFPB); Harvey, Imani (CFPB); Trueblood, Andrew (CFPB); Brown, Allison (CFPB); VanMeter, Stephen (CFPB); Levisohn, Ethan (CFPB); Alag, Sartaj Subject: All Hands Meeting When: Tuesday, May 10, 2011 1:30 PM-2:00 PM (UTC-05:00) Eastern Time (US & Canada). Where: 5th floor elevator bank

When: Tuesday, May 10, 2011 1:30 PM-2:00 PM (UTC-05:00) Eastern Time (US & Canada). Where: 5th floor elevator bank Note: The GMT offset above does not reflect daylight saving time adjustments. *~*~*~*~*~*~*~*~*~* Please join us for all hands with a special guest visitor.

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From:

To:

Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk> Gonzalez, Roberto (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gonzalezr>

Cc: Bcc: Subject: Date: Attachments: Hi Roberto,

Re: Quick Chat Tue May 10 2011 12:23:21 EDT

That works great. I'll swing by your office at 330 tomorrow. Thanks again! -Kevin

From: Gonzalez, Roberto (CFPB) Sent: Tuesday, May 10, 2011 12:20 PM To: Lownds, Kevin (CFPB) Subject: RE: Quick Chat

Hey Kevin - 3:30 tmrw works - want to meet in my office, rm 519, and well go from there? Ill be coming from a meeting that ends at 3:30 so might be a couple minutes late.

From: Lownds, Kevin (CFPB) Sent: Monday, May 09, 2011 5:25 PM To: Gonzalez, Roberto (CFPB) Subject: Quick Chat

Hi Roberto,

Thank you for agreeing to sit down with me and talk about Wilmer and your experiences there. Would you be able to grab coffee this Wednesday around 3:30? If not, Id be happy to make myself available whenever it is most convenient for you.

Thanks again, Kevin

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Kevin K. Lownds Review Analyst Consumer Financial Protection Bureau (202) 435-7399

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From:

To: Cc:

Blenkinsopp, Alexander (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=blenkinsoppa> _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands> Adamske, Steven </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=adamskes>; Moore, Megan </o=ustreasury/ou=do/cn=recipients/cn=mooreme>; Hunt, Anita Maria </o=ustreasury/ou=do/cn=recipients/cn=hunta>; Wallace, Kim </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=wallacek>; Wolin, Neal </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=wolinn>; Warren, Elizabeth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=warrene>; Fitzpayne, Alastair </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=fitzpaynea>; LeCompte, Jenni </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=engebretsenj>; Murray, Colleen </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=murrayco>; Coloretti, Nani </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=colorettin>; Gordon, Ashley (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gordonas> CFPB Press Clips 5/10 Tue May 10 2011 12:15:49 EDT

Bcc: Subject: Date: Attachments:

Press Clips 5/10/2011

Index

Click publication title to find its location in this e-mail. Click article title to go to its source website.

Congress and the CFPB American Banker Shelby Should Get Out Of the Way and Let the CFPB Get to Work American Banker Feedback: Dont Give CFPB a Chance NPR Republicans Propose Tweaks To New Financial Rules

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American Banker Shelby Plays Gatekeeper Role for Banking Nominees Reuters U.S. Senate banking panel chief defends Dodd-Frank Huffington Post Payday Loan Kingpin Praises Elizabeth Warren

Huffington Post The Economic Security President: Four Ways to Be Bold and Gutsy on the Home Front Slate War Against the Weak

Consumer Financial Protection Bureau Bank Systems & Technology Banks Hurry Up and Wait for Guidance from CFPB Housing Wire Nothing is clear when it comes to Dodd-Frank and the CFPB Credit Union Times Trades Urge Changes in Complaint Process for New Consumer Bureau

Consumer Credit Bloomberg Late Fees Drop Two Years After Credit-Card Act, Pew Study Says New York Times (blog) Stay-at-Home Moms and the Need for Credit American Banker Huntington Opts for Free Checking Over Fees, Dares Rival Banks to Follow Wall Street Journal Cards Return to School Los Angeles Times Banks should cut fees, not pay for market research American Banker The Debate Over Social Media in Collections Heats Up

Housing Washington Post State attorneys general in D.C. for talks on fund to aid homeowners Naked Capitalism North Carolina Appellate Decision Raises New Chain of Title Issue Housing Wire Reported incidents of mortgage fraud drop 41% in 2010

Other Bloomberg FDICs Bair Will Leave July 8 After Living-Will Rule American Banker Senators Demand Review of Dodd-Franks Economic Costs New York Times (blog) House Financial Services Committee Goes Digital

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American Banker Shelby Should Get Out Of the Way and Let the CFPB Get to Work May 10, 2011 By Barbara A. Rehm

Sen. Richard Shelby is wily, powerful and not particularly concerned with how he looks when he's throwing his weight around. Winning is what matters.

But it's losing that is behind the Alabama Republican's latest outburst.

Sen. Shelby lost last year when Congress voted for, and President Obama signed, the Dodd-Frank Wall Street Reform and Consumer Protection Act. There is plenty Shelby didn't like about the law, but what he is upset about now is the structure of the Consumer Financial Protection Bureau.

He and 43 other Republican members of the Senate told President Obama in a May 5 letter that they would block any nominee to lead the bureau unless significant changes are made to its governance. For good measure, the next day a Republican staffer made it clear that unless Obama plays ball, all of his financial services appointments will face delays.

Is this any way to run a government? Shelby wants to make changes to Dodd-Frank, and that's his prerogative. But he shouldn't use the nominations process to accomplish his political goals.

And remember, it's not as if the bureau is up and running and issuing rules that make no sense. It won't even have the power to write rules until July 21, the first anniversary of Dodd-Frank's enactment.

The bureau's creation was the subject of long and hard debate, and the language in the law represents a compromise. Republicans opposed creating an independent consumer protection agency, so the Democrats agreed to house the bureau inside the Federal Reserve Board.

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Remember when Sen. Chris Dodd cut that deal a year ago? Rep. Barney Frank was caught off guard and told reporters it was a "bad joke." But that's what happens when laws are made people agree to things they don't want in order to accomplish broader goals, which in this case was assuring the public that Congress was responding to the nation's worst financial crisis in 70 years.

Granted, Shelby was not a party to that compromise, and he voted against the bill. What's more, his concerns are legitimate, especially whether consumer protection regulation may interfere with safety and soundness oversight.

But while he has every right to seek changes to laws that aren't working, he should give Dodd-Frank and the bureau a chance before he tries to crush them.

Shelby's letter to the president envisions all kinds of things none of which are even close to happening.

According to Shelby and Co.: The bureau "will directly affect every American household by limiting their choices when purchasing financial products, restricting the availability of credit to consumers, and increasing the cost of goods or services purchased using credit."

The letter adds, "How the CFPB director exercises his or her authority therefore will have a profound influence on the future of our economy and job creation."

Maybe. Maybe not. No one, including Dick Shelby, knows yet.

Shelby told Obama that before the Senate will clear any nominee the director must be replaced by a board to make the bureau more accountable.

Shelby also wants the bureau's budget to be subject to the congressional appropriations process rather than have the Fed supply the funding. Of course, Congress nearly shut the government down because it couldn't pass a budget, so it's tough to claim you "support strong and effective consumer protection" while also insisting the bureau's budget be subject to the delays and politics that accompany congressional oversight.

Finally, Shelby wants Obama to ensure that the agencies enforcing bank safety and soundness rules have the ability to block the bureau if it writes a rule that could spur bank failures.

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This last point is Shelby's best, but Dodd-Frank does have a safety valve designed to prevent the bureau from going off half-cocked and writing rules that endanger the system. A two-thirds vote of Financial Stability Oversight Council members can overturn a bureau rule. What's more, the bureau's director will get a seat on the oversight council as well as on the board of the Federal Deposit Insurance Corp. and the Federal Financial Institutions Examination Council.

So it's not as if the director will operate in a vacuum. That person will have close contact with all the people charged with safeguarding the banking system.

And as noted three times above, there is not an ounce of evidence that the bureau will write a bunch of rules that will lead lenders to do stupid things.

President Obama should have nominated a director long ago, but fearing a confirmation fight he made Elizabeth Warren an adviser and asked her to start organizing the bureau. She has. Even her critics will concede she has worked tirelessly to ensure the bureau fulfills Dodd-Frank's mandate of protecting consumers.

The Obama administration was reportedly on the verge of announcing nine nominations for financial policy jobs when Shelby decided to step in the way.

Dodd-Frank will never get implemented if the president is unable to assemble his team. The Senate should approve the qualified candidates Obama sends up.

Shelby should have learned this lesson already. Just weeks after blocking Peter Diamond's nomination to the Fed board last fall, claiming the MIT economist wasn't good enough, Diamond won a Nobel Prize.

So let's let the bureau do its job, and then judge what it does not what Shelby fears it may do.

Barb Rehm is American Banker's editor at large. She welcomes feedback to her weekly column at Barbara.Rehm@SourceMedia.com.

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American Banker Feedback: Dont Give CFPB a Chance May 9, 2011 By Randy Boyer

I have been in this industry over 30 years as a banker and as a provider of bank services. I am outraged at your editorial position and hope it does not speak for American Banker as a whole.

The bias in your editorial, stated as fact, is clear. "Throwing his weight", "latest outburst", " political goals" are red meat hyperbole. "The bureau's creation was the subject of long and hard debate, and the language in the law represents a compromise" makes it sound as if the Republicans had a place at the table while Dodd-Frank was proscribed. They didn't have a say, due to Harry Reid's parliamentary maneuvers and a filibuster-proof majority. Dodd-Frank in general, and CFPB in particular, are daggers pointed at the heart of our industry and will not be a solution to the problems they purport to address. DF was passed with the chicanery of Chris Dodd and Barney Frank, who should be discredited arguably as the #1 enablers of the 2008 financial meltdown (did you forget their lack of interest in auditing or curbing the GSEs over the preceding 10 years?). Does it not bother you that DF, which has created 10,000 pages of conflicting regulations, will reduce consumer access to credit, create arbitrary winners and losers (TBTF etc), etc, with little offsetting good ?

Specifically, what FDIC-regulated financial insitutions committed the egregious consumer frauds that CFPB supposedly will prevent? Answer: none.

Elizabeth Warren is the most anti-business, most idealogical partisan that President Obama could nominate. If Senator Shelby prevails, Obama will sneak her in through a recess appointment, which sidesteps the advise and consent role of the Senate, (you don't seem too concerned about that either). Shelby is doing nothing the Democrats in the previous Congress didn't do, (where's your outrage about that ?).

Your argument seems to be "give CFPB a chance" before it is OK with you to voice opposition. Sounds like giving car keys to a drunk, then waiting till he causes an accident before opining he shouldn't be behind a steering wheel. The time to change or stop CFPB is now.

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I am amazed that the ABA and ICBA have rolled over at the anti-capitalist behavior of the Obama administration, and seemingly have endorsed Elizabeth Warren. OK, maybe they are afraid the Chicago machine will come after them, but what about American Banker ? You are supposed to be standing up for our industry. Your editorial does it a disservice.

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NPR Republicans Propose Tweaks To New Financial Rules May 10, 2011 By Audie Cornish

One of the first bills Republicans filed on the first day of this Congress was one repealing the new law governing Wall Street. But since then, the repeal bill has languished untouched, with barely a halfdozen co-sponsors.

That doesn't mean Republicans are giving up, however. The GOP's latest plan is what detractors call death by a thousand cuts.

'They're Trying To Nibble It To Death'

On the website of the House Financial Services Committee, there's a Republican video highlighting what the party says is wrong with the Wall Street law. Splashed across the screen are daunting stats: 2,600 new bureaucrats; 300 new regulations. But instead of seeking a repeal, the GOP is calling for "fixing the failed policies of Dodd-Frank," the bill named for its authors, Rep. Barney Frank (D-MA) and former Sen. Chris Dodd (D-CT).

Republican Rep. Nan Hayworth, a Tea Party-backed freshman from New York, has had to dial back expectations that the Wall Street law would be taken down in the House the way the health care law was.

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"The more we depower, defund Dodd-Frank, the better," she says. "But we are doing so in a way that we feel will have the greatest results within the time frame of the 112th Congress."

Republicans are trying to retool the new law even the parts of it that haven't hit the books yet, says Frank, the ranking Democrat on the Financial Services Committee.

"They recognize that the financial reform is more popular," he says. "So with health care, they just did a flat-out repeal, and they also offered budget amendments. With the financial reform, they're trying to nibble it to death."

And now is as good a time as any, as many of the law's regulations are still unwritten.

"They are able to do it they think; I don't think they'll get away with it because attention is focused on the debt limit and on health care," Frank says. "They are trying to do this ... beneath the radar screen."

Proposed Changes

Republicans have been working on four bills aimed at one part of the financial industry law the Consumer Financial Protection Bureau, which is supposed to oversee financial products from credit cards to home loans.

Freshman Republican Rep. Sean Duffy of Wisconsin is among those proposing what he calls "tweaks" to the law. His proposal would make it easier to override rules written by the new consumer bureau.

"I get concerned when I see regulation after regulation, and we just pile it on, and we don't have a comprehensive review to see what impact ... all of these massive rules have on our banking system," he says.

Of course, Democrats such as Minnesota Rep. Keith Ellison don't see it that way.

"If the rules were firmly in place and we had some experience under the rules, then we would know whether or not the legislation or the rule needs to be ... 'tweaked,' " he says. "We don't know that yet, because all this stuff is being fashioned now."

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There's also a bill that would bar the consumer bureau from acting on its full power until a director is in place. Another measure would replace the director with a five-member commission.

But there is no appetite in the Democrat-led Senate to take up those measures, according to Sen. Mark Warner (D-VA), a member of the Banking Committee.

"I think there are areas in Dodd-Frank that could stand tweakings, but the concern I think here on the Senate side is that we don't want to relitigate the whole issue," Warner says. "And if you open up one of these bills, then you don't know what might end up coming back."

There is also still a Senate battle looming over who will head the new consumer bureau. President Obama appointed Harvard professor Elizabeth Warren to get it up and running, with a launch date in July.

Whether Warren will be his choice as the first director is one question and whether Democrats have the votes to confirm her is still another. Senate Republicans have written the president, saying they would refuse to confirm any nominee unless there are changes to the law.

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American Banker Shelby Plays Gatekeeper Role for Banking Nominees May 10, 2011 By Cheyenne Hopkins

WASHINGTON While President Obama is the one who chooses nominees for key financial services policy posts, it is a Republican from Alabama, Sen. Richard Shelby, who appears to have a big say in whether a candidate is actually confirmed.

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Shelby has already blocked nominations for the Federal Reserve Board and Federal Housing Finance Agency, and is leading the charge to hold up any Consumer Financial Protection Bureau nominee until structural changes are made to the agency.

Although in the minority, Shelby has effectively become the one who makes or breaks banking nominations, thanks in part to his influence with fellow Republicans and his long tenure on the banking panel.

"In terms of nominations in general, he is going to be a pivotal player in making sure they move through Banking," said Mark Calabria, a former top aide to Shelby and a director of financial regulations studies at the Cato Institute. "He is going to have close to a veto role."

Shelby has already exercised that role. He has blocked the nomination of Peter Diamond, who won a Nobel Prize for economics last October, by declaring him unqualified to serve on the Federal Reserve. The White House also withdrew its nomination in January of Joseph Smith to be director of the FHFA after Shelby called him a "lapdog" and a "tool" of the administration. Last week Shelby, along with 43 other Republican senators, announced they would not support any nominee for the CFPB unless structural changes are made.

Amy Friend, a managing director at Promontory Financial Group and the former chief counsel to the Senate Banking Committee, said the Smith and Diamond nominations prove Shelby's influence.

"Joe Smith seemed to be a moderate, middle-of-the-road nominee, and the fact that Sen. Shelby chose to stop that nomination made people sit up and take stock," Friend said. "Now people are naturally looking to see what Sen. Shelby's reaction will be, and it's not clear what criteria he'll use to judge any prospective nominee."

While observers said Shelby approaches nominations on a case-by-case basis, they expect him to closely scrutinize the long list of pending nominations. The administration is expected to offer a slate of nine appointments, including the heads of the Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency.

Shelby is also unafraid to use the advice-and-consent role of the Senate to pursue other policy objectives. Although he unsuccessfully fought last year to limit the CFPB's authority, Shelby has reopened that battle by saying he will not agree to any nominee for the agency's director unless legislation is enacted that puts the bureau through the congressional appropriations process and gives banking regulators more leeway to override the CFPB's actions.

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"Shelby has considerable clout, because the Democrats lack 60 votes to defeat a filibuster," said Jaret Seiberg, an analyst for MF Global Inc.'s Washington Research Group. "So it's going to be very hard to get a nominee through if Shelby is objecting. Shelby has enough respect and clout within the Republican caucus to hold up most nominees. Shelby is a gatekeeper. You are not going to get through the gate if Shelby doesn't want you to."

To be sure, Shelby has not rejected all of Obama's financial services nominees. While he blocked Diamond's nomination last year, Shelby's support helped win confirmation for Janet Yellen to become the Fed's vice chairman, and Sarah Bloom Raskin to join the central bank's board.

A spokesman for Shelby said the Alabama Republican evaluates nominees according to their qualifications on a case-by-case basis.

But there is little doubt, observers said, that the nomination process has become tougher in the postcrisis era, especially as banking issues are decidedly more partisan.

"Shelby has long felt that the process of enacting the Dodd-Frank Act really railroaded him and didn't give him the traditional last-minute considerations of the other side so he's still on the warpath," said Joseph Engelhard, a senior vice president at Capital Alpha Partners LLC. "Anything to do with DoddFrank, Shelby's attitude is our side was completely shut out in the end and we have to exert our rights for the minority and this is one way to do that."

Jerry Buckley, co-chair of BuckleySandler LLP, said the crisis has definitely raised the stakes.

"The fact that we have had an economic meltdown attributed to the financial services industry and partially attributed by the regulation of the financial services industry means that it's a much more highprofile time," Buckley said. "It's perceived as the industry that got the country in a ditch, so the importance of financial services regulators is much more enhanced."

Industry observers said the administration would be wise to consult with Shelby more on the nomination process. With the upcoming slate of financial services nominees, V. Gerard Comizio, a partner at the corporate department at Paul, Hastings, Janofsky & Walker LLP, said he expects some bartering over nominees to gain Shelby's support.

"I thought from what I've heard that this is a good old-fashioned horse swapping," Comizio said. "For the White House to have its slate of nominations, they are going to have to cut some deals, and that may include considering candidates offered up by the other party."

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Since the FDIC's five-member board can only have three members of the same political party, many expect Shelby to have a lead role in helping pick the relevant Republican nominees, including the FDIC's vice chairman.

"When they get around to nominating people on the FDIC I wouldn't be surprised if he asked for the two Republican nominees before he is willing to move on the Democrat," said Wayne Abernathy, a former top Senate Republican aide and now executive director of financial institutions policy and regulatory affairs for the American Bankers Association.

Many observers also said Shelby's actions have helped heighten the importance of the ranking member position, which often can be relatively sidelined.

"Shelby seems more assertive than your traditional ranking member in recent history," Abernathy said. "I think it's because Shelby is taking the job seriously."

But some observers hope Shelby will not hold up a financial services package, leaving several agencies, including the FDIC, OCC, FHFA and CFPB without permanent directors.

"These agencies are hampered by not having confirmed heads," Friend said. "Whether or not you agree with Dodd-Frank, these are key positions and you want somebody in them who has gone through the confirmation process."

Bob Clarke, a senior partner at Bracewell & Giuliani LLP and a former comptroller of the currency, suffered from Shelby's influence when the senator was among those who voted against Clarke's renomination. Clarke urged speed in filling the many banking regulatory vacancies.

"The nomination process is so strange, because it seems like in every administration it's not a Democrat or Republican problem it seems the White House takes far longer than it should for these very important jobs," Clarke said. "I think it's irresponsible to have left these principal bank regulatory agencies without knowing who their leaders will be. It creates problems internally in the agency it creates all kinds of uncertainty even under normal times, and these are not normal times."

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Reuters U.S. Senate banking panel chief defends Dodd-Frank May 10, 2011 By Kevin Drawbaugh

* House Republicans seeking to weaken, delay reforms

* Senate likely to block rollback efforts

* Sen. Shelby says financial crisis panel irrelevant

Rolling back the Dodd-Frank Wall Street law of 2010 "would be dangerous and irresponsible," said the Democratic chairman of the U.S. Senate Banking Committee on Tuesday.

As Republicans in the U.S. House of Representatives move to weaken and delay key parts of DoddFrank, banking panel chairman Tim Johnson made clear that such efforts will face a steep uphill climb in the Democratic-controlled Senate.

"We cannot allow Dodd-Frank to be dismantled," Johnson said at a hearing focused on the work of an independent commission that investigated the financial crisis of 2007-2009, which prompted the drafting and passage of Dodd-Frank.

"We simply cannot afford to go back to the old financial system that destroyed millions of jobs and cost the economy trillions of dollars," Johnson said.

Republican attacks on Dodd-Frank, coming more than nine months after President Barack Obama signed it into law, are focused on trying to cut funding for the federal agencies that must implement it and, more directly, on specific provisions.

A House panel last week approved a bill that would weaken a new financial consumer protection

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watchdog being set up under Dodd-Frank. The Consumer Financial Protection Bureau is on track to begin regulating mortgages and credit cards in July.

Republicans, who control the House, consistently opposed most of Dodd-Frank through the debate over it in 2009 and 2010, as did an army of bank and financial services lobbyists.

House Republicans' attempts to roll back the law were not expected to make headway in the Senate. Even if they do, they would likely face a swift veto from Obama, a staunch Dodd-Frank supporter, according to policy analysts.

Senator Richard Shelby, the banking panel's top Republican, called Dodd-Frank "a wish-list of reforms long sought by liberal activists, special interests and federal bureaucrats."

Shelby said the banking committee should have conducted its own investigation of the crisis, rather than assigning that job to the independent Financial Crisis Inquiry Commission (FCIC).

Testifying at the hearing, FCIC Chairman Phil Angelides said the commission conducted a thorough inquiry. The bipartisan commission was unable to issue a unified report, however, with some members issuing their own findings.

None of the commission's findings appeared until several months after Congress approved DoddFrank.

"While it is unfortunate that the commission was unable to reach a bipartisan consensus on its final report, it is more unfortunate that, in the end, it did not matter," Shelby said.

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Huffington Post

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Payday Loan Kingpin Praises Elizabeth Warren May 10, 2011 By Zach Carter

WASHINGTON -- The CEO of the nation's largest payday lending outifit is making the rounds in the nation's capital to praise consumer advocate Elizabeth Warren and the new Bureau of Consumer Financial Protection (CFPB). The mini-press-junket is part of a concerted lobbying effort from payday loan giant Advance America aimed at pushing the CFPB to crack down on the overdraft fees charged by mainstream banks like Wells Fargo and Bank of America, to the benefit of payday lenders.

Overdraft fees and payday loans are widely reviled by consumer advocates, who view both as unfair and deceptive products that directly target the poor. But they are also big business -- both overdrafts and payday lending represent multi-billion-dollar markets. They also directly compete with each other: Every payday loan customer could be padding bank profits by overdrawing, and vice versa.

Warren is charged with setting up the new Consumer Financial Protection Bureau, but she is not formally director of the nascent agency. President Obama must put a formal CFPB director in charge by July 21 or the bureau will lose authority over payday lenders and other "nonbank" financial operators, like mortgage brokers and check-cashing firms.

With that deadline fast approaching, Advance America CEO Billy Webster is doing everything he can to make sure that whoever gets the top CFPB job will steer consumers who need quick cash away from overdraft fees and into payday loans.

"People . . . might think we're opposed to CFPB, and we're not," Webster told The Huffington Post.

Webster explicitly praised Warren's background and said she would make a good candidate for the CFPB Director position. Independent Community Bankers Association President Cam Fine made similar comments last week.

"I like Elizabeth Warren," Webster said. "She's got incredibly relevant life experience for this job: She comes from a working middle-class family, she knows how working middle-class families think and what pressures they're under. That's good."

Webster says Advance America supports CFBP because the agency could fairly evaluate payday lenders' and big banks' products to the benefit of consumers.

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"We think that, as Elizabeth Warren has talked about, we should evaluate all these nonbank lenders on criteria around transparency, disclosure, understandability to the consumer, hidden fees. We think those are right criteria to evaluate all the products," he said.

Webster objects to criticism of payday loans' high annual percentage rate (APR), noting that competing products offered by big banks are not subject to the same analysis.

A typical Advance America loan, Webster says, amounts to $300, with $45 in fees. It must be repaid within 18 days, and carries an APR of over 300 percent -- far above the 36 percent maximum that consumer advocates cite as a fair.

Webster says banks have only avoided scrutiny for overdraft programs because overdraft costs are measured in one-time fees rather than APR. But Webster pointed to a recent report from the Pew Charitable Trusts which finds the equivalent APR on the average overdraft fee to be more than 5,000 percent.

But Susan Weinstock, project director Pew Charitable Trusts' Safe Checking in the Electronic Age program, said Webster is taking the wrong lesson from the report. She said both payday loans and overdraft fees are predatory.

"5,000 percent interest is too high and so is 400 percent interest," Weinstock told HuffPost. "We want to see financial products that minimize risk, that are transparent, that are safe. It's like curing obesity -- do you feed them cake or do you feed them cookies? Neither of them are going to get you any better. Let's feed people fruits and vegetables."

Other consumer advocates agree.

Choosing between overdraft fees and payday loans is "a false choice," said Kathleen Day, spokesperson for the Center for Responsible Lending. "Both are abusive. These are abusive products. We don't think consumers should have to choose between two abusive products."

Instead, "people should be given reasonably priced overdraft products, and payday lending should be limited to 36 percent APR," she said.

Webster says bank customers who overdraw their accounts do so an average of 14 times a year, but a March report from CRL finds that payday loans are "designed to to keep [borrowers] indebted for extended periods." The report calls this a "treadmill of debt" that results in much higher costs than

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Advance America's $45 fee.

According to the report, payday loan recipients are indebted to payday lenders for an average of 212 days during the first year after they take out their first payday loan -- the same loan which Advance America touts as an 18-day debt. Borrowers routinely "roll over" their first payday loan into another larger loan when they find themselves unable to pay off the initial loan. A full 44 percent of borrowers in the CRL study defaulted on their payday obligations within two years of taking out their first payday loan.

Every major U.S. bank offers some form of overdraft "protection," which adds up to big money for those banks. According to financial research firm Moeb's Services, banks accrued $36.5 billion in overdraft fees in 2010. The entire banking industry's 2010 profit was $87.5 billion, according to the FDIC.

Big banks say their overdraft profits are fair, pointing to a recent federal regulation that requires customers to "opt in" to overdraft programs, rather than being automatically enrolled without explicit consent.

A Wells Fargo spokesperson noted that the company lost $270 million in revenue during the fourth quarter of 2010 alone, thanks to the new rules, and expects to lose $215 million to $240 million each quarter of 2011. The spokesperson said Wells Fargo now offers a "protection" service that links a customer's checking accounts to a savings account, rendering a fee of just $12.50 in the event of an overdraft. But traditional overdraft fees run $35 per charge, and Wells allows up to four overdrafts per day -- up to $140.

A Bank of America spokesperson said the bank no longer permits overdrafts for in-store purchases, limiting them to ATMs in an effort to eliminate "unwanted" overdrafts. The bank does not disclose its overdraft revenue, but the spokesperson said it anticipates a negative impact on earnings from the new policy.

CFPB declined to comment for this article.

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Bank Systems & Technology Banks Hurry Up and Wait for Guidance from CFPB Even as a picture of the Consumer Financial Protection Bureau's mission under Elizabeth Warren's leadership begins to take shape, banks continue to wait for specific regulatory guidance. May 10, 2011 By Matt Gunn

With the Dodd-Frank Wall Street Reform and Consumer Protection Act signed into law, and with new regulation either in place or rapidly taking shape, the question banks must be asking is: What happens next?

In terms of consumer protection, the answer simply might be to keep waiting. But that doesn't necessarily mean things aren't happening.

The Consumer Financial Protection Bureau is preparing for its July 21 mandate to consolidate consumer protection functions that formerly resided with multiple agencies. As Bank Systems & Technology previously reported, the new bureau -- under the leadership of Elizabeth Warren, assistant to the President and special adviser to the Secretary of the Treasury on the Consumer Financial Protection Bureau -- has begun public outreach, attempting to engage Americans through social media and the web. Simultaneously, the CFPB has begun to communicate with financial institutions and other key industries to clarify its mission and answer questions.

Along the way, Warren has been delivering a message of accountability. "Accountability means that someone can be held responsible for failure," Warren told the Society of American Business Editors and Writers during a recent appearance. "With the new consumer agency, there is now someone to call out. Instead of hauling up seven regulators to point fingers at each other, now Congress can haul up one. That's the ultimate accountability."

Warren acknowledged the bureau's limitations, as well, stressing that the rules made by the CFPB are subject to the requirements and limitations of the Administrative Procedure Act and that the agency is subject to judicial review to ensure that it is acting within the constraints set forth by Congress. "But the constraints go further," she added.

"The CFPB is the only bank regulator -- and perhaps the only agency anywhere in government -- whose rules can be overruled by a group of other agencies," she said. "While we cannot interfere with other agencies' rulemaking efforts, no matter how much we think consumers will be harmed by their rules, other agencies can veto our rules. This is an extraordinary restraint."

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That isn't to say the bureau believes it is without support. In April it agreed on a Joint Statement of Principles with the National Association of Attorneys General, declaring that the two groups were on the same page in terms of protecting consumers from harmful financial products.

"We believe that Congress is behind us on this mission," Warren told the National Association of Attorneys General. "As part of Dodd-Frank, non-bank mortgage lenders and payday lenders will be subject to significant federal law enforcement for the first time ever. ... Now we will have the tools to deal effectively with some of the worst abuses. On the issue of law enforcement, we are putting our money where our mouth is. We are planning for more than half of the consumer bureau's resources to be devoted to ensuring consistent compliance with the law."

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Housing Wire Nothing is clear when it comes to Dodd-Frank and the CFPB May 10, 2011 By Kerry Curry

The Consumer Financial Protection Bureau will open in less than three months but questions about who will head it and what it will do still persist.

Panelists speaking about the Dodd-Frank Act and other regulatory issues involving mortgage finance at the HousingWire REthink symposium going on Tuesday and Wednesday said industry players will see regulation that will evolve over time.

"You will have reinterpretation," said Joe Mason, a finance professor at Louisiana State University and an expert on securitization who has consulted for government agencies, research institutions and the mortgage industry.

"This is a dynamic process and the law is incredibly vague," he said. Mason predicted that it will take

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five to six years for the regulations to shake out, and said the industry should be prepared for more white papers, studies and appeals concerning the law.

"A lot of this will evolve maybe not be struck down but we will find a way to maneuver around."

Michael Waldron, a partner at law firm Patton Boggs, who focuses on regulatory issues, said industry players should develop a culture of compliance.

"Understand the benefit of being proactive instead of reactive. Reactive is always much more expensive," he said, noting that regulators like low-lying fruit and most defense of actions has involved issues such as unlicensed loan officers, unlicensed branches, lack of timely disclosures and consumer complaints that don't get addressed in a timely fashion.

Ed Kramer, executive vice president of Wolters Kluwer Financial Services, said more than 50% of the loans written in the runup of the housing market would not have been written under Dodd-Frank and said the industry lost its footing in terms of following basic underwriting principles.

Ron D'Vari, CEO of NewOak Capital and an investor, said the mortgage industry needs to concentrate on delivering a quality product.

Trust, he said, needs to be regained and investors will come back.

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Credit Union Times Trades Urge Changes in Complaint Process for New Consumer Bureau May 10, 2011 By Claude R. Marx

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CUNA and NAFCU want the complaint process at the new consumer bureau to be less burdensome for credit unions and not publicize unwarranted complaints against financial institutions.

We are concerned that the burden on some institutions could be substantialparticularly given the Bureaus estimate that between one and three million forms will be completed annually, CUNA Assistant General Counsel Luke Martone wrote in a comment letter. It is therefore possible that this new intake method will increase the number of complaints credit unions received and result in new regulatory burdens.

Martone also recommends that the bureau give credit unions the chance to directly respond to consumer complaints, while sending copies to the bureau, rather than requiring a response from the bureau.

NAFCU President/CEO Fred Becker wrote that it isnt appropriate to publicize complaints made against particular financial institutions given that any consumer can file a complaint, regardless of the merits of the accusation.

He also urged the bureau to minimize the amount of personal data it collects from people who file complaints to reduce the potential damage that could be caused by data breaches.

In addition, Becker suggested that when requesting information from consumers filing complaints, the bureau should ask for documentation about whether they contacted the financial institution and what response they received. Consumers should also be able to attach documentation to the complaint form and explain what their desired outcome is.

The Consumer Financial Protection Bureau, which was established by the financial overhaul bill passed by Congress last year, is scheduled to begin operation in July. It is now in the setup stage and determining the procedures for resolving complaints.

For further information on the bureau, which will be an independent agency housed in the Federal Reserve, and to read comment letters, go to: http://www.consumerfinance.gov/

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Huffington Post The Economic Security President: Four Ways to Be Bold and Gutsy on the Home Front May 9, 2011 By Richard (RJ) Eskow

The post-bin Laden afterglow is fading. Those video clips of his home movies seem like scenes from a reality show, not glimpses of an Existential Threat. It's the master terrorist as an addled Ozzy Osbourne, minus the Beverly Hills couturiers and groomers. And while a few people might wait for bin Laden to sing Ozzy's "Iron Man" -- "Nobody wants him/he just stares at the world, planning his vengeance" -- our attention-deficit nation is getting ready to move on.

Significantly, while the President's overall approval rating jumped 11 percent after the killing, his economic approval fell and reached a new low: Only 34 percent approved of his handling of the economy, while 55 percent disapproved.

People were happy to see 9/11 avenged, but there's another lesson in that 11% boost, too: The public wants its President to be clear-eyed, resolute, and able to make tough decisions under pressure. We know now that the President can be (and just as importantly, can appear to be) as steely-eyed and decisive as the best of them.

They can't kill Bin Laden again. Al Zawahiri's a distant number two, and after that the terrorists' names are so little-known that our national game of Call of Duty: Black Ops will quickly descend into Trivial Pursuit. So what's next? Hmmm: Steely-eyed. Calm under pressure. Making the tough calls ... wonder where else those Presidential skills might come in handy?

Here are four "bold" and "gutsy" moves the President can make right here at home that would be good for the country ... and good for him: 1. Nominate Elizabeth Warren as a recess appointment to the Consumer Financial Protection Bureau.

The GOP handed this one to him when 44 Republican Senators signed a letter saying that they "will not support the consideration of any nominee, regardless of party affiliation," unless the Agency is watered down and restructured even more than it has been.

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Now is the time to say "Look, guys: I'll negotiate whenever it's reasonable and fair. But we had a debate when we created this agency. We took some of your suggestions into consideration and then we had a vote. You lost. You can't re-legislate every law that's ever been passed by holding an agency hostage -especially one that's designed to protect the public."

Now that's decisive and tough -- two things that Elizabeth Warren will be adding to the President's team in spades. They say she's bumped heads with senior White House officials. But strong leaders know that a little conflict can make a team stronger.

The President can also say: "What's next - ending Medicare by refusing to confirm a Secretary of Health and Human Services? I've spent the last two years making it clear that I'll negotiate with anybody -- except hostage takers. Call me when you're ready to talk. But I'm not waiting: Elizabeth Warren is running this agency. We don't have time for games."

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Slate War Against the Weak The brutal Republican campaign to eliminate the collective rights of individuals and increase the collective rights of corporations May 9, 2011 By Eliot Spitzer

Three recent Republican efforts, each one critical to the conservative agenda:

1) the attempt by Republican governors to eliminate the right of public employees to bargain collectively;

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2) the attempt to eliminate the consumer protection bureau created in the Dodd-Frank financial services reform lawprobably the most important part of the law for ordinary investors;

3) the recent 5-4 Supreme Court decision to limit the right to "class-arbitration" in many circumstances taking away the collective power of those whose injuries are too small to be effectively remedied individually yet who, together, might be able to stand up to much stronger institutions.

The unifying theme is an assault on the weak. The power of individuals, each of us feeble in isolation, to act collectively and hence stand up to the powerful is being eviscerated. Those who already begin behind are finding the few legal protections afforded them under attack. A critical element of the Republican agenda has become increasing the legal power of those who already have power, and diminishing the power of the weak.

The focus on eliminating public-sector collective bargaining rights in Wisconsin and elsewhereeven after workers had agreed to all the financial concessions soughtmakes clear the fundamental reallocation of power being sought. If we are upset at the outcome of an election, we don't take away the right to vote of those who defeated us; or limit their speech. If a trial results in an outcome we are not satisfied with, we don't eliminate the capacity of the opposing the party to call witnesses. So why the rush to alter the rights of the workers? Why not focus on the failure of elected officials to negotiate more effectively or elect leaders who will do so?

The answer given by the Republicans is that it isn't possible to get a fair outcome when unions of public -sector employees make such significant contributions to elected officials. If this concern for undue influence is so paramount, why don't the Republicans get more exercised when contributions are being made by enormous corporations that have equally significantand costlyissues pending before the government? Take, for instance, all the legislation relating to tax loopholes or to procurement or the myriad of regulatory matters that are at the heart and soul of Washington decision-making. Not a word has been said about limiting the collective power of these corporate groups to exercise their pre-existing rights to contribute, lobby, organize, or speak as one.

Why focus only on the rights of the workers, traditionally the least powerful group?

The relentless effort by Republicans to dismantle the consumer protection bureau is equally dismaying. On the one hand, the new bureau has relatively few powers beyond those already distributed to regulatory agencies that failed over the past decadethe OCC, OTS, FED, CFTC, etc. On the other hand, the agencies that failed did so precisely because they were subject to agency capture by the industries they were supposed to regulate. A newly resurgent consumer protection bureau with an aggressive chief in Elizabeth Warren could actually empower the consumers whose voices have traditionally been ignored. Hence the rush to defund, dismantle, and disparage.

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And, finally, conservatives abandoned their oft-claimed allegiance to federalism by ignoring established California law in order to eliminate the right of consumers to join together in class-arbitration, the arbitration analog to class-action law suits. The concern asserted by the conservatives on the court was that such a mechanism might exact "unfair" settlements from the major corporations on the other side. In open disregard of a clear state law that permitted such claims to go forward, the court eliminated the only mechanism small claimants would have to proceed when the value of their individual claims made separate arbitrations impossible.

When was the last time conservatives on the court demonstrated significant concern for the absence of a remedy for smaller claimants who cannot stand up to the unending litigation capacity of the larger entities they are challenging? The notion of collective action by the weak is fundamentally anathema to the Republican agenda. The notion of collective action by the powerful, on the other hand, is only applauded and reinforced. As soon as the associational rights of the powerful are at issue, conservatives unwrap endless constitutional arguments to protect their collective action. Yet these rights are mere ephemera when it comes to the poor, to bilked investors, or to workers.

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Bloomberg Late Fees Drop Two Years After Credit-Card Act, Pew Study Says May 10, 2011 By Alexis Leondis

Two years after credit-card legislation was signed, late payment fees have declined and interest rates have stabilized, the Pew Charitable Trusts said.

Charges for late payments on U.S. bank-issued credit cards decreased to a range of $25 to $35 from a median of $39, according to the report released today by the Philadelphia-based nonprofit. The study looked at about 300 consumer credit cards offered online by the 12 largest banks and credit unions, and compared terms for cards offered in March 2010 and January 2011. Late fees were as common as they were in 2010, the study said.

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The Federal Reserve approved rules that took effect in August prohibiting card issuers in most cases from charging first-time offenders more than $25 for paying their bills late. The Fed set a maximum fee of $35 for additional late payments within six months of the first delayed payment.

Pews research shows that predictions that the legislation would spark new charges and long-term interest rate growth have not materialized, Nick Bourke, director of Pews Safe Credit Cards Project, which began studying how the industry treats consumers in 2007, said in a statement.

The median highest advertised interest rate for credit cards issued by banks was unchanged at 20.99 percent and the lowest also stayed the same at 12.99 percent, the report said. The average rate on existing credit-card balances fell to 13.44 percent in February from 14.67 percent a year earlier, Federal Reserve data show.

Annual Fees

Annual fees stayed at a median of $59 for bank-issued cards, the Pew study said. The percentage of bank credit cards with annual fees increased to 21 percent from 14 percent.

U.S. revolving debt, which includes credit cards, increased $1.9 billion in March, the second gain in four months, the Fed said May 6.

President Barack Obama signed the Credit Card Accountability Responsibility and Disclosure Act on May 22, 2009, calling the rules limiting fees and abrupt contract rate changes common sense reforms, designed to protect consumers. The provisions were phased in, with most taking effect Feb. 22, 2010, including prohibitions on interest-rate increases in most cases during the first year an account is opened.

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New York Times (Bucks blog)

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Stay-at-Home Moms and the Need for Credit May 9, 2011 By Ann Carrns

If you are a stay-at-home mom (or dad) and want a credit card, you should consider applying for one, pronto. A pending change in the way card companies must evaluate applications will probably make it much harder for people who dont have their own, independent income to get one.

As part of a clarification of the Credit Card Act of 2009, the Federal Reserve board has made it tougher for stay-at-home spouses to get their own credit cards. (Discussions of the Feds rule can be found in U. S. News & World Reports Alpha Consumer blog, and on creditcards.com.)

The Card Act has many provisions that help protect consumers, like requiring credit card companies to give you advance notice before slapping you with a double-digit penalty interest rate. But in its final comments on the law, published earlier this year, the Fed told credit card companies that they must consider individual income, not household income, on credit applications. That means that in most situations, a nonworking spouse wont be able to obtain credit based on their husbands or wifes income, as they can now.

In explaining why this is O.K., the Fed said it believed married women who do not work outside the home will still have access to credit because they can apply for joint accounts with their husbands, or become authorized users on their husbands accounts. The board did concede that applying jointly might be inconvenient or impracticable in some situations, like applying for on-the-spot credit at a retail store. But the move is necessary, the Fed said, to make sure the person holding the card can actually pay the bill.

The problem is that nonworking parents do have the ability to pay, through their spouses income. (And anyone who has children knows full well that he or she is working theyre just not getting a paycheck.)

All this struck a nerve with me recently, because of a problem that arose with an account I hold with my husband. A few years back, he got a new credit card so he could rack up frequent-flier miles. Even though I was working full time and had my own set of plastic, he got a companion card for me, so we could pool our spending and earn miles faster. Ive used it often, without thinking much about it.

Until last week, that is. I had a question about a statement fee and called the card company only to be told that the assistant couldnt discuss it with me without first obtaining my husbands permission.

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I was speechless. I began supporting myself financially in my early 20s. I have my own credit history and credit score. Yet, I was being told that I couldnt be taken seriously without a say so from a man (albeit, one of whom Im exceedingly fond). It felt like a scene from the Mad Men era.

When I insisted, the representative partly addressed my question, but said a full review would require spousal approval. For me, the incident provided a good laugh and an anecdote for a blog post. But for an at-home mom in, say, a deteriorating or possibly even abusive relationship, it could be devastating. Forcing such women to piggyback on a husbands account means that she is still subject, to an uncomfortable degree, to his oversight which strikes me as an unhealthy step backwards on the long, hard-fought road to gender equality.

Card companies must comply with the law on Oct. 1, but they can begin enforcing it before then if they choose.

Representative Carolyn B. Maloney, a New York Democrat and an author of the Card Act, has said the Feds rule exceeds the laws intent. Originally, strict ability to pay restrictions were meant only for applicants under 21, to help prevent college students and other young people from getting into debt. She and three other members of Congress have asked the Fed, along with the new Consumer Financial Protection Bureau, to study the new standard for six months after it is adopted, and to make changes if it turns up any negative effects on stay-at-home spouses.

We are sure the board understands that it was never the intention of Congress that there would be any impact on stay-at-home spouses, the letter says, and that we should make sure that that is in fact the case.

A lawyer from the Feds Division of Consumer & Community Affairs wasnt immediately available to comment.

What do you think about the rule? Should nonworking spouses be able to obtain credit in their name alone?

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American Banker Huntington Opts for Free Checking Over Fees, Dares Rival Banks to Follow May 10, 2011 By Matthew Monks

Huntington Bancshares Inc. Chief Executive Stephen Steinour is challenging his rivals to double down on free checking or abandon it.

The Columbus, Ohio, company on Monday unveiled "asterisk-free checking," which Steinour said offers at no charge services that most of his big bank rivals are beginning to assess fees for. It is free to open, and has no monthly maintenance fee, minimum balance or rules governing check or debit card use.

"We wanted the other banks to declare" whether they will end free checking or keep it, Steinour said. "Most banks have gone to fee checking account products. A couple have not. We've said we want to be a category of one. This is another way to break out." The new account is part of a streamlining of Huntington's deposit offerings, he said. The bank will offer two basic checking accounts; currently it has six.

The new account is part of Huntington's so-called "fair play" marketing and business plan it launched last year. Huntington seeks to attract new customers by not raising fees and prices on basic banking services. It previously began offering a "24-hour grace" service that lets customers make a deposit a day late to avoid overdraft charges.

Huntington's gamble is simple: Lose revenue now by not raising fees, to grow it later by bringing more customers in the door that have a good shot at buying multiple products. It is a risk: Huntington's expenses trend higher than aggressive in-market rivals like U.S. Bancorp, which is betting it can take share by offering cheaper loans or services even as it eliminates beloved customer giveaways like free checking.

Huntington like virtually every bank in the country is struggling to increase revenue even as profits increase because of fewer delinquent home and business borrowers. Its net income rose 3% from the second to the third quarter, to $126 million. Revenue declined about 6%, to $645 million.

But Huntington said it expects the 24-hour grace program to result in $30 million of lost revenue annually.

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The obvious questions: What will its new free checking cost? And what impact has 24-hour grace had on cross-sales and customer growth?

Steinour says he'll release some of those details when he speaks at the UBS Financial Services Conference in New York on Tuesday.

He said free checking will pay off over time. Huntington grew its number of banking relationships per household at a rate of 9% annually in the first quarter.

"We would expect to do better with this checking product," Steinour said.

Some investors and analysts have begun to question whether banks need to keep raising deposits with few opportunities to lend them out.

Steinour's view: A bank cannot have too many core deposits, or stable, cheap funds from customers that have been with the bank for a while.

They are good for the bottom line for a number of reasons, he said. Checking account holders are more likely than non-customers to take out a loan or seek investment advice from Huntington, he said. The more noninterest bearing funds that the company raises, the less it has to rely on costlier wholesale borrowings or deposits that accrue interest, like money market accounts and certificates of deposits. That, in turn, improves the net interest margin.

Huntington's net interest margin rose 5 basis points, to 3.42%, last quarter as deposits that do not accrue interest rose 2% and certificates of deposit declined 3%.

Absorbing costs means elevated expenses. The launch of the new free checking will "be supported by print, online and television advertising" and direct marketing campaign, adding to Huntington's already increasing advertising expenses which rose 4% and more than 50% from the prior quarter and a year earlier during the first three months of the year.

"We're willing to sacrifice for the short term," Steinour said. "Right now we're pulling our revenue levers very hard," he said later in the interview.

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Free checking may not be the company's last, new customer-friendly offering. It is testing 32 other potential new products that may or may not come to market, Steinour said.

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Wall Street Journal Cards Return to School How Banks Are Circumventing Campus Credit Restrictions May 7, 2011 By Jessica Silver-Greenberg and Mary Pilon

The Federal Reserve in March moved to close some of the loopholes in the Credit Card Accountability, Responsibility and Disclosure Act, the 2009 law intended to curb abusive credit-card lending. One group of borrowers, though, could still be vulnerable to aggressive tactics from lenders: college students.

The CARD Act prohibited issuers from handing out free gifts such as Frisbees and T-shirts to college students, and required that students under 21 years of age have a co-signer before they are granted a card. So-called tabling, where card-companies set up near student haunts to pitch cards, also was banned.

But "a ton of loopholes" remain, says Jim Hawkins, a professor at the University of Houston Law Center who surveyed more than 300 students in November about their credit-card habits.

Under the new rules, for example, issuers can no longer offer gifts to induce students to sign up for cards. But the gift prohibition can be circumvented easily, says Ed Mierzwinski, director of the consumer program at the U.S. Public Interest Research Group. The law specifies only that card companies can't offer "any tangible item as a gift." That leaves the lenders free to offer intangible gifts like online coupons or bonuses credited to accounts. "It's a distinction without a real difference," Mr. Mierzwinski says.

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Citigroup Inc.'s Citibank unit, for example, last summer offered students a $50 statement credit on its four student credit cards.

"We remain committed to responsible lending and marketing practices to young adults as well as providing them with the utmost guidance and financial-management resources they need to spend wisely," says Liz Fogarty, a Citi spokeswoman.

As part of the push to protect students from being bombarded with card solicitations while they head to class, the law prevents issuers from setting up tables on campus. Instead, credit-card companies hunker down in well-traveled paths just off campus; 73% of students surveyed by Prof. Hawkins said card issuers marketed to students off-campus.

Some banks skirt the on-campus marketing restrictions by pitching checking accounts instead, in hopes of signing students up for cards later. "Then you have a captive audience," says Joe Ridout, consumerservices manager with the nonprofit Consumer Action.

At Sarah Lawrence College in Bronxville, N.Y., several banks, including J.P. Morgan Chase & Co., were "all aggressively marketing" on campus last fall, says freshman Sahil Bhalla. Mr. Bhalla says some were offering coupons and handing out promotional literatureall of which was within the confines of the law, say consumer advocates.

Chase spokesman Paul Hartwick says the bank did "reach out for new checking-account customers" on the Sarah Lawrence campus last fall, as the bank does at many schools located near its branches. Other card issuers have simply moved online, flooding students with email offers and marketing popular social-networking sites.

Chase marketed its Chase +1 Student MasterCard in a realm that may have been more effective among college students than the quad anyway: Facebook. The Chase card offered students additional "Karma" reward points for joining its Facebook group. Points also may be given for paying bills on time, says Chase's Mr. Hartwick. "The student market is not a focus for us at Chase Card Services," he says, adding that the bank discontinued the campaign in October.

The CARD Act also requires that students under age 21 show proof of sufficient income or get a cosigner to obtain credit. But the law doesn't specify what constitutes incomeor proof. In that sense, credit applications aren't much different from the so-called stated-income mortgages that came to be called "liar loans" during the subprime crisis.

"The sufficient-income provision is hopelessly vague," says Chi Chi Wu, a lawyer with the National Consumer Law Center. "It's entirely subjective." Some 29% of students who obtained a credit card

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during this academic year said they used student-loan debt as income on their application, according to Mr. Hawkins's survey.

What's more, the requirement to have a co-signer over 21 years old or show proof of income also can be easily manipulated by merely having a fellow student who is over 21 years old be a co-signer, says John Ulzheimer, president of consumer education at SmartCredit.com. "It's no different really than telling a buddy to go get a 12-pack for you."

While co-signing isn't banned under the CARD Act, and having two names on an account reduces risk from a lender's perspective, critics argue that this flies in the face of the CARD Act's intent. Younger consumers may not realize they are entering into a legal agreement. "It's a disaster waiting to happen," Mr. Ulzheimer says. "They're permanently joined by the wallet with the liability."

Savvy students can still navigate the credit-card terrain successfully. The key is to have a credit-card battle plan in place long before arriving on campus. First, decide ahead of time what kind of credit product you want, and compare potential offers before heading to campus. You may want to test-drive a card before leaving for college, so you can learn how it works with your parents nearby to help.

Parents, meanwhile, should be well-versed on the consequences for them (and their credit reports) if the student blows up an account by overspending or missing payments.

Secured credit cards, which typically require a deposit on an account, may help students establish credit while reduce their risk of incurring debt. And all potential borrowers should be wary of promotional rates, which can quickly evaporate, Consumer Action's Mr. Ridout says.

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Los Angeles Times Banks should cut fees, not pay for market research Surveys probably have some value to restaurants, hotels and other service-heavy businesses. But do bank customers really care that much whether a teller was friendly or the branch was spotless?

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May 10, 2011 By David Lazarus

Carole Krezman wasn't sure what to make of a recent mailing from San Diego's California Bank & Trust inviting her to participate in "a very important program."

The letter said the bank wanted Krezman, 58, to visit her local branch at least once a month for the next year. She'd have to fill out a questionnaire each time detailing her experience. Each questionnaire would result in a $5 payment.

"Please do not contact the personnel at your branch office about this process," the letter instructed. It said bank workers knew that a "mystery shopper" program was under way, but they shouldn't know who was participating.

An accompanying form requested Krezman's name, address, phone number, email address and favorite bank branches.

"My impression was that it was likely a scam," she told me. "We frequently get things in the mail that look genuine but aren't."

Long story short: The program's legit. California Bank & Trust really is enlisting the aid of customers in evaluating the performance of employees at its various branches statewide.

Steven Borg, corporate marketing director for the bank, said Krezman was correct to question the validity of the mailer.

"In this day and age," he said, "you have to make sure that solicitations are real."

But the bank's mystery shopper program raises a few questions. Not least: What's the point?

These sorts of things probably have some value when it comes to restaurants, hotels and other serviceheavy businesses. But do bank customers really care that much whether a teller was friendly or the branch was spotless?

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I don't know how much money California Bank & Trust spent hiring an Omaha company called Customer Service Profiles to conduct this research. But I do know what bank customers really care about.

They care about interest rates and fees. They care about loan processes that are fair and transparent. They care about being able to reach someone by phone who's actually capable of solving a problem.

In other words, they care primarily about the sorts of things you won't learn by paying someone $5 to visit a branch and make a withdrawal or deposit.

As for California Bank & Trust, I can say with confidence that customers probably aren't thrilled about the fact that almost every checking account comes with either a "monthly maintenance fee" or a minimum balance requirement. The exception is a basic account only for people 55 and older.

Then there's the $5 "excessive transaction fee" for savings accounts if you make more than six transactions a month. And the $2 monthly charge if you want images of canceled checks (forget about receiving the real thing). And the $5 monthly charge to pay your bills online.

To be sure, most banks have similar fees although this is the first time I've seen a charge for online bill payments. Bank of America introduced its own $3 charge in January for customers to receive images of canceled checks with monthly statements.

The point is that you don't have to conduct reams of market research to discover what makes bank customers happy. Sure, it's nice when tellers are pleasant and know their jobs. But what customers want first and foremost is a bank that's not always nickel-and-diming you.

"We're focused on that as well," said Borg. "We want to remain competitive in terms of pricing."

One quick thought: Instead of spending money making sure customers enjoy the quality of service at branches, use it instead to lower fees. Why be merely competitive in pricing when you can be a leader?

Jolted by fees

I write from time to time about what I call "pay to pay" companies that charge you money so you can give them money.

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The latest example of this practice is offered by Annette Halpern, 54, who insures her Ventura home against earthquake damage with Pacific Select Property Insurance Co., a subsidiary of GeoVera Holdings in Fairfield, Calif.

Like many other people, Halpern chooses to break her annual quake insurance premium into three payments to ease the financial burden, which for her is nearly $1,360 a year. Her first bill comes at no cost. The second and third bills, however, cost her $4 each.

That's right: A $4 bill just to receive a bill. Halpern could forgo the extra bills and try to remember on her own when payments are due. But if she wants reminders from the company, that'll cost her.

"That's $8 a year for the service of receiving a bill," Halpern observed. "Multiply this over the life of the policy and they will earn themselves a nice chunk of change simply for doing normal customer service."

No one at GeoVera returned my calls for comment. But a service rep termed the charges for subsequent bills a "service fee" and said about half of GeoVera customers opt for the installment plan when it comes to quake insurance.

The rep said the pay-to-pay fees can be avoided if you set up automatic payments each month from your checking account or credit card.

That's not good enough. Consumers should be free to pay their bills however they please. As long as they're on time and submitting the required amount, there should be no additional charge.

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American Banker The Debate Over Social Media in Collections Heats Up

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May 10, 2011 By Peter Lucas

With the widespread use of social networking sites it's no surprise that collection agencies are browsing them to gather information on debtors and their assets.

Collectors sometimes use the medium to make direct contact with a debtor or through family and friends. The practice has the industry and regulators wrestling with how to manage the use of social networks within the guidelines of the Fair Debt Collection Practices Act, a law written in the 1970s, well before the advent of Facebook or Twitter.

Billy Howard, head of the consumer protection department for Morgan & Morgan, an Orlando, Fla., law firm, said he has seen more than 20 cases this year of consumers being contacted by collectors via Facebook. "Some were clearly a violation of harassment laws; some were close to it," Howard said during a recent panel discussion organized by the Federal Trade Commission. "This kind of communication scares people and they want it to stop."

The consensus among panelists was that there is nothing wrong with collectors browsing social media sites simply to learn more about a debtor as long as the information is displayed publicly. "It comes down to an expectation of privacy," said John Bedard, principal of Bedard Law Group PLC in Duluth, Ga.

"Consumers have no more an expectation of privacy when they put their personal information on public websites than when they take that same information and publish it on an interstate highway billboard," he said. "I think it's wrong to condemn debt collectors who view that information and use that information when they drive by it on the Internet superhighway."

Attorneys on the panel said the biggest risk in using social networks for skip tracing is mistaken identity.

"I've seen enough bad skip tracing to know that the process can be fraught with liability problems," said Dan Edelman, principal at Edelman, Combs, Latturner & Goodwin LLC, a Chicago law firm. "Even with a less common name, debt collectors can wind up identifying the wrong person as the debtor and initiating action."

Edelman said he has seen cases where after a skip trace the collection agency or attorney sends a letter to the wrong person, who then informs the agency they are not the debtor, but the agency or attorney still pursues recovery. "It's a violation of the FDCPA to send a letter to someone saying they owe money when they don't, because that is a false statement," Edelman said. "As with any form of

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skip tracing, debt collectors have got to be careful to avoid incorrect matches."

Panelists were divided about the appropriateness of using social media to contact debtors or their friends and family. Collectors who try to "friend" a debtor on Facebook without disclosing who they are; or who contact friends in the debtor's social media network without disclosing who they are; or who post a comment about the debtor on their Facebook wall were all considered taboo by the panel.

Several panelists likened such tactics to sending a debtor a postcard detailing information about their unpaid balance. "Publicly posting information about a debt on a consumer's Facebook wall seems intended to pressure the debtor as opposed to initiate communication with them," said Susan Grant, director of consumer protection for the Consumer Federation of America.

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Washington Post State attorneys general in D.C. for talks on fund to aid homeowners May 9, 2011 By Brady Dennis and Dina ElBoghdady

State attorneys general are descending on Washington again this week for negotiations with federal regulators and the nations largest mortgage servicers over the purpose of a multibillion-dollar fund aimed at helping troubled borrowers.

The idea behind the yet-to-be-created fund, the size of which remains in flux but could eclipse $20 billion, is to punish the servicers for their shoddy foreclosure practices, which came to light in the fall, and to put that money toward keeping struggling homeowners in their homes.

But deciding how to do that remains a complicated, contentious and politically fraught task.

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One option, said people with knowledge of the talks, would be to use a portion of the money to write down the principal balance for some beleaguered homeowners a controversial approach that, bank representatives argue, raises questions of fairness and poses logistical hurdles for the industry.

Another option would be to dole out part of the funds to an array of state-run aid programs, mediation services, foreclosure hotlines and other efforts to help homeowners. But that approach also presents questions about how to allocate the money fairly and who would make that decision.

Other questions remain, such as how much in penalties each individual bank would have to pay and whether some of the money also will be set aside to compensate homeowners who suffered abuses such as wrongful foreclosures.

Even as government officials and bank representatives wrestle over the parameters of the fund, they plan to continue negotiations over large-scale changes to practices within the servicing industry.

On Friday, state attorneys general and federal regulators submitted to the mortgage servicing firms a revised version of the original 27-page term sheet that they put together this year, people familiar with the talks said.

The original proposal would require servicers to provide a single point of contact for borrowers looking to modify their loans and to do away with the dual-track problem in which homeowners sometimes receive foreclosure notices as they are negotiating modifications to their loans.

Government officials and banking representatives said the most recent term sheet includes items on which they have found common ground, but they acknowledged that the two sides remain far apart on key issues, such as reducing the loan balances of troubled borrowers.

The current settlement talks grew out of widespread problems within the mortgage servicing industry including instances of forged foreclosure documents and flawed paperwork that surfaced in the fall and prompted federal officials and the state attorneys general to join forces against the industrys largest players.

Last month, the Office of the Comptroller of the Currency and other federal banking regulators announced a separate deal with financial firms that requires them, in part, to hire consultants to determine whether any borrowers were harmed by sloppy foreclosure practices and reimburse them for any damage. Some critics called that settlement, which did not include fines, too lenient.

Meanwhile, leaders of the 50-state coalition and other federal agencies, such as the Justice

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Department and the Department of Housing and Urban Development, forged ahead with their own settlement.

But even keeping that alliance together has proven tricky. Oklahomas attorney general, who opposes forcing servicers to reduce the principal on mortgages of borrowers who owe more than their properties are worth, has said he is prepared to break ranks. Other Republican attorneys general also have voiced concern about the original proposed terms, including Ken Cuccinelli II of Virginia.

This weeks negotiations are expected to include Iowa Attorney General Tom Miller and Illinois Attorney General Lisa Madigan, among others, as well as HUD and Justice officials and representatives of various banks, including Bank of America and Wells Fargo. The talks are scheduled to begin Tuesday, one government official said.

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Naked Capitalism North Carolina Appellate Decision Raises New Chain of Title Issue May 9, 2011 By Yves Smith

A potentially important North Carolina appeals court case, In re Gilbert, has not gotten the attention it warrants.

In very short form, the borrowers, who were unable to obtain a loan modification, tried to halt a foreclosure by arguing that the lenders had failed to make required disclosures under the Truth in Lending Act (which they hoped would allow for recission of the loan, and that the party seeking to foreclose had not proved that it was the holder of the Note with the right to foreclose under the instrument. The judges nixed the TILA argument, affirming lower court decisions, but reversed the superior court on the question of the standing of the petitioner.

In Re Gilbert May 3, 2011 North Carolina Appeals Court Decision

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What is interesting is the logic of the decision, which blows a hole in one of the pet arguments of the American Securitization Forum, that possession of a note will suffice. We have argued that the contracts that govern the securitization, the pooling and servicing agreement, sets the requirements for conveyance as is contemplated in the Uniform Commercial Code (its Article 1 allows for parties to make their own arrangements as long as certain conditions are met). But if the parties to a case do not argue that the PSA trumps the UCC (and many do not), most judges will reason from the UCC, and securitization attorneys have blithely assumed this will get them out of trouble. This is the position asserted in the ASFs white paper last fall:

Under the UCC, the transfer of a mortgage note that is a negotiable instrument is most commonly effected by (a) indorsing the note, which may be a blank indorsement that does not identify a person to whom the mortgage note is payable or a special indorsement that specifically identifies a person to whom the mortgage note is payable, and (b) delivering the note to the transferee (or an agent acting on behalf of the transferee). As residential mortgage notes in common usage typically are negotiable instruments, this is the most common method to transfer the mortgage note. In addition, even without indorsement, the transfer can be effected by transferring possession under the UCC. Moreover, the sale of any mortgage note also effects the transfer of the mortgage under Article 9. Securitization agreements often provide both for (a) the indorsement and transfer of possession to the trustee or the custodian for the trustee, which would constitute a negotiation of the mortgage note under Article 3 of the UCC and (b) an outright sale and assignment of the mortgage note. Thus, regardless of whether the mortgage notes in a securitization trust are deemed negotiable or non-negotiable, the securitization process generally includes a valid transfer of the mortgage notes to the trustee in accordance with the explicit requirements of the UCC.

The North Carolina judges blew a hole in that theory. This particular foreclosure had some of the irregularities that are all too common, but the borrowers were deemed to have abandoned the related arguments. However, the judge focused on a specific failure in this deal which is pervasive in securitizations: the final endorsement was to the trustee, not the particular trust. The judges in the case goes through multiple deficiencies in the transfer process: some transfers were made by parties that did not have clear authority to do so, the affidavits were unreliable (as in they were in some cases nonfactual and separately made inappropriate conclusions of law), and there was no evidence provided that the securitization trust was the owner and holder of the note (as in the not exactly compelling endorsements ending with a trustee and not a particular trust were inadequate). The most important part was this statement:

the Allonge in the record contains no indorsement to Deutsche Bank Trust Company Americas as Trustee for Residential Accredit Loans, Inc. Series 2006-QA6

Few courts have questioned whether the final endorsement needs to be to the trust rather than the trustee; weve argued that that is necessary because the trusts elect to be governed by New York law and case law has long stipulated that endorsement to a particular trust is necessary. Interestingly, the North Carolina judges came to a similar conclusion independently. We expect this argument to be made in other courts. Given that endorsement to a specific trust seems to be very rare, this could prove to be a potent argument.

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Housing Wire Reported incidents of mortgage fraud drop 41% in 2010 May 9, 2011 By Jason Philyaw

The level of mortgage fraud decreased for the first time in several years in 2010, as declining loan origination and overall economic malaise contributed to less instances of deception in the process.

LexisNexis said reported incidents of verified mortgage fraud and misrepresentation by professionals in the industry decreased 41% from 2009 to 2010. Still, the level of verified cases "does not necessarily correlate to actual occurrences of mortgage fraud," which are still rising as evidenced by a 5% increase in the number of suspicious activity reports in 2010, Denise James and Jennifer Butts of LexisNexis Risk Solutions wrote in the firm's latest mortgage fraud report.

And the Financial Crimes Enforcement Network estimates losses at more than $1.5 billion, "a total that is still likely to be grossly under-reported," according to James and Butts.

"Although origination volumes have decreased to just over $1 trillion dollars in 2010, fraud and misrepresentation continue to be a highly visible issue for mortgage lenders," the analysts said.

"Depreciated housing inventories and the threat of homeownership uncertainty by consumers have opened new doors for fraudsters to evolve their craft," according to James, director of real estate solutions, and Butts, manager of data processing at the firm's mortgage asset research institute.

Fewer ways to identify and report fraud also contributed to lower levels last year.

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"We are seeing the convergence of several factors, including decreasing loan origination volumes and fewer resources available to investigate and report incidents of fraud as discovered," Butts said.

"Mortgage fraud has become more complex and harder to verify using traditional methods," according to James.

Still, as market participants grapple with the uncertainty of new rules and regulations mandated by Dodd-Frank and the establishment of the Consumer Financial Protection Bureau, they're acutely aware of the problems associated with mortgage fraud.

"Fraudsters thrive on inadequacies within lengthy loan-related processes and a lack of consistency across organizations and/or industries that help them hide their true motives," the LexisNexis analysts said. "Technology has enabled faster loan production through automation, ease of processing, and analytics. Industry professionals have keen knowledge of those processes, which makes it much easier to manipulate protocols in place to thwart adverse activities."

James said mortgage businesses "are quickly trying to implement new procedures to detect emerging frauds while, at the same time, focusing their energies on recovering the huge financial losses of recent years."

More mortgage fraud was perpetrated in Florida last year than any other state, and homeowners can expect to see more than three times as much fraud in the Sunshine State than elsewhere in the country, according LexisNexis. New York remains second and California third in the expected amount of reported mortgage fraud and misrepresentation by origination volume.

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Bloomberg FDICs Bair Will Leave July 8 After Living-Will Rule May 9, 2011

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By Meera Louis and Craig Torres

Federal Deposit Insurance Corp. Chairman Sheila Bair will leave her post July 8, a week after the official expiration of her term, the agency announced.

Bair, whose term officially ends June 30, plans to stay the extra days to finish work on the rule requiring systemically risky firms to outline how they can be unwound in the event of a collapse, a person briefed on the matter said.

The final rule on the so-called living wills is to be voted on during an FDIC board meeting in the first week of July, said the person, who spoke on condition of anonymity because the plan isnt public.

The FDIC rule will require financial companies with at least $50 billion in assets to provide information on their debt, funding, capital and cash flows. The plan is designed to mitigate some of the risks that exacerbated the credit crisis after Lehman Brothers Holdings Inc. (LEHMQ) collapsed in 2008.

Bair, 57, said at a Federal Reserve Bank of Chicago meeting May 5 that the Fed and FDIC must be willing to force systemically important financial firms to create credible and actionable resolution plans.

Companies failing to submit credible plans could be subject to more stringent capital, leverage or liquidity requirements as well as restrictions on their growth, activities or operations, agency officials have said.

Writing a Book

Bair, who is serving as the 19th chairman of the agency, has said she was not interested in renewing her term and intends to write a book and spend time with her family.

Consistent with previous public statements, Chairman Bair has announced her intention to depart the agency following the expiration of her term, the FDIC said today in a statement. Bair will lead her final meeting as chairman during the first week in July, the agency said.

President Barack Obama faces several high-level regulatory vacancies within the next several months, including the FDIC chair and the head of the new Consumer Financial Protection Bureau, which is scheduled to officially start work on July 21.

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Bair, a former assistant Treasury secretary and New York Stock Exchange executive, took the helm at the FDIC in June 2006 after being appointed by President George W. Bush to replace Donald Powell, who moved to the Department of Homeland Security.

Praise, Criticism

A Republican who once served as a policy aide to former Senator Bob Dole, she drew praise from Democratic lawmakers in guiding the FDIC through a financial crisis that saw banks fail at the fastest pace since the savings-and-loan crisis of the 1980s and early 1990s.

At the same time, she found herself at odds with government officials including Treasury Secretary Timothy F. Geithner, who was president of the Federal Reserve Bank of New York during the Bush administration and sought to have her replaced as chairman after Barack Obama was elected president in 2008.

In the Bush administration, she was not seen as a team player, former FDIC General Counsel John Douglas, now a partner at the Davis Polk & Wardwell law firm in New York, said in a 2009 interview. It was clear she was standing up for what she thought her role was as chairman of the FDIC.

For her part, Bair rejected the criticism and said reports of conflict were overblown by the media.

People need to make up their minds whether they want us to be a tough regulator or a weak, accommodating regulator, she said in 2009.

Lawmakers including Representative Barney Frank, the Massachusetts Democrat who led efforts to enact the regulatory overhaul that bears his name, praised Bair for pushing banks and regulators to protect homeowners as foreclosures soared after the collapse of the U.S. mortgage market.

Bair successfully pushed for the FDIC to be given authority under the Dodd-Frank Act for unwinding failed companies whose collapse could threaten the broader economy as happened in 2008. The livingwills measure is part of that authority.

Bair, who was born in Kansas, is married and has two children.

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American Banker Senators Demand Review of Dodd-Franks Economic Costs May 10, 2011 By Donna Borak

WASHINGTON Members of the Senate Banking Committee are warning regulators responsible for implementing the rules of the Dodd-Frank Act not to ignore the potential economic cost of the new law.

In a letter sent last week to Inspector Generals at the Federal Reserve Board, Treasury Department, Federal Deposit Insurance Corp., and two other agencies, lawmakers demanded that the IGs conduct thorough reviews of economic assessments submitted by each agency and prepare written reports of their findings. Specifically, the IGs must provide descriptions of internal policies and procedures the agencies use to "ensure rigor and consistency in the economic analysis," and assessments of the degree to which "relevant staff understand and follow statutory and the agency's own requirements."

The letter sent by 10 lawmakers on Wednesday including Richard Shelby, the lead Republican on the panel was prompted after an April report by the IG's office for the Commodity Futures Trading Commission found that legal formalities in the rulemaking process had "trumped" economic analysis.

"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," they wrote. "Therefore, we request that you conduct a review of the economic analyses performed by the regulatory agency under your supervision and prepare a written report of your findings."

Lawmakers also raised concerns over "the cumulative burden of Dodd-Frank" and asked that agencies assess the impact the law would have on job creation and economic growth, as well as how consumers and business obtain credit, allocate capital and manage risk.

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The Senators have asked the IGs to respond to their requests by June 13.

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New York Times (DealBook blog) House Financial Services Committee Goes Digital May 9, 2011 By Ben Protess

The financial crisis prompted Congress to offer a $700 billion banking bailout, a sweeping overhaul of financial regulations and now a blog.

The House Financial Services Committee, which oversees Wall Street and its regulators, caught up with the digital age on Monday as it unveiled a revamped Web site and a blog entitled The Bottom Line.

The committee, controlled by Republicans, has high hopes for the blog: We hope this blog will make people think, the committee said in its inaugural post.

Thats not all: We hope this blog will make people want to read it.

So hows that going so far? DealBook has requested the opening day traffic numbers for the site. We will post the figures here if and when we receive them.

The committee wants The Bottom Line to become a must read for journalists, Capitol Hill staff members, lobbyists, constituents and fellow politicians who have interest in financial issues, but dont necessarily have the time to do the digging, the opening post said.

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Since the financial crisis, the committees profile has risen in Washington and on Wall Street.

When Democrats controlled Congress last year, the committee helped draft the Dodd-Frank financial regulatory law. Now that Republicans control the House, the committee has become the center of efforts to undermine the Dodd-Frank Act and all its new rules for Wall Street.

The financial crisis and our countrys ongoing economic struggles have placed a great emphasis on the work of the committee, Spencer Bachus, the Alabama Republican who heads the committee, said in a statement. Our new Web site will help us engage Americans on the issues they care about and enhance our ability to keep them informed of the committees work, he said.

The blog will focus on mouse-scrolling topics like financial regulation, trends in the financial services industry and housing policy. Dont worry if that doesnt grab you; the committee promises that its site will be entertaining.

We believe that there is a need for clear, concise appraisals of policies and ideas as opposed to inside baseball commentary, the opening blog post said. No matter the post, the committee has a simple goal for its blog: We will try to entertain.

And dont expect the Congressional bloggers to bite their tongue. We will blog about ideas and policies that we support and that we dont support, according to the post.

A committee official told DealBook that staff members would aim to write a few blog posts a day, although the committee would not enforce a specific quota.

The committee so far has posted three items, including the introductory note, a post entitled How costly are the bailouts of Fannie Mae and Freddie Mac? and a link to Shelley Moore Capito, a Republican member of the committee, appearing on CNBCs Squawk Box.

Still, its not all links and aggregation at The Bottom Line. The committee says it has a flair for the longform piece as well. You can expect short reaction pieces and longer thought pieces, according to the first post.

House Financial Services 2.0 also dabbles in crowd-sourcing. The Web site features a widget known as YourWitness, which enables Americans to submit questions for committee members to ask witnesses at future hearings.

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The YouComment portion of the site collects comments on pending legislation, while the aptly named You Blow The Whistle allows concerned citizens to report waste, fraud and abuse taking place at federal regulatory agencies.

No word yet on whether you can send personal text messages to Mr. Bachus and the committees ranking Democrat, Barney Frank of Massachusetts.

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Page 753 of 2347

From:

To: Cc: Bcc: Subject: Date: Attachments: Colleagues,

Harvey, Imani (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harveyi> _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands>

CFPB Job Vacancy Announcements Posted on USAJobs as of 5/9/2011 and 5/10/11 Tue May 10 2011 10:06:25 EDT

The CFPB Human Capital Team has posted a new vacancy announcement on the USAJobs website. Below, you will find the job title, grade level, and link for the new announcement. If you know great candidates who might be interested in joining our team, please share this information with them!

Counsel (General), CN-0905-5B/7A

Office: Office of General Counsel Vacancy Announcement #: 11-CFPB-209P Announcement Closes: Friday, May 13, 2011 Who May Apply: All U.S. citizens Link: 11-CFPB-211P

Student Loan and Installment Lending Analyst, CN-301-6A Office: Research, Markets & Regulations; Credit Information Markets Vacancy Announcement #: 11-CFPB-210P Announcement Closes: Friday, May 13, 2011 Who May Apply: All U.S. citizens Link: 11-CFPB-210P

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Counsel (General), CN-0905-5B/7A

Office: Office of General Counsel Vacancy Announcement #: 11-CFPB-209P Announcement Closes: Friday, May 19, 2011 Who May Apply: All U.S. citizens Link: 11-CFPB-209P

Consumer Response Manager (Quality Manager), CN-301-6A

Office: Response Center Vacancy Announcement #: 11-CFPB-189P Announcement Closes: Friday, May 23, 2011 Who May Apply: All U.S. citizens Link: 11-CFPB-189P

Consumer Response Manager, CN-301-6A

Office: Response Center Vacancy Announcement #: 11-CFPB-191P Announcement Closes: Friday, May 23, 2011 Who May Apply: All U.S. citizens Link: 11-CFPB-191P

Consumer Response Specialist, CN-301-5B

Office: Response Center

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Vacancy Announcement #: 11-CFPB-193P Announcement Closes: Friday, May 23, 2011 Who May Apply: All U.S. citizens Link: 11-CFPB-193P

Consumer Response Policy & Procedure Analyst, CN-301-5A/5B/5C

Office: Response Center Vacancy Announcement #: 11-CFPB-191P Announcement Closes: Friday, May 23, 2011 Who May Apply: All U.S. citizens Link: 11-CFPB-206P

Imani Harvey Special Assistant to the Chief Human Capital Officer Consumer Financial Protection Bureau Email: Imani.Harvey@treasury.gov Phone: 202-435-7513

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From:

To: Cc: Bcc: Subject: Date: Attachments: Colleagues,

Slagter, Dennis (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=slagterd> _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands>

Welcome our Newest Hires! Tue May 10 2011 10:01:27 EDT image001.jpg

Please join us in welcoming the following new team members to our family at CFPB!

If you have not already met our newest additions, please stop by and introduce yourself.

On May 9th, we welcomed:

PP10 EOD 050911

Left to Right: Rick Hackett, Deputy Assistant Director, Installment Lending Markets, 542 Tami Lucero, Administrative Ops. Assistant, Consumer Education & Engagement, 7310 Lawrence Brown, Attorney-Advisor, Enforcement, 509 Ethan Levisohn, Attorney-Advisor, Enforcement, 547 (Started 5/2/11) Kathy Sanders, Administrative Ops. Assistant, Community Affairs, 568 Chris Vaeth, Community Affairs Advisory (IPA), Community Affairs, 568 Dalie Jimenez, Policy Analyst, Credit Information Markets, 543 Wally Adeyemo Anne Zorc, Attorney-Advisor, Deputy General Counsel, 520 Ashley Gordon, Student Trainee (Communications), Media Relations, 541

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Sean OMealia, Review Analyst, Small Bus. & Community Banks, 568 Peter Carroll, Mortgage Markets Specialist, Mortgage Markets, 543 Paul Rothstein, Economist, Research, 504 Jesse Leary, Economist, Research, 504 (Started 4/25/11) Shawn Mewhorter, Management & Program Analyst (Privacy Act), PIRT, 7120

Congratulations and welcome!

Page 759 of 2347

From:

To: Cc: Bcc: Subject: Date: Attachments: Good Morning,

Hart, Maria (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=hartm> on belhaf of West, Catherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=westca> _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands>

CFPB Policy_ Business Casual Dress Friday Memo Tue May 10 2011 09:23:50 EDT CFPB Policy_ Business Casual Dress Friday Memo.docx

Corrected version of dress-code attached.

Best,

Catherine

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CFPB Policy_ Business Casual Dress Friday Memo.docx (Attachment 1 of 1)

May 9, 2011 MEMORANDUM FOR CFPB STAFF FROM: Catherine West Chief Operating Officer Business Casual Dress on Fridays

SUBJECT:

This memo lays out the policy to allow business casual dress on Fridays under certain circumstances. Our objective in establishing a business casual dress code on Fridays is to allow our staff, detailees, interns and consultants collectively referred to hereafter as team members-- to work comfortably in the workplace. Yet, we still need our team members to project a professional image for our stakeholders, potential employees, and visitors. Business casual dress is the standard for this dress code. Because all casual clothing is not suitable for the office, we will provide guidelines at the end of this memorandum to help team members determine what is appropriate to wear to work. In addition, there are situations where business attire (e.g., coat and tie) is required even if it is a Friday. These situations include: Anyone on site at a financial institution on official business (e.g., during an examination). Anyone in meetings with external parties where they are representing the Bureau. Since meetings can come up on short notice, team members should keep themselves prepared for that. Also note this policy can be reversed or changed anytime, temporarily or permanently, by the Chief Operating Officer. Guideline to Business Casual Dressing for Work - This is a general overview of appropriate business casual attire. Items that are not appropriate for the office are listed, too. Neither list is all-inclusive and both are open to change. The lists tell you what is generally acceptable as business casual attire and what is generally not acceptable as business casual attire. No dress code can cover all contingencies so employees must exert a certain amount of judgment in their choice of clothing to wear to work. If you experience uncertainty about acceptable, professional business casual attire for work, please ask your supervisor or your Human Capital staff. Slacks, Pants, and Suit Pants - Slacks such as dress pants or khaki are acceptable. They should be neat and not crumpled. Inappropriate slacks or pants include jeans, sweatpants, active wear, or shorts. Skirts, Dresses, and Skirted Suits - Short skirts, mini-skirts, skorts and beach dresses may not be appropriate for the office.

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CFPB Policy_ Business Casual Dress Friday Memo.docx (Attachment 1 of 1)

Shirts, Tops, Blouses, and Jackets Collared polo/golf shirts, dress shirts, sweaters, tops, and turtlenecks are acceptable attire for work. Most suit jackets or sport jackets are also acceptable attire for the office, if they violate none of the listed guidelines. Inappropriate attire for work includes tank tops; midriff tops; shirts with potentially offensive words, terms, logos, pictures, cartoons, or slogans; halter-tops; sweatshirts, and t-shirts unless worn under another blouse, shirt, jacket, or dress. Shoes and Footwear - Walking shoes, loafers, clogs, boots, flats, dress heels, and leather decktype shoes are acceptable for work. Athletic shoes, sandals, flip-flops and slippers are not acceptable in the office. Hats and Head Covering - Hats are not appropriate in the office. Head covers that are required for religious purposes or to honor cultural tradition are allowed. Remember these are guideline: if you have any questions or concerns please check with Human Capital. Your good judgment is the most important thing you can bring to work each day.

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From:

To:

Adeyemo, Adewale (Wally) (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=adeyemoa> Abney, Wilson (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=abneyw>; Adeyemo, Adewale (Wally) (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=adeyemoa>; Alag, Sartaj </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=alags>; Antonakes, Steve (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=antonakess>; Antonellis, Sherry (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=antonelliss>; Assebab, Catherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=assebabc>; Bach, Mary (Stacey)(CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=bachs>; Basham, Stephanie (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=bashams>; Bateman, Jon </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=batemanj>; Bernstein, Ethan (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=bernsteine>; Betts, Kristina (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=bettsk>; Black, Brad </o=ustreasury/ou=do/cn=recipients/cn=blackb>; Blanton, Mary </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=blantonm>; Blenkinsopp, Alexander (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=blenkinsoppa>; Blow, Marla (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=blowm>; Blumenthal, Pamela (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=blumenthalp>; Boateng, W. (Kwadwo)(CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=boatengk>; Boenau, Susan (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=boenaus>; Botelho, Michael (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=botelhom>; Breslaw, April (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=breslawa>; Brolin, John (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=brolinj>; Brown, Allison (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=brownall>; Brown, Amy (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=brownam>; Brown, Charles (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=brownchar>; Brown, Robert (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=brownr>; Brown, Trina (CFPB) </o=ustreasury/ou=exchange administrative group

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(fydibohf23spdlt)/cn=recipients/cn=browntri>; Burniston, Tim (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=burnistont>; Burton, Matthew (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=burtonm>; Callan, Nicole (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=callann>; Campbell, Michael (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=campbellmic>; Canfield, Anna (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=canfielda>; Cantrell, Diane (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cantrelld>; Chandler, Deidra (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=chandlerde>; Chanin, Leonard (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=chaninl>; Chopra, Rohit (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=choprar>; Chow, Edwin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=chowe>; Chuhaj, Yuri J </o=ustreasury/ou=do/cn=recipients/cn=ots/cn=ch4970>; Cochran, Kelly (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cochrank>; Coleman, John (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=colemanjo>; Coney, Steven (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=coneys>; Cordray, Richard (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cordrayr>; Coyle, Raymond (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=coyler>; Craft, Nadine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=craftn>; Cronan, Russell (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cronanr>; Cronin, Katherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cronink>; Cumpiano, Flavio (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cumpianof>; D'Amico, Christina </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=damicoc>; Darling, Eben (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=darlinge>; Date, Rajeev (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dater>; Davidson, Terri L </o=ustreasury/ou=do/cn=recipients/cn=ots/cn=da0037>; Decker, Sharon (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=deckers>; Deutsch, Rebecca (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=deutschr>; Dickman, Marilyn (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dickmanm>; DiPalma, Nikki (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dipalman>; Dokko, Jane (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dokkoj>; Donoghue, Kristen

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(CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=donoghuek>; Dorsey, Darian (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dorseyd>; Duncan, Timothy (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=duncant>; Egerman, Mark (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=egermanm>; Elliott, Brandace (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=elliottbr>; English, Jared (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=englishjar>; English, Leandra (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=englistl>; Forrest, David (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=forrestda>; Fravel, Wesley (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=fravelw>; Frotman, Seth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=frotmans>; Fuchs, Meredith (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=fuchsm>; Galicki, Joshua (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=galickij>; Gao, Jane (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gaoj>; Geary, John (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gearyj>; Geldon, Daniel (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=geldond>; Gelfond, Rebecca (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gelfondr>; Glaser, Elizabeth (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=glasere>; Goldfarb, Rachael (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=goldfarbr>; Gonzalez, Roberto (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gonzalezr>; Gordon, Michael (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gordonm>; Gorski, Stephanie (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=gorskis>; Gragan, David (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gragand>; Granat, Rochelle </o=ustreasury/ou=do/cn=recipients/cn=granatr>; Gregorio, Laurie (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=gregol>; Grover, Eric (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=grovere>; Gupta, Neeraj (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=guptan>; Hammonds, Jamice (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=hammondsj>; Hancock, Gary (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=hancockg>; Hannah, Stephen (Rick)((CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=hannahs>; Harpe, Pam (CFPB)

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</o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harpep>; Hart, Maria (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=hartm>; Harvey, Imani (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harveyi>; Haynes-Gholar, Tywana (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=haynes-gholat>; Healey, Jean (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=healeyj>; Herchen, Emily (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=herchene>; Herring, Maia </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=herringm>; Hillebrand, Gail (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=hillebrandg>; Holmes, Cordelia (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=holmesc>; Horan, Kathleen (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=horank>; Horn, Richard (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=hornr>; Howard, Jennifer (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=howardje>; Hrdy, Alice (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=hrdya>; Hupp, James (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=huppj>; Jackson, Monica (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=jacksonmo>; Jackson, Peter (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=jacksonpe>; Johnson, Christopher </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=johnsonch>; Keane, Micheal (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=keanem>; Kearney, Thomas (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=kearneyt>; Kennedy, Leonard (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=kennedyle>; Kern, Shaun (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=kerns>; Kim, Lynn </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=kiml>; Kitt, Brett (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=kittb>; Klein, Heather (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=kleinh>; Krafft, Nicholas (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=krafftn>; Kunin, Noah (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=kuninn>; Ladd, Christine </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=laddc>; Lauderdale, Steve (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lauderdales>; Leary, Jesse (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=learyje>; Leiss, Wayne (CFPB) </o=ustreasury/ou=exchange administrative group

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(fydibohf23spdlt)/cn=recipients/cn=leissw>; Lepley, Richard (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=lepleyr>; Lev, Ori (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=ofac/cn=ofac users/cn=levo>; Levisohn, Ethan (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=levisohne>; Lilly, Antona </o=ustreasury/ou=do/cn=recipients/cn=lillya>; Logan, Amanda (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=loganam>; Lombardo, Christopher </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lombardoc>; Lopez-Fernandini, Alejandra (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lopez-fernadinia>; Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk>; Mann, Benjamin </o=ustreasury/ou=do/cn=recipients/cn=mannb>; Mann, Seth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=manns>; Markus, Kent </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=marcusk>; Marshall, Mira (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=marshallm>; Martin, Alyssa (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=martinal>; Martinez, Adam (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=martinezaz>; Martinez, Zixta (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=martinezz>; McCoy, Patricia (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=mccoyp>; McDonald, Alicia (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=mcdonalda>; McQueen, Suzanne (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=mcqueens>; Megee, Christine (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=megeec>; Mestre, Juan (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=mestrej>; Meyer, Erie (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=meyerer>; Michalosky, Martin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=michaloskym>; Middlebrook, Jack (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=middlebrookj>; Miller, Kimberly (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=millerki>; Morris, Lucy (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=morrislu>; Mosena, Lea (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=mosenal>; Munz, Daniel (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=munzd>; Nelson, Sheila </o=ustreasury/ou=do/cn=recipients/cn=nelsons>; Osborn, Meredith (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=osbornm>; Patross, Whitney

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(CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=patrossw>; Pearl, Joanna (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=libermanj>; Perry, Vanessa (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=perryv1>; Petersen, Cara (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=petersenc>; Petraeus, Holly (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=petraeush>; Plunkett, Alexander (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=alexanderp>; Pluta, Scott (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=plutas>; Prince, Victor (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=princev>; Proctor, Althea </o=ustreasury/ou=do/cn=recipients/cn=proctora>; Puri, Angela (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=puria>; Reeder, Garry (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=reederg>; Reese, Angelique (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=reesea>; Reilly, Deb (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=reillyd>; Reilly, Elizabeth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=ericksone>; Rexroth, Mariana (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=rexrothm>; Riley, Jeffrey (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=rileyje>; Royster, Felicia (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=roysterf>; Ruihley, Joshua (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=ruihleyj>; Sanford, Paul (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sanfordpa>; Scala, Courtney (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=scalac>; Scanlon, Thomas </o=ustreasury/ou=do/cn=recipients/cn=scanlont>; Scurlock, Angelika (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=scurlocka>; Sealy, William (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sealeyw>; Selden, R. Colgate (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=seldenr>; Sena, Theresa (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=senat>; Sensiba, Vicki (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sensibav>; Shue, Jeffrey (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=shuej>; Silberman, David (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=silbermand>; Skinner, Cathaleen (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=skinnerc>; Slagter,

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Dennis (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=slagterd>; Smith, Rorey (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=smithror>; Smullin, Rebecca (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=smullinr>; Smyth, Nick (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=smythn>; Sobczak, Greg </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sobczakg>; Sokolov, Dan </o=ustreasury/ou=do/cn=recipients/cn=sokolovd>; Stapleton, Claire (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=stapletonc>; Stark, Paula-Rose (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=starkp>; Starr, John (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=starrj>; Sterken, Nathan (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sterkenn>; Stone, Bayard (Corey) (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=stonec>; Suess, Robert (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=seussr>; Taiwo, Ebunoluwa (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=taiwoe>; Tamberrino, Mary (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tamberrinom>; Taylor, Doug (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=taylord>; Tierney, Patrick (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tierneyp>; Tingwald, James (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tingwaldj>; Trueblood, Andrew (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=trueblooda>; Tucker, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tuckerke>; Turenne, Jeannine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=turennej>; Twohig, Peggy (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=twohigp>; Vail, Amber (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=vaila>; Vale, Elizabeth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=valee>; Van Loo, Rory (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=vanloor>; Vanderslice, Julie (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=vanderslicej>; VanMeter, Stephen (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=vanmeters>; Vinton, Merici (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=vintonm>; Wanderer, Agnes (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=wanderera>; Wang, Shou (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=wange>; West, Catherine

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(CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=westca>; Williams, Anya (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=williamsany>; Williams, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=williamsk>; Witt, Michael (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=wittm>; Worthman, Katherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=worthmank>; Young, Christopher </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=youngc>; Yuda, John (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=yudaj>; Zapanta, Victor (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=zapantav> Cc: Bcc: Subject: Date: Attachments:

CFPB Weekly Report 5/9 Mon May 09 2011 19:43:31 EDT

CFPB Weekly Report 5/9/2011

Overview

This week, Elizabeth Warren will meet with Senator John Kerry, Senator Michael Bennet, Senator Jerry Moran Representative Henry Waxman, and Representative Stephen Lynch.

On Friday, Professor Warren will be in New York meeting with Meetings with Allan Sloan of Fortune Magazine, Adam Sorenson of Time Magazine, Jim Cramer, JPMorgan Investor, and Attorney General Schneiderman.

The House Financial Services Committee will mark up the three bills to alter the structure of the CFPB on Thursday that passed out of subcommittee last week.

This week, Holly Petraeus will travel to Western Ohio to listen to servicemembers and their families, and to speak to the business community about the Office of Servicemember Affairs.

The CFPBs Know Before You Owe mortgage disclosure project will continue this week with outreach to key stakeholders inviting them to sign up to take part in giving the Bureau feedback when the two draft combined TILA/RESPA forms are released.

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On Friday, CFPB Assistant Director for Community Affairs Zixta Martinez will speak at the Greenlining Institutes Economic Summit in Los Angeles. This event is open to the press.

Representatives Randy Neugebauer, Shelley Moore Capito, Scott Garrett, and Patrick McHenry have sent a letter requesting additional information on the CFPBs role in mortgage-servicing settlement discussions.

Policy

Cards Last week, we met with two of the largest card issuers to discuss an approach to simplification of cardholder agreements. We will be meeting with the ABA on this topic during the coming week and have scheduled additional meetings for later in the month. We also completed a round of quarterly update meetings with the top issuers.

In the prepaid space, we are continuing to develop a set of options for CFPB action. Last week, we met with several consumer groups to hear their recommendations regarding prepaid cards. We also received additional data from the largest general purpose prepaid card issuer and met with one of the largest provider of government benefit cards. We will meet with Ace Cash Express, one of the largest distributors of prepaid cards.

Mortgages As the TILA/RESPA mortgage disclosure project approaches its public launch date, the OMB review process is drawing to a close, initial web materials are being posted, and prototype forms for testing have been submitted for final approval. With Consumer Response and the Office of Financial Education, we launched a series of external meetings to explore how best to design web content and initial response capability for delinquent homeowners. The mortgages team also refined a proposal for the purchase of loan-level mortgage datasets.

This week, we will meet with counterparts at the Federal Reserve Board and with representatives from NeighborWorks America, the Homeownership Preservation Fund (which operates the HOPE Hotline), and the National Association of Independent Housing Professionals. We will also host a research presentation by researchers at Genworth.

Other Policy Developments In the area of deposits, we will be meeting this week with the Community Bankers Association with

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respect to overdraft rules. We also will be meeting with the head of retail banking for one of the largest retail banks.

Last week we started establishing contacts with the Conference of State Bank Supervisors and the States Multi-State Mortgage Examination Committee to lay the groundwork for cooperation in coordinating future mortgage originators examinations as required by the Dodd-Frank Act.

We will be meeting with FinCEN to review our security plans and procedures for accepting Bank Secrecy Act data (including money services business registration data).

We have begun direct outreach to states that have not yet signed the information-sharing MOU to encourage them to sign on. This is being used as a broader opportunity to build personal relationships with the states.

We participated in our first regular telephone conference with OCC, FDIC, OTS, NCUA, Farm Credit Administration, and the Conference of State Bank Supervisors regarding the Federal registration program for mortgage originators conducted through the Nationwide Mortgage Licensing System. These are biweekly meetings and we will be participating from now through the transfer date as part of process to transfer federal SAFE Act responsibilities from these agencies to the CFPB.

Fair Lending met with the Interagency Fair Lending Task Force to discuss the newly effective Loan Origination Compensation Rule under Regulation Z. We also continue to review supervisory information received from the Federal Reserve Board to identify immediate fair lending issues at the transferring institutions, and we met with Board staff last week to discuss those issues.

We hope to obtain final Treasury signatures on data agreements with the three national consumer credit reporting agencies and with Western Union to initiate analysis for the studies on credit scoring mandated in the Dodd-Frank Act.

Outreach

On Tuesday, Holly Petraeus will meet with the Adjutant General of Ohio, Major General Deborah Ashenhurst, members of the Ohio National Guard, and their spouses to discuss the unique financial challenges that National Guard members face. She will also speak at the West Chester Liberty Chamber Alliance Business Expo and the Dayton Better Business Bureau Eclipse Awards Dinner, discussing the Office of Servicemember Affairs and its role in protecting military families.

On Friday, Petraeus will speak at the Association of Military Banks Luncheon and Mini-Workshop,

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which will include military bankers, federal banking regulators, Department of Defense and Service officials, private organizations, and banking trade association representatives.

On Wednesday, Peggy Twohig, Steve Antonakes, Len Kennedy, and Elizabeth Vale will speak to the Financial Services Roundtable working group.

On Thursday, Len Kennedy will speak to the Financial Services Roundtable Lawyers Council Spring Meeting about the Bureaus vision and priorities. This event is for registered guests only.

Peggy Twohig and Corey Stone will meet with the National Installment Lenders Association. Stone will attend the Online Lenders Alliance annual policy summit.

David Silberman will travel to Newark to participate in a panel discussion of prepaid cards at a conference hosted by Mayor Cory Booker and Cities for Financial Empowerment, and Rich Cordray will speak to the Ohio Mortgage Bankers in Ohio.

Elizabeth Vale meets today with community bankers in Lexington, Kentucky. She and David Silberman will meet tomorrow with the Independent Community Bankers of America.

On Friday, Elizabeth Warren will travel to New York to meet with industry representatives on her vision and priorities for the CFPB. She will also sit for off-the-record interview with Allan Sloan of Fortune.

Also on Friday, CFPB staff will meet with the National Credit Union Association regarding financial literacy.

Management

The CFPB entered into a memorandum of understanding with the Federal Reserve Board establishing the terms and conditions under which Bureau employees are eligible to participate in the Federal Reserve Systems retirement plans, as well as how the Bureau will contribute and reimburse administrative expenses under these plans.

Procurement released several solicitations last week, in connection with regional office space, a flexible spending plan, helpdesk services, short-term operational training for examiners, and computer-based training licenses for examiners. Evaluation demos for notebook computers will occur this week. The FOIA processing system procurement is also expected to be awarded this week.

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Conference room 501 will be converted into bullpen workspace to accommodate our growing staff.

Professor Warren Week Ahead

Monday, May 9, 2011 EW & Raj Date Meeting w NAACP HPetraeus Visit to Wright-Patterson Air Force Base in Dayton, OH EVale Remarks to Community Bankers in Lexington, KY. DSilberman Call w US Bank DSilberman Meeting w Ace Cash Express PTwohig, CStone Meeting w National Installment Lenders Association (NILA) GHillebrand & PMcCoy Meeting w NeighborWorks

Tuesday, May 10, 2011 EW Meeting with Industrial Areas Foundation (IAF) HPetraeus Meeting w TAG of Ohio National Guard CStone Meeting w NMTA & Via Americas HPetraeus Remarks to West Chester Liberty Chamber Alliance, Ohio EVale & DSilberman Meeting w ICBA PMcCoy Meeting w Homeownership Preservation Hotline (HPF) HPetraeus Remarks at BBB Eclipse Awards, Ohio

Wednesday, May 11, 2011 PTwohig & SAntonakes Remarks to Financial Services Roundtable (FSR) PMcCoy Meeting w National Asso of Independent Housing Professionals (NAIHP) LKennedy Remarks at FSR Dinner

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Thursday, May 12, 2011 LKennedy Remarks to FSR Lawyers Council DSilberman Remarks to Cities for Financial Empowerment in New Jersey PTwohig, CStone Meeting w Online Lenders Alliance

Friday, May 11, 2011 GHillebrand & EVale Meeting w NCUA HPetraeus Remarks to Asso of Military Banks and Mini-workshop (AMBA) ZQM Remarks to The Greenlining Institute in CA

Last Week Monday, May 2, 2011 EW Meeting w Arkansas Bankers EW Meeting w Independent Community Bankers Asso (ICBA) EW Meeting w Illinois Bankers EVale Meeting w Connecticut Bankers DSilberman Meeting w PNC DSilberman Call w Green Dot

Tuesday, May 3, 2011 EW Call w National Credit Union Roundtable EW Meeting w Georgia Bankers ICBA Reception

Wednesday, May 4, 2011 EW in Little Rock, Arkansas EW Meeting w Consumer/Civil Rights groups in Little Rock, AR RDate Remarks Morgan Stanley Services Conference. Closed Press.

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HPetraeus Meeting w CUNA EVale Meeting w TN Bankers Asso

Thursday, May 5, 2011 EW in Little Rock, AR EW Meeting w AR Community Bankers EW Remarks at William J. Clinton School at the University of Arkansas. Open Press. LChanin Remarks at Payment Card Institute. Open Press. EV & ZQM Remarks to Independent Bankers Asso of Texas (IBAT) RCordray Meeting w US Chamber of Commerce CStone & GHillebrand attending Consumer Data Industry Asso Briefing on Credit Reporting Accuracy PTwohig Meeting w Consumer Federation of America (CFA) DSilberman Meeting w CFA CStone Meeting w Equifax EV Meeting w MN Community Bankers

Friday, May 6, 2011 HPetraeus Visit to Fort Bragg w Senator Kay Hagan

Saturday, May 7, 2011 HPetraeus Commencement Address at Methodist University Smullin Call w Golden Money Transport

Page 777 of 2347

From:

To: Cc: Bcc: Subject: Date: Attachments:

Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk> Hart, Maria (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=hartm>

RE: Return Items Mon May 09 2011 17:40:18 EDT

Perfect. Will do on Wednesday. Thanks!

From: Hart, Maria (CFPB) Sent: Monday, May 09, 2011 5:40 PM To: Lownds, Kevin (CFPB) Subject: RE: Return Items

Yes, to me.

From: Lownds, Kevin (CFPB) Sent: Monday, May 09, 2011 5:37 PM To: Hart, Maria (CFPB) Subject: Return Items

Hi Maria,

Quick question for you --- do you know who I should return my Blackberry, ID, and DORA token to? My last day here is on Wednesday. Thanks!

-Kevin

Kevin K. Lownds Review Analyst

Page 778 of 2347

Consumer Financial Protection Bureau (202) 435-7399

Page 779 of 2347

From:

To:

Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk> Deutsch, Rebecca (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=deutschr>

Cc: Bcc: Subject: Date: Attachments:

RE: Quick Conversation Mon May 09 2011 17:32:58 EDT

Thank youmuch appreciated!

From: Deutsch, Rebecca (CFPB) Sent: Monday, May 09, 2011 5:30 PM To: Lownds, Kevin (CFPB) Subject: RE: Quick Conversation

Of course. Wednesday at 2 works well.

Rebecca Deutsch Attorney-Advisor Office of General Counsel Consumer Financial Protection Bureau rebecca.deutsch@treasury.gov Office: (202) 435-7091

From: Lownds, Kevin (CFPB) Sent: Monday, May 09, 2011 5:29 PM To: Deutsch, Rebecca (CFPB) Subject: Quick Conversation

Hi Rebecca,

Quick question for you --- would you be willing to sit down with me for a few minutes and talk about your time at Wilmer? I would love to hear about your experiences and any advice you might have for me as I

Page 782 of 2347

start there in a few weeks. I have a pretty open schedule on Wednesdaywould you be available around 2 pm? If not, I would be happy to make myself available when it is most convenient for you.

Thanks, Kevin

Kevin K. Lownds Review Analyst Consumer Financial Protection Bureau (202) 435-7399

Page 783 of 2347

From:

To:

Deutsch, Rebecca (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=deutschr> Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk>

Cc: Bcc: Subject: Date: Attachments:

Accepted: Quick Chat re: Wilmer Mon May 09 2011 17:32:50 EDT

Page 784 of 2347

From:

To: Cc: Bcc: Subject: Date: Attachments:

Hart, Maria (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=hartm> on belhaf of West, Catherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=westca> _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands>

Business Casual Fridays and Business Cards Mon May 09 2011 17:32:48 EDT CFPB Policy Business Casual Dress Friday Memo.docx CFPB Policy Business Cards Final.docx

CFPB All Hands, In response to frequent questions, the CFPB Executive Committee approved the following two internal policies last week. Please let us know if you have any questions. Best, Catherine West Chief Operating Officer, CFPB

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CFPB Policy Business Casual Dress Friday Memo.docx (Attachment 1 of 2)

May 9, 2011 MEMORANDUM FOR CFPB STAFF FROM: Catherine West Chief Operating Officer Business Casual Dress on Fridays

SUBJECT:

This memo lays out the policy to allow business casual dress on Fridays under certain circumstances. Our objective in establishing a business casual dress code on Fridays is to allow our staff, detailees, interns and consultants collectively referred to hereafter as team members-- to work comfortably in the workplace. Yet, we still need our team members to project a professional image for our stakeholders, potential employees, and visitors. Business casual dress is the standard for this dress code. Because all casual clothing is not suitable for the office, we will provide guidelines at the end of this memorandum to help team members determine what is appropriate to wear to work. In addition, there are situations where business attire (e.g., coat and tie) is required even if it is a Friday. These situations include: Anyone on site at a financial institution on official business (e.g., during an examination). Anyone in meetings with external parties where they are representing the Bureau. Since meetings can come up on short notice, team members should keep themselves prepared for that. Also note this policy can be reversed or changed anytime, temporarily or permanently, by the Chief Operating Officer. Guide to Business Casual Dressing for Work - This is a general overview of appropriate business casual attire. Items that are not appropriate for the office are listed, too. Neither list is all-inclusive and both are open to change. The lists tell you what is generally acceptable as business casual attire and what is generally not acceptable as business casual attire. No dress code can cover all contingencies so employees must exert a certain amount of judgment in their choice of clothing to wear to work. If you experience uncertainty about acceptable, professional business casual attire for work, please ask your supervisor or your Human Capital staff. Slacks, Pants, and Suit Pants - Slacks that are similar to Dockers or nice looking dress pants are acceptable. They should be neat and not crumpled. Inappropriate slacks or pants include jeans, sweatpants, exercise pants, or shorts. Skirts, Dresses, and Skirted Suits - A reasonable length skirt (not mini-skirt) or full-length trousers of a non-jeans material is considered acceptable. Short skirts, mini-skirts, skorts, sun dresses, beach dresses, and spaghetti-strap dresses are inappropriate for the office.

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CFPB Policy Business Casual Dress Friday Memo.docx (Attachment 1 of 2)

Shirts, Tops, Blouses, and Jackets Collared polo/golf shirts, dress shirts, sweaters, tops, and turtlenecks are acceptable attire for work. Most suit jackets or sport jackets are also acceptable attire for the office, if they violate none of the listed guidelines. Inappropriate attire for work includes tank tops; midriff tops; shirts with potentially offensive words, terms, logos, pictures, cartoons, or slogans; halter-tops; tops with bare shoulders; sweatshirts, and t-shirts unless worn under another blouse, shirt, jacket, or dress. Shoes and Footwear - Walking shoes, loafers, clogs, boots, flats, dress heels, and leather decktype shoes are acceptable for work. Socks or stockings are required. Athletic shoes, sandals, flipflops, slippers, and any shoe with an open toe are not acceptable in the office. Hats and Head Covering - Hats are not appropriate in the office. Head covers that are required for religious purposes or to honor cultural tradition are allowed. Conclusion - If clothing fails to meet these standards, as determined by the employee s supervisor and Human Capital staff, the employee will be asked not to wear the inappropriate item to work again. If the problem persists, the employee may be sent home to change clothes and will receive a verbal warning for the first offense. All other policies about personal time use will apply. Progressive disciplinary action may be applied if dress code violations continue.

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CFPB Policy Business Cards Final.docx (Attachment 2 of 2)

May 9, 2011 MEMORANDUM FOR CFPB STAFF FROM: Catherine West Chief Operating Officer Business Cards

SUBJECT:

This memo lays out the policy to enable staff to have business cards for use on official business. This memorandum will define a short term and long term policy and basic principles applicable for both short and long term. Goal of this policy is to meet our operating needs in a way that is in line with other comparable agencies. This policy can be reversed or changed anytime, temporarily or permanently, by the Chief Operating Officer. Basic Principles Contractors and interns are not allowed to have official CFPB business cards. All titles on cards must be the official titles. Business cards are intended to be used for workrelated, not personal, needs. Long Term Policy All staff will be able to order business cards if their supervisor determines that their job requires business cards. All business cards will have to be an approved design from an approved vendor. CFPB will pay for one box of 250 business cards (or up to 500 business cards if order size of 250 is not available) for each staff member. Orders beyond that need approval from a supervisor. Reorders are allowed when all cards are depleted or when official job title changes. Reorders should not happen more than once per year. The timing of when this policy takes effect is to be determined, but will not be before our official stand up day on July 21, 2011. Short Term Policy CFPB will not provide business cards in the short term. This is for a variety of operational reasons -- e.g., we do not yet have our permanent seal design and we do not want to make this a procurement that will get in the way of higher priority procurements. However CFPB will allow people to buy business cards with their own money and apply for reimbursement. Employees will receive reimbursement via direct deposit through the CFPB GovTrip travel system. Employees will need to register in GovTrip and then file a local voucher (reimbursement request) for the amount of the purchase. Note that this is the standard system for reimbursements that staff should sign up for anyway. For more information on registering in GovTrip and processing a local voucher, please contact the BPD-ARC Travel Help Desk at (304) 480-8000 Option 1 or your team administrative assistant. s If cards are purchased, the card should be an approved design. Below is the standard template that people should use.

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CFPB Policy Business Cards Final.docx (Attachment 2 of 2)

www.consumerfinance.gov

Note some core things with the approved temporary format: This template uses the generic seal of the United States government. Address for all should be simply 1801 L St. NW address. All should include the URL for the website. We have also identified an online vendor that people can order those cards if they choose. That vendor is www.govbusinesscards.com. People are welcome to use other providers as long as they have the same approved template. Staff are expected to use their personal credit card to complete this order.

Page 789 of 2347

From:

To:

Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk> Darling, Eben (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=darlinge>

Cc: Bcc: Subject: Date: Attachments:

RE: IMPT. HUD EOI Received # Mon May 09 2011 16:57:23 EDT

Thanks Eben! Much appreciated

From: Darling, Eben (CFPB) Sent: Monday, May 09, 2011 4:53 PM To: Lownds, Kevin (CFPB) Cc: Glaser, Elizabeth (CFPB) Subject: RE: IMPT. HUD EOI Received #

Thanks guys. And congrats on the summer gig Kevin! Great news. Well miss you.

From: Lownds, Kevin (CFPB) Sent: Monday, May 09, 2011 4:47 PM To: Darling, Eben (CFPB) Cc: Glaser, Elizabeth (CFPB) Subject: FW: IMPT. HUD EOI Received # Importance: High

Hi Eben,

In response to this question, we received 41 EOIs from HUD employees. Let me know if you have any additional questionsthanks!

-K

From: Glaser, Elizabeth (CFPB) Sent: Monday, May 09, 2011 4:41 PM To: Lownds, Kevin (CFPB)

Page 796 of 2347

Subject: FW: IMPT. HUD EOI Received # Importance: High

From: Darling, Eben (CFPB) Sent: Monday, May 09, 2011 4:17 PM To: Glaser, Elizabeth (CFPB) Subject: IMPT. HUD EOI Received # Importance: High

Do you know how many HUD EOIs you received total?

Eben P. Darling Department of Treasury CFPB Implementation Team 202.435.7272 (P) Eben.Darling@treasury.gov

Page 797 of 2347

From:

To:

Cc:

Glaser, Elizabeth (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=glasere> Dickman, Marilyn (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dickmanm> Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk>; Slagter, Dennis (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=slagterd> HUD OFFERS - GREEN LIGHT PER WALLY Mon May 09 2011 14:46:16 EDT

Bcc: Subject: Date: Attachments:

Page 803 of 2347

From:

To:

Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk> Tamberrino, Mary (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tamberrinom>

Cc: Bcc: Subject: Date: Attachments:

Accepted: Happy hour - Kevin Lownds farewell Mon May 09 2011 14:39:26 EDT

Page 804 of 2347

From:

To:

Cc:

Tamberrino, Mary (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tamberrinom> Tamberrino, Mary (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tamberrinom>; Dickman, Marilyn (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dickmanm>; Slagter, Dennis (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=slagterd>; Sensiba, Vicki (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sensibav>; Harpe, Pam (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harpep>; Tingwald, James (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tingwaldj>; Royster, Felicia (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=roysterf>; Megee, Christine (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=megeec>; Cronin, Katherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cronink>; Black, Brad </o=ustreasury/ou=do/cn=recipients/cn=blackb>; DiPalma, Nikki (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dipalman>; Plunkett, Alexander (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=alexanderp>; Harvey, Imani (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harveyi>; Mann, Seth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=manns>; Wanderer, Agnes (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=wanderera>; Herchen, Emily (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=herchene>; Glaser, Elizabeth (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=glasere>; Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk>; Brown, Charles (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=brownchar> bakingdelight@cox.net <bakingdelight@cox.net>; Cumpiano, Flavio (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cumpianof>; Deutsch, Rebecca (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=deutschr>; Hart, Maria (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=hartm>; Kern, Shaun (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=kerns>; Klein, Heather (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=kleinh>; Lopez-Fernandini, Alejandra (CFPB) </o=ustreasury/ou=exchange administrative

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group (fydibohf23spdlt)/cn=recipients/cn=lopez-fernadinia>; Mosena, Lea (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=mosenal>; Osborn, Meredith (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=osbornm>; Scanlon, Thomas </o=ustreasury/ou=do/cn=recipients/cn=scanlont>; Sealy, William (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sealeyw>; Smullin, Rebecca (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=smullinr>; Smyth, Nick (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=smythn>; VanMeter, Stephen (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=vanmeters> Bcc: Subject: Date: Attachments: NEW TIME! Happy hour - Kevin Lownds farewell Mon May 09 2011 14:38:34 EDT

StartTime: Wed May 11 18:00:00 Eastern Daylight Time 2011 EndTime: Wed May 11 19:30:00 Eastern Daylight Time 2011 Location: Invitees: Recurring: No ShowReminder: Yes ReminderMinutes: 15 ReminderTime: Wed May 11 17:45:00 Eastern Daylight Time 2011 Accepted: Yes AcceptedTime: Mon May 09 14:39:00 Eastern Daylight Time 2011 When: Wednesday, May 11, 2011 6:00 PM-7:30 PM (UTC-05:00) Eastern Time (US & Canada). Where: 19th and I Street NW (Elephant & Castle) Note: The GMT offset above does not reflect daylight saving time adjustments. *~*~*~*~*~*~*~*~*~* Whoops! New time too! ************************* UPDATE: Location confirmed - see link below http://www.elephantcastle.com/dc_eye ******************* All, Several of us will be going out for Happy Hour Wednesday to wish Kevin Lownds well. He is completing his time here at CFPB and will be taking a summer associate job at Wilmer Hale. We will miss him and want to give him a good send off! Hope to see you there (pls forward to anyone I may have inadvertently left off). Mary

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From:

To: Cc: Bcc: Subject: Date: Attachments: Colleagues,

Harvey, Imani (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harveyi> _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands>

CFPB Job Vacancy Announcement Posted on USAJobs as of 5/9/2011 Mon May 09 2011 13:19:13 EDT

The CFPB Human Capital Team has posted a new vacancy announcement on the USAJobs website. Below, you will find the job title, grade level, and link for the new announcement. If you know great candidates who might be interested in joining our team, please share this information with them! Residential Mortgage Originations Program Manager, CN-1530-7A Office: Research, Markets & Regulations; Mortgage Markets Vacancy Announcement #: 11-CFPB-232P Announcement Closes: Friday, May 13, 2011 Who May Apply: All U.S. citizens Link: 11-CFPB-232P

Imani Harvey Special Assistant to the Chief Human Capital Officer Consumer Financial Protection Bureau Email: Imani.Harvey@treasury.gov Phone: 202-435-7513

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From:

To: Cc:

Blenkinsopp, Alexander (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=blenkinsoppa> _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands> Adamske, Steven </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=adamskes>; Moore, Megan </o=ustreasury/ou=do/cn=recipients/cn=mooreme>; Hunt, Anita Maria </o=ustreasury/ou=do/cn=recipients/cn=hunta>; Wallace, Kim </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=wallacek>; Wolin, Neal </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=wolinn>; Warren, Elizabeth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=warrene>; Fitzpayne, Alastair </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=fitzpaynea>; LeCompte, Jenni </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=engebretsenj>; Murray, Colleen </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=murrayco>; Coloretti, Nani </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=colorettin> CFPB Press Clips 5/9 Mon May 09 2011 11:37:53 EDT

Bcc: Subject: Date: Attachments:

Press Clips 5/9/2011

Index

Click publication title to find its location in this e-mail. Click article title to go to its source website.

Congress and the CFPB American Banker Block Party: GOP Out to Stop Recess CFPB Move

Firedoglake Republicans Deliver Empty Threat of Consequences If Obama Recess-Appoints CFPB Director Bloomberg Republicans Press Warren, Geithner on CFPB Mortgage-Talks Role The Hill (blog) GOP Has more questions for CFPB on mortgage settlement

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 Baltimore Sun Critics continue efforts to chip away at the new Consumer Financial Protection Bureau CNNMoney Republicans: Change consumer bureau or else The Hill (blog) GOP vow to block nominees makes Warren appointment more likely ABC News (The Note) Republicans Revive Fight Over Consumer Watchdog Agency TPMDC Republicans Make Power Play To Gut Consumer Financial Protection Bureau

Time (blog) GOP Puts on Consumer Bureau War Paint, But Are They Just Ensuring Warren Gets the Nod? Huffington Post Senate Republicans Give up on Opposing Elizabeth Warren for CFPB, With a Twist BNET Why Republicans Just Did Elizabeth Warren a Big Favor The Hill (blog) Bachus: Even odds Warren becomes first Consumer Bureau director Housing Wire A CFPB deadlock is forming Huffington Post Democrats and Wall Street Forbes (blog) Republican Senators Say No! to Wall Street Watchdog

Consumer Financial Protection Bureau Bloomberg JPMorgan Debt-Protection Fees May Drop on Consumer Bureau Rules (no external hyperlink available) Wall Street Journal Consumer Groups Back Warren for CFPB NBC-17 (North Carolina) Businesses Increasingly Use Deceptive Tactics To Target Military Washington Post Whats keeping small businesses up at night New York Times Buyer, Be Aware the Law Is on Your Side

Consumer Credit American Banker Debit Double Take? B of A Mulls a Tweak to Its No-Overdraft Policy American Banker Prepaid Companies Going After Rivals Markets

Housing Huffington Post Obama Administration, State Officials Expected To Give Banks New Mortgage

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Terms As Some Question Pace Of Negotiations ProPublica In Fine Print, Banks Require Struggling Homeowners to Waive Rights Time (blog) Foreclosure Probe Chief Asked Bank Lawyers for Money Wall Street Journal Home Market Takes a Tumble American Banker Meet QM, QRMs SisterOnly Tougher

American Banker Block Party: GOP Out to Stop Recess CFPB Move May 9, 2011 By Kate Davidson and Cheyenne Hopkins

WASHINGTON Republicans are strongly considering using a rare procedural move to prevent President Obama from making a recess appointment to install a director of the Consumer Financial Protection Bureau.

Forty-four GOP senators signed a letter last week vowing to block any nominee absent several significant changes to the bureau, a move that political analysts said all but guarantees the president will use his recess appointment powers. But Republican lawmakers are weighing tactics to make that option much less appealing or prevent it altogether by leveraging their power over other financial services nominees.

"If they were to go the recess-appointment route, I believe Senate Republican leadership would use every tool at their disposal and there would be a major response from Senate Republicans," a Republican Senate staffer said Friday. "It could result in costs to other nominees, and I think it would ultimately affect the legitimacy of whoever is recess-appointed to run the CFPB."

Republicans are attempting to box Obama in, preventing him confirming a permanent director to CFPB or allowing a temporary one to be put in place. Under the Dodd-Frank law, the CFPB is limited in what actions it can take unless it has a formal director. (While Elizabeth Warren, the architect of the agency, has been its de facto head since last year, she is an administration appointee and does not technically count as its director.)

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Republicans are eyeing a tactic first employed by Democrats when President Bush was in power to hold "pro forma sessions" short sessions during which no business is conducted that prevents the Senate from being considered in "recess." Republicans used the tactic successfully last year after agreeing to confirm 54 of the president's nominees, but preventing him from making any recess appointments.

It's not clear whether such a move would pass constitutional muster if challenged, but Republicans were hopeful last week that it may not come to that. Sen. Richard Shelby, the top Republican on the Banking Committee, rejected the idea that the letter compels the president to make a recess appointment.

"The president is not being forced to do anything but work with Republicans to provide some semblance of accountability to this massive new bureaucracy," Shelby said in an email.

Asked whether he thought Obama would negotiate, the Alabama Republican said it is the president's decision.

"We are willing to talk, and we certainly hope he is," Shelby said. "Republicans are simply calling for some modicum of accountability in the nomination process and in the bureau's operations. If President Obama does not support accountability, then that's his position and we'll go from there."

If Obama were to recess-appoint a CFPB director, Republicans could also hold up any other financial services nominees. A slate of several nominations, including the heads of the Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency, is expected soon.

Although Obama has opposed the CFPB changes the Republicans are seeking including putting the agency through the congressional appropriations process and giving bank regulators the power to overrule the bureau GOP members note that the president has reversed course in the past on other issues, including tax cuts.

Political observers said a compromise is unlikely but feasible. Some speculated the administration could find one Republican demand palatable: that the director be replaced by a commission.

"Is this something that the administration might be able to live with? I would say yes, but there some costs involved in this," said Mark Calabria, a former top aide to Shelby. "The trade-off might be that, at the end of the day, Shelby sits down with the administration and says, 'Well, make it a board, and in exchange we'll let Elizabeth Warren be the chairman.' "

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Brian Gardner, a political analyst for KBW Inc., agreed.

"I haven't heard anybody float it, but it seems to me that if you're looking for an endgame, there's a deal to be made," Gardner said, adding that Republicans would be unlikely to negotiate that sort of deal in public.

Still, while a commission structure might be acceptable, it's less likely Obama would allow the CFPB to be placed under the congressional appropriations process. All the other banking regulators are independently funded, and those agencies that are subject to the process frequently find lawmakers playing politics with their budgets. If the CFPB's budget were subject to congressional oversight, Republicans likely would seek to give it relatively little money to ensure its power remained limited.

"The proposed changes on funding and oversight probably go further than the administration would be willing to accept," said Jean Noonan, a partner at Hudson Cook LLP.

President Obama may also be able to challenge Republicans' legal authority to block a recess appointment.

In 2006, Democrats began using a political maneuver to recess for three days, hold a short pro forma session, and adjourn. In theory, the period of adjournment is short enough that the Senate is not technically in recess, thus recess appointments are not allowed.

"It certainly is possible," said Robert Dove, a former Senate parliamentarian and public policy specialist at Patton Boggs LLP. "It's totally up to Senate Majority Leader [Harry] Reid. He decides whether the Senate is going to take a recess or not. And if they're not, the way they do it is to come in every three days."

Some congressional experts have urged the administration to challenge this procedure, arguing it is unconstitutional.

John P. Elwood, former senior deputy in the Office of Legal Counsel, said the pro forma sessions are simply formalities. Because the Senate doesn't conduct any business during these breaks and is not capable of acting on nominations the chamber remains in "recess" for the purpose of recess appointments.

He said a court may decide that the Senate is violating the president's constitutional right to make recess appointments. But even the threat of this procedural move may put off the White House. "It just

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kind of raises the stakes," he said.

Some Republicans have noted that Dodd-Frank restricts CFPB powers to a "Senate-confirmed" director; Elwood said a recess appointment would meet that definition.

Democrats are also looking for ways to prevent pro forma sessions from being held. Some sources said Friday that Republicans cannot filibuster an adjournment proceeding, and noted that the last time pro forma sessions were held, it was under an agreement with Reid. It's unclear if Republicans can force the Senate, which is still controlled by Democrats, to engage in pro forma sessions.

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Firedoglake Republicans Deliver Empty Threat of Consequences If Obama Recess-Appoints CFPB Director May 7, 2011 By David Dayen

This article from American Banker must have been written by people who know nothing about Senate procedure.

WASHINGTON Republicans are strongly considering using a rare procedural move to prevent President Obama from making a recess appointment to install a director of the Consumer Financial Protection Bureau.

Forty-four GOP senators signed a letter last week vowing to block any nominee absent several significant changes to the bureau, a move that political analysts said all but guarantees the president will use his recess appointment powers. But Republican lawmakers are weighing tactics to make that option much less appealing or prevent it altogether by leveraging their power over other financial services nominees.

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If they were to go the recess-appointment route, I believe Senate Republican leadership would use every tool at their disposal and there would be a major response from Senate Republicans, a Republican Senate staffer said Friday. It could result in costs to other nominees, and I think it would ultimately affect the legitimacy of whoever is recess-appointed to run the CFPB. [...]

Republicans are eyeing a tactic first employed by Democrats when President Bush was in power to hold pro forma sessions short sessions during which no business is conducted that prevents the Senate from being considered in recess. Republicans used the tactic successfully last year after agreeing to confirm 54 of the presidents nominees, but preventing him from making any recess appointments [...]

If Obama were to recess-appoint a CFPB director, Republicans could also hold up any other financial services nominees. A slate of several nominations, including the heads of the Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency, is expected soon.

OK, so heres the deal. Republicans in the Senate cannot hold pro forma sessions. They are the minority party. They dont control the schedule of the Senate. Its true that last year, Republicans secured an agreement from Harry Reid to hold pro forma sessions. But read the fine print. That only happened after they confirmed 54 nominees. The whole point of this idea is, in the event of a recess appointment, Republicans would block other nominees in the financial services sector. Under similar terms of last years agreement, Republicans would have to allow votes on those individuals, defeating the entire purpose of the blackmail. Otherwise, Democrats are unlikely to agree to the pro forma sessions.

Im guessing Republican aides called around to find someone, anyone, willing to buy their spin. Looks like it worked.

Meanwhile, its not like Republicans are speeding through Presidential nominees currently. Its taken months to get judicial nominees confirmed. Some of them have been moving through so far this year, but this past week a relatively uncontroversial district court judge in Rhode Island needed a cloture vote (which he was able to obtain). Other Presidential nominees have lingered for months if not years. Republicans have already said theyd block any replacement for Commerce Secretary (Gary Locke is becoming the US Ambassador to China) unless Obamas trade deals pass. This threat is empty because Republicans saying that theyll block nominees if the President recess-appoints a CFPB director would not change the status quo of obstructionism one iota.

So this threat is empty, and should be regarded with a laugh and a recess appointment for CFPB as soon as possible. In addition, they should elevate this threat. Republicans just sent me a letter saying that theyll stop the business of the Senate if I dare install someone to protect consumers getting ripped off by banks and mortgage companies, would be a sample public statement.

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The one useful part of the article is the speculation that the White House would change the organizational chart of CFPB from a single director to a commission with a chairman, a la the FCC or FDIC.

Political observers said a compromise is unlikely but feasible. Some speculated the administration could find one Republican demand palatable: that the director be replaced by a commission.

Is this something that the administration might be able to live with? I would say yes, but there some costs involved in this, said Mark Calabria, a former top aide to Shelby. The trade-off might be that, at the end of the day, Shelby sits down with the administration and says, Well, make it a board, and in exchange well let Elizabeth Warren be the chairman.

I dont see that coming to pass either, to be honest, but its certainly a way for the White House to thread the needle. They make Warren the chairman, Republicans get two seats, and one of the other two Democratic seats goes to one of Geithners minions who forces a more bank-friendly approach. Now thats certainly possible. And it should be guarded against. Theres no need for a compromise on protecting consumers.

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Bloomberg Republicans Press Warren, Geithner on CFPB Mortgage-Talks Role May 6, 2011 By Phil Mattingly

U.S. House Republicans are pressing the Obama administration for more information on the Consumer Financial Protection Bureaus role in mortgage-servicing settlement talks between regulators and state attorneys general.

Representatives Scott Garrett of New Jersey and Randy Neugebauer of Texas requested any documents, analysis and communications from the bureau referring or relating to the mortgage

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servicing settlement negotiations in a letter sent today to administration officials including Treasury Secretary Timothy F. Geithner and Elizabeth Warren, the adviser assigned to set up the consumer bureau.

The settlement approach being pursued -- which ignores Congressional prerogatives and bypasses the legislative process -- is unwise policy and potentially unlawful, the lawmakers said in the letter, which also was signed by Representatives Shelley Moore Capito of West Virginia and Patrick McHenry of North Carolina. Garrett, Neugebauer and Capito are chairmen of House Financial Services subcommittees.

Republicans have criticized and questioned the bureau and Warren for their roles in providing analysis stating that mortgage servicers including Bank of America Corp. (BAC) and Wells Fargo & Co. (WFC) may have jointly avoided more than $20 billion in costs on collections and foreclosures.

The bureau provided the analysis in a Feb. 14 presentation to state attorneys general led by Iowas Tom Miller, who are pressing banks to accept fines and make concessions after a probe of foreclosure practices. A $5 billion penalty would be too low, and banks can afford more, the agency told the state officials.

We have concerns about the potential terms of the servicing settlement because, among other things, we believe that a $20 billion principal reduction fund will create incentives to default that could worsen the housing crisis and impede economic recovery, the lawmakers wrote in the letter, which that also was sent to U.S. Attorney General Eric Holder and Robert Bauer, the White House counsel.

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The Hill (On The Money blog) GOP has more questions for CFPB on mortgage settlement May 6, 2011 By Peter Schroeder

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Republicans are keeping up the pressure on what role officials at the fledgling Consumer Financial Protection Bureau (CFPB) may have played in mortgage settlement talks.

In a letter sent to Treasury Secretary Timothy Geithner Friday, four GOP lawmakers demanded more information about exactly what role CFPB officials played as the government weighed settlement terms for mortgage servicers that were found to have widespread documentation problems.

"The settlement approach being pursued -- which ignores Congressional prerogatives and bypasses the legislative process -- is unwise policy and potentially unlawful," the lawmakers wrote.

Specifically, they argue that no law gives "political appointees" like CFPB architect Elizabeth Warren the ability to participate in such enforcement matters. They ask for any documents or communications created by CFPB officials tied to settlement talks. They also request any communications between Warren and the Office of White House Counsel on the settlement talks.

They take particular issue with a recommendation that servicers be levied $20 billion to fund a principal reduction fund, based on a CFPB claim that servicers saved over that amount by cutting corners.

They warned that such a fund would encourage homeowners to default and could worsen the housing crisis. They ask for any CFPB research on the impact of mortgage principal reductions on the housing market, as well as data that yielded the estimate on how much companies saved by underinvesting in mortgage servicing.

Warren defended the bureau when she appeared before the House Financial Services Committee in April, saying CFPB officials we "proud" to assist other agencies in ongoing settlement talks. Challenged by several Republicans about her role in the talks, she said the agency had hired several experts in mortgage servicing, which made it a valid resource for other agencies to tap.

Signing on to the letter were Reps. Scott Garrett (R-N.J.), Randy Neugebauer (R-Texas), Shelley Moore Capito (R-W.Va.) and Patrick McHenry (R-N.C.). All are members of the House Financial Services Committee

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Huffington Post Obama Administration, State Officials Expected To Give Banks New Mortgage Terms As Some Question Pace Of Negotiations May 6, 2011 By Shahien Nasiripour

WASHINGTON -- The Obama administration and state officials are expected to offer the nation's five largest mortgage firms updated terms next week in ongoing negotiations over a settlement regarding the firms' faulty treatment of borrowers, according to three people with knowledge of the government plan.

As part of their discussions to settle months-long state and federal probes into shoddy mortgage practices and wrongful foreclosures, the new terms are expected to incorporate suggestions offered by the banks in response to an earlier term sheet circulated in early March by state and federal officials. Bankers said the original terms were too stiff; investors said they didn't go far enough. Consumer advocates said they were a good start.

The new term sheet will mark another attempt to get bankers and policymakers on the same page regarding the treatment of borrowers who fall behind on their mortgage payments or default on their obligations. But it is not expected to detail any fines to be meted out in response to banks' flawed practices, which include improper home seizures and other actions that broke federal and local laws.

Officials also remain undecided on a possible mandate to banks to reduce borrowers' loan balances, according to the three sources, who were not authorized to speak publicly about the matter. Banks are reluctant to slash mortgage principal balances; some agencies in the Obama administration want to require it, as do most of the state attorneys general leading their mortgage probe. A vocal minority -- all Republicans -- are opposed.

On April 28, the disagreement played out during meetings held in Washington. State and federal officials held two in-person meetings with bankers, with many state officials calling in from their respective states. Representatives of the five firms -- JPMorgan Chase, Bank of America, Wells Fargo, Citigroup and Ally Financial -- made a presentation which they claimed showed why mandating principal reductions would not prevent a significant number of new foreclosures and would be harmful to the general economy.

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The banks said "it would trigger a stampede of strategic defaults," said an official familiar with one of the two discussions, referring to instances in which borrowers who can afford to make good on their obligations choose not to. Strategic defaults are much more common in the business world than among homeowners, according to experts who study the issue.

Government officials questioned the banks' assumptions, which were partly based on data from the Obama administration's signature foreclosure-prevention initiative, the Home Affordable Modification Program, according to people familiar with the meetings. HAMP, which seeks to reduce monthly payments, is primarily known for its lackluster results.

But the bankers and government officials did not discuss the size of potential fines, nor did they address the mortgage firms' push for release from legal liability for their unlawful actions in their treatment of borrowers and pursuit of home repossession. The nation's largest lenders voluntarily halted home seizures last autumn after faulty document practices -- like so-called "robo-signing" -- came to light, erupting into a national scandal. Federal and state investigations began shortly afterward.

Now, the top law enforcement officers in some states, most notably New York Attorney General Eric Schneiderman, want to make sure they are not constrained in taking legal action against mortgage firms for violations of state and local laws.

Some have grown frustrated with the pace of negotiations, people familiar with the matter say, and fear a broad release from legal liability will likely be sprung on them at the last minute as a condition of their settlement with the targeted banks. Attempts to begin discussions over the liability release have thus far been thwarted, however.

Also at issue are potential fines. The Department of Housing and Urban Development and the Bureau of Consumer Financial Protection are looking to impose penalties on the five firms nearing a total of $30 billion, according to people familiar with the matter. The Federal Deposit Insurance Corporation has suggested levying at least $20 billion in penalties. Other federal agencies have suggested amounts closer to $5-10 billion, with the banks open to fines just under that range. Some state officials are pushing for more than $30 billion.

However, the size of possible fines was not discussed Thursday, people familiar with the discussions said.

This week, Bank of America, Wells, JPMorgan and Citigroup said they collectively could shell out as much as $11.8 billion in litigation losses beyond amounts that they've already set aside, regulatory documents filed with the Securities and Exchange Commission show.

By taking shortcuts in processing troubled borrowers' home loans, the nation's five largest mortgage

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firms have saved more than $20 billion since the housing crisis began in 2007, according to a confidential presentation prepared for state attorneys general by the nascent Bureau of Consumer Financial Protection inside the Treasury Department and obtained by The Huffington Post in March.

The estimate suggests that the nation's largest banks have reaped tremendous benefits from underserving distressed homeowners, a complaint frequent enough among borrowers that federal regulators have repeatedly acknowledged the industry's fundamental shortcomings.

The dollar figure provides a basis for regulators' internal discussions regarding how best to penalize Bank of America, JPMorgan, Wells, Citigroup and Ally. Much of the money would go towards reducing troubled homeowners' mortgage payments and lowering loan balances for underwater borrowers, who owe more on their home than it's worth.

This week, 33 Democratic members of Congress signed a letter sent to Attorney General Eric Holder and Iowa Attorney General Tom Miller (D), urging them to extract a meaningful settlement with the targeted banks.

"In the communities we represent, and in others across the country, the flagrant disregard for the law and predatory practices by lenders and servicers have imposed substantial hardships on both homeowners and their neighbors," the letters read. "We hope that, as these talks proceed, you will work to protect the rights of those harmed by these practices, provide meaningful immediate relief to homeowners, hold lenders and servicers accountable for any unlawful practices that they engaged in, and ensure that, in the future, the practices that brought about this crisis will not reoccur."

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Baltimore Sun Critics continue efforts to chip away at the new Consumer Financial Protection Bureau May 8, 2011 By Eileen Ambrose

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The new Consumer Financial Protection Bureau won't assume its powers until July, but efforts are under way to weaken the federal agency before it gets off the ground.

Republicans recently introduced several bills that would tamper with the bureau's funding, make it easier for its regulations to be overturned and even delay its launch. Three of them are expected to be taken up by the House Financial Services Committee this week.

And last week, 44 Republican Senators sent a letter to President Barack Obama saying they won't approve anyone he nominates to lead the agency unless it's restructured in a way that would reduce its power and independence.

"This is unprecedented," says Travis Plunkett, legislative director for the Consumer Federation of America. "They seem to be declaring war on the Consumer Bureau unless the president agrees to changes that would cripple its ability to help consumers."

For years, the role of consumer financial protection fell to a variety of federal regulators. But these regulators also were charged with overseeing monetary policy or the safety and soundness of banks, so consumer protection often got short shrift.

The Dodd-Frank financial reform law created the bureau to put consumers first, a huge victory for them. On July 21, federal regulators, including the Federal Reserve, the Office of Thrift Supervision and Office of the Comptroller of the Currency, will transfer their consumer protection responsibilities to the new agency. It will have the power to enforce consumer laws and regulate financial products and services, such as mortgages, credit cards and debt management.

The bureau is to be overseen by a director nominated by the president and confirmed by the Senate.

Obama hasn't nominated a director yet. Many consumers groups want the job to go to Harvard University law professor Elizabeth Warren, who came up with the idea of a consumer-focused agency. But industry groups oppose her, fearing she is too anti-business. To avoid a brutal confirmation battle, Obama named Warren as a special adviser last year.

But pressure is mounting for the president to name someone before July 21. Until a director is in place, the bureau's powers will be more constrained. It won't, for example, be able to oversee payday lenders.

Supporters of the bureau say it will have just as much oversight and accountability as any other federal banking regulator. But opponents fear it will be too powerful and will hurt businesses with overreaching regulations.

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In their letter to the White House last week, the senators called for changes to the bureau's structure. For instance, they want the agency to be run by a board, not a single director. And they want the bureau's funding to come from Congress.

But the bureau was set up to prevent just this sort of outside meddling. Its annual funding comes from a share of the Fed's revenue, purposefully avoiding Congress.

In response to the senators' demands, White House spokeswoman Amy Brundage said in a statement: .

"For far too long, American consumers have fallen victim to fraud, misleading claims, and powerful special interests and the President believes that American families who were the hardest hit by this financial crisis deserve an independent watchdog to protect consumers and prevent predatory lending and other abuses in the future."

Even before this gang of 44 came up with their demands, several bills in Congress were seeking to curb the bureau's powers.

The U.S. Chamber of Commerce, which fought the creation of the bureau last year, supports this legislation.

"We're not trying to hurt the thing. We're trying to improve it," says Jess Sharp, executive director for the Chamber's Center for Capital Markets Competitiveness. "It's an attempt to get it right in the beginning."

One bill, for instance, would make it easier for other regulators to overturn the bureau's regulations. Another calls for delaying the July transfer of regulatory powers to the bureau until a director is in place.

"It's an invitation for the Senate Republicans to delay forever the confirmation of a CFPB director," warns the Consumer Federation's Plunkett.

A third bill would replace the director with a five-member commission, similar to what the senators want.

"Having a single person in charge of this much power is incredibly unusual," Sharp says.

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He says the bureau can benefit from getting commissioners' different viewpoints. And it would have more leadership stability if it was run by members serving staggered terms, he says.

But having a single person head up a regulatory agency isn't unheard of. The OCC, which has regulated national banks since 1864, is led by one person a comptroller.

Consumer advocates also fear that a commission would be slow to react to a financial world where products, services and schemes change so quickly.

"A commission may bog down that progress and have internal conflicts that will delay progress in terms of making rules," says Pamela Banks, senior policy counsel with the Consumers Union.

The legislation is unlikely to succeed, at least while Obama, a Democrat, holds the veto pen. But consumer advocates still worry that continued congressional attempts to restrain the bureau could end up intimidating the fledgling agency.

"You can create a political climate where the CFPB is afraid of its shadow" and reluctant to take on politically controversial legislation, Consumer Federation's Plunkett says.

It's unclear how the president will respond to the senators' threat.

Banks, of the Consumers Union, says they leave the president with little choice but to bypass the Senate.

"It almost forces your hand to do a recess appointment. The gauntlet has been thrown down," she says.

A director appointed during a congressional recess would serve until the end of next year. And that person could be Warren.

The irony is that Warren's priorities for the new bureau aren't as extreme as business groups fear. In fact, Plunkett says, some consumer advocates would like to see Warren go further than she has indicated.

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Warren has said the bureau's goal is to make prices and risks more transparent to consumers. She wants to simplify mortgage documents and clarify credit card pricing so consumers can comparison shop. Really, not so scary. Even some business groups support these measures.

A regulatory agency whose sole concern is protecting consumers in their financial dealings is long overdue. And rather than spend this time trying to derail the people's agency, businesses and their supporters in Congress should give the bureau and Warren a chance to do their job. What they may find is that what's good for consumers is also good for them.

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ProPublica In Fine Print, Banks Require Struggling Homeowners to Waive Rights May 9, 2011 By Paul Kiel

A few months ago, Bank of America offered Sergio Cortez of Staten Island, N.Y., the help he desperately needed to stay in his home: a break on his mortgage. Like millions of others, he was facing foreclosure. But there was a catch buried in the fine print. Cortez had to waive any possibility of ever suing the bank for anything relating to the loan.

Cortez isn't alone. While regulators have banned the practice, some banks and others who handle mortgages have still been forcing homeowners into a corner: You want a chance at saving your home? Then you'll have to waive your rights.

"It's just unfair," said Jane Azia, director of consumer protection for the New York State Banking Department. "It puts borrowers in a very vulnerable situation."

We identified eight banks and other mortgage servicers who offer help that limits homeowners' ability to

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sue or fight foreclosure. When we contacted them, they offered a variety of responses. Some said the inclusion of the waivers had been a mistake and would stop. Some argued that language that seemed to waive the homeowner's rights didn't actually do so. One argued that a loophole in a rule barring the practice meant their inclusion in certain agreements was proper.

Homeowners face a tough choice with these offers. Despite the overwhelming need, it remains a struggle for borrowers to get help. Any offer might be the last one to come along. Yet if a homeowner signs away their right to sue, they might be forfeiting the best leverage they have to get a lasting solution, borrower attorneys say.

The companies that handle mortgage payments and evaluate whether to modify a loan or foreclose -known as mortgage servicers -- have been facing a rising tide of litigation by homeowners for their widespread abuses and violations of law, giving them motivation to want to head off more suits. The companies' problems range from long delays, errors, and lost documents when reviewing homeowners for modifications to violations during the foreclosure process, such as the use of so-called "robosigners" and forging of documents.

"I'm troubled, but not surprised, that this is still occurring," said Rep. Maxine Waters, D-Calif., who has been pushing a bill to ban these waiver clauses since 2008. "The mortgage servicing industry has been broken for quite some time and needs substantial reforms."

Borrower attorneys and counselors told ProPublica that such waiver clauses, which were once standard practice for banks and mortgage servicers, declined markedly after the Obama administration launched its mortgage modification program in early 2009. The program forbids the practice for governmentsponsored modifications.

But fewer modifications are now done through the program, and some of the industry's old practices have been making a comeback -- despite regulators' efforts. It's impossible to say precisely just how common the clauses are now, but attorneys said there was no doubt they were seeing more of them lately. (If you're a homeowner who received an agreement with a waiver clause, ProPublica wants to hear from you.)

In New York, regulators banned waiver clauses in modification agreements last year, but ProPublica found several examples of banks and mortgage servicers like Bank of America continuing to include such clauses in temporary payment agreements.

Recently, for example, two homeowners working with a legal aid organization in the Bronx received temporary payment agreements from two different servicers that required the borrower to waive any potential defense to foreclosure. Both companies, Selene Finance and Carrington Mortgage Services, specialize in handling troubled or subprime loans.

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What made the agreements particularly unfair, said Justin Haines, director of foreclosure prevention at Legal Services NYC in the Bronx, was that they required his clients to waive rights without receiving a permanent solution.

The offers were forbearance agreements, which typically last three to six months and are frequently used by servicers as short-term solutions. They can be a prelude to an actual modification but offer no guarantee of one if all the payments are made, and they explicitly state that if a foreclosure is pending, it won't be dismissed.

"The agreements are extremely one-sided and offer no real benefit for the borrower," Haines said. "If these borrowers did not have attorneys to advocate for the removal of this language they would just be regularly waiving their claims for nothing."

The overwhelming majority of homeowners facing foreclosure don't have legal representation, said Diane Thompson of the National Consumer Law Center. The legal aid organizations that do offer such services are overwhelmed, she said, and "few homeowners facing foreclosure make enough to hire an attorney."

On the face of it, both agreements seem like clear violations of a recent New York state regulation: "A Servicer shall not require a homeowner to waive legal claims and defenses as a condition of a loan modification."

But Owen Blicksilver, a spokesman for Selene, argued that the regulation forbade only loan modifications from including such language, not the more short-term forbearance agreements.

State regulators said while that may technically be true, it didn't mean such clauses would be allowed. "Even if we had no rule, we would find a problem with requiring borrowers to waive their legal claims in a forbearance or a modification," said Azia, of the New York State Banking Department.

Despite the company's stance, Selene did remove the clause from the agreement after Legal Services NYC objected, Blicksilver said, because "we were committed to a good faith resolution."

Chris Orlando, a spokesman for Carrington, did not defend the practice. "Any reference to such a waiver has been removed from our documents."

There have been other examples. In January, HSBC, which services approximately 340,000 mortgages throughout the United States, offered a client of Wendy Dolce, an attorney with the City Bar Justice

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Center in New York, a payment plan with a similar clause. "It's something that I would never counsel a client to sign or accept," said Dolce.

Neil Brazil, a spokesman for HSBC, said the bank doesn't include any rights waiver in its standard modification agreements, but that attorneys pursuing foreclosure on its behalf might include them when offering a homeowner a forbearance plan. Brazil declined to say if HSBC included the clauses more generally. He emphasized that HSBC had been working with the borrower for over two years.

Bank of America, the country's largest servicer, included similar language in agreements late last year not only in New York, but several other states.

It's not a new practice for Bank of America. Back in July 2008, Rep. Waters confronted Bank of America executive Michael Gross over the practice during a congressional hearing. When Gross said he wasn't aware that the bank had ever required that borrowers waive their rights, Rep. Waters read out an excerpt from a Countrywide agreement. Bank of America had bought Countrywide that year.

After hearing the excerpt, Gross apologized and promised the issue would "be under review by Bank of America very quickly."

But ProPublica spoke to attorneys in New York, Maine, Connecticut, Indiana and North Carolina who received agreements with waiver clauses from Bank of America in the last year. In four cases, the clause was word-for-word the same as the one discussed in the 2008 hearing, a lengthy paragraph involving a release of all of Bank of America's "investors, employees and related companies from any and all claims."

Bank of America's language even waives the right to invoke a California law that limits the scope of waiver clauses, "so that this release shall include all and any claims whatsoever of every nature concerning the loan."

Cortez, the homeowner from Staten Island, had been trying to get a loan modification since 2008, ever since his monthly payments had doubled and his son, who lived in the home, lost his job. He said he probably would have signed the forbearance agreement if he hadn't had legal representation, since any offer at all from Bank of America had been so difficult to come by.

"I might have signed it, but that would have been worse for us. I've heard of people who signed their three-month agreement and then don't get their modification and then get foreclosed on."

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When Cortez's attorney objected to the clause, the bank initially resisted removing it. At a court hearing in January as part of New York's foreclosure settlement process, Bank of America's attorney said it was standard language for the bank's agreements and shouldn't be removed, said Diane Johnston, a paralegal at Staten Island Legal Services. The agreement was eventually withdrawn. Having resubmitted their documents once again, Cortez's family is still waiting to hear whether they're getting a modification.

Rick Simon, a spokesman for Bank of America, said it wasn't standard to have a waiver clause in its agreements, and there'd simply been a mistake.

Bank of America had stopped the practice back in 2008, he said, but a "specialized unit of the home retention division" had been mistakenly sending out agreements with the waiver language last year. "The mistaken presence of waiver clauses in some agreements appears to be limited to the unit and was discovered in December. The situation was rectified in January."

Asked about a North Carolina case where a modification agreement offered in March contained similar waiver language -- two months after the problem was "rectified" -- Bank of America's Simon said that, too, had been a mistake.

"In the interest of expediting the modification, a previous template for a similar modification was used," Simon said.

Rochelle Sparko, an attorney with the North Carolina Justice Center, said the homeowner involved had been seeking a modification since 2008.

"In cases where a waiver is mistakenly included in a modification or forbearance agreement, it is not the bank's policy or intent to enforce it," said Simon.

Borrower attorneys say that in some cases there's language in the agreements that doesn't constitute an explicit waiver but that could have the intended effect of restricting a homeowner's defense to foreclosure.

GMAC, for instance, the fifth-largest servicer, which oversees about 2.5 million mortgages, includes a clause in its modification agreements that the "Borrower acknowledges that Lender is the legal holder of the owner of the Note and Security Instrument."

Franklin Romeo, an attorney with Queens Legal Services, said he'd objected to the clause on behalf of his client because there is some doubt about who the legal holder is. Last September, GMAC

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suspended foreclosure evictions and sales in 23 states after the revelation over its use of "robosigners," employees who signed thousands of documents each month falsely swearing that they'd personally verified the details of the mortgage. In the case of Romeo's client, one key document is signed by one of those robo-signers.

"My concern is that, if the borrower were ever to face another foreclosure in the future, the lender would argue that this paragraph would preclude the borrower from challenging the way in which the lender acquired the note and mortgage even though, in this case, we believe the assignment transferring the mortgage to the lender was faulty," Romeo said.

Azia, of the New York State Banking Department, said given the vagueness of the language, it wasn't clear whether the clause was meant to act as a waiver. But if GMAC relied on it to preempt a borrower's defense, she said, it would clearly be a violation of the state rule.

GMAC did not respond to a request for comment. Romeo said the bank had so far resisted removing the clause.

GMAC is not alone. Citibank's servicing arm, the fourth-largest servicer, included a very similar clause in a recent modification agreement with another client of Queens Legal Services.

Mark Rodgers, a spokesman for Citi, said the language "does not waive any rights to claims or defenses. It requires the borrower to acknowledge that the lender is the owner of the note, and that should the note be transferred, the new owner will be entitled to payments. We believe the language is appropriate."

A case in Florida shows how servicers can invoke such waivers to smooth the way to foreclosure -even when servicer error is the apparent cause of default.

Facing foreclosure in August 2008, Joseph and Myrna Strain of St. Augustine, Fla., signed a modification agreement with American Home Mortgage Servicing, Inc., a large servicer that handles about 430,000 mortgages. It contained a waiver clause.

"My client had no choice but to agree it," said Chip Parker, the couple's attorney. "Otherwise they were going to foreclose on the home."

Parker says the Strains made the payments as agreed, but that American Home did not credit them correctly, a common mistake by servicers. As a result, American Home started the foreclosure process again in 2009.

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On the Strains' behalf, Parker raised a number of defenses to the foreclosure. In response, the servicer's attorney pursuing foreclosure argued that the waiver signed in 2008 precluded any defense: "Defendants expressly waived the right to challenge or contest the foreclosure process."

"They were clearly relying upon the waiver language to try and get around all of the very complex securitization problems plaguing their case," said Parker. Furthermore, he said, it didn't make sense to rely on a waiver that was part of an agreement American Home had breached by not properly handling the payments.

Early in April, shortly before the foreclosure suit was about to go to trial, American Home's attorney suddenly dropped it. The Strains, meanwhile, are pursuing a countersuit.

American Home spokeswoman Philippa Brown said the company could not respond to the specifics of the Strains' case because it is in litigation. She said American Home no longer includes that waiver clause in its agreements but continues to use another clause from the Strains' agreement: That language says the borrower has no "defense to the obligations of the note."

Brown argued the language in the clause "is not a waiver" because it did not expressly waive the borrower's rights.

But Azia, of the New York Banking Department, said it sounded like a waiver to her. "That's exactly what a waiver is -- a relinquishment of your claims and defenses."

It's unclear whether such clauses are ultimately successful in blocking homeowners' challenges to foreclosures. Many attorneys said the waivers might not hold up in court because they sought to waive rights that couldn't be waived (like whether the bank even had the right to foreclose). The inherent unfairness of the tactic might also get them thrown out. But all of them said it was particularly unfair to homeowners without legal representation.

"It's a horrible tactic by the banks because most homeowners give up," said Parker.

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CNNMoney Republicans: Change consumer bureau or else May 9, 2011 By Charles Riley

Republican senators have fired another broadside at the Consumer Financial Protection Bureau, vowing to block the nomination of any candidate to lead the watchdog agency without major structural reforms. For the Obama administration, it's the latest roadblock in what has become a marathon search for a director to head the agency that was a key component of last year's Wall Street reform law.

Born out of the financial crisis, the consumer bureau has its own funding and will regulate financial products such as mortgages and credit cards starting July 21.

On Thursday, 44 of the 47 Republicans in the Senate sent a letter to President Obama, arguing that the new agency is far too powerful, and lacks structural checks and balances that would make it more accountable. For the White House, the math is daunting. With nearly every Republican a signatory to the letter, there won't be enough votes to end a filibuster and bring a nominee up for a vote.

Republicans want changes at the very top of the agency. The director -- a position that sits vacant -would be replaced with a board.

Also at issue: exactly who that single person is. Without mentioning her by name, the letter is a thinly veiled reminder to the White House that an attempt to nominate Democrats' favorite candidate, Elizabeth Warren, would lead to a contentious fight on the Hill.

Officially a White House adviser who also works with the Treasury Department, Warren is a lightening rod figure in the fight over the future of the agency.

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It's no secret that the White House would love to nominate her to lead the agency. Republicans are less thrilled with the idea.

Just last week, the outspoken Warren lambasted Republican tactics during an appearance on "The Daily Show with Jon Stewart."

"Now the game is, let's just see if we can stick a knife in the ribs of this consumer agency," she said.

On another front, the House Financial Services Committee is considering bills to prevent the bureau from flexing new powers.

In defending the agency on the show, Warren harkened back to the plain-spoken, heartfelt attacks that won her such broad public support as a consumer advocate.

"Right now there are bills pending in Congress to delay the agency, to defund the agency, to defang the agency, make it toothless, so it won't get anything done," she told Stewart. "And bills to kill the agency outright before it is ever able to take one step on behalf of middle class families."

Amy Brundage, a spokeswoman for the White House, defended the agency's mission.

"The consumer agency's sole mission is to protect American families and provide the tools they need to make smart financial decisions," Brundage said. "American families who were the hardest hit by this financial crisis deserve an independent watchdog to protect consumers and prevent predatory lending and other abuses in the future."

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The Hill (On The Money blog)

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GOP vow to block nominees makes Warren appointment more likely May 7, 2011 By Peter Schroeder

A promise by Senate Republicans to block anyone President Obama nominates to lead the Consumer Financial Protection Bureau has increased the likelihood that Elizabeth Warren will get the job.

The president has little choice but to use his recess powers given the position of Senate Republicans, said Rep. Barney Frank (D-Mass.), one of the Wall Street reform bills chief architects.

It's the worst abuse of the confirmation process I've ever seen, said Frank. What it clearly says is that the president will have to make a recess appointment. Theres a good chance that will be Warren, the person many Republicans least want to see get the job.

The CFPB is supposed to start work on July 21, and advocates for the bureau are already calling for Warren to be nominated.

The White House demurred from nominating Warren, the chief advocate for the bureau, to the spot earlier in the year, and instead made her a special adviser to the president.

But given the GOP's promise to block any nominee unless the agency's unfettered authority is brought under control, some say the White House now has nothing to lose by recess appointing Warren if it wants someone in charge of the bureau for its start date.

He should jump-start the debate ... by nominating Warren immediately and touting her and the CFPB loudly, said David Arkush, a director with Public Citizen, a consumer group. If Republicans continue to block her nomination, then the president should appoint her during the next Senate recess, the week of Memorial Day.

Republicans are well aware that a recess appointment is possible. They coupled their promise to block nominees with warnings for the president about skirting the confirmation process.

Senate confirmation is about accountability and giving the American people a voice in the process, said Sen. Richard Shelby (R-Ala.), the ranking member of the Banking Committee who helmed the effort. I would hope the President wont silence the peoples voice."

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Weve all heard rumors and seen indications for a long time that the president would work around the Senate and make a recess appointment to this agency and have strongly urged him not to circumvent the process in this way, added Sen. Bob Corker (R-Tenn.).

But CFPB proponents argue that the blame for a recess appointment would fall on Republicans for their broad blockade, not on the White House.

They absolutely have no basis for complaint, said Frank. You can't refuse to let the confirmation process work and then complain when it's bypassed.

It's going to be very hard for [Republicans] to turn around and complain if the president uses virtually the only option that's left to him in order to get this agency up and running in an effective way, which is to do a recess nomination, said Travis Plunkett, legislative director for the Consumer Federation of America.

The filibuster-proof bloc of Senate Republicans are vowing to block any nominee to head the CFPB until several changes are made. They want a board of directors at the top instead of a single director, and are demanding that the CFPB budget be submitted to Congressional appropriators. They also want to make it easier for other regulators to overrule CFPB rules.

While some groups believe the road for Warren to become CFPB director is now clear, others warn that there are some pitfalls that come with recess appointments, which could be exacerbated since this pick will kick off a brand new agency.

Going with an acting director or a recess appointed director, you don't really have the nice, clear firm start that everybody was hoping would happen, said Wayne Abernathy, executive vice president of the American Bankers Association, which lobbied against the CFPB when it was being considered. That's less than optimal.

He added that if a person is recess appointed to head the CFPB, he or she will probably only get a year and a half in the position, as opposed to the five-year tenure dictated by the law. That is because a recess appointment would expire at the conclusion of the 112th Congress at the end of 2012.

While the administration could re-nominate that person at the beginning of the next Congress, it is very rare for the Senate to confirm someone who has already been recess appointed.

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It sours the Senate, he said. People on both sides of the aisle feel like they've been avoided or evaded.

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ABC News (The Note) Republicans Revive Fight Over Consumer Watchdog Agency May 6, 2011 By Matthew Jaffe

The agency, the brainchild of longtime consumer advocate Elizabeth Warren, was a contentious issue in the Obama administration's push last year for sweeping Wall Street reforms in the wake of the 2008 meltdown. As Congress debated the Democrats' reform bill last summer, Republicans objected to the agency, arguing that it would wield too much power and could ultimately do more harm than good.

Now they're back at it.

44 of the 47 GOP senators have vowed in a letter to President Obama not to confirm anyone to lead the agency unless the administration makes major structural changes. Among other things, Republicans want to scrap the bureaus director position and replace it with a five-person board.

But critics say changes like that will only weaken the fledgling agency, cautioning that more bureaucracy would slow its ability to respond to looming financial issues.

Senate Banking Committee chairman Tim Johnson said the GOP needs to let go of a battle they've been waging for the better part of two years.

"The truth is this bureau is already subject to greater checks and balances than any other financial

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regulator and this is just another attempt by Republicans to delay and derail these critical new protections," Johnson said.

Republicans in Washington may want to use revisionist history, but Americans havent forgotten that the recession was caused in part by predatory lenders and bad actors on Wall Street.

The group Consumers Union urged Democrats in Congress to fight the new GOP efforts aimed at the new agency.

"We need a cop on the beat to protect consumers from credit card rip-offs and shady mortgages," said Pamela Banks, senior policy counsel for Consumers Union. "If Congress shackles this bureau, lawmakers will be putting consumers at risk of more abuse by big banks and financial scam artists. We learned the hard way that when financial abuses go unchecked, the economy suffers mightily, and consumers get hurt.

"We need a watchdog for consumers, not a lapdog for the banks, and thats why Congress needs to stand up and reject this effort to cripple the CFPB," she emphasized.

But if the 44 Republicans remain united in their demand for major changes to the bureau, then Democrats in the Senate would not have the votes needed to overcome a filibuster and confirm a nominee to lead the agency.

The fight, it seems, is back on.

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TPMDC Republicans Make Power Play To Gut Consumer Financial Protection Bureau May 6, 2011

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By Brian Beutler

On Thursday, while House Republicans were dealing with a small Medicare privatization snafu, their Senate counterparts laid down an impossible marker. Forty four of their 47 members have signed on to a letter threatening to filibuster any nominee to head the new Consumer Financial Protection Bureau unless it is dramatically weakened.

"We will not support the consideration of any nominee, regardless of party affiliation, to be the CFPB director until the structure of the Consumer Financial Protection Bureau is reformed," reads a letter, coauthored by Senate Minority Leader Mitch McConnell and Sen. Richard Shelby (R-AL), ranking member of the Banking Committee.

Congress created the CFPB, despite GOP opposition, as part of the Wall Street reform law, to protect consumers from predatory actors in the financial industry. Its intellectual godmother is Elizabeth Warren, whom President Obama has tasked with standing up the agency. Despite her popularity, she's been a long-shot to run the Bureau when it officially launches -- largely because of financial industry and Republican (and even some Democratic) opposition. Indeed, former Banking Committee Chairman Chris Dodd (D-CT) -- who poured cold water on the idea of nominating Warren -- warned that if Democrats tried to jam a director through the Senate without bipartisan support, Republicans would go to war against the Bureau and try to gut it.

Turns out that's what's happening anyhow. Who could've predicted?

Specifically, Republicans want the CFPB subject to the appropriations process -- something it avoids as an entity housed in the Federal Reserve. They also want to delegate more decision making authority away from the Bureau's director, and give other regulators -- many of which are captured by the financial industry -- opportunities to block CFPB rules.

This shouldn't be a winning fight, if Democrats don't want it to be. The financial reform law is still fairly popular, and the CFPB is the most popular part of it. President Obama could use recess appointment to fill the vacancy, and take the fight public. At this point it's a question of how he and Senate Democrats decide to handle it.

Note, not signing the letter were Sens. Scott Brown (R-MA), Lisa Murkowski (R-AK), and John Ensign (R-NV), who stepped down before it was released. Sens. Olympia Snowe (R-ME) and Susan Collins (R -ME), who along with Brown voted for the financial reform law, added their names to the roster.

Read it here.

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Time (Swampland blog) GOP Puts on Consumer Bureau War Paint, But Are They Just Ensuring Warren Gets the Nod? May 6, 2011 By Adam Sorensen

Forty-four Republican Senators sent a letter to President Obama on Thursday pledging to block any nominee, no matter merits or ideology, to head the newfangled Consumer Financial Protection Bureau created by the Democrats 2010 financial regulation overhaul of and set to open shop in July. Their demands? They want a check on the unfettered authority of the yet-to-exist agency, which will police consumer issues like mortgages, credit card contracts and payday lenders, in the form of a board of directors (rather than one bureau head) and congressional appropriation power over the CFPBs budget.

The bureau has been opposed by the GOP since its inception and party leaders have a special aversion to Elizabeth Warren, the Harvard prof who schemed up the idea of a consumer agency in the first place, and is now at the Treasury Department helping to set it up. Liberals have been clamoring for Warren to get the directors nod from the outset, but the Senate math never looked good. Republicans would simply block her nomination until Obama presented another option, and the President has reportedly been sending out feelers to other potential nominees in recent months. If he eventually found the right (and willing) person for the job, he could nominate whomever and tell liberals that a Warren directorate just wasnt in the cards. But if the GOP follows through on its threat to block any candidate, theyre just ensuring that Warren ends up in the job. Why?

There is no way Obama and Democrats accede to the GOPs demands. A directors board isnt so farfetched, but Republicans main goal is to subject the CFPB to appropriations. The framers of the financial reform bill designed the CFPB not to rely on Congress for funding, instead placing it under the umbrella of the Federal Reserve. If Republicans can disentangle it from that framework, theyll be able to deny requested funding levels for the bureau as they have with the Securities and Exchange Commission and the Commodity Futures Trading Commission, and gain some control over the scope of its mandate. Democrats arent going to accept that.

So, the only way for Obama to get the CFPB a director by July, when the bureau is supposed to open

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its doors, is to use a recess appointment. (The Senate will be out May 30-June 5 for Memorial Day and July 4-10 for Independence Day.) Theres a precedent for this. A qualified candidate facing unyielding conservative opposition to head an important agency in the wake of a landmark regulatory bill? Sounds like Donald Berwick. He was even appointed in early July.

There are other qualified candidates beside Warren, but by forcing a recess appointment, its hard to imagine anyone else gets the nod. For one, potential directors have reportedly been turning away Obamas overtures in what some speculate is deference to Warren. Obama might have been able to convince them that the Senate just wasnt going to let her through, but if theyre not going to let anyone through, that point is moot. Similarly, liberals might have been able to come to terms with some other capable director if they felt satisfied that person could win Senate confirmation where Warren could not. No longer.

Granted, all of this is pretty speculative. Republicans might not follow through on the threat or Obama could simply elect to do nothing until the political winds shift. (No word yet on the fate of Peter Diamond.) But the latter would do a disservice to the bureau he holds up as a key accomplishment, and the most soundbite-friendly element of financial regulatory reform he can tout during his reelection campaign.

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Huffington Post Senate Republicans Give up on Opposing Elizabeth Warren for CFPB, With a Twist May 6, 2011 By David Arkush

On Thursday, 44 Senate Republicans signed a letter to President Obama stating that they will oppose any nominee to head the Consumer Financial Protection Bureau (CFPB) unless the Bureau is first weakened dramatically. This is an interesting development.

Here's what's really going on, that the papers won't be reporting: This letter signals that the Senate Republicans have surrendered their fight against Elizabeth Warren. In recent weeks there has been a strong, growing belief in Washington that the president will nominate Warren to head the CFPB. Public

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Citizen has been urging Obama to nominate her since last summer, and saying it's a fight worth having. Warren is an outstanding champion for consumers. If the American public gets more exposure to her, they will love her. Wall Street and its congressional allies would be bruised and muddied by a nomination fight; she and the CFPB would be strengthened.

Apparently the Senate Republicans understand this. So they are doing the best they can to retreat strategically. It's not a bad strategy: First, they are pretending their fight is about something else. They say they would oppose any nominee, not just Professor Warren, because the agency is structurally flawed. Second, they are forcing the president to make a recess appointment, which they will use to claim that he and the agency are unaccountable and undemocratic. Their arguments about the agency are specious, as recent congressional debate has shown. It's clear that they simply oppose a strong consumer protection agency.

The Senate Republicans' strategic surrender -- giving up on fighting Warren and saying instead that they would oppose anyone -- leaves President Obama no choice but to appoint a CFPB director during a Senate recess. It also leaves him no reason to appoint anyone but the strongest candidate, Elizabeth Warren. That's an excellent development.

But the president shouldn't fall into the trap that's been set -- letting Wall Street and its congressional allies avoid a public conversation about Elizabeth Warren and the agency. They are on the run. The president should not miss the opportunity to introduce more Americans to Professor Warren, and to have the debate that Wall Street and its congressional allies fear. He should nominate Professor Warren immediately and tout her and the CFPB loudly. The Senate should hold hearings on her nomination right away. They should make sure the American public sees Warren and hears her message -- and sees and hears the opponents of strong consumer protection.

Then, if Republicans continue to block her nomination, the president should appoint Warren during the next Senate recess, the week of Memorial Day.

Sign a petition calling on President Obama to nominate Elizabeth Warren.

David Arkush is Director of Public Citizens Congress Watch division.

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BNET Why Republicans Just Did Elizabeth Warren a Big Favor May 6, 2011 By Alain Sherter

Pencil in Elizabeth Warren in as the first director of the Consumer Financial Protection Bureau and she has 44 Senate Republicans to thank for it.

The lawmakers yesterday vowed to block any candidate whatever party the person belongs to from getting the job unless Congress changes the new agency in ways that would severely restrict its authority. In a letter to President Obama, they demanded that the CFPBs single director be replaced by a commission; that lawmakers, not the Federal Reserve, control the bureaus budget; and that other banking regulators have greater power to veto its rules.

In other words, the senators say they will strangle the agency in its crib unless Congress smothers it first. Said Travis Plunkett, an official with the Consumer Federation of America, in a statement:

The measures that these Senators are demanding were all considered and rejected by Congress last year because they would give big banks extraordinary power over the Bureaus operations and handcuff the only consumer financial cop on the beat that Americans have ever had. Enactment of these measures would virtually guarantee that the CFPB would be a weak and timid agency without the will or ability to curb the kind of financial abuses that caused the nations worst financial crisis since the Great Depression.

So why does this make it likely that Warren will get the job? Because Democrats control the Senate, and not enough of them would consent to the Republican ultimatum to overhaul the CFPB. For their part, Republicans have enough votes in the Senate, which must confirm any nominee to head the CFPB, to filibuster the process. (Forget whatever you learned in high school about needing 51 votes to pass a bill when it comes enacting legislation, we now live in an age of minority rule.)

With Republicans barring the door in the Senate, President Obama will have little choice but to name the CFPB director through a recess appointment before the bureau opens for business on July 21. As David Dayen notes, the lawmakers threat eliminates the main obstacle to nominating Warren, which is that the Senate would never confirm her. And again, that threat is now moot since Republicans now refuse to approve anyone.

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The latest hubbub over the CFPB reveals that while Republicans fear Warren, their real concern is with the bureau itself, which will inherit consumer protection powers from the Fed, other banking agencies and the FTC. They fought its creation before last years passage of financial reform legislation. They are now moving in the House to hamstring the bureau. And given an opportunity following next years national elections, they will undoubtedly move to weaken it in future.

Whether or not Warren is at the CFPBs helm come July, this fight is less about any one individuals ideas on financial regulation than over the idea of regulation itself. That battle will continue, of course. To that end, Republicans have, intentionally or not, given Obama the perfect excuse to give her the job. He should take it.

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The Hill (On The Money blog) Bachus: Even odds Warren becomes first Consumer Bureau director May 6, 2011 By Peter Schroeder

A top House Republican believes Elizabeth Warren, the architect of the new Consumer Financial Protection Bureau (CFPB), has a "50-50" chance of being named its first director.

"If I were a gambling man, I would say they are 50-50," said Rep. Spencer Bachus (R-Ala.), the chairman of the House Financial Services Committee, in an interview with Fox Business Network.

Warren, who currently is a special presidential adviser in charge of setting up the CFPB, is a longtime favorite of consumer groups to head the agency. But the White House has yet to name a nominee.

Bachus warned that having no director nominated "calls into question the legitimacy of the agency and puts it in jeopardy." He also used the interview to stump for a bill he has introduced that would replace the top of the CFPB

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with a bipartisan commission as opposed to a single director. He said he is "absolutely" looking to restructure the agency, warning that it concentrates too much power in a lone director whether it be Warren or anyone else.

"It isn't so much about Elizabeth Warren as it's about the structure of this agency," he said. "I think it would function much better as a commission."

Bachus's comments come one day after nearly every Senate Republican told the president they would block any nominee for CFPB director until several changes are made to rein in the agency's power. They too called for putting multiple people in charge on a board as opposed to a single director, as well as placing its budget under the control of congressional appropriators and making it easier for other regulators to overturn CFPB rules they deem to be harmful to banks.

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Bloomberg JPMorgan Debt-Protection Fees May Drop on Consumer Bureau Rules May 2, 2011 By Carter Dougherty

About a decade ago, credit card issuers overhauled the product they market to customers as protection against falling behind on bills because of unemployment, divorce or a health emergency.

Instead of credit insurance, which was regulated by state insurance agencies, the firms began selling debt protection. While essentially the same product -- typically costing cardholders a few dollars a month -- the new version fell under the purview of federal regulators who historically were less aggressive in overseeing consumer banking services.

Now that oversight is likely to be ramped up by the new Consumer Financial Protection Bureau. Along with lawsuits alleging deceptive practices by the issuers, the move may cut into the annual $2.4 billion in revenue that the products generate for firms including JPMorgan Chase & Co., Bank of America

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Corp., and Discover Financial Services.

In a March 16 letter responding to a Government Accountability Office report on debt protection, Raj Date, an associate director at the consumer bureau, said that the new agency would consider writing rules for such coverage. He noted that the Dodd-Frank Act empowers the bureau to ensure proper disclosure in consumer financial products as well as to protect buyers from deceptive and abusive practices.

The report raises important questions as to how well consumers understand the products they are purchasing and their value, wrote Date, who oversees the bureaus division of research, markets and regulations.

Substantial Fees

Using data obtained from the industry, the GAO concluded that firms charge substantial fees for debt protection. Of the $2.4 billion collected from customers in 2009, issuers kept 55 percent as pretax earnings, according to the report. About 24 percent of fees went to administrative expenses and reserves, while 21 percent, or $518 million, was paid in benefits.

Other insurance products pay out over 90 percent of premiums in benefits, said Edward Graves, an associate professor of insurance at The American College in Bryn Mawr, Pennsylvania.

The GAOs research suggests that debt-protection products are extremely profitable, Graves said.

Industry officials said they are concerned the bureau may attempt to limit fees for the products. The consumer agency is going to say that the price is high, but consumers appear to like them, Kevin McKechnie, executive director of the American Bankers Insurance Association, said in an interview.

Paul Hartwick, a spokesman for Chase Card Services, declined to comment as did Bank of America spokeswoman Betty Riess.

Qualifying Events

Customers who purchase the products can get their credit- card debt canceled or suspended following a qualifying event, which depending on the program can include death, disability, unemployment, birth or adoption of a child, relocation, divorce or a call to active military duty. In some cases cardholders can

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miss minimum monthly payments without accruing interest.

At the nine largest issuers, monthly fees range from 85 cents to $1.35 per $100 of outstanding balance, according to the GAO.

Issuers revamped debt protection coverage a decade ago to bring it under federal supervision rather than having to meet the requirements of 50 different states, said Birny Birnbaum, the executive director of the Austin, Texas-based Center for Economic Justice and a former state insurance official.

You design one program and it works in the entire country, Birnbaum said.

Birnbaum said the strong profitability of the products reflects the limits of competition in the market. Its not like you can say that, with your Citibank card, youll buy debt protection from someone else, Birnbaum said. Youre a captive audience.
( b ) OCC Oversight ( 2 ) , Of the nine largest card issuers that offer debt protection, the Office of the Comptroller of the Currency ( regulates seven -- Bank of America, JPMorgan, Citigroup Inc., Capital One Financial Corp., HSBC Bank b Plc, Wells Fargo & Co. ) ( and U.S. Bancorp. The Federal Deposit Insurance Corp. oversees Discover while the Office of Thrift 5 Supervision, which is being merged into the OCC, regulates a bank owned by American Express Co. )

Since the products fell under federal oversight a decade ago, the main focus of regulators has been whether marketing practices were unfair or deceptive, not whether pricing reflected competitive markets. Federal banking regulators identified relatively few violations related to debt protection products in recent years, none of which resulted in a formal enforcement action, the GAO wrote.

That focus may change when the consumer bureau formally begins operation in July.

Lawsuits

State and private legal actions already have targeted practices by Discover. Minnesota Attorney General Lori Swanson charged in a lawsuit that telemarketers for Discover used deception to sell debt protection. In recordings of phone calls she released upon filing the lawsuit Dec. 6, the Discover

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representatives made quick recitals of terms and conditions and seemed to presume that anytime a customer said okay, he or she agreed to enroll in the plan, according to Benjamin Wogsland, a spokesman for Swanson.

In another lawsuit, Betsy Irvine, a longtime cardholder, said Discover enrolled her and her husband Shawn in its debt protection program without their consent. Irvine, a software developer in Dallas, said she didnt realize for almost a year that she was being charged $110 a month for the product. When she objected, the firm told her that theyd signed up during a July 2008 phone call.

Irvine said that was impossible. We were on our honeymoon in Europe, Irvine, 44, said in an interview. Our phone would not even have worked there.

Peace of Mind

Irvine posted her experience on a consumer complaint website, which eventually drew some 50 comments from cardholders who claimed similar experiences. The couple filed a lawsuit, which in July was combined with other plaintiffs in federal court in California.

I get 5 to 10 e-mails a week from people who got enrolled even though they did not want the product, said Irvines lawyer, David Paris, an attorney with Paris, Ackerman and Schmierer LLP in Roseland, New Jersey.

Leslie Sutton, a spokeswoman for Discover, said the company wouldnt comment on specific pending litigation. She added in an e-mail: Its not in Discovers interest to sell a product that doesnt enhance our relationship with our card members, many of whom find Discovers protection products valuable given the peace of mind they provide.

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Time (Swampland blog) Foreclosure Probe Chief Asked Bank Lawyers for Money

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May 9, 2011 By Massimo Calabresi

A few weeks ago, the National Institute for Money in State Politics published a report showing a marked spike last fall in campaign contributions to Iowa Attorney General Tom Miller by lawyers and law firms that represent big banks after Miller announced he was opening an investigation into the nationwide mishandling of foreclosures by Bank of America, Chase and others.

On April 20, TIME reported that a lawyer and a consultant for Bank of America, which is in direct negotiations with Miller over its handling of foreclosures, gave a total of $15,000 to Millers campaign.

Now, in response to queries from TIME, Miller says that he initiated fundraising calls to several national firms that represent big banks after he had announced his intention to investigate the foreclosure mess. In September and October, I tried to reach out to people that Id worked with and I thought had respect for me and potential support for me and tried to raise money from them, Miller says, And a number of them were from national firms.

Miller declined to say how many lawyers he contacted that regularly represent big banks and said he didnt know until after the election which firms were representing the banks in the foreclosure case.

A source on the bank side of the case described one such fundraising call with Miller. He told me that there was a great deal of money coming into the state to defeat him and he was fairly disconsolate. I volunteered to make a contribution. The source said he had not previously given to Miller, but that he had known and worked with him for several years, and that his contribution was based on his longstanding friendship with him. The source then spoke again with Miller after the election to congratulate him on his victory.

Miller says he does not believe his fundraising efforts among lawyers representing potential targets of his investigations give the impression of impropriety. Nor does he believe that negotiating with the lawyer who gave him $5,000, Meyer Koplow of New Yorks Wachtell Lipton now representing Bank of America, presents a conflict of interest. All of this is just so much of a stretch, Miller says.

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Housing Wire A CFPB deadlock is forming May 6, 2011 By Jon Prior

A House subcommittee cleared three bills this week to amend how and when the Consumer Financial Protection Bureau will govern lenders. But legislation along with a vote on a possible director will most likely hit a deadlock in the Senate.

Republicans introduced the bills and ushered them through subcommittee on party-line votes. Since then, Republicans facing an uphill battle to push them through the Democrat-controlled Senate sparred with the White House over a director nomination.

The CFPB is scheduled to launch July 21, as stipulated by the Dodd-Frank Act. But less than two months out, there is no nomination for director. A group of Senators said they will not vote for one until their demands are met.

Among them is whether or not a director will be leading the agency at all. One of the bills passed this week is H.R. 1121, introduced by Rep. Spencer Bachas (R-Ala.), would establish a five-member commission to replace the director. Each member would require Senate confirmation and serve staggered five-year terms.

"We continue to be concerned about the amount of power vested in the director's position and, as we indicated in a letter to Congress today, we support legislation that replaces the director with a fivemember commission," said American Bankers Association CEO Frank Keating said.

Another, H.R. 1315, introduced by Rep. Sean Duffy (R-Wis.) would make it easier for the Financial Stability Oversight Council to overturn rules made by the CFPB. Other regulators will sit on the FSOC, and, under Dodd-Frank, overrule the CFPB on a two-thrids vote. Duffy's bill would reduce the required votes to a simple majority.

Rep. Shelley Capito (R-W.V.) introduced the third bill, H.R. 1667. It would delay the entire agency from opening until a director of the bureau is confirmed by the Senate.

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Elizabeth Warren, the special adviser to the Treasury Department in charge of building the CFPB, said the bills were merely attempts by Republicans to water down the agency. Republicans maintain the CFPB has too much power, according to guidelines, and necessary checks and balances need to be put in place.

Analysts at the Washington think tank MFGlobal said there is little chance of any bill to pass the Senate before the 2012 election.

"The one wild card is Thursdays threat by Senate Republicans to block any CFPB director unless the banking regulators get the power to void CFPB rules," MFGlobal said.

Analysts there raised their odds that Warren would get the nomination, but depending upon the reaction, the White House may find it more politically advantageous to nominate a less controversial director and charge the GOP with opposing consumer protection, MFGlobal said.

If Warren gets a recess appointment, she would serve about 18 months through the end of 2012. The first Senate recess after July 21 begins Aug. 8 and lasts the entire month. But analysts said this would cramp the amount of time she would have to implement disclosure initiatives and other policies.

"This is because the agency needs to grow massively as it becomes the primary consumer protection regulator for most of the consumer banking business on July 21," MFGlobal said. "It also gains power over nonbank financial firms and will write the consumer protection rules for the entire banking industry."

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Huffington Post Democrats and Wall Street May 6, 2011 By Mike Lux

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The Republicans in the Senate have thrown down the gauntlet: 44 Republican senators have signed a letter saying they won't confirm anyone -- anyone at all -- to be the director of the new Consumer Financial Protection Bureau unless the new agency is made toothless. It is this kind of way-over-the-top overreaching that has hurt Republican governors like Walker and Kasich so badly because of their attempt to wipe out public-sector unions, and has made the Ryan budget the most unpopular bill in front of Congress in years. When you are so clearly willing to do everything the Wall Street bankers could ever ask, you paint a very big target on your back.

Democrats should seize this opportunity and strike while the iron is hot, just as they did in standing up to Walker, Kasich, and Ryan. Being willing to stand tall and fight back against those unpopular rightwing policies, and the moneymen behind them like the Koch brothers, has already paid off enormously for Democrats. Just think how picking a fight with the most unpopular entity in America (now that Osama bin Laden is dead) -- the big banks on Wall Street -- could help them politically. The President should immediately announce he is appointing Elizabeth Warren as director of the CFPB, and when the next recess comes, immediately put her in as a recess appointment. There is no longer any reason not to, because the Republicans gave us our opening: if they are going to oppose anyone no matter how weak in that job, there is no reason to offer a compromise candidate. Obama should just give it to the person who would be the best director, which Elizabeth would clearly be. Having a big blow-up with Republicans, with us fighting for consumers and homeowners and them fighting for the banks, would be a great political fight to have.

I suspect at the end of the day, that will be the conclusion the Obama team comes to as well, although they are taking their own sweet time on this CFPB decision. And their options of who to appoint got narrowed a lot by that Senate GOP too. The White House already has had several feelers rejected by candidates who didn't want to be seen as taking the job Warren should have, which is a big factor in making Elizabeth's appointment more and more likely. The bottom line is that this letter probably just sealed the deal for her getting the job, so we can once again thank overreaching Republicans for helping get something good done.

Unfortunately, though, this rather obvious notion of picking fights with incredibly unpopular Wall Street bankers isn't a universally held Democratic strategy. Take a look at the dynamics on a couple of other fronts.

The first example is how the swipe-fee issue still has some Democrats being dumb in their politics. I got involved in this issue during last year's financial-reform battle, forming a rather unusual (okay, extremely unusual) alliance with retailers and merchants. Dick Durbin offered an amendment that would require the Federal Reserve to provide some regulation of debit card swipe fees so that the big banks who thoroughly dominate this market (Visa and MasterCard, which are subsidiaries of the big banks, represent more than 80 percent of the debit card market) couldn't just charge whatever outrageous swipe fees they wanted to every small businessperson and non-profit group that let customers use debit cards. The politics of this issue seemed easy to me: the Big Banks vs. Main Street Businesses and Consumers. And it was easy the first time around: when Durbin offered his amendment 63 Senators voted for it, including some Republicans. But the big banks have a ton of money, lobbyists, and muscle -- and they keep chipping away at this. They have convinced a lot of Democrats to go over to their side. An organization I chair, American Family Voices, recently came out with and ad that got

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some notice because it targeted some Democrats, including DNC chair Debbie Wasserman Schultz. But if Democrats took the side of small businesses and consumers, and left helping Wall Street bankers to Republicans, the politics of this issue would be a lot cleaner.

The second issue is the foreclosure fraud issue. The big banks have run roughshod over hard-pressed homeowners, abusing the foreclosure process to the point where they have had a series of court decisions go against them. The 50 attorneys general and multiple federal agencies have been negotiating with the big banks on this issue, but the Obama administration has been way too weak in helping underwater homeowners press for mortgage write-downs. The administration refused to issue a moratorium on foreclosures in spite of all the problems with the banks that were handling them, Treasury's HAMP program has been a disaster, and the administration's acting head of the critically important OCC regulatory agency has been completely in bed with Wall Street bankers on housing and many other issues. The Obama administration should be taking on the big banks on foreclosures, not coddling them.

I am a Democrat because our party has historically been on the side of middle-class workers, homeowners, consumers, and small businesses against wealthy special interests like Wall Street bankers. Politically and policywise, we should be clearly, cleanly, and strongly on the side of the former, and not confuse voters by straddling both sides of the issue. I will always be a Democrat because we are the only party that would ever appoint someone like Elizabeth Warren to office, or pass legislation like the CFPB and swipe-fee regulation, but when we waver on these kinds of things, we lose our way politically as well. It is time for Democrats to take a clear side for the middle class, and let the Republicans choke on having to be on Wall Street's side.

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Forbes (Law of the Market blog) Republican Senators Say No! to Wall Street Watchdog May 6, 2011 By Timothy Spangler

With only weeks to go before the scheduled launch of the Consumer Financial Protection Bureau (CFPB), the Wall Street watchdog established last year by Dodd-Frank, 44 Republican Senators have vowed to block any nominee put forward to run the new regulator. They expressed concern in a letter to President Barack about the lack of adequate checks-and-balance for the CFPB.

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In particular, they are proposing that CFPB be headed by a board of directors, rather than a single czar, and that the agency be fund directly by Congress, rather than receiving its budget from the Federal Reserve.

Unsurprising, consumer groups have begun to rally around the CFPB, claiming that the net effect of the Republican proposals would be to strip the agency of its independence.

Failure to name a director of the agency before its July 21st launch could be seen as a serious political failure for Obama. Elizabeth Warren, a law professor at Harvard, has been widely rumored to be the Administrations choice for this important role, and she is currently overseeing the agencys initial rollout. But Warren remains a highly controversial figure, and a painful confirmation process in the Senate could await her, or any nominee that Obama ultimately decides upon.

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Wall Street Journal Consumer Groups Back Warren for CFPB May 6, 2011 By Maya Jackson Randall

WASHINGTONPublic-interest groups are pushing for President Barack Obama to appoint White House adviser Elizabeth Warren director of the new consumer-financial-protection agency, even as Republicans threaten to block any nominee.

Some groups that pushed for the creation of the Consumer Financial Protection Bureau had refrained from publicly endorsing a nominee but are now urging the president to nominate Ms. Warren and then appoint her to the post to ensure the bureau has a director by its July 21 launch.

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"We urge the president to stand up to this bullying, to swiftly nominate Professor Warren to lead the Consumer Bureau, and to make a recess appointment if the Senate refuses to act," said Lisa Donner, executive director of Americans for Financial Reform, in a statement Friday.

The statement marks the first time the coalition has called on the president to put Ms. Warren in charge through a so-called recess appointment, a controversial maneuver that is likely to frustrate Senate Republicans because it would mean Ms. Warren would lead the agency without the Senate's endorsement.

An Americans for Financial Reform spokesman said the coalition's executive committee agreed Thursday night to call on Mr. Obama to nominate and then install Ms. Warren through a recess appointment.

In addition, the consumer-advocacy organization Public Citizen is calling on the president to nominate Ms. Warren.

"The Senate Republicans' strategic gambit likely leaves Obama no choice but to appoint a CFPB director during a Senate recess," said David Arkush, director of Public Citizen's Congress Watch division. "It also leaves him no reason to appoint anyone but the strongest candidate: Elizabeth Warren."

The statements come in the wake of news Thursday that Senate Republicans plan to block whomever the president nominates to spearhead the bureau. In a letter to Mr. Obama, 44 Senate Republicans nearly all of the chamber's Republicanssaid they wouldn't support any nominee unless the agency is reworked so that its funding faces congressional scrutiny, its director is replaced by a board and its actions can be overturned by other regulators.

"We will not support the consideration of any nominee, regardless of party affiliation, to be the CFPB director until the structure of the Consumer Financial Protection Bureau is reformed," they wrote. They said they "support strong and effective consumer protection" but the structure of the agency "violates basic principles of accountability and our democratic values."

Consumer advocates say Republicans, who have opposed the creation of the new bureau, are simply trying to weaken the agency.

Under the Dodd-Frank Act, if the agency doesn't have a director by July 21, its powers to fight abusive financial practices will be limited.

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Obama administration officials have been cool to many of the changes Republicans are proposing, arguing that the consumer agency already has significant oversight and accountability.

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NBC-17 (North Carolina) Businesses Increasingly Use Deceptive Tactics To Target Military May 6, 2011 By Charlotte Huffman

FORT BRAGG, N.C. -- Military service men and women at Fort Bragg -- and nationwide -- are the target of a number of different scams that result in high interest loans, bogus credit plans and fraudulent car deals.

Flashy signs outside military posts advertise "Buy Now, Pay Later," "Military Loans," "Quick Cash," "Pre -Owned Cars" and a host of other so-called deals designed to entice members of the military.

These are the sorts of businesses that the Office of Service Member Affairs is addressing.

Elizabeth Warren, assistant to the President and special advisor to the Secretary of Treasury on the Consumer Financial Protection Bureau, said the Office of Service Member Affairs will work closely with the Defense Department to help ensure military families receive the financial education needed to make wise financial decisions.

Holly Petraeus, the 36-year military spouse of General David Petraeus, commander of U.S. forces in Afghanistan, is the newly appointed director of the agency.

"I have moved 23 times in 36 years, and sometimes you go for the biggest billboard outside the front gate," Holly Petraeus said. "That may not be the one you should be dealing with."

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The Department of Treasury reports that three quarters of financial counselors say they've helped military families deal with abusive auto loans.

Petraeus was a victim of a car deal gone bad herself, something that Staff Sergeant Diann Traina experienced in 2007.

"When you have these businesses around that put out all these flags and military appreciation and everything, it's easy to think, 'They are going to help me out,'" Traina explained.

"It's easy money," she added. "The military is an easy target."

Holly Petraeus explained, "It's easy to get them to sign on the dotted line. You're new, you don't know the players."

Traina says she's turning the page on a new chapter in her life; a chapter that includes the memory of a dream car and a growing collection of legal documents.

Traina signed a contract for a loan with SLM Financial Corp in 2007, and traded in her Dodge pick-up truck at a dealership on Yadkin Road outside Fort Bragg. Traina purchased a 2001 BMW for $17,900.

"I thought it was reasonable. I didn't think it would be a big deal," Traina explained. "It was a 2001 BMW, it was pretty, it looked good.

However Traina was never able to register her new BMW. A few months after buying the car, she was deployed to Iraq, and that's when she learned the dealership she purchased the car from had shut down.

Traina said the dealership never owned the BMW in the first place.

"There was nothing I could do," Traina said. "I'm in a different time zone; I've got a mission I'm supposed to be focusing on."

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When she returned from deployment, Traina found herself without a car, and the loan company demanding "immediate payment" of the "loan in full." With a $10,000 debt on her credit, Traina became one of many young soldiers trapped by a bad deal.

The Office of Service Member Affairs will have the ability to write rules, and if companies are breaking existing laws the agency will have enforcement power as well.

Victims can file a complaint with Petraeus' office at ConsumerFinance.gov or members of the military can send an e-mail to military@treasury.gov.

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Washington Post Whats keeping small businesses up at night May 8, 2011 By Danielle Douglas

Thomas M. Sullivan has been busy these days. The attorney at Nelson Mullins Riley & Scarborough in the District fields dozens of calls from local business owners trying to wrap their heads around financial reform.

Small businesses are anxious. Theyre uncertain whats going to happen when theres a new cop on the beat, he said, referring to the newly created Consumer Financial Protection Bureau.

Though Sullivan can offer a myriad of probable impacts, there is little certainty in any scenario as proposed measures may morph along the road to implementation. Still, small businesses are bracing themselves for changes in government policy that some observers say could prove detrimental.

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Take corporate tax reform. The Obama administration wants to eliminate many abatements and credits to offset a reduction of the 35 percent tax on corporate profits. A recent study released by Ernst & Young, however, concludes that such a move could raise the tax burden on small businesses by about 8 percent, or $27 billion, per year.

Many mom-and-pop shops enjoy those tax breaks that stand to disappear, but would not benefit from the lower corporate rate because they pay taxes through their owners individual returns.

If they want to make more businesses competitive, then they should move more businesses toward the pass-through structure and not away from it, said Brian Reardon, executive director of the S Corporation Association, which commissioned the Ernst & Young study.

Treasury Secretary Timothy F. Geithner has been sounding the horn on tax reform for months, with some media organizations reporting a tax package to come as early as this month. The Treasury Department is reportedly considering making businesses with more than $50 million in gross receipts pay corporate income tax.

Until the agency issues a proposal, tax reform and its impacts remain up in the air. A more pressing concern is the summer rollout of the Dodd-Frank Act. Banks anticipate hiring more compliance officers to manage the laws reporting requirements, an expense small businesses worry will translate into higher lending costs, Sullivan said.

If the cost of credit goes up, youll potentially have a shock wave go through the small-business community at a time when we need people putting money on the street, he said.

For now, the Federal Reserve says banks have been loosening lending standards to spur loan growth. Whats more, Dodd-Frank includes an amendment requiring the new consumer bureau to study smallbusiness implications when issuing rules. Elizabeth Warren, the front-runner to head the agency, has thrown support behind the amendment, but Sullivan stressed nothing is guaranteed.

The threat of higher costs of capital is compounded by concerns about the end of the Federal Reserves asset-purchase program, or quantitative easing, in June. Higher Treasury yields, observers say, will increase rates, making it more expensive for small-business owners to get lines of credit.

Recent reports from Merrill Lynch forecast a gradual, slow rise in interest rates, noted Heather Evans, a Vienna-based vice president and wealth management adviser at the company. She advises clients to consider locking in rates on their outstanding debt.

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American Banker Debit Double Take? B of A Mulls a Tweak to Its No-Overdraft Policy May 9, 2011 By Sara Lepro

Bank of America Corp. is learning customers really do want a say in the matter of overdraft protection.

The bank is considering a text message feature that would allow customers to elect overdraft coverage on an individual debit transaction at the point of sale if they happened to be short on funds. Though the concept is still in the early stages it won't be tested on a broader level in the market until early next year it marks a shift in the way B of A approaches the overdraft issue.

In March of last year, the Charlotte, N.C., company made waves for adopting a blanket policy to deny debit card purchases at the point of sale if a customer did not have enough funds to cover the purchase. The change was made ahead of regulations requiring banks to give customers the ability to opt out of overdraft coverage and potentially avoid paying massive fees for making small-dollar transactions.

At the time, B of A stressed that its decision to block debit card purchases that would overdraw an account was in response to feedback from customers that they did not want to spend money they did not have. The decision was also applauded by Treasury Secretary Tim Geithner, who encouraged other banks to follow B of A's lead.

Other big banks countered that they would continue to give customers a choice.

"We are not going to tell consumers what they are supposed to do and we're not going to tell them what they are supposed to think," said U.S. Bancorp's chief executive, Richard Davis, at the time.

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It seems B of A may have underestimated the power of choice.

Speaking at an RBC Bank financial services conference on Friday, Laurie Readhead, B of A's retail segment executive, said the bank has seen "a significant improvement in our customer experience since implementing the overdraft policy," including fewer customer service calls, fewer complaints and fewer customers closing their accounts.

However, B of A has also gotten feedback about customers wanting more options and more control.

"For the most part, they don't want to go back to the experience that they were having before, where they were consistently incurring multiple $35 fees," she said. "We think the text message solution is a much better approach to let the customer choose, because the customer still wants to choose whether or not they want to proceed with the transaction."

Analysts say B of A is headed in the right direction, even though it means backtracking on its year-old policy.

"It's a good consumer-friendly solution," said Madeline Aufseeser, a senior analyst at Aite Group.

James Van Dyke, the president and founder of Javelin Strategy and Research, also said B of A made a smart move, but stressed that the key to success is in the implementation.

"There are a lot of alerts offered by institutions of varying effectiveness," he said. "Debit payments are something that are preferred by a different audience than the bankers who run payments and this same audience values real-time alerts."

Van Dyke said banks need to be aware that alerts can be delayed by poor phone reception in a store.

Overall, he said, B of A is "realizing the market is shifting very rapidly to real-time and customercontrolled capabilities."

B of A may have another motivation. Though it does not break out revenue from overdraft fees in its financial results, its deposit service charges (which include overdraft fees) dropped 26% last year from 2009, to $5.06 billion.

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Giving customers the chance to overdraw at the point of sale could make up for some lost fees.

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American Banker Prepaid Companies Going After Rivals Markets May 9, 2011 By Andrew Johnson

The gloves have come off in prepaid as card marketers are targeting underbanked consumers in each other's markets.

Green Dot Corp., NetSpend Holdings Inc. and other companies have largely avoided one another in the quest for customers, but a new partnership between NetSpend and entertainment conglomerate BET Network changes the dynamic.

The two companies said Thursday they plan to develop a co-branded prepaid card aimed at black consumers. The move is a direct assault on media icon Russell Simmons' well-known prepaid RushCard, targeted at the same demographic, some analysts said.

"With the BET agreement, I think that the brawl in prepaid has begun," Ben Jackson, a senior analyst in the prepaid advisory service at Mercator Advisory Group in Maynard, Mass., said. "Before this I think a lot of the prepaid card providers were sort of operating in separate spaces. They were adjacent but they weren't necessarily going head to head for anything other than the nebulous unbanked market or underserved market. With NetSpend saying, 'OK, now we're going to partner with BET,' now they're going right in and going after the RushCard market."

Other companies are also going after specific ethnic groups.

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Early this year the payments services company PreCash Inc. announced the Reach Visa prepaid card targeted at blacks with syndicated radio host Tom Joyner as the product's spokesman. Univision Communications Inc. last year launched a prepaid debit card targeted at Hispanics with MasterCard Inc.

Green Dot, NetSpend and other third-party program managers do not issue prepaid cards. Rather, they manage customer relationships and handle marketing of their cards, which are issued by partner banks.

Prepaid executives say there is more than enough room for multiple players, with an estimated 60 million unbanked and underbanked consumers in the U.S. But Green Dot and NetSpend, two of the best-known names in the market, have been under pressure by analysts and investors in recent months to expand after having completed successful initial public offerings last year.

NetSpend said Thursday that its number of active cards, or those that have been used to make a transaction in the previous 90 days, was 2.3 million as of March 31, up from 2.1 million a year earlier.

NetSpend's first-quarter revenue rose 16%, to $80.8 million, and its net income rose 68%, to $7.8 million.

Because it missed analysts' estimates of adjusted earnings and lowered its forecast for the year due to costs related to the partnership with BET, NetSpend's share price fell 14% Friday, to $9.22.

NetSpend does not intend to use its deal with BET a unit of Viacom Inc. to take on specific competitors, Dan Henry, the chief executive of the Austin, Texas, prepaid marketer, said in an interview on Friday. Rather, the goal is to continue expanding distribution.

"It's not so much about getting into RushCard's space at all," Henry said. "It's doing what we do, which is partnering with organizations that have got reliability, trust and reach into our target market."

Of the 9.1 million U.S. households that do not have a checking or savings account, 36.9% are black, according to a 2009 study by the Federal Deposit Insurance Corp.

NetSpend declined to discuss its financial arrangements with BET. The companies plan to release their product near the end of this year.

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A spokesman for UniRush LLC, the company that Simmons founded in 2003 to market the RushCard, did not comment on NetSpend's plans.

The RushCard "serves about 2.5 million members, and more than $1 billion is spent annually" on the cards, the spokesman said in an email.

Gil Luria, a senior vice president with Wedbush Securities LLC, said it is too soon to predict the impact of NetSpend's partnership with BET. All prepaid companies are looking for deals to expand their reach, he said.

"They're growing very rapidly, and they're finding new channels to sell through, and the category's expanding," Luria said.

NetSpend also announced a partnership with Blackhawk Network Inc., a subsidiary of Safeway Inc. that sets up gift and prepaid card displays in retailers. The deal will help expand brand awareness among customers, experts said.

"Prepaid is a volume business," Mercator's Jackson said. "The only way you make money is, you've got to have a lot of cards out there."

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Wall Street Journal Home Market Takes a Tumble May 9, 2011 By Nick Timiraos and Dawn Wotapka

Home values posted the largest decline in the first quarter since late 2008, prompting many economists

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to push back their estimates of when the housing market will hit a bottom.

Home values fell 3% in the first quarter from the previous quarter and 1.1% in March from the previous month, pushed down by an abundance of foreclosed homes on the market, according to data to be released Monday by real-estate website Zillow.com. Prices have now fallen for 57 consecutive months, according to Zillow.

Last year, the housing market showed signs of improving as price depreciation slowed in some markets and stabilized in others. In response, a number of economists began forecasting that housing would hit a bottom in late 2011, then begin to recover. But the improvements, spurred by federal programs that gave buyers up to $8,000 in tax credits, proved fleeting. Sales collapsed when the credits expired last summer, and prices in many markets have been falling ever since.

While most economists expected sales to decline after tax credits expired, the drag on the market has been greater than many anticipated. "We expected December and January to be bad" as the market reeled from the after-effects of the tax credit, said Stan Humphries, Zillow's chief economist. But monthly declines for February and March were "really staggering," he said. They indicate "a reflection of the true underlying demand, which is now apparent because most of the tax credit is out of the system, and it's being completely overwhelmed by supply."

Mr. Humphries now believes prices won't hit bottom before next year and expects they will fall by another 7% to 9%. Other economists revised their forecasts. In April, the chief economist at mortgage company Fannie Mae, Doug Duncan, said home prices in the second quarter would be 5.3% lower than the previous-year period, down from his earlier estimate of a 2.6% decline.

The estimates, which are based on data from the mid-1990s on, come from a proprietary computer program that takes into account sale prices for nearby homes that appear comparable, the size and other physical attributes of the home, its sales history and tax-assessment data, Mr. Humphries says.

Prices are decelerating in large part because the many foreclosed properties that often sell at a discount force other sellers to lower their prices. Mortgage companies Fannie Mae and Freddie Mac have sold more than 94,000 foreclosed homes during the first quarter, a new high that represented a 23% increase from the previous quarter. More could be on the way: They held another 218,000 properties at the end of March, a 33% increase from a year ago.

The companies are bracing for more bad news: On Friday, Fannie reported a $6.5 billion net loss, largely as it boosted loan-loss reserves in anticipation of falling home prices.

Paul Dales, a senior U.S. economist with Capital Economics, says prices could fall by as much as 10%, down from his previous forecasts of around 5%. A March survey of more than 100 economists by

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MacroMarkets LLC forecasts a 1.4% drop in prices this year, down from the December estimate of a 0.2% decline.

Other home-price indexes also show weakness. The widely followed Case-Shiller index published by Standard & Poor's showed that prices climbed from April 2009 until last summer, when they started declining as tax credits expired. Today, prices are on the verge of reaching new lows, the index shows. The Case-Shiller index tracks repeat sales of previously owned homes using a three-month moving average.

According to the Zillow index, a handful of California markets and Washington, D.C., saw price appreciation last year, but that has since reversed. Mr. Humphries attributes the "double dip" in those markets, which include Los Angeles, San Francisco and San Diego, to the way in which the tax credit stimulated demand from buyers. When the tax credit went away, markets were left with rising supply from foreclosures but with less demand from buyers.

Detroit, Chicago and Minneapolis posted the largest declines during the first quarter of the top 25 metro areas tracked by Zillow, while Pittsburgh, Dallas and Washington posted the smallest declines.

To be sure, steep declines in home prices along with mortgage rates near their lowest levels in decades have helped make housing more affordable than at any time in the past 30 years, according to Zillow. Markets that have lower levels of foreclosures, such as Dallas, and those with better job-growth prospects, such as Washington, are faring better.

However, credit standards remain tight, posing another challenge for the housing market. Just as many unqualified borrowers received loans during the boom, "there are people today who probably could afford loans but can't get them," says David Berson, chief economist at PMI Group Inc. The average credit score on loans backed by Fannie Mae stood at 762 in the first quarter, up from an average of 718 for the 2001-2004 period.

Joe Sullivan, a real-estate agent in Stockton, Calif., is worried that more traditional buyers are seeing their loan applications canceled late in the process as lenders change qualification terms. If mortgage standards continue tightening, prices are "going to drop down to where only investors can get them, people with cash money," he said. Sales to absentee buyers, primarily investors, accounted for 47% of all Phoenix-area home sales in March, the highest level for any month in more than a decade, according to DataQuick, a real-estate research firm.

Christine Rice spent two years looking to buy a home in Los Angeles but found herself continually losing out to bids from investors offering to pay in cash. In September, she finally made a winning bid, paying $275,000 for a two-bedroom home. The prospect of falling prices "doesn't keep me up at night, but only because it was so cheap," says the 43-year-old tailor, who says she and her husband needed to move to have more space for their family. Her mortgage payments plus taxes are less than the rent she had been paying. "If it had been a stretch, then maybe I'd be worried," she says.

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Buyers who qualify for mortgages are demanding bigger discounts as added insurance against further declines in values. Sellers, meanwhile, are balking. "More often, they don't want to take the first offer," says Jeffrey Otteau, president of Otteau Valuation Group, an East Brunswick, N.J., appraisal firm. "What they don't realize is, in an oversupplied market, the next offer is for less."

While some analysts have argued that home prices need to fall to "clearing prices" that will attract more buyers, price declines could also complicate any recovery by pushing more borrowers under water. Zillow estimates that more than 28% of borrowers owe more than their homes are worth nationally. Those numbers are much higher in hard-hit markets such as Phoenix, where more than two-thirds of borrowers owe more than their homes are worth.

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American Banker Meet QM, QRMs SisterOnly Tougher May 9, 2011 By Alex Ulam

As the mortgage industry girds for life under the Dodd-Frank Act, two legislated products are capturing bankers' attention.

The one getting the most eyeballs is the Qualified Residential Mortgage, or QRM, which challenges a lender to meet certain underwriting standards or, failing that, to retain 5% of the credit risk should the loan in question be securitized and sold to an entity other than Fannie Mae or Freddie Mac.

QRM's sister product, the Qualified Mortgage, also penalizes lenders when its conditions are unmet for all residential first-lien loans. Under QM, the penalties are legal and the ramifications for a violation may be wider.

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The new rules are intended to prevent lenders from making the types of exotic loans that have been blamed for setting off the mortgage meltdown.

All well and good, but as proposed, the rules would drive up the cost of credit for many low- and moderate-income borrowers, while shutting out many others, said both mortgage bankers and their lawyers, now studying the fine print.

"I think that the natural consequence of QM and QRM is that only the most privileged borrowers in our country will be able to get mortgage loans unless the regulations are changed," said Laurence Platt, a partner at the Washington law firm K&L Gates, "because they won't meet the standards."

Six different agencies have to sign off on the rule that is the basis for QRM.

In contrast, the Federal Reserve Board alone handles QM, which comes out of Dodd-Frank enhancements to the Truth in Lending Act's Regulation Z: the ability-to-repay provision. The Fed is soliciting public comment on it until July 21, after which responsibility for final rulemaking passes to the Consumer Financial Protection Bureau.

One comment the Fed may hear: there is too much overlap between the rules and that they need to be simplified. "We are still trying to sort it all out," said Stephen O'Connor, senior vice president for public policy and industry relations at the Mortgage Bankers Association. "We think that they [the new rules] should be synchronized and similar as possible."

"If you are going to go in the direction of making a good QM standard, then the question becomes whether you should make the QRM closer to the QM," said Kenneth Markison, associate vice-president and regulatory counsel for public policy and industry relations at the MBA. "Because maybe that is all you need."

The legal penalties for violating TILA's enhanced ability-to-repay provision can be severe; if made outside QM's proposed safe harbor, the loan's owner could run into a raft of legal counterclaims if it tries to foreclose on a borrower in default. In addition, lenders could get fined a million dollars a day for knowingly originating a loan violating the enhanced Regulation Z.

Under QRM, for loans to meet standards, the borrower has to make a minimum down payment of 20% and they have to have a relatively low debt-to-income ratio. According to the Federal Deposit Insurance Corp., approximately $8.5 trillion in outstanding mortgages would not have qualified as QRM loans if they were made under the proposed risk-retention rule. Under the rule, lenders may make non-QRM mortgages, but they will have to keep 5% of the credit risk of any asset that is transferred, sold or conveyed to a third party. And lenders said that the 5% risk-retention stipulation for non-QRM

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mortgages will add to the cost of making the loan, and they maintain that this expense will be passed along to the consumer.

Lenders also can make exotic loans that don't conform to the QM standard. However, to do so requires more extensive underwriting: they must consider and verify eight underwriting factors, including the borrower's current debt obligations, monthly debt-to-income ratio and credit history.

"The way that Dodd-Frank works is that the consumer in foreclosure can assert a failure of the ability-torepay standard, no matter how many years later, and that claim can result in an offsetting financial claim of the finance charges, payments of interest the consumer has paid so in effect, you have a big counterclaim," Markison said.

However, consumer advocates said that the enhanced ability-to-repay provision will protect consumers and force banks to do better underwriting. "The remedy is really the guarantee that lenders won't do collateral-based lending, which is one of the hallmarks of predatory lending," said Diane Thompson, a lawyer at the National Consumer Law Center. "So if they don't comply with the rules, fine. But they won't be able to take the house, so that really is going to force them to do the underwriting."

Given the potential liabilities, many lenders will undoubtedly choose to make QM loans that provide special protections, such as a potential safe harbor, from liability for violations of the TILA ability-torepay provision. QM loans will primarily be plain vanilla, although a special balloon payment QM mortgage is allowed in rural or underserved areas.

In general, "to meet the QM standard, you cannot have the neg-am interest only or balloon payment or a loan payment term exceeding 30 years," Markison said. "You take on the legal risk under QM, and you take on the risk retention under QRM, because those products are also ineligible for the exemption under QRM so there is more risk all around you can still make the loan, but you will charge a premium for all of that additional risk, which means it will be more expensive for the borrower."

Some consumer advocates call banks' concerns about QM-related litigation overblown.

"The fact is, the litigation has never been as great as they like to say it has, and it probably won't be in the future, for the simple fact that most people in foreclosure cannot find access to lawyers who know what they are doing," said Kathleen Keest, senior policy counsel at the Center for Responsible Lending. "

"People don't sue banks willy-nilly; they only tend to raise these things defensively or when they are close to foreclosure, so if you get hit with a lot of these lawsuits, it is probably because you didn't address the ability-to-repay standard," Keest said.

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However, the proposed rules also create potential legal risks for lenders, according to Platt. "The natural consequence of these rules will be a disproportionate adverse impact on minorities' being able to get loans," Platt said.

"So that in and of itself will raise fair-housing issues, and then if what lenders do is increase the price on nonqualifying loans to account for the risk and minorities get those loans in greater numbers, then they are paying higher amounts. So it is either denial of credit or higher prices, but either way, it will lead to fair-lending claims."

One significant distinction between the two types of rules is that QRM applies primarily to mortgage originators, while QM expands assignee liability so that in addition to lenders, securitizers and investors also can be held liable for violations of TILA's ability-to-repay provision. Some investors and lenders may still have an appetite for buying and selling exotic loans, even with the increased risk. "It will be a great opportunity for lenders who can deal with the non-QM stuff," said Paul Schieber, a partner at Stevens & Lee in Philadelphia. "There will be a niche for someone who is willing to take on the risk, but it will be driven by how much the investment community can tolerate it."

Although the mortgage banking industry is chafing at both the proposed rules, consumer advocates are primarily worried about QRM.

"I have concerns about QRM because I don't think that the down-payment restriction of 20% is reasonably related to the actual riskiness of the loan, and it will unequivocally bar folks that don't have a lot of wealth from homeownership," Thompson said. "But from what I have seen of the QM rule, I think that it is generally in the right direction you want to figure how to get people access to credit, but you want to make sure that it is credit that is not going to destroy their lives."

One potentially huge loophole for lenders in QM is that it only applies to closed-end loans and not home equity lines of credit. "What it means is that the abuses are going to migrate to open-end credit to the extent they haven't already," Thompson said. "I hear stories of clients who need a $10,000 loan, and they are steered to a HELOC because they are told that the banks want to do it that way. And the reason that banks want to do it that way is that there are fewer disclosures on HELOCs, and therefore fewer protections."

In general, however, Thompson said that QM will be much more of a brake on lenders making bad loans than QRM.

"The QM rule is going to apply to a much broader section of the market," she said, whereas "the big thing about the QRM rule is the risk-retention rule. However, many of the subprime securitizers such as New Century routinely retained 5% of their loans or interest in the total pool, so it is not clear the retention is going to be very meaningful by itself."

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Schieber said the QM rule unfairly restricts the options of wealthier borrowers. "A negative amortization loan may be totally appropriate for someone with substantial assets," he said. "My personal view is that if you have a sophisticated borrower who has real assets, like a hedge fund investor with an estate on the south shore of Connecticut, why expose them to these kinds of restrictions?"

Ultimately all consumers stand to lose from QM, Schieber said. "The only thing I have to say in favor of QM is that it adds certainty there is a pretty low common denominator. Is that good for the industry? No. Is it good for the public in general? No. Is it pretty straightforward? I think that the answer is going to be yes, but I don't think that is ultimately a good result."

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New York Times Buyer, Be Aware the Law Is on Your Side May 6, 2011 By Alina Tugend

I was out shopping a few months ago when I saw a banner in a stores shoe department that proclaimed, All footwear half off. I searched through the pile of winter boots and found some just my size.

But when the saleswoman rang them up, they were full price. I pointed to the sign. She told me boots were excluded. I told her it didnt say that anywhere and asked for the manager. The manager told me that some signs indicated the exclusion, but that didnt seem to be true.

We were at an impasse. I could have walked away, but I wanted the boots and they were still a good price. I bought them, but filed an online complaint form with the store.

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As often happens, though, I wondered if this was just an annoying incident or actually illegal? What do consumer laws require and what dont they?

Its surprising what a thicket of laws and regulations are out there and how difficult it can be to determine what agency has jurisdiction over what product or service.

I thought I could sort it all out but I quickly realized that I would need to write a thesis rather than a column if I wanted to cover all the laws. So I decided to focus on some of the ones consumers might most need to know.

First, theres the concept of the implied warranty. Yes, we all know that any major appliance or product is going to fail days after the manufacturers warranty runs out. But apparently, thats not the end of the story.

Have you heard about the concept of implied warranty of merchantability? It is part of the Uniform Commercial Code, first published in 1952.

That means, said Anthony Giorgianni, associate finance editor for Consumer Reports Money Adviser, that when a retailer sells you something, it is giving you an unwritten assurance that the item being sold will perform how it is supposed to for a reasonable period of time. This implied warranty overrides any return policy or limitations in the manufacturers warranty.

All states have adopted, in some form or another, this provision of the Uniform Commercial Code or similar legislation, he said.

Now, that doesnt mean a product is supposed to last forever.

Most states assume four years is a reasonable amount of time, Mr. Giorgianni said. The only way to escape the implied warranty is to post in a visible place that a product is being sold as is or with all faults. Some states, however, prohibit retailers from using such disclaimers.

There is also the implied warranty of fitness for a particular purpose, which means that if you bought something that you were told would serve your needs like a washing machine that is supposed to handle 15 pounds of laundry but, as you later find out, wont wash more than 10 pounds you can request a refund or replacement, Mr. Giorgianni said.

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And remember that while implied warranties and unwritten assurances may be on your side, its always best to get a retailers assurances in writing.

This is all fine and good, but its hard for me to imagine going into a retailer with, say, a digital camera that has failed to work, and arguing that it should be replaced under an implied warranty.

Or rather, its easy to imagine me doing it. Its hard to imagine the salesperson willingly handing over a new camera.

Well, Mr. Giorgianni said, it can actually work.

I walked into Wal-Mart with a broken cordless telephone after the 90-day return policy, he said. I asked for the manager and said its not reasonable that a cordless phone should break down after 90 days. I think I even had a copy of the Connecticut Uniform Commercial Code I used to carry in my wallet.

The guy had no idea what I was talking about, but told me to get another one.

The point is, Mr. Giorgianni said, that we shouldnt just give up. In this country, weve gotten away from the idea that were entitled to get what you pay for, he said.

Some of the things we assume are covered under federal law really arent, which is good news and bad. For example, according to Consumer Reports, its generally not true that retailers must honor a posted price if its a mistake.

And federal law does not prohibit the return of earrings, underwear, bathing suits and similar items. But merchants can, and often do, post their own policies. If there is no policy, but the merchant says its against local health rules to allow such returns, you may want to call a consumer organization to verify that.

In fact, a friend of mine bought some pierced earrings she never wore. A year later, she went to the store and explained that she really wished she had bought a slightly larger pair. The store very obligingly made the switch.

I would really prefer, however, not to buy returned underwear.

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If you feel your retailer is violating a warranty, express or implied, you can file a complaint online with the Federal Trade Commission at www.ftc.gov. The F.T.C. does not resolve individual complaints, but it does aggregate them and, if enough complaints are directed at a particular business, the commission will take action, said Mitchell Katz, a spokesman for the agency.

Although many federal and state agencies cover a panoply of consumer concerns, the F.T.C. is responsible for many of the issues that the average consumer faces.

These include false claims for food, over-the-counter drugs and dietary supplements; telemarketing scams and violation of the do-not-call registry; debt collection; identity theft; and work-at-home scams and direct-mail fraud. For further information on what the commissions Bureau of Consumer Protection offers, go to www.ftc.gov/bcp/about.shtm.

For areas other federal agencies cover, check out the Federal Citizen Information Center. The newest consumer protection agency established by Congress the Consumer Financial Protection Agency, which will be up and running in July will tackle problems related to credit cards and mortgages, among other things.

As to any products that pose a safety concern and may have to be recalled or to find out about recalls check with the Consumer Product Safety Commission.

While its important to know where to go to report a problem, knowing that some day a federal agency may bring action against the recalcitrant company offers little satisfaction when youre being bounced between the retailer and manufacturer if your computer needs fixing or youre still waiting for that refund check for the coat you sent back six months ago.

Thats why its a good idea, consumer experts say, to complain not just to one agency but to stage a multipronged attack. Do what you can within the company. Then file complaints with local and state consumer protection agencies as well as federal ones and your local Better Business Bureau.

So what about my boot incident? As I said, I filled out an online complaint form for the store, and received a form letter that never responded directly to the point.

But apparently I was right if a sign says everything is on sale, then everything is on sale.

They must clearly and conspicuously state an exemption, Mr. Katz said.

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Now I know the law is on my side. Next time, I bring in the federal regulators.

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Cc:

Canfield, Anna (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=canfielda> _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands>; Ladd, Christine </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=laddc>; Lilly, Antona </o=ustreasury/ou=do/cn=recipients/cn=lillya>; Betts, Kristina (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=bettsk>; Worthman, Katherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=worthmank>; Leary, Jesse (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=learyje>; Donoghue, Kristen (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=donoghuek>; Starr, John (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=starrj>; Chanin, Leonard (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=chaninl> Grover, Eric (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=grovere>; Keane, Micheal (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=keanem>; Hillebrand, Gail (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=hillebrandg>; Gupta, Neeraj (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=guptan>; Deutsch, Rebecca (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=deutschr>; Healey, Jean (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=healeyj>; Brolin, John (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=brolinj>; Wanderer, Agnes (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=wanderera>; Selden, R. Colgate (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=seldenr>; Young, Christopher </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=youngc>; Petraeus, Holly (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=petraeush>; Blow, Marla (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=blowm>; Plunkett, Alexander (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=alexanderp>; Coleman, John (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=colemanjo>; Scala, Courtney (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=scalac>; Gragan, David (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gragand>; Tingwald, James

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(CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tingwaldj>; Shue, Jeffrey (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=shuej>; Bach, Mary (Stacey)(CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=bachs>; Turenne, Jeannine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=turennej>; Riley, Jeffrey (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=rileyje>; D'Amico, Christina </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=damicoc>; Reeder, Garry (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=reederg>; Petersen, Cara (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=petersenc>; West, Catherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=westca>; Sena, Theresa (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=senat>; Mosena, Lea (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=mosenal>; Gao, Jane (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gaoj>; Geldon, Daniel (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=geldond>; Pearl, Joanna (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=libermanj>; Boenau, Susan (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=boenaus>; Dickman, Marilyn (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dickmanm>; Mann, Seth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=manns>; Morris, Lucy (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=morrislu>; Herchen, Emily (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=herchene>; Silberman, David (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=silbermand>; DiPalma, Nikki (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dipalman>; McQueen, Suzanne (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=mcqueens>; Sanford, Paul (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sanfordpa>; Jackson, Peter (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=jacksonpe>; Hrdy, Alice (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=hrdya>; Date, Rajeev (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dater>; Michalosky, Martin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=michaloskym>; Cordray, Richard (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cordrayr>; Cumpiano, Flavio (CFPB) </o=ustreasury/ou=exchange administrative group

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(fydibohf23spdlt)/cn=recipients/cn=cumpianof>; Cochran, Kelly (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cochrank>; Stark, Paula-Rose (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=starkp>; English, Jared (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=englishjar>; Twohig, Peggy (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=twohigp>; Gordon, Michael (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gordonm>; Lev, Ori (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=ofac/cn=ofac users/cn=levo>; Chow, Edwin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=chowe>; Vanderslice, Julie (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=vanderslicej>; Smullin, Rebecca (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=smullinr>; McCoy, Patricia (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=mccoyp>; Lopez-Fernandini, Alejandra (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lopez-fernadinia>; Williams, Anya (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=williamsany>; Gorski, Stephanie (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=gorskis>; Fuchs, Meredith (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=fuchsm>; Geary, John (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=gearyj>; Reilly, Deb (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=reillyd>; Fravel, Wesley (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=fravelw>; Abney, Wilson (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=abneyw>; Proctor, Althea </o=ustreasury/ou=do/cn=recipients/cn=proctora>; Cronin, Katherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cronink>; Lombardo, Christopher </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lombardoc>; Vail, Amber (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=vaila>; Rexroth, Mariana (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=rexrothm>; Breslaw, April (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=breslawa>; Suess, Robert (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=seussr>; Harvey, Imani (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harveyi>; Trueblood, Andrew (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=trueblooda>; Brown, Allison (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=brownall>; VanMeter, Stephen (CFPB) </o=ustreasury/ou=exchange administrative group

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(fydibohf23spdlt)/cn=recipients/cn=vanmeters>; Levisohn, Ethan (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=levisohne>; Alag, Sartaj </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=alags> Bcc: Subject: Date: Attachments: All Hands Meeting Mon May 09 2011 09:20:40 EDT

When: Tuesday, May 10, 2011 1:30 PM-2:00 PM (UTC-05:00) Eastern Time (US & Canada). Where: 5th floor elevator bank Note: The GMT offset above does not reflect daylight saving time adjustments. *~*~*~*~*~*~*~*~*~* Please join us for all hands with a special guest visitor.

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Harpe, Pam (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harpep> Black, Brad </o=ustreasury/ou=do/cn=recipients/cn=blackb>; Burden, Gail (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=burtong>; Coyle, Raymond (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=coyler>; Cronin, Katherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cronink>; Darling, Eben (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=darlinge>; Dickman, Marilyn (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dickmanm>; DiPalma, Nikki (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dipalman>; Glaser, Elizabeth (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=glasere>; Gorski, Stephanie (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=gorskis>; Harpe, Pam (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harpep>; Harvey, Imani (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harveyi>; Herchen, Emily (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=herchene>; Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk>; Mann, Seth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=manns>; Megee, Christine (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=megeec>; Plunkett, Alexander (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=alexanderp>; Royster, Felicia (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=roysterf>; Sensiba, Vicki (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sensibav>; Slagter, Dennis (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=slagterd>; Tamberrino, Mary (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tamberrinom>; Tingwald, James (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tingwaldj>; Wanderer, Agnes (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=wanderera>

Cc: Bcc: Subject: Date: Attachments:

Brownies in 554 bullpen Mon May 09 2011 08:14:14 EDT

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Pam Harpe 202 435-7235

This e-mail may contain Privacy Act/Sensitive Data, which is intended only for the individual to which it is addressed. It may contain information that is privileged, confidential, or otherwise protected from disclosure under applicable laws. Do not disclose sensitive data to others within or outside of CFPB unless they have a legitimate need for the information based on their official duties. If you are unsure of the appropriateness of information disclosure, please contact the General Counsel or the Privacy Team for guidance.

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From: To: Cc: Bcc: Subject: Date: Attachments:

Microsoft At Home <microsoft at home>

Do a clean sweep: How to delete unwanted files and programs Mon May 09 2011 00:00:00 EDT

Ever wonder how to clean out your computer? Our instructions describe how to safelyand easily uninstall old or unused programs and remove files from your Windows-based computer.

View article...

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From:

To: Cc:

Martinez, Zixta (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=martinezz> _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands> English, Leandra (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=englistl> Weekly Outreach Calendar May 9-13, 2011 Sun May 08 2011 14:53:01 EDT

Bcc: Subject: Date: Attachments:

Events & Meetings w External Groups May 9-13, 2011

Monday, May 9, 2011 EW & Raj Date Meeting w NAACP HPetraeus Visit to Wright-Patterson Air Force Base in Dayton, OH EVale Remarks to Community Bankers in Lexington, KY. DSilberman Call w US Bank DSilberman Meeting w Ace Cash Express PTwohig, CStone Meeting w National Installment Lenders Association (NILA) GHillebrand & PMcCoy Meeting w NeighborWorks

Tuesday, May 10, 2011 EW Meeting with Industrial Areas Foundation (IAF) HPetraeus Meeting w TAG of Ohio National Guard CStone Meeting w NMTA & Via Americas HPetraeus Remarks to West Chester Liberty Chamber Alliance, Ohio EVale & DSilberman Meeting w ICBA PMcCoy Meeting w Homeownership Preservation Hotline (HPF) HPetraeus Remarks at BBB Eclipse Awards, Ohio

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Wednesday, May 11, 2011 PTwohig & SAntonakes Remarks to Financial Services Roundtable (FSR) PMcCoy Meeting w National Asso of Independent Housing Professionals (NAIHP) LKennedy Remarks at FSR Dinner

Thursday, May 12, 2011 LKennedy Remarks to FSR Lawyers Council DSilberman Remarks to Cities for Financial Empowerment in New Jersey PTwohig, CStone Meeting w Online Lenders Alliance

Friday, May 11, 2011 GHillebrand & EVale Meeting w NCUA HPetraeus Remarks to Asso of Military Banks and Mini-workshop (AMBA) ZQM Remarks to The Greenlining Institute in CA

Last Week Monday, May 2, 2011 EW Meeting w Arkansas Bankers EW Meeting w Independent Community Bankers Asso (ICBA) EW Meeting w Illinois Bankers EVale Meeting w Connecticut Bankers DSilberman Meeting w PNC DSilberman Call w Green Dot

Tuesday, May 3, 2011 EW Call w National Credit Union Roundtable EW Meeting w Georgia Bankers ICBA Reception

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Wednesday, May 4, 2011 EW in Little Rock, Arkansas EW Meeting w Consumer/Civil Rights groups in Little Rock, AR RDate Remarks Morgan Stanley Services Conference. Closed Press. HPetraeus Meeting w CUNA EVale Meeting w TN Bankers Asso

Thursday, May 5, 2011 EW in Little Rock, AR EW Meeting w AR Community Bankers EW Remarks at William J. Clinton School at the University of Arkansas. Open Press. LChanin Remarks at Payment Card Institute. Open Press. EV & ZQM Remarks to Independent Bankers Asso of Texas (IBAT) RCordray Meeting w US Chamber of Commerce CStone & GHillebrand attending Consumer Data Industry Asso Briefing on Credit Reporting Accuracy PTwohig Meeting w Consumer Federation of America (CFA) DSilberman Meeting w CFA CStone Meeting w Equifax EV Meeting w MN Community Bankers

Friday, May 6, 2011 HPetraeus Visit to Fort Bragg w Senator Kay Hagan

Saturday, May 7, 2011 HPetraeus Commencement Address at Methodist University Smullin Call w Golden Money Transport

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Zixta Q. Martinez Assistant Director for Community Affairs Consumer Financial Protection Bureau 202.435.7204 www.consumerfinance.gov

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From:

To:

Klein, Heather (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=kleinh> Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk>

Cc: Bcc: Subject: Date: Attachments:

RE: Fri May 06 2011 16:06:19 EDT

Stepping away from my desk for one minute, in case you are looking for me!

From: Lownds, Kevin (CFPB) Sent: Friday, May 06, 2011 2:42 PM To: Klein, Heather (CFPB) Subject: RE:

Oh, Klein. Sounds good. Ill see if EG can come too

From: Klein, Heather (CFPB) Sent: Friday, May 06, 2011 2:41 PM To: Lownds, Kevin (CFPB) Subject: RE:

That timing is parfait (ha!)

From: Lownds, Kevin (CFPB) Sent: Friday, May 06, 2011 2:38 PM To: Klein, Heather (CFPB) Subject:

FrozenYo at 4?

Kevin K. Lownds Review Analyst

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Consumer Financial Protection Bureau (202) 435-7399

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From:

To:

Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk> Glaser, Elizabeth (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=glasere>

Cc: Bcc: Subject: Date: Attachments:

Soft Copies of KLownds Legal Opinions Fri May 06 2011 16:02:12 EDT Working List of Issues under 1063i.doc SAFE Act Legal Issue 4-1-11.docx Language Options for Official Staff Interpretations 2-28-2011.docx Bureau Authority to Issue Official Staff Interpretations 3-2.docx AMTPA Enforcement Scheme 4-15-11.docx

These correspond to Issues 1, 8, and 10 on the working list (also attached)

Kevin K. Lownds Review Analyst Consumer Financial Protection Bureau (202) 435-7399

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From:

To:

Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk> Mann, Seth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=manns>

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HUD Charts Fri May 06 2011 15:58:08 EDT HUD Transfer Data 5-6-11.xlsx

The first tab should have the full breakdown by organization, but theres lots of other data in there if you need it as well

Kevin K. Lownds Review Analyst Consumer Financial Protection Bureau (202) 435-7399

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From:

To:

Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk> Glaser, Elizabeth (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=glasere>

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HUD Documents Fri May 06 2011 15:49:10 EDT HUD Transfer Data 5-6-11.xlsx HUD Employee Recommended Placement DRAFT 5-6-11.docx HUD Employee Placement Summary 5-6-11.docx

All of these will be transferred over to you in the transition anyway, but I wanted to give you an email which had the most up-to-date versions of all of the HUD documents in case you need them for reference. I added a new worksheet to the data document which contains the statistics on the offers that we discussed this morning

-K

Kevin K. Lownds Review Analyst Consumer Financial Protection Bureau (202) 435-7399

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From:

To:

Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk> Klein, Heather (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=kleinh>

Cc: Bcc: Subject: Date: Attachments:

RE: Fri May 06 2011 14:41:37 EDT

Oh, Klein. Sounds good. Ill see if EG can come too

From: Klein, Heather (CFPB) Sent: Friday, May 06, 2011 2:41 PM To: Lownds, Kevin (CFPB) Subject: RE:

That timing is parfait (ha!)

From: Lownds, Kevin (CFPB) Sent: Friday, May 06, 2011 2:38 PM To: Klein, Heather (CFPB) Subject:

FrozenYo at 4?

Kevin K. Lownds Review Analyst Consumer Financial Protection Bureau (202) 435-7399

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From:

To: Cc:

Blenkinsopp, Alexander (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=blenkinsoppa> _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands> Adamske, Steven </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=adamskes>; Moore, Megan </o=ustreasury/ou=do/cn=recipients/cn=mooreme>; Hunt, Anita Maria </o=ustreasury/ou=do/cn=recipients/cn=hunta>; Wallace, Kim </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=wallacek>; Wolin, Neal </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=wolinn>; Warren, Elizabeth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=warrene>; Fitzpayne, Alastair </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=fitzpaynea>; LeCompte, Jenni </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=engebretsenj>; Murray, Colleen </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=murrayco>; Coloretti, Nani </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=colorettin> CFPB Press Clips 5/6 Fri May 06 2011 12:19:54 EDT

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Press Clips 5/6/2011

Index

Click publication title to find its location in this e-mail. Click article title to go to its source website.

Senate and CFPB Director Nomination Bloomberg Senate Republicans Plan to Block Consumer Bureau Nominee American Banker Senate GOP Move Likely to Force Recess Appointment at CFPB New York Times Foes Revise Plan to Curb New Agency Wall Street Journal Consumer Agency Stymied by GOP

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Wall Street Journal (blog) GOP Senators to Obama: Reshape Consumer Bureau or Else The Hill (blog) Democrats respond to GOPs Consumer Bureau threat

The Hill (blog) Groups use GOP threat on Consumer Bureau to make fresh push for Warren nomination Dow Jones Newswires Group Urges Obama To Swiftly Tap Warren For Consumer Bureau Politico Morning Money First Look: Left Pushes Back on Warren

Los Angeles Times Senate Republicans vow to block any appointee to head consumer protection bureau Washington Post GOP senators vow to block CFPB nominee Politico Senate GOP: Well block consumer protection nominee Reuters Senate Republicans draw line on consumer watchdog

American Banker Senate GOP Vows Not to Confirm Any CFPB Nominee Without Agency Changes Associated Press Senate GOP wont vote for consumer protection head Roll Call Senate GOP Pledges to Block Nominee Without Changes to Consumer Agency USA Today Senate GOP vows to block consumer financial watchdog if powers not curbed Firedoglake Richard Shelby Gives Boost to Elizabeth Warrens Nomination for CFPB Huffpost Hill GOP Hating On The CFPB Naked Capitalism Republicans to Consumer Financial Protection Bureau: Drop Dead

Consumer Financial Protection Bureau Mother Jones Has Elizabeth Warren Won Over the Banks? Baseline Scenario Nominate Elizabeth Warren Provide The Pecora Hearings We Need Reverse Mortgage Daily Quote-Worthy: Bachus Says CFPB Leadership Structure is Radical Housing Wire GAO pressures CFPB for federal foreclosure oversight Associated Press Holly Petraeus to meet with Fort Bragg families The Diane Rehm Show The Future of the Consumer Financial Protection Bureau Point of Law Staffing Advice to a President Point of Law The Battle over the CFPB Politico Reform still lets banks play roulette

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Consumer Credit Bloomberg Errors in Credit Reports Rare, Study Funded By Industry Says New York Times (blog) The Case Against 111-Page Checking Account Disclosures Los Angeles Times Early withdrawals from CDs get more expensive at Bank of America American Banker Fewer Than 2,500 Banks by 2021, Valley Nationals Lipkin Predicts

Housing Huffington Post Banks Illegally Foreclosed On Dozens Of Military Borrowers, Federal Investigators Say Washington Post More home buyers should put faith in good-faith estimate

Bloomberg Senate Republicans Plan to Block Consumer Bureau Nominee May 6, 2011 By Phil Mattingly and Carter Dougherty

U.S. Senate Republicans told President Barack Obama they will block any nominee to lead the Consumer Financial Protection Bureau unless Democrats agree to change the agencys structure and funding.

The warning, delivered in a letter to the White House, adds to the uncertainty surrounding the agency, created by the Dodd- Frank Act last year over the objections of Republican lawmakers and financialindustry lobbyists.

Forty-four Republican senators, led by Richard Shelby of Alabama, the top Republican on the Banking Committee, signed the May 2 letter made public yesterday. They wrote that they want the agencys director to be replaced by a board of directors, its funding brought under congressional control and its operations subject to more oversight from other bank regulators.

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No person should have the unfettered authority presently granted to the director of the Consumer Financial Protection Bureau, the senators said in the letter signed by Republicans including Minority Leader Mitch McConnell of Kentucky. We believe that the Senate should not consider any nominee to be CFPB director until the CFPB is properly reformed.

Democrats control 53 of the 100 votes in the Senate, so the 44 Republican signatures ensure they wouldnt be able to garner the 60 needed to overcome objections to a nominee.

Payday Lenders

The consumer bureau was conceived as a response to what proponents said was the failure of existing regulators to protect consumers from risky financial products that contributed to the credit crisis. Under Dodd-Frank, the bureau has authority to regulate products financial firms from the biggest banks to mortgage originators and payday lenders.

Banking lobbyists fought the idea from its inception, arguing that an agency separate from prudential regulators would threaten the safety and soundness of the banks. Financial firms have expressed concern that the bureaus rules will limit the products they can offer or result in new regulatory compliance costs. Recently, for example, agency officials said they would consider restrictions on credit -card debt-protection products, from which big card issuers earned $2.4 billion in 2009.

The structural changes proposed by the senators in their letter echo proposals advancing in the Republican-controlled House. Banks including Bank of America Corp. (BAC), Citigroup Inc. (C) and Capital One Financial Corp. (COF) have lobbied on the legislation, according to public filings. Two financial industry trade groups, the American Bankers Association and the Consumer Bankers Association, have done the same, the filings show.

Elizabeth Warren

Republicans fought the creation of a strong consumer watchdog from the start and now they are at it again, Senate Banking Committee Chairman Tim Johnson, a South Dakota Democrat, said in a statement yesterday.

Obama hasnt nominated a director for the consumer agency. Last year he named Harvard University law professor Elizabeth Warren as an adviser to set up the bureau after then-Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, said she couldnt get the 60 votes needed to be confirmed as director.

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Treasury Secretary Timothy F. Geithner set July 21 as the date the agency would start operations as an independent agency. The Republican move leaves Obama with the choice of missing that deadline, acceding to the demands or going around the lawmakers by making a temporary appointment during a congressional recess.

Senates Authority

Shelby, in a statement yesterday, said a recess appointment would undercut the Senates authority.

Senate confirmation is about accountability and giving the American people a voice in the process, Shelby said. I would hope the president wont silence the peoples voice.

Two Republican senators -- Scott Brown of Massachusetts and Lisa Murkowski of Alaska -- didnt sign the letter to Obama.

Warren, who has been criticized by banks and Republicans for her role in a 50-state investigation of the mortgage industry by state attorneys general, hasnt been ruled out by the White House as a candidate for the permanent post.

The consumer agency has been a polarizing entity since the idea was first included in the Obama administrations financial overhaul proposal in June 2009. The U.S. Chamber of Commerce pledged millions of dollars to kill the bureau, running campaign advertisements and working a grassroots campaign that resulted in more than 200,000 letters designed to sway lawmakers thought to be on the fence.

Initially drafted as a standalone agency, Dodd reached a compromise to place the bureau inside the Federal Reserve in an effort to appease Republican critics. In the end, only three Republicans voted for the final measure.

Jamie Dimon

Since the passage of Dodd-Frank, banks and the business lobby have focused on changing the bureau s structure. Jamie Dimon, chairman and chief executive officer of JPMorgan Chase & Co. (JPM) addressed its creation in a letter to shareholders last month that noted his concerns about a standalone agency.

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It has been widely reported that we were against the creation of a Consumer Financial Protection Bureau (C.F.P.B.), Dimon wrote in the April 4 letter. We were not -- we were against the creation of a standalone C.F.P.B., operating separately and apart from whatever regulatory agency already had oversight authority over banks.

The Obama administration, which touted the bureau as one of the cornerstones of the regulatory overhaul, remains committed its independence, according to Amy Brundage, a White House spokeswoman.

Special Interests

For far too long, American consumers have fallen victim to fraud, misleading claims, and powerful special interests and the President believes that American families who were the hardest hit by this financial crisis deserve an independent watchdog to protect consumers and prevent predatory lending and other abuses in the future, Brundage said in an e-mailed statement.

Frank Keating, the head of the American Bankers Association, endorsed the move by Senate Republicans.

We appreciate and support the 44 senators who are calling for structural changes to the CFPB before considering any nominee, Keating said in an e-mailed statement. These commonsense reforms strike the right balance and provide a critical check on the bureaus broad authority.

Travis Plunkett, director of legislative affairs for the Consumer Federation of America, said giving in to the Republican demands would give big banks extraordinary power over the bureaus operations even before it begins work.

The measures that the senators are demanding were all considered and rejected by Congress last year, Plunkett said in an interview.

Back to Top

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American Banker Senate GOP Move Likely to Force Recess Appointment at CFPB May 6, 2011 By Kate Davidson and Cheyenne Hopkins

WASHINGTON Senate Republicans' vow not to confirm any permanent director for the Consumer Financial Protection Bureau unless changes are made to the agency's structure and funding is likely to push the Obama administration to make a recess appointment to the job.

In a joint letter to the president, 44 Senate Republicans more than enough to maintain a filibuster of a nominee said they would not support any candidate unless Congress enacted legislation that would replace the agency's director with a commission, subject the bureau to the appropriations process and allow banking regulators the power to override the CFPB.

The letter leaves the president with virtually no other option than to recess-appoint a CFPB director.

"This guarantees that we are going to have a recess appointment of a CFPB director," said Jaret Seiberg, an analyst for MF Global Inc.'s Washington Research Group. "Even if the administration wanted to work on legislative changes to the CFPB to address some of these concerns, there is not close to enough to time to really get something done and get a nominee confirmed prior to the Independence Day recess."

Mark Calabria, a former top aide to Sen. Richard Shelby, the top Republican on the Banking Committee, agreed. "What it means to me is that [the administration] is going to go the recess route," said Calabria, now director of financial regulations studies at the Cato Institute. "It forces the administration's hand."

Ironically, the move may have had made it easier to put Elizabeth Warren in the job at least temporarily. Warren, the administration's point person in setting up the new agency, is widely expected to be nominated soon, although it's clear the administration has been having second thoughts about doing so.

In choosing Warren, the administration would have set itself up for a very difficult confirmation fight. But the Republicans' vow to oppose any nominee, regardless of whether it was Warren or someone else,

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effectively frees up the administration. Since it knows any nominee is doomed unless it agrees to GOP demands, there is no need to try and find a more politically acceptable candidate.

"Essentially what the Republicans are doing with a statement like this is not daring the president to do a recess appointment, but giving the president every reason to do so," said Rick Fischer, a partner at Morrison & Foerster LLP. "If he wants to do it anyway, but he's been told that would not go over well, this provides him both the opportunity and the excuse to do so."

A recess-appointed director can serve only until the end of the current legislative term, and this move will punt the confirmation of a CFPB director until 2013, Seiberg said, at which point Republicans hope to have won back the White House and regained the majority in the Senate. For now, Seiberg said, they are flexing their political muscle to rein in the CFPB before it officially assumes its authority, on July 21.

"This is a basic demonstration of political power," he said. "The administration is going to have to moderate its goals if it wants to have somebody put into the director's job on a permanent basis."

Senate GOP members are in effect refighting a battle they lost during the Dodd-Frank debate, when Shelby and others attempted to put restrictions on the CFPB, including allowing bank regulators more leeway to overrule its decisions.

In the letter, Republicans said Dodd-Frank failed to provide any real check on the director's power. And while the Financial Stability Oversight Council may overrule the bureau's decisions, Republicans said the circumstances under which they may do so are "so narrow as to make this check illusory."

In particular, Republicans want to replace the director with a commission. They also say Congress should oversee the CFPB's budget. Under Dodd-Frank, the agency is funded by the Federal Reserve Board.

"This is about accountability," Shelby said in a press release. "The bureau, as currently structured, lacks any semblance of the checks and balances inherent in the Constitution. Everyone supports consumer protection, but we should never entrust a single person with this much power and public money. We are simply asking the president to support common-sense reforms that provide the accountability absent in the current structure."

But Senate Banking Committee Chairman Tim Johnson said Republicans were trying to rewrite history.

"Republicans fought the creation of a strong consumer watchdog from the start, and now they are at it

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again," the South Dakota Democrat said in a press release. "The truth is this bureau is already subject to greater checks and balances than any other financial regulator and this is just another attempt by Republicans to delay and derail these critical new protections."

A White House spokeswoman said that "last year, the president signed into law the strongest consumer protections in history and the consumer agency's sole mission is to protect American families and provide the tools they need to make smart financial decisions.

"For far too long, American consumers have fallen victim to fraud, misleading claims, and powerful special interests and the President believes that American families who were the hardest hit by this financial crisis deserve an independent watchdog to protect consumers and prevent predatory lending and other abuses in the future," said Amy Brundage, the White House spokeswoman.

Consumer groups were outraged that Republicans would seek to use the nomination process in such a way. "It's an absurd position to take, saying, 'We will refuse your right as president to choose a nominee unless you rewrite legislation enacted last year,' " said Ed Mierzwinski, the consumer program director for the U.S. Public Interest Research Group. "I just cannot believe what kind of demand that is. I've never seen that kind of demand before."

Travis Plunkett, a legislative director for the Consumer Federation of America, called the move shocking. "What they appear to be doing is holding the nomination hostage in return for concessions that would cripple the agency," he said. "I didn't expect that. It's a brazen effort to renegotiate legislation that's in place and being implemented."

Back to Top

New York Times Foes Revise Plan to Curb New Agency May 5, 2011 By Edward Wyatt and Ben Protess

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WASHINGTON After losing a contentious battle last year over creating an agency to protect consumers against deceptive financial products, Republicans are fighting the battle again, determined to rein in the independence and financing of the agency.

The Consumer Financial Protection Bureau has been one of Washingtons drawn-out passion plays, featuring bankers and finance companies that want to undermine the agency and have villainized Elizabeth Warren, the hard-edged Harvard law professor President Obama picked to start it.

Ms. Warren has characterized the fight as one in which opponents are trying to stick a knife in the ribs of the agency. In a recent interview, she said, the fight has now shifted. It didnt stop, it just moved from being a fight out in the headlines, out in the middle of the street, to a fight in the back alleys.

But on Thursday, the fight returned to the open as 44 Senate Republicans sent a letter to Mr. Obama saying they will not support the consideration of any nominee, regardless of party affiliation, to direct the bureau until the agency is restructured.

With 44 of 47 Republican senators digging in against the bureau, Democrats would be unable to gather the 60 votes necessary to end a filibuster and bring a vote on a nominee for director of the agency. That leaves the president with the option of a recess appointment, a move that would anger legislators whose support the president is likely to need to tackle other issues, like cutting the deficit and raising the debt ceiling.

Already, three bills are pending in the House of Representatives to alter the agencys charter, making it easier for other regulators to overturn the bureaus rules and replacing its director with a five-person commission.

This is about accountability, said Senator Richard Shelby of Alabama, the ranking Republican member of the Senate Banking Committee. The bureau, as currently structured, lacks any semblance of the checks and balances inherent in the Constitution. Everyone supports consumer protection, but we should never entrust a single person with this much power and public money.

The White House defended the agencys structure, saying it provided the strongest consumer protections in history.

The consumer agencys sole mission is to protect American families and provide the tools they need to make smart financial decisions, said Amy Brundage, a White House spokeswoman. For far too long, American consumers have fallen victim to fraud, misleading claims and powerful special interests, and the president believes that American families who were the hardest hit by this financial crisis deserve an independent watchdog to protect consumers and prevent predatory lending and other abuses in the future.

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While the rhetoric surrounding the fight over the consumer bureau has recently focused on its structure, behind the scenes it has been as much about Ms. Warren, who was widely believed to be unable to pass confirmation in the Senate last year. As an alternative, Mr. Obama appointed Ms. Warren last September as a special adviser to oversee the standing up of the agency, and she has hired officials who will carry out the regulation of mortgage loans, credit cards, payday lenders and other sellers of financial products.

But until the bureau has a formal director, it cannot write rules governing consumer finance or begin overseeing previously unregulated agencies like payday lenders.

In some ways, Ms. Warrens own celebrity might be getting in the way of that effort. She is a dynamic public speaker who has for years championed the right of the middle class to receive plain-English explanations of often-complex financial products. But that effort has drawn criticism from some bankers, who feel she has unfairly accused them of exploiting consumers.

Several candidates for director of the bureau have reportedly turned down the opportunity, with at least one saying that she thought Ms. Warren should get the job. As the delay in selecting a nominee has lengthened, supporters of Ms. Warren have characterized her nomination as inevitable.

Theres no doubt that the fact shes there has made it more complicated to recruit a director, said an Obama administration official who spoke on the condition of anonymity and who was not authorized to discuss the search process. Shes done a terrific job attracting talent to the agency, the official said. But recent efforts by supporters to portray her as the putative nominee are proving mildly counterproductive, the official said.

Ms. Warren herself has deflected speculation about her taking the job, saying it is for the president to decide.

For much of the last few weeks, Ms. Warren has been speaking publicly about what she calls attacks on the consumer agency. Every day, somebodys got a plan to undercut this agency, to knock it down, she said. The conversation is effectively: Oh, wed really like to kill this thing but it might be too popular for that that might cause too much blowback. So can we find a way to maim it?

Republicans have complained that the bureau, which is to be housed in the Federal Reserve and whose budget is independent of Congressional oversight, has broad powers but does not have to answer to anyone. Republican opponents say they are simply trying to ensure that the agency does not interfere with other regulators that look after the safety and soundness of banks and financial institutions.

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The Senate group urged the establishment of a board of directors to oversee the bureau, and a House bill similarly calls for the establishment of a five-member commission. A board structure would be similar to the Federal Reserve, the Federal Trade Commission and the Federal Deposit Insurance Corporation agencies whose consumer oversight will be shifted to the new consumer bureau on July 21, a year after President Obama signed the Dodd-Frank bank regulation act into law.

Legislators also have called for the consumer bureau to be subject to the Congressional appropriations process. As established, its budget is set as a percentage of the Federal Reserves budget and is not subject to approval by Congress.

Consumer groups responded angrily Thursday to the Republican letter. Its sort of breathtaking, said Lisa Donner, executive director of Americans for Financial Reform, which lobbied for the creation of the consumer bureau. Theyre saying, Were not O.K. with an effective consumer bureau.

In spite of the continued resistance, Ms. Warren is moving ahead with efforts to begin the consumer agencys work. Later this month, it is to begin circulating drafts of new consumer mortgage forms that combine two complicated documents that consumers are required to receive as part of a home purchase into a single form that the agency hopes will be easier for homebuyers to understand.

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Wall Street Journal Consumer Agency Stymied by GOP May 6, 2011 By Deborah Solomon

Republican senators effectively blocked President Barack Obama's ability to nominate a director for the new consumer financial-protection agency, saying they won't confirm anyone for the postregardless of party affiliationunless the agency is restructured.

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The move makes it likely Mr. Obama will resort to a so-called recess appointment, tapping someone to run the Consumer Financial Protection Bureau when Congress is out of session. The agency needs a confirmed director in place by July 21 or, according to the legislation that established the agency, its new powers to attack fraudulent and abusive financial practices can't be put into effect.

The GOP threat could also spur the White House to appoint Elizabeth Warren, a longtime critic of the financial-services industry who pushed to create the agency and is currently helping to set up the agency as an adviser to Mr. Obama. The White House has shied away from nominating Ms. Warren for fear she couldn't win confirmation. But she remains popular with many Democrats, particularly those in the left wing of the party.

A spokeswoman for the agency declined to comment.

In a blunt letter to Mr. Obama, 44 Republican senators said they won't confirm anyone for the post because the agency lacks accountability and its director would enjoy too much unfettered power. Since Senate confirmation requires 60 votes, the Republican resistance ensures no nominee will be confirmed.

"The present structure of the Consumer Financial Protection Bureauviolates basic principles of accountability and our democratic values," the letter states.

Senate Banking Chairman Tim Johnson (D., S.D.) blasted the Republican position, calling it "just another attempt by Republicans to delay and derail these critical new protections."

The GOP ultimatum is the latest hurdle for the nascent agency, which was created to police consumer financial products, such as credit cards and mortgages, when Congress passed last year the DoddFrank financial-regulation overhaul.

The agency, which is opposed by many business groups, is under attack on Capitol Hill where Republicans are seeking to replace its director post with a five-member commission, give Congress authority over its funding and make it easier to overturn its rules. This week, several bills aimed at weakening the agency passed a House subcommittee.

Much of the ire has been directed toward Ms. Warren. But the GOP senators made clear it doesn't matter if the White House nominates her or anyone else, saying they won't support anyone for the post until changes are made.

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The changes they seek include establishing a board to oversee the agencyrather than a single individualand subjecting the agency's budget to the appropriations process rather than having its funding come from the Federal Reserve.

The White House is unlikely to support those changes. Administration officials say the agency is subject to oversight, including annual reports to Congress justifying its budget.

Amy Brundage, a White House spokeswoman, said the agency's "sole mission is to protect American families and provide the tools they need to make smart financial decisions.The president believes that American families who were the hardest hit by this financial crisis deserve an independent watchdog to protect consumers and prevent predatory lending and other abuses in the future. "

The administration has been struggling to find a director to lead the agency, with several candidates rebuffing its overtures.

The White House has unsuccessfully reached out to Democrats such as former Michigan Gov. Jennifer Granholm and former Delaware Sen. Ted Kaufman, as well as attorneys general from Iowa, Illinois and Massachusetts, according to people familiar with the matter. Others under consideration for the post include Democratic former Ohio Gov. Ted Strickland and Federal Reserve Board member Sarah Bloom Raskin.

Many on the left want Ms. Warren to have the director's job, and some potential candidates have expressed concern that accepting the post could be seen as stepping on her toes.

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Wall Street Journal (Washington Wire blog) GOP Senators to Obama: Reshape Consumer Bureau or Else May 5, 2011 By Maya Jackson Randall

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The White House has been trying for months to decide who should head the new Consumer Financial Protection Bureau.

Senate Republicans have now told President Barack Obama not to bother making a nomination unless the administration is ready to reshape the new agency.

The letter is signed by 44 GOP senators, a group big enough to block Democrats from approving any candidate for the job, a key position established by the Dodd-Frank financial overhaul law that Congress passed last year.

With that, the White Houses options appear slim: It can bypass a Senate confirmation vote by making a recess appointment or it can negotiate with the lawmakers.

At this point, administration officials havent signaled any willingness to revisit Dodd-Frank. The agency is being set up by Elizabeth Warren, a longtime advocate for establishing a consumer bureau who is widely opposed by Republicans.

In releasing the letter, Senate Republican Leader Mitch McConnell (R., Ky.) said in a statement that The reforms outlined are necessary before we will consider any nominee to head this agency.

The GOP lawmakers want the bureau to be run by a commission rather than a single director. They also want to make sure its budget gets congressional scrutiny, and that financial regulators can ensure that the bureaus regulations dont cause bank failures.

Republican lawmakers have argued that the Consumer Financial Protection Bureau has way too much power over the financial industry but too little accountability and congressional oversight. A U.S. House subcommittee on has already signed off on a slew of bills that would rework the agencys structure.

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The Hill (On The Money blog) Democrats respond to GOPs Consumer Bureau threat May 5, 2011 By Peter Schroeder

Democrats responded to a Republican threat to block any nominee to head the new Consumer Financial Protection Bureau (CFPB) by saying Americans deserved the new watchdog and the GOP should not restart the battle over Wall Street reform.

In a letter sent to the president Thursday, a bloc of 44 Republican senators vowed to block any nominee to be the first director of the agency until some of the CFPB's new powers were checked. They argued the new bureau, which they fiercely opposed during the debate over the Dodd-Frank financial reform law, enjoys an unprecedented reach without proper Congressional oversight.

But the White House responded to the threat by saying the American people deserved the new protections the CFPB is designed to provide.

"The consumer agencys sole mission is to protect American families and provide the tools they need to make smart financial decisions," said White House spokeswoman Amy Brundage. "For far too long, American consumers have fallen victim to fraud, misleading claims, and powerful special interests and the President believes that American families who were the hardest hit by this financial crisis deserve an independent watchdog to protect consumers and prevent predatory lending and other abuses in the future." And Senate Banking Committee Chairman Tim Johson (D-S.D.) said Republicans were "at it again" with their threat, revisiting a battle they lost during the Dodd-Frank debate over the existence of the CFPB.

"The truth is this bureau is already subject to greater checks and balances than any other financial regulator and this is just another attempt by Republicans to delay and derail these critical new protections," he said. Republicans in Washington may want to use revisionist history, but Americans havent forgotten that the recession was caused in part by predatory lenders and bad actors on Wall Street.

In their letter, Republicans said they would stand in the way of any nominee until specific changes were made to the CFPB. They demanded the top of the agency be remade so it is run by a board of directors instead of a single director and that the agency's budget be brought under the Congressional appropriations process. They also said other regulators should have an easier time overruling the CFPB if its regulations endanger the health of banks.

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The Hill (On The Money blog) Groups use GOP threat on Consumer Bureau to make fresh push for Warren nomination May 6, 2011 By Peter Schroeder

A Senate GOP vow to block any nominee to head the new Consumer Financial Protection Bureau (CFPB) seems to have re-ignited a push from consumer groups to call for CFPB architect Elizabeth Warren to be named to the position as soon as possible and by any means necessary.

On Thursday, a filibuster-proof bloc of 44 Republican senators told the president they would block any nominee to head the new bureau unless major changes were made to rein in its power.

A pair of consumer groups responded to the letter Friday by calling on the president to nominate Warren as director, and to circumvent the Senate confirmation process by using a recess appointment if necessary.

Warren, currently a special adviser to the president in charge of setting up the CFPB, is a longtime favorite of progressives and consumer groups, but has been subject to strong criticism from Republicans. The White House has reportedly been reluctant to nominate her as the agency's inaugural director over concerns that conservatives in the Senate would block the selection. The consumer advocacy group Public Citizen said the GOP vow is simply a ploy to discredit the bureau before it goes live in July.

The group argues that the GOP move will force the president to make a recess appointment for the director position, which "they will use to claim that he and the agency are unaccountable and undemocratic."

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The group called on the president to use the move as an opportunity to nominate Warren to the post.

"The Senate Republicans strategic gambit likely leaves Obama no choice but to appoint a CFPB director during a Senate recess," said David Arkush, director of the group's Congress Watch division. "It also leaves him no reason to appoint anyone but the strongest candidate: Elizabeth Warren. That is a good thing."

The group Americans for Financial Reform similarly called on the president to respond to the GOP threat by advancing Warren.

"We urge the President to stand up to this bullying, to swiftly nominate Professor Warren to lead the Consumer Bureau, and to make a recess appointment if the Senate refuses to act," the group said in a statement.

In their letter, the Republican senators demanded three major changes be made to the CFPB before they would be willing to consider a director nominee. They want to establish a board of directors to run the agency instead of a lone director, bring the agency's budget under the congressional appropriations process, and make it easier for other regulators to overturn CFPB rules if they deem them to be harmful to banks.

The lawmakers argue these changes would bring the agency's "unchecked authority" under control and make it more accountable.

But Americans for Financial Reform contended the changes would stifle the agency before it even begins work in July.

"If the signers of this letter got their way the CFPB would be put back under the thumb of the regulators who failed to stand up for consumers so spectacularly the last time. It would be doomed to failure before it even began," the group said.

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Dow Jones Newswires Group Urges Obama To Swiftly Tap Warren For Consumer Bureau May 6, 2011 By Maya Jackson Randall

A coalition of consumer, labor and civil rights groups Friday urged President Barack Obama to "swiftly" nominate White House adviser Elizabeth Warren to lead the new consumer financial-protection agency and then appoint her to the post if the Senate fails to sign off on the nomination.

The statement from Americans for Financial Reform comes in wake of news Thursday that Senate Republicans plan to block whomever the president nominates to spearhead the Consumer Financial Protection Bureau unless the bureau is restructured in several ways.

Meanwhile, the consumer bureau's July 21 launch is fast-approaching. If the agency doesn't have a director by then, its powers to fight abusive financial practices will be limited.

"We urge the president to stand up to this bullying, to swiftly nominate Professor Warren to lead the consumer bureau, and to make a recess appointment if the Senate refuses to act," said Americans for Financial Reform Executive Director Lisa Donner.

Donner argued that Senate Republicans are trying to keep the consumer bureau from helping consumers in the financial marketplace. If the changes proposed by Republicans were made, the consumer bureau "would be doomed to failure before it even began," she said.

Meanwhile, Obama administration officials have been cool to many of the changes Republicans are proposing, arguing that the consumer agency already has significant oversight and accountability.

In a letter to Obama, 44 Senate Republicans--nearly all of the chamber's Republicans--said they would not support any nominee for the consumer bureau director post unless the agency is reworked so that its funding faces congressional scrutiny, its director position is replaced by a board and its actions can be overturned by other regulators.

Republicans, who have opposed the creation of the new bureau, say the changes would make the

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bureau more accountable.

But consumer advocates see it as an effort to weaken the bureau before it starts up as a new financial markets cop on July 21.

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Politico Morning Money First Look: Left Pushes Back on Warren May 6, 2011 By Ben White

FIRST LOOK: LEFT PUSHES BACK ON WARREN - From Americans for Financial Reform statement going out later today reacting to a letter from a filibuster-proof bloc of 44 GOP Senators saying they will not support any nominee for the CFPB until the structure of the agency is changed (read: dramatically weakened): They are essentially declaring that they want to keep the CFPB from doing its job: standing up for consumers in the financial marketplace, said Lisa Donner, Executive Director of [AFR]. Deceptive and abusive mortgage lending allowed to continue by the existing regulators was a fundamental cause of the financial crisis, and of the worst recession since the Great Depression.

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Los Angeles Times Senate Republicans vow to block any appointee to head consumer protection bureau They say major changes must be made to the agency's structure before they will vote to confirm a candidate. Consumer advocates say the changes would gut the bureau's power. May 6, 2011 By Jim Puzzanghera

Nearly all Republican senators vowed to block any Obama administration nominee to head the new Consumer Financial Protection Bureau unless major changes are made to the agency's structure.

The move threatens to hobble the powerful agency created last year to protect consumers in the financial marketplace as it prepares to begin operations in July. The bureau was the centerpiece of last year's sweeping overhaul of financial regulations legislation opposed by most Republicans and industry leaders.

President Obama still has not nominated a director, a five-year appointment that must be confirmed by the Senate. In all, 44 Republicans enough to block confirmation signed a letter about their demands and sent it to Obama on Thursday.

Among the changes, the Republicans want to replace the director position with a multi-member board, subject the bureau's funding to annual congressional review and allow other financial regulators to block the agency's actions more easily.

Administration officials, congressional Democrats and consumer advocates have said those changes would gut the bureau's power.

They argued that a strong, independent agency was needed because banking regulators were more concerned about the health of financial firms than about consumer abuses, such as subprime mortgages, in the years leading up to the housing market crash.

"For far too long, American consumers have fallen victim to fraud, misleading claims and powerful special interests, and the president believes that American families who were the hardest hit by this financial crisis deserve an independent watchdog to protect consumers and prevent predatory lending

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and other abuses in the future," White House spokeswoman Amy Brundage said.

Obama appointed Harvard Law professor Elizabeth Warren last year as an administration advisor to help set up the bureau. But he did not nominate the outspoken consumer advocate as director because of concerns that Senate Republicans would block her confirmation.

The president could circumvent Senate confirmation by making a so-called recess appointment when Congress is on break. But that person could only serve until the end of next year.

Warren, who originally proposed the idea of a consumer agency in 2007, could be that appointment now that Senate Republicans have vowed to block anyone, even a fellow Republican.

"The bureau, as currently structured, lacks any semblance of the checks and balances inherent in the Constitution," said Sen. Richard C. Shelby (R-Ala.), who helped organize the letter. "Everyone supports consumer protection, but we should never entrust a single person with this much power and public money."

Shelby said a recess appointment "would silence the people's voice."

Frank Keating, president of the American Bankers Assn., said he supported the move by the Republican senators. "These common-sense reforms strike the right balance and provide a critical check on the bureau's broad authority," he said.

One leading consumer advocate said the move by the Senate Republicans amounted to extortion.

"This is the biggest case of sour grapes I've ever seen in my life," said Travis Plunkett, legislative director for the Consumer Federation of America. "This is a minority of the Senate attempting to extort legislative changes that they failed to get last year or they'll try to assure the new bureau never opens its doors."

Two of the senators who signed the letter Susan Collins and Olympia J. Snowe, both of Maine provided key votes to help pass the financial overhaul bill last year. Their offices did not respond to requests for comment.

A third Republican crucial to the bill's passage, Scott Brown of Massachusetts, did not sign the letter. Sen. Lisa Murkowski (R-Alaska) was the only other Senate Republican who did not sign the letter.

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There is one Senate vacancy after former Sen. John Ensign (R-Nev.) stepped down Tuesday.

After taking control of the House in January, Republicans began pushing to weaken the consumer agency. A House Financial Services subcommittee voted along party lines Wednesday to approve three bills to change the agency's structure.

The bills would replace the director with a bipartisan five-member commission, make it easier for other regulators to veto the agency's actions and prevent it from exercising its new authority until a Senateconfirmed director is in place. But those bills are likely to be blocked by the Democratic majority in the Senate, and probably would be vetoed by Obama even if they did pass.

Like other banking regulators, the new consumer agency is not funded through congressional appropriations. The agency will receive its money directly from the Federal Reserve, where it will be housed. But the Fed will have no control over the agency.

The White House and congressional supporters of the agency set up the independent funding to prevent it from being starved of money, as has happened in the past with other regulators.

Under the law, Treasury Secretary Timothy F. Geithner heads the consumer agency until a director is confirmed. He has delegated that authority to Warren, a special advisor to the White House and the Treasury Department who has been hiring staff and readying the bureau for operation.

A Warren spokeswoman had no comment on Thursday's letter. But Warren spoke out this week against the changes being considered by House Republicans.

"Many in Congress have made clear their intention to defund, delay and defang the consumer agency before it can help one family," she said.

"These bills are about preventing the CFPB from operating effectively a dangerous game to play in light of recent lessons in the marketplace and how quickly financial threats to consumers emerge," she said.

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Washington Post GOP senators vow to block CFPB nominee May 5, 2011 By Ylan Q. Mui

Republican senators vowed Thursday to block any nominee to lead the fledgling Consumer Financial Protection Bureau unless stronger limits are put on its power, in the latest blow in a long-running battle to rein in the watchdog agency before it officially launches this summer.

In a letter to President Obama, 44 lawmakers called for a board of directors to run the agency, rather than a single leader. The letter also demanded tougher oversight of the CFPB by existing banking regulators, such as the Financial Stability Oversight Council, and that the new agency be funded by congressional appropriations. Under the current structure, the CFPBs budget is carved from the Federal Reserve.

How the CFPB director exercises his or her authority ... will have a profound influence on the future of our economy and job creation, the letter said. Lead signatories were Senate Minority Leader Mitch McConnell (R-Ky.) and Sen. Richard C. Shelby (Ala.), ranking Republican on the Senate banking committee.

The proposals mirror three bills passed by the House Financial Services Committee a day earlier. Rep. Sean P. Duffy (R-Wis.), who sponsored one of the bills, said he believed that the movement here on both sides of the aisle is to make sure we have a system thats going to work for our consumers.

But consumer advocacy groups lashed out at the proposals, arguing that they would give banks undue influence over the CFPB and jeopardize its independence.

Enactment of these measures would virtually guarantee that the CFPB would be a weak and timid agency, said Travis Plunkett, legislative director for the Consumer Federation of America.

In response to the letter, a spokeswoman for the White House reiterated the need for an independent watchdog. Obama is under pressure to name a director for the agency before it opens for business July 21.

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Harvard law professor Elizabeth Warren, in charge of setting up the CFPB, is considered a leading candidate, but she is disliked by many Republicans and financial industry officials. Any nominee will face a tough confirmation battle in the Senate. The president could appoint a head while the Senate is in recess, but that person would only be allowed to stay in the position until next year.

Republicans in Washington may want to use revisionist history, but Americans havent forgotten that the recession was caused in part by predatory lenders and bad actors on Wall Street, said Senate banking committee Chairman Tim Johnson (D-S.D.).

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Politico Senate GOP: Well block consumer protection nominee May 5, 2011 By Meredith Shiner

Forty-four Republican senators sent a letter to Barack Obama Thursday threatening to vote down whomever the president nominates to run the new Consumer Financial Protection Bureau unless the administration overhauls the agencys regulatory powers.

The new agency which GOP lawmakers have opposed since its inception has been without a permanent head and is in the process of being set up by special adviser Elizabeth Warren. If a director is not appointed by July, the agencys one-year anniversary, the bureau will lose certain powers, including the authority to supervise non-bank lenders.

The CFPB as created by the deeply-flawed Dodd-Frank Act is set to be one of the least accountable and most powerful agencies in Washington, Minority Leader Mitch McConnell said. Todays letter delivers a commitment by 44 Republican Senators to fix the poorly-thought structure of this agency that will have unprecedented reach and control over individual consumer decisionsbut an unprecedented lack of oversight and accountability. The reforms outlined are necessary before we will consider any

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nominee to head this agency.

The Republicans laid out three specific, common sense reforms they would like to see in the CFPBs structure before they will commit to voting on any presidential nominee. The GOP told the president they would like to see a board of overseers to replace the director position, to prevent a single person from dominating the Bureau and provide a critical check on the Bureaus authority.

They also want the agency to be subject to the congressional appropriations process. As it stands now, the bureau is contained within the Treasury, which receives congressional funds but can direct them within the body at its own discretion. Lastly, the Republicans want to establish a safety-and-soundness check for regulators because they fear excessive regulations would needlessly cause bank failures.

The president declined to name a permanent director last September, choosing instead to make Warren a controversial figure in her own right a special adviser to Treasury Secretary Timothy Geithner. At the time, it was clear that a confirmation battle would re-litigate the existence of the agency and that it would be difficult to get a nominee through the formal confirmation process.

Despite the Republican threat to block any nominee, Obama could use one of the upcoming congressional breaks such as Memorial Day or Fourth of July to circumvent the formal confirmation process and recess-appoint the CFPBs director. Such a move clearly would cause a stir among congressional Republicans, but they would not be able to stop the installation of the director.

This about accountability. The bureau, as currently structured, lacks any semblance of the checks and balances inherent in the Constitution, said Senate Banking Committee ranking member Richard Shelby (R-Ala.). Everyone supports consumer protection, but we should never entrust a single person with this much power and public money. We are simply asking the president to support common sense reforms that provide the accountability absent in the current structure.

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Reuters Senate Republicans draw line on consumer watchdog

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May 5, 2011 By Kevin Drawbaugh

* Senators want changes to structure of new bureau

* Demands resemble bill already approved in House

* Letter to Obama signed by 44 Republican senators

WASHINGTON - Forty-four U.S. Republican senators vowed on Thursday to vote against any White House nominee to head a new consumer watchdog agency without fundamental changes to how it is structured.

The Consumer Financial Protection Bureau, set to open its doors in July, was created by 2010's DoddFrank legislation as part of that law's response to the 2007-2009 financial crisis.

President Barack Obama has not yet nominated a director for it, though the front-runner has long been seen as Elizabeth Warren, an outspoken champion of financial consumer rights who is widely reviled in the banking industry.

The bureau is meant to protect consumers from abusive and misleading mortgages and credit cards, among other financial products and services. Its creation has been opposed since 2009 by Republicans and financial industry interests.

Obama is considering whether to nominate Warren, a Harvard Law School professor who is now working as an administration adviser to help set up the bureau.

The Republicans' demands set up a potentially fierce debate in the Senate over the CFPB, while also perhaps tempting the Obama administration to sidestep a fight by appointing a director while the Senate is in recess.

A House of Representatives panel on Wednesday backed a bill to weaken the CFPB by having it run by a five-member board, not a single director, and making it easier for other financial regulators to block its rules.

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The senators, including Richard Shelby, called for similar changes, as well as for requiring the bureau to ask Congress for a budget each year rather than getting it directly from the Federal Reserve. They made their demands in a letter to Obama, released with their statement.

"The bureau, as currently structured, lacks any semblance of the checks and balances inherent in the Constitution. Everyone supports consumer protection, but we should never entrust a single person with this much power and public money," Shelby said in a statement.

On the possibility of a recess appointment, he said, "Senate confirmation is about accountability and giving the American people a voice in the process. I would hope the president won't silence the people's voice."

Kansas Republican Senator Jerry Moran said he has filed legislation that would replace the CFPB director with a board and subject the agency to the budget appropriations process.

The consumer protection bureau declined to comment.

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American Banker Senate GOP Vows Not to Confirm Any CFPB Nominee Without Agency Changes May 6, 2011 By Kate Davidson

WASHINGTON Senate Republicans effectively declared war on the Consumer Financial Protection Bureau on Thursday when they vowed to block the nomination of any permanent director unless Congress agrees to sweeping changes to the agency's structure.

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In a joint letter to the president, 44 Senate Republicans - more than enough to maintain a filibuster of a nominee urged the adoption of legislation that would replace the agency's director with a fivemember commission, subject the bureau to the appropriations process, and allow banking regulators the power to override the CFPB.

Republicans are essentially re-fighting a battle they lost last year, when they tried and failed to change the structure of the agency during the debate over Dodd-Frank.

"Today's letter delivers a commitment by 44 Republican Senators to fix the poorly-thought structure of this agency that will have unprecedented reach and control over individual consumer decisions but an unprecedented lack of oversight and accountability," Minority Leader Mitch McConnell said in a press release. "The reforms outlined are necessary before we will consider any nominee to head this agency."

Republicans said the director of the new consumer bureau would have unprecedented authority over financial institutions that could limit consumer choice, restrict the availability of credit for consumers and increase the costs of financial products and services. New regulations could also put small businesses and banks at a competitive disadvantage, they said.

The Dodd-Frank Act failed to provide any real check on the director's power, the letter said. While the Financial Stability Oversight Council may overrule the bureau's decisions, Republicans said the circumstances under which they may do so are "so narrow as to make this check illusory."

The Republicans are also seeking to have Congress control the CFPB's budget. Under Dodd-Frank, the agency takes its funds from the Federal Reserve Board.

"This is about accountability," Sen. Richard Shelby, the top Republican on the Senate Banking Committee, said in a press release. "The bureau, as currently structured, lacks any semblance of the checks and balances inherent in the Constitution. Everyone supports consumer protection, but we should never entrust a single person with this much power and public money. We are simply asking the President to support common sense reforms that provide the accountability absent in the current structure."

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Associated Press Senate GOP wont vote for consumer protection head May 5, 2011 By Jim Abrams

Senate Republicans say they will vote against any administration choice to head the new agency designed to protect consumers from harmful financial activities unless changes are made in an agency they say has been given too much power.

Almost every GOP senator, in a letter to President Barack Obama, say, "No person should have the unfettered authority presently granted to the director of the Consumer Financial Protection Bureau." They say the Senate should not consider any nominee to head the agency until it is properly reformed.

The agency was established to protect consumers from problems with mortgages, credit cards and other financial products as part of legislation enacted last year to address some of the banking and Wall Street excesses that led to the recession.

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Roll Call Senate GOP Pledges to Block Nominee Without Changes to Consumer Agency May 5, 2011 By Jessica Brady

Senate Republicans proved Thursday that they have enough votes to filibuster any nominee that President Barack Obama appoints for a consumer protection agency.

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In a letter sent to the president, 44 Republicans called for an overhaul of the Consumer Financial Protection Bureau created by last years financial regulatory reform bill and pledged to block any nominee tapped to lead the agency absent those changes.

The Senators wrote that the CFPB director has unprecedented authority over financial institutions under current law and could threaten to affect every American household by limiting their choices when purchasing financial products.

Despite this broad mandate the Dodd-Frank Act failed to provide any real checks on the CFPB director s powers, the Members wrote. Once confirmed, the director effectively answers to no one.

The GOP lawmakers are calling on Obama to replace the individual director with a board and give Congress oversight by submitting the agency to the appropriations process.

Sens. Scott Brown (Mass.) and Lisa Murkowski (Alaska) were the only Republican Senators who did not sign on to the letter, which was released by Banking ranking member Richard Shelby (R-Ala.).

The CFPB's regulatory powers officially kick in in July, and so far Obama has not named anyone to direct the agency. Elizabeth Warren, a Harvard University law professor, has taken the lead in getting the agency off the ground, and she is widely considered by liberals to be the top choice for the full-time job. It remains unclear, however, whether Warren could win Senate confirmation, and Thursdays letter further complicates the matter.

Shelby urged Obama not to issue a recess appointment to circumvent the confirmation process.

Senate confirmation is about accountability and giving the American people a voice in the process, he said. I would hope the president wont silence the peoples voice.

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USA Today Senate GOP vows to block consumer financial watchdog if powers not curbed May 5, 2011 By Michael Winter

Senate Republicans declared war today on the new Consumer Financial Protection Bureau, vowing to block any of President Obama's nominees unless the director's "unprecedented authority" is curbed.

In a letter to the president, 44 GOP senators wrote that "we will not support the consideration of any nominee, regardless of party affiliation, to be the CFPB director until the structure of the Consumer Financial Protection Bureau is reformed."

The Dodd-Frank Act grants the CFPB director unprecedented authority over financial institutions and main street businesses. The CFPB director will have vast rulemaking, supervisory, investigative and enforcement powers and the authority to regulate any person or business that offers or sells a "financial product or service." This authority will extend to not just traditional financial institutions, but also potentially thousands of entrepreneurs and small businesses.

This authority will directly affect every American household by limiting their choices when purchasing financial products, restricting the availability of credit to consumers, and increasing the cost of goods or services purchased using credit. Furthermore, these regulations could put small banks and businesses at a competitive disadvantage to big banks and businesses, which can more easily absorb compliance costs. How the CFPB director exercises his or her authority therefore will have a profound influence on the future of our economy and job creation.

Only Sens. Scott Brown of Massachusetts and Lisa Murkowski of Alaska did not sign.

The letter, released by Sen. Richard Shelby of Alabama, the ranking Republican on the banking committee, lists three "reforms":

* Establish a board of directors to oversee the CFPB.

* Subject the bureau to the appropriations process.

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* Establish a safety-and-soundness check for the prudential regulators.

A House subcommittee Wednesday advanced three bills that would make those changes. Companion legislation has been introduced in the Senate.

Read the news release and the full letter.

Obama tapped Harvard lawyer Elizabeth Warren to set up the agency but has not named his nominee. She is deeply unpopular with Republicans and the financial industry.

The bureau was created by Congress to provide greater transparency about the true costs of mortgages, student loans, credit cards and other financial products, and to punish violators. Republicans and the money industry have strongly opposed the increased regulation in the wake of the recent financial crisis.

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Mother Jones Has Elizabeth Warren Won Over the Banks? Industry reps who once thought she was akin to the Antichrist now cant stop praising the consumer protection chief. What gives? May 6, 2011 By Andy Kroll

On her first day running the new Consumer Financial Protection Bureau (CFPB), Elizabeth Warren met with a group of bankers from her home state, Oklahoma. Going into that meeting, Roger Beverage, president of the Oklahoma Bankers Association, feared the havoc Warren, who had developed a reputation as a fierce consumer champion, would soon wreak upon his state's banks. He and his

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colleagues in the banking industry, he recalls, "had this vision that she was akin to the Antichrist."

Today, Beverage considers himself a Warren convert. He openly praises Warrenwho was appointed by the White House to get the bureau up and running but has not been nominated to head itsaying she is "far and away" the most qualified person to become the bureau's permanent director. "Ms. Warren has demonstrated that she is willing to work as hard as possible for the benefit of consumers, consumers' families, and community banks," Beverage says. "She would be an outstanding director, and I have encouraged both of our US senators to look past political rhetoric and look at what the woman has done."

Beverage's reversal reflects a noticeable thaw in relations between Warren and parts of the banking industry. This week, Camden Fine, president and CEO of the influential Independent Community Bankers Association, told a gathering of 1,000 bankers that the odds Obama would nominate Warren were "better than even," later remarking to American Banker that "you would have to look favorably on a [Warren] nomination because clearly she understands our model." Frank Keating, the head of the American Bankers Association, told a reporter that the ABA would support Warren if she were confirmed as CFPB director by the Senate. And Robert Palmer, who heads the Community Bankers Association of Ohio, captured the mood of small banks when he told Bloomberg Businessweek that if Warren "leaves, and the direction changes, we're not going to be very receptive."

While Warren's nomination was too-toxic-to-touch mere months ago, the momentum of the past few weeks could be enough to convince the White House to tap her for the job. Whomever Obama picks, he'll need to do it soon: The deadline for having a permanent CFPB director in place is July 21, according to the Dodd-Frank financial reform law.

The warming to Warren is due, in large part, to a months-long outreach campaign aimed at members of the banking industry. According to calendars posted on the CFPB's website, Warren's schedule has included 150 appointments with industry officials since her first day in Septemberphone calls, inperson meetings, industry conference speeches, even visits to local bank branches. She's spoken with everyone from Bank of America CEO Brian Moynihan to the head of the American Bankers Association to community bankers in states from Maine to Texas.

The charm offensive appears to be paying offand at precisely the right time.

Michael Grant, president of the National Bankers Association, which represents more than 100 minorityand women-owned banks throughout the country, is another fan. He met with Warren in February and says he would support her as the nominee to run the CFPB because of her "genuine concern for protecting the rights for consumers and for her appreciation of the role banks play in the financial infrastructure of this country." Grant adds, "She's a win-win both for our industry and for the consumer if she is nominated and made permanent chief."

Paul Hickman, president and CEO of the Arizona Bankers Association, says he, too, came away

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impressed after he and a group of Arizona bankers and business leaders met with Warren in Washington. A former staffer for Sen. John McCain (R-Ariz.), Hickman says Warren went a long way toward allaying the industry's fears of a consumer bureau run amok that would slap banks with new regulations and bury them in paperwork. "I thought Elizabeth Warren did a really good job of letting the members of that meeting know, and the business people of Arizona know, that her mission was not to somehow suppress community banks," Hickman recalls.

But for some state banking chiefs, Warren's outreach has changed their mind about her but not about the CFPB itself. George Beattie, president and CEO of the Nebraska Bankers Association, told Mother Jones last fall that, in his view, Warren simply didn't understand community banks. Today, he's more positive about Warren, noting her "better appreciation for what banks in this country do for their communities." He worries more about having a single director run the CFPB, whether that's Warren or not. Beattie says he'd prefer a panel of directors run the bureau, like the Securities and Exchange Commission, though he ultimately thinks the bureau should be scrapped altogether. "The congress has created an exceedingly strong governmental agency with little oversight," he says. "I think that's a bad thing for this country regardless of who runs it."

House Republicans agree with Beattie. On Thursday, a House financial services subcommittee passed a trio of bills that would replace the single director with a bipartisan five-person commission, give a separate council of financial regulators veto power on new regulations by the bureau, and restrict the CFPB's power until the Senate confirms Obama's nominee to be director. So, too, do Senate Republicans. Earlier this week, they sent a letter to Obama saying they'd oppose any CFPB nominee until the bureau's power was scaled back.

To be sure, major hurdles remain between Warren and the nomination. Republicans in Congress almost universally oppose her nomination. (She has, however, earned tepid praise from Senate GOPers including Chuck Grassley of Iowa and Bob Corker of Tennessee.) And on Wall Street, she has no shortage of enemies among the nation's largest banks.

But even if Warren only wins over some bankers and not others, leaving the industry conflicted on her nomination, that's could actually be a victory. "There was universal opposition to Dodd-Frank," says a person who's worked closely with Warren in the past. "There was universal opposition to Warren getting the bureau started. At the end of the day, if the banking industry is fractured on her nomination, that's just fine."

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Baseline Scenario Nominate Elizabeth Warren Provide The Pecora Hearings We Need May 4, 2011 By Simon Johnson

Ms. Warren is helping get the new Consumer Financial Protection Bureau (CFPB) off the ground and remains the leading contender to become its formal head (subject to Senate confirmation). She summarizes her substantive agenda this way,

Were trying to make these markets transparent, which makes it easier for community banks to compete both with large financial institutions and with their nonbank competitors.

She should now be nominated to the CFPB position. There will be strong Republican opposition and some Democrats who are close to the financial sector may be lukewarm. But a public hearing on her case represents our best opportunity to experience a modern version of the Pecora Hearings the Senate Banking Committee hearings in the 1930s that laid bare the inner (and rotten) workings of the biggest financial firms (see Michael Perinos book on Pecora for details).

These hearings would represent a major step forward towards forging a new consensus regarding how to really establish markets (as opposed to the crazy government subsidy schemes that predominate). In addition, the administration would win a big victory with Ms. Warrens confirmation.

Elizabeth Warren has worked long and hard to build a working relationship with reasonable people in the banking community. These investments now seem to be paying off, with the president of the American Banker Association saying this week that his organization would support Professor Warren if she is nominated (although he later backtracked and said he meant they would be supportive if she is appointed). Community bankers have already expressed support in various ways.

Her arguments are very hard for Republicans on the Senate Banking Committee or more intransigent bankers to refute in any kind of public setting because there is very little of the market in our currently predominant banking sector arrangements.

A proper Senate confirmation hearing would be the perfect platform for Ms. Warren to explain, (a) not only do too big to fail banks now constitute and hugely dangerous government subsidy scheme, but (b) based on these subsidies, they are becoming larger and acquiring more market power that can be and has been used to abuse consumers in a nontransparent fashion.

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All attempts so far to construct some form of Pecora Hearings have failed partly because the issues are complex and partly because of partisan fighting. The Financial Crisis Inquiry Commission made some progress but could reach no consensus (or bring anyone to justice). Senator Levins hearings into Goldman Sachs grabbed attention and were most helpful in the Dodd-Frank reform debate but again no one is going to jail and few people even grasp what were the real issues at stake. And the Department of Justice has preferred to pursue insider trading cases, perhaps taking the view that these are easier to explain to juries.

But Elizabeth Warren cuts through the complexity and offers a message that outside of Washington plays well across the political spectrum.

Her message is simple: the consumer market for financial products does not operate like a proper market because leading firms (bigger banks and also nonbanks, like some payday lenders) have figured out how to make a great deal of money by confusing their customers.

Of course, there are many honest players mostly in credit unions and smaller banks. But when the playing field has been unfairly tilted towards cheating, honest bank executives struggle to stay in business (or to keep their jobs).

If someone attempted to sell boxed cereal in the same fashion that many financial products are now sold, that person would be drummed out of the cereal business. The norms of that sector (and many other nonfinancial sectors in the United States) would not stand for this degree of deception and malpractice.

Some parts of financial services have moved too far towards become unscrupulous and abusing customers. This is bad for the people who are mistreated, its bad for the economy, and its bad for all honest people in the financial sector.

Elizabeth Warren is offering to allow proper markets to work again within at least part of finance. She has convinced many community bankers that her intentions are sincere and that her principles-based approach can work.

Its time for the president to stand up to abusive financial practices facilitated by cynical and nontransparent subsidies.

If nominated, Elizabeth Warrens confirmation hearing would become a defining moment for thinking about finance in America.

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And reform would win. All the missed opportunities, botched bailouts, and kowtowing to megabanks would fade into the background. Every attempt at change must face many setbacks and financial reform has really struggled to have any impact.

But at the end of the day, if Elizabeth Warren wins, we all win.

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Firedoglake Richard Shelby Gives Boost to Elizabeth Warrens Nomination for CFPB May 6, 2011 By David Dayen

I mentioned this in yesterdays roundup, but its worth repeating. Richard Shelby, the ranking member of the Senate Banking Committee, wrote a letter signed by 44 of his colleagues, saying that they would filibuster any nominee to the Consumer Financial Protection Bureau unless they are allowed to significantly weaken it. Their list of demands:

Replace the single Director with a board to oversee the Bureau. This would prevent a single person from dominating the Bureau and provide a critical check on the Bureaus authority.

Subject the Bureau to the Congressional appropriations process. This would provide oversight and accountability to the American people on how public money is spent.

Establish a safety-and-soundness check for the prudential financial regulators, who oversee the safety and soundness of financial institutions. This would help ensure that excessive regulations do not needlessly cause bank failures.

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So, no director, a budget Congress can squeeze and the ability to pre-empt anything CFPB does. Just three simple reforms.

This makes the recess appointment of Elizabeth Warren that much more likely. These are the demands for the confirmation of any director; indeed, the demand for confirmation is to eliminate the directorship and create a multi-member board. Since these are all elements that would significantly weaken CFPBs structure, its likely that they will not be agreed to. Indeed, they couldnt pass the Democratic-held Senate. Which means that the only way to get a director is through a recess appointment. And to the extent there was any strike against Warren, it was confirmability. Now Shelby tells the White House that NOBODY is confirmable. All things being equal, then, the Warren nomination becomes incredibly attractive. Not to mention the fact that theres a built-in deadline to get a director up and running by July 21 or else CFPB loses the ability to regulate non-bank financial institutions.

I dont think this was Shelbys intention, but after the nomination and recess appointment, maybe Warren can send him a box of chocolates or something.

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Huffpost Hill GOP Hating On The CFPB May 5, 2011 By Eliot Nelson, Ryan Grim, and Arthur Delaney

SENATE GOP STRAIGHT-UP DONE WITH THE CFPB - Led by Alabama's Richard Shelby (more on that state later), 44 Senate Republicans sent a letter to Obama earlier this week promising to oppose ANY nominee from either party to head the Consumer Financial Protection Bureau unless it is significantly weakened. CFPB watchers had thought that Elizabeth Warren's chance of getting the nomination hovered somewhere around zero, but Republicans have just given her a tremendous boost. If they're promising to oppose absolutely anybody, why the hell not just nominate the best person? The law allows for Warren or another temporary head to serve until their is a permanent director. In other words, she could serve out Obama's entire second term. Thanks, Richard!

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Reverse Mortgage Daily Quote-Worthy: Bachus Says CFPB Leadership Structure is Radical May 5, 2011 By Elizabeth Ecker

what is actually radical is the current leadership structure of the [Consumer Financial Protection Bureau]. It is unlike any other found in the Federal bureaucracy. The CFPB director serves for a fixed term, and therefore is exempt from presidential control; exercises sole authority over the agency; and has the singular power to spend hundreds of millions of dollars outside the congressional appropriations process. Although some regulatory bodies have some of these features, no other entity in Federal government combines all of them.

Rep. Spencer Bachus, House Financial Services Committee Chairman

Rep. Bachus made the statement during the consideration of three bills yesterday by a House Financial Services subcommittee. Bachus made a larger statement of support for the bills, which passed through the subcommittee yesterday, and aim to restrict the Consumer Financial Protection Bureaus power. One such bill favors a five-member bipartisan commission rather than the director structure that the bureau would have under Dodd-Frank.

While the bills will now advance, it is speculated that they will not pass through the Senate.

View Bachuss full statement.

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Housing Wire GAO pressures CFPB for federal foreclosure oversight May 5, 2011 By Jon Prior

The Government Accountability Office said federal banking regulators failed to catch the recent foreclosure issues at the nation's largest banks and challenged the upcoming Consumer Financial Protection Bureau not to repeat the mistake.

Late in 2010, problems emerged inside mortgage servicing shops. Employees were found to be mishandling documentation and cutting corners in judicial foreclosure states. Federal regulators and the 50 state attorneys general launched investigations, leading up to consent orders signed last month to correct the problems.

In a report released Thursday, the GAO examined the aftermath and pointed out federal laws did not govern the foreclosure process, and regulators did not consider these practices to be a high risk for the banks they oversaw.

"Although various federal agencies have authority to oversee most mortgage servicers, past oversight of their foreclosure activities has been limited, in part because banking regulators did not consider these practices as posing a high risk to banks safety and soundness, and some servicers have not been under direct federal oversight," the GAO said.

When the CFPB opens its doors July 21, it will become the de facto regulator for the entire mortgage industry, including servicer shops that were previously classified as nondepository institutions and therefore lacked federal oversight.

But the GAO said it is still unclear if the bureau will be up to the task.

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"How regulators and CFPB will interact and share responsibility for ongoing oversight of servicers is yet unclear, leaving the potential for continued gaps and inconsistency in oversight until final plans are developed," the GAO said.

Elizabeth Warren, the special adviser to the Treasury Department and the architect of the still forming CFPB, assured Congress in March that mortgage servicing would be of particular focus to the bureau.

"Recent revelations of mortgage servicers haphazard and questionable practices have further demonstrated the need for a new cop on the beat," Warren said at the time.

The GAO recommended the bureau work with other agencies and include proper foreclosure practices into upcoming national servicing standards. It also pushed regulators to begin assessing the risks documentation problems pose for the institutions they oversee. Warren, though, recently pushed back against lawmaker attempts to dilute the bureau's regulatory powers to do so.

Meanwhile, lawsuits challenging loan transfers in the securitization process persist. Foreclosures continue to be held up as courts across the country work to determine the legitimacy of a practice previously ignored.

"Regulators did not always verify these transfer practices during their reviews or assess the potential risks of transfer problems to institutions," the GAO said. "The potential financial costs resulting from these issues for investors, institutions that create MBS, and the overall financial system likely will remain uncertain until sufficient numbers of courts render decisions on the appropriateness of these practices."

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Associated Press Holly Petraeus to meet with Fort Bragg families May 6, 2011

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FORT BRAGG, N.C. - Members of the Fort Bragg military community will hear from the wife of Gen. David Petraeus about financial challenges they face and how to protect themselves from predatory lending.

Holly Petraeus is director of the Office of Servicemember Affairs at the Consumer Financial Protection Bureau. She and North Carolina Sen. Kay Hagan will meet Friday with the families atFort Bragg.

Holly Petraeus says she'll take what she learns at Fort Bragg and use it as she forms the Office of Servicemember Affairs.

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The Diane Rehm Show The Future of the Consumer Financial Protection Bureau May 5, 2011

MS. DIANE REHM Thanks for joining us. I'm Diane Rehm. The creation of the Consumer Financial Protection Bureau was mandated last summer by the Dodd-Frank Wall Street Reform law. It's a central piece of the Obama administration's overhaul of financial industry regulations. The consumer bureau took a hit from Republican lawmakers yesterday. We'll talk about those and the background. Joining me here in the studio to talk about the fate of the Consumer Financial Protection Bureau, otherwise shortly known as the CFPB, Travis Plunkett of the Consumer Federation of America, Maya Randall Jackson of Dow Jones Newswires and Mark Calabria of the Cato Institute.

MS. DIANE REHM We, of course, do welcome your calls, questions. Join us on 800-433-8850. Send us your email to drshow@wamu.org. Maya, let me start with you. Tell us what the Consumer Financial Protection Bureau was designed to do and why it was even thought of.

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MS. MAYA JACKSON RANDALL Well, it's a new bureau designed to root out abusive practices in financial markets, abusive practices dealing with credit cards, mortgages and other services. And a lot of consumer advocates didn't think that the Federal Reserve and the current agencies did an appropriate job in protecting consumers before the run-up to the financial crisis, and so through Dodd-Frank, the new Consumer Financial Protection Bureau was created. It has broad powers over giant banks, as well as thousands of payday loan firms, check-cashing companies, a lot of firms that did not have federal regulation currently. So it's a brand-new agency. And a lot of consumer advocates fought hard for it. And so that's why the current battle is pretty interesting.

REHM Tell me about the current battle and the three bills that the House subcommittee introduced yesterday.

RANDALL The Republican-led House has looked at the Consumer Financial Protection Bureau and has promised vigorous oversight of the bureau. They're not happy with a lot of the powers that the bureau has. The three bills that a subcommittee voted on yesterday would restructure the consumer bureau. So, one, it would make it easier to veto the bureau's authority, the bureau's actions. Another one would change the consumer bureau into a commission, so instead of a single director, you'd have a five-person bipartisan commission. And then a third bill would make it so the transfer date or the so-called start date of bureau, which is July 21, would be put off until there is a director in place. And, currently, there is no director.

REHM Maya Jackson Randall, she is financial reporter for Dow Jones Newswires at The Wall Street Journal bureau. Mark Calabria, what are the objections to the Consumer Financial Protection Bureau?

MR. MARK CALABRIA Well, there are a number of objections. I first want to sort of take some issue with (unintelligible) as a hit. I think these bills actually increase the integrity and increase the oversight and strengthen this agency. And I'll be very straightforward. I'm not a fan of the agency. I prefer it went away. But I think that agencies should be accountable, and they should have debate. I mean, you have an agency, particularly an independent agency, that has a single person running it. You really don't get that back and forth. We have a number of agencies like the Securities and Exchange Commission or the CFTC, which is the Commodity Futures Trading Commission, that are all boards.

MR. MARK CALABRIA And the agency that this agency was actually designed on, the Consumer Product Safety Commission, is itself a board that is subject to the appropriations process. So, unfortunately, there's a number of

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issues that have gotten entangled together. And I think they're issues about good government and what any agency should look like regardless of its function along with the function. So, unfortunately in Washington, there's just attitude sometimes that if you're in favor of something, that that means you should be against any constraints on it. You know, to me, I think what a good design for an agency, again, is irregardless of what the function of that agency should be. So we should have accountability there in general.

MR. MARK CALABRIA Now, of course, there are a number of objections. Some of them are, of course, to that -- the powers that the agency has. And it's worth noting that none of these three bills actually change the underlying powers of the agency. They simply change the oversight of the agency. Of course, there's a long-going debate about the contrast intentions between sometimes safety and soundness in the banking industry and consumer protection, or if you want to call it consumer protection.

MR. MARK CALABRIA I think those are important things. I, myself, and, I think, I probably speak for certainly more than just myself, saying I'm tired of all the bank bailouts. I'm tired of risk to safety and soundness. So I know that some of my friends would say that bank regulators did not take safety and soundness seriously when we've had over 300 or something banks bailed. I would make the argument they didn't take safety and soundness seriously enough.

REHM And wouldn't this agency do exactly that?

CALABRIA One would hope so. But I think that the history of consumer finance -- and, I think, probably something we all agree on -- is that the history of consumer finance in America is not necessarily been one we'd be proud of. After the last bubble in the early -- late '80s, early '90, what did we do? We passed a bunch of consumer finance laws. It's hard to see that those made a difference at all in the most previous bubble. So I'm certainly the first one who would say, we need to completely reform our system of consumer finance. I don't believe this agency does it. I believe the agency simply takes the broken system we have now, cobbles it all together.

CALABRIA For instance, if you believe that the Federal Reserve fell down on the job in terms of consumer finance, then why did you take all of the staff from the Consumer Finance Agency and the Federal Reserve and put them in this new agency? These are all the same employees who apparently failed before. Are they going to do a better job this time?

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REHM Mark Calabria, he's director of financial regulation studies at Cato Institute. Travis Plunkett, where is all the objection focused? Is it on the bureau itself? Is it on Elizabeth Warren, who has been tapped to head the agency, at least for the time being? Where is all of it coming from?

MR. TRAVIS PLUNKETT Well, it's coming from the same community that opposed the creation of the bureau in the beginning, and that is the big banks and large financial firms. They didn't want to reform a system that worked quite well for them but not for the public and not for the economy. So they object to the structure of the bureau. They object to the fact that the bureau will have power to address consumer protection instead of the seven agencies that existed before when consumer protection fell through the cracks. And they object to Elizabeth Warren, who has been very articulate and very vigorous in trying to get this new agency up and running and fulfilling its mission. So it's both.

REHM How effective do you believe this new agency could be? Or would it simply add to Washington's bureaucracy?

PLUNKETT10:14:33 Well, it's important to note that this does not layer on new bureaucracy. Congress actually did something they rarely do. They took power away from existing federal regulators. Mark alluded to this. The Federal Reserve no longer has power to write rules on consumer protection. A little known but very powerful federal agency called the Office of the Comptroller of the Currency no longer has power to regulate consumer protection when it comes to mortgage loans or credit cards. They didn't layer on new bureaucracy. They took it away, and they consolidated it.

PLUNKETT10:15:06 That's because consumer protection fell through the cracks. We had seven agencies, none of whom paid attention to consumer protection. So the potential is very great if Congress doesn't succeed in handcuffing the new agency, and that's what these three bills, that you're talking about today, would do.

REHM10:15:24 Travis Plunkett of the Consumer Federation of America. Do join us, 800-433-8850. Send us your email to drshow@wamu.org. Maya, Congresswoman Carolyn Maloney, the subcommittee's top Democrat, introduced an amendment yesterday. Tell us about that.

RANDALL10:15:55

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That amendment was interesting. It would basically ensure that Elizabeth Warren would be head of whatever commission would be created. So if this Republican bill made it through Congress and there were a commission instead of a director at the bureau, the way that the amendment was written, it would have to be -- Warren would have to be chair of the commission.

REHM10:16:17 Tell me why so many people on -- who were opposed to this agency object to Elizabeth Warren.

RANDALL10:16:30 I think, initially, there were a lot of objections from the industry. People thought that she was more of a radical individual, a consumer advocate that might not fully understand the financial industry and their -just the profit, the way that banks are run, the way that they operate. And so I think she sparked a lot of fear among companies and people in the industry that she would take -- use these broad powers at the bureau and make decisions that could hurt profits, that could hurt -- that could limit choices that companies can make. And so there's been a lot of angst about Elizabeth Warren.

REHM10:17:08 Mark.

PLUNKETT10:17:09 It should be noted, though, that...

REHM10:17:11 Travis.

PLUNKETT10:17:11 ...bankers are warming up to her because they've realized that she does understand their business, that she's a good listener and that she has no intention of making life more difficult for the small banks in particular. So two days ago, they had a very powerful trade association in Washington. The Independent Community Bankers said that he thought that she -- he didn't endorse her, but he thought that she was doing a very good job, was listening very well to the needs of small community banks, most of whom weren't involved in creating this crisis, and could potentially do a good job.

REHM10:17:46 Mark.

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CALABRIA10:17:47 A couple of points. First of all, I mean, I'm somebody who absolutely believes in the rule of law, and it needs to be important that our agencies in our government should not matter what somebody had for lunch that day. You should have the same set of regulations, regardless who's running it. And I think it's been a mistake to make the argument about Elizabeth Warren. This is about the agency. If you were nominating me for the agency, I would still say it has to be a board. So I think accountability's an important part of this.

CALABRIA10:18:10 I also want to address what, I think, is largely a canard. While the banks have problems with it, there are a number of people who, very legitimately -- I mean, for instance, the opposition to the agency in the Senate was Sen. Shelby, who only a number of years ago was given the Legislator of the Year award by Travis' organization. Travis knows that Sen. Shelby is not a show for the banks. He knows that I'm not a show for the banks.

REHM10:18:29 Travis.

PLUNKETT10:18:30 True. Absolutely true. Sen. Shelby has been out front on some important consumer issues like credit reporting, and Mark is a reasonable guy. That doesn't mean these bills, though, won't handcuff the agency.

REHM10:18:43 Travis Plunkett of the Consumer Federation of America. Short break. We'll be right back.

REHM10:20:04 And here's an email from Abby, who says, "To your guest who expressed concern that the same employees who failed, could he speak to the difference in mission and goals of the agency with a change in focus from corporate to consumer concerns? Perhaps give those employees the tools they need to be effective advocates, something they could not do at the Fed."

CALABRIA10:20:38 My reaction to that is -- I mean, that's a very good question. And certainly the argument behind the

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agency is that if we set up something different, there will be different incentives. I think that remains to be seen. I mean, certainly same employees brought the same perspective to it. I don't believe that the Fed necessarily failed on the job of consumer protection. I mean, I absolutely believe they failed on the job when it comes to monetary policy, but that's a different issue.

CALABRIA10:20:59 So I do think the argument that somehow these agencies were not taking consumer protection seriously, you know, was not part of it. And, of course, there was no contribution to the crisis from things like payday lenders and check cashers who were not under federal supervision before.

REHM10:21:13 Go ahead, Travis.

PLUNKETT10:21:15 Well, two things. First, I think most Americans would completely disagree. The Fed blew it when it came to subprime mortgage loans. They had authority, starting in 1994, to deal with it, and they ignored it until it was too late. Second, it is absolutely not the case that many of the senior employees in particular who were involved in those failures are coming over to the Consumer Financial Protection Bureau. In fact, some lower-level staff will be going over there, the top leadership, none of whom were involved in those debacles.

REHM10:21:46 All right. Let's hear what Elizabeth Warren had to say to Stephen Colbert on May 3, 2010.

REHM10:22:43 Agree with that, Travis Plunkett?

PLUNKETT10:22:46 Well, she's absolutely correct that in terms of the emperor having no clothes, so to speak, that consumer protection has been an abject failure in recent years at the federal level. It's important to note that accountability was an issue here. I mentioned those seven agencies. I mentioned that all of them had a little bit of responsibility, but none of them made it a priority when it came to consumer protection. That's why a single director who's completely accountable, both to Congress and the president and the American people, is important. If they mess up, there will be no excuses.

REHM10:23:20

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And joining us now by phone is Massachusetts Democratic Congressman Barney Frank. Good morning to you, sir.

REP. BARNEY FRANK10:23:30 Good morning, Diane.

REHM10:23:31 Talk about how important you see the Consumer Financial Protection Bureau to be for people in this country.

FRANK10:23:43 It has two very, very clear signs of importance. In the first place, the suggestion that consumer-related problems weren't part of the lead-up to the crisis couldn't be more wrong. Inappropriately granted mortgages were both a consumer abuse and a systemic problem. And Travis Plunkett just gave you the basic facts. In 1994, Congress passed the Homeowners Equity Protection Act, and it empowered the Federal Reserve to regulate mortgages and to regulate them, by the way, whether they were issued by regulated entities called banks or the unregulated mortgage lenders that were doing it.

FRANK10:24:23 And Alan Greenspan, as a matter of ideology, refused to use it. There were people on the Federal Reserve, one in particular, who said we should do this, and he refused to do it. In addition, the control of the currency -- and this was a Clinton appointee -- hold on, let's make this a similar bipartisan -- named John Hawke. He used federal powers to preempt all of the state consumer protection laws that applied to national banks. Literally, if you were a national bank, no state law trying to protect consumers could apply, whether or not it was found to be inconsistent or an interference.

FRANK10:24:58 And we had -- Congress had given the Federal Reserve the power to promulgate a code which could be used to protect consumers. The Federal Reserve refused to do it. So there was a clear conscious refusal by the bank regulators to do it because, frankly, their main job was bank regulation as they saw it, and they had this relationship to the banks. And consumer protection was, at best, a second thought, and sometimes not thought of at all. We had hearings on this issue. And I asked, for instance, the general council to the Federal Reserve how many meetings he could remember consumers who's being discussed that -- I think like one over many, many years.

REHM10:25:33 All right. So now is the Consumer Financial Protection Bureau's existence at risk?

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FRANK10:25:43 Its ability to function effectively is at risk. The Republicans understand that consumer protection is popular -- ending credit card abusers, ending bad mortgages, et cetera. So they don't want to make a frontal assault on it, but they have a series of measures which, taken together, would make it impossible to work. In the budget debate, the first budget debate this year, they cut its funding very substantially. Now, the president and the Senate pushed back, and we got that restricted. But they tried to do that.

FRANK10:26:10 Secondly, they want to give the bank regulators -- that's what you heard Elizabeth Warren just telling Stephen Colbert. They want to give the very bank regulators who had failed to use their powers to protect consumers the right to override by a majority vote of these regulators, who would almost be unanimous in any case on the other side to cancel any consumer regulation. We do say that two-thirds of those regulators, if they think a consumer protection agency is going to endanger the stability of the financial system to step in. Now, we don't foresee that happening.

FRANK10:26:43 But it was one of these horrible scenarios they raised. We said, fine. We'll make sure that can't happen. So they also want to say instead of a single director, have a five-member commission. All five would have to be confirmed by the Senate. And the way the confirmation process is working now, it obviously wouldn't function. And it's because, in part, they're afraid of Elizabeth Warren. Mr. Bachus, who's the chairman, the Republican chairman of the committee, told the bankers -- I think from Alabama, his own state -- oh, this is not about Elizabeth Warren. And then he immediately said, oh, but, of course, I wouldn't take a lie detector test to prove it.

REHM10:27:16 All right. And I want to let listeners know we have invited Congressman Spencer Bachus of Alabama to join us this morning. We hope he'll take us up on our invitation. Finally, Congressman Frank, tell us what's going on with regard to regulation of the derivatives market.

FRANK10:27:42 Okay. Now, Mr. Bachus may be afraid doing -- give him a lie detector test, Diane, so you're going to have to promise him to do that.

PLUNKETT10:27:48 No, no.

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FRANK10:27:49 On derivatives, again, we are talking about something which has been a problem for individuals, what was clearly a major economic crisis. AIG was one of the precipitating instances of the crisis when the Federal Reserve, without any congressional involvement, lent them $80-plus billion because AIG had gotten itself committed to other financial institutions like Goldman Sachs and others to pay off something called credit default swaps. Credit default swaps means that AIG was ensuring the value of mortgage-backed securities that these other financial companies had bought.

FRANK10:28:25 Then when the price of housing went down because mortgages were given to the people who shouldn't have gotten them because the Fed wouldn't prevent that and all these regulatory failures reinforced each other, AIG suddenly found itself forced to pay over nearly $200 million that they didn't have. And that threatened the whole crisis. What we said was, look, if you're an airline and you need a hedge against an increase in fuel prices, we don't do anything to restrain you.

FRANK10:28:52 But if you are a financial institution, AIG, engaging in credit default swap razzle-dazzle, frankly, with Goldman Sachs and we say, if you're going to do that, you're going to have to have capital behind it, you can't engage in the kind of transactions that are going to leave you high and dry if you can't pay off. And that was -- that's a very important safety measure.

REHM10:29:13 So...

FRANK10:29:13 You also specifically gave the Commodity Futures Trading Commission the power to set position limits, the power to deal with speculation. And there wasn't any question but that speculation by people, not in the oil business, financial companies, is helping drive up oil prices. It's not the major reason, but it's a contributing factor.

REHM10:29:33 So...

FRANK10:29:33 The Republican -- let me just finish, like, for one second...

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REHM10:29:34 Okay. All right.

FRANK10:29:35 I apologize. But the Republicans have a bill pending now that they want to bring up in committee next week that will be fighting to say that between now and December of 2012 -- by which time they hope to have won the presidential election -- nothing to regulate derivatives can go into effect, no restriction on what AIG and Goldman Sachs did. And, outrageously, there's a rule pending now at the Commodity Futures Trading Commission that would allow them to step in and restrain speculation, tell people you can't buy up all those oil futures in the way that would drive up prices. And they would make that impossible to go into effect for a year-and-a-half.

REHM10:30:11 And you're saying that this is going to happen next week?

FRANK10:30:16 We will be voting in committee a week from today. And the agriculture committee -- this legislation goes to both committees. The agriculture committee voted on it yesterday and voted it through, and we will be fighting it next week.

REHM10:30:30 All right, sir. Thank you so much for joining us, Massachusetts Democratic Congressman Barney Frank.

FRANK10:30:38 Thank you, Diane.

REHM10:30:39 Thank you. And turning to you now, Mark Calabria, what's your reaction to the congressman's comments?

CALABRIA10:30:47

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There were certainly a lot there. I guess I should say, any time somebody says there's no question, that's the first red flag in my mind, that there are actually lots of questions. We could have an hour-long discussion on the 1994 HOPA Act. I've read that section repeatedly. I simply don't see how you could get to, it doesn't bar irresponsible lending, it only bars unfair and deceptive. And so, for instance, getting somebody into a loan with no down payment is neither unfair or deceptive, but it's pretty irresponsible and pretty dangerous. But that's a conversation that we could debate for hours.

REHM10:31:15 All right.

CALABRIA10:31:16 I think legitimate people could read that -- I do want to comment quickly on -- the part that the congressman leaves out on derivatives is by pushing all of these derivatives on the clearing houses, and the Dodd-Frank bill, for the first time, creates an opportunity where clearinghouses can be bailed out by the Federal Reserve. We created new too-big-to fail institutions that the taxpayer is on the hook for that were not on the hook for beforehand.

REHM10:31:36 Travis.

PLUNKETT10:31:37 Well, on those mortgage loans, I'd just say that most of them were unfair and deceptive. And had the Fed acted, they could have stopped a lot of that abusive lending because these lenders were not telling consumers the truth about the real cost of those loans. Often, those loans would increase sharply in price after a year or two, and the brokers and the lenders were misleading consumers about real cost. That's why they couldn't afford them.

REHM10:32:03 And turning to you, Maya Jackson Randall. Are Republicans and bankers literally afraid of Elizabeth Warren?

RANDALL10:32:17 I'm not sure if they're afraid of her or if there's been a caricature of her out there. I think that, you know, a lot in the financial industry, a lot of bankers did not want the bureau created. So, I mean, whether it's Elizabeth Warren or someone else, you know, they're concerned about the powers in one individual. And so, yes, they're concerned about Warren in the past, what she said about Wall Street, about banks, so I think it's a little bit of both. It's, you know -- they're concerned about Elizabeth Warren, but they're also concerned about the bureau.

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REHM10:32:47 And you're listening to "The Diane Rehm Show." Finally, before we take a break, let's hear what Elizabeth Warren had to say on Jon Stewart's program last week, April 26.

REHM10:33:51 Travis, do you agree with that characterization?

PLUNKETT10:33:54 Well, that's exactly what the bills would do. And the last bill she mentioned would -- it's been introduced in the Senate, would completely repeal financial reform. We call it the Dodd-Frank Act. And so, even Sen. Shelby, who Mark mentioned has been quite good on some consumer issues, has endorsed that bill. In fact, every member of the Senate banking committee, where a nomination for the director would start -- save one -- hasn't -- has signed on to that bill. So this is an example of what Maya was just saying. It's not just about Elizabeth Warren. It's about the agency and the power of the agency. Anybody who wants to really fulfill the mission of the agency is going to have a difficult time when so many members of the Senate want to completely repeal financial reform.

REHM10:34:46 I do want to repeat, since you've heard Congressman Barney Frank, we did invite Congressman Spencer Bachus of Alabama to join us. He's chair of the House Financial Services Committee. Our producer, Denise Couture, in fact, called several Republican members of Congress, all of whom declined our invitation to be on this morning. I want to turn to you, Mark Calabria, and get your reaction to Elizabeth Warren's statement.

CALABRIA10:35:26 I mean, certainly, factually, there are people who have bills out there to repeal Dodd-Frank, which I actually think it should be. I mean, the need -- the biggest bait and switch ever put upon the American public...

REHM10:35:34 How so?

CALABRIA10:35:35 Because it's not going to do anything to actually address the causes of the financial crisis.

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REHM10:35:38 How do you know that?

CALABRIA10:35:39 Because I've looked at the bill. I've studied the financial crisis. I can guarantee you that we will have the financial crisis to stay in the next 20 years, and Dodd-Frank would have done nothing to stop it. And this is what frustrates me the most. We have a flawed and broken financial system. Congress has sold the American public on a bill...

REHM10:35:53 So what kinds of restraints would you like to see in place?

CALABRIA10:35:58 First of all, we need to look at this, that -- what was the cause of the financial crisis? Now, my friends, Travis, will say it's predatory lending, but if it's predatory lending, why did we see a same boom and bust in, say, the commercial office market or the apartment market, where apparently all these people buying office loans duped? You saw very same bubbles across assets that suggest there's got to be a common cause, and it wasn't prepayment penalties.

CALABRIA10:36:20 So what are we looking at as a common cause? What drives up asset prices, monetary policy, global flows of capital in this country? We aren't here today because capital and interest rates and loans were too expensive. We are here because they were too cheap.

REHM10:36:32 Travis.

PLUNKETT10:36:33 Well, predatory lending wasn't the only cause, but it was the spark that lit the housing crisis, which, because of a number of flaws in our securities markets, eventually spread to a economic crisis. So it was an important, very significant factor.

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REHM10:36:50 Maya.

RANDALL10:36:53 I mean, I think it's both. I think, you know, you have experts who point to monetary policy and you have experts that also point to the foreclosure crisis and say that, you know, there are a lot of things that need to be fixed to help, especially lower-income borrowers, troubled borrowers. So, I mean, I think, you know, there are a lot of things that could be addressed. You know, I can't say what Dodd-Frank will do, but, you know, there are interesting sides on both sides.

REHM10:37:15 There are those within the American public who really support a consumer financial protection agency. What do you say to them, that this would simply not do any good?

RANDALL10:37:33 I don't -- I think they're waiting, and I think some of the consumer groups are trying to point out to the American public that this bureau is under -- at risk of being restructured.

REHM10:37:42 Maya Jackson Randall, financial reporter for Down Jones Newswires. Stay with us.

REHM10:40:03 And it's time to go to the phones. Let's go first to Bruce, who's in Baltimore. Md. Good morning, Bruce.

BRUCE10:40:14 Good morning. Yeah, I just want to make a quick comment that I get so fired up about this. Let's be honest, just tell it the way it is. The (unintelligible) the big banks, Wall Street, the finance institutions have influenced, have manipulated, have controlled in so many ways your contributions to different candidates, particularly the Republican Party, the people that support business. I believe in business, too, enterprise, but, you know, this nonsense has been going on for years and decades with credit cards, with lending, the hidden traps and fees in credit cards, the nonsense that these big banks and Wall Street, the lies, the manipulation that they did for years and decades.

BRUCE10:40:59

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And, now, we finally get -- they try to pass a legislation for real consumer protection and real control and stuff, and the Republicans -- generally, the Republicans are against it or they want award them or they come up with all kind of nonsense and spin, it's a good thing. And I do believe they are afraid of Elizabeth Warren because she speaks the truth. She really cares about the proper control or...

REHM10:41:24 Mark Calabria.

CALABRIA10:41:25 I mean, I share Bruce's concerns. I certainly have a tremendous amount of frustration at Wall Street. First, I think we need to point out what is a very important fact here. The new consumer agency does not cover Wall Street. Your mutual funds, they are not addressed by this agency. That remains at the SCC, the Securities and Exchange Commission, so all this talk about taking on Wall Street is spin. This agency, by and large, exempts it, not to mention it exempts Freddie and Fanny. It exempts those realtors who told you that it was always a great time to buy. This organization is so riddled with the exemptions that almost anybody who actually had anything to do with the financial crisis is not covered by it.

REHM10:41:57 Maya.

RANDALL10:41:58 There are exemptions, but the largest banks would be covered, large banks as well as thousands of financial firms that have not been directly regulated by the federal government. So a lot of payday loans, a lot of cash -- check-cashing services, but also the giant banks as well, and the bureau has new powers to find these companies. And that's what has a lot of people in the financial industry concerned.

PLUNKETT10:42:21 And, of course, the rest of the financial reform bill does cover Wall Street, does cover problems like swaps that Congressman Frank mentioned, and does close a lot of gaps that helped cause the economic crisis.

REHM10:42:36 All right. To Oakville, Mo. Good morning, Fred.

FRED10:42:41

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Good morning. I was -- people seem to object to collective or universal risk for particular deposits. Why not promote deposits to equity? That would limit the collectivity of the risk and obviate the FDIC and (word?).

REHM10:43:01 Travis.

PLUNKETT10:43:05 It's not something we looked at, so I can't really comment.

CALABRIA10:43:07 I think he's partly -- I think what Fred is partly addressing is the amount of deposits and debt in the system versus equity. And, certainly, one of the problems with the financial crisis were that banks, corporations, households were all massively leveraged, something we haven't done anything about, and that concerns me as well -- another very big cause of the crisis left unaddressed.

REHM10:43:26 All right. To...

PLUNKETT10:43:27 Well, we should note, though, that there -- the treasury, the Department of Treasury is looking at leverage restrictions, restrictions on the amount of leverage that large financial institutions can take on under the law.

REHM10:43:38 All right. To Shawn, who's here in D.C. Good morning.

SHAWN10:43:45 Yeah, hi. Good morning. Thanks for taking the call.

REHM10:43:47

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Sure.

SHAWN10:43:47 Two quick points. First, I applaud Mr. Calabria's use French, the canard, but maybe he should stick to French because irregardless is not a word. Second, I just wanted to point out that I wish you would address this from an international comparative perspective. Independent regulatory agencies in Europe are one of the chief reasons that they've been spared the worst effects of the financial crisis. And if you look at this across sectors -- everything from food and health safety to the financial sector, to credit cards, the banking sector -- it really makes a big difference. And it would be funny if it weren't so tragic.

SHAWN10:44:22 But when Mr. Calabria said that he would prefer, regardless of who the head of the agency is, that the agency's rules would be enforced across administrations, when he knows that subject to the appropriation process is code for the agency's mission being destroyed, depending on which way the partisan winds are blowing. I'm...

REHM10:44:39 All right, sir.

CALABRIA10:44:40 First of all, I'll react to being a libertarian. I fully believe in my right to make up whatever words I wish as I go along. Language is organic and growing, and I reject those who try to enforce some sort of conformity of language on me.

REHM10:44:51 So you like the word irregardless?

CALABRIA10:44:53 I like the word, and I'm going to use it again until Webster's accepts it. That said, you know, everybody -- everything in the federal budget is important to somebody. I mean, the Defense Department is, of course, important. It's subject to appropriations. Does that mean we've ended wars because we have this department of war subject to appropriations? Governing is about making choices and about making tradeoffs, and that means the dollar goes here versus the dollar goes there. Congress needs to make the hard decisions of, say, do I put a dollar in this agency or do I put a dollar in the health care or do I put it on the education?

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REHM10:45:21 Travis.

PLUNKETT10:45:23 The history of consumer protection agencies in this country is a history of special interest affected by consumer regulation using their power to stop and limit funding for those agencies. That's why the funding for this agency, the Consumer Financial Protection Bureau, will not come through appropriations because the special interests have a leg up there. It will come from the Federal Reserve. There are many limits on the use of that money in the law, but the source of the funding is designed to be more independent...

REHM10:45:57 Hmm. I see.

PLUNKETT10:45:58 ...so that special interest can't manipulate the appropriations process.

REHM10:46:02 Maya.

RANDALL10:46:03 Yeah, that' true. I think the authors of that, Frank, made it so that the bureau would be somewhat shielded from the political process. Although, early this year, it's clear that, I mean, a lot of Republicans still want to change the funding mechanism at the bureau, so it's not completely shielded. If there is a greater Republican representation in Congress anytime soon, maybe at some point they'd have the votes to actually change the structure of the bureau. So it was designed to be shielded, but who knows how long it could stay that way.

REHM10:46:31 Yeah, all right. To Gig Harbor, Wash. Good morning, Rex.

REX10:46:38 Good morning. I was calling just to make a couple of points of reference. You guys were talking about kind of what sparked the product of the financial crisis. And I was in the mortgage industry during the up

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run to the financial crisis, and I would say that we weren't the cause of it. We were a product of an environment that allowed it to happen. I noticed that there was being sold to investors, as grade A paper. And I knew what was on that paper, and it was not grade A. The manipulations that were done for borrowers, they wanted to borrow these massive amounts of money, and it was pushed on us to, hey, we couldn't get our values, so call your appraiser and get another $40,000 in value so you can make this loan work.

REX10:47:27 There were companies that would take the credit report that you printed off without running another one. You need 30 days after the fact. When you know that the credit has gone down substantially, that things have gone into collections, and they would accept that credit report. There are mortgage -- you know, it's great for certain purposes, but we were told to sell it. And this is what it is, and there's a thing called the truth in lending page. And on a lot of the adjustable rate mortgages, it was set up so it looked almost like it was a fixed rate at half the cost of what a 30-year fixed mortgage would be. And they sold it to us on the justification that, well, you don't know what the rate index is going to go up to, so we just leave that as this.

REHM10:48:15 Wow. Maya.

RANDALL10:48:16 Well, that's some of what Elizabeth Warren had -- has said she wants to address at the consumer bureau, not exactly what he's talking about, but more of the fine print and helping borrowers to understand...

REHM10:48:24 Sure. Yeah.

RANDALL10:48:25 ...what they're getting into, making prices more transparent.

REHM10:48:28 And to Rafael in Charlotte, N.C. Good morning.

RAFAEL10:48:35

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Good morning. Diane, I have a question for you. I own a commercial janitorial business. If my employees do a bad job, should I blame my supervisors? Or is it my responsibility as the owner? I think it is my responsibility. I was listening to Sen. Frank pointing fingers and calling people names at the Federal Reserve like things that they were asleep at the wheel. This is something that happened over years, and the Federal Reserve does report to someone. Whose responsibility was it really that the Federal Reserve was not doing its job?

REHM10:49:18 Travis.

PLUNKETT10:49:19 Well, the president appoints the members of the board of the Federal Reserve, but they -- it should be noted that the Federal Reserve is designed to be independent. Those terms are for a very long period of time. They cut across presidential administrations. And, ultimately, I think the Board of Governors of the Federal Reserve was responsible for their failures, chief among them, the head of the Board of Governors, who was Alan Greenspan for a very long period of time.

REHM10:49:49 Maya, if President Obama continues to hold off in naming Elizabeth Warren as head of this consumer protection bureau, who are the other names that are up there being considered?

RANDALL10:50:10 There have been other names, I mean, Sarah Bloom Raskin, who's currently on the Fed, although it seems odd that she would leave the Fed position to run the bureau. But she's, you know -- she's obviously been able to get through the confirmation process. And then there's also -- it looks like some of the other people that they've reached out to -- ex-governors, other attorney general -- have turned down the position because it seems like something that Elizabeth Warren would want to run and should run. So some people have backed off because of that.

RANDALL10:50:37 And so, I mean, time is running out. It seems like there's no other choice but for the president to nominate Warren. And given that it would be unlikely for the Senate to sign off on her in such a short period of time, a recess appointment seems likely.

REHM10:50:51 Mark.

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CALABRIA10:50:52 Well, first of all, I mean, the president has had a number of months, almost a year, to come up with a nominee, and, certainly, I think it's irresponsible not to have put a name forward. And that's only one of many nominations that have been filled. I mean, I hear a lot about Republicans blocking nominees. You can't block a nomination that hasn't been sent up yet, so I do encourage the president to send up a name. Certainly, I would agree as well that Raskin is one of those names who could get through. She's a former Sarbanes staff. Her people know her. Sen. Shelby knows her, likes her. They could get her through. She works on consumer issues at the Fed. That's primarily her expertise.

CALABRIA10:51:23 She's been a bank regulator, ran bank regulation in Maryland, so, to me, she's somebody who is actually very similar to Elizabeth Warren. I mean, I would be no happier with her than I would be with Elizabeth Warren, but she could get through the Senate.

REHM10:51:32 Because you want a commission. Travis.

PLUNKETT10:51:35 Well, this is a point I'd agree with Mark on. We'd like to see the president send somebody -- nominate somebody right away.

REHM10:51:42 Why do you think he isn't?

PLUNKETT10:51:44 Well, it's -- he's in a bind. That's why. It's a tough decision because, on the one hand, you have a Senate that increasingly is not going to, in my opinion, move anybody who would strongly enforce consumer protection at the CFPB. On the other hand, you've got Elizabeth Warren and others who might do a very strong job being very popular and financial reform in general being very popular with the American public and with constituencies that want strong consumer protection. Plus, he's been focused on other things. However, this delay has been a problem. The president needs to nominate somebody right away.

REHM10:52:27 Do you think he will, Maya?

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RANDALL10:52:30 I think he would have to. I mean, the bureau's powers are at risk. So if there isn't a director in place, come July 21 when the bureau is set to get all of its powers, it might not get all of those powers. So the ability to go after these payday loans and to look at them and supervise them and oversee them would be limited, or it wouldn't be there. So you have to get a director in place by July 21 for the bureau to have all of its powers.

REHM10:52:54 I see. Maya Jackson Randall is with Dow Jones Newswires. You're listening to "The Diane Rehm Show." And let's go now to Quincy, Ill. Good morning, James.

JAMES10:53:12 Good morning. My question is in regards to the Federal Reserve. A few years ago, they stopped publishing M3 data. From my understanding, M3 data was meant to kind of understand more of the speculation and the hedging going on as far as the Federal Reserve's action to it. I was wondering if that has played any role as far as the financial crisis.

REHM10:53:35 What do you think, Maya?

RANDALL10:53:37 I do not know enough about the M3 data to (unintelligible).

REHM10:53:39 Okay. How about you, Mark?

CALABRIA10:53:41 First, I mean, economists spend a tremendous amount of time arguing what you look at -- M1, M2 or M2 minus deposit -- small deposit...

REHM10:53:46 Tell me what a M1, M2...

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CALABRIA10:53:49 The way to understand it is that M1 starts with the fairly narrow definition of money, which is, essentially, cash and deposits. And then as you get M2, M3, it becomes broader and broader, so it includes elements that are less and less liquid. Does that make sense?

REHM10:54:02 Yeah, that helps.

CALABRIA10:54:03 And so M3 is sort of the broadest measure of money. I think there was feeling that some of the things in M3, like, say, CDs, were simply not liquid, that you weren't going to out and cash them, so that it was a lot of noise. I do think that there are, again, arguments about how much liquidity was in the system. So I do think it's a reasonable debate, but I don't think that it was a driver in terms of dropping the coverage of M3.

REHM10:54:24 Travis?

PLUNKETT10:54:27 It's not something I've looked at, so I couldn't venture an opinion there.

REHM10:54:31 Okay. And to Cincinnati, Ohio. Good morning, James.

JAMES10:54:38 Yeah, good morning. How you doing?

REHM10:54:39 Good.

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JAMES10:54:41 Have done a lot of studying about this. You know, it's really come to the point in this country where the financial -- excuse me -- the financial system is almost something you can do a Mafia at this point. I mean, with the rolling back of all the new deal things, like Glass-Steagall, it's just to the point where it's really run like a Mafia. They have banks. They do whatever they want. They have infinite amount of money to do what they want and four regulations at every turn. And the comment I'd like to make is we now have the biggest disparity in income almost in this country's history. Do you think it has anything to do with how badly the financial system in this country is totally toward the rich?

REHM10:55:24 And I think a number of people on -- who were calling in want to know about Glass-Steagall and whether it had not been repealed, would we have found ourselves in this situation? Travis.

PLUNKETT10:55:41 Well, Glass-Steagall was a Depression-era law, enacted just after the Great Depression that put limits on what various sectors, financial sectors, could do. They were basically placed in a box. If you did insurance, you needed to sell insurance. You couldn't do insurance and retail banking and investment banking, and the wall between -- a number of experts have called into question the wall that was removed between retail banking, you know, just serving the public through deposits and investment banking and have questioned whether it had that wall still been up -- some of the problems we saw with the securities industry would have occurred.

REHM10:56:20 What do you think, Mark?

CALABRIA10:56:21 I want to make -- 'cause there's two important issues here, and I want to touch very quickly on the income equality. I do think that some of the income equality has been driven by subsidies we give toward not just financial services, but to real estate in general. And the importance to this is that we decided to, over the last decade or so, invest in a housing bubble. Asset bubbles do not increase productivity, which increases wages. So you don't see wage growth by -- bidding up housing prices does not ultimately make us richer when it busts.

CALABRIA10:56:48 The part of Glass-Steagall that, I think, is important, in my own, you know, sort of principle is that deposit insurance is not entitlement. If you want to limit risk that's taken around deposit insurance, I think that's legitimate. But there's almost no evidence. I mean, Lehman, Behr, they were not depositories. You cannot look at anybody who it would have made a difference on.

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REHM10:57:04 Mark Calabria, he's at Cato Institute, Maya Jackson Randall of Dow Jones Newswires and Travis Plunkett of the Consumer Federation of America, we shall see what happens to the Consumer Protection Bureau and whether it actually becomes reality. Thanks for listening, all. I'm Diane Rehm.

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Bloomberg Errors in Credit Reports Rare, Study Funded By Industry Says May 5, 2011 By Carter Dougherty

Less than one percent of consumer credit reports contain errors that lead to a significant change in the score, according to a study commissioned by the three largest credit-reporting companies.

We found that a vast majority of credit reports are accurate and that it is rare for a credit report error to materially impact a consumers access to credit, said Michael Turner, the head of the Durham, North Carolina-based Policy and Economic Research Council, which conducted the study.

The council said it surveyed 2,338 people from February to May 2010 and examined their credit reports. David Musto, a professor of finance at the Wharton School of the University of Pennsylvania who was hired by the council to review the examination, called it a well-executed study, in that the sample is large and appears to be representative.

The U.S. credit reporting business is dominated by Equifax Inc. (EFX) of Atlanta, Chicago-based TransUnion LLC and Dublin-based Experian Plc.

The Consumer Financial Protection Bureau, which is scheduled to begin work on July 21, will have

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jurisdiction over consumer credit firms. Under the law that created it, the bureau has to produce a study by then on the differences between reports provided to creditors and those given to consumers who are the subject of the reports.

Consumer Group

Ed Mierzwinski, director of the consumer program at the U.S. Public Interest Research Group, said in an interview that the industry study may have underestimated the error rate by overestimating the number of consumers who were satisfied by the bureaus dispute resolution process. Other reports, he said, have shown an error rate closer to 25 percent.

The planned CFPB report is the holy grail that we have been looking for but have not gotten access to, Mierzwinski said. That is the study we need.

Elizabeth Warren, the White House and Treasury adviser charged with setting up the new agency, met in March with Bobby Mehta, the chief executive officer of TransUnion, her appointment calendar shows.

The councils study found that 0.93 percent of the consumers surveyed had disputes with creditreporting firms that led to their FICO credit scores rising by 25 points or more. Also, 0.5 percent of those surveyed had a dispute that led to their scores changing enough to affect their access to credit.

FICO scores can range between 300 and 850. Generally speaking, a score lower than 620 can make it difficult for consumers to get credit, while a score above 650 signals good credit. The report also discusses credit scores in terms of VantageScore, a similar system developed by the major credit firms.

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New York Times (Bucks blog) The Case Against 111-Page Checking Account Disclosures May 5, 2011

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By Ann Carrns

While you are opening that new checking account, dont forget to read the accompanying 111 pages of legal fine print that go along with it.

How many pages?

A new study from the Pew Charitable Trusts found that 111 pages is the median length of checking account disclosure documents given to customers by the 10 biggest banks in the United States.

Often nestled in the thicket of disclosures, schedules and related addenda are rules that favor the bank over the customer. These include binding arbitration clauses, which require any dispute over the contents of the agreement to be settled by a private arbitrator usually one picked by the bank instead of a judge. Other versions allow customers to take their case to court, but require them to cover the banks costs even if the customers are found to be in the right.

An excerpt from a PNC Bank disclosure, included in the report, even states that such funds will be withdrawn from your account without prior notice to you.

The report, on hidden risks in checking accounts, notes that the new Consumer Financial Protection Bureau has already been asked by Congress to look into such mandatory arbitration clauses.

Pew recommends that the bureau require banks to summarize crucial information about fees, account terms and conditions in a short, plain-language format, similar to the so-called Schumer Box now used for credit cards. That would make it easier for consumers to compare accounts and avoid costly fees.

Pew also recommends that regulators require banks to post deposits and withdrawals in an objective way like chronological order to minimize instances when banks reorder postings to increase fees from bounced checks. Most banks post checks in order of highest dollar amount to lowest, which tends to maximize the bounced check fees. Banks can also process debits to the account before posting deposits.

Pew provides a clear illustration of the effect of this method, in a chart based on a recent court challenge of Wells Fargos daily transaction-posting policy. The chart shows that posting deposits and debits in chronological order would result in fees of $22, while Wells Fargo ordered them in a way that the customer ended up owing $88.

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Citibank, in a departure from its big bank peers, recently announced that it would start processing checks in in low to high order to minimize potential fees for overdrawn accounts. But it remains in the minority.

Since we collected our data, some banks have said theyre changing this policy, said Eleni Constantine, director of Pews financial security portfolio. But its voluntary. They could go back to what they were doing before, anytime they want to.

The Pew report also found that consumers are not given enough information to compare the various overdraft options that is, protection against overdrawing your account by debits or bounced checks offered by their banks.

Usually, a transfer plan, in which funds are moved from the customers savings account or credit card to cover shortages in the checking account, is significantly cheaper, at about $10 a transfer. But many banks promote more expensive options in which the bank pays the shortage and charges a fee typically $35.

Have you read your checking account disclosure? Did you understand it? Did anything in it surprise you?

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Huffington Post Banks Illegally Foreclosed On Dozens Of Military Borrowers, Federal Investigators Say May 5, 2011 By Shahien Nasiripour

WASHINGTON -- Two of the nation's largest mortgage firms illegally foreclosed on the homes of "almost 50" active-duty military service members, according to a Thursday report by the Government

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Accountability Office.

The report does not identify the two mortgage companies. GAO investigators attributed the finding to federal bank regulators, who recently completed a three-month probe into allegations of improper foreclosures carried out by the nation's 14 largest home loan servicers.

The GAO report, which focused on problems in the mortgage industry and the lack of federal oversight, is the first official study to feature a partial tally of military families whose homes have been illegally seized. The 50 or so wrongful foreclosures were discovered during regulators' review of only about 2,800 loans that experienced foreclosure last year.

Millions of other foreclosures in recent years have not been reviewed by regulators. More than 2.8 million homes received a foreclosure filing in 2009, and nearly 2.9 million residences got one last year, according to RealtyTrac, a California-based data provider.

Federal bank supervisors "could not provide a reliable estimate of the number of foreclosures that should not have proceeded," they said in their April report on improper mortgage servicing. Two months earlier, the head of the Office of the Comptroller of the Currency, which oversees national banks like JPMorgan Chase and Bank of America, said that only a "small number" of home seizures should not have occurred. The large number of wrongful foreclosures identified by the GAO from such a small sample suggests that the problem could be more widespread.

As foreclosures have surged to record levels, banks and other mortgage firms have been caught illequipped to handle the ever-increasing workload, Treasury Department and Federal Reserve officials have repeatedly said. Due to years of under-investment by banks in their mortgage processing operations, regulators and experts have found that shortcuts were taken and procedures were not followed. Homeowners are bearing the brunt of these decisions.

Improper mortgage practices affecting military borrowers are "perhaps the most egregious cases," wrote five Democratic lawmakers in a joint letter Thursday to bank regulators.

"The idea of wrongfully forcing service members families from their homes while their loved ones are risking their lives to protect our country is not only unconscionable, its illegal," said Sen. Al Franken (DMinn.), one of the co-signers, in an emailed statement.

Members of the armed forces on active duty are covered by the Servicemembers Civil Relief Act, a law designed to protect them from financial distress. The legislation restricts foreclosure of properties owned by active-duty members of the military. Violations are handled by the Justice Department's civil division.

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The Justice Department has reportedly said it's investigating allegations of improper foreclosures on service members that were commenced by mortgage subsidiaries of Morgan Stanley and Deutsche Bank AG, two of the world's largest banks. Bank of America recently announced it would change the way it handles military borrowers.

A 50-state coalition of attorneys general and bank supervisors along with the Obama administration are also in talks with the nation's five largest mortgage firms -- Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial -- to resolve allegations of wrongful foreclosures and improper mortgage practices. Fines could reach up to $30 billion, according to people familiar with the matter.

JPMorgan Chase disclosed in February that it had improperly foreclosed on the homes of 18 military families. Stephanie Mudick, an official at the nation's second-largest bank by assets, told a House panel that the lender had either rescinded the foreclosure sale or reached a settlement for 12 of those military borrowers, and was working through the rest.

The firm's mistakes were a "painful aberration," Jamie Dimon, JPMorgan's chairman and chief executive, said in a February statement. In April, the bank agreed to pay $56 million to settle claims of improper mortgage practices when dealing with military borrowers.

On Thursday, JPMorgan spokesman Tim Keefe said that the bank had found additional cases of military families whose homes were illegally seized. Although he did not specify the exact number, a separate JPMorgan official said the total was less than 30. Keefe said the bank had committed to providing new homes and full forgiveness of any mortgage debt owed to the lender for these borrowers.

By taking shortcuts in processing troubled borrowers' home loans, the nation's five largest mortgage firms have saved more than $20 billion since the housing crisis began in 2007, according to a confidential presentation prepared for state attorneys general by the nascent Bureau of Consumer Financial Protection inside the Treasury Department and obtained by The Huffington Post in March.

In February, Holly Petraeus, who leads the bureau's unit overseeing military borrowers, sent a letter to the chief executives of the nation's 25 largest banks urging them to follow the law when it comes to dealing with service members.

"I appreciate your assistance in ensuring that your bank does not overlook its obligations - legal and otherwise - to your military customers," wrote Petraeus, whose husband, David, leads U.S. forces in Afghanistan.

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Washington Post More home buyers should put faith in good-faith estimate May 6, 2011 By Kenneth R. Harney

What if the federal government spent years designing a tool to help consumers shop intelligently for mortgages comparing lenders rates, terms and total settlement costs but consumers ignored it or didnt use it?

No need to speculate here; it appears to have happened. A new survey of 1,000 American consumers suggests that the good-faith estimate (GFE) disclosures that all home buyers and refinancers receive at loan application to facilitate shopping are not getting the job done.

Federally mandated good-faith estimates spell out the lenders charges, all anticipated fees for title insurance, escrow and settlement services, plus other key costs. The most recent version of the GFE, released at the beginning of last year, contains space for consumers to take one lenders estimates and get competing quotes from as many as three others. It also requires lenders to stand behind their estimates, guaranteeing that some of them wont increase by even a penny at closing, and that others wont increase by more than 10 percent.

But the survey found that the GFE may not be improving shopping as intended. After receiving the disclosure, 56 percent of buyers say they did no comparison shopping among lenders. Twelve percent used the form to contact just one other lender, and 10 percent werent sure whether they used the GFE at all. Just 3 percent said they comparison-shopped rates and terms at four lenders or more.

The survey, conducted by market research firm TNS Global for mortgage lender ING Direct, also found that 53 percent of those buyers who looked at the GFE spent less than 30 minutes doing so. Twenty-six percent either never looked at it or dont know whether they looked at it. Forty-nine percent of buyers said the GFE disclosure was too complicated, a waste of time, or they werent sure. Just 37 percent rated it useful. The survey had a statistical margin of error of plus or minus 3.2 percentage points.

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Arkadi Kuhlmann, chief executive of ING Direct, called the GFE potentially one of the most crucial documents a home buyer [receives], yet the survey indicates that it is not effective. If its too complicated and not being used to help homeowners find the right mortgage for them, he said, then [it s] just a waste of three pieces of paper. Kuhlmanns firm, which does most of its mortgage business online, directs its customers to a Web site it created, ingdirect.com/clearorange, that walks them through the GFE step by step, explaining the process in terms that are easy to understand.

Between 2003 and 2008, the Department of Housing and Urban Development proposed modifications to the GFE, but critics said the revised disclosure, at three pages, was too long and predicted that it would become just another part of the paper blitz that cascades over mortgage applicants.

Kurt Pfotenhauer, chief executive of the American Land Title Association, said that if the [revised] GFE were a rocket, it would still be sitting on the launch pad. Not only has it failed to simplify consumer shopping, there is evidence that [it] is actually confusing shoppers.

Phillip L. Schulman, a lawyer who represents mortgage lenders and banks, said the survey results are not surprising because the disclosure looks complicated and doesnt tell buyers what they really want to know: How much theyre going to pay per month from a given lender, with all expenses factored into a bottom-line number.

Brian D. Montgomery, who was federal housing commissioner during the final years of drafting the revised GFE, said, We believed that making shopping easier would be a benefit because there had been very little real shopping before. But obviously we didnt have a magic wand that would change consumers traditional behavior overnight.

Meanwhile, Congress has shifted responsibility for GFEs and other consumer mortgage disclosure issues to the new Consumer Financial Protection Bureau, which is scheduled to spring to life in July. The bureau said that streamlining the GFE and combining it with federal truth-in-lending disclosures will be one of its high-priority projects.

But given the glacial pace of federal rulemaking, the three-page GFE is likely to remain in use for many months, maybe a year or more, before any new streamlined version takes its place. So heres a smart action plan for you as a consumer. If you want to shop intelligently for a home loan, buck the popular trend: Read your GFE. And use it to compare costs line item by line item among multiple lenders.

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Los Angeles Times Early withdrawals from CDs get more expensive at Bank of America May 5, 2011 By David Lazarus

It seems like every time you turn around, banks find a new way to stick it to you.

The latest example comes from Bank of America, which has significantly toughened the penalty for early withdrawals from a certificate of deposit.

In the past, BofA would charge 90 days worth of interest for early withdrawals from a CD good for 12 months or less. In other words, a $10,000, 12-month CD with an annual yield of 0.3% would entail an early withdrawal penalty of about $7 if you took out the entire amount.

Now BofA is charging a flat $25 plus 1% of the amount withdrawn for CDs with terms under 12 months and 3% for longer terms.

That means the early withdrawal penalty for that same $10,000, 12-month CD now runs $125 a nearly 1,700% increase. The penalty for a five-year, $10,000 CD is $325 a roughly 1,600% increase.

Gregg McNelly discovered this the other day when he went to a BofA branch to ask about the consequences of withdrawing a $10,000 CD to help cope with some medical expenses. The teller explained the new penalties, which took effect in February.

"My jaw dropped when I heard how much it would cost," said McNelly, 54, of Westchester. "I couldn't believe it. I wouldn't just be losing interest. I'd be losing principal."

The bank's new-and-not-so-improved CD policy is part of an ongoing trend throughout the banking industry to milk profit from additional sources amid a crackdown on what lawmakers say were unfair credit-card and checking-account practices.

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Banks are scrambling to make up for lost revenue they could once count on from high interest rates, late fees and overdraft charges. In BofA's case, the company says its first-quarter revenue from card services plunged 18% from the same period last year.

Don Vecchiarello, a BofA spokesman, said the new early-withdrawal policy for CDs was intended to simplify things for customers. Many people, he said, had trouble calculating a penalty of 90 days worth of interest from an annual percentage yield.

Vecchiarello also said the bank wanted to implement a consistent policy nationwide and, most importantly, to discourage customers from making early withdrawals from their CDs.

"A CD is a contract between a bank and a customer," he said. "If the contract is broken by an early withdrawal, the bank needs to replace those funds. There's a cost to that."

But did BofA lose money with the former penalty?

"I don't know the answer to that," Vecchiarello said.

I do. Of course the bank didn't lose money by charging 90 days' interest for early withdrawals. If the old policy was a money loser, BofA would have changed it long ago.

Rather, it looks like that 90 days' interest simply wasn't enough for BofA. The bank wanted more.

It doesn't seem like a coincidence that, along with the fatter penalty for early CD withdrawals, BofA has introduced new checking accounts that come with monthly fees and slapped a $59 annual fee on about 2 million credit card accounts.

The bank is now also notifying credit card customers that their interest rate could hit nearly 30% if they miss a single payment.

To be fair, BofA isn't the only bank playing rough with customers. Most other major banks also have sky -high penalty rates for missed card payments.

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Similarly, Chase bank revamped its own early-withdrawal policy for CDs last year, introducing a $25 fee plus 3% of the amount withdrawn.

This week, Chase said it was ending an experiment with $5 fees for people from other banks to withdraw money from Chase ATMs. Such fees typically run $2 or $3. It's possible the higher fees will return down the road.

Where will it stop? Doubling ATM fees is one thing. A 1,700% increase in the early-withdrawal penalty for CDs seems like a blatant money grab, made all the more insulting by the minuscule amount of interest banks dole out in return for being able to spend and invest your money.

Banks provide a variety of valuable services, and customers should pay a reasonable price for the convenience and reliability they offer.

But the banking industry, through its relentless pursuit of higher fees and charges, has demonstrated that its practices are motivated almost solely by greed an unwavering instinct to pad its pockets even when lawmakers and regulators are telling them to cool it.

Meanwhile, banks continue to oppose establishment of a Consumer Financial Protection Bureau intended to, yes, protect consumers from banks' more rapacious practices.

The industry's latest stab at weakening the agency is a proposal to replace its director (although there isn't one yet) with a more easily influenced commission.

When McNelly learned about the harsh new penalty for early withdrawals, he left his CD alone and managed to find the money he needed elsewhere. But he's still smarting.

"I can't believe they wanted to charge me so much of my own money just to get my own money," he said.

Believe it. And you can be sure banks will find even more inventive ways of doing so again in the future.

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Naked Capitalism Republicans to Consumer Financial Protection Bureau: Drop Dead May 6, 2011 By Yves Smith

In a new effort to guarantee the continued right of banks to loot and pillage, 44 Republican senators have written to Obama saying that they wont approve of any head of the Consumer Financial Protection Bureau ex what these Ministers of Truth choose to call a restructuring of the agency.

The arguments made against the agency strain credulity. As the New York Times reports:

This is about accountability, said Senator Richard Shelby of Alabama, the ranking Republican member of the Senate Banking Committee. The bureau, as currently structured, lacks any semblance of the checks and balances inherent in the Constitution. Everyone supports consumer protection, but we should never entrust a single person with this much power and public money.

Shelbys blustering is about the CFPBs budget, which is to be 12% of the Feds total. That would make it roughly half the size of the not terribly effective SEC. But Congress controls the SECs funding, and there is a direct relationship between what a joke the agency has become and regular threats to cut off its air supply (particularly from the senator from Hedgistan, Joe Lieberman). By contrast, the far more effective FDIC (which has a bigger budget than the SEC) and the CFTC keep their fees and dont have to go begging to Congress (note the SEC is a profit center and actually uses less money than it collects from the securities industry). Note that the unhappy Republicans are also calling for the CFPB to have a board, as the FDIC does, but that issue is a mere sideshow to the budgetary question.

So Shelby is lying on two fronts: that there are no financial regulators free from Congressional thumbscrews, and that it will have a large amount of money and independence.

And if he really is worried about rich, powerful, rogue financial regulators, why isnt he taking aim at the Fed first and foremost? It fits his profile far better than the CFPB does.

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The real issue, of course, is that an effective CFPB will commit crimes against banking (note that crimes against banking can get you put in jail in Switzerland and they dont mean just robbing banks. Damaging the reputation of banks also qualifies). Financial firms have behaved so badly in the consumer arena that even a half-hearted effort at consumer protection will inevitably create bad press about banking practices. So it is absolutely necessary to hobble the agency. Warren is not exaggerating when she says:

Every day, somebodys got a plan to undercut this agency, to knock it down, she said. The conversation is effectively: Oh, wed really like to kill this thing but it might be too popular for that that might cause too much blowback. So can we find a way to maim it?

Warren has been seen as a non-starter as a head of the agency because shed never be confirmed. But the requirement that the chief be in place by July 21 necessitates a recess appointment, which would circumvent the approval process. The Republicans are making clear that if that happens, they will extract a few pounds of flesh, say in budget fights.

It was pretty much assumed that the Administration would find someone less inflammatory but still fitting vaguely under the liberal brand (particularly now that liberal extends well into the center right) to appease the right wing hotheads and still look like they had not completely capitulated. But now that Warren has been doing a good job in staffing up the agency (one of the criticisms made of her was she was a mere academic and hence incapable of running an organization) and various candidates have turned the Administration down, her fans are talking up the idea that she will indeed get the nod.

Id be delighted for that to be the case, but I dont see that happening. America is a very big place, and I m sure if the powers that be look further, they can find someone who will appear adequate. In fact, there might be some logic in holding the see arent you glad this isnt Warren candidate back as long as possible to increase Republican anxiety (as in they waste energy shooting at Warren when she isnt in the running).

Nevertheless, this sorry episode again proves that the primary objective of most members of the ruling classes is preserving and extending their power. Every account of the crisis has shown that bad mortgage lending practices were a major culprit. Having consumers be smarter and better protected should logically be a plus unless your business model depends on cheating them. So the vociferous attacks on the CFPB should clear up any doubts on that front.

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Point of Law Staffing Advice to a President May 5, 2011 By Michael Perino

Over at the Baseline Scenario, Simon Johnson was kind enough to mention The Hellhound of Wall Street in his call for President Obama to nominate Elizabeth Warren for the top spot at the new Consumer Financial Protection Bureau. The continuing controversy over Warren calls to mind a similar battle waged in Washington exactly 77 years ago.

In May 1934, the Securities Exchange Act was finally making its way through Congress after a bitter lobbying campaign to defeat it. With passage now virtually certain, the predominant question was who would lead the new agency the law created, the Securities and Exchange Commission.

Most New Dealers wanted James Landis, the Harvard law professor who had been a primary architect of the federal securities laws and who was already in charge of the securities division at the Federal Trade Commission. Others wanted Ferdinand Pecora, the stalwart lawyer who led the investigation of Wall Street that was just then wrapping up. Bankers hated both ideas. They thought either man would push through regulations that were far too stringent.

With mid-term elections on the horizon and with hopes of jump starting a business recovery, President Roosevelt sought to make a truce of God with bankers. The rumor was that he would appoint as the new chairman Joseph P. Kennedy, a man who had made a substantial part of his fortune operating the very manipulative pools the Exchange Act sought to eliminate.

Word of Kennedys potential appointment reached future Supreme Court Justice Felix Frankfurter, who wrote to the President to lobby for his protg, Landis. Frankfurters advice is just as salient today as it was then.

Legislation, Frankfurter wrote, means predominantly administration and less than vigorous administration would doom the new agency. Frankfurter pointed to the then well documented cases of public service commissions, which had been extremely weak-kneed in the face of lobbying from the utilities they oversaw. Securities regulation, Frankfurter warned, presented even graver dangers:

Now the administration of the Stock Exchange Act will, I am sure, be even more difficult and call for even greater skill, resourcefulness, firmness as well as fairness of temper, a will not worn down by

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fatigue, than has been the work of the older regulatory commissions. The problems are more subtle, the abuses less obvious, the public more misleadable [sic] and the consequences of non-action more far reaching. What will matter most to Wall Street indeed is what the Commission will refrain from doing, in view of what the law might enable a courageous and knowing commission to do. I dont know, of course, what the final terms of the Act will be, but I do know that the extent and effectiveness of the powers conferred by the legislation will depend largely upon the understanding of the possibilities under the statute by those charged with its administration. [Y]ou need administrators who are equipped to meet the best legal brains whom Wall Street always has at its disposal, who have stamina and do not weary of the fight, who are moved neither by blandishments nor fears, who in a word, unite public zeal with unusual capacity.

Roosevelt was unswayed. On July 2, 1934, Kennedy became the first chairman of the SEC. Perhaps the result will be different this time around.

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Point of Law The Battle over the CFPB May 6, 2011 By Michael Perino

Yesterday I tried to give some historical context to the continuing controversy over whether President Obama should nominate Elizabeth Warren to head the CFPB. I want to return to that subject today.

This mornings New York Times has an article addressing the issue. Part of the objection to Warren is her outspoken criticism of the banking industry. Bankers apparently feel that she has unfairly accused them of exploiting consumers. This has become a familiar refrain of late in the financial community (see for example Jamie Dimons comments at Davos earlier this year).

But such expressions have a much older lineage than that. In 1939, Ferdinand Pecora wrote Wall Street under Oath, his memoirs of the Senate investigation he led in 1933 and 1934. This quote is from his introduction.

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Frequently we are told that regulation has been throttling the countrys prosperity. That its leaders are eminently fitted to guide our nation, and that they would make a much better job of it than any other body of men, Wall Street does not for a moment doubt. Indeed, if you now hearken to the oracles of The Street, you will hear now and then that the money-changers have been much maligned. You will be told that a group of high-minded men, innocent of social or economic wrongdoing, were expelled from the temple because of the excesses of a few. You will be assured that they were simply scapegoats, sacrificed on the altar of unreasoning public opinion to satisfy the wrath of a howling mob blindly seeking victims.

A good deal of the New York Times article was devoted to chronicling attempts to weaken the agency. Warren described the efforts this way:

Every day, somebodys got a plan to undercut this agency, to knock it down, she said. The conversation is effectively: Oh, wed really like to kill this thing but it might be too popular for that that might cause too much blowback. So can we find a way to maim it?

In 1939, Pecora ended Wall Street under Oath this way:

When open mass resistance fails, there is still the opportunity for traps, stratagems, intrigues, underminingall the resources of guerilla warfare. These laws are no panacea; nor are they selfexecuting. More than ever, we must maintain our vigilance. If we do not, Wall Street may yet prove to be not unlike that land, of which it has been said that no country is easier to overrun, or harder to subdue.

The more things change

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Politico Reform still lets banks play roulette

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May 5, 2011 By Jonathan Macey

The financial crisis of 2007-08 is receding in the public mind. Other than the giant hole in the federal budget, its legacies are obscure. But one key legacy of the crisis is its enduring lesson about the power of big U.S. banks and the elusiveness of meaningful reform of the financial system.

Of course, the crisis was not entirely wasted especially not for Rep. Barney Frank (D-Mass.) and former Sen. Chris Dodd (D-Conn.), who used the opportunity offered by the crisis to burnish their own images, which had been tarnished by scandals.

Like earlier reformers Sen. Carter Glass (D-Va.) and Rep. Henry Steagall (D-Ala.), and Sen. Paul Sarbanes (D-Md.) and Rep. Michael Oxley (R-Ohio), Frank and Dodd have assured themselves a place in U.S. history for their creation, the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Analyzing Dodd-Frank is a matter of determining whether the statute accomplished its disparate goals of reforming Wall Street and protecting consumers.

Wall Street reform was supposed to reduce the massive risks taken by too-big-to-fail institutions such as Citigroup and Bank of America. And consumers were supposed to get protection from swindlers involved in predatory lending practices in the housing market.

The Dodd-Frank Act tackles these problems in the traditional way: It creates new bureaucracies and gives them huge budgets and broad powers to make new regulations.

For consumers, we have a new Consumer Financial Protection Bureau. Consumers, though, are still expected to look out for themselves. There is a new Office of Financial Literacy, where they can learn when they are being defrauded; and a new national consumer complaint hotline that gives homeowners the ability to call a handy toll-free number to report that they are being ripped off.

It is impossible to imagine that anyone really believes that this act could have cut down on mortgage fraud if it had been in place in 2007 and 08.

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Jonathan Macey is a professor at Yale Law School specializing in banking and finance. He is also a member of the Hoover Institution Task Force on Property Rights.

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American Banker Fewer Than 2,500 Banks by 2021, Valley Nationals Lipkin Predicts May 6, 2011 By Alan Kline

Many have argued that competitive pressures and increased regulatory costs will force a wave of consolidation in the banking industry. On Thursday, a prominent banker made a stark prediction about how many institutions will survive the next decade.

Speaking on a panel at an investor conference in Boston, Gerald H. Lipkin, the chairman, president and chief executive at the Valley National Bancorp in Wayne, N.J., predicted that the number of banks in the United States would fall from about 7,600 today to below 5,000 in the next five years and below 2,500 in the next 10.

"The regulatory is environment is forcing it," said Lipkin at the conference hosted by RBC Capital Markets. He argued that the burden will be particularly heavy on small banks because they have fewer resources to absorb the cost of complying with the Dodd-Frank Act and other legislation passed in the wake of the financial crisis.

"They are going to be priced out of the market," he said.

David Payne, the chairman and chief executive officer at Westamerica Bancorporation in San Rafael, Calif., was less specific about the pace of consolidation, but agreed that it would be "significant." While he too cited regulatory burden as a factor, he said the consolidation would be driven largely by competition. With so many banks chasing too few loans, "there's just not going to be enough room for all of us," he said. "Pretty soon, people start to do stupid things."

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From:

To:

Glaser, Elizabeth (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=glasere> Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk>

Cc: Bcc: Subject: Date: Attachments:

FW: Milk case Fri May 06 2011 11:57:58 EDT Milk Industry Found. v. Glickman APA issue _17_44_36.docx Milk Ind. v. Glickman APA issue 132_F_3D_1467.docx Milk Compact Proposed Notice 61_FED__REG__19904.docx

From: Scanlon, Thomas Sent: Thursday, May 05, 2011 6:27 PM To: Deutsch, Rebecca (CFPB) Cc: Glaser, Elizabeth (CFPB) Subject: Milk case

APA case.

Tom

Thomas E. Scanlon tel. (202) 622-8170

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Milk Industry Found. v. Glickman APA issue _17_44_36.docx (Attachment 1 of 3)

Page 949 F.Supp. 882 (Cite as: 949 F.Supp. 882) Once given, congressional consent transforms interstate compact into law of United States. U.S.C.A. Const. Art. 1, 10, cl. 3. [2] Associations 41 20(1)

United States District Court, District of Columbia. MILK INDUSTRY FOUNDATION, Plaintiff, v. Daniel R. GLICKMAN, Secretary, United States Department of Agriculture, Defendant, Northeast Dairy Compact Commission, DefendantIntervenor. Civil Action No. 96-2027 (PLF). Dec. 11, 1996. Trade association whose members processed, marketed and distributed fluid milk and fluid milk products nationwide brought action asserting that Congress had impermissibly delegated to Secretary of Agriculture responsibility to consent to Northeast Interstate Dairy Compact, which enabled participating states to raise minimum milk prices payable to dairy farmers, and additionally alleging that Secretary of Agriculture in any event exercised his authority arbitrarily and capriciously in violation of Administrative Procedure Act (APA). On association motion for preliminary injunction, the s District Court, Paul L. Friedman, J., held that: (1) there was no unconstitutional delegation of congressional authority; (2) Secretary finding of s compelling public interest was rule resulting from informal rulemaking, and was reviewable under APA; (3) there was substantial likelihood of success on claim that Secretary acted arbitrarily and capriciously by failing to articulate any coherent explanation for his finding; but (4) association failed to make any showing of immediate and irreparable injury, as required for preliminary injunctive relief. Motion denied. West Headnotes [1] States 360 6

41 Associations 41k20 Actions by or Against Associations 41k20(1) k. In General. Most Cited Cases Trade association, some of whose members bought milk in region of Northeast Interstate Dairy Compact, enabling states in region to raise minimum milk prices that dairy processors had to pay to dairy farmers, had standing to challenge validity of compact; members could face significant injury if compact were to carry out its goal of raising fluid milk prices over federally-ordered price, and association, representing interests of its members, had standing to seek preliminary injunction that some, if not all, of its members could seek in their own right. U.S.C.A. Const. Art. 1, 10, cl. 3. [3] Food 178 1.9(2)

178 Food 178k1 Power to Make Regulations 178k1.9 Milk Marketing and Price 178k1.9(2) k. State Power. Most Cited Cases Under Agricultural Marketing Agreement Act (AMAA), states retain authority to establish milk prices above federally established floor set by Secretary of Agriculture. Agricultural Adjustment Act, 1 et seq., 7 U.S.C.A. 601 et seq. [4] Injunction 212 138.21

360 States 360I Political Status and Relations 360I(A) In General 360k6 k. Compacts Between States. Most Cited Cases

212 Injunction 212IV Preliminary and Interlocutory Injunctions 212IV(A) Grounds and Proceedings to Procure 212IV(A)2 Grounds and Objections 212k138.21 k. Likelihood of Success, or Presence of Substantial Questions, Combined with Other Elements. Most Cited Cases Emergency injunctive relief may be justified where there is particularly strong showing of success

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Page 949 F.Supp. 882 (Cite as: 949 F.Supp. 882) on merits, even if there is relatively slight showing of irreparable injury and, conversely, when factors of irreparable injury, public interest, and harm to defendants or other parties strongly favor interim relief, court may grant injunctive relief when moving party has merely made out substantial case on merits. [5] Constitutional Law 92 2412

Food 178

1.9(3)

178 Food 178k1 Power to Make Regulations 178k1.9 Milk Marketing and Price 178k1.9(3) k. Administrative Power. Most Cited Cases Congressional consent to Northeast Interstate Dairy Compact, enabling participating states to raise minimum milk prices that dairy processors had to pay to dairy farmers, conditioned on finding by Secretary of Agriculture of compelling public interest, provided Secretary of Agriculture with constitutionally required intelligible principle according to which Secretary had to act, despite claim that compelling public intereststandard was too vague. U.S.C.A. Const. Art. 1, 10, cl. 3; Federal Agriculture Improvement and Reform Act of 1996, 147, 110 Stat. 888. [7] Constitutional Law 92 2400

92 Constitutional Law 92XX Separation of Powers 92XX(B) Legislative Powers and Functions 92XX(B)4 Delegation of Powers 92k2410 To Executive, Particular Issues and Applications 92k2412 k. Agriculture and Food. Most Cited Cases (Formerly 92k62(6)) States 360 6

360 States 360I Political Status and Relations 360I(A) In General 360k6 k. Compacts Between States. Most Cited Cases Congress, in consenting to Northeast Interstate Dairy Compact, which enabled participating states to raise minimum milk prices that dairy processors had to pay to dairy farmers, conditioned on finding by Secretary of Agriculture of compelling public interest, did not unconstitutionally delegate to Secretary Congress exclusive power to consent to compact; compact had already been conditionally consented to by Congress when Secretary began process of making public interest finding. U.S.C.A. Const. Art. 1, 10, cl. 3; Federal Agriculture Improvement and Reform Act of 1996, 147, 110 Stat. 888. [6] Constitutional Law 92 2412

92 Constitutional Law 92XX Separation of Powers 92XX(B) Legislative Powers and Functions 92XX(B)4 Delegation of Powers 92k2400 k. In General. Most Cited Cases (Formerly 92k60) So long as Congress shall lay down by legislative act intelligible principle to which person or body authorized to exercise delegated authority is directed to conform, such legislative action is not forbidden delegation of legislative power. U.S.C.A. Const. Art. 1, 10, cl. 3. [8] Constitutional Law 92 2412

92 Constitutional Law 92XX Separation of Powers 92XX(B) Legislative Powers and Functions 92XX(B)4 Delegation of Powers 92k2410 To Executive, Particular Issues and Applications 92k2412 k. Agriculture and Food. Most Cited Cases (Formerly 92k62(6))

92 Constitutional Law 92XX Separation of Powers 92XX(B) Legislative Powers and Functions 92XX(B)4 Delegation of Powers 92k2410 To Executive, Particular Issues and Applications 92k2412 k. Agriculture and Food. Most Cited Cases (Formerly 92k62(6)) Food 178 1.9(3)

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Page 949 F.Supp. 882 (Cite as: 949 F.Supp. 882) determination whether general public or compact region was benefitted by compact, decision had prospective effect by allowing Compact Commission to begin its operations, and finding served to implement Congress consent to compact, and moreover, Secretary followed most of steps required for rulemaking under APA. U.S.C.A. Const. Art. 1, 10, cl. 3; 5 U.S.C.A. 551(4), 702; Federal Agriculture Improvement and Reform Act of 1996, 147, 110 Stat. 888. [10] Administrative Law and Procedure 15A 701 15A Administrative Law and Procedure 15AV Judicial Review of Administrative Decisions 15AV(B) Decisions and Acts Reviewable 15Ak701 k. In General. Most Cited Cases Almost any action taken by agency is either rule, order, adjudication or equivalent thereof which, if final, is subject to judicial review under Administrative Procedure Act (APA). 5 U.S.C.A. 551(13), 702. [11] Administrative Law and Procedure 15A 651 15A Administrative Law and Procedure 15AV Judicial Review of Administrative Decisions 15AV(A) In General 15Ak651 k. In General. Most Cited Cases There is strong presumption that agency action is reviewable by courts, and that presumption cannot be overcome without clear and convincing evidence that Congress intended otherwise. 5 U.S.C.A. 702. [12] Administrative Law and Procedure 15A 797 15A Administrative Law and Procedure 15AV Judicial Review of Administrative Decisions 15AV(E) Particular Questions, Review of 15Ak797 k. Legislative Questions; RuleMaking. Most Cited Cases In reviewing informal rulemaking to determine whether it is arbitrary and capricious, court must first

178 Food 178k1 Power to Make Regulations 178k1.9 Milk Marketing and Price 178k1.9(3) k. Administrative Power. Most Cited Cases Secretary of Agriculture opinion that he could s revoke his authorization to implement Northeast Interstate Dairy Compact, enabling participating states to raise minimum milk prices that dairy processors had to pay to dairy farmers, did not render Congress delegation of authority to Secretary unconstitutional; Secretary view of scope of his s authority could not constitute unconstitutional congressional delegation of legislative authority but, rather, only Congress could do that, Congress had never stated that Secretary would have power to revoke his approval to implement compact consented to by Congress, and Secretary therefore had no such authority. U.S.C.A. Const. Art. 1, 10, cl. 3; Federal Agriculture Improvement and Reform Act of 1996, 147, 110 Stat. 888. [9] Administrative Law and Procedure 15A 383 15A Administrative Law and Procedure 15AIV Powers and Proceedings of Administrative Agencies, Officers and Agents 15AIV(C) Rules and Regulations 15Ak382 Nature and Scope 15Ak383 k. Matters Subject. Most Cited Cases Food 178 4.5(6)

178 Food 178k4 Quantity and Price 178k4.5 Milk Marketing 178k4.5(6) k. Judicial Review and Enforcement of Administrative Action. Most Cited Cases Secretary of Agriculture finding of s compelling public interest satisfying condition of Congress consent to Northeast Interstate Dairy Compact, enabling participating states to raise minimum milk prices that dairy processors had to pay to dairy farmers, was ruleresulting from informal rulemaking, and was thus judicially reviewable under Administrative Procedure Act (APA); finding was

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Page 949 F.Supp. 882 (Cite as: 949 F.Supp. 882) Trade association whose members processed, marketed and distributed milk and milk products failed to make any showing of immediate and irreparable injury required for preliminary injunctive relief on challenge to validity of Northeast Interstate Dairy Compact, enabling participating states to raise minimum milk prices that dairy processors had to pay dairy farmers; before Compact Commission could issue price order, several procedural steps had to be followed, including notice, public comment, referenda and super-majority voting. U.S.C.A. Const. Art. 1, 10, cl. 3; Federal Agriculture Improvement and Reform Act of 1996, 147, 110 Stat. 888. *884 Steven J. Rosenbaum,Covington & Burling, Washington, DC, for Plaintiff. Marcia Sowles, U.S. Dept. of Justice, Civil Division, Federal Programs Branch, Washington, DC, for Defendant. Clifford M. Sloan, Wiley Rein & Fielding, Washington, DC, for Defendant-Intervenor. OPINION PAUL L. FRIEDMAN, District Judge. [1] In creating the Union, the Framers acknowledged the inherent right of the states to make compacts and agreements with each other subject only to the limitation that Congress must consent to such compacts: State shall, without the Consent No of Congress ... enter into any Agreement or Compact with another State....U.S. Const., Art. I, sec. 10, cl. 3. A compact accorded congressional consent is more than a supple device for dealing with interests confined within a region.... [I]t ... also [can be] a means of safeguarding the national interest.... West Virginia ex rel. Dyer v. Sims, 341 U.S. 22, 27, 71 S.Ct. 557, 560, 95 L.Ed. 713 (1951). Once given, congressional consent transforms an interstate compact ... into a law of the United States.Texas v. New Mexico, 462 U.S. 554, 564, 103 S.Ct. 2558, 2565, 77 L.Ed.2d 1 (1983) (quoting Cuyler v. Adams, 449 U.S. 433, 438, 101 S.Ct. 703, 707, 66 L.Ed.2d 641 (1981)). [2] In 1993, the six New England statesConnecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont-agreed to form the Northeast Interstate Dairy Compact, a compact enabling them to raise the minimum milk prices that dairy processors must pay to dairy farmers in their region for milk processed and consumed in fluid form.FN1 Congress consented to *885 the Compact through a bill signed into law on April 4, 1996. Plaintiff, the Milk Industry Foundation, a trade association whose members process, market and distribute fluid milk and fluid milk products nationwide, maintains that Congress did not consent to the Northeast Dairy Compact but instead impermissibly delegated this constitutional responsibility to the Secretary of Agriculture. It challenges this act of Congress as an unconstitutional delegation of legislative power and also maintains that, even if Congress had the authority to make such a delegation, the Secretary of Agriculture exercised his delegated authority arbitrarily and capriciously in violation of the Administrative Procedure Act. Plaintiff filed this action for declaratory and injunctive relief against the Secretary of Agriculture and seeks a preliminary injunction.FN2 FN1. The Court has been advised that the Northeast Interstate Dairy Compact Commission, the defendant-intervenor, recently changed its name to the Northeast Dairy Compact Commission. FN2. The Court need not pause over the challenge to plaintiff standing. Plaintiff is s an association with approximately 200 member companies that are milk producers throughout the United States, including the Northeast Compact Region. The Milk Industry Foundation members collectively s process approximately 80 percent of the fluid milk and fluid milk products consumed in the United States. Pl. Supplemental Br., s Affidavit of Charles N. Shaw at 1-2 (October 16, 1996). At the very least, plaintiff members buying milk in the s Compact Region could face significant injury if the Compact were to carry out its goal of raising fluid milk prices over the federally-ordered price. The Milk Industry Foundation, representing the interests of its members, undoubtedly has standing to seek a preliminary injunction that some, if not all, of its members could seek in their own right. See United Food and Commercial Workers Union Local 751 v. Brown Group, Inc., 517 U.S. 544, ----, 116 S.Ct. 1529, 1534, 134 L.Ed.2d 758 (1996). I. BACKGROUND [3] In a response to the disruption of agriculture

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Page 949 F.Supp. 882 (Cite as: 949 F.Supp. 882) product pricing during the Great Depression that had an injurious effect on farmers, including a severe drop in milk prices, Congress passed the Agricultural Marketing Agreement Act ( AMAA in 1937. 7 ) U.S.C. 601 et seq. See Cumberland Farms, Inc. v. Lyng, Civ. No. 88-2406 (CSF), 1989 WL 52697 (D.N.J. May 15, 1989). By this Act, Congress, inter alia, initiated the federal program for the regulation of minimum milk prices that milk processors must pay to dairy farmers, and it delegated to the Secretary of Agriculture the authority to set minimum milk prices nationwide. These national prices are to reflect the available supplies of feeds, and other economic conditions which affect market supply and demand for milk and its products in the marketing area ...; [the need to] insure a sufficient quantity of pure and wholesome milk to meet current needs; [the need to] assure a level of farm income adequate to maintain productive capacities sufficient to meet anticipated future needs, and be in the public interest. 7 U.S.C. 608c(18). The proceeds of milk sales by all processors subject to the Secretary s regulations are pooled and later distributed in accordance with a weighted average to all dairy farmers who have provided milk at the federally set price. 7 U.S.C. 608c(5)(B)(ii). Under the AMAA, the states retain the authority to establish milk prices above the federally established floor set by the Secretary. See United Dairy Farmers Cooperative Ass v. Milk Control Comm 335 F.Supp. 1008, n n, 1013-15 (M.D.Pa.) (three-judge court), aff without d opinion, 404 U.S. 930, 92 S.Ct. 280, 30 L.Ed.2d 244 (1971). In 1988, Vermont began considering the possibility of regulating milk prices beyond its own state borders by forming an interstate compact to be comprised of the states of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont. By 1993, all six of the New England state legislatures had approved the formation of the Northeast Interstate Dairy Compact, and all six of the statesgovernors had signed resolutions supporting it. The Compact states agreed to establish a Commission to administer the Compact. The Commission was to consist of three to five persons from each state, with at least one person from each state being a dairy producer and another a consumer representative. Compact Art. III, *886 4.FN3 FN3. The Northeast Interstate Dairy Compact is contained within S.J.Res. 28, 104th Cong. 1(b) (1995). See Pl. Mot. s for Prelim.Injunction, Ex. 9. Under the Compact, the Commission would have the authority to (1) review and propose changes in state laws and regulations pertaining to milk and dairy products, (2) review and recommend changes in the existing structure of milk assembly and distribution, (3) investigate costs and charges for milk hauling, processing and other services, (4) examine the economic forces affecting milk production, consumption and prices, and (5) establish an over-order price to producers, a price up to $1.50 over the federal order minimum price for milk used in fluid products, including the authority to require that all handlers, except producer-handlers, pay producers the over-order price for milk used in fluid products. Compact Art. IV, 8, 9(a), 9(b). The Commission price setting powers purport to extend s to processing plants located both within and without the New England Compact region with respect to milk the processors sell in New England. Compact Art. II, 2(7), Art. IV, 9(d). The Compact states first sought congressional approval of the Compact with a bill introduced in both houses of the 103d Congress, S. 2069 in the Senate and H.R. 4560 in the House. Neither bill was enacted. An effort to include congressional approval of the Compact in the Balanced Budget Reconciliation Act of 1995, H.R. 2491, in the 104th Congress also failed, as did the attempt to pass a Senate Resolution, providing for Compact approval. S.J.Res. 28, 104th Cong. 1(b) (1995). Compact proponents then turned to the Federal Agricultural Improvement and Reform Act of 1996 (the Farm Bill or FAIRA which touched a ), variety of critical agricultural issues. When first introduced, FAIRA contained no provision relating to the Northeast Dairy Compact in either the House or the Senate. The House bill, H.R. 2854, was passed on February 29, 1996, still without any provision relating to the Compact. On the Senate side, Compact proponents introduced proposed Amendment 3184 to S. 1541 which added a provision to the Farm Bill consenting to the Compact. 142 CONG.REC. S999 (1996); Pl. Mot. for Prelim. Injunction, Ex. 16. A s vote on the Senate floor resulted in the defeat of the amendment, and the Senate passed the Farm Bill without a provision consenting to the Compact. 142

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Page 949 F.Supp. 882 (Cite as: 949 F.Supp. 882) CONG.REC. S1001-36, S1191-1262 (1996); Pl. s Mot. for Prelim. Injunction, Exs. 17, 18. The House and Senate Farm Bills then went to a House-Senate Conference Committee. The Committee voted to include a provision in the bill, Section 147, that would constitute Congressconsent to the Compact. No written record of the Conference Committee deliberations was made, and the Conference Report merely recites the language of Section 147 without any explanation for its inclusion. H.R. Conf. Rep. No. 104-494, 104th Cong. at 339 (1996); Pl. Mot. for Prelim. Injunction, Ex. 19. s There therefore is no legislative history that explains the reasoning behind the decision of Congress to add Section 147 to the Farm Bill. The Conference Report on the Farm Bill, including Section 147, was passed by both the House and the Senate on March 28, 1996. It was signed by the President and became law on April 14, 1996, as the Federal Agricultural Improvement and Reform Act of 1996, Pub.L. No. 104-127, 147, 110 Stat. 888, 919-20 (1996). See Pl. Mot. for Prelim. Injunction, Ex. 22. s Section 147 of FAIRA provides: Congress hereby consents to the Northeast Interstate Dairy Compact entered into among the States of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont as specified in section 1(b) Senate Joint Resolution 28 of the 104th Congress, as placed on the calendar of the Senate, subject to the following conditions: (1) FINDING OF COMPELLING PUBLIC INTEREST.-Based upon a finding by the Secretary [of Agriculture] of a compelling interest in the Compact region, the Secretary may grant the States that have ratified the Northeast Interstate Dairy Compact, as of the date *887 of enactment of this title, the authority to implement the Northeast Interstate Dairy Compact. FAIRA, Pub.L. No. 104-127, 147, 110 Stat. 888, 919 (1996). See Pl. Mot. for Prelim. s Injunction, Ex. 22.FN4 FN4. Section 147 also provided: (2) LIMITATION ON MANUFACTURING PRICE.-The Northeast Interstate Dairy Compact Commission shall not regulate [milk prices] other than [for] Class I (fluid milk).... (3) DURATION.-Consent for the Northeast Interstate Dairy Compact shall terminate concurrent with the Secretary s implementation of the dairy pricing and Federal milk marketing order consolidation and reforms.... (4) ADDITIONAL STATES.-Delaware, New Jersey, New York, Pennsylvania, Maryland, and Virginia are the only additional States that may join the Northeast Interstate Dairy Compact.... (5) COMPENSATION OF COMMODITY CREDIT CORPORATION.- ... The Northeast Dairy Compact Commission shall compensate the Commodity Credit Corporation for the cost of any purchases of milk and milk products by the Corporation that result from the projected rate of increase in milk production for the fiscal year within the Compact region in excess of the national average rate of the increase in milk production.... (6) MILK MARKETING ORDER ADMINISTRATOR.-At the request of the ... Compact Commission, the Administrator of the applicable Federal milk marketing order issued under [the AMAA] shall provide technical assistance to the Compact Commission.... (7) FURTHER CONDITIONS.-The ... Compact Commission shall not prohibit or in any way limit the marketing in the Compact region of any milk or milk product produced in any other production area in the United States. The Compact Commission shall respect and abide by the ongoing procedures between Federal milk marketing orders.... The Compact Commission shall not use compensatory payments ... as a barrier to the entry of milk into the Compact region or for any other purpose. FAIRA, Pub.L. No. 104-127, 147, 110

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Page 949 F.Supp. 882 (Cite as: 949 F.Supp. 882) Stat. 888, 919-20 (1996): Pl. Mot. for s Prelim.Injunction, Ex. 22. On May 3, 1996, the Secretary of Agriculture began the process of making the required compelling public interest finding through a Federal Register Notice soliciting public comments on whether there exists a compelling public interest in the Compact region.61 FED.REG. 19,904 (1996); Pl. Mot. for s Prelim. Injunction, Ex. 23. As a result, over 1,600 comments were filed with the Secretary, both for and against Compact approval. Def. Mem. in Opp at s n 8; Intervenor Mem. in Opp at 39. Those groups s n opposing approval included several Midwestern states, consumer groups and dairy farmer organizations in the Midwest and Northeast. Those groups supporting approval of the Compact included New England dairy farmers, the six Compact State governors, and various state legislatures. On August 28, 1996, the Secretary of Agriculture published his finding of compelling public interest in the Federal Register, which read in its entirety: Whereas the State legislatures in Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont have approved the Northeast Interstate Dairy Compact, the governor of each Compact State has signed a resolution supporting the Compact, the Congress has consented to the Compact in the Federal Agriculture Improvement and Reform (FAIR) Act of 1996, and approximately ninety-five percent of the comments the Department of Agriculture received regarding the Compact supported its implementation, I hereby find that a compelling public interest in the Compact region exists and authorize the Compact States to implement the Northeast Interstate Dairy Compact. This finding and authorization shall be effective immediately and shall be published in the Federal Register. 61 FED.REG. 44,290 (1996); Pl. Mot. for s Prelim. Injunction, Ex. 24. At the same time, the Secretary of Agriculture issued a press statement, also published in the Federal Register, which included the following: While it is unclear what specific actions the Compact Commission will take to implement the Compact, I am concerned about the potential effects of the Compact in several respects. I intend therefore, to monitor closely its implementation. I also encourage Congress to exercise its oversight function and monitor the implementation of the Compact. If my expectations are not met, or if conditions otherwise *888 warrant, I will revoke this authorization to implement the Compact. I expect that the Compact Commission will implement the Compact in a way that does not burden other regions of the country, consistent with the provisions of the FAIR Act and the Compact. I would be greatly concerned if the Commission restricts in any way the ability of producers to ship milk into the Compact region. I will monitor whether the Compact has any adverse effects on the income of dairy producers outside the Compact region as well as the extent to which the Commission utilizes its authority to impose production controls to minimize the effect of the Compact on other dairy producing regions. I also expect the Commission to ensure that its actions are flexible and responsive to changing supply, demand and price conditions in milk markets. Perhaps most significantly, I am deeply concerned about and will closely monitor the effect of the Compact on consumers, especially lowincome families, within the Compact region. I expect that the Commission will pay close attention to and monitor the effects of its decisions on consumers before and after it takes any action. I also expect the Commission and Compact States to provide assistance to offset any increased burden on low-income families in the Compact region. I am also concerned about the effect of the Compact on the Department of Agriculture nutrition s programs, and I expect the Commission to exercise its authority to reimburse participants in the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC).... The Compact is a transitional milk marketing system for the region and will expire when a new nationwide Federal milk marketing order structure is implemented. I believe the approach outlined in this statement offers the best opportunity to strengthen the dairy industry in the Compact region during the transition to the reformed milk marketing order structure required by the FAIR Act. 61 FED.REG. 44,291 (1996); Pl. Mot. for s

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Page 949 F.Supp. 882 (Cite as: 949 F.Supp. 882) Prelim. Injunction, Ex. 30. II. DISCUSSION A. Standards For Granting Emergency Injunctive Relief In deciding whether to grant emergency injunctive relief, the Court must consider (1) whether there is a substantial likelihood that plaintiff will succeed on the merits of the case, (2) whether plaintiff will suffer irreparable injury absent an injunction, (3) the harm to defendants or other interested parties, and (4) whether an injunction would be in the public interest or at least not be adverse to the public interest. Sea Containers Ltd. v. Stena AB, 890 F.2d 1205, 1208 (D.C.Cir.1989); Washington Metro. Area Transit Comm v. Holiday n Tours, Inc., 559 F.2d 841, 843 (D.C.Cir.1977). [4] Plaintiff is not required to prevail on each of these factors. Rather, under Holiday Tours, the factors must be viewed as a continuum, with more of one factor compensating for less of another. the If arguments for one factor are particularly strong, an injunction may issue even if the arguments in other areas are rather weak.CityFed Fin. Corp. v. Office of Thrift Supervision, 58 F.3d 738, 747 (D.C.Cir.1995). An injunction may be justified where there is a particularly strong likelihood of success on the merits even if there is a relatively slight showing of irreparable injury.Id. Conversely, when the other three factors strongly favor interim relief, a court may grant injunctive relief when the moving party has merely made out a substantial case on the merits. The necessary level or degree of likelihood of success that must be shown will vary according to the Court assessment of the other s factors. Washington Metro. Area Transit Comm v. n Holiday Tours, Inc., 559 F.2d at 843-45. In sum, an injunction may be issued with either a high probability of success and some injury, or vice versa. Cuomo v. United States Nuclear Regulatory Comm 772 F.2d 972, 974 (D.C.Cir.1985). n, In this case, the Court finds that plaintiff has a substantial likelihood of success on the merits with respect to its Administrative Procedure Act claim, although not with respect to its constitutional claim. The most *889 relevant inquiry therefore is whether plaintiff will suffer irreparable injury. B. Substantial Likelihood of Success on the Merits 1. Unconstitutional Delegation of Congressional Authority Plaintiff argues that the Constitution provides that only Congress can consent to an interstate compact, that the consent of Congress is a specific action, effective by its own force, and that the first condition of Section 147 of the 1996 Farm Billgiving the Secretary of Agriculture authority to implement the compact only upon a finding of a compelling public interest in the Compact regionconstitutes an unconstitutional delegation of legislative authority to the Executive Branch of government. It relies on the first articulation of the nondelegation doctrine by the Supreme Court in Field v. Clark, 143 U.S. 649, 692, 12 S.Ct. 495, 504, 36 L.Ed. 294 (1892) ( That Congress cannot delegate legislative power to the President is a principle universally recognized as vital to the integrity and maintenance of the system of government ordained by the Constitution and the most recent one by a ), court of appeals in South Dakota v. U.S. Dep of t Interior, 69 F.3d 878 (8th Cir.1995), vacated and remanded, 519 U.S. 919, 117 S.Ct. 286, 136 L.Ed.2d 205 (1996).FN5 FN5. Interestingly, in Field v. Clark, the Supreme Court upheld the delegation by Congress to the President to impose duties on the import of certain items if the country of origin imposed unreasonable duties on American-made goods. 143 U.S. at 694, 12 S.Ct. at 505. Similarly, in a case in which the Court made the unequivocal statement, That the legislative power of Congress cannot be delegated is, of course, clear,the Court upheld the delegation of power by Congress to the Secretaries of the Treasury, Agriculture, Commerce and Labor to make rules and regulations permitting variations to and exemptions from a hard and fast ruleregarding the proper labeling of food. United States v. Shreveport Grain & Elevator Co., 287 U.S. 77, 82, 85, 53 S.Ct. 42, 43-44, 44-45, 77 L.Ed. 175 (1932) ( Congress may declare its will, and, after fixing a primary standard, devolve upon administrative officers their power to fill up the details by prescribing administrative rules and regulations. See United States v. ). Grimaud, 220 U.S. 506, 521, 31 S.Ct. 480, 484, 55 L.Ed. 563 (1911) ( [T]he authority to make administrative rules is not a delegation of legislative power. ). The Supreme Court has in fact held delegations of legislative power to Executive Branch departments

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Page 949 F.Supp. 882 (Cite as: 949 F.Supp. 882) or agencies unconstitutional on only two occasions, both in the same year and both involving delegations under the same statute, the National Industrial Recovery Act. Panama Refining Co. v. Ryan, 293 U.S. 388, 55 S.Ct. 241, 79 L.Ed. 446 (1935); A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495, 55 S.Ct. 837, 79 L.Ed. 1570 (1935). As Professor Davis has pointed out, these decisions are best understood in their unique historical context, which included deep skepticism about President Roosevelt revolutionary economic recovery s program after the Great Depression and, in the case of Schechter Poultry, the most sweeping congressional delegation of all time. KENNETH CULP DAVIS AND RICHARD J. PIERCE, JR., ADMINISTRATIVE LAW TREATISE 2.6, 70-71 (3d ed. 1994). Likewise, Judge Leventhal characterized these cases as arising from an extremist pattern of delegation run riot in the New Deal era. Amalgamated Meat Cutters and Butcher Workmen of North America, AFL-CIO v. Connally, 337 F.Supp. 737, 763 (D.D.C.1971) (threejudge court). And as Professor Davis has pointed out, [t]he Panama decision cannot be reconciled with earlier or later decisions of the Supreme Court,and neither Panama nor Schechter reflect the law today.KENNETH CULP DAVIS AND RICHARD J. PIERCE, JR., ADMINISTRATIVE LAW TREATISE 2.6, 71-72 (3d ed.1994). As Judge Murphy said in her dissent panel decision in South Dakota v. U.S. Interior, the only decision in six decades congressional delegation of unconstitutional, from the Dep of t to find a authority commodity prices that would be fair and equitable and would effectuate purpose of Emergency Price Control Act of 1942); FPC v. Hope Natural Gas Co., 320 U.S. 591, 600, 64 S.Ct. 281, 286-87, 88 L.Ed. 333 (1944) (authority to determine just and reasonable rates); National Broadcasting Co. v. United States, 319 U.S. 190, 225-26, 63 S.Ct. 997, 1013, 87 L.Ed. 1344 (1943) (authority to regulate broadcast licensing for public interest, convenience, or necessity The delegation ). doctrine has in fact evolved into a tool of statutory construction, by which reviewing courts give narrow constructions to statutory delegations that might otherwise be thought to be unconstitutional. See Mistretta, 488 U.S. at 373 n. 7, 109 S.Ct. at 655 n. 7. 69 F.3d at 886 (Murphy, J., dissenting). In 1944, in upholding the delegation to the Office of Price Administration under the Emergency Price Control Act of the authority to set maximum prices and decide when they should be imposed, the Supreme Court recognized the value of congressional delegation in the modern administrative state: The Constitution as a continuously operative charter of government does not demand the impossible or the impracticable. It does not require that Congress find for itself every fact upon which it desires to base legislative action or that it make for itself detailed determinations which it has declared to be prerequisite to the application of the legislative policy to particular facts and circumstances impossible for Congress itself properly to investigate. Yakus v. United States, 321 U.S. 414, 424, 64 S.Ct. 660, 667, 88 L.Ed. 834 (1944). Since Yakus, the nondelegation doctrine has diminished in importance as the Supreme Court and other courts have continued to recognize the necessity of congressional delegation. See, e.g., Mistretta v. United States, 488 U.S. 361, 372, 109 S.Ct. 647, 654, 102 L.Ed.2d 714 (1989) ( [T]he nondelegation doctrine ... do[es] not prevent Congress from obtaining the assistance of its coordinate Branches. Amalgamated Meat Cutters ); and Butcher Workmen of North America, AFL-CIO v. Connally, 337 F.Supp. at 752 ( The national Government has the power to do what is needful for the great national purposes that identify this

Only twice in its history, and not since 1935, has the Supreme Court invalidated a statute on the ground of excessive delegation of legislative authority. Since 1935, the Supreme Court has consistently upheld statutes involving broad delegations of authority. See e.g., Mistretta v. United States, 488 U.S. 361, 372-73, 109 S.Ct. 647, 654-55, 102 L.Ed.2d 714 (1989) (authority to promulgate sentencing guidelines for federal criminal offenses); *890Lichter v. United States, 334 U.S. 742, 785-86, 68 S.Ct. 1294, 1316-17, 92 L.Ed. 1694 (1948) (authority to determine excessive profits); American Power & Light Co. v. SEC, 329 U.S. 90, 67 S.Ct. 133, 91 L.Ed. 103 (1946) (authority to prevent unfair or inequitable distribution of voting power among security holders); Yakus v. United States, 321 U.S. 414, 64 S.Ct. 660, 88 L.Ed. 834 (1944) (authority to fix

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Page 949 F.Supp. 882 (Cite as: 949 F.Supp. 882) country adjustments to change and ultimately s survival. Indeed, our increasingly complex ) in society, replete with ever changing and more technical problems, Congress simply cannot do its job absent an ability to delegate power under broad general directives. Mistretta v. United States, 488 U.S. at 372, 109 S.Ct. at 655. Therefore, today the nondelegation doctrine is reserved for what Judge Leventhal has called the extremist instance. Amalgamated Meat Cutters and Butcher Workmen of North America, AFL-CIO v. Connally, 337 F.Supp. at 762. [5] Plaintiff asserts that Section 147 of the Farm Bill is one of those extreme cases of impermissible congressional delegation that Judge Leventhal had in mind and that the Supreme Court struck down in two cases at the height of the New Deal over sixty years ago. Plaintiff argues that Article I, Section 10, Clause 3 of the United States Constitution means that the power to approve any interstate compact rests exclusively with Congress, and that Congress in Section 147 of the Farm Bill unconstitutionally delegated to the Secretary of Agriculture its exclusive power to consent to the Northeast Interstate Dairy Compact by first requiring him to find a compelling public interest in order to grant the New England states the authority to implement the Compact. The Court disagrees. The Court finds that Congress did expressly consent to the Compact, as it was required to do by the Constitution, and that it did not delegate its exclusivepower to consent to an interstate compact to the Secretary of Agriculture. Under Article I, Section 10, Clause 3, Congress exercises national supervision through its power to grant or *891 withhold consent, or to grant it under appropriate conditions. Petty v. Tennessee-Missouri Bridge Commission, 359 U.S. 275, 282 n. 7, 79 S.Ct. 785, 790 n. 7, 3 L.Ed.2d 804 (1959) (quoting Frankfurter and Landis, The Compact Clause of the ConstitutionA Study in Interstate Adjustments, 34 YALE L.J. 685, 694-95 (1925)). In this case, Congress made its consent subject to the fulfillment of certain conditions, one being that the Secretary of Agriculture make a finding that approval of the Compact was a compelling public interest in the Northeast region.FN6 In other words, the Compact had already been conditionally consented to by the Congress when the Secretary began the process of making his public interest finding. By conditioning its consent to the Compact on the making of such a finding, Congress did not run afoul of the nondelegation doctrine. As the Supreme Court has said, [i]t can hardly be doubted that in giving consent [to a compact] Congress may impose conditions. James v. Dravo Contracting Co., 302 U.S. 134, 148, 58 S.Ct. 208, 216, 82 L.Ed. 155 (1937); see Tobin v. United States, 306 F.2d 270, 272 (D.C.Cir.), cert. denied, 371 U.S. 902, 83 S.Ct. 206, 9 L.Ed.2d 165 (1962). FN6. See infra note 4 for the several other conditions Congress placed on its consent to the Compact. [6] Plaintiff also argues that Section 147 of the Farm Bill is unconstitutional because even if it were a proper delegation of congressional authority, it fails to provide the Secretary of Agriculture with any intelligible principles according to which he must act. See Loving v. United States, 517 U.S. 748, ----, 116 S.Ct. 1737, 1750, 135 L.Ed.2d 36 (1996). Plaintiff asserts that the compelling public interest standard is too vague to function as such an intelligible principle and could not have meaningfully guided the Secretary finding or s enable[d] Congress, the courts and the public to ascertain whether the [Secretary] ... ha[d] conformed to those standards.Yakus v. United States, 321 U.S. at 426, 64 S.Ct. at 668. [7] The intelligible principle standard on which plaintiff relies is of course the proper touchstone for analysis. As the Supreme Court has stated: long as Congress So shall lay down by legislative act an intelligible principle to which the person or body authorized to [exercise the delegated authority] is directed to conform, such legislative action is not a forbidden delegation of legislative power.Mistretta v. United States, 488 U.S. at 372, 109 S.Ct. at 655 (quoting J.W. Hampton, Jr. & Co. v. United States, 276 U.S. 394, 409, 48 S.Ct. 348, 352, 72 L.Ed. 624 (1928)). As our court of appeals has noted, however, Only the most extravagant delegations of authority, those providing no standards to constrain administrative discretion, have been condemned by the Supreme Court as unconstitutional.Humphrey v. Baker, 848 F.2d 211, 217 (D.C.Cir.), cert. denied, 488 U.S. 966, 109 S.Ct. 491, 102 L.Ed.2d 528 (1988) (emphasis added). Where plaintiff argument succeeds in theory, it s fails in practice. Standards that are equally or perhaps even more vague than the compelling public intereststandard have been upheld by the Supreme

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Page 949 F.Supp. 882 (Cite as: 949 F.Supp. 882) Court as providing more than adequate guidance in such diverse fields as transportation, communications and natural gas regulation, among many others. See, e.g., Tagg Bros. & Moorhead v. United States, 280 U.S. 420, 435, 442-43, 50 S.Ct. 220, 225-26, 74 L.Ed. 524 (1930) (upholding legislation delegating to the Secretary of Agriculture the authority to establish and enforce and reasonable rates and charges just for the furnishing of stockyard services); New York Central Securities Corp. v. United States, 287 U.S. 12, 24, 53 S.Ct. 45, 48, 77 L.Ed. 138 (1932) (permitting legislation delegating authority to consolidate carriers when the public interest in ); National Broadcasting Co. v. United States, 319 U.S. 190, 225-26, 63 S.Ct. 997, 1013-14, 87 L.Ed. 1344 (1943) (permitting licensing of radio communications as public convenience, interest or necessity requires FPC v. Hope Natural Gas Co., 320 U.S. ); 591, 600-04, 64 S.Ct. 281, 286-89, 88 L.Ed. 333 (1944) (permitting just and reasonable rates for natural gas); Yakus v. United States, 321 U.S. at 427, 64 S.Ct. at 668-69 (sufficiently definite standard that maximum beef prices must be generally fair and equitable *892Lichter v. United States, 334 U.S. ); 742, 785-87, 68 S.Ct. 1294, 1316-18, 92 L.Ed. 1694 (1948) (permitting recovery of excessive profits earned on war contracts); see also Amalgamated Meat Cutters and Butcher Workmen of North America, AFL-CIO v. Connally, 337 F.Supp. at 764 (permitting Presidential stabilization of prices, rents, wages, and salaries with such adjustments as might be necessary to prevent gross inequities ). Thus, since 1935 the Supreme Court has upheld, without deviation, Congress ability to delegate power under broad standards. Mistretta v. United States, 488 U.S. at 373, 109 S.Ct. at 655; see Loving v. United States, 517U. S. at ----, 116 S.Ct. at 1750 (since 1935, Supreme Court has upheld, without exception, delegations under standards phrased in sweeping terms Plaintiff intelligible principles ). s argument therefore must fail. FN7 FN7. Under this Court decision in s Amalgamated Meat Cutters, it is plaintiff who has the burden of proving there is that an absence of standards for the guidance of the Administrator action, so that it would s be impossible in a proper proceeding to ascertain whether the will of Congress has been obeyed. 337 F.Supp. at 746 (quoting Yakus v. United States, 321 U.S. at 426, 64 S.Ct. at 668). Plaintiff has failed to meet its burden in this case.

[8] During oral argument and in its postargument supplemental brief, plaintiff asserted that its nondelegation doctrine argument was bolstered by the following statement in the Secretary press s release published with his finding of a compelling public interest: my expectations are not met, or if If conditions otherwise warrant, I will revoke this authorization to implement the Compact. 61 FED.REG. 44,291 (1996); Pl. Mot. for Prelim. s Injunction, Ex. 30. The Secretary opinion that he s can revoke his authorization to implement the Compact is troublesome but of no effect. His view of the scope of his authority cannot constitute an unconstitutional congressional delegation of legislative authority; only the Congress can do that. Since Congress never stated in Section 147 that the Secretary would have the power to revoke his approval to implement the Compact consented to by Congress, it is obvious to the Court that the Secretary has no such authority. If the Secretary view of what s is a compelling public interest changes, or if the circumstances that gave rise to his finding are altered, he may, of course, report that fact to the Congress which may well have the authority to rescind or amend the Compact. See Compact Art. VIII, 22 ( Congress reserves the right to amend or rescind this interstate compact at any time. But see Tobin v. ). United States, 306 F.2d at 273-75.FN8 FN8. Had Congress itself purported to give the Secretary the power to revoke the approval to implement, the question before the Court would be infinitely more difficult and might implicate the nondelegation doctrine. Had Congress purported to give the Secretary the power to revoke Congress consent, there would very likely have been an unconstitutional delegation of legislative authority. But Congress did neither. In sum, Congress did not delegate to the Secretary of Agriculture its constitutionallymandated legislative authority to consent to interstate compacts. Rather, it placed conditions on its consent to the Northeast Dairy Compact, one of which required the Secretary of Agriculture to make a compelling public interest finding. Furthermore, the compelling public interest standard it articulated is well within the broad definition of an intelligible principle previously approved by the courts. The Court therefore concludes that plaintiff is not likely to succeed on the merits of its

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Page 949 F.Supp. 882 (Cite as: 949 F.Supp. 882) nondelegation doctrine claim. 2. Administrative Procedure Act Under the Administrative Procedure Act, a person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute is entitled to judicial review thereof.5 U.S.C. 702. Agency action under the APA is defined as the whole or a part of an agency rule, order, license, sanction, relief, or the equivalent or denial thereof, or failure to act. 5 U.S.C. 551(13). Agency action that is arbitrary and capricious, an abuse of discretion or a violation of law must be set aside. 5 U.S.C. 706(2)(A). Plaintiff argues that the Secretary of Agriculture finding of a compelling public interest s was arbitrary and capricious because the Secretary articulated no coherent*893 reasons to support his finding. Plaintiff maintains that it is entitled to a preliminary injunction because it is likely to succeed on this claim. [9] Initially defendant and defendant-intervenor, like plaintiff, premised their APA arguments on the notion that the Secretary finding was an informal s rulemaking. During oral argument and in its supplemental brief, however, defendant argued for the first time that the Secretary finding was not s agency action within the meaning of the APA because it was neither a rule, an adjudication, a finding, an order nor any of the other actions that make up the APA definition of s agency action.It maintains that the Secretary decision therefore is s not subject to judicial review. In its supplemental brief, defendant-intervenor joined this argument, urging that because the Secretary finding s does not fit within any cognizable categoryunder the APA s definition of agency action the Secretary finding is s assignment wholly outside the scope of the an APA.Defendant-intervenor Supplemental Brief at s 6. [10][11] The Court rejects this argument. Almost any action taken by an agency is either a rule, an order, an adjudication or equivalent ... thereof, the 5 U.S.C. 551(13), which, if final, is subject to judicial review. 5 U.S.C. 702. See Paradyne Corp. v. United States Dep of Justice, 647 F.Supp. 1228, t 1231-32 (D.D.C.1986). There is a strong presumption that agency action is reviewable by the courts, and this presumption cannot be overcome without clear and convincing evidence that Congress intended otherwise. Bowen v. Michigan Academy of Family Physicians, 476 U.S. 667, 670, 106 S.Ct. 2133, 213536, 90 L.Ed.2d 623 (1986); Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 410, 91 S.Ct. 814, 820-21, 28 L.Ed.2d 136 (1971); Abbott Laboratories v. Gardner, 387 U.S. 136, 140-41, 87 S.Ct. 1507, 1510-12, 18 L.Ed.2d 681 (1967). Very rarely does Congress withhold judicial review. The exceptions, those few matters wholly committed to unreviewable agency discretion, are extremely rare. See Franklin v. Massachusetts, 505 U.S. 788, 816-20, 112 S.Ct. 2767, 2783-86, 120 L.Ed.2d 636 (1992) (Stevens, J., concurring). Neither the arguments of defendant and defendant-intervenor nor the few, entirely distinguishable cases they cite persuade the Court that this is one of those rare exceptions. The Court concludes that the Secretary s compelling public interest finding was a rule that resulted from an informal rulemaking. The APA broadly defines a rule as whole or part of an the agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or describing the organization, procedure or practice requirements of an agency.... 5 U.S.C. 551(4). As our court of appeals has noted, the APA definition of a rule s includes nearly every statement an agency may make. Center for Auto Safety v. NHTSA, 710 F.2d 842, 846 (D.C.Cir.1983); see Batterton v. Marshall, 648 F.2d 694, 700 (D.C.Cir.1980) ( The breadth of this definition cannot be gainsaid. National ); Wildlife Fed v. Babbitt, 835 F.Supp. 654, 661 n (D.D.C.1993) (same). The Secretary action meets all the s requirements of the definition of a rule under the APA. See National Wildlife Fed v. Babbitt, 835 n F.Supp. at 661. First, the Secretary finding is a s statement of general or particular applicability. 5 U.S.C. 551(4). In contrast to an adjudication, the decision was issued as part of an agency statement and does not purport to decide whether the Compact would benefit a particular individual or to resolve past and present rights and liabilities of particular individuals. See Association of Nat Advertisers, Inc. l v. FTC, 627 F.2d 1151, 1160 (D.C.Cir.1979). Rather, it is a determination whether the general public or the Compact region is benefitted by the Compact. See Motion Picture Ass of America v. Oman, 969 F.2d n 1154, 1157 (D.C.Cir.1992) (rule is decision of general application rather than decision affecting a particular individual); Association of Nat l Advertisers, Inc. v. FTC, 627 F.2d at 1160 (contrasting rulemaking and adjudication). Second,

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Page 949 F.Supp. 882 (Cite as: 949 F.Supp. 882) the decision has a prospective or future effect by allowing the Compact Commission to begin its operations. See Yesler Terrace Community Council v. Cisneros, 37 F.3d 442, 448 (9th Cir.1994) ( Rulemaking ... is prospective, and has a definitive*894 effect on individuals only after the rule subsequently is applied. Community Nutrition ); Inst. v. Young, 818 F.2d 943, 946 (D.C.Cir.1987) (agency decision is a ruleunder APA where it has future effect). Third, the statement is designed to implementa law. 5 U.S.C. 551(4). The Secretary s finding of a compelling public interest served to implement Congress consent of the Northeast Compact. See RLC Indus. Co. v. Commissioner of IRS, 58 F.3d 413, 417 (9th Cir.1995) ( rule completes a congressional act). In sum, the Secretary decision bears all the earmarks of a rule. s The administrative steps Secretary Glickman took before making his finding are telling in themselves. The Secretary followed most of the steps required for a rulemaking under the APA: He published a Federal Register notice soliciting public comment, he received comments, and he then published his finding in the Federal Register. See 5 U.S.C. 553(b), (c), (d). Even though the Secretary did not entitle the agency action a rule, the D.C. Circuit has held that if the administrator follows the administrative steps necessary for a rulemaking, the final agency action is invariably a rule. City of Chicago v. FPC, 458 F.2d 731, 739 (D.C.Cir.1971); see also Motion Picture Ass of America v. Oman, n 969 F.2d at 1157. is the substance of what the [I]t [agency] has purported to do and has done which is decisive.Center for Auto Safety v. NHTSA, 710 F.2d at 846 (quoting Columbia Broadcasting System, Inc. v. United States, 316 U.S. 407, 416, 62 S.Ct. 1194, 1199-1200, 86 L.Ed. 1563 (1942)). [12][13] In reviewing an informal rulemaking to determine if it is arbitrary and capricious,the Court must first make a searching and careful inquiry. International Ladies Garment Union v. Donovan, 722 F.2d 795, 815 (D.C.Cir.1983); see Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. at 416, 91 S.Ct. at 823. The Court inquiry necessarily s involves a review of the agency reasons for its s rulemaking decision; thus, if the agency or Department has failed to cogently explain why it has exercised its discretion in a given manner, International Ladies Garment Union v. Donovan, 722 F.2d at 815 n. 35, a searching and careful inquiry is impossible, and the action of the Department or agency must be set aside as arbitrary and capricious. See Bowen v. American Hospital Ass 476 U.S. n, 610, 626-27, 106 S.Ct. 2101, 2112-13, 90 L.Ed.2d 584 (1986); Motor Vehicle Mfrs. Ass v. State Farm n Mutual Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 2866-67, 77 L.Ed.2d 443 (1983). Although the court may uphold a decision of less than ideal clarity if the agency path may reasonably be s discerned, Bowman Transp., Inc. v. Arkansas-Best Freight System, 419 U.S. 281, 286, 95 S.Ct. 438, 442, 42 L.Ed.2d 447 (1974), at a minimum, an agency must articulate why it has exercised its discretion in a particular way and provide an adequate explanation for its action. Mere conclusory statements are not enough. Motor Vehicle Mfrs. Ass v. State Farm n. Mutual Auto Ins. Co., 463 U.S. at 48-49, 103 S.Ct. at 2869-70; International Fabricare Inst. v. EPA, 972 F.2d 384, 389, 392 (D.C.Cir.1992). [14][15] Although there is a presumption in favor of the validity of administrative action, Ethicon, Inc. v. FDA, 762 F.Supp. 382, 386 (D.D.C.1991); see Motor Vehicle Mfrs. Ass v. State n Farm Mutual Auto Ins. Co., 463 U.S. at 43, 103 S.Ct. at 2866-67; Ethyl Corp. v. EPA, 541 F.2d 1, 34 (D.C.Cir.), cert. denied, 426 U.S. 941, 96 S.Ct. 2662, 2663, 49 L.Ed.2d 394 (1976), the Court concludes that the Secretary finding in this case is wholly s lacking because he failed to articulate any coherent explanation for his finding in his one-paragraph, twosentence decision. See Consumer Fed of America v. n U.S. Dep of Health and Human Services, 83 F.3d t 1497, 1506 (D.C.Cir.1996) (agency s explanation is simply too terse to support the agency decision s ). In the absence of such an explanation, the Court cannot exercise a searching and careful inquiryof the Secretary reasons for finding a compelling s public interest in the approval of the Compact. As plaintiff points out, the Secretary finding s consists essentially of four statements: (1) that the relevant state legislatures approved the Compact, (2) that the governor of each state signed a resolution supporting it, (3) that Congress had consented to it, and (4) *895 that ninety-five percent of the comments received supported its implementation. Only the fourth fact was unknown before the Secretary asked for comments, and the mere quantity of favorable comments by itself hardly supports a finding of a compelling public interest in the Compact region. A simple head count will not do. Natural Resources Defense Council v. EPA, 822 F.2d 104, 122 n. 17 (D.C.Cir.1987) (agency decisionmaking is not democratic process by which the a majority of commentators prevail by sheer weight of

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Page 949 F.Supp. 882 (Cite as: 949 F.Supp. 882) numbers The quality, content, reasoning and tenor ). of the comments might possibly support the finding, but the Secretary failed to explain how. Indeed, the Secretary is substantially more voluble and explicit about the concerns he has about the Compact than he is about his reasons for making a compelling public interest finding. In the Secretary press statement published with the s finding, he expressed concern about burdening other regions of the country, the potential for the Commission to restrict the ability of producers to ship milk into the Compact region, whether the Compact might have adverse effects on the income of dairy producers outside the Compact region, the extent to which the Commission might utilize its authority to impose production controls, the effect of the Compact on the Department nutrition programs, s and the effect of the Compact on consumers, especially low-income families, within the Compact region. 61 FED.REG. 44,291 (1996); Pl. Mot. for s Prelim. Injunction, Ex. 30. These concerns, expressed in four paragraphs, overshadow the four reasons, expressed in two sentences, that the Secretary gave for finding a compelling public interest. Defendant, defendant-intervenor and the six New England states in their amicus curiae brief all argue that the record fully supports the Secretary s compelling public interest finding. Each of them pulls bits and pieces from the exhibits submitted by plaintiff (including the legislative historyfrom bills never enacted) and from the comments submitted to the Secretary, as well as from the material considered by some of the state legislatures and governors. From these materials, they argue that the record contains overwhelming support for the Secretary finding. s That may or may not be true. But no matter how thorough counsel may have been in combing through the record and picking out the materials they think support the Secretary finding, that is no substitute s for the Secretary himself reviewing the record materials, examining the relevant data, and coherently articulating the decision he made and the bases on which he in fact rested his finding-which is, of course, his obligation under the APA. Motor Vehicle Mfrs. Ass v. State Farm Mutual Auto Ins. n Co., 463 U.S. at 48-49, 103 S.Ct. at 2869-70. An agency action must be upheld, if at all, on the bases s articulated by the agency itself,not those articulated after the fact by its lawyers. Id. at 50, 103 S.Ct. at 2870; see Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. at 419-20, 91 S.Ct. at 825-26 (litigation affidavits are merely post-hoc rationalizations that cannot be the basis for review under section 706 of the APA); City of Brookings Municipal Telephone Co. v. FCC, 822 F.2d 1153, 1165 (D.C.Cir.1987) ( Post hoc rationalizations advanced to remedy inadequacies in the agency s record or its explanation are bootless. A court may ). not supply a reasoned basis for the agency action s that the agency itself has not given. Motor Vehicle Mfrs. Ass v. State Farm Mutual Auto Ins. Co., 463 n U.S. at 43, 103 S.Ct. at 2867 (quoting SEC v. Chenery Corp., 332 U.S. 194, 196, 67 S.Ct. 1575, 1577, 91 L.Ed. 1995 (1947)). Because the Secretary failed to articulate any coherent reasons or justification for his finding of a compelling public interest, the Court concludes that there is a substantial likelihood that plaintiff will succeed on the merits of its APA claim. C. Irreparable Harm and the Public Interest [16] Plaintiff argues that its members will suffer irreparable harm because the Compact Commission will increase the prices plaintiff members will have s to pay for milk by setting and charging minimum prices above the federal minimum, collecting the money charged from milk processors and distributing it among the more than 4,000 *896 New England dairy farmers, so that it will be impossible for plaintiff members to recover the excess even if s ultimately they are successful in this litigation. FN9 Defendant and defendant-intervenor do not dispute the fact that if the Compact Commission raises the price that milk producers must pay dairy farmers the money will be unrecoverable. They maintain, however, that plaintiff irreparable harm argument is s based on conjecture and speculation because the Commission has not yet raised prices, there is no assurance that it will do so, and there are numerous procedural steps that must be taken before the Commission decides whether to set higher prices. Finally, they argue that it would be an extraordinary and unwarranted step to enjoin a compact consented to by Congress, which the Secretary of Agriculture has found to be in the compelling public interest because it offers best opportunity to strengthen the the dairy industry in the Compact region.FN10 FN9. It also argues that because Congress and the Secretary of Agriculture have acted in a way that contravenes separation of powers, plaintiff injuries are constitutional s in nature and that constitutional injuries are irreparable per se. Because the Court has

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Page 949 F.Supp. 882 (Cite as: 949 F.Supp. 882) rejected plaintiff non-delegation argument s and because its unconstitutional per se argument, when accepted at all, has only been applied in the First Amendment context, the Court rejects this argument. See Hohe v. Casey, 868 F.2d 69, 73 (3d Cir.), cert. denied, 493 U.S. 848, 110 S.Ct. 144, 107 L.Ed.2d 102 (1989); Student Press Law Center v. Alexander, 778 F.Supp. 1227 (D.D.C.1991). FN10. On October 18, 1996, defendantintervenor, Northeast Dairy Compact Commission, filed a supplemental brief regarding an administrative assessment adopted by the Commission on October 17, 1996. This one-year administrative assessment would be levied on all milk processors in the New England region. The Court is not persuaded that plaintiff s irreparable injury argument is strengthened by the Commission adoption of this s administrative assessment. As defendant and defendant-intervenor point out, before the Commission can issue a price order, several procedural steps must be followed: (1) the Commission must undertake notice-and-comment rulemaking, hold a public hearing, consider specific criteria, and issue a written opinion; (2) each of the six member states is given one vote, and the establishment or termination of a price order over the federal price requires a two-thirds vote of the states; (3) each state is given the absolute right to opt-out of any specific regulation with which it does not agree; (4) the Commission must conduct a formal referendum of producers within the regulated area, in which the terms of the pricing order must be approved by a two-thirds vote before any order goes into effect; and (5) any Commission order is subject to judicial review. Compact Art. I, 3, Art III, 5, Art. IV, 9(e), Art V, 11-13, Art. VI, 16(c). Defendant and defendant-intervenor maintain that in these circumstances, and with these procedural protections in place, plaintiff has failed to show that injury complained of [is] of such imminence that the there is a clear and presentneed for equitable relief to prevent irreparable harm. Ashland Oil, Inc. v. FTC, 409 F.Supp. 297, 307 (D.D.C.), aff 548 F.2d d, 977 (D.C.Cir.1976) (citation and internal quotations omitted); see also Wisconsin Gas v. FERC, 758 F.2d 669, 674 (D.C.Cir.1985). Defendant and defendant-intervenor argue that if the Court issues an injunction, defendant-intervenor will be injured because it will be delayed from implementing the Compact pending resolution of this case on the merits. And defendant-intervenor asserts that an injunction could seriously injure the Compact region, whose dairy farmers are already suffering severe economic problems, and that a preliminary injunction would stop the Commission in its tracks before it has had a chance to address the problems, whether through raising prices or through its investigative or other functions. Its position is supported by the amicus brief of the six Northeast Dairy Compact states. Of course, these arguments represent the flip side of plaintiff injury argument: s implementation of the Compact would cause economic harm to plaintiff, while failure to implement would cause economic injury to defendantintervenor members and the New England states. s As for the public interest, plaintiff argues that a preliminary injunction would be in the interest of the consuming public, while defendant*897 makes an equally strong argument that a preliminary injunction would not be in the public interest because of the harm it would cause to Northeast dairy farmers and to the Compact duly consented to by Congress. The Court would be better equipped to balance the public interest factors if Congress had explained the public interest considerations that led it to pass Section 147 of the Farm Bill in the first place, or if the Secretary of Agriculture had articulated his reasons for finding a compelling public interest in the Compact region. While Congress is not required to articulate the reasons for its actions, the Secretary of Agriculture is. A carefully crafted and articulated statement of reasons for his compelling public interest finding by the Secretary of Agriculture would have been of great assistance to the Court in considering the balance of harms, but no such statement exists. Under the circumstances, the Court cannot make an educated decision regarding whether issuing a preliminary injunction in this case would or would not be in the public interest. Our court of appeals has recently reiterated the principle that even though the courts have a great degree of flexibility in applying the four-part test of Holiday Tours, the moving party must always demonstrate at least some injury because [t]he basis for injunctive relief in the federal courts has always been irreparable harm.CityFed Fin. Corp. v. Office of Thrift Supervision, 58 F.3d at 747 (citation and internal quotations omitted). In this case, plaintiff

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Page 949 F.Supp. 882 (Cite as: 949 F.Supp. 882) has failed to show certain, imminent irreparable harm. As defendant and defendant-intervenor point out, the Compact was explicitly designed with significant limitations on the Commission ability to s act swiftly. Unless the Court is to assume that the procedural steps-including notice, public comment, referenda and super-majority voting requirements-are mere charades, there is as yet no assurance that the Commission will in fact raise milk prices, or when, and thus there is no irreparable harm at this time. While it appears that a clear mission of the Commission is eventually to raise the Northeast region milk prices above the federally regulated s price order, a claim of injury for a possible future pricing order at this point is speculative and conjectural. See Compact Art. II, 2(8), Art. IV, 9, 10; 61 FED.REG. 44,291; Pl. Mot. for Prelim. s Injunction, Ex. 30. Until the Compact Commission adopts a pricing order or at least is much further along in its process, plaintiff has not been irreparably harmed. III. CONCLUSION Although plaintiff is unlikely to succeed on the merits of its nondelegation argument, it has a substantial-indeed, almost certain-likelihood of success on the merits of its APA claim. On the other hand, the irreparable injury it may suffer is remote and speculative. In the absence of some showing of immediate and irreparable injury, the Court must deny the request for a preliminary injunction, although it does so without prejudice to plaintiff s filing an application for a temporary restraining order or motion for preliminary injunction if circumstances later warrant. Since plaintiff ultimately is likely to succeed on the merits of this case, requiring the Secretary of Agriculture rule to be set aside under the APA, and s since the parties are in agreement that this case should be put on a fast track and will be disposed of on dispositive motions without a trial, the Court will set an expedited briefing and argument schedule. An Order consistent with this Opinion is issued this same day. SO ORDERED. ORDER Upon consideration of the memorandum in support of plaintiff motion, defendant and s s defendant-intervenor opposition briefs, plaintiff s s reply brief, each party supplemental brief, the s memoranda discussing the issue of an administrative assessment, the amicus curiae briefs of the six Northeast Dairy Compact states and of the Midwestern states of Minnesota, Wisconsin, North Dakota, South Dakota, and Senators Paul Wellstone, Rod Grams, Russell D. Feingold and Herbert Kohl, and the arguments presented by counsel in open Court, and for the reasons stated in the Court s accompanying Opinion, it is hereby *898 ORDERED that Plaintiff Motion for s Preliminary Injunction is DENIED; and it is FURTHER ORDERED that any necessary discovery shall be completed by December 31, 1996. Motions for summary judgment and motions to dismiss shall be filed by January 23, 1997; oppositions by February 7, 1997; and reply briefs by February 14, 1997. The Court will hear oral argument on February 25, 1997 at 2:00 p.m. SO ORDERED. D.D.C.,1996. Milk Industry Foundation v. Glickman 949 F.Supp. 882 END OF DOCUMENT

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Page 132 F.3d 1467, 328 U.S.App.D.C. 121 (Cite as: 132 F.3d 1467, 328 U.S.App.D.C. 121)

United States Court of Appeals, District of Columbia Circuit. MILK INDUSTRY FOUNDATION, Appellant, v. Daniel R. GLICKMAN, Secretary, United States Department of Agriculture and Northeast Dairy Compact Commission, Appellees. No. 97-5163. Argued Nov. 20, 1997. Decided Jan. 20, 1998. Trade association brought action against Secretary of Agriculture and commission for interstate dairy compact, alleging improper delegation of congressional authority to consent to compact and arbitrary and capricious exercise of that delegated authority. Following denial of association's motion for preliminary injunction, 949 F.Supp. 882, and grant of Secretary's motion to stay proceedings, 955 F.Supp. 8, parties cross-moved for summary judgment. The United States District Court for the District of Columbia, Paul L. Friedman, J., 967 F.Supp. 564, granted Secretary's motion and denied that of association. Association appealed. The Court of Appeals, Edwards, Chief Judge, held that: (1) power delegated by Congress to Secretary to authorize interstate dairy compact upon finding of compelling public interest in compact region was delegable power; (2) compelling public interest in compact region standard fell within established intelligible principle parameters for congressional delegations; (3) Secretary's finding that compelling public interest justified compact's authorization was agency action reviewable under Administrative Procedure Act's (APA) arbitrary and capricious standard; and (4) Secretary's finding that compelling public interest justified compact's authorization was supported by the record. Affirmed. Rogers, Circuit Judge, concurred and filed a separate opinion in which Karen LeCraft Henderson, Circuit Judge, joined. West Headnotes [1] Administrative Law and Procedure 15A 751

15A Administrative Law and Procedure 15AV Judicial Review of Administrative Decisions 15AV(D) Scope of Review in General 15Ak751 k. Limitation of scope of review in general. Most Cited Cases On claim challenging agency's action under Administrative Procedure Act (APA), Court of Appeals' review of agency's finding is deferential. 5 U.S.C.A. 551 et seq. [2] Constitutional Law 92 2412

92 Constitutional Law 92XX Separation of Powers 92XX(B) Legislative Powers and Functions 92XX(B)4 Delegation of Powers 92k2410 To Executive, Particular Issues and Applications 92k2412 k. Agriculture and food. Most Cited Cases (Formerly 92k62(6)) Food 178 1.8(4)

178 Food 178k1 Power to Make Regulations 178k1.8 Milk Products and Substitutes 178k1.8(4) k. Administrative power. Most Cited Cases States 360 6

360 States 360I Political Status and Relations 360I(A) In General 360k6 k. Compacts between states. Most Cited Cases Power delegated by Congress to Secretary of Agriculture to authorize interstate dairy compact upon finding of compelling public interest in compact region was delegable power, notwithstanding trade association's claim that delegation was impermissible on ground that consent did not entail ongoing administration of regulatory scheme by executive branch; relevant distinction between legislative and executive was one of function, not frequency, and delegated role was consistent with Secretary's role in regulation of milk

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Page 132 F.3d 1467, 328 U.S.App.D.C. 121 (Cite as: 132 F.3d 1467, 328 U.S.App.D.C. 121) prices nationwide. Federal Agriculture Improvement and Reform Act of 1996, 147, 7 U.S.C.A. 7256. [3] Constitutional Law 92 2412 Issues and Applications 92k2412 k. Agriculture and food. Most Cited Cases (Formerly 92k62(6)) Food 178 1.8(4)

92 Constitutional Law 92XX Separation of Powers 92XX(B) Legislative Powers and Functions 92XX(B)4 Delegation of Powers 92k2410 To Executive, Particular Issues and Applications 92k2412 k. Agriculture and food. Most Cited Cases (Formerly 92k62(6)) Food 178 1.8(4)

178 Food 178k1 Power to Make Regulations 178k1.8 Milk Products and Substitutes 178k1.8(4) k. Administrative power. Most Cited Cases States 360 6

178 Food 178k1 Power to Make Regulations 178k1.8 Milk Products and Substitutes 178k1.8(4) k. Administrative power. Most Cited Cases States 360 6

360 States 360I Political Status and Relations 360I(A) In General 360k6 k. Compacts between states. Most Cited Cases Compelling public interest in compact region standard established by Congress in delegating to Secretary of Agriculture power to authorize interstate dairy compact, upon finding of such interest, fell within established intelligible principleparameters for congressional delegations; standard was discernible and demanding. Federal Agriculture Improvement and Reform Act of 1996, 147, 7 U.S.C.A. 7256. [5] Constitutional Law 92 2400

360 States 360I Political Status and Relations 360I(A) In General 360k6 k. Compacts between states. Most Cited Cases Congress could lawfully delegate to Secretary of Agriculture power to authorize interstate dairy compact upon finding that compact served compelling public interest, notwithstanding trade association's claim that congressional consent to interstate compacts had to be effective of its own force, with no role for executive; association failed to offer compelling reason why delegations under Compact Consent Clause had to be treated differently than those under Congress' other Article I powers. U.S.C.A. Const. Art. 1, 10, cl. 3; Federal Agriculture Improvement and Reform Act of 1996, 147, 7 U.S.C.A. 7256. [4] Constitutional Law 92 2412

92 Constitutional Law 92XX Separation of Powers 92XX(B) Legislative Powers and Functions 92XX(B)4 Delegation of Powers 92k2400 k. In general. Most Cited Cases (Formerly 92k60) When power at issue is delegable power, Congress may provide discretionary authority to coordinate branch of government so long as Congress lays down by legislative act intelligible principle to which person or body authorized to exercise delegated authority is directed to conform. [6] Food 178 4.5(6)

92 Constitutional Law 92XX Separation of Powers 92XX(B) Legislative Powers and Functions 92XX(B)4 Delegation of Powers 92k2410 To Executive, Particular

178 Food 178k4 Quantity and Price

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Page 132 F.3d 1467, 328 U.S.App.D.C. 121 (Cite as: 132 F.3d 1467, 328 U.S.App.D.C. 121) 178k4.5 Milk Marketing 178k4.5(6) k. Judicial review and enforcement of administrative action. Most Cited Cases Secretary of Agriculture's finding that compelling public interest in compact region justified authorization of interstate dairy compact was agency action reviewable under Administrative Procedure Act's (APA) arbitrary and capricious standard. 5 U.S.C.A. 551(4, 13), 553. [7] Administrative Law and Procedure 15A 763 15A Administrative Law and Procedure 15AV Judicial Review of Administrative Decisions 15AV(D) Scope of Review in General 15Ak763 k. Arbitrary, unreasonable or capricious action; illegality. Most Cited Cases Administrative Law and Procedure 15A 790

Secretary of Agriculture's finding of compelling public interest within compact region, required to exercise congressional delegation of power to authorize interstate dairy compact, was reasonably supported by key factors, which in turn were supported by the record, that principal objective of compact was to preserve family farms in compact region, that family dairy farmers in region were under severe financial stress, and that compact would effectively preserve family dairy farms during transitional period pending reform of national scheme for regulating milk prices, at which time congressional consent to compact would expire. Federal Agriculture Improvement and Reform Act of 1996, 147, 7 U.S.C.A. 7256. [9] Administrative Law and Procedure 15A 763 15A Administrative Law and Procedure 15AV Judicial Review of Administrative Decisions 15AV(D) Scope of Review in General 15Ak763 k. Arbitrary, unreasonable or capricious action; illegality. Most Cited Cases To meet arbitrary and capricious standard of review, factors undergirding agency's finding must be appropriate to relevant context. [10] Food 178 4.5(1)

15A Administrative Law and Procedure 15AV Judicial Review of Administrative Decisions 15AV(E) Particular Questions, Review of 15Ak784 Fact Questions 15Ak790 k. Rational basis for conclusions. Most Cited Cases Agency's finding must be upheld as long as agency examined relevant data and articulated satisfactory explanation for its action, including rational connection between facts found and choice made. [8] Food 178 4.5(1)

178 Food 178k4 Quantity and Price 178k4.5 Milk Marketing 178k4.5(1) k. In general. Most Cited Cases States 360 6

178 Food 178k4 Quantity and Price 178k4.5 Milk Marketing 178k4.5(1) k. In general. Most Cited Cases States 360 6

360 States 360I Political Status and Relations 360I(A) In General 360k6 k. Compacts between states. Most Cited Cases That Secretary of Agriculture had, in reviewing milk prices pursuant to his authority under Agricultural Marketing Agreement Act of 1937 (AMAA), previously found that it would not be in public interest to raise farm-gate prices in New England did not render arbitrary and capricious

360 States 360I Political Status and Relations 360I(A) In General 360k6 k. Compacts between states. Most Cited Cases

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Page 132 F.3d 1467, 328 U.S.App.D.C. 121 (Cite as: 132 F.3d 1467, 328 U.S.App.D.C. 121) finding that compelling public interest in compact region warranted authorization of New England interstate dairy compact whose commission would be authorized to raise prices during transitional period pending federal reform of national price-regulation scheme. Agricultural Adjustment Act, 601-624, as amended, 7 U.S.C.A. 1-22; Agricultural Marketing Agreement Act of 1937, 3-6, 7 U.S.C.A. 671-674; Federal Agriculture Improvement and Reform Act of 1996, 147, 7 U.S.C.A. 7256. [11] Food 178 4.5(1) possible negative consequences of authorizing interstate dairy compact did not render invalid finding that compelling public interest in compact region justified compact's authorization; rather, it demonstrated that Secretary realized that compelling interest standard imposed high hurdle and weighed factors on all sides. Federal Agriculture Improvement and Reform Act of 1996, 147, 7 U.S.C.A. 7256. [13] Food 178 4.5(1)

178 Food 178k4 Quantity and Price 178k4.5 Milk Marketing 178k4.5(1) k. In general. Most Cited Cases States 360 6

178 Food 178k4 Quantity and Price 178k4.5 Milk Marketing 178k4.5(1) k. In general. Most Cited Cases States 360 6

360 States 360I Political Status and Relations 360I(A) In General 360k6 k. Compacts between states. Most Cited Cases Even if Secretary of Agriculture were deciding directly whether farm-gate prices for milk should be raised in finding that compelling public interest in compact region warranted authorization of New England interstate dairy compact, whose commission would be authorized to raise prices for certain period, Secretary would not be bound by his prior decision, so long as decision under review was well-reasoned. [12] Food 178 4.5(1)

360 States 360I Political Status and Relations 360I(A) In General 360k6 k. Compacts between states. Most Cited Cases Secretary of Agriculture's concern that authorization of interstate dairy compact might result in higher retail prices for fluid milk in compact region did not invalidate finding that compelling public interest existed in compact region that justified compact's authorization; assumption that compact commission would be sensitive to consumer needs, and thus that any price increases would not offset public interests warranting authorization, was amply supported by compact's structural requirements designed to protect consumer interests. Federal Agriculture Improvement and Reform Act of 1996, 147, 7 U.S.C.A. 7256. [14] Food 178 4.5(1)

178 Food 178k4 Quantity and Price 178k4.5 Milk Marketing 178k4.5(1) k. In general. Most Cited Cases States 360 6

178 Food 178k4 Quantity and Price 178k4.5 Milk Marketing 178k4.5(1) k. In general. Most Cited Cases States 360 6

360 States 360I Political Status and Relations 360I(A) In General 360k6 k. Compacts between states. Most Cited Cases That Secretary of Agriculture considered

360 States 360I Political Status and Relations 360I(A) In General 360k6 k. Compacts between states. Most Cited Cases

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Milk Ind. v. Glickman APA issue 132_F_3D_1467.docx (Attachment 2 of 3)

Page 132 F.3d 1467, 328 U.S.App.D.C. 121 (Cite as: 132 F.3d 1467, 328 U.S.App.D.C. 121) of Minnesota, St. Paul, MN, was on the brief for amici curiae States of Minnesota, Wisconsin, and South Dakota. Emily J. Gould, Assistant Attorney General, State of Vermont, was on the brief for amici curiae State of Connecticut, et al. Eric Rome was on the brief for amici curiae Public Voice for Food and Health Policy, et al. Roy J. Rodney, Jr., New Orleans, LA, and Endya E. Delpit were on the brief for amici curiae Commissioners of the Louisiana, Arkansas, Georgia, South Carolina and West Virginia Departments of Agriculture. Before: EDWARDS, Chief Judge, HENDERSON, and ROGERS, Circuit Judges. Opinion for the Court filed by Chief Judge EDWARDS. Concurring opinion filed by Circuit Judge ROGERS with whom Circuit Judge HENDERSON concurs. EDWARDS, Chief Judge: **124 In 1993, the six New England statesConnecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont ( Compact states )agreed to form the Northeast Interstate Dairy Compact ( Compact to enable them to raise the ) minimum milk prices that dairy processors must pay to dairy farmers in their region for milk processed and consumed in fluid form ( farm-gate prices The ). Constitution provides that [n]o State shall, without the Consent of Congress, ... enter into any Agreement or Compact with another State....U.S. CONST. art. I, 10, cl. 3 ( compact consent clause Congress ). purported to consent to the Compact with the passage of the Federal Agricultural Improvement and Reform Act of 1996 ( FAIRA 147, 7 U.S.C. 7256 ) (Supp.1996). Congress conditioned its consent on a finding of a compelling public **125 *1471 interest by the Secretary of Agriculture ( Secretary ). Appellant, the Milk Industry Foundation, contends that Congress did not consent to the Compact but instead impermissibly delegated this constitutional responsibility to the Secretary. Appellant also claims that even assuming, arguendo,

Secretary of Agriculture's initial emphasis on perceived authority to revoke consent to interstate dairy compact, followed by his acknowledgement that he lacked such power, did not make decision to consent to compact arbitrary and capricious, given that consent could not be granted unless Secretary found that compelling public interest in compact region warranted consent, and Secretary's clarification that authorization was still warranted despite absence of revocation power. Federal Agriculture Improvement and Reform Act of 1996, 147, 7 U.S.C.A. 7256. [15] Administrative Law and Procedure 15A 763 15A Administrative Law and Procedure 15AV Judicial Review of Administrative Decisions 15AV(D) Scope of Review in General 15Ak763 k. Arbitrary, unreasonable or capricious action; illegality. Most Cited Cases Under arbitrary and capricious standard of review, agency's predictive judgments about areas that are within agency's field of discretion and expertise are entitled to particularly deferential review, as long as they are reasonable. *1470 Appeals from the United States District Court for the District of Columbia. (No. 96cv02027).Steven J. Rosenbaum argued the cause for appellant, with whom Jonathon C. Drimmer and Jason A. Levine, Washington, DC, were on the briefs. Douglas N. Letter, Appellate Litigation Counsel, U.S. Department of Justice, Washington, DC, argued the cause for appellee Daniel R. Glickman, Secretary, United States Department of Agriculture, with whom Frank W. Hunger, Assistant Attorney General, Washington, DC, Mary Lou Leary, U.S. Attorney, and Stephen W. Preston, Deputy Assistant Attorney General, U.S. Department of Justice, Washington, DC, were on the brief. Clifford M. Sloan, Washington, DC, argued the cause for appellee Northeast Dairy Compact Commission, with whom Michael A. Rotker, Washington, DC, was on the brief. Paul A. Strandberg, Assistant Attorney General, State

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Page 132 F.3d 1467, 328 U.S.App.D.C. 121 (Cite as: 132 F.3d 1467, 328 U.S.App.D.C. 121) that the delegation was lawful, the Secretary exercised his delegated authority arbitrarily and capriciously in violation of the Administrative Procedure Act ( APA ). The congressional action here is not substantially different from countless pieces of contingent legislation enacted by Congress over the last few decades-including many that have been challenged and upheld by the courts. Appellant asserts that the instant delegation is somehow different because it involves an interstate compact. This claim is meritless. Furthermore, we have no doubt that, in instructing the Secretary to authorize the Compact only upon finding a compelling public interest in the Compact region,Congress provided an intelligible principle to guide the Secretary's exercise of the delegated power. Accordingly, we hold that the delegation is constitutional. We also reject Appellant's APA claim. Evaluating the Secretary's finding of a compelling public interest within the relevant context at issue, we find that he examine[d] the relevant data and articulate[d] a satisfactory explanation for [his] action[,] including a rational connection between the facts found and the choice made.Thus his decision is not arbitrary and capricious under the APA. See Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 2866, 77 L.Ed.2d 443 (1983) (internal quotations omitted). I. BACKGROUND A. The National Scheme for the Regulation of Milk Prices Congress initiated the federal program for the regulation of farm-gate milk prices with the passage of the Agricultural Marketing Agreement Act of 1937 ( AMAA 2, 7 U.S.C. 601-624, 671-674 ) (1994). The AMAA delegates the authority to set minimum milk prices nationwide to the Secretary, 608c(18), while the states retain authority to establish milk prices above the federal price floor. See United Dairy Farmers Coop. Ass'n v. Milk Control Comm'n of Pennsylvania, 335 F.Supp. 1008, 1013-15 (M.D.Pa.) (three judge court), aff'd without opinion, 404 U.S. 930, 92 S.Ct. 280, 30 L.Ed.2d 244 (1971). B. The Northeast Interstate Dairy Compact In 1988, Vermont initiated an effort to regulate milk prices beyond its own state borders by forming an interstate compact with neighboring states. By 1993, all of the New England state legislatures had approved the formation of the Northeast Interstate Dairy Compact, and all of the states' governors had signed resolutions supporting it. See Milk Indus. Found. v. Glickman, 949 F.Supp. 882, 885 (D.D.C.1996) ( MIF I (explaining history of ) Compact). A principal objective of the Compact is to preserve dairy farms in the Compact states. See Compact art. I, 1, reprinted in Appendix to Brief for Appellee Northeast Dairy Compact Commission. The Compact states agreed to establish a Commission consisting of three to five representatives from each state, with at least one person from each state being a dairy farmer and another a consumer representative, to administer the Compact. Compact art. III, 4. The Compact grants the Commission authority to, among other things, establish an over-order farm-gate price, a price of up to $1.50 per gallon over the federal minimum price for milk used for fluid products. Compact art. IV, 9. The Compact's voting requirements are designed to ensure that the Commission does not pass any over-order prices without the broad consensus of the Compact states, both dairy-producing and dairy-consuming states. See Compact art. III, 5 (requiring at least two-thirds vote of the delegations present to establish or terminate an over-order price); id. ( The establishment of a regulated area which covers all or part of a participating state shall require also the affirmative vote of that state's delegation. ). **126 *1472 C. Congress' Consent to the Compact Congress consented to the Compact with the enactment of FAIRA 147, 7 U.S.C. 7256 (Supp.1996). See MIF I, 949 F.Supp. at 886-87 (detailing efforts to obtain congressional consent to the compact). Congress' consent to the Compact was made subject to a number of conditions and limitations, two of which are relevant here. First, Congress conditioned its consent on a finding by the Secretary that the implementation of the Compact is in the compelling public interest of the Compact region. 7256. ( Based upon a finding by the Secretary of a compelling public interest in the Compact region, the Secretary may grant the States that have ratified the Northeast Interstate Dairy Compact ... the authority to implement the [ ] Compact. Second, Congress limited the duration of ). its consent to the Compact, providing for its termination upon the Secretary's implementation of comprehensive reforms of the federal scheme for regulating milk prices mandated by FAIRA. See id. (providing that Congress' consent shall terminate

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Page 132 F.3d 1467, 328 U.S.App.D.C. 121 (Cite as: 132 F.3d 1467, 328 U.S.App.D.C. 121) concurrent with the Secretary's implementation of pending reforms to the federal milk-pricing scheme); see also 7 U.S.C. 7253 (Supp.1996) (mandating the consolidation and reform of the federal milk-pricing scheme not later than April 4, 1999). D. The Secretary's Findings and Appellant's Challenges to the Compact On August 28, 1996, the Secretary published a two-sentence finding of a compelling public interest and authorized the Compact states to implement the Compact. 61 Fed.Reg. 44,290 (1996) ( Initial Finding Appellant promptly filed a motion in the ). District Court for the District of Columbia for a preliminary injunction to bar the implementation of the Compact, claiming that section 147 of FAIRA was an unconstitutional delegation of legislative power and that the Secretary had exercised his delegated authority arbitrarily and capriciously in violation of the APA. Following the District Court's denial of Appellant's motion for a preliminary injunction, the Secretary moved to stay proceedings so that he could review the entire administrative record and provide an amplified decision justifying his finding of a compelling public interest. The District Court granted this motion, instructing the Secretary to hold open the possibility of reaching a contrary conclusion upon reexamination of the record. Milk Indus. Found. v. Glickman, 955 F.Supp. 8, 9 (D.D.C.1997). The Secretary issued a second decision on March 28, 1997, again finding a compelling public interest in the Compact region warranting authorization of the Compact. 62 Fed.Reg. 14,879 (1997) ( Amplified Decision In reaching his decision, the Secretary ). emphasized the importance of taking reasonable measures to preserve small family farms,noting that America wants and still needs the family farm. This belief is obviously strongly held by the people of the Compact region. Id. at 14,879-80 (finding that small dairy farms are an essential part of the character and culture in the Compact region The ). Secretary also noted that the Compact is a short-term measure which will expire upon the completion of the pending reform of the federal milk-pricing scheme. Id. at 14,880. The Secretary found that the Compact likely would result in higher milk prices and therefore, at least in the short-term, provide higher profitability for, and decrease financial pressures on, family-sized dairy farms in New England. Id. at 14,879. After noting his countervailing concern over the Compact's potential to increase the cost of milk for low-income families, the Secretary concluded that there is a compelling public interest in the Compact region in favor of authorizing the Compact, stating that, balance the has been properly struck, given current conditions. The Compact is a short-term measure that, if implemented with common sense and sensitivity to the needs of all affected persons and interests, can benefit the dairy producers and all citizens in the Compact region without producing adverse side effects.Id. at 14,880. At the time the Secretary published his Initial Finding, he also published a statement saying that he was concerned about potential effects of the Compact in several respects and that he would revoke his authorization if he determined that conditions **127 *1473 warranted revocation. 61 Fed.Reg. at 44,291. Likewise, in his Amplified Decision, the Secretary maintained that he would revoke authorization if he determined that changing conditions in the Compact region warranted such action. 62 Fed.Reg. at 14,880. However, in an addendum to his Amplified Decision, the Secretary retreated from this position. 62 Fed.Reg. 16,539 (1997) ( Addendum ). Following issuance of the Secretary's Amplified Decision, the parties cross-moved for summary judgment. The District Court granted Appellees' summary judgment motion and denied Appellant's summary judgment motion. Milk Indus. Found. v. Glickman, 967 F.Supp. 564 (D.D.C.1997) ( MIF II ). II. ANALYSIS [1] We review the District Court's grant of summary judgment de novo. See Tao v. Freeh, 27 F.3d 635, 638 (D.C.Cir.1994); see also Dr Pepper/Seven-Up Cos. v. FTC, 991 F.2d 859, 862 (D.C.Cir.1993) ( Where the decision under review is the district court's assessment of the legal sufficiency of an agency's action in light of the record, ... [w]e proceed as if the Commission's decision had been appealed to this court directly, notwithstanding the intervening step; the district court's decision is not entitled to any particular deference) (internal quotations and citations omitted). On the APA claim, our review of the Secretary's finding is deferential. See State Farm, 463 U.S. at 43, 103 S.Ct. at 2866 ( The scope of review under the arbitrary and capricious' standard is narrow and a court is not to substitute its judgment for that of the agency. ).

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Page 132 F.3d 1467, 328 U.S.App.D.C. 121 (Cite as: 132 F.3d 1467, 328 U.S.App.D.C. 121) 1313, 92 L.Ed. 1694 (1948) (alteration in original)). See also **128*1474Yakus v. United States, 321 U.S. 414, 425-26, 64 S.Ct. 660, 668, 88 L.Ed. 834 (1944) ( Congress is not confined to that method of executing policy which involves the least possible delegation of discretion to administrative officers. ). The Court frequently has upheld Congress' delegation of responsibilities to the Executive through contingent legislation requiring an executive agent to take some action upon the finding of specified conditions. For example, in upholding Congress' delegation to the Price Administrator to fix commodity prices that would be fair and equitable and would effectuate the purposes of the Emergency Price Control Act of 1942, the Court stated: The essentials of the legislative function are the determination of the legislative policy and its formulation and promulgation as a defined and binding rule of conduct.... These essentials are preserved when Congress has specified the basic conditions of fact upon whose existence or occurrence, ascertained from relevant data by a designated administrative agency, it directs that its statutory command shall be effective. Yakus, 321 U.S. at 424-25, 64 S.Ct. at 667. Thus, the relevant distinction between the legislative and the executive is one of function, not of frequency. See Loving, 517 U.S. at 758, 116 S.Ct. at 1744 ( true distinction ... is between the delegation of The power to make the law, which necessarily involves a discretion as to what it shall be, and conferring authority or discretion as to its execution, to be exercised under and in pursuance of the law. This first cannot be done; to the latter no objection can be made. (quoting Field, 143 U.S. at 693-94, 12 ) S.Ct. at 505) (alteration in original). In any case, the Secretary's delegated role here is consistent with the Secretary's role in the regulation of milk prices nationwide. In this instance, the Secretary was not asked to regulate milk prices directly. Instead, he was asked to determine whether permitting the Compact Commission to override the national minimum price for milk, in the case of the Compact states pending reform of the federal milkpricing scheme, would be in the compelling public interest of the Compact region. This question implicates the Secretary's administrative role in regulating milk prices.

A. Congress' Contingent Consent Was a Lawful Delegation In Field v. Clark, 143 U.S. 649, 12 S.Ct. 495, 36 L.Ed. 294 (1892), the Supreme Court articulated what has come to be known as the delegation doctrine. However, since Field, the Court has invalidated statutes on grounds of unlawful delegations on only two occasions, both of which occurred prior to the full development of the regulatory state ushered in by the New Deal. See A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495, 55 S.Ct. 837, 79 L.Ed. 1570 (1935); Panama Refining Co. v. Ryan, 293 U.S. 388, 55 S.Ct. 241, 79 L.Ed. 446 (1935). In recent decades, it has become widely accepted that Congress may, as a general matter, confer substantial authority upon a coordinate branch of government, as long as it provides an intelligible principle to guide the delegatee's exercise of the power conferred. See, e.g., Mistretta v. United States, 488 U.S. 361, 372, 109 S.Ct. 647, 654-55, 102 L.Ed.2d 714 (1989). 1. The Power Delegated was Delegable Power [2] In the instant case, Congress made its consent contingent upon a finding by the Secretary that the Compact was in the compelling public interest of the Compact region. This act of contingent legislation is not substantially different from countless pieces of legislation passed by Congress over the last several decades-including many which have been challenged under the delegation doctrine and found to be constitutional by reviewing courts. We are unpersuaded by Appellant's efforts to distinguish the delegation in this case, on the grounds of both the nature of the legislative power delegated and the extent of executive action involved, from delegations that have been upheld as constitutional. Appellant argues that consent to the Compact does not entail on-going administration of a regulatory scheme by the Executive Branch, on the assumption that this matters. However, precedent does not support Appellant's suggestion that contingent legislation is permissible only when associated with the administration of an on-going regulatory scheme. Rather, the Supreme Court has adopted the general rule that constitutional [a] power implies a power of delegation of authority under it sufficient to effect its purposes.Loving v. United States, 517 U.S. 748, 768, 116 S.Ct. 1737, 1748, 135 L.Ed.2d 36 (1996) (quoting Lichter v. United States, 334 U.S. 742, 778, 68 S.Ct. 1294,

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Page 132 F.3d 1467, 328 U.S.App.D.C. 121 (Cite as: 132 F.3d 1467, 328 U.S.App.D.C. 121) [3] Appellant asserts that congressional consent to interstate compacts must be effective of its own force, with no role for the Executive, Brief for Appellant at 11, but fails to offer any compelling reason why the compact consent clause should be understood differently from Congress' other Article I powers for the purposes of the delegation doctrine. Cf. Loving, 517 U.S. at 767, 116 S.Ct. at 1748 (Congress' power to make Rules for the Government and Regulation of the land and naval forcespursuant to U.S. CONST. art. I, 8, cl. 14 ( Clause 14 no ) is less plenary than other Article I powers (citations ) omitted). If, as the Court held in Loving, Congress can lawfully delegate the power to define crimes-a power which is arguably at the height of that which might be defined as legislative-then surely it can lawfully delegate to the Secretary the power to authorize an interstate compact upon the finding that the Compact would serve a compelling public interest in the Compact region. Although it may still be possible to posit hypothetical instances of delegations which might be found unlawful, we are unconvinced that this is such an instance. Appellant notes that, in Loving, the Court observed at length that the Executive has traditionally played a significant role in the regulation of the military, see id. at 758 - 768, 116 S.Ct. at 1744-48, thus suggesting that Loving should not be viewed as a weighty precedent in this case. There is nothing in the Loving opinion that we can find, however, indicating that this historical fact is a limiting principle governing application of the delegation doctrine. Indeed, such a reading of Loving would conflict with previous statements of the Court. See, e.g., Mistretta, 488 U.S. at 385, 109 S.Ct. at 661 ( Our constitutional principles of separated powers are not violated ... by mere anomaly or innovation. ). Rather, it appears that the Loving Court examined the historical practice of England as a tool for ascertaining the Framers' intent in drafting Clause 14. See Loving, 517 U.S. at 765, 116 S.Ct. at 1747 ( ... the Framers knew well this history ... In addition, ). the Court emphasized the *1475 lack of **129 any clear and absolute rule against the delegation at issue in Loving. See id. at 767-768-116 S.Ct. at 1748. Although Appellant maintains that the delegation at issue here is a novelty, it fails to identify any clear and absolute rule against such a delegation. 2. The Delegation Was Governed by an Intelligible Principle [4][5] Where the power at issue is a delegable power, Congress may provide discretionary authority to a coordinate branch of government [s]o long as Congress lay[s] down by legislative act an intelligible principle to which the person or body authorized to [exercise the delegated authority] is directed to conform. Mistretta, 488 U.S. at 372, 109 S.Ct. at 655 (quoting J.W. Hampton, Jr., & Co. v. United States, 276 U.S. 394, 406, 48 S.Ct. 348, 351, 72 L.Ed. 624 (1928) (second alteration in original)). Applying this general rule over the last several decades, the Supreme Court has upheld, without deviation, Congress' ability to delegate power under broad standards, id. at 373, 109 S.Ct. at 655, including delegations authorizing the Executive to take action upon finding that it would be in the public interest to do so. See, e.g., National Broadcasting Co. v. United States, 319 U.S. 190, 22526, 63 S.Ct. 997, 1013-14, 87 L.Ed. 1344 (1943) (upholding delegation to FCC to regulate broadcast licensing in the public interest New York Cent. ); Sec. Corp. v. United States, 287 U.S. 12, 24, 53 S.Ct. 45, 48, 77 L.Ed. 138 (1932) (upholding delegation to ICC to authorize the consolidation of carriers where it finds that such consolidation would be in the public interest see also Yakus, 321 U.S. at 425, 64 ); S.Ct. at 667-68 ( is no objection [under the It delegation doctrine] that the determination of facts and the inferences to be drawn from them in the light of the statutory standards and declaration of policy call for [the delegated agent's] judgment, and for the formulation of subsidiary administrative policy within the prescribed statutory framework. ) (citations omitted). The compelling public interest in the Compact region standard falls well within established intelligible principle parameters. Indeed, Appellant's arguments in support of its APA claim convincingly demonstrate that the compelling public interest standard is discernible and demanding. In advancing this argument, Appellant has no difficultynor do we-in defining the scope of the compelling public intereststandard. B. The Secretary's Finding Was Not Arbitrary and Capricious Congress' requirement that the Compact can only be authorized upon a finding of a compelling public interest in the Compact region provides a demanding standard requiring that the data and reasoning justifying the Secretary's finding weigh heavily in favor of authorizing the Compact. We find that the Secretary's Amplified Decision meets this standard.

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Milk Ind. v. Glickman APA issue 132_F_3D_1467.docx (Attachment 2 of 3)

Page 132 F.3d 1467, 328 U.S.App.D.C. 121 (Cite as: 132 F.3d 1467, 328 U.S.App.D.C. 121) 1. The Secretary's Finding is Agency Action Reviewable Under the APA [6] As a threshold matter, the Secretary argues that his finding is not agency action reviewable under the APA, but rather merely [a] determin [ation] that conditions in the Compact region met the condition set by Congress for implementation of the Compact.Brief for Appellee Secretary at 30. This is a distinction without a difference. The APA defines agency actionto include agency rules, see 5 U.S.C. 551(13), and defines an agency rule as the whole or a part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy....5 U.S.C. 551(4). The Secretary neither disputes that the APA's procedural requirements for informal rulemaking were satisfied, see 5 U.S.C. 553, nor explains why his Amplified Decision should not be understood as a rule implementing congressional policy. We see no meaningful distinction between the delegation at issue here and the many acts of contingent legislation passed by Congress over recent decades. Through such contingent legislation, Congress enacts a policy (in this case, consent to the Compact), which is to be implemented upon the Executive's finding of the conditions specified by Congress (in this case, a compelling public interest in the Compact region ). Clearly, the Secretary's**130 *1476 finding and his corresponding authorization of the Compact is a rule reviewable under the APA's arbitrary and capriciousstandard. 2. The Secretary's Finding of a Compelling Public Interest in the Compact Region is Not Arbitrary and Capricious [7][8][9] Under familiar and well-established principles, the Secretary's finding must be upheld as long as the Secretary examine[d] the relevant data and articulate[d] a satisfactory explanation for its action including a rational connection between the facts found and the choice made.State Farm, 463 U.S. at 43, 103 S.Ct. at 2866 (quoting Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168, 83 S.Ct. 239, 246, 9 L.Ed.2d 207 (1962)); Republican Nat'l Comm. v. Fed. Election Comm'n, 76 F.3d 400, 407 (D.C.Cir.1996) (APA's arbitrary and capricious standard of review is satisfied if the agency enables us to see what major issues of policy were ventilated ... and why the agency reacted to them as it did ) (internal quotations omitted), cert. denied, 519 U.S. 1055, 117 S.Ct. 682, 136 L.Ed.2d 607 (1997). To meet this standard, the factors undergirding the Secretary's finding must be appropriate to the relevant context. In the instant case, four aspects of the relevant context are particularly noteworthy. First, the Secretary was required to find a compelling public interest in the Compact region. See 7 U.S.C. 7256 (Supp.1996). Thus, contrary to Appellant's arguments, how the situation of dairy farmers in New England compares to that of dairy farmers in the remainder of the country is largely irrelevant. Rather, an appropriate inquiry must focus on the Compact region measured in absolute, not relative, terms. Second, it is significant here that Congress' consent to the Compact is for a very limited duration. Consent expires upon the completion of pending reforms of the federal scheme for regulating milk prices nationwide, rendering the Compact a transitional, interim measure. See id. (providing that Congress' consent shall terminate concurrent with the Secretary's implementation of the dairy pricing and Federal milk marketing order consolidation and reforms under section 7253 of this title ). Third, it is also important to bear in mind that, under the disputed legislation, the Secretary is not authorized to implement any particular regulatory measure, but, rather, to determine whether the Compact Commission should be allowed to regulate milk prices in the Compact region. Appellant argues that the Secretary erred in failing to give due weight to the possibility that increased milk prices might burden low-income families in the Compact region. However, any weighing of this factor must take into account the governance structure of the Commission, for it will be the Commission's actions, not the Secretary's, that will affect consumer prices. Significantly, the Commission is composed of equal numbers of representatives from each Compact statethose which are primarily dairy-consuming states as well as those which are primarily dairy-producing states. Compact art. III, 4. In addition, at least one representative from each state must be a consumer representative, id., a two-thirds vote of the Commission is required to raise farm-gate prices, and each state is subject to a Compact regulation increasing farm-gate prices only if the state's delegation votes for the measure. Compact art. III, 5. Finally, the record clearly identifies a strong consensus within the Compact states that the preservation of family dairy farms is of vital

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Page 132 F.3d 1467, 328 U.S.App.D.C. 121 (Cite as: 132 F.3d 1467, 328 U.S.App.D.C. 121) importance to the region's economic and environmental interests in a number of ways. Thus, although the availability of a sufficient supply of milk from large-scale farmers-even in the event that local family farmers go out of business-is a relevant inquiry in assessing whether there is a compelling public interest, it must be balanced against this countervailing factor of a strong regional desire to maintain family dairy farms. Within this overall context, the Secretary's finding of a compelling public interest within the Compact region was reasonably supported by the following key factors: (1) a principal objective of the Compact is to preserve family farms in the Compact region; (2) family dairy farmers in the region are **131 *1477 under severe financial stress; and (3) the Compact will effectively preserve family dairy farms during the transitional period pending reform of the national scheme for regulating milk prices, at which time congressional consent will expire. These factors, in turn, were reasonably supported by the record before the Secretary. See MIF II, 967 F.Supp. at 571 n. 8 (citing portions of the record supporting key factors relied on by the Secretary). [10][11] Prior to this case, the Secretary, in reviewing milk prices pursuant to his authority under the AMAA, found that it would not be in the public interest to raise farm-gate prices in New England. See 58 Fed.Reg. 12,634 (1993). Appellant argues that this prior decision cannot be squared with the decision under attack here. We disagree. First, the question addressed by the Secretary in the instant case is not whether farm-gate prices should be increased, but whether the Compact Commission should be authorized to raise prices during the transitional period pending reform of the national priceregulation scheme. Notably, the factors relevant to a price determination in a federal milk marketing order under the AMAA and those considered by the Commission under the Compact are not identical. Compare 7 U.S.C. 602, 608c(18) (1994) with Compact arts. I, IV, 1, 9(e), (f). Moreover, individual states already possess the authority to regulate prices above the AMAA floor. See United Dairy Farmers, 335 F.Supp. at 1013. In a region in which individual state regulation is impracticable because of the small geographic area and the interrelationships among neighboring states, the Compact simply gives the New England region similar authority. Thus, permitting state governments to collaborate in setting farm-gate prices above the AMAA price floor is hardly incompatible with the objectives of the AMAA. In any event, even if the Secretary were deciding directly whether prices should be raised, it is well-established that he would not be bound by his prior decision, so long as the decision under review is well-reasoned. See, e.g., DIRECTV, Inc. v. FCC, 110 F.3d 816, 826 (D.C.Cir.1997); National Audubon Soc'y v. Hester, 801 F.2d 405, 408 (D.C.Cir.1986). [12][13] Furthermore, the fact that the Secretary considered possible negative consequences of authorizing the Compact does not render his finding invalid; rather, this merely demonstrates that the Secretary realized that the compelling public interest standard is a high hurdle and weighed factors on every side. In particular, the Secretary's concern that the Compact might result in higher retail prices for fluid milk in the Compact region does not invalidate his finding. The Secretary noted this concern, but, while expressing some uncertainty as to how the Commission would implement the Compact, he ultimately assumed that the Commission would be sensitive to consumer needs and thus that any rise in milk prices would not be so great as to offset the compelling public interests warranting authorization of the Compact. See Amplified Decision, 62 Fed.Reg. at 14,880. The reasonableness of this assumption is amply supported by the Compact's structural requirements designed to protect consumer interests, described above. As an additional safeguard to ensure that the Compact is implemented with sensitivity to all affected persons and interests, the Secretary offered the Commission the assistance of the Department of Agriculture to achieve this goal. Id. [14] Finally, the Secretary's initial emphasis on a perceived authority to revoke the Compact, followed by his acknowledgment that he lacks such revocation authority, is not determinative of the question before us. The Secretary first stated, in his Amplified Decision, that, [g]iven the shifting nature of the compelling interest test, the Department strongly believes that the authority to withdraw or revoke its authorization is an essential element of any decision which finds that a compelling public interest exists. 62 Fed.Reg. at 14,880. In an Addendum to that decision, published approximately one week later, the Secretary recognized that he may have inadvertently created the impression that it would have been impossible for [him] to authorize implementation in the absence of revocation authority and clarified that, fact, ... [his] finding of compelling public [i]n interest was based on a broad array of factors**132

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Page 132 F.3d 1467, 328 U.S.App.D.C. 121 (Cite as: 132 F.3d 1467, 328 U.S.App.D.C. 121) *1478 which [he] discussed in [the Amplified Decision and] was not contingent upon the existence of revocation authority.62 Fed.Reg. at 16,539. The Secretary's mistaken belief that he could revoke authorization of the Compact, should he determine that changing conditions warranted revocation, does not render his decision invalid in light of the demanding compelling public interest standard. In his Amplified Decision, the Secretary concluded that given current conditions authorization of the Compact was in the compelling public interest of the Compact region. 62 Fed.Reg. at 14,880. Rather than attempt to predict precisely how relevant conditions might play out in the future, the Secretary simply planned to revoke his authorization should changing conditions warrant. See id. ( Facts and circumstances that may currently justify authorization may subsequently change to the extent that a compelling public interest no longer exists in the Compact region. However, when pushed to ). clarify whether-even without revocation authority and without being able to predict with certainty how relevant conditions might change-he anticipated that authorization nevertheless would be in the compelling public interest of the Compact region, the Secretary clarified that authorization was still warranted. See Addendum, 62 Fed.Reg. at 16,539. On the record at hand, we have no good reason to question this predictive judgment. [15] Under the arbitrary and capricious standard of review, agency's predictive judgments about an areas that are within the agency's field of discretion and expertise are entitled to particularly deferential review, as long as they are reasonable. International Ladies' Garment Workers' Union v. Donovan, 722 F.2d 795, 821-22 (D.C.Cir.1983) (citations omitted). The question of whether permitting the Compact Commission to override federal farm-gate prices pending the reform of the national milk pricing scheme would be in the compelling public interest of the Compact region implicates the Secretary's expertise in the regulation of milk prices. We find that the Secretary's predictive judgment on this point is reasonable, notwithstanding his confusion over the authority to revoke. III. CONCLUSION For the reasons explained above, the District Court's decision granting Appellees' summary judgment motion and denying Appellant's summary judgment motion is affirmed.

So ordered. ROGERS, Circuit Judge, with whom HENDERSON, Circuit Judge joins, concurring: I join the opinion of the court and write separately only to note another reason underscoring why the condition requiring that the Secretary of Agriculture determine whether a compelling public interest existed in the Compact region does not involve an impermissible delegation. The Compact Clause has always been recognized as a device to protect federal power from encroachments by the states. The Framers required the Consent of Congress before any state could enter into any Agreement or Compact with another State. U.S. CONST. art. I, 10, cl. 3. It has ever since been evident that the [Compact Clause] prohibition is directed to the formation of any combination tending to the increase of political power in the States, which may encroach upon or interfere with the just supremacy of the United States.Virginia v. Tennessee, 148 U.S. 503, 519, 13 S.Ct. 728, 734, 37 L.Ed. 537 (1893). As Joseph Story explained, consent of congress may be properly the required, in order to check any infringement of the rights of the national government; and at the same time a total prohibition, to enter into any compact or agreement, might be attended with permanent inconvenience, or public mischief. JOSEPH STORY, 3 COMMENTARIES ON THE CONSTITUTION OF THE UNITED STATES 1397 (1833); see also Felix Frankfurter & James M. Landis, The Compact Clause of the Constitution-A Study in Interstate Adjustments, 34 YALE L.J. 685, 694-95 (1925). The Compact Clause was drafted at a time when the states were relatively powerful and **133 *1479 independent entities. The drafters of the Constitution sought to ensure the supremacy of federal power in interstate affairs. Although the drafters spoke of congressional consent, it is clear that they hoped not just to vindicate the legislative power of Congress, but to protect the power of the entire federal government with the Clause. Indeed, the Supreme Court has since recognized that the Compact Clause required congressional consent for interstate compacts only when the compact infringes upon federal power. See, e.g., United States Steel Corp. v. Multistate Tax Comm'n, 434 U.S. 452, 459-60, 471, 98 S.Ct. 799, 805-06, 811-12, 54 L.Ed.2d 682 (1978).

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Page 132 F.3d 1467, 328 U.S.App.D.C. 121 (Cite as: 132 F.3d 1467, 328 U.S.App.D.C. 121)

With this background in mind, it is clear that the process of consent in the instant case fully realized the purpose of the Compact Clause. The New England states appropriately sought congressional consent to the dairy compact, which will affect the federal regulation of milk prices pursuant to the Agricultural Marketing Agreement Act of 1937, 7 U.S.C. 601-624, 671-674 (1994). They obtained that consent from Congress and its delegate, the Secretary of Agriculture. Both Congress and the Secretary were capable of vindicating the federal power protected by the Compact Clause, the former under the Clause itself, and the latter by virtue of delegated and statutory powers. As the Supreme Court has observed, the constitution makes no provision respecting the mode or form in which the consent of congress is to be signified, very properly leaving that matter to the wisdom of that body, to be decided upon according to the ordinary rules of law, and of right reason. Green v. Biddle, 21 U.S. (8 Wheat.) 1, 85-86, 5 L.Ed. 547 (1823). For these reasons, the balance of power envisioned in the Compact Clause has been preserved by the actions of the New England states, Congress, and the Secretary. C.A.D.C.,1998. Milk Industry Foundation v. Glickman 132 F.3d 1467, 328 U.S.App.D.C. 121 END OF DOCUMENT

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Milk Compact Proposed Notice 61_FED__REG__19904.docx (Attachment 3 of 3)

61 FR 19904-01, 1996 WL 222545 (F.R.)

Page

NOTICES DEPARTMENT OF AGRICULTURE Agricultural Marketing Service [DA-96-06] Request for Comments on a Compelling Public Interest for the Northeast Interstate Dairy Compact Friday, May 3, 1996 *19904 AGENCY: Agricultural Marketing Service. ACTION: Notice. SUMMARY: The 1996 Federal Agricultural Improvement Reform Act provides that the Secretary of Agriculture may grant authority to implement the Northeast Interstate Dairy Compact (the Compact) based upon a finding of a compelling public interest in the Compact region. The Secretary is asking all interested parties to submit written comments regarding the Compact and the existence of a compelling public interest in the Compact region. DATES: Comments are due no later than June 3, 1996. ADDRESSES: Comments (two copies) should be sent to USDA/AMS/Dairy Division, Order Formulation Branch, Room 2971, South Building, P.O. Box 96456, Washington, DC 20090-6456. FOR FURTHER INFORMATION CONTACT: John F. Borovies, Branch Chief, USDA/AMS/Dairy Division, Order Formulation Branch, Room 2971, South Building, P.O. Box 96456, Washington, DC 20090-6456 (202) 7206274. SUPPLEMENTARY INFORMATION: Section 147 of the 1996 Federal Agricultural Improvement Reform (FAIR) Act (Pub. L. 104-127) establishes Congressional consent for the Northeast Interstate Dairy Compact (the Compact) entered into by the States of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont subject to several conditions. The Act provides that Based upon a finding by the Secretary of a compelling public interest in the Compact region, the Secretary may grant the States that have ratified the Northeast Interstate Dairy Compact, as of the date of enactment of this title, the authority to implement the Northeast Interstate Dairy Compact.The Secretary is requesting that all interested parties submit written comments regarding the existence of a compelling public interest in the Compact region. All persons who desire to submit written data, views or arguments regarding whether a compelling public interest exists in the Compact region should send two copies of their views to USDA/AMS/Dairy Division, Order Formulation Branch, Room 2971, South Building, P.O. Box 96456, Washington, DC 20090-6456, by the 30th day after publication of this notice in the Federal Register. All written submissions made pursuant to this notice will be made available for public inspection in the Dairy Division during regular business hours. Dated: April 30, 1996. Lon Hatamiya, Administrator. [FR Doc. 96-11169 Filed 5-02-96; 8:45 am] BILLING CODE 3410-02-P 61 FR 19904-01, 1996 WL 222545 (F.R.) END OF DOCUMENT

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From:

To:

Cc:

Glaser, Elizabeth (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=glasere> Deutsch, Rebecca (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=deutschr> Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk> Consumer Response - Relevant Provisions of Transferring Regulations 5-6-11 Fri May 06 2011 10:12:34 EDT Consumer Response - Relevant Provisions of Transferring Regulations 5-6-11.docx

Bcc: Subject: Date: Attachments:

Hi Rebecca per our conversation, attached please find the provisions relevant to consumer response. I just wanted to confirm that you didnt have any additional provisions you would like me to add. Otherwise, I will send it along to Meredith and CR today.

Thanks! Liz

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From:

To:

Glaser, Elizabeth (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=glasere> Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk>

Cc: Bcc: Subject: Date: Attachments:

HUD Offer Letter Spreadsheet.xlsx Fri May 06 2011 09:56:17 EDT HUD Offer Letter Spreadsheet.xlsx

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From:

To:

Dickman, Marilyn (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dickmanm> Black, Brad </o=ustreasury/ou=do/cn=recipients/cn=blackb>; Coyle, Raymond (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=coyler>; Darling, Eben (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=darlinge>; DiPalma, Nikki (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dipalman>; Glaser, Elizabeth (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=glasere>; Gorski, Stephanie (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=gorskis>; Harpe, Pam (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harpep>; Harvey, Imani (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harveyi>; Herchen, Emily (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=herchene>; Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk>; Mann, Seth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=manns>; Megee, Christine (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=megeec>; Plunkett, Alexander (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=alexanderp>; Royster, Felicia (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=roysterf>; Tamberrino, Mary (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tamberrinom>; Tingwald, James (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tingwaldj>; Wanderer, Agnes (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=wanderera>

Cc: Bcc: Subject: Date: Attachments: Hi everyone,

HIGH PRIORITY TO COMPLETE FED AND OTS TRANSFER OFFERS TODAY Fri May 06 2011 08:27:49 EDT

There are a number of transfer offers that must be finalized, vetted and sent to transferees today for individuals being selected from the Federal Reserve and from OTS. I am asking everyone to be as maximally flexible as possible today to assist in any way to complete this initiative. To the extent that this might take until into the evening, I would also appreciate any flexibility to stay late in order to complete the task.

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I am in the process of trying to nail down the final offers at which point I may need some or all of you to help finalize any pay setting, pds and template offers to go to candidates. I hope to get back to everyone very shortly.

Thanks as always for being such a great team.

Marilyn

Marilyn A. Dickman Deputy Chief Human Capital Officer Consumer Financial Protection Bureau 202-435-7157 (W)

This e-mail may contain Privacy Act/Sensitive Data, which is intended only for the individual to which it is addressed. It may contain information that is privileged, confidential, or otherwise protected from disclosure under applicable laws. Do not disclose sensitive data to others within or outside of CFPB unless they have a legitimate need for the information based on their official duties. If you are unsure of the appropriateness of information disclosure, please contact the General Counsel or the Privacy Team for guidance.

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SF 50.pdf (Attachment 1 of 1)

Doe, Jane Marie

11-7-2010

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From:

To:

Harpe, Pam (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harpep> Black, Brad </o=ustreasury/ou=do/cn=recipients/cn=blackb>; Burden, Gail (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=burtong>; Coyle, Raymond (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=coyler>; Cronin, Katherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cronink>; Darling, Eben (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=darlinge>; Dickman, Marilyn (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dickmanm>; DiPalma, Nikki (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dipalman>; Glaser, Elizabeth (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=glasere>; Gorski, Stephanie (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=gorskis>; Harpe, Pam (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harpep>; Harvey, Imani (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harveyi>; Herchen, Emily (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=herchene>; Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk>; Mann, Seth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=manns>; Megee, Christine (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=megeec>; Plunkett, Alexander (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=alexanderp>; Royster, Felicia (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=roysterf>; Sensiba, Vicki (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sensibav>; Slagter, Dennis (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=slagterd>; Tamberrino, Mary (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tamberrinom>; Tingwald, James (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tingwaldj>; Wanderer, Agnes (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=wanderera>

Cc: Bcc: Subject: Date: Attachments:

Cinco de Mayo Thu May 05 2011 14:51:21 EDT

In the spirit of any reason for a celebration, please join your HC colleagues tonight for a margarita (or

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whatever) at Black Rooster Pub, 1919 L Street. Well be there around 5:30.

Pam Harpe 202 435-7235

This e-mail may contain Privacy Act/Sensitive Data, which is intended only for the individual to which it is addressed. It may contain information that is privileged, confidential, or otherwise protected from disclosure under applicable laws. Do not disclose sensitive data to others within or outside of CFPB unless they have a legitimate need for the information based on their official duties. If you are unsure of the appropriateness of information disclosure, please contact the General Counsel or the Privacy Team for guidance.

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From:

To: Cc:

Klein, Heather (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=kleinh> _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands> Adamske, Steven </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=adamskes>; Moore, Megan </o=ustreasury/ou=do/cn=recipients/cn=mooreme>; Hunt, Anita Maria </o=ustreasury/ou=do/cn=recipients/cn=hunta>; Wallace, Kim </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=wallacek>; Wolin, Neal </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=wolinn>; Warren, Elizabeth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=warrene>; Fitzpayne, Alastair </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=fitzpaynea>; LeCompte, Jenni </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=engebretsenj>; Murray, Colleen </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=murrayco>; Coloretti, Nani </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=colorettin> CFPB Press Clips 5/5 Thu May 05 2011 11:55:13 EDT

Bcc: Subject: Date: Attachments:

Press Clips 5/5/2011

Index

Click publication title to find its location in this e-mail. Click article title to go to its source website.

Consumer Financial Protection Bureau American Banker House Panel Passes Bills to Revamp CFPB Structure Reuters House panel backs weakening new consumer bureau American Banker Obama Expected to Nominate Gruenberg as FDIC Chair Dow Jones Newswires US House Panel Approves Bills To Restructure New Consumer Bureau

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Reuters House GOP tries to slow Dodd-Frank express MarketWatch Financial-bureau fight is bad news for consumers Dow Jones Newswires Rep Maloney Proposes Making Warren Chairman Of Consumer Bureau The Hill (blog) - House GOP advances bills to curb Consumer Bureau

Huffington Post GOP House Blocks Bid To Name Elizabeth Warren Head Of The Consumer Financial Protection Bureau Politico Influence Speaking of ICBA Daily Kos Rep. Spencer Bachus: CFPB repeal effort is about stopping Elizabeth Warren The Hill (blog) What else to watch for: Leaving on a jet plane

Consumer Credit Credit Slips (blog) The Anti-Consumer Agenda

Housing Bloomberg BofA, Wells Fargo Mortgage Papers Challenged in North Carolina New York Times Bank of America to Triple Number of Mortgage Help Centers Wall Street Journal L.A. Blames Bank for Foreclosure Blight

American Banker House Panel Passes Bills to Revamp CFPB Structure May 5, 2011 By Kate Davidson

A House Financial Services subcommittee approved three bills Wednesday that would change the

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structure of the Consumer Financial Protection Bureau and limit its powers until a director is in place.

Democrats argued that the bills have less to do with improving the new agency, and more to do with Republican opposition to Elizabeth Warren, the chief advocate for the bureau's creation and its de facto head for the past eight months.

"The backers of these bills suggest that its real purpose is to put in place oversight of the new CFPB," said Rep. Carolyn Maloney, the subcommittee's top Democrat. "The idea that there is not already rigorous oversight under the Dodd-Frank bill is simply wrong. The real reason is to delay, distract and weaken the CFPB before it goes into effect."

Rep. Shelley Moore Capito, R-W.Va., the chairman of the Financial Institutions Subcommittee, acknowledged that critics have characterized the bills as an attack on the new bureau.

"I couldn't disagree more," she said. "These three bills are an effort to make sure Congress is doing its job, and that there is a watchdog for the watchdog."

The subcommittee voted 13-7 to approve a bill, introduced by Financial Services Committee Chairman Spencer Bachus, R-Ala., that would replace the CFPB director with a five-member board. Bachus said his bill would provide continuity by preventing one director from unilaterally changing rules implemented by a previous director.

"This is not about Elizabeth Warren," Bachus said. "This is no more about Elizabeth Warren than it is about George Washington."

He also noted that the measure uses the same language from the version of regulatory reform legislation originally passed by the House last year, which would have put a commission in charge upon the conversion date, when the bureau officially assumes its rulemaking and enforcement authorities. (The final bill was changed during negotiations with the Senate.)

"If it was the way to approach it at the time and all the Democratic members said it was why all of a sudden is it a terrible idea?" Bachus said.

Maloney insisted that the debate "is clearly about Elizabeth Warren, so let's make it about her." She offered an amendment to Bachus' bill that would require the head of the commission to be an individual who is credited with the creation of the bureau, advocated for the bureau and is currently helping to set up the bureau in effect, Elizabeth Warren.

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Maloney said Warren is the only person who should lead the CFPB when it officially assumes its authority on July 21.

"I hope the president will nominate her," Maloney said. "And with the number of bankers coming out in support of her, the degree of probability of that happening appears very good."

Capito said consumer protection was important to everyone on the committee, but the bureau should be about more than one individual.

"I don't want to sit up here and make an argument on the merits of Professor Warren and her ability to oversee consumer protection," she said. "I have no doubts that she is very sincere and a very accomplished individual. This is about our consumers. How are we going to protect our consumers and get continuity in our rules and our regulations?"

Rep. Brad Miller, D-N.C., offered an amendment that would similarly change the structure of the Office of the Comptroller of the Currency, replacing the director with a commission. Capito ruled the amendment was not germane.

The subcommittee also voted, 13-8, in favor of a bill from Capito that would delay implementation of the CFPB's powers until a Senate-confirmed leader is in place. It voted 13-9 to allow the Financial Stability Oversight Council to overrule the CFPB with a simple majority vote, rather than the two-thirds vote established under Dodd-Frank.

Maloney said Capito's bill would create an enormous incentive for Senate Republicans to hold up the confirmation process and prolong the status quo indefinitely.

Although the bills should have no trouble passing the full committee and the GOP-controlled House, it's unlikely they would gain much traction in the Senate.

In a statement released ahead of Wednesday's vote, Warren reiterated her criticism that the bills are simply an effort to undercut the agency.

"Many in Congress have made clear their intention to defund, delay and defang the consumer agency before it can help one family," Warren said. "These bills are about preventing the CFPB from operating effectively a dangerous game to play in light of recent lessons in the marketplace and how quickly financial threats to consumers emerge."

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A slew of consumer advocates released statements ahead of the vote condemning the bills.

"These industry-backed bills are designed to stop the agency from doing its only job: protecting consumers," Ed Mierzwinski, the consumer program director of the U.S. Public Interest Research Group, said in a press release. "Congress should reject these wrong-headed proposals."

Lisa Donner, the executive director of Americans for Financial Reform, said in a press release that the bills "would virtually guarantee that the CFPB would be a weak and timid agency without the will or ability to curb the kind of financial abuses that caused the nation's worst financial crisis since the Great Depression."

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Reuters House panel backs weakening new consumer bureau May 4, 2011 By Dave Clarke

A U.S. House of Representatives panel backed legislation on Wednesday aimed at weakening the powers of the new Consumer Financial Protection Bureau.

The bureau is a key part of the Dodd-Frank financial oversight law and one of its most hotly debated provisions. When it opens its doors on July 21, the agency will have the authority to write rules governing financial products such as credit cards and home loans.

Republicans and the banking industry argue the bureau has too much power to write and enforce rules that they contend could restrict credit and cripple lenders.

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The initiatives have little chance of becoming law since they would have to be approved by the Democrat-run Senate and signed by President Barack Obama.

They show, however, that political tensions over the bureau are still running hot.

The legislation approved on Wednesday by a House Financial Services subcommittee would have the bureau run by a five-member board rather than a single director and make it easier for the new Financial Stability Oversight Council to overturn bureau regulations.

"A commission is not an unprecedented leadership structure for a regulatory agency," said Republican Representative Shelley Moore Capito, chairman of the subcommittee.

She argued that other regulatory agencies are run this way and it will help prevent the bureau from being a partisan tool of any administration because no more than three board members could be from the same party.

The subcommittee also approved a proposal to prevent the bureau from exercising some authorities until a director is in place.

Democrats sought to make Elizabeth Warren, the Harvard law professor preparing the agency for its July 21 launch, an issue during Wednesday's debate.

Warren is beloved by consumer advocates and liberals but has received a cool and at times hostile reception from Republicans and bankers.

The Obama administration is considering whether to nominate Warren as bureau director and then fight to have her confirmed by the Senate.

Republicans denied their legislation had anything to do with Warren, saying that even if she was confirmed she could only lead the agency for a few years.

"This is no more about Elizabeth Warren than George Washington," said Spencer Bachus, chairman of the Financial Services Committee.

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Democrats charged the legislation was at least partially motivated by opposition to Warren's nomination.

To make that point Carolyn Maloney, the leading Democrat on the subcommittee, offered a proposal listing criteria that should be used in nominating a director that mirrored parts of Warren's resume and her public stances on consumer issues.

"This whole debate is clearly about Elizabeth Warren so let's make it about her," she said before her proposal was voted down.

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American Banker Obama Expected to Nominate Gruenberg as FDIC Chair May 5, 2011 By Joe Adler

Marty Gruenberg, the No. 2 at the Federal Deposit Insurance Corp., is expected to be nominated shortly as the agency's chairman, according to several sources.

Though the White House is remaining silent on a forthcoming package of financial services nominees, Gruenberg's ascension has been rumored for months, with no other likely candidate mentioned. A former top aide on the Senate Banking Committee, Gruenberg has been the FDIC's vice chairman since 2005, and briefly was its acting head before the confirmation of Sheila Bair.

During that time Gruenberg has amassed a solid background in regulatory policy, taking an active role in the development of Basel capital standards and demonstrating a clear interest in consumer protection. Gruenberg's agenda is an unknown, but he has been aligned with Bair on every recent FDIC initiative, including those that have upset bankers, suggesting he may steer the agency in a similar

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direction.

"I wouldn't see significant differences with how the FDIC operates right now under Sheila Bair," said V. Gerard Comizio, a partner at Paul, Hastings, Janofsky & Walker LLP. "As the vice chair, he has been involved in all of the important policies that have been developed since the financial crisis and are continuing to evolve post-Dodd-Frank."

But where Bair has been vocal on the agency's behalf, observers say Gruenberg would likely work more quietly, making his presence known behind the scenes.

"Marty will be a deliberate, thoughtful regulator who will think much before he speaks. He'll do his homework. He'll dig into the issues," said Mark Oesterle, an attorney at Reed Smith LLP who was a senior Republican aide to the Senate Banking Committee while Gruenberg worked for the Democratic side. "Once he makes up his mind, he sticks to his convictions."

Gruenberg is well known as a consumer advocate, having worked for years under former Sen. Paul Sarbanes, D-Md., another champion of customer rights. Some of Gruenberg's views may rub bankers the wrong way, but he has shown a willingness to listen and find common ground.

"There's a strong exasperation on the part of many bankers that the FDIC has been led by people who don't have much banking background. So there is a strong desire to have someone there who has either been a banker or some other strong banking experience," said an industry source who spoke on the condition of anonymity. "Marty won't fit that concept of what many bankers would really want to see in that spot. That will be a source of concern for them. I don't think it will be a disqualifying concern."

Still, Gruenberg is "a known quantity," the source added, and bankers "don't have bad feelings about him."

"He's always been willing to talk to folks," the source continued. "He's been very accessible. He had a round of being the acting chairman where bankers got to know him. All of that adds up to: they will be concerned, but they're also ready to give him the benefit of the doubt."

Gilbert Schwartz, a partner at Schwartz & Ballen and a former Federal Reserve Board attorney, said any industry concerns about Gruenberg's consumer-rights views would be muted by the restrictions on the FDIC's authority in writing consumer rules.

The agency still can issue guidance to the banks it supervises, and enforce consumer protection rules for its banks, but the primary rule writer under Dodd-Frank is the new Consumer Financial Protection

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Bureau.

"He's a strong consumer advocate," but "the Consumer Financial Protection Bureau is going to have most of the say. If I were in the industry, I'd be more concerned about the CFPB than I would be about Marty Gruenberg," Schwartz said.

But he added that Gruenberg would likely scan the industry to identify products that may be abusive.

"For quite a while, the FDIC's position on payday loans was they can be offered in a safe and sound manner. If they didn't violate the law and were offered in a prudent way, the FDIC did not find that to be objectionable," Schwartz said. "Somewhere along the line, they changed their view, and I suspect he had something to do with that. He will probably find some other abuses that he feels should not be engaged in by FDIC-insured institutions or state nonmember banks."

Though Gruenberg has been the obvious choice for the job for months, the Obama administration has hesitated on naming financial services nominees, apparently because it prefers to push through a package of candidates at the same time.

A White House spokeswoman said she had "no comment on speculation about personnel before the president makes his decision."

Challenges for the White House include a statutory limit on the number of FDIC board members from the ruling party (three) and issues facing other potential nominees.

Gruenberg's position as vice chairman is the only FDIC board seat not nearing the end of its term. (His term expires in 2012.)

Bair's term as chairman is up in June, and she has said she plans to leave then. The administration has yet to appoint a permanent comptroller of the currency since the August 2010 departure of John Dugan. (John Walsh has been serving as acting comptroller.)

Meanwhile, Tom Curry's term as an FDIC board director officially ended last year, and under DoddFrank the Office of Thrift Supervision's seat will be replaced by the director of the CFPB.

Many names have been tossed around for the other positions, including that of Elizabeth Warren, the architect behind the CFPB who is advising the administration on its formation and is widely expected to

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be nominated as its permanent director.

Warren's nomination would be contentious. Many observers say the White House is likely negotiating with congressional Republicans on a package of members that would satisfy both parties. Gruenberg became vice chairman under a similar scenario in 2005, when Sarbanes encouraged his appointment as the Bush administration was looking to nominate Republicans for other roles.

The administration is expected to announce its full package of nominees at any time. Under DoddFrank, the CFPB assumes its authority on July 21, and most observers expect President Obama to push to get an agency director in place by then or shortly afterward.

"They're generally aware that with the way the Senate works, you probably need to announce the nominations soon to even make it possible for people to be in place by the July deadline," Oesterle said.

But some said the rancorous political environment in Washington may make it difficult for any nominee to be moved.

Cornelius Hurley, director of the Morin Center for Banking and Financial Law at the Boston University School of Law, cited the recent nomination of the Nobel Prize-winning economist Peter Diamond as a Fed governor. Republican senators blocked Diamond's nomination; Sen. Richard Shelby, R-Ala., the Banking Committee's ranking member, called Diamond unqualified for the job. But Hurley said Gruenberg may have a better shot if he is nominated.

"Gruenberg is highly qualified, but so is Peter Diamond from MIT. He just picked up a Nobel Prize, and he can't get confirmed. It's crazy," Hurley said, though he added that Gruenberg's time working on Capitol Hill may work in his favor.

"Somebody who is a known staffer from the Hill probably has personal relationships that transcend party and should be able to be confirmed," Hurley said.

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Dow Jones Newswires US House Panel Approves Bills To Restructure New Consumer Bureau May 4, 2011 By Maya Jackson Randall

A Republican-led U.S. House subpanel Wednesday approved a trio of bills that would rework the structure of the new Consumer Financial Protection Bureau and make it easier for a council of regulators to veto the bureau's actions.

Banking industry officials and House Republicans argue that the proposals approved by the House Financial Services Subcommittee on Financial Institutions and Consumer Credit would make the consumer protection bureau more accountable and transparent.

The bills "are a good faith effort to improve the structure of the Consumer Financial Protection Bureau," said Rep. Shelley Moore Capito (R., W.Va.), the subcommittee's chairwoman.

But consumer advocates have slammed the GOP proposals, calling them an attack on the new agency charged with protecting consumers from abusive financial products.

Rep. Carolyn Maloney, the panel's top Democrat, said Republicans, who largely opposed the creation of the consumer bureau, are seeking to cripple the agency.

"The real reason is to delay, distract and weaken the CFPB before it even goes into effect on July 21," she said.

One of the approved bills, introduced by House Financial Services Committee Chairman Spencer Bachus (R., Ala.), would replace the bureau's director position with a five-person, bipartisan panel.

Maloney had offered an amendment that would have guaranteed that White House adviser Elizabeth Warren would lead any new commission. But the panel defeated her proposal.

A second bill introduced by Rep. Sean Duffy (R., Wis.) would make it easier for a council of regulators

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known as the Financial Stability Oversight Council to veto the consumer bureau's actions.

The third approved bill would prevent the bureau from receiving key regulatory powers before the agency has a director in place. The bureau is on track to gain new consumer protection powers on its July 21 launch date, but the White House has not yet announced its pick for the top job.

Capito, in her opening statement, argued that the White House has waited too long to announce a nominee.

"The administration has had almost ten months to find a nominee for the director position," said Capito. "It is simply irresponsible to not have a nominee at this point."

She voiced concern that the White House will make a controversial "recess" appointment to fill the Consumer Financial Protection Bureau's director post, a move she said "could further call into question the legitimacy of the CFPB in its infancy."

Still, Maloney said Warren, the Harvard Law professor who is currently preparing the consumer agency for its July launch, would be a great nominee.

"I hope the president nominates her," Maloney said.

Maloney also argued that the Republican bills up for a vote are aimed at hamstringing the new consumer protection bureau.

"The CFPB is already carefully constructed" and "urgently needed," Maloney said. "The CFPB has unprecedented oversight and accountability."

Republicans repeatedly stated that the bills would "improve" the bureau's structure.

"This is not about Elizabeth Warren. This is no more about Elizabeth Warren than it is about George Washington," Bachus said.

While the full House is likely to sign off on the bills, the Senate is unlikely to back the measures in the near term, according to analysts.

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Reuters House GOP tries to slow Dodd-Frank express May 4, 2011 By Sarah N. Lynch and Christopher Doering

Two congressional committees led by Republicans approved measures on Wednesday to delay and weaken key provisions of last year's Dodd-Frank Wall Street reforms, but they were expected to fizzle in the Senate.

With Democrats in control of the upper chamber of Congress and President Barack Obama able to defend Dodd-Frank with his veto pen, efforts by Republicans to water down and postpone the reforms seemed unlikely to succeed, analysts said.

That is not stopping Republicans from pressing their rollback agenda, however, especially in the U.S. House of Representatives.

"Dodd-Frank is not in any way, shape or form in danger of being repealed," said Ed Mills, a financial policy analyst with brokerage FBR Capital Markets. "But they're building the groundwork over time to strip away elements that the business community feels are the most onerous."

As a global regulatory crackdown moved ahead fitfully in the United States and Europe after the 20072009 financial crisis, a House subcommittee voted in favor of weakening the powers of the new U.S. Consumer Financial Protection Bureau, or CFPB.

Set up by Dodd-Frank to protect consumers from abusive and misleading credit cards and mortgages, the CFPB will open its doors in July. Like the rest of Dodd-Frank, it has been hotly opposed by

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Republicans and Wall Street since it was proposed.

The legislation approved by the subcommittee would have the bureau run by a five-member board rather than a single director, and make it easier for the new Financial Stability Oversight Council to overturn bureau regulations.

Another Republican-led committee voted on Wednesday for an 18-month delay of post-crisis regulations intended to reduce risk in the over-the-counter derivatives market. The rules are being implemented by the Commodity Futures Trading Commission and Securities and Exchange Commission.

The legislation would keep in place the timeline for issuing final rules for definitions such as swaps and swap dealers, and for rules requiring record retention and regulatory reporting.

"The speed at which these rules are coming out is unprecedented, and these are important rules and thus a delay of 18 months is reasonable," said Greg Mocek, a former enforcement chief at the CFTC and now a partner at law firm Cadwalader Wickersham & Taft.

Like the CFPB measure, the derivatives delay bill may win approval in the full House, but it has little chance of becoming law. There is no similar Senate bill and futures regulators have said that they do not need additional time.

OTC DERIVATIVES TARGETED

The Dodd-Frank law, enacted last July, extended full federal regulation to the $600 trillion over-thecounter derivatives market for the first time. It requires derivatives to go through clearinghouses and trade on exchanges as much as possible, with more disclosure and reporting also required.

"It's highly politically risky to move back the date of implementation" for the derivatives rules, said Michael Greenberger, a law professor at the University of Maryland and the CFTC's former director of trading and markets.

"The Republican drive for this does not take into account that the CFTC is contemplating a phase-in process," he said. "It is allowing people to prepare themselves for the new regulatory situation."

To implement the derivatives rules, and many others mandated by Dodd-Frank, regulators asked

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Congress for more money. At a Senate committee hearing, both the Securities and Exchange Commission and CFTC asked for funding increases.

Republicans seeking to weaken Dodd-Frank and restrain federal spending are trying to block big funding increases for the two agencies. The SEC wants a $222 million increase for its fiscal 2012 budget, beginning October 1, which would bring the total to $1.4 billion. The CFTC wants an increase of $106 million, bringing its budget to $308 million.

Separately, SEC Chairman Mary Schapiro told reporters on Wednesday that there is no guaranteed way to prevent a repetition of the May 6, 2010 "flash crash," but that measures being implemented should help head off volatile price swings.

Last year's unprecedented drop sent the Dow Jones industrial average down some 700 points in minutes before it sharply rebounded -- a rapid breakdown that exposed deep flaws in the mostly electronic U.S. marketplace.

Schapiro said the agency has moved fast on circuit breakers to dampen volatility, along with new rules for breaking clearly erroneous trades, rules banning "naked access" to the market, and a prohibition on stub quotes, those offers to buy or sell stock at prices not in line with the prevailing market.

"Can I guarantee we will never have another flash crash? No," Schapiro said. "But I think these are really important steps to take that I think go a really long way toward fortifying our market structure."

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MarketWatch Financial-bureau fight is bad news for consumers May 4, 2011 By Andrea Coombes

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The Consumer Financial Protection Bureau, a key component of the Dodd-Frank bank-reform law, could find its sharp regulatory teeth dulled if three bills now under consideration in the U.S. House of Representatives become law.

And consumer advocates say that, even though its unlikely these bills will make it through the Senate, the mere fact of their existence signals trouble ahead for the agency.

The three bills, taken together, propose to change the bureaus leadership from a sole director to a fivemember commission, make it easier for other regulators in the form of the Financial Stability Oversight Council to veto the rules the CFPB writes and delay the CFPBs assumption of new powers until a director is named, a contentious and possibly lengthy process.

A subcommittee of the House Financial Services Committee voted Wednesday to send all three bills to the full committee, which plans to meet on May 12 to consider them.

Even if the House of Representatives ultimately votes to approve the bills, their chances in the Senate are far less certain. But consumer advocates say that passing laws isnt necessarily the goal of lawmakers who are opposed to the CFPB.

The goal is not just to pass legislation but to intimidate the consumer bureau so it doesnt act vigorously to protect consumers, said Travis Plunkett, legislative director at the Consumer Federation of America, a nonprofit consumer advocacy group. You can literally tie up the time of an agencys leadership if youre hauling them before Congress for hearings and plying them with oversight letters and moving legislation destined to undermine the agency, he said.

Others agreed. In this town, perception matters, said Ed Mierzwinski, consumer advocate with the Washington-based U.S. PIRG, the federation of state Public Interest Research Groups. Holding a hearing where you bash a regulator, voting on a bill only in the House that bashes the bureau changes the perception of what the bureau can accomplish, and thats part of their goal.

Some say thats not the case. Debating proposed legislation is what congressional committees do and are expected to do. These [consumer] groups apparently want to silence debate over bills they disagree with. Thats wrong, Jeff Emerson, a spokesman for the House Financial Services Committee, said in an email.

For her part, Shelley Moore Capito, a Republican congresswoman from West Virginia and sponsor of the bill to delay the start of the bureau, said in a recent press release that we have a responsibility to ensure that [consumers] personal financial decisions are left up to them and not unduly influenced by unelected bureaucrats who seek to limit consumer choice.

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Delaying the start date, and other changes

Capitos bill, H.R. 1667, aims to delay the date that the CFPB realizes its full powers until a director is in place.

Under current law, whether or not the bureau has a director, on July 21 it will have some authority over banks Capitos bill would delay that power. Even under current law, the CFPBs ability to oversee non-bank entities such as payday lenders is on hold until a director is approved.

Another of the bills, H.R. 1315, aims to make it easier for other regulators to veto rules written by the CFPB. Under current law, the Financial Stability Oversight Council can veto CFPB rules that two-thirds of its members agree pose a risk to the financial system a high threshold to meet.

The bill, sponsored by Sean Duffy, Republican congressman from Wisconsin, would reduce that standard, so that the FSOC could veto rules that are inconsistent with the safe and sound operation of financial-services firms. The bill also would allow a veto to pass by a simple majority.

Advocates say a reduced standard would be bad news for consumers. Safety and soundness is an exceedingly vague term which some regulators in the past have used to stop any significant consumer rule, even if that rule had no effect on the overall stability of financial institutions, said Plunkett, of the Consumer Federation of America. He noted that the Comptroller of the Currency in 2008 said that the credit-card reform laws limit on banks ability to raise interest rates on customers existing balances would pose a risk to those firms safety and soundness.

H.R. 1121, sponsored by Republican Congressman Spencer Bachus of Alabama, would require that a five-member commission head the CFPB, rather than a lone director.

Consumer advocates point to the Office of the Comptroller of the Currency, which regulates national banks, as an example of an agency with a single administrator and one that doesnt have a board like the Financial Stability Oversight Council to veto its rules.

Bachus, in a press release Wednesday, said: Almost all independent agencies, including those responsible for consumer protection, are governed by a commission rather than a single person. Whether its the FTC, SEC, CFTC, FCC, the Consumer Products Safety Commission, FDIC, EEOC, NCUA, the U.S. International Trade Commission, the Nuclear Regulatory Commission or the National Transportation Safety Board all are governed by a commission.

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Some say the bill to install a five-member commission is a response to President Barack Obamas likely goal of nominating Elizabeth Warren, a leading consumer advocate and law professor, to head the CFPB. He has yet to do so; instead, shes been charged with setting up the agency. Shes a favorite among many Democrats as the person to direct the agency, but her nomination faces strong resistance from some Republicans.

In a recent speech to the Independent Community Bankers of America, Bachus said his goal to change how the CFPB is headed has nothing to do with Elizabeth Warren, it really has nothing to do with her, Bachus said. But then he added, I will not take a lie detector test, at which point the audience laughed, according to a news report on Bloomberg.com.

When asked about the comment, Emerson, the House Financial Services Committee spokesman said, The fact that people laughed at the comment shows it was obviously intended to be humorous.

In a research note to clients, Brian Gardner, senior vice president of Washington research for Keefe, Bruyette and Woods said, Regardless of who the director of the CFPB is, the initial targets of the CFPB may well be the lesser regulated players in the financial space such as debt collectors, payday lenders, and mortgage brokers rather than the already regulated banks. Also, we expect that the CFPB will act more deliberately than people expect when the time comes for writing new rules and regulations.

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Dow Jones Newswires Rep Maloney Proposes Making Warren Chairman Of Consumer Bureau May 4, 2011 By Maya Jackson Randall

WASHINGTON -(Dow Jones)- U.S. Rep. Carolyn Maloney (D., N.Y.) Wednesday had an interesting way of fighting back against Republican proposals to rework the structure of the Consumer Financial Protection Bureau: an amendment that would ensure that White House adviser Elizabeth Warren leads

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the agency.

"This debate is clearly about Elizabeth Warren, so let's make it about her," said Maloney, who argued that Warren, the Harvard law professor given the responsibility of preparing the consumer bureau for its July launch, is the person who should lead the agency.

Maloney's comments came at a House Financial Services subcommittee meeting to consider a trio of Republican bills aimed at scaling back the powers of the consumer bureau, a centerpiece of the DoddFrank financial overhaul that was opposed by Republicans and the financial industry. Business groups back the legislative proposals as attempts to make the bureau more accountable and transparent, but consumer advocates argue that the bills would handcuff the consumer protection bureau before it even opens its doors.

Maloney offered her proposal as an amendment to a bill introduced by U.S. House Financial Services Committee Chairman Spencer Bachus (R., Ala.) that would replace the bureau's director position with a five-person, bipartisan commission. The subcommittee ultimately rejected her proposal.

Maloney made clear she sees the proposals to rework the consumer agency's structure as attempts to hamstring the bureau but argued that if Republicans are going to try to change the structure of the bureau, there should be someone at its helm who can get the job done.

Under her amendment, the leader of any new consumer bureau commission would have to be someone who: is credited with coming up with the idea of the consumer bureau; has advocated for the creation of the consumer bureau; and is standing up the consumer bureau, among other things.

Warren, who hatched the idea of the consumer bureau years ago, would meet all of those requirements.

Still, the Republican-led Financial Services subcommittee on financial institutions and consumer credit decided against Maloney's plan.

"I do not think I have ever seen an amendment or a bill that is written specifically for one single American individual," said Rep. Shelley Moore Capito, the West Virginia Republican who leads the subcommittee.

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The Hill House GOP advances bills to curb Consumer Bureau May 4, 2011 By Peter Schroeder House Republicans continued their efforts to limit the new Consumer Financial Protection Bureau (CFPB) Wednesday, moving forward three bills that would place restrictions on the fledgling agency. While Republicans maintained the legislation was an attempt to improve the bureau, House Democrats painted the bills as a backdoor attempt to kill the agency before it even begins work in July. A subcommittee of the House Financial Services Committee approved the bills largely down party lines, and the full committee is scheduled to consider the measures May 12. One bill would change the CFPB's leadership to a bipartisan five-member commission instead of a single director. A second would make it easier for fellow regulators on the Financial Stability Oversight Council (FSOC) to overturn CFPB regulations, and a third would limit the work the agency can conduct without an appointed and confirmed director. Following the markup, Rep. Carolyn Maloney (D-N.Y.) singled out the third bill as an effort to stifle the agency at its outset. She argued that Republicans in the Senate can simply block any presidential nominees to be director, which in turn would prevent the CFPB from doing anything. Maloney is the ranking member of the subcommittee on financial institutions and consumer credit that weighed the bills. "It's wrong and it's unfair," she told reporters. But subcommittee Chairwoman Shelley Moore Capito (R-W.Va.) defended the bills as "good faith" efforts to improve the nascent agency. "Some have characterized these measures as an attack on the CFPB. I couldn't disagree more," she said. "These three bills are an effort to make sure that Congress is doing its job and there is a watchdog for the watchdog." For her part, Elizabeth Warren, the president's adviser in charge of setting up the CFPB, has also criticized the legislation. In a statement Tuesday, she criticized the measures as an attempt to "defund, delay, and defang" the bureau. "These bills are about preventing the CFPB from operating effectively," she said. Meanwhile, a House Agriculture subcommittee advanced its own Wall Street reform bill, approving by a voice vote legislation that would delay new rules regulating derivatives by 18 months. Republicans have aired concerns about the rapidly approaching deadlines regulators are working to meet in implementing

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Dodd-Frank. They have suggested that regulators may be failing to consider public comments and the economic impact of their rules in the rush to meet statutory deadlines. Back to Top

Huffington Post GOP House Blocks Bid To Name Elizabeth Warren Head Of The Consumer Financial Protection Bureau May 4, 2011 By Michael McAuliff

WASHINGTON -- Republicans dont even want public advocate Elizabeth Warren to head a watereddown Consumer Financial Protection Bureau.

At least thats what Democrats tried to show Wednesday with a number of amendments to three Financial Services bills that aim to alter the nascent CFPB. The Democratic measures were all nixed by the GOP.

One amendment would have required Congress to name Warren the head of the bureau once she finishes the job of creating it and getting it running by July. The provision, offered by CFPB proponent Rep. Carolyn Maloney (D-N.Y.), was designed to put Republicans, who have vehemently opposed Warren in the past, on the spot.

"This debate is clearly about Elizabeth Warren, so let's make it about her," said Maloney, the top Democrat on the Financial Institutions and Consumer Credit Subcommittee.

The amendment, which said the top job had to be filled by the person "credited with coming up with the idea" for the CFPB, failed on a party-line vote.

It was offered to a bill that would, among other things, turn the bureau into a commission with five members leading it. Subcommittee Chairwoman Shelley Moore Capito (R-W.Va.) argued that a

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commission offers greater stability in the leadership than a single boss.

"If theyre going to make it a commission, at least put someone in the chairs seat who has been the vision behind it and can make it work," Maloney told The Huffington Post after the heated hearing.

Another GOP bill aims to make it easier for the Financial Stability Oversight Commission to overrule decisions that the CFPB might make in favor of consumers. It would require a simple majority vote by the FSOC, instead of a two-thirds majority.

That bill would also change language in current law to give the FSOC authority to protect not just the "safety and soundness of the U.S. financial system -- a key goal of the Dodd-Frank legislation passed last year -- but of individual institutions.

Republicans argued that the changes the bill would produce would make the consumers bureau more transparent and accountable, and protect more small banks.

Democrats contended that the revisions would only weaken the CFPB, and give financial institutions a stronger say.

To prove Democrats point, Maloney offered another amendment that would have defined the "safety and soundness" mentioned in the proposal to exclude profits. Her point was that consumer-friendly decisions generally come at the expense of profits, and -- if profitably is a standard -- there would be a ready rationale to overturn almost any CFPB rule or finding.

"I am not saying that a financial institution should not be able to make a profit," Maloney said in the hearing. "I am simply saying that, if you are going to put an extraordinary check on the CFPBs ability to protect consumers, then a financial institutions profitability should not come at the expense of consumers.

The amendment also failed, while the subcommittee passed the three GOP-sponsored bills. The third aims to delay the July 21 starting date for the CFPB. The full Financial Services Committee is expected to consider the bills next week.

Democrats in the Senate will likely squash the measures there, but they could be offered as amendments to larger pieces of legislation.

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Back to Top

Politico Influence Speaking of ICBA May 4, 2011 By Chris Frates

SPEAKING OF ICBA President Camden Fine asked hundreds of his members Monday to consider whether to back Elizabeth Warren for CFPB head or take their chances with an unknown. National Journals Stacy Kaper quotes Fine as saying: That is going to be a tough issue, because you have to think about this: Its kind of damning with faint praise, as Shakespeare once said. Better the devil you know. Weve all met with her. She has made it her business to reach out to our industry. She is very charming and she comes across as very good for the community banking industry. Or do we take our chances with someone we dont know, like somebody from the Center for Responsible Lending or one of these zealot attorney[s] general, or somebody from the Consumer Federation of America, like their general counsel or some fang-tooth zealot who is going to lump us into the same box as Wall Street and just say I dont give a rats ass how big you are; I am going to hammer your butt. Because there are those people out there, dont kid yourselves. Washington is crawling with those people. This presents ourselves with a very interesting dilemma, because the president is going to act.

WHAT IT COULD MEAN PI reached out to Fine but was told through a spokeswoman that he was unavailable. But if ICBA does come out in favor of Warren, it will only further aggravate Republicans still sore because the group never opposed Democrats Wall Street reform bill last year even though they were privately lobbying GOP lawmakers to kill provisions they didnt like. Last year, in front of 100 financial services lobbyists, Republican Rep. Spencer Bachus called out the groups campaign giving for favoring Democrats an imbalance it soon corrected. Endorsing, or even saying nice things about, Warren would almost surely dredge up all those bad feelings.

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Daily Kos Rep. Spencer Bachus: CFPB repeal effort is about stopping Elizabeth Warren May 4, 2011 By Joan McCarter

Count among the things Republicans really hate the idea that the American consumer get a fair shake when dealing with banks and other financial institutions. If it could possibly mean that the banksters make slightly less money, then screw the American people. And if there is a particularly effective advocate for the American people in the fight, she must be destroyed.

That premise is proven by House Financial Services Chairman Spencer Bachus, who famously said back in December, the role of Congress is "to serve the banks."

He has insisted that this is out of legitimate concern that the agency is too powerful, and not part of the Republican campaign to prevent Harvard Law professor Elizabeth Warren from taking the reins at the agency. (Warren is currently setting up the agency as an Assistant to the President.) This is not about Elizabeth Warren," Bachus insisted early last month. However, yesterday, during a speech before the Independent Community Bankers of America, a trade group, Bachus added a line to his pronouncement:

Bachus introduced a bill in March that would replace the post of director with a five-member bipartisan commission, saying the structure imposed by Dodd-Frank places too much power in the hands of one person.

"It has nothing to do with Elizabeth Warren, it really has nothing to do with her," Bachus said.

After a pause, Bachus drew laughs from the bankers when he said, "I will not take a lie detector test."

Asshole. You'll be shocked to find that Bachus is one of the top three recipients of donations in the Congress from the mortgage brokers and accountants, and does pretty damned well with the finance and insurance sectors, too.

Yes, he gets so much from those industries it runs off the side of the chart. When he said that he's in Congress to serve the banks, he meant it. And has been richly rewarded for that service.

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The Hill What else to watch for: Leaving on a jet plane May 4, 2011 By Bernie Becker, Erik Wasson, Peter Schroeder and Vicki Needham

Elizabeth Warren, the adviser to President Obama on the new Consumer Financial Protection Bureau (CFPB), will have more of a President Clinton-type agenda on Thursday.

Warren is set to speak at the Clinton School of Public Service at the University of Arkansas a day after House Republicans targeted the CFPB and as Washington chatterers wonder aloud if the current president will nominate Warren as the bureaus first director.

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Credit Slips (blog) The Anti-Consumer Agenda May 4, 2011 By Adam Levitin

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I often find myself annoyed by left-wing (and occassionally right-wing) anti-business screeds that decry corporations, big business, etc. I don't find anything inherently troubling about corporate form or business size, and I have no problem with profit-motivated actors (individual or corporate), so long as they play fair. Mindless attacks on the business community have the unfortunate effect of undermining perceived validity of more targeted, thoughtful concerns through a guilt-by-association phenomenon. But business and consumer interests often diverge. Now, it should hardly be controversial that there is an unequal playing field between businesses and consumers. Generally, businesses know more about their products than consumers and have more bargaining power than consumers. (Yes, there are information assymetries running the opposite way, which is a particularly salient problem for credit and insurance products.) For many businesses, it is important to maintain this assymetry of information and bargaining power, as there's profit in it. In theory, and I emphasize in theory, competition should eliminate many of the problems these assymetries create for consumers, but there's no such thing as a perfect, complete market, just varying degrees of market imperfection, so competition alone cannot be relied upon to solve everything. What, if anything else, should be done is an open question, but when one looks at a range of seemingly unconnected recent public policy issues, a troubling common theme emerges. Instead of a laboratory of experiements to help level the b2c playing field, we see a different trend emerging: a distinct anti-consumer agenda that aims to reduce consumer bargaining power and information. Consider the common theme that runs through the following issues: *AT&T v. Concepcion (waiver of class actions in arbitrations) *Attempts to bust up public employee unions (and attacks on unions in general, such as the failure of Card Check legislation) *Citizens United (corporate speech rights) *Attempts to retain the current corrupt swipe fee system (failure of antitrust) *Attacks on public health insurance (prohibition on Medicare bargaining over prescription drug prices and the death of the public option) *Attempts to first kill off and now to maim the Consumer Financial Protection Bureau Class action arbitration waivers and attacks on unionization are attempts to prevent consumers from banding together to gain greater efficiency and bargaining power to pursue their interests. (Yes, labor isn't the same as consumers, but here it's the purchase of wages in exchange for labor, instead of the purchase of air time minutes for cash.) Citizens United runs the other way--by permitting corporate spending on elections, it helps drown out the voices of individuals. Some readers will reasonably argue that I am stretching to fit swipe fees, one of my pet issues, into this frameworks, and they are right that it doesn't fit as neatly as the other points. But swipe fees are ultimately about an exercise of market power by financial institutions. This market power is exercised directly at merchants, but ultimately part of the price is paid by consumers. I see this as an example of how antitrust law has become ineffective at preventing abuses of market power. I hope that the courts will ultimately prove me wrong on this, but they move very slowly. Finally, attacks on the public health insurance system (such as prohibiting Medicare from bargaining with pharmaceutical makers over prescription drug pricing) and on the CFPB are attempts to prevent government from becoming a collective agent for consumers and helping level the playing field, either by bargaining for consumers with prescription drug prices or from simply ensuring that consumers have adequate information about financial products to make informed, responsible decisions. There might be other items to add to this list (and please feel free to note so in the comments), but to me, it paints a disturbing picture of a concerted anti-consumer agenda.

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There are distinct constituencies for each of these issues, but I think it's important to recognize that there's a larger strategic move going on here. I'm not entirely comfortable with branding this move as "anti-consumer," but am doing so for lack of a better label. The old standby categories of capital vs. labor don't do the trick. I'd love to hear any thoughts on how better to frame the issue. Back to Top

Bloomberg BofA, Wells Fargo Mortgage Papers Challenged in North Carolina May 4, 2011 By Chris Burritt and David McLaughlin

Bank of America Corp. (BAC) and Wells Fargo & Co. (WFC), lenders already being probed for faulty home foreclosure practices, were accused by a county official in North Carolina of using mortgage documents that were possibly forgeries.

The signatures of the same names on more than 4,500 documents handled by Lender Processing Services Inc. (LPS) for real estate valued at $624.8 million varied enough to raise doubts about their validity, Jeff Thigpen, register of deeds in Guilford County, North Carolina, told reporters today in Greensboro.

Most of the documents were certificates of satisfaction filed on behalf of San Francisco-based Wells Fargo, Bank of America, based in Charlotte, North Carolina, and other institutions showing the payoff of home mortgages, he said. Thigpen said defective documents may harm a persons ability to get a loan if there are doubts about the legitimacy of the paperwork discharging a previous mortgage.

Investigators need to look at all of this, including the possibility of forgery, Thigpen said in an interview. I dont know if the people who signed the documents were authorized to sign the documents or if they were who said they said were. It is all very questionable.

Thigpens allegations, covering paperwork from 2008 through 2010, follows complaints that banks relied on so-called robosigners, who allegedly processed and signed foreclosure documents without verifying the facts of the cases.

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No Risk

Jason Menke, a Wells Fargo spokesman, said the banks practices regarding certificates of satisfaction are appropriate and pose no risk or harm to homeowners in the Carolinas or anywhere else.

Michelle Kersch, a spokeswoman for Lender Processing Services, said by e-mail that when the company learned of improper signing practices at its subsidiary Docx in November 2009 the process was halted, clients notified and the unit ultimately shut down.

The signing procedures at Docx were not consistent with LPSs policies and practices nor were they approved of by LPSs senior management, she said.

Jumana Bauwens, a spokeswoman for Bank of America, didnt respond to an e-mail and phone call seeking comment.

There are 4,000 people here who may have paid off their loans but we dont know because the paperwork is bad, said Thigpen, 40, the register since 2004. That is the ticking time bomb. Somebody somewhere who has authority for this has got to fix it.

Federal Reserve

Thigpen said he will send his offices findings to the Federal Reserve, the Federal Deposit Insurance Corp. and other federal regulators. He also plans to ask lenders including Bank of America and Wells Fargo as well as Merscorp Inc., which runs an electronic registry of mortgages, to submit documents to correct defective paperwork.

Karmela Lejarde, a spokeswoman for Merscorp, declined to comment.

Thigpen said hell also ask a group of attorneys general that are leading a 50-state probe into foreclosure and mortgage- servicing practices to investigate the matter.

The Guilford County investigation represents the very first time we have actual findings, said Lynn Szymoniak, an attorney in West Palm Beach, Florida, who has represented homeowners in document

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cases.

We have plenty of people doing investigations, Szymoniak said. But we never see data come out of these investigations. This is a blueprint for other offices all around the country, she said.

The attorneys general and federal agencies, including the Justice Department, are negotiating a settlement with five banks that are the top mortgage servicers in the U.S. The banks are Bank of America, Wells Fargo, JPMorgan Chase & Co., Citigroup Inc. and Ally Financial Inc.

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New York Times Bank of America to Triple Number of Mortgage Help Centers May 5, 2011 By Nelson D. Schwartz

Bank of America plans to triple the number of local centers across the country that provide assistance to mortgage customers facing foreclosure, lifting the total to 40 from 12 by early summer.

The bank, which will announce the plan on Thursday, will focus on regions hit especially hard by the rising tide of homeowners struggling to make their mortgage payments. Seven locations will open in California and three in the Detroit area; other centers will be unveiled in St. Louis, Newark, Philadelphia and Tucson, among other cities.

Just over two million homes are in foreclosure nationwide, according to LPS Mortgage Monitor, and another two million borrowers are severely delinquent.

Additional centers may open later this year, the bank said. Counselors fluent in languages including Spanish, Korean, Vietnamese and Russian will be available for non-English speaking customers.

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There are some people that prefer a face-to-face experience, said Rebecca Mairone, national mortgage outreach executive for Bank of America. They prefer telling their story face to face or need additional information about documents or other counseling. Were committed to helping distressed customers.

Most of the counselors in the new centers will be transferred from other areas of the mortgage business, like sales and originations, which have slowed with the decline in mortgage demand.

Bank of America officials said their internal foreclosure procedures had changed in the wake of public criticism, and that the centers were being opened partly in response to customer feedback.

Despite the plans for the new centers, local housing advocates said they remained skeptical of the bank s willingness to reduce loan balances or otherwise ease the terms of existing mortgages.

Bank of America, the nations largest mortgage servicer, and other major banks are overhauling their approach to dealing with distressed homeowners in response to pressure from regulators.

After a public uproar began last fall over problems in the foreclosure process, regulators in Washington and all 50 state attorneys general began a broad inquiry into servicing procedures. In particular, they looked at issues like frequently lost material and at cases in which bank officials reviewed thousands of documents a month with only a cursory glance, a practice known as robo-signing.

Fourteen servicers signed consent orders last month with federal regulators. The orders restrict foreclosure-related fees, and mandate servicers to provide a single point of contact for homeowners who are behind on their payments and an appeals process for borrowers whose first request for a loan modification was turned down.

Separate negotiations are still under way between the major servicers and the state attorneys general, who are pressing the banks to set aside billions to help distressed homeowners modify their mortgages.

Since January 2009, Bank of America has doubled the number of employees who deal with troubled borrowers, to 28,000, but critics say the process still leaves much to be desired.

If they dont change the way they interpret the rules for making modifications, the centers wont make that much of a difference, said Avis Holmes, executive director of the Detroit Non-Profit Housing

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Corporation, which provides counseling to homeowners in danger of default. It seems like theyre more interested in ways not to fully implement modifications.

Ms. Mairone said that Detroit would soon have three centers to help troubled borrowers, but said many of these customers will not be able to get modifications. Instead, she said, the local centers can ease the process, providing other options like allowing customers to sell their homes and pay back as much as they can without a foreclosure, a process known as a short sale.

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Wall Street Journal L.A. Blames Bank for Foreclosure Blight May 5, 2011 By John R. Emshwiller

LOS ANGELESThe city attorney of Los Angeles filed a civil complaint Wednesday against Deutsche Bank AG, alleging it allowed hundreds of foreclosed residential properties to fall into such disrepair as to become public nuisances.

The lawsuit in state court here also alleged that the bank was involved in illegally evicting hundreds of tenants who were renting the residences. The city attorney's office, in a news release, said Deutsche Bank's liability for repairs and payments to former tenants "is potentially in the hundreds of millions of dollars."

Deutsche Bank, in a statement, said "the Los Angeles City Attorney's Office has filed this lawsuit against the wrong party." It said the loan servicers, not the bank, which served as trustee on the loans for the foreclosed properties, were contractually responsible for maintenance and tenant issues.

For over a year, Deutsche Bank said in its statement, it has offered to help city-attorney officials contact the loan servicers, "but they have refused our help and would not even tell us which properties they were talking about."

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The city attorney, in a written response, said Deutsche Bank, as owner of the properties, was responsible for them.

A spokesman for city attorney Carmen Trutanich said this was the first such suit brought by the office. However, he added, similar investigations were ongoing. He declined to say what other banks might be under scrutiny.

Mr. Trutanich, who was elected city attorney in 2009, recently filed for a possible run next year for Los Angeles County district attorney, one of the more powerful local law-enforcement jobs in the country.

Suits have been filed in other parts of the country over the past few years against major financial institutions in connection with properties that went into foreclosure amid the national meltdown of the real-estate industry.

The city attorney's suit said the defendant took title to some 2,000 foreclosed residential properties in Los Angeles. The propertiessingle-family homes and rental properties of up to four unitsare concentrated in lower-income areas, such as south Los Angeles and the northeastern San Fernando Valley.

Upon taking title to the properties, Deutsche Bank "disregarded virtually every one" of its legal duties and responsibilities as property owners, "resulting in the creation and maintenance of an unprecedented number of vacant nuisance properties and substandard occupied housing units," alleged the suit, which focused on 166 properties.

The suit included photos of exposed wiring, missing windows, cockroach droppings, debris, graffiti and mold at various properties.

The city attorney's news release said Deutsche Bank was "repeatedly notified of the substandard conditions" at the properties.

The troubled buildings have depressed property values and contributed to increased crime rates in the neighborhoods, the statement added.

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From:

To:

Ellis, Claudia (Contractor)(CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=elliscl> Slagter, Dennis (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=slagterd>; Black, Brad </o=ustreasury/ou=do/cn=recipients/cn=blackb>; Burden, Gail (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=burtong>; Coyle, Raymond (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=coyler>; Cronin, Katherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cronink>; Darling, Eben (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=darlinge>; Dickman, Marilyn (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dickmanm>; DiPalma, Nikki (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dipalman>; Glaser, Elizabeth (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=glasere>; Gorski, Stephanie (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=gorskis>; Harpe, Pam (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harpep>; Harvey, Imani (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harveyi>; Herchen, Emily (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=herchene>; Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk>; Mann, Seth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=manns>; Megee, Christine (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=megeec>; Plunkett, Alexander (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=alexanderp>; Royster, Felicia (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=roysterf>; Sensiba, Vicki (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sensibav>; Tamberrino, Mary (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tamberrinom>; Tingwald, James (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tingwaldj>; Wanderer, Agnes (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=wanderera>; Weizmann, Jane (CFPB)(Contractor) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=weizmannj>; Picerno, Emelia </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=picernoe>; Sper, Lisa (Contractor)(CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sperl>; Goobic, Jessica (Contractor)(CFPB) </o=ustreasury/ou=exchange

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administrative group (fydibohf23spdlt)/cn=recipients/cn=goobicj> Cc: Bcc: Subject: Date: Attachments: Hi All,

CHCO All Hands Meeting Thu May 05 2011 11:25:32 EDT

Per Dennis request, please send me the following by 12:30pm today:

the number of pending offer letters that you need to complete by COB tomorrow for OTS transferees

Thank you!

Claudia

Page 1121 of 2347

From:

To:

Cc:

Slagter, Dennis (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=slagterd> Slagter, Dennis (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=slagterd>; Black, Brad </o=ustreasury/ou=do/cn=recipients/cn=blackb>; Burden, Gail (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=burtong>; Coyle, Raymond (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=coyler>; Cronin, Katherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cronink>; Darling, Eben (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=darlinge>; Dickman, Marilyn (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dickmanm>; DiPalma, Nikki (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dipalman>; Glaser, Elizabeth (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=glasere>; Gorski, Stephanie (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=gorskis>; Harpe, Pam (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harpep>; Harvey, Imani (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harveyi>; Herchen, Emily (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=herchene>; Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk>; Mann, Seth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=manns>; Megee, Christine (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=megeec>; Plunkett, Alexander (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=alexanderp>; Royster, Felicia (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=roysterf>; Sensiba, Vicki (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sensibav>; Tamberrino, Mary (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tamberrinom>; Tingwald, James (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tingwaldj>; Wanderer, Agnes (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=wanderera>; Weizmann, Jane (Washington) (b) (6) ; Picerno, Emelia (Towers Perrin) (b) (6) >; Mike Blank (b) (6) >; Sper, Lisa (Contractor)(CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sperl>; Jessica Goobic (b) (6) > Full Disclosure Conference Room 503

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</o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=1801conferenceroom503>; (b) (6) > Bcc: Subject: Date: Attachments: CHCO All Hands Meeting Wed May 04 2011 18:49:48 EDT

StartTime: Thu May 05 10:00:00 Eastern Daylight Time 2011 EndTime: Thu May 05 11:00:00 Eastern Daylight Time 2011 Location: Invitees: Recurring: No ShowReminder: No Accepted: No When: Thursday, May 05, 2011 10:00 AM-11:00 AM (UTC-05:00) Eastern Time (US & Canada). Where: 503, Dial-in 202-927-2255 PIN 144508 Note: The GMT offset above does not reflect daylight saving time adjustments. *~*~*~*~*~*~*~*~*~* Location update: 503 Dial-In: Forthcoming N.B. Human Capital Partners (Towers Watson, A+/FMP), one to two reps on site for this meeting only please. Given the agenda below, please make the determination about whom you would like to participate. AGENDA I.Top 3 Significant Activities and/or Issues From (In the Following Order, 10 minutes each): 1.Talent Acquisition Team 2.Employee Engagement 3.Mary Tamberrino & Co. (Systems, Benefits Implementation etc.) 4.Compensation and Communications (Jane Weizmann) 5.A+/FMP (No Production Brief Expected But Any Issues Please) II.Wrap-Up and Discussion (Dennis and Marilyn, 10 minutes) Thanks everyone, Eben

Page 1128 of 2347

From:

To:

Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk> Glaser, Elizabeth (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=glasere>

Cc: Bcc: Subject: Date: Attachments:

RE: CFPB phone number on various notices and credit bureau complaints Wed May 04 2011 18:10:24 EDT

1710.15 Regulatory exemptionmultiple site subdivisiondetermination required. The sample format in this section includes the following language: If you have evidence of any scheme, artifice or device used to defraud you, you may wish to contact: Interstate Land Sales Registration Division, HUD Building, Room 6278, 451 Seventh Street, SW., Washington, DC 20410.

From: Glaser, Elizabeth (CFPB) Sent: Wednesday, May 04, 2011 4:39 PM To: Lownds, Kevin (CFPB) Subject: FW: CFPB phone number on various notices and credit bureau complaints

From: Smullin, Rebecca (CFPB) Sent: Wednesday, May 04, 2011 12:16 PM To: Glaser, Elizabeth (CFPB) Subject: FW: CFPB phone number on various notices and credit bureau complaints

Rebecca Smullin Consumer Financial Protection Bureau Implementation Team (202) 435-7178 rebecca.smullin@do.treas.gov

Page 1129 of 2347

From: Smullin, Rebecca (CFPB) Sent: Friday, April 22, 2011 5:26 PM To: Reilly, Deb (CFPB) Subject: FW: CFPB phone number on various notices and credit bureau complaints

Deborah,

I wanted to update you on two points regarding credit bureau complaints.

1) First, as you recall, it was mentioned during the Wednesday policy meeting that, by law, certain credit reports now list the FTC as a point of contact, and, at some point will start listing the CFPB (rather than the FTC). Below is our earlier correspondence with the attorneys on this subject. Liz Glaser is the point of contact for these issues internally.

Here is more information on these disclosure requirements:

(b) (5)

Happy to discuss further if I can be helpful.

Page 1130 of 2347

Thanks,

Rebecca Smullin Consumer Financial Protection Bureau Implementation Team (202) 435-7178 rebecca.smullin@do.treas.gov

From: Smullin, Rebecca (CFPB) Sent: Monday, February 28, 2011 4:21 PM To: Forrest, David (CFPB); Reilly, Deb (CFPB) Cc: VanMeter, Stephen (CFPB) Subject: Fw: CFPB phone number on various notices

Looping in David and Deborah. David, both Steve's email below and Tom's earlier in the chain respond to your question regarding what contact info is provided. In general terms,(b) (5)

_____ From: VanMeter, Stephen (CFPB) To: Scanlon, Thomas; Smullin, Rebecca (CFPB); Cochran, Kelly (CFPB) Cc: Glaser, Elizabeth (CFPB) Sent: Mon Feb 28 09:26:08 2011 Subject: RE: CFPB phone number on various notices Thanks, Tom. I completely agree with what you outlined below.

At the OCC, I believe we always provided the Customer Assistance Group as the official contact point for purposes of all these rules, with the expectation that they would forward matters that belonged elsewhere as appropriate. As a practical matter, people do find their way to other points of contact (e. g., they write directly to the head of the agency, or to the General Counsel, etc.), but my own view is that there are a number of operational and other reasons (e.g., efficiency, quality control, ensuring responses to all correspondence, and equal treatment of those who follow the standard process) to establish a single official point of contact for consumers to contact the agency.

Page 1131 of 2347

From: Scanlon, Thomas Sent: Sunday, February 27, 2011 10:41 PM To: Smullin, Rebecca (CFPB); Cochran, Kelly (CFPB); VanMeter, Stephen (CFPB) Cc: Glaser, Elizabeth (CFPB); Scanlon, Thomas Subject: RE: CFPB phone number on various notices
(b) (5)

Tom

From: Smullin, Rebecca (CFPB) Sent: Sunday, February 27, 2011 10:23 PM To: Cochran, Kelly (CFPB); VanMeter, Stephen (CFPB); Scanlon, Thomas Subject: RE: CFPB phone number on various notices

Thanks! Would much appreciate your insight!

Page 1132 of 2347

Rebecca Smullin Consumer Financial Protection Bureau Implementation Team (202) 435-7178 rebecca.smullin@do.treas.gov

From: Cochran, Kelly (CFPB) Sent: Sunday, February 27, 2011 5:40 AM To: Smullin, Rebecca (CFPB); VanMeter, Stephen (CFPB); Scanlon, Thomas Subject: RE: CFPB phone number on various notices

Hi, I think Tom may have been thinking about this as part of the 1063(i) process where we have to list all of the regulations and orders that the CFPB will enforce.

From: Smullin, Rebecca (CFPB) Sent: Saturday, February 26, 2011 12:21 PM To: VanMeter, Stephen (CFPB) Cc: Cochran, Kelly (CFPB) Subject: CFPB phone number on various notices

Hi Steve,

It has come to my attention that under current regulation, certain regulators contact info is required to be printed on various notices to consumers. In order to better anticipate the types of contacts we will receive from consumers, Id like to understand a bit more about exactly what the current requirements are, and how they will change on transfer date. With that in mind, could you help me understand the following? Im copying Kelly in case she happens to know the answers to these questions off the top of her head.

(b) (5)

Page 1133 of 2347

(b) (5)

Im sure you have lots on your plate; would love to discuss this at your earliest convenience. Could you let me know whether you or one of your colleagues is able to assist?

Many thanks!

Rebecca Smullin Consumer Financial Protection Bureau Implementation Team (202) 435-7178 rebecca.smullin@do.treas.gov

Page 1134 of 2347

From:

To:

Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk> Glaser, Elizabeth (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=glasere>

Cc: Bcc: Subject: Date: Attachments:

RE: CFPB phone number on various notices and credit bureau complaints Wed May 04 2011 16:48:31 EDT

(2) Summary of rights required to be included with agency disclosures

A consumer reporting agency shall provide to a consumer, with each written disclosure by the agency to the consumer under this section--

(A) the summary of rights prepared by the Bureau under paragraph (1);

(B) in the case of a consumer reporting agency described in section 1681a(p) of this title, a toll-free telephone number established by the agency, at which personnel are accessible to consumers during normal business hours;

(C) a list of all Federal agencies responsible for enforcing any provision of this subchapter, and the address and any appropriate phone number of each such agency, in a form that will assist the consumer in selecting the appropriate agency;

(D) a statement that the consumer may have additional rights under State law, and that the consumer may wish to contact a State or local consumer protection agency or a State attorney general (or the equivalent thereof) to learn of those rights; and

(E) a statement that a consumer reporting agency is not required to remove accurate derogatory information from the file of a consumer, unless the information is outdated under section 1681c of this title or cannot be verified.

From: Glaser, Elizabeth (CFPB) Sent: Wednesday, May 04, 2011 4:39 PM

Page 1135 of 2347

From:

To:

Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk> Glaser, Elizabeth (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=glasere>

Cc: Bcc: Subject: Date: Attachments:

Document1 [Compatibility Mode] Wed May 04 2011 14:38:25 EDT Doc1.doc

Page 2213 of 2347

Doc1.doc (Attachment 1 of 1)

Enumerated Laws and Regulations for Restatement Project Enumerated Consumer Law Alternative Mortgage Transaction Parity Act of 1982 (12 U.S.C. 3801, et seq.) Consumer Leasing Act of 1976 (15 U.S.C. 1667, et seq.) Electronic Fund Transfer Act (15 U.S.C. 1693, et seq.) Equal Credit Opportunity Act (15 U.S.C. 1691, et seq.) Fair Credit Reporting Act (15 U.S.C. 1681, et seq.) Regulations Already Redlined 12 C.F.R. 560.220 Regulations Need to Be Redlined 12 C.F.R. 34.20 34.25 12 C.F.R. 560.35 12 C.F.R. 560.210 12 C.F.R. 701.21

12 C.F.R. part 213 (Regulation M) 12 C.F.R. part 205 (Regulation E) 12 C.F.R. part 202 (Regulation B) 12 C.F.R. part 41 12 C.F.R. part 222 (Regulation V) 12 C.F.R. part 334 12 C.F.R. part 571 12 C.F.R. part 717 12 C.F.R. part 600

Home Owners Protection Act of 1998 (12 U.S.C. 4901, et seq.) Fair Debt Collection Practices Act (15 U.S.C. 1692, et seq.) Subsections (b)-(f) of section 43 of the Federal Deposit Insurance Act (12 U.S.C. 1831t(c)-(f)) Sections 502-509 of the GrammLeach-Bliley Act (15 U.S.C. 6802-6809) Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2801, et seq.) Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2601, et seq.) S.A.F.E. Mortgage Licensing Act of 2008 (15 U.S.C. 1601, et seq.)

16 C.F.R. part 320 12 C.F.R. part 216 (Regulation P) 12 C.F.R. part 203 (Regulation C) 24 C.F.R. part 3500 Consolidated Redline: 12 C.F.R. 34.101 34.105 12 C.F.R. 208.101 208.105 12 C.F.R. 365.101 365.105 12 C.F.R. 563.101 563.105 12 C.F.R. 761.101 761.105 12 C.F.R. part 226 (Regulation Z) 12 C.F.R. part 230 (Regulation DD) 16 C.F.R. part 322 12 C.F.R. part 40 12 C.F.R. part 332 12 C.F.R. part 573

Truth in Lending Act (15 U.S.C. 1601, et seq.) Truth in Savings Act (12 U.S.C. 4301, et seq.) Section 626 of the Omnibus

Page 2214 of 2347

Doc1.doc (Attachment 1 of 1)

Appropriations Act of 2009 (Pub. L. 111-8) Interstate Land Sales Full Disclosure Act (15 U.S.C. 1701, et seq.)

24 C.F.R. part 1710 24 C.F.R. part 1715 24 C.F.R. part 1720

Page 2215 of 2347

From:

To:

Glaser, Elizabeth (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=glasere> Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk>

Cc: Bcc: Subject: Date: Attachments:

FW: Transferred Regulations and Consumer Complaint Wed May 04 2011 14:31:57 EDT

-----Original Message----From: Fuchs, Meredith (CFPB) Sent: Wednesday, May 04, 2011 12:05 AM To: Glaser, Elizabeth (CFPB); Deutsch, Rebecca (CFPB); VanMeter, Stephen (CFPB) Cc: Pluta, Scott (CFPB); Gonzalez, Roberto (CFPB) Subject: RE: Transferred Regulations and Consumer Complaint I think it would be helpful for the consumer response team to know what already exists in this space, as they consider the need to issue regulations to implement their program responsibilities. Elizabeth, could you consolidate the references of which you are aware with any that Rebecca is aware of? Meredith -----Original Message----From: Glaser, Elizabeth (CFPB) Sent: Tuesday, May 03, 2011 11:22 AM To: Fuchs, Meredith (CFPB); Deutsch, Rebecca (CFPB); VanMeter, Stephen (CFPB) Cc: Pluta, Scott (CFPB); Gonzalez, Roberto (CFPB) Subject: RE: Transferred Regulations and Consumer Complaint Hi Meredith,
(b) (5)

I hope this is helpful. Please let me know if I can assist in any other way. Thanks, Elizabeth -----Original Message----From: Fuchs, Meredith (CFPB) Sent: Tuesday, May 03, 2011 10:05 AM To: Deutsch, Rebecca (CFPB); VanMeter, Stephen (CFPB); Glaser, Elizabeth (CFPB) Cc: Pluta, Scott (CFPB); Gonzalez, Roberto (CFPB)

Page 2216 of 2347

Subject: Transferred Regulations and Consumer Complaint Rebecca, Steve, and Elizabeth(b) (5)

Meredith Meredith Fuchs Principal Deputy General Counsel Consumer Financial Protection Bureau

Page 2217 of 2347

From:

To: Cc:

Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk> Hart, Maria (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=hartm> Glaser, Elizabeth (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=glasere> RE: Timesheet Pay Period 9 Wed May 04 2011 14:03:29 EDT Timesheet Pay Period 9.xlsx

Bcc: Subject: Date: Attachments: Hi Maria,

Attached is my time card for this pay period. Also, I had a question for you: my last day at CFPB is next Wednesday, May 11. Do you know where I should turn in my Blackberry, my DORA token, and my ID? Thanks!

-Kevin

From: Hart, Maria (CFPB) Sent: Tuesday, May 03, 2011 3:02 PM To: Basham, Stephanie (CFPB); Botelho, Michael (CFPB); Brown, Charles (CFPB); Cronin, Katherine (CFPB); Darling, Eben (CFPB); Dickman, Marilyn (CFPB); Fravel, Wesley (CFPB); Glaser, Elizabeth (CFPB); Gupta, Neeraj (CFPB); Hannah, Stephen (Rick)((CFPB); Harpe, Pam (CFPB); Harvey, Imani (CFPB); Herchen, Emily (CFPB); Hillebrand, Gail (CFPB); Horan, Kathleen (CFPB); Jackson, Monica (CFPB); Keane, Micheal (CFPB); Kunin, Noah (CFPB); Lopez-Fernandini, Alejandra (CFPB); Lownds, Kevin (CFPB); Mann, Seth (CFPB); Meyer, Erie (CFPB); Michalosky, Martin (CFPB); Murrell, Karen (CFPB); Plunkett, Alexander (CFPB); Prince, Victor (CFPB); Reilly, Elizabeth (CFPB); Royster, Felicia (CFPB); Ruihley, Joshua (CFPB); Scurlock, Angelika (CFPB); Sena, Theresa (CFPB); Sensiba, Vicki (CFPB); Slagter, Dennis (CFPB); Stapleton, Claire (CFPB); Tamberrino, Mary (CFPB); Tingwald, James (CFPB); Tucker, Kevin (CFPB); Wanderer, Agnes (CFPB); West, Catherine (CFPB); Williams, Anya (CFPB); Yuda, John (CFPB) Cc: Hart, Maria (CFPB) Subject: Timesheet Pay Period 9 Importance: High

Good Afternoon,

This is an notification that Im your new timekeeper. Please complete the attached time and attendance

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form (annual/sick leave usage or projected usage). The form will reflect Pay Period #9 (April 24th May 7th ). It is important that all timecards be submitted on time so that we can ensure accurate and timely salary payment.

Forward your completed timecard to maria.hart@treasury.gov and to your supervisor, no later than noon on Thursday, May 5th.

**Reminder: Timecards will not be processed unless your supervisor is copied on the email.

Thanks, Maria

Page 2219 of 2347

Timesheet Pay Period 9.xlsx (Attachment 1 of 1)

Consumer Financial Protection Bureau - Time Sheet

NAME:
(b) (6), (b) (2)

KEVIN LOWNDS

PAY PERIOD:

Page 2220 of 2347

Timesheet Pay Period 9.xlsx (Attachment 1 of 1)

Period 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

2010 Week 1 01/03/09 01/17/09 01/31/09 02/14/09 02/28/09 03/14/09 03/28/09 04/11/09 04/25/09 05/09/09 05/23/09 06/06/09 06/20/09 07/04/09 07/18/09 08/01/09 08/15/09 08/29/09 09/12/09 09/26/09 10/10/09 10/24/09 11/07/09 11/21/09 12/05/09 12/19/09

Week2 01/10/09 01/24/09 02/07/09 02/21/09 03/07/09 03/21/09 04/04/09 04/18/09 05/02/09 05/16/09 05/30/09 06/13/09 06/27/09 07/11/09 07/25/09 08/08/09 08/22/09 09/05/09 09/19/09 10/03/09 10/17/09 10/31/09 11/14/09 11/28/09 12/12/09 12/26/09

Page 2221 of 2347

From:

To:

Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk> Martinez, Zixta (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=martinezz>

Cc: Bcc: Subject: Date: Attachments: Hi Zixta,

Event Invitation: Jackson Hole, Wyoming Wed May 04 2011 13:59:48 EDT

A friend of mine has asked me to follow up with you about an event invitation that was sent in within the last few weeks. My understanding is that the event is a conference of state attorneys general which will include a panel on the CFPB, and is being hosted in Jackson Hole, Wyoming. I believe the invitation was sent by someone named Marie Vulaj.

Do you have any updates on the status of this invitation? Sorry to bug you with thisthanks in advance!

-Kevin

Kevin K. Lownds Review Analyst Consumer Financial Protection Bureau (202) 435-7399

Page 2222 of 2347

From:

To: Cc:

Blenkinsopp, Alexander (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=blenkinsoppa> _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands> Adamske, Steven </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=adamskes>; Moore, Megan </o=ustreasury/ou=do/cn=recipients/cn=mooreme>; Hunt, Anita Maria </o=ustreasury/ou=do/cn=recipients/cn=hunta>; Wallace, Kim </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=wallacek>; Wolin, Neal </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=wolinn>; Warren, Elizabeth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=warrene>; Fitzpayne, Alastair </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=fitzpaynea>; LeCompte, Jenni </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=engebretsenj>; Murray, Colleen </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=murrayco>; Coloretti, Nani </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=colorettin> CFPB Press Clips 5/4 Wed May 04 2011 11:58:49 EDT

Bcc: Subject: Date: Attachments:

Press Clips 5/4/2011

Index

Click publication title to find its location in this e-mail. Click article title to go to its source website.

Pending Legislation on CFPB Washington Post House GOP set to move ahead with legislation to limit new consumer bureau New York Times Party Like Its 2013 Huffington Post The CFPB needs to get to work; Republicans need to stop trying to stall it

Page 2223 of 2347

Dow Jones Newswires House Panel To Vote On Bills To Rework Consumer Bureau Powers Cleveland Plain Dealer House tries to defang consumer watchdog one tooth at a time Fortune The war over consumer financial protection intensifies Advisor One Consumer Groups Rally Against Passage of Bills to Alter CFPB The Hill (blog) Overnight Money: Defund, delay, defang Housing Wire Elizabeth Warren accuses lawmakers of trying to defang the CFPB

The Consumerist Washington Already Considering Ways To Ruin Consumer Financial Protection Bureau

Keating Statements Dow Jones Newswires ABA president backtracks from Warren comments American Banker ABAs Keating Backpedals Off of Warren Endorsement Philadelphia Inquirer (blog) Oops. Does he or doesnt he back Warren for CFPB?

Firedoglake ABA President Frank Keating: Ill Back Elizabeth Warren If Shes Nominated to Run CFPB: Updated

Consumer Financial Protection Bureau Politico Morning Money Dodd Hits Warrens Ego

Dow Jones Newswires US Sen Carper: Favors Banking Industry Pro To Head Consumer Agency The Hill (blog) Consumer group presses Capito to announce husbands new banking job BNET If Liz Warren Gets the Nod, Shell Have Osama bin Laden to Thank National Journal She-Devil Warren?

Consumer Credit American Banker How Interchange Debate Could Be Affected by Testers Reelection Race American Banker Big Six Card Lenders Give Up Market Share

American Banker MasterCard, Profit Up 23%, Doesnt Expect Near-Term Hit from Debit Interchange Cap Huffington Post Attorneys General In 10 States Launch Joint Investigation Into For-Profit Colleges

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American Banker JPMorgan Chase Stops Test of Higher ATM Fees American Banker Boom in Auto Loans Fizzles as Competition Drives Down Prices

Housing Wall Street Journal Foreclosures Trapped by a Lack of Lawyers American Banker Short Sale Help, or Mortgage Steering?

Huffington Post Deutsche Bank Accused Of Massive Mortgage Fraud, Sued for $1 Billion By U. S. Government

Regulators Budgets New York Times (blog) U.S. Regulators Face Budget Pinch as Mandates Widen

Washington Post House GOP set to move ahead with legislation to limit new consumer bureau May 3, 2011 By Brady Dennis and Ylan Q. Mui

The political tug of war over the new Consumer Financial Protection Bureau will enter another round Wednesday, when House Republicans forge ahead with legislation aimed at curbing the fledgling watchdogs powers even before it officially opens its doors in July.

The House Financial Services Committee is scheduled to vote on a trio of GOP-backed bills, each of which encapsulates arguments that have lingered since Congress created the consumer regulator last year.

One bill, sponsored by the committees chairman, Rep. Spencer Bachus (R-Ala.), would replace the bureaus independent director position with a five-member commission. Bachus and other Republicans have insisted that the current structure will give too much power to a single individual.

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President Obama has yet to nominate a permanent director for the bureau. But Harvard law Professor Elizabeth Warren a favorite of consumer advocates but disliked by many Republicans and financial industry officials has headed the creation of the agency since the fall and is considered a leading candidate.

If George Washington came back today, or Abraham Lincoln, or if Warren Buffett signed up, I wouldnt give that person total discretion, Bachus said in a recent speech, arguing that his efforts had little to do with Warren but with the power of her current position.

Another bill, sponsored by Rep. Sean P. Duffy (R-Wis.), would make it easier for fellow regulators to veto rules written by the bureau. Members of the Financial Stability Oversight Council need a two-thirds majority to overrule the bureau. The new rule would alter that to a majority vote.

The third bill on tap would prevent the bureau from exercising the full extent of its powers until a permanent director is in place a scenario that could be slow in coming because of the glacial pace of many Senate confirmations.

Warren has remained on the offensive in the face of the continued Republican criticism. She has crisscrossed the country, from Capitol Hill to military installations and late-night talk shows, defending the need for a federal agency dedicated solely to protecting ordinary consumers.

Last week, she took her message to The Daily Show with Jon Stewart, where she argued that the debate over the structure of the consumer bureau should have ended last summer when Congress passed its financial overhaul legislation, known as the Dodd-Frank Act. She warned that the bills under consideration by the House committee would stick a knife in the ribs of the new bureau.

Warren reiterated that argument Tuesday afternoon.

Many in Congress have made clear their intention to defund, delay, and defang the consumer agency before it can help one family, she said in a statement. These bills are about preventing the CFPB from operating effectively a dangerous game to play in light of recent lessons in the marketplace and how quickly financial threats to consumers emerge.

She got an assist from a slew of advocacy groups, which once again rushed to the bureaus defense. The GOP-sponsored measures are not about reasonable congressional oversight, Ed Mierzwinski, consumer program director for U.S. PIRG, said on a call with reporters. They are an attack on consumer protection.

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Republicans insist otherwise. From the beginning, they have criticized the new bureau and much of the Dodd-Frank Act as little more than an unnecessary government overreach that would increase costs on banks and small businesses and constrict access to credit for average Americans.

Even if the bills up for review clear the Republican-led House, the likelihood they ever would become law remains slim. Sen. Tim Johnson (D-S.D.), chairman of the Banking Committee, has shown no inclination to roll back key provisions of the landmark legislation. And any such bill also would have to get past a potential veto from President Obama, who made the consumer bureau a central part of his efforts to overhaul financial regulation.

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New York Times Party Like Its 2013 May 3, 2011 Editorial

Republicans on the House Financial Services Committee are having a campaign fund-raiser this week.

Starting on Wednesday, the committees majority is expected to pass bills to cripple the Consumer Financial Protection Bureau, one of the most important innovations in the 2010 Dodd-Frank financial reform law.

The bureau has one purpose: to shield consumers from unfair, misleading and deceptive lending. The purpose of the Republican bills is twofold. One is to deprive the agency of the power to fulfill its mission. Another is to attract campaign money. As long as the Senate and White House are controlled by Democrats, the bills are unlikely to become law. But by advancing them in the House, Republicans can demonstrate how thoroughly they would dismantle reform if they controlled Washington and, in the process, rake in Wall Street donations.

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What do the banks want in exchange? For starters, they want even stricter constraints on the agency than those that were written into the law last year and that were expressly included to address banks objections to the agency.

Under the law, a two-thirds majority of a panel of other financial regulators can veto rules by the consumer bureau a constraint faced by no other government agency. One of the Republican bills would allow a simple majority of other regulators to veto bureau rules.

Worse, the bill would lower the standard for exercising a veto. Under current law, a veto is allowed if other regulators deem consumer bureau rules a threat to systemwide stability a high hurdle. Under the bill, a veto would require only that other regulators find the bureau rules inconsistent with safety and soundness. In other words, if a rule might cause banks to be less profitable, say, by curbing tricky and excessive fees, it could be vetoed by bank-friendly regulators.

Another of the Republican bills would rewrite the Dodd-Frank law so that the bureau would be managed by a five-member, bipartisan board, rather than one director a recipe for delay and division. Yet another would block the agency from wielding its full powers until a director is confirmed by the Senate. Thats a way to hold up the agency indefinitely.

President Obama and other White House officials have been aloof in the face of Republican rhetoric and bills that call for the demise of the consumer agency. The strategy seems to be to downplay the effort by ignoring it. That doesnt generally work.

In the battle to pass a budget earlier this year, the White House agreed to Republican demands for government and private-sector audits of the consumer bureau. It also agreed to a government study of financial regulation that is clearly intended to emphasize the cost not the benefits of regulation. Such audits and studies might seem to be mere annoyances, but as part of a larger effort to derail the consumer agency, they are dangerous steps.

Unless the administration offers a quick, full-throated defense, the agency may never fulfill its promise. And the process by which Congress is bought and sold and consumers and taxpayers are hung out to dry will be, once again, on full display.

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Huffington Post The CFPB needs to get to work; Republicans need to stop trying to stall it May 4, 2011 By Rep. Carolyn Maloney

There is no body within the federal government that has consumers as its main raison d'etre, which means consumers often come in second, third or last in any discussion of financial institutions. That lack of oversight had a role in creating the worst financial crisis in my, or most Americans', lifetime. And that's what Congress tried to fix with the creation of the Consumer Financial Protection Board (CFPB) as part of the Dodd-Frank reforms last year.

But today, the Financial Institutions & Consumer Credit Subcommittee of the Financial Services Committee will debate legislation that is clearly meant to cripple the CFPB before it even opens its doors.

One bill would convert the leadership of the Bureau to a five-member Commission instead of a single Director who can act quickly to changing market conditions. Another would make it easier for the Financial Stability Oversight Council to veto CFPB rules, allowing a single member to petition for an override and lower the vote required for override to a simple majority (from a 2/3 majority). A third bill would delay the Bureau from opening on July 21 until a Director has been confirmed by the Senate-where a single Senator of either party can stall any confirmation.

These bills are thinly-veiled attacks on the functioning of the CFPB and its chief proponent, Elizabeth Warren, a consumer finance expert and Harvard Law School professor.

The fact is that Congress has created the CFPB with so much oversight--from the Financial Stability Oversight Committee overrides to regular annual Government Accountability Office audits to regular GAO audits of the Bureau, among other provisions--that calls for "improving" the CFPB before it even opens its doors in July are unfair to all of us who use financial services.

We must make the prices--and the risks--clear in any financial product. We live in a world where use of financial products has exploded--whether it's a student loan, or a debit card, or a variable-rate mortgage--and financial "innovation" all too often means impenetrable financial complexity which is sold in multi-page, small-type terms and conditions that you have to graduate law school to understand!

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I was sitting in the Financial Services Committee room when Ben Bernanke said "disclosure is not enough" when it comes to credit card agreements-- and when Daniel Mudd, the then-CEO of Fannie Mae described reading through his own credit-card agreement and even he couldn't understand it!

As Elizabeth Warren noted in her original proposal for the creation of a consumer finance agency: "It is impossible to buy a toaster that has a one-in-five chance of bursting into flames and burning down your house. But it IS possible to refinance an existing home with a mortgage that has the same one-infive chance of putting the family out on the street-and the mortgage won't even carry a disclosure of that fact to the homeowner."

Even those in the industry recognize the Bureau's merits. Jamie Dimon--the Chief Executive of JP Morgan Chase--said in his letter to shareholders in their annual report last month, "...there were many good reasons that led to the creation of the CFPB and (we) believe that if the CFPB does its job well, the agency will benefit American consumers and the system." And earlier this week, Camden Fine, president and CEO of the Independent Community Bankers of America said that Warren has consistently reached out to many small bankers around the country. "If we take her at her word, and we have no reason not to, she's spoken very favorably about regulatory burden on the smallest banks".

Consumers have been calling for help with financial issues since before the financial crisis. But the bills before us today will do little to help consumers; these bills are transparent attempts to hobble the agency before it has even opened its doors. As the USA Today editorial page put it, "In Washington, when you can't kill an idea you hate, you can always go back and maim it."

I hope the Subcommittee can deal with these bills today and move on to the real needs of our country: getting the economy back on track and Americans back to work--and allow the CFPB to start work on leveling the playing field on behalf of consumers.

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Dow Jones Newswires House Panel To Vote On Bills To Rework Consumer Bureau Powers May 3, 2011

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By Maya Jackson Randall

The political fight over the new U.S. Consumer Financial Protection Bureau will continue on Wednesday, with a Republican-led House subcommittee prepared to sign off on a trio of controversial bills that would scale back the agency's authority.

Republicans, who have promised vigorous oversight of the consumer bureau, could also use Wednesday's meeting to weigh in on growing expectations among banking industry officials and analysts in Washington that President Barack Obama will nominate White House adviser and vocal banking critic Elizabeth Warren to spearhead the agency.

Rep. Shelley Moore Capito (R., W.Va.), who leads the House Financial Services subpanel, has already made clear that she doesn't think Warren should be nominated for the post.

"First, I support a five-person commission. But, no, I do not believe nominating Warren is the direction the president should take," Capito said.

The three bills up for a subcomittee vote are backed by business groups such as the American Bankers Association but fiercely opposed by consumer advocates. The measures are unlikely to win Senate approval but could gain momentum a couple of years from now if Republicans gain greater control of Congress.

A bill introduced by House Financial Services Committee Chairman Spencer Bachus (R., Ala.) would replace the bureau's director position with a five- person, bipartisan panel.

Bachus has said he believes the bureau "will do a better job carrying out its mission if it is led by a bipartisan commission rather than a single director."

However, Senate Banking Committee Chairman Tim Johnson (D., S.D.) has signaled that he doesn't support the measure.

"This issue of a 5-member commission instead of a single director was already considered during the thorough Wall Street reform debate last year, and agreement was reached that consumers would be protected best with a strong and independent director in place at the CFPB," he said in a statement.

A second bill introduced by Rep. Sean Duffy (R., Wis.) would make it easier for a council of regulators

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known as the Financial Stability Oversight Council to veto the consumer bureau's actions.

The third bill would prevent the bureau from receiving key regulatory powers before the agency has a director in place. The bureau is on track to gain new consumer protection powers on its July 21 launch date. While banking officials and analysts anticipate that the White House will nominate Warren, the White House has not yet announced its pick and the top job remains vacant.

While the Senate is unlikely to back the proposals in the near-term, the bills could gain greater traction in years to come, analysts say.

"This should set the stage for action in 2013," MF Global Inc. analyst Jaret Seiberg said in a research note this week.

Capito said the bills are "commonsense measures to promote effective and efficient transparency and accountability" at the consumer bureau.

But consumer advocates and Warren, who is in charge of preparing the consumer protection agency for its July launch, have steadily criticized the legislative proposals.

"Many in Congress have made clear their intention to defund, delay, and defang the consumer agency before it can help one family," Warren said in a statement Tuesday. "These bills are about preventing the CFPB from operating effectively-- a dangerous game to play in light of recent lessons in the marketplace and how quickly financial threats to consumers emerge."

Similarly, consumer advocates are concerned that the bills will hurt the consumer agency's ability to protect consumers from fraudulent practices related to credit cards, mortgages and other financial products.

"If enacted, these bills will virtually guarantee the agency will be a weak and a timid one without the ability or the will to curb the kind of financial abuses that have caused the nation's worst financial crisis since the Great Depression and that are still harming tens of thousands of Americans throughout the country now," Consumer Federation of America Legislative Director Travis Plunkett said.

In addition, Plunkett said the bills are aimed at intimidating the bureau.

"They're creating a political climate where anyone, whether Elizabeth Warren or someone else, who

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tries to fulfill the mission of the agency is not going to be able to do so," he said.

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Cleveland Plain Dealer House tries to defang consumer watchdog one tooth at a time May 3, 2011 By Sheryl Harris

Talk about bait and switch. Congress promised Americans a new consumer watchdog agency, but it's trying to deliver a toothless hound.

Wednesday, members of the House Financial Services subcommittee are marking up legislation that will shorten the Consumer Financial Protection Bureau's leash.

The agency has one job: To protect consumers from unfair terms and surprise fees hidden in the fine print of financial contracts.

HR 1121 would replace the agency's director (a post not yet filled) with a five-member commission.

HR 1315 would make it easier for bank regulators (who for years ignored consumer complaints about unfair bank products) to veto new rules.

Another, as yet unnumbered, bill, which would prevent the bureau from opening until a director is named, made the subcommittee's schedule, too.

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Make no mistake.

These changes are not meant to make the Consumer Financial Protection Bureau a stronger agency.

They're intended to weaken the bureau before it opens its doors in July.

By replacing the director with a commission, the House can make it harder for the bureau to start work writing rules to protect consumers.

The president has yet to name a director for the bureau. The leading candidate is Elizabeth Warren, who first proposed creating an agency to protect consumers from deceptive marketing of financial products -- an issue bank regulators ignored.

The bureau can enforce existing law, but it doesn't have the authority to propose new rules until a leader is in place. By creating five positions to fill rather than one, the House can effectively delay the agency's ability to get down to business.

Creating a commission also blunts the impact of Warren, a tireless champion for consumers.

The House Financial Institutions and Consumer Credit subcommittee, which has been heavily lobbied by the banking industry, plans to take up the bills today.

House members know they can't kill the bureau outright without massive public outcry. Instead, they're hoping Americans won't notice as they defang the bureau one tooth at a time.

Consumers who want to end the shenanigans should contact their representatives in the U.S. House. (Find yours by entering your ZIP code at house.gov.)

Tell them you want the Consumer Financial Protection Bureau delivered on time and as promised.

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Fortune The war over consumer financial protection intensifies A series of bills aimed at watering down the Consumer Financial Protection Bureau will be up for vote this week. What's a consumer agency that can't protect? May 3, 2011 By Abigail Field

An obscure but extremely important political war is being fought in Washington right now over the design and power of the Consumer Financial Protection Bureau, the new agency created in the wake of the financial meltdown to protect consumers and help prevent another financial crisis.

Either the banks will win or the American people will win. It's impossible for both stakeholders to declare victory.

The fight will only get more interesting if Elizabeth Warren, currently the special advisor in charge of the agency, gets the nod from President Obama to run it, as is expected. It's worth noting that if this agency had existed before the housing bubble, we would have most likely avoided the worst of it and the financial meltdown it triggered. But it would have been powerless to help under the laws currently proposed. Although many factors fed the crisis, the "but-for" cause was the millions of mortgages that never should have been made during final years of the housing bubble. Those mortgages fraudulently pushed home prices into the stratosphere and filled many of the securities that so quickly turned to junk. The Consumer Bureau could have prevented those loans from being made.

And yet the very players who brought us the bubble and the meltdown -- the big banks that stopped underwriting their loans and offloaded them to investors -- are pushing hard to make the Consumer Bureau so feeble it won't be able to stop a future bank-driven disaster. The banks are spending tremendous cash on lobbying, and their trade groups are telling Representatives to vote for weakening the Bureau.

Sen. Jim DeMint (R-SC) is leading the Senate effort, trying to get rid of the Consumer Bureau entirely. But the greatest threat to the Consumer Bureau is "efforts by House Republican leadership to eviscerate it little by little," according to Travis Plunkett, legislative director of the Consumer Federation of America. "They realize that financial reform is still very popular with the public so instead of a head-

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on assault, they're taking a death by a thousand cuts approach."

Two of the bills Plunkett is talking about are scheduled to be voted on by a House Financial Services subcommittee on May 4. Both are ultimately expected to pass both the committee and the House of Representatives.

One bill, sponsored by Rep. Spencer Bachus (R-AL), would render the Consumer Bureau less able to act, less efficient, and thus less powerful, by putting a bipartisan committee in charge instead of a single director. Another bill, by Rep. Sean Duffy (R-WI), would effectively neuter the Bureau, preventing it from issuing meaningful rules.

Not all regulators created the same

To really understand who has power in Washington, it's helpful to contrast the Consumer Bureau's rulemaking power with that of the main bank regulator, the Office of the Comptroller of the Currency.

The OCC's rules govern national banks, and thus affect Americans everywhere. Unfortunately for consumers, the OCC often decides that its rules trump state laws, typically using that power to destroy consumer protections. For example, the OCC chose to exempt most banks from state laws against predatory lending, and took away enforcement powers from state attorneys general, as Illinois Attorney General Lisa Madigan explained to the Financial Crisis Inquiry Commission.

To make its powerful rules, the OCC complies with the Administrative Procedures Act, which all agencies have to follow. Once issued, the rules can only be vetoed by Congress, by its passing a new law.

Contrast the OCC's nearly unchecked power to Consumer Bureau's. For starters, the new agency joins only OSHA and the EPA in having to comply with two laws besides the Administrative Procedures Act when it wants to issues rules. And the Consumer Bureau faces a hurdle no other agency does: the FSOC veto (pronounced F-Sock).

In the wake of the financial crisis, Congress created the Financial Stability Oversight Commission -FSOC -- to force regulators to work together to prevent another crisis. If all constituencies were equally powerful in Congress, the FSOC would be able to veto any regulation that "would put the safety and soundness of the United States banking system or the stability of the financial system of the United States at risk." But only the Consumer Bureau's rules are subject to that veto.

So the OCC and the Federal Reserve, whose regulatory failures contributed to the financial meltdown,

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still can write rules subject only to Congressional override. But the OCC and the Federal Reserve can vote (with other regulators) to override Consumer Bureau rules. It helps that the veto standard is pretty high, requiring a 2/3 vote of the 10-member FSOC.

And that's where the Duffy bill comes in. The Duffy bill would not only lower the vote total needed for a veto to five out of nine, it allow the FSOC to veto any rule that made banks less profitable -- that is, any rule "inconsistent with the safe and sound operations of United States financial institutions." Seriously. A bank that is not profitable by definition isn't safe and sound, and as Adam Levitin, an associate professor at Georgetown Law School explained to the House subcommittee recently, the OCC has a track record of objecting to laws that might make banks less profitable on "safety and soundness grounds."

For example, when the Federal Reserve wrote rules making it harder for credit card companies -- banks -- to jack up interest rates, the head of the OCC objected on safety and soundness grounds. Luckily for consumers, Congress ultimately passed even stronger protections.

Since taking advantage of consumers is more profitable that obeying rules designed to protect them -just like it's more profitable to operate an unsafe workplace and pollute lots -- having the Duffy standard would mean essentially any Consumer Bureau rule could be vetoed. This is important, since the Consumer Bureau's power extends far beyond mortgages to cover most consumer financial products. And it has a mission to particularly protect groups frequently exploited by lenders, such as our soldiers and veterans.

Consumers need the help. When two businesses cut a deal, they negotiate a contract. When consumers buy products, they agree to a fine print contract they rarely read, much less have the power to negotiate. If the Consumer Bureau has the power to write tough rules, consumers will in effect have someone negotiating for them. But not if Rep. Duffy gets his way.

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Politico Morning Money Dodd hits Warrens ego May 4, 2011

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By Ben White

EXCLUSIVE: DODD HITS WARRENS EGO - Last night, M.M. checked in with former Senator Chris Dodd, co-author of the historic bill that created the CFPB, on a rumor that he was working the phones in opposition to the possible nomination of Elizabeth Warren to formally lead the consumer agency. In a statement to M.M., Dodd, now head of the MPAA, strongly denied making any such calls. But he also expressed deep frustration that getting the CFPB off the ground has turned into a seemingly endless drama about whether (and when) the White House might try and elevate Warren from her current role as assistant to the President.

Dodd: I never have made, nor would I ever make calls urging the White House not to nominate Elizabeth Warren for the CFPB. That is a complete fabrication. Last year, when the issue came up, I said I would have voted for her. But the establishment of the consumer protection agency is far more important than any one individual. ... I wrote the legislation and I care about it deeply.

My overriding interest is the preservation and continuation of this critically important agency. I believe it would be deeply unfortunate if the head of this agency is not filled because of ego, because of people who believe they are so important that their value exceeds the idea. It would essentially enable the opponents to kill the bill.

MORE ON CFPB NOISE - Lot of chatter in the system about the potential for the White House to nominate Warren and risk a potentially ugly Senate confirmation fight. Some outside the White House said President Obamas new momentum might incent him to send Warrens name up. But inside the White House (which has had a couple other things going on) nothing seems to have changed and no announcement appears imminent, though the situation is always subject to rapid change.

CORDRAY FALL BACK? - Another person close to the situation suggested that if the White House decides not to nominate Warren, then former Ohio Attorney General Richard Cordray, currently head of enforcement at the CFPB, would be a natural fall-back candidate.

WARREN ON HOUSE GOP EFFORTS - Warren issued a statement ahead of todays meeting of the House Financial Services Subcommittee on Financial Institutions & Consumer Credits meeting to markup bills to change the CFPB structure. Many in Congress have made clear their intention to defund, delay, and defang the consumer agency before it can help one family. These bills are about preventing the CFPB from operating effectively -- a dangerous game to play in light of recent lessons in the marketplace and how quickly financial threats to consumers emerge.

ABA WALKS IT BACK - Many were surprised yesterday when ABA President Frank Keating said that

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the death of Osama bin Laden might embolden Obama to nominate Warren and appeared to add (according to wire reports) that his group would be fully supportive of Warrens nomination. Keating quickly clarified: ABA doesnt weigh in on the nominations process ... If Elizabeth Warren is nominated and confirmed, we will work with her as we would any director. We continue to be concerned about the amount of power vested in the directors position

CFPB HALL MONITOR IN THE WORKS - POLITICOs Chris Frates scoops: Financial services lobbyists Jim Sivon and Larry LaRocco are working on a website to monitor the evolution of the [CFPB]: There are always government bureaucratic tendencies to overreach and we want to track it to see if it does overstep its intended purpose. And we will be there to applaud good things along the way and give a nudge if they're overstepping their bounds LaRocco told PI.

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Advisor One Consumer Groups Rally Against Passage of Bills to Alter CFPB Three House bills would ensure a weak and timid CFPB, Plunkett with CFA says May 3, 2011 By Melanie Waddell

Consumer advocate groups sounded an alarm on Tuesday over three bills scheduled to be marked up Wednesday by members of the House Financial Services Committee that the groups say would hobble the Consumer Financial Protection Bureau (CFPB).

The three bills are: H.R. 1121, the Responsible Consumer Financial Protection Regulations Act of 2011, sponsored by Rep. Spencer Bachus (right), R-Ala., chairman of the House Financial Services

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Committee, which would replace the CFPBs one director with a five-member board. H.R. 1315, the Consumer Financial Protection Safety and Soundness Improvement Act of 2011 ; And the yet-to-benamed bill that would postpone the July start-up date for the CFPB until a director for the agency has been named.

Travis Plunkett, legislative director at the Consumer Federation of America (CFA), said on a conference call on Tuesday, that if enacted, all three of these bills would ensure a weak and timid CFPB. Plunkett said that replacing the CFPBs one director status with a five-member board would stop the [CFPB] from acting quickly in helping consumers.

Plunkett noted, too, that H.R. 1315 would "expand the ability of other regulators to 'veto' proposed rules by the CFPB." This bill, he continued, "is a very dangerous piece of legislation because it would handcuff the CFPB and make it hard for [the agency] to do its job."

Ed Mierzwinski, director of U.S. PIRGs consumer program, said on the same conference call that the bills arent about reasonable oversight [of the CFPB], rather they are an attack on consumer protection.

Elizabeth Warren (left), chief architect of the CFPB, said in testimony before a House Financial Services Subcommittee in March that a director to head the agency would be named soon. Mierzwinski said on the call that while President Obama has not yet named a director, Warren has not rejected being nominated, and there is a possibility she will get the nomination. Warren, he continued, has the support of U.S. PIRG, and the small bank lobby may even end up supporting her.

While the three bills will likely get approved by House Republicans, they will not receive support from democrats who still hold a majority in the Senate, specifically Sen. Tim Johnson, D-S.D., chairman of the Senate Banking Committee. But Plunkett with CFA said that despite lack of support from Democrats, House Republicans may still acheive their goal, which is "to intimidate the consumer bureau so it doesnt act to protect consumers.

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The Hill (On The Money blog)

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Overnight Money: Defund, delay, defang May 3, 2011 By Bernie Becker, Erik Wasson, Peter Schroeder, and Vicki Needham

House Republicans are set to push parallel efforts to alter the Dodd-Frank financial reform law at a pair of markups tomorrow.

A House Financial Services subcommittee is slated to weigh three measures that would tweak the new Consumer Financial Protection Bureau (CFPB), including one that would eliminate the as-yet unnamed director of the agency in favor of a bipartisan commission. The other two would make it easier for the new Financial Stability Oversight Council to overrule CFPB regulations and postpone when the CFPB can begin work, should a director not be in place when the bureau goes live in July.

Not surprisingly, Elizabeth Warren, the president's CFPB architect and the de facto face of the fledgling agency, has made it clear that she has no interest in those tweaks or any other current proposed ones, for that matter.

Many in Congress have made clear their intention to defund, delay, and defang the consumer agency before it can help one family," she said in a statement Tuesday. "These bills are about preventing the CFPB from operating effectively a dangerous game to play in light of recent lessons in the marketplace and how quickly financial threats to consumers emerge.

For its part, the House Agriculture Committee is expected to mark up a bill that would delay, for 18 months, the implementation of new regulations on financial derivatives. Republicans have contended that regulators are failing to properly weigh public comments in writing rules for Dodd-Frank, thanks to rapidly approaching deadlines, and are pushing to delay when those rules take effect.

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Dow Jones Newswires ABA president backtracks from Warren comments May 3, 2011 By Maya Jackson Randall

American Bankers Association President Frank Keating Tuesday backtracked from an earlier statement he made about supporting White House adviser Elizabeth Warren if President Barack Obama were to nominate her as head of the Consumer Financial Protection Bureau.

In a phone interview Tuesday, Keating told Dow Jones Newswires he meant that he would support Warren if she were confirmed by the Senate.

"If Elizabeth Warren is the head of the bureau, of course we're going to work with her," he said. But that doesn't mean the banking association won't seek legislation to rework the bureau's structure so that there is more accountability to the taxpayers and more congressional oversight, he added.

Keating said the American Bankers Association "will work actively and closely with whomever is ultimately confirmed."

At a luncheon earlier in the day, Keating said that the death of Osama bin Laden might give the president the confidence to name Warren as the permanent director of the consumer bureau.

And in a surprising comment, he added that "if she is the nominee, we will be fully supportive of her."

But in the phone interview, Keating clarified his position. He said he meant he would back Warren if she were confirmed.

"My mind was racing ahead," he explained.

Asked if he would oppose Warren if she were nominated, he said: "I don't think so." He added that it all depends on how the Senate confirmation process would proceed.

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"It's pretty hard to be definitive," Keating told Dow Jones. "I really have no opinion on the nomination process."

Last year, Obama skirted what would have been a likely contentious Senate confirmation battle and instead tapped Warren as a White House adviser in charge of preparing the consumer agency for its July launch.

Still, bin Laden's death is a political victory for Obama, and some Washington observers believe the president will now be more willing to pursue a political fight over the consumer bureau.

"In our view, political capital is a depreciating asset and the White House may want to use its new capital on a political fight that it thinks it can win even if the nomination is defeated," said Keefe, Bruyette and Woods analyst Brian Gardner in a research note Tuesday.

Similarly, Keating suggested the bin Laden news could move the president to nominate Warren.

"If she is going to be nominated, it's as a result of the events of the last several days," Keating said in response to a question at the luncheon. "The president is really riding high right now, and he may decide that it's worth it."

Keating, who served two terms as Oklahoma's governor, said he has spoken with Warren, a fellow Oklahoman who is already at work preparing the consumer bureau for its July launch, about the need to help community banks around the country.

He said Warren is "very bright" and "capable" and "extremely personable" but noted that some people fear the Harvard law professor is too focused on enforcement.

"Consumer protection is a two-way street," he said, adding that while some bad financial firms have sought to trick consumers, some consumers have also tried to get over on banks.

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American Banker ABAs Keating Backpedals Off of Warren Endorsement May 4, 2011 By Donna Borak

WASHINGTON Frank Keating, the head of the American Bankers Association, on Tuesday quickly reneged on his endorsement of Elizabeth Warren as director for the Consumer Financial Protection Bureau within hours of saying the trade group would "be fully supportive" of her nomination.

In a telephone interview, Keating said his earlier statement to reporters after his first speech before the Women in Housing and Finance was only if Warren was nominated by the president and confirmed by the Senate. The remark was not made in regards to her potential nomination, Keating said.

He said it is up to the president to make that call, and there is always the possibility she could not be confirmed, if for instance she took a contrary position to the law.

Keating reiterated that there are certain reforms that will need to be made to the CFPB, which is a process the ABA intends to be involved in with whoever is confirmed as director.

"My role is to support or oppose [and] work with her if selected," said Keating.

Earlier in the day, Keating had said "if she is the nominee, we would be fully supportive of her."

Keating, a former governor of Oklahoma, joined the ABA as president and chief executive on Jan. 1.

Speaking to reporters, Keating said President Obama may nominate Warren following the surge of support after the death of Osama bin Laden.

"Because of that lift to the president, it may well be that he does decide to nominate her," said Keating. "She's very bright, very capable."

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He added: "If she is going to be nominated, it's as a result, truthfully in my opinion, of the events of the last several days. The president is really riding high right now. He may decide it's worth it, let's get her."

Keating acknowledged public criticism of Warren's focus on enforcement issues, which he says he's spoken to her about.

"Consumer protection is a two-way street," said Keating. "You have bad consumers trying to screw banks, and on occasion, financial institutions trying to screw consumers. So you've got both; it's a two way street."

He's also made the case to Warren on the need to preserve community banks, which average just 35 employees. He said those employees are tasked with implementing thousands of pages of regulations signaling that at some point bankers may be too burdened with compliance obligations to do their actual jobs.

"We need regulation, but it can't be oppressive," said Keating. "If that community bank closes because the regulatory burden is so oppressive, it's simply isn't worth it. When those banks close those towns are going to blow away."

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Philadelphia Inquirer (Inquiring Consumer blog) Oops. Does he or doesnt he back Warren for CFPB? May 3, 2011 By Jeff Gelles

The head of the American Bankers Association flip-flopped today on a key question: Whether he'd support the possible nomination of Elizabeth Warren to head the new Consumer Financial Protection Bureau.

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First the American Banker reported his support:

WASHINGTON Frank Keating, the head of the American Bankers Association, said Tuesday he would back Elizabeth Warren as director of the Consumer Financial Protection Bureau, if nominated by the president.

"If she is the nominee, we would be fully support of her," said Keating, who, like Warren, hails from Oklahoma.

But barely an hour and a half later, the ABA officially backtracked - with a pointed reference to its support for a House Republican plan to make sure that no actual director be appointed to head the new agency - and especially not Warren, the Harvard bankruptcy scholar and middle-class advocate who dreamed up the idea of a single agency to protect consumers from risky financial products.

The American Bankers Association emailed out a statement - from Keating himself:

ABA STATEMENT ON POTENTIAL CFPB NOMINATION

by Frank Keating, president and CEO, American Bankers Association

Let me clarify news reports that misrepresent ABAs position on the potential nomination of Elizabeth Warren as director of the Consumer Financial Protection Bureau. ABA doesnt weigh in on the nominations process; thats for the President and Senate to decide.

If Elizabeth Warren is nominated and confirmed, we will work with her as we would any director. We continue to be concerned about the amount of power vested in the directors position and, as we indicated in a letter to Congress today, we support legislation that replaces the director with a fivemember commission.

Or, as the Banker's Donna Borak put it:

BA's Keating Backpedals Off of Warren Endorsement

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The head of the American Bankers Association on Tuesday quickly reneged on his endorsement of Elizabeth Warren as director for the Consumer Financial Protection Bureau...

It's hard to tell what this all means, but perhaps it's a "Kinsley gaffe," which Wikipedia defines as:

... an occurrence of someone telling the truth by accident. Typically, it refers to a politician inadvertently saying something publicly that they privately believe is true, but would ordinarily not say publicly because they believe it is politically harmful. The term comes from journalist Michael Kinsley, who said, "A gaffe is when a politician tells the truth."

Warren is portrayed by many Republicans and right-wing talkers as a scary lefty. But that's not how she comes across in person - and she's gone out of her way to meet as many bankers as possible in the months since she was asked by President Obama to get the new agency on its feet.

If she's scary, it's only to opponents who object to the very idea of consumer protection. But after the housing bubble and subprime debacle, that's a tough case for anyone but an avowed market fundamentalist to make.

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Housing Wire Elizabeth Warren accuses lawmakers of trying to defang the CFPB May 4, 2011 By Kerri Panchuk

Elizabeth Warren, the architect of the Consumer Financial Protection Bureau, jumped into the political fray Tuesday to protect the bureau from what she calls lawmaker attempts to defang the agency.

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In a statement, Warren specifically referenced two House bills H.R. 1315 and H.R. 1121 as well as a drafted bill that aims to postpone the transfer of regulatory powers to the CFPB until the agency has a director.

The CFPB is set to open July 21, but has yet to name a director. When the bureau does open, it will be the mortgage industry's top cop, creating protective guidelines under the Truth in Lending Act and implementing new prototypes for mortgage applications.

Warren, who is currently a special adviser to President Obama and Treasury Secretary Geithner, is reportedly still in the running for the director post.

A mark-up of the bills takes place Wednesday, which prompted Warren's office to issue a statement.

"Many in Congress have made clear their intention to defund, delay and defang the consumer agency before it can help one family," Warren said. "These bills are about preventing the CFPB from operating effectively a dangerous game to play in light of recent lessons in the marketplace and how quickly financial threats to consumers emerge.

Warren also is pushing back against H.R. 1315 and H.R. 1121. The two bills outline proposals to replace the CFPB director with a five-person commission and to strengthen oversight over the agency.

Since January, lawmakers have publicly criticized the make-up of the CFPB, claiming the agency lacks congressional oversight.

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Firedoglake ABA President Frank Keating: Ill Back Elizabeth Warren If Shes Nominated to Run CFPB: Updated May 3, 2011

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By David Dayen

This is a pretty big deal: Frank Keating, the former Republican Governor of Oklahoma who is now the President of the American Bankers Association, just announced in a speech that he would back Elizabeth Warren if she were nominated by the President to run the Consumer Financial Protection Bureau. Keating makes the second bank trade group leader in two days to speak on the likelihood of Warrens nomination, joining Camden Fine, President of the Independent Community Bankers Association.

Keatings reasoning for why Obama will nominate Warren sounds faintly ridiculous to me, but his backing is clear:

Speaking at a luncheon Tuesday, American Bankers Association President Frank Keating said that the death of Osama bin Laden might give the president the confidence to name Warren as the permanent director of the Consumer Financial Protection Bureau.

He also said hed back her if she is indeed Obamas pick.

If she is the nominee, we will be fully supportive of her, Keating said after his speech.

If Obama names Warren, it will have nothing to do with the death of Osama bin Laden. I dont think he looks at things in terms of political capital. No, it will be because, mainly, he couldnt find anyone else willing to take the job, and because Warren became the last available option. And Administration officials have already conceded that whoever takes this position will probably get a recess appointment. The July 21 deadline, which would prevent CFPB from getting its full powers upon transfer to the Federal Reserve, works in favor of a recess appointment, in this case.

Whats important here is the view of those who would know. Im not sure the decision has been made in the White House, but the banking industry is preparing as if it has. And Keatings support is huge. I wonder if Warrens Oklahoma heritage has anything to do with it.

UPDATE: Keating has now backtracked on the story:

In a phone interview Tuesday, Keating told Dow Jones Newswires he meant that he would support Warren if she were confirmed by the Senate.

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If Elizabeth Warren is the head of the bureau, of course were going to work with her, he said. But that doesnt mean the banking association wont seek legislation to rework the bureaus structure so that there is more accountability to the taxpayers and more congressional oversight, he added.

Keating said the American Bankers Association will work actively and closely with whomever is ultimately confirmed. [...]

My mind was racing ahead, he explained.

Asked if he would oppose Warren if she were nominated, he said: I dont think so. He added that it all depends on how the Senate confirmation process would proceed.

Its pretty hard to be definitive, Keating told Dow Jones. I really have no opinion on the nomination process.

Keating would still not commit to opposing Warrens nomination, and neutrality in that confirmation would be important, but this is a somewhat different statement now.

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The Consumerist Washington Already Considering Ways To Ruin Consumer Financial Protection Bureau May 3, 2011 By Chris Morran

The still nascent Consumer Financial Protection Bureau is already on its way to becoming the latest victim in Washington's efforts to make sure American consumers have their voice taken away. Tomorrow, the House Subcommittee on Financial Institutions and Consumer Credit is scheduled to

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consider a number of bills that, if passed, would undermine the CFPB's ability to protect consumers.

The biggest of the CFPB killers on the slate is HR 1121, sponsored by Representative Spencer Bachus of Alabama. This bill would replace the Bureau's directorship with a five-member commission, and we've all seen how well that has worked out in other federal regulatory agencies.

"It's critical for the CFPB to be led by a single director," says Pamela Banks, Senior Policy Counsel for our sponsors at Consumers Union. "We can't afford to hamstring the CFPB with an unnecessarily complicated bureaucratic structure. Replacing the CFPB's director with a commission would slow down its decision making process and make it more prone to internal discord."

For years, consumer advocates warned that subprime and other exotic mortgage lenders were putting homebuyers at risk. It's now clear that the failure to act quickly and effectively to protect consumers from these lending abuses played a key role in triggering a record number of foreclosures and the country's deep recession.

And then there is HR 1315, sponsored by Representative Sean Duffy of Wisconsin. This legislation would make it easier for other banking regulators to veto new rules developed by the CFPB. As things stand now, it would take a two-thirds vote from the Financial Stability Oversight Council (made up of representatives of other banking agencies) to set aside new rules developed by the CFPB. This proposed bill would change it so that only a simple majority vote would nullify new CFPB rules.

"It makes no sense to give the same banking regulators who were asleep at the wheel before the last financial crisis more power to second guess the CFPB," said Banks. "Current law already provides the needed balance on the CFPB's authority without undermining its ability to protect consumers."

As you may have guessed, Consumers Union and other concerned groups are calling on Congress to cut these harmful pieces of legislation off at the pass.

"Congress should reject efforts to turn this new consumer watchdog into a lapdog," said Banks. "The Consumer Financial Protection Bureau hasn't even opened its doors yet and opponents of reform in Congress are already trying to weaken it. Lawmakers should oppose efforts to undercut the CFPB and stand up for consumers who deserve a fair deal on their credit cards, mortgages and bank accounts."

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Dow Jones Newswires US Sen Carper: Favors Banking Industry Pro To Head Consumer Agency May 3, 2011 By Michael R. Crittenden

A veteran of the financial-services industry should be tasked with heading the new consumer financial protection agency, a Senate Democrat said Tuesday.

Sen. Tom Carper of Delaware said he favors the first director of the Consumer Financial Protection Bureau be someone "from the industry who knows the business, knows financial services, but also someone who just has a great reputation for putting consumers first."

Carper's comments highlight the dilemma facing the Obama administration, which has yet to name a nominee to head an agency that was a keystone of its efforts to overhaul regulation of the financialservices industry. White House adviser Elizabeth Warren has been serving as the de facto head since last year, taking the initial steps to set up the agency.

Warren is popular among consumer advocates and many Democrats, and is widely credited with ensuring the new consumer agency was ultimately included in the Dodd-Frank overhaul bill. But she is sharply opposed by the banking industry, Republicans, and some more conservative Democrats.

The White House has held off on nominating her, wary of the effects of a high- stakes political fight on the fledging bureau. Carper said Warren has played a " valuable role" in standing up for the new consumer bureau, but said he prefers someone with a background in the banking industry. He didn't offer any potential nominees who fit his criteria.

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The Hill (On The Money blog) Consumer group presses Capito to announce husbands new banking job May 3, 2011 By Peter Schroeder

A consumer watchdog group is pressuring Rep. Shelley Moore Capito (R-W.Va.) to announce her husband's new position with Wells Fargo when a subcommittee she chairs considers legislation to alter a key piece of the Wall Street reform law.

Capito's subcommittee on the House Financial Services Committee will weigh three bills Wednesday that would change the new Consumer Financial Protection Bureau (CFPB) created by last year's DoddFrank financial reform law. But the group Public Citizen is demanding she disclose her husband's job at the outset of the markup.

The Charleston Daily Mail reported Monday that Charles Capito had joined Wells Fargo Advisors, the investment arm of the bank, as a manager of several of its West Virginia offices. A longtime member of the banking industry, he previously was an executive vice president at United Bank Inc.

"Having knowledge of our investment community, it (the opportunity to work for Wells Fargo Advisors) is all about the opportunity for this company in West Virginia," the article quoted him as saying.

But Public Citizen maintained Tuesday that the congresswoman needed to announce her husband's new position before leading debate on bills that would affect the banking industry.

"Details of how his position will be affected by the actions of his wife, who chairs an important subcommittee, are not entirely clear, said Bartlett Naylor, financial policy advocate for the group's Congress Watch division. At the very least, we ask Chairman Capito to disclose her husbands new position at one of the nations largest banks at the beginning of tomorrows markup.

In a letter sent to the lawmaker, the group asked for details about his new responsibilities, income and what relationship his company has with the Wells Fargo bank holding company.

Capito is also the sponsor of a bill that would delay the implementation of new limits on debit card fees, which has been a top priority for the banking industry. Public Citizen acknowledged that it appeared her

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husband is "unlikely to be directly affected" by the bill.

One of the bills slated for markup tomorrow would replace the still-unnamed director of the CFPB with a bipartisan commission, which Capito said Tuesday would provide a "more balanced approach" to the bureau's work while providing for smoother transitions between administrations.

Another measure would make it easier for the new Financial Stability Oversight Council to overrule CFPB regulations, and a third draft measure would postpone the agency's assumption of new authority if it is still lacking a director in July, when it is scheduled to begin work.

Elizabeth Warren, the White House adviser charged with setting up the agency, has opposed any effort to rework the agency as attempts to "defund, delay and defang" the bureau.

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BNET If Liz Warren Gets the Nod, Shell Have Osama bin Laden to Thank May 4, 2011 By Alain Sherter

Elizabeth Warren is like Rocky she refuses to get knocked out. Against all odds, she helped win the fight to create an agency to protect consumers from financial abuse. Now chances are growing that President Obama will nominate her to lead the regulator, called the Consumer Financial Protection Bureau, despite continued objections from Wall Street.

Adriaaaan! The Harvard professor would still be a long-shot for confirmation in the Senate, of course. But its getting dangerous to count her out. Even the American Bankers Association, one of the bureau s most virulent critics, appears to be hedging its bets. ABA president Frank Keating on Tuesday told reporters today that his organization would be fully supportive of Warren if she is nominated to serve as the bureaus first director. Then he backed away from that apparent endorsement, saying later that the trade group would support her only if she were confirmed by the Senate.

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Yet Keating also acknowledged that Obama is increasingly likely to nominate Warren as the CFPBs first director. She had seemed out of the running for the slot after the White House in September made her a special adviser in charge of setting up the bureau. Why the turnaround? The Presidents soaring poll numbers following the death of Osama bin Laden.

If she is going to be nominated, its as a result of the events of the last several days, Keating said in response to a question. The president is really riding high right now, and he may decide that its worth it.

Appointing Warren: Win-win for the White House

Only nine weeks remain for Obama to put forward a candidate to lead the CFPB before it formally opens on July 21. In some ways, he cant lose by nominating Warren for the post. If Senate Republicans block her path, as they have threatened, Obama can blame the GOP for obstructing financial reform by thwarting the appointment of someone even her critics agree is supremely qualified for the position.

If a miracle happens and Republicans relent, then the White House has its woman. Alternatively, Obama could simply give her the job while Congress is adjourned for the July 4 break. But under such a recess appointment, a favorite tactic under former President George W. Bush, Warren could serve as director of the CFPB only through 2012. That would give her a relatively small time frame in which to get the bureau up to speed.

Wall Street in fear

Either way, theres a growing feeling among financial industry types that Warren will get the nomination. Camden Fine, head of the Independent Community Bankers of America, said this week that its better than 50-50 that Obama will back the long-time consumer advocate to lead the CFPB;

I think the president is going to feel like he needs to give her a shot, said Mr. Fine said in an interview at a conference held by his trade group in Washington. He told a crowd of around 1,000 bankers gathered to lobby on Capitol Hill this week that he expects the nomination to come within two weeks.

Yet Fine, who before Congress passed the Dodd-Frank Act in 2010 had joined other financial lobbyists in trying to stymie the bureaus creation, also said big banks would continue to oppose Warren:

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There is no doubt that Wall Street is terrified of her, he said. She really is the spawn of Satan to them. they will come out against her with a vengeance.

Wall Street in terror? Cant get a better endorsement than that.

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National Journal She-Devil Warren? May 3, 2011

Independent Community Bankers of America President and CEO Camden Fine asked a group of hundreds of his members at a conference Monday whether they should give President Obama the "allclear" signal to make a recess appointment of Elizabeth Warren to serve as director of the Consumer Financial Protection Bureau and avoid a confirmation battle. Fine pointed out Warren has said she wants to focus on Wall Street and mortgage brokers, not community banks, and warned bankers to consider how much worse the alternative might be. "It's kind of damning with faint praise, as Shakespeare once said. Better the devil you know," he said. "Or do we take our chances with someone we don't know... some fang-tooth zealot who is going to lump us into the same box as Wall Street and just say, 'I don't give a rat's ass how big you are; I am going to hammer your butt'?"

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Wall Street Journal Foreclosures Trapped by a Lack of Lawyers May 4, 2011 By Nick Timiraos

Moves by banks to ditch law firms snared in the "robo-signing" mess are spreading delays and confusion to borrowers, while angering judges grappling with thousands of foreclosure cases now trapped in limbo.

The trouble began when U.S. banks and government-owned mortgage giants lost confidence in some law firms that handled a huge volume of foreclosures. After controversy erupted last fall over the shoddy review of loan documents known as robo-signing, banks dropped some law firms.

Finding replacement lawyers who can pick up the slack quickly has been a struggle. While the resulting slowdown means that fewer houses are being seized, late fees are piling up for homeowners seeking a loan modifications. Investors who own bonds backed by those mortgages could face higher costs from the snags.

"It's causing chaos because nobody knows who's representing whom," says Thomas Ice, a foreclosure defense lawyer in Royal Palm Beach, Fla.

The problems are particularly acute in Florida, one of 23 U.S. states where foreclosures must be processed through courts. Last fall, Fannie Mae and Freddie Mac terminated their relationship with the Law Offices of David J. Stern. At its peak, the Plantation, Fla., firm handled nearly 20% of all foreclosures in the state.

In March, the Stern law firm told judges across Florida that it was unable to file the necessary paperwork to withdraw from 100,000 cases. Florida's attorney general is investigating allegations that the firm routinely forged notarized documents. The firm denies the accusations and is challenging the attorney general's jurisdiction in court.

"There's nobody to call to expedite any of these things. My clients are in limbo every day," says Craig Lynd, a founding partner of KEL Attorneys, an Orlando, Fla., law firm.

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Two of his clients, 58-year-old Ruth Diehl and her husband, have been in talks with a J.P. Morgan Chase & Co. unit for more than two years about a loan modification on their home in Ocoee, Fla. The bank agreed to offer different loan terms at a court-ordered mediation session last summer, where it was represented by the Stern law firm.

But the deal wasn't finished, Mr. Lynd says, and efforts to force compliance with the agreement in court was hampered by the removal of the Stern firm from the case. A different law firm was assigned to the case, and J.P. Morgan asked the new firm to reach out to Mr. Lynd, said a J.P. Morgan spokesman.

Ally Financial Inc., the GMAC Mortgage parent in which the U.S. government owns a 73% stake, transferred to other lawyers its foreclosures previously assigned to the Stern firm.

Lisa Butterfield, who is trying to surrender her Middleburg, Fla., home to GMAC through a "deed-in-lieu" of foreclosure, says she has heard nothing from the new lawyer who was assigned her case. "You finally think, 'I'm finally going to get this settled,' and then it's not," she says. She moved last year to take care of her parents but still pays the utilities in hopes of reaching a deal with GMAC.

An Ally spokeswoman says the "situation in Florida is challenging, given the large number of borrowers in foreclosure and the number of quality law firms to manage these cases." She declined to comment on Ms. Butterfield's situation.

Mr. Stern has blamed former foreclosure clients for failing "to take into consideration any succession planning" when they terminated his firm, according to a written response to a Florida judge. Jeffrey Tew, a lawyer for Mr. Stern, says banks have withheld millions in legal fees and are to blame for delays.

A Fannie spokeswoman says transfers of foreclosure files from terminated firms to new lawyers have been completed. Fannie has approved 16 law firms to handle its cases in the state, up from nine firms last year. Freddie uses 14 law firms in Florida, up from four.

Peter Blanc, the chief judge in Palm Beach County, Fla., with nearly 9,000 cases from the Stern firm, last month urged Mr. Stern to reconsider his decision to walk away from cases. Another problem: Two law firms that got some of the Stern cases were later dropped by Fannie, Freddie and banks.

"Whatever anyone thinks the cost of David Stern's implosion is, quadruple it," says Richard Shuster, a real-estate lawyer in Miami.

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On Friday, Judge Blanc will start convening special hearings to reassign hundreds of cases a day until the backlog is cleared. "If nobody shows up" on behalf of the banks, "we will dismiss the cases," he says. If that happens, banks would have to essentially start over.

In February, Fannie terminated its relationship with Ben-Ezra & Katz after the Fort Lauderdale firm notified Fannie that some paralegals took inappropriate technical shortcuts. Marc Ben-Ezra, a principal at the law firm, says the firm is trying to withdraw from 15,000 cases "cooperatively and responsibly."

But other firms taking over those foreclosures "tend to be overwhelmed," while some clients have seized files and told his firm to no longer act on their behalf. "It's bad for everybody," Mr. Ben-Ezra says. On Thursday, the law firm said it is suspending its foreclosure practice until further notice.

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American Banker How Interchange Debate Could Be Affected by Testers Reelection Race May 4, 2011 By Cheyenne Hopkins

WASHINGTON Although it's rare to have a financial services issue play much of a role in a local political campaign, the battle over the Durbin interchange amendment has become an unusually prominent part of the re-election race of Sen. Jon Tester.

The Montana Democrat has been deluged by attack ads protesting his bill to delay proposed debit interchange fee restrictions by two years while regulators study their impact, as his opponent seeks to portray Tester as a tool of large banks.

But the close reelection race may ultimately help the bill's chances, as Democratic leadership looks for ways to give Tester a legislative victory on a controversial issue.

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In an interview Tuesday, Tester said he believes he has the 60 votes necessary to pass his bill, but acknowledges he is still seeking a legislative vehicle that could be enacted before the Durbin amendment is scheduled to go into effect on July 21.

"The truth is I think we have the votes," Tester said. "If I was going to bet, I'd say we've got the votes."

Tester is currently eyeing attaching his bill to an energy appliance measure, but he is uncertain if that will work.

"If we are dealing with an energy bill and we put it on an energy bill and it passes and the amendment passes, then we have victory," Tester said. "If the bill fails then we just fail. What's the right vehicle? The problem is going to be timing, because time is of the essence and at this point and time I don't know if anything is going to pass the Senate."

Tester is locked in a dead heat with his Republican challenger Rep. Denny Rehberg, with each having the support of 45% of Montana voters according to a Billings Gazette poll in March. Tester won his first time five years ago with only 49% of the vote, and is considered key to Republican chances to take back the Senate in 2012.

As a result, most observers said Democratic leadership, including fellow Banking Committee member Sen. Charles Schumer, who recruited Tester to run five years ago, have a vested interest in helping the Montana lawmaker win his fight.

"It will help him," said Charles Gabriel, a managing director at Capital Alpha Partners LLC. "We hear Sen. Schumer's invisible hand is involved... The fact that Tester is an endangered species is important. And there's apparently still ill will over how Sen. Durbin forced a vote on his bill last year. That, plus the political cover provided by Bair and Bernanke, all suggest that if Tester can get a vote on the bill the tide could turn and he will succeed."

For his part, Tester said comments by Federal Deposit Insurance Corp. Chairman Sheila Bair and Federal Reserve Board Chairman Ben Bernanke that the Durbin amendment could hurt small banks despite a technical exemption in the law were the reason why he introduced a bill.

"This amendment for me was generated because of answers that were given to me by Sheila Bair and Ben Bernanke and those answers were 'we don't know how to implement the exemption for banks and credit unions under $10 billion,'" Tester said. "Bingo, that's what I thought when we passed the [Durbin] amendment and that's why I asked them. Now we have to figure out how to fix it because if we don't we are going to create a bunch more problems."

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But Tester seems likely to pay a political price for his support. Retailers, who are fighting to ensure the Durbin measure is not delayed, have launched a full scale assault on Tester with TV, print and radio ads. Groups including the Montana Convenience Store Association, Montana Retail Association and several national merchant advocacy groups are portraying Tester as a friend of Wall Street banks.

They are being countered by ads from the Montana Bankers Association as well as community bank and credit union groups, who have launched their own TV, radio and print ads on the issue.

David Parker, a Montana State University political science professor who is writing a book on Tester's race, said the interchange measure is probably a popular issue in the state because Republicans need Tester's seat to regain control of the Senate and advertisements are cheap.

"If you look at a lot of policy a lot of it does not resonate at the local level but to make a political point really this is esoteric," he said. "The average consumer doesn't understand this. This is an example that you can take a policy that seems irrelevant to the average retailer and make it relevant."

But he wasn't sure if Tester had the experience to move the bill.

"If you look at Tester's record, he is not a legislator," he said. "On the one hand it might pass but on the other hand he doesn't have the experience under his belt of shepherding a bill completely to passage. This is not a knock on him. One of the things we know is the more experienced we are the more likely you are to get a bill to pass."

Steve Turkiewicz, president and chief executive of the Montana Bankers Association, said his group became involved in reaction to the negative interchange ads in Montana.

"It's more of an interchange issue than the election with the election so far off.... We ended up reacting to the ads and radio ads and activity of the supporters from Durbin and that activity in Montana," he said. "We didn't feel it was appropriate to let those wild and baseless accusations against Tester to go on unanswered."

Lyle Knight, president and CEO of $7.5 billion- asset First Interstate Bank of Billings, Mont., is among the bankers who have written op-eds in the Billings Gazette in support of Tester and his bill.

"It was really more to educate the people who are our customers," Knight said. "I think the retailers are

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fairly well organized. If the Durbin amendment stays intact, it's not going to put any money back in the consumers pocket. This is actually going to hurt the consumer in the long run than help them. If we can get a couple of years delay, all the crazy stuff the banks are talking about doing, it would give them more time to be thoughtful and more consumer-minded in how we implement these changes to the Durbin amendment."

Tester dismissed the attack ads claiming his interchange position makes him a friend of Wall Street.

"This is about community banks and credit unions and informing rural America, access to capital, making sure this thing works," Tester said. "It's not about Wall Street. In fact, I'm the only Democrat who opposed the Wall Street bailout and auto bailout. I'm not a bail out guy. This is about rural America... This is going to create more problems than it is going to solve so we need to study the problems and see if we can solve the problems and not create a bunch more."

Gabriel said Tester is betting that community bankers can help him more than merchants.

"I think he must have made the calculation that community bankers could help him in the state more than merchants and retailers could hurt him," he said. "He obviously is in a tight race, and these guys didn't get to the U.S. Senate by being poor politicians. He must have made the calculation that by becoming a standard bearer for community bankers, especially with cover from the Federal Reserve and FDIC, that the bankers could help him more in the state than retailers could hurt him."

But Ronna Alexander, executive director of the Montana Convenience Store Association, said the interchange issue could hurt Tester.

"Unfortunately for Sen. Tester, there are many more small business people affected by this issue in this state than there are small banks and that I believe will hurt him in the long run in the election in Montana because they are not going to forget it," Alexander said. "I think he's made a mistake."

Other retail industry representatives are not so sure.

"It might be one of those arcane arguments that two industries are having with each other that the public isn't registering with," said Brad Griffin, president of the Montana Retail Association. "I don't know how it's going to play out or register with voters."

Tester said the bill is not about his reelection race.

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"If I made decisions or carried bills based on how it was going to impact the next election I guarantee I'd be doomed to fail," he said. "If this thing passes and it has a negative impact on me in the election, so be it; it's the right thing to do."

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American Banker Big Six Card Lenders Give Up Market Share May 3, 2011 By Harry Terris

Borrowing on credit cards is close to bottoming out, according to lenders, but the nation's biggest players have had to cede market share during the sharpest contraction in the industry's history. Now they are increasingly fighting for the same kinds of customers.

Between the second quarter of 2008 and the first quarter this year, receivables reported by the six largest issuers slipped more than 4 percentage points, to about 66% of total revolving credit reported by the Federal Reserve. (See charts, which reflect lenders' U.S. or North American portfolios where available.)

Discover Financial Services bucked the trend: the roughly 6% decline in its credit card loans was smaller than at its major competitors, and its share actually increased about 0.7 of a percentage point, to 5.6%. (Data for Discover is for its fiscal quarters, which end one month before calendar quarters.)

Much of the reduction in revolving credit came from pools earmarked for runoff. Citigroup Inc.'s retailpartners portfolio, which is housed in the company's Citi Holdings repository for noncore businesses, shrank almost 40% from the second quarter of 2008 to $41 billion in the first quarter this year, compared with a 13% fall in the Citi-branded portfolio, to $73 billion.

Bank of America Corp.'s card portfolio contracted by almost 30%, to $134 billion. In the company's

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earnings call in April, Chief Executive Brian Moynihan said the business's revenue had declined as "we continue to run down the books of the loans we don't want."

But chargeoffs a principal cause for the drop in outstanding credit card loans have eased rapidly, issuers are stepping up marketing expenditures and the powerful seasonal undertow that prevails in the first quarter is past. JPMorgan Chase & Co. said in April that it planned to more or less finish the process of paring its balance-transfer book and the card assets from its Washington Mutual Bank acquisition in the third quarter, and projected that its overall portfolio would stabilize in the second half. (The Wamu credit card loans have been cut by more than half since JPMorgan Chase bought them in September 2008.)

Capital One Financial Corp. has turned to portfolio acquisitions and retail partnerships including a recent deal with Kohl's Corp. to fill out its balance sheet. The company said in April that it believes the first quarter would mark a low point for its domestic card receivables.

But during its earnings call, CEO Richard Fairbank said that Capital One, like the rest of the industry, was focusing on high-credit-quality customers, including those who tend to pay off their accounts every month. He said that "loan balances and revenues from these customers ramp up gradually over time."

"Supply has continued to rebound in the marketplace," Fairbank said of the competition. "It is not lost on me that so many players are going right at, for example, the top end of the market."

While portfolio yields have held up well despite landmark legislation that prohibited a wide range of pricing practices, Fairbank said issuers have been richening rewards inducements and that account origination costs had become high. He predicted that cardholder attrition would rebound after a period during the recession when consumers "wanted to hang on to what they have."

In addition to the obstacles posed by heated competition, Fairbank was cautious about the overall environment for loan growth.

He said that while household deleveraging is stabilizing, "I don't think the consumers [have] fully demonstrated how much collectively they are going to step up and be the same consumers they were before with respect to cards."

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American Banker MasterCard, Profit Up 23%, Doesnt Expect Near-Term Hit from Debit Interchange Cap May 4, 2011 By Sean Sposito

The Federal Reserve Board's debit interchange cap is set to go into effect July 21, but MasterCard Inc. said it does not expect to feel its impact until at least next year.

Under the current proposal, interchange rates for debit cards would be capped at 12 cents per transaction for issuers with over $10 billion of assets. It is the issuers, not the card brands, that get revenue from interchange, and many issuers will not change their policies the moment their interchange rates are trimmed from the current average of 44 cents.

Many of the changes banks are considering would aim to restrict consumers' debit use, and once that happens MasterCard will feel the effects.

Issuers "are looking at reducing the reward levels on their debit card activity," Ajay Banga, MasterCard's president and chief executive, said Tuesday on a conference call with analysts to discuss first-quarter results. "They're looking at fees on debit cards. They're looking at restricting the manner in which debit cards get used, either for large-ticket items because of concerns around fraud losses or at the bottom end, for small-ticket items."

Executives of Visa Inc. and MasterCard have taken a hard line on the interchange rules. Executives at both companies have pointed to unintended consequences that they say will ultimately harm consumers. Each has made lobbying efforts to delay, or ultimately abolish, the financial reform, and legislative efforts are under way to do just that.

Visa has already announced that it will support a two-tiered interchange system to accommodate higher interchange rates for smaller financial institutions. MasterCard has not yet said whether it would support a two-tiered rate structure.

Banga said that exclusivity and routing rules could be a boon for the company in that it could draw traffic away from its rival Visa.

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"If there is a ruling that blows up the exclusivity arrangements that Visa has, that's a good thing for MasterCard," said Thomas C. McCrohan, managing director for equity research at Janney Montgomery Scott LLC. "But there are so many moving parts that I don't know how anyone could speak with conviction of who is going to win or lose at the end of the day."

Banga said the simpler the routing rules, the better.

"It's only if the routing options that come out are somewhat simpler than that and are limited to having a nonconnected PIN brand along with a signature brand one in the back, one in the front on a card. I think that is the opportunity," he said. "I'm looking out and saying just given the reality of my lower share, that should give me some volume benefit over a period of time."

On the call with analysts, Banga also discussed recent additions that are meant to diversify MasterCard's "revenue streams across different kinds of clients."

Banga highlighted the card brand's newest board member, Rima Qureshi, a senior vice president and business unit head for Telefonaktiebolaget LM Ericsson's CDMA Mobile Systems business.

The addition of Qureshi could help MasterCard move ahead in mobile payments, an area that many in the payments industry are focused on. Several banks and vendors are testing technology that would allow consumers to turn their phones into digital wallets that can be used for payment at the point of sale.

Qureshi "hopefully brings not just global knowledge with her and her global expertise in running a business as well as being a very active research and development scientist at Ericsson," Banga said, "but also brings direct, let's say, domain expertise in the mobile space."

MasterCard's first-quarter results beat analysts' expectations. Its profit rose 23.6% year over year, to $562 million. Revenue rose 14.8%, to $1.5 billion. MasterCard said fluctuations in foreign currency and natural disasters overseas did not affect its bottom line.

MasterCard shares rose 2.58% Tuesday, to $282.38.

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Huffington Post Attorneys General In 10 States Launch Joint Investigation Into For-Profit Colleges May 3, 2011 By Chris Kirkham

Top prosecutors in 10 states have convened a joint investigation into potential violations of consumer protection laws by for-profit colleges, Kentucky Attorney General Jack Conway (D), who is leading the multi-state effort, said in an interview with The Huffington Post.

The combined investigation only began within the past two months, but it comes after several state attorneys general launched individual probes of deceptive recruiting practices and possible misrepresentations to recruits regarding federal financial aid dollars.

The multi-state probe is the latest sign that rapidly rising enrollments and an increased reliance on federal student aid dollars by for-profit colleges are attracting greater scrutiny of the industry.

The for-profit higher education industry, which includes a vast swath of colleges ranging from the more than 400,000-student University of Phoenix to small mom-and-pop beauty schools, is facing intense scrutiny from the federal government due to growing federal student loan default rates at many schools. Although only about 10 percent of college students nationwide attend such for-profit institutions, the schools account for nearly half of all student loan defaults, leaving the government to pick up the tab.

A lot of people who are in Washington right now want to run around talking about fiscal responsibility, said Conway, who issued subpoenas to six for-profit schools in Kentucky last year, seeking information on job placement claims made to prospective students and management of financial aid dollars. Well, making certain that $25 billion in federal education dollars doled out is being spend in a way that appropriately trains people and prepares them for job opportunities that are out there That, to me, is a fiscal responsibility issue.

Conway confirmed that 10 states so far have signed on to the multi-state working group. He declined to name the other states, but representatives for Attorneys General Tom Miller of Iowa (D), Lisa Madigan

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of Illinois (D) and Pam Bondi of Florida (R) confirmed that they are participating in the investigation.

A spokesman for the Association of Private Sector Colleges and Universities, Bob Cohen, said in a statement that the organizations schools are committed to putting students first and enforcing existing federal and state laws.

We support a dialogue with the attorneys general that is based on hard facts, on principles fairly applied to all, and is not a product of ideology, innuendo or anecdote, the statement said. We firmly believe such a conversation will demonstrate that there is no systemic, sector-wide issue here.

At this point, Conway said, the primary goal is to share information and compare notes about violations of consumer protection statutes. But he said it is possible that the participating states could outline a joint agreement to require such schools to adhere to certain industrywide standards.

There need to be guidelines for information on cost and student loan debt provided to the students before they sign up, and we need to make sure that these schools reform the way they target and recruit potential students, Conway said.

He said the investigation so far involves civil violations, not criminal activity. But he did not rule out a criminal prosecution if investigators discover more information.

There are precedents for multi-state settlements with state attorneys general, most notably in litigation against tobacco companies and in an agreement reached with state attorneys general and social networking sites meant to protect children against sexual predators.

In 2008, 11 states reached an $8 billion settlement with Countrywide Financial to settle predatory lending allegations. And state attorneys general and the Obama administration are negotiating with the nations five largest mortgage companies to settle accusations of improper foreclosures and violations of consumer protection laws.

"If you've got a school negotiating with 10 attorneys general, they snap to much faster than if they're dealing with just one," Conway said.

Conway noted that unlike the tobacco industry, which was concentrated in a few major corporations, there are many smaller, independently-owned colleges throughout the country.

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The Department of Education has stepped up its scrutiny of for-profit colleges in the past year, proposing stronger federal regulations regarding bonuses or raises given to recruiters based on enrollment numbers. The department has also drafted rules regarding student loan accountability, which could cut off funding to programs with a track record of enrollees failing to pay back student loans and facing high debt loads.

The industry has mounted an aggressive, multimillion-dollar lobbying campaign against the student loan regulations, saying they unfairly target for-profit colleges and would restrict college access to lowincome students who attend such schools in large numbers.

The multi-state investigation comes as the Department of Justice is also stepping up its involvement in litigation against for-profit colleges. This week, Education Management Corp. of Pittsburgh, the secondlargest publicly traded college corporation, acknowledged that the U.S. Attorney of Western Pennsylvania had intervened in a civil case that had been brought against the company.

Other states have also gotten intervened as parties in the case against Education Management Corp., which owns schools ranging from The Art Institutes to Argosy University.

In a filing with the Securities Exchange Commission, the corporation noted, The case alleges that the companys compensation plans for admission representatives violated the Higher Education Act. The company said it plans to vigorously defend itself.

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American Banker JPMorgan Chase Stops Test of Higher ATM Fees May 4, 2011 By Andrew Johnson

JPMorgan Chase & Co. has scrapped a test of higher ATM fees it did in two states for noncustomers, a spokesman confirmed on Tuesday.

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The bank had tested $4 automated teller machine withdrawal fees in Texas and $5 fees in Illinois starting in February, the spokesman said. JPMorgan Chase charges $3 in all other states.

The trial concluded at the end of March, said the spokesman, who declined to give a reason or say whether JPMorgan Chase is looking at testing higher ATM fees in other states. The fees in Texas and Illinois have gone back to $3 for noncustomers.

JPMorgan Chase and other banks have made changes in anticipation of pending caps on debit interchange fees.

In February, JPMorgan Chase stopped offering rewards to new debit customers. In March, it said rewards for current customers would end in July, explicitly blaming the Durbin amendment to the DoddFrank Act that mandated the debit fee caps.

A JPMorgan Chase executive recently told American Banker that it will keep its debit rewards program if the interchange caps are delayed.

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American Banker Short Sale Help, or Mortgage Steering? B of A suggests frustrated real estate agents try its retail branches May 4, 2011 By Kate Berry

The event was billed as an opportunity for San Diego real estate agents to get some pointers on hard-to -close short sales.

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"Learn How to Escalate Your Short Sales from a local branch, Get Your REO Pre-Approval Letters Faster, and much more," read a flier for the April 14 luncheon sponsored by the local chapter of the National Association of Hispanic Real Estate Professionals. By "local branch," the trade group's flier meant a local branch of Bank of America Corp. And the featured speaker was Alan Seelenbinder, B of A's vice president of portfolio retention, real estate owned and short sales.

Seelenbinder told the 200 agents in attendance that one of the most common complaints he hears from brokers handling short sales is, " 'I lose buyers because it takes so long.' " Pointing to a table of B of A loan officers, he said, "If you keep the people involved and you have your buyer working with a loan officer that understands the process, the buyers will stay interested."

Homebuyers have been scarce this spring selling season, and banks are looking for every opportunity to get their retail staff to close loans. So it's only logical that Bank of America, the second-largest originator, would want to finance the buyers in distressed sales and develop relationships with the agents who broker them. According to the National Association of Realtors, distressed transactions made up 40% of all sales of existing homes in March. Short sales alone accounted for 13%.

But Bank of America is also the largest servicer of home loans, with the power to approve or reject many short sales. So some real estate agents, as well as competitors of B of A, are interpreting pitches like the one Seelenbinder has been making as a subtle way of telling agents to send lending business to B of A if they want to get a short sale done for an existing, distressed B of A borrower.

"It's a clandestine steering to say, 'Go to our loan officer, and your deal will get done faster,' " said Charlie Christensen, a branch manager and senior loan officer at Equitable Mortgage Group in San Rafael, Calif. "The loan officer just has the inside track at B of A, and they're not going to offer that to an outside lender. It flies in the face of the spirit of the deal."

Explicit steering would potentially violate the Real Estate Settlement Procedures Act, which forbids promising anything of value in exchange for referring business.

B of A said there is no correlation between a short sale being approved (which is done at a central office) and the buyer obtaining financing from a Bank of America loan officer. The company says it is simply suggesting retail branches as a place that short-sale brokers can turn to if they hit a wall dealing with the short-sale department. The retail loan officers would help them talk to the right people in the central office.

Matt Vernon, B of A's head of short sales, said the company is "utilizing our mass distribution of loan

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officers across the country to educate realtors" about the short-sale process. "If they have a good experience, we expect them to have the opportunity to give us business in the future. We would certainly like that opportunity as we would in any mortgage transaction."

When asked if retail loan officers can clinch a short sale, Vernon said, "They can do absolutely nothing." Typically, the loan officer would "escalate it to their management and over to the short-sale business," he said. "We would have no interaction with the specialist in short sales on the loan officer side."

Sergio Moreira, president of the San Diego chapter of the NAHREP, seconded that view.

"This is just good customer service," Moreira said. "What they said is, if you have a relationship with a B of A loan officer, go to them and they might help you on that short sale. The word 'expedite' means to help. It doesn't say they're going to solve the short sale at the branch, and I don't see how B of A is trying to keep the business."

Michael Byrd, the owner of SLO Homestore in Grover Beach, Calif., which represents buyers in short sales, said he has advised some clients to go to bank retail branches "just to get help cutting through the bureaucracy."

"There's a lot of frustration on the agent side because there's not a lot we can do to try to expedite things with the short sale," Byrd said.

The situation would indeed create an opportunity for the loan officer to make a sales pitch for the new loan, he said. But seizing that opportunity is not inherently objectionable, unless getting the short sale closed is a condition of that bank's getting the loan.

"Business logic says that if there's a loan to be had, try to get it," Byrd said. "It's just a question of whether you cross Respa."

Banks have long required when selling repossessed properties that a buyer get prequalified with the original lender even if they make it clear that the person does not have to use that bank to get the loan, Byrd said. "In the back of their minds, they're thinking, 'By the time the consumer has gone to all this trouble, they'll just stick with us.' "

If a broker having a hard time getting a short sale done goes to a branch for help, "technically the loan officer can't do anything on a short sale other than go to the bank directory and try to get the agent a better contact."

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Still, George Kenner, a broker at Keller Williams Realty in San Diego who has 14 short sales pending with B of A, said he was incensed by the suggestion that agents like him go to a retail loan officer to get their short sales resolved. Kenner claims to have made hundreds of calls to B of A, written dozens of letters to the bank's executives and industry officials, and received no responses to his inquiries.

He too interpreted Seelenbinder's pitch as "steering" real estate agents to B of A's own retail branches to get new business while failing to offer a single point of contact for borrowers or agents to resolve short sales.

"They're doing everything they can to capture the new loan but nothing to help with the actual short sale," said Kenner, who posted a video of Seelenbinder's presentation on his blog. "It's a silent quid pro quo where there's no explicit demand for the borrower to get a loan through B of A, but it's very clear how beneficial a good relationship with B of A is."

Vernon said that real estate agents have told B of A that they want mortgage loan officers to know the basics of default, loss mitigation and alternatives to foreclosure.

"That's part of our strategy to differentiate ourselves with the real estate community," Vernon said. "If it gets to a [short-sale] transaction with specificity, that's when we have to pull in the experts to talk with the realtor."

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American Banker Boom in Auto Loans Fizzles as Competition Drives Down Prices May 4, 2011 By Matthew Monks

Car sales are up, and Detroit is on the comeback trail but the miniboom that banks enjoyed in car

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lending may be over.

Ally Financial Inc., the country's top car lender, is struggling to translate higher sales into more profits. So, too, are the big commercial banks that stole market share from the former lending arm of General Motors Corp. during the recession.

Virtually every auto lender just about the only market where banks could expand lending in 2010 wants to extend as many loans as possible to car buyers and car dealers, driving down rates and making them less lucrative for everybody.

Earnings fell 15.8% in the first quarter at Ally's North American auto finance division the primary lender to GM and Chrysler dealers compared with a year earlier, though its originations of new- and used-car loans nearly doubled.

Ally's quarterly performance indicates that problem is not going away anytime soon: The Detroit company, which is majority-owned by the government and plans to go public soon, suffered from softer revenue even as it took market share from banks and the lending arms of Toyota Motor Corp. and Honda Motor Corp.

Michael Carpenter, Ally's chief executive officer, said during a conference call that the mortgage and auto lender is positioned to pursue more car buyers after its $11.6 billion of quarterly originations enabled it to displace Toyota as the country's top auto lender.

"The competition is exhilarating," Carpenter said, adding that its "multi-decade relationships with dealers" gives it an edge over the big banks that had essentially retreated from auto lending before the recession presented an opportunity for them to get back into it. "We have reputations of being there through thick and thin."

Ally is also setting its sights on used cars, a lending segment in which it says it is No. 2 to Wells Fargo & Co.

"The used market is a great growth opportunity for us," Bill Muir, the president of Ally, told analysts Tuesday on a conference call. "We used to focus on selling the new vehicle as a captive-type lender but as an independent we are growing the used business. Used could get equally as big as the new business, but it could take some time."

Such competition is making car loans less lucrative even as demand increases. Automakers sold more than 1.2 million vehicles in March, up 16.9% from a year earlier, according to data from Autodata Corp.

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And about 25% of the loan officers polled in the Federal Reserve's April survey in lending practices reported strengthened demand for auto loans.

But auto loan standards eased at about 30% of the large banks that responded to the survey, and slightly more than that said spreads on auto loans had weakened. The quarterly poll questioned 77 domestic and foreign-owned bank officers.

Its findings echoed comments in April from executives at a number of large banks where auto lending gains narrowed during the first three months of the year, suggesting that the miniboom in auto lending that some banks enjoyed in 2010 is coming to an end. "There are new players, new entrants coming back into that space," Kevin Kabat, the chief executive officer of Fifth Third Bancorp in Cincinnati said in a call with analysts last month. "That's the battle of everyday that we compete with."

Fifth Third is the seventh-biggest provider of used car loans, according to data from Experian Automotive that Ally included in an investor presentation.

Fifth Third's total loans to car buyers were up 2% quarter to quarter and 9% year over year, to $11.7 billion.

Kabat said those results were "solid" but that the company had expected them to be higher. The portfolio's "unusually attractive" spreads have also been narrowing, he said.

"Originations are generally being made at lower yields than the loans at which they're replacing," Fifth Third's chief financial officer, Daniel Poston, said during the same call. "That's true in most categories with auto loans being a notable example."

BB&T Corp. had the same problem. Its auto loans grew by 3.8%, its fourth straight quarter of growth in that book and its second highest quarterly growth rate in a year.

But its $7.12 billion portfolio generated less interest than it did a year ago because yields on auto have fallen sharply. They yielded 5.21% in the most recent quarter, compared with 6.31% a year earlier.

BB&T CEO Kelly King said in a call with analysts in April that auto lending was "down a little bit from

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what we would hope but still good."

Other Ally competitors reported softer auto lending results.

Bank of America Corp.'s loans to car dealers for managing inventory were down quarter to quarter. U.S. Bancorp's auto lending leveled off after relatively strong growth in 2010. The Minneapolis company makes new and used car loans to consumers. It added about $39 million, or less than 1%, more of them to its books in the first quarter. That portfolio grew by about 2% and 6.5% in the fourth and third quarters, respectively.

JPMorgan Chase & Co.'s auto growth flattened in the quarter. The New York company, which makes auto loans at more than 16,000 dealers, is the country's No. 5 auto finance provider, according to the data provided by Ally.

Though JPMorgan Chase's chief financial officer, Doug Braunstein, told analysts last month that its auto business had a "solid performance" last quarter, average auto loans fell by about 1%, or $700 million.

Balances were up 2% from a year earlier, but that was the first quarter-to-quarter decline in four quarters.

Auto originations, meanwhile, were flat from the previous quarter and down 24% from a year earlier, to $4.8 billion.

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Huffington Post Deutsche Bank Accused Of Massive Mortgage Fraud, Sued for $1 Billion By U.S. Government May 3, 2011 By Shahien Nasiripour

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The Justice Department sued Deutsche Bank AG, one of the world's 10 biggest banks by assets, on Tuesday for at least $1 billion for defrauding taxpayers by "repeatedly" lying to a federal agency when securing taxpayer-backed insurance for thousands of shoddy mortgages.

MortgageIT, a subsidiary of Germany's largest lender, egregiously violated federal rules that came with government backing on more than 39,000 mortgages worth more than $5 billion since 1999, according to the lawsuit filed in Manhattan federal court.

By funneling risky mortgages to the Department of Housing and Urban Development's Federal Housing Administration, MortgageIT's loans were guaranteed with the full faith and credit of the U.S. government. A third of those mortgages, or about 12,500, have since defaulted, leaving the government on the hook.

On more than 3,100 of its FHA-guaranteed mortgages that have defaulted, HUD has paid more than $386 million in claims to the owners of the mortgage debt, according to the lawsuit. More than twothirds of those mortgages defaulted within two years of origination.

As of February, more than 7,500 additional mortgages, with more than $888 million in unpaid principal balances, also had defaulted without HUD paying any claims. About half of those defaulted within the first two years.

The agency expects to pay "at least hundreds of millions of dollars" in additional claims as more risky mortgages default in the months and years ahead, according to the lawsuit.

Meanwhile, Deutsche Bank made "substantial profits" by selling these loans to investors, the suit claims. Federal authorities identified some of the MortgageIT practices that now form the basis of its suit as far back as 2003. Despite warnings, the problems continued.

The Justice Department is seeking damages three times the amount HUD has already shelled out for defaulted mortgages with allegedly fraudulently-obtained government insurance, plus additional penalties for each mortgage that broke federal rules.

While private investors have thus far faced a long, slow war battling lenders and connected Wall Street firms to buy back toxic mortgages investors claim were sold to them fraudulently, the government's suit is fairly straightforward. As part of the FHA program MortgageIT participated in, lenders are required to annually certify that they check basic records like borrowers' incomes, credit history and employment record. The lenders also are required to review loans that quickly default to guard against sloppy

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lending practices, and act in the government's best interests because taxpayers are bearing the risks for potentially poor loans.

Deutsche did none of those things, according to the lawsuit.

The lender "recklessly selected mortgages that violated program rules in blatant disregard of whether borrowers could make mortgage payments," the government claims. "While Deutsche Bank and MortgageIT profited from the resale of these government-insured mortgages, thousands of American homeowners have faced default and eviction."

Deutsche acquired MortgageIT for about $430 million in January 2007. At the time, Deutsche said MortgageIT was "one of the fastest-growing and largest residential mortgage loan originators in the U. S." and would help the bank expand its mortgage securitization business.

On Tuesday, a Deutsche spokeswoman, Renee Calabro, said that "close to 90 percent of the activity" alleged in the lawsuit occurred prior to the bank's purchase of the lending unit.

"We believe the claims against MortgageIT and Deutsche Bank are unreasonable and unfair, and we intend to defend against the action vigorously," Calabro said in a statement.

From 2007 through early 2009, Robert Khuzami, the current head of enforcement at the Securities and Exchange Commission, served as Deutsche's lawyer overseeing regulatory matters and investigations. He was not named in the Justice Department's suit.

In the suit, authorities spelled out a variety of alleged abuses that paint the Deutsche subsidiary as a reckless lender that employed minimal oversight over its operations. When alert employees raised concerns over violations, upper management, including the president of MortgageIT at the time, failed to act, the suit claims.

The firm's president knew there were problems with its loan underwriting as early as 2005, according to the lawsuit.

Upper management at MortgageIT "knowingly, wantonly, and recklessly permitted egregious underwriting violations to continue unabated," the lawsuit alleges. "These failures caused the government millions of dollars in losses."

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In one example of the firm's reckless attitude, an outside auditors reports that found "serious underwriting violations" at MortgageIT were literally stuffed in a closet and left unread and unopened" in 2004, according to the suit.

The firm should have had up to eight employees reviewing loans it peddled to FHA. Instead, it never employed more than one person, the suit claims. By the end of 2007, that one person was producing loans, instead of reviewing them.

On three separate occasions in 2003, 2004 and 2006 the firm was told by federal authorities to fix its deficient review practices. Each time, MortgageIT said it had complied. And each time, it lied, the suit claims.

Twice in 2005, employees at the firm went to upper management to complain about poor underwriting practices. Management did nothing, the suit claims.

The lawsuit follows two separate reports this year by HUD's inspector general. In one, the internal watchdog faulted the agency for its poor oversight of FHA-approved lenders. In the other, it found that more than 49 percent of loans underwritten by FHA-approved lenders in a sample did not conform to the agency's requirements.

"These companies repeatedly and brazenly breached the public trust," said Preet Bharara, the U.S. Attorney in Manhattan. "This lawsuit sends them -- and other lenders -- the message that they cannot get away with lies and recklessness. They cannot casually assign the prospect of being caught to the cost of doing business."

Read the lawsuit:

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New York Times (DealBook blog) U.S. Regulators Face Budget Pinch as Mandates Widen

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May 3, 2011 By Ben Protess

Government regulators on the Wall Street beat have long been outnumbered and outspent by the companies they are supposed to police. But even after receiving budget increases from Congress last month, regulators are still falling behind.

The Securities and Exchange Commission and the Commodity Futures Trading Commission are struggling to fill crucial jobs, enforce new rules, upgrade market surveillance technology and pay for travel.

On a recent trip to New York to tour a trading floor, a group of employees from the commodities watchdog rode Mega Bus both ways, arriving late to their meeting despite a 5:30 a.m. departure. The bus, which cost $30 a person round trip, saved the agency roughly $1,000 over Amtrak.

We spent hundreds of billions of dollars on a hideous bailout, and now were not going to fund reforms to prevent another one, said Bart Chilton, a commissioner with the agency.

The money squeeze comes as Wall Street regulators take on added responsibilities in the wake of the financial crisis, including monitoring hedge funds, overseeing the $600 trillion derivatives market and other tasks mandated by the Dodd-Frank law.

Their budgets may soon be even tighter, with Republicans looking to cut the regulators spending beginning Oct. 1, the start of the governments fiscal year. Gary Gensler, the chairman of the commodities agency, and Mary L. Schapiro, the head of the S.E.C., will discuss their budgets for the 2012 fiscal year before a Senate committee on Wednesday.

Current and former regulators warn that budgets cuts would prevent the agencies from enforcing hundreds of new rules enacted under Dodd-Frank, or worse, catching the next Bernard L. Madoff.

But critics contend that the agencies dont deserve extra money, given that they missed warning signs and failed to catch serious wrongdoing in the years leading up to the crisis. The S.E.C., too, has been accused of mismanaging its finances. The Government Accountability Office has faulted the agencys accounting almost every year since it began producing financial statements in 2004.

Some Republicans argue that the regulators cries of poverty are overblown. The S.E.C.s budget this

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year is $1.18 billion, up 6 percent over 2010 and nearly triple what it was a decade ago.

A dramatic spending increase to fund the S.E.C. and C.F.T.C., as envisioned by the authors of the Dodd-Frank legislation, would further the mind-set that our nations problems can be solved with more spending, not more efficiency, Representative Scott Garrett, the New Jersey Republican who leads the House Financial Services Committees Capital Markets panel, said in a statement earlier this year.

While hiring bans and travel restrictions have been eased since the new budget, regulators say they are largely in a holding pattern as lawmakers debate the 2012 budget. Any further cuts, they say, could undermine their efforts to police Wall Street.

The commodities agency says the uncertainty has forced it to delay some investigations and forgo other potential cases altogether.

We dont have the sufficient number of bodies to pursue all relevant investigations and leads, said Mr. Gensler, adding that his agency was short nearly 70 people in its enforcement division.

Robert S. Khuzami, the S.E.C.s enforcement chief, has similar worries, noting that some Wall Street investigations have faced mounting delays. Recent departures of lawyers will only magnify the problem, he added.

Mr. Khuzami also said he faced a significant backlog of tips and referrals, including in the area of market manipulations and accounting irregularities. The tips, which come from whistle-blowers, law enforcement agencies and investors, often prompt S.E.C. investigations.

The biggest concern is were not going to get to fraud and wrongdoing as early as we should, he said. And if the agencys budget is not increased in 2012, the S.E.C.s enforcement division wont cast as wide a net, he added.

Already, the S.E.C.s enforcement division has adopted cutbacks. The division, for instance, has curbed its use of expert witnesses in some securities fraud trials, Mr. Khuzami said.

The division also started sending only one lawyer sometimes a junior staff member to conduct depositions and interview witnesses, according to defense lawyers and people close to the agency. Senior S.E.C. lawyers monitor the depositions via videoconference.

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To avoid hotel costs, some S.E.C. investigators have shuttled between New York and Washington on Amtrak trains that leave around dawn and return the same day. The agency only recently started to again examine investment firms and public companies in some Southern states, after postponing reviews to avoid paying for plane fares.

Despite the recent budget increase, the S.E.C. still must closely monitor expenses such as travel to make sure that each expense is truly mission-critical, according to an internal agency memo dated April 14 that was provided to The New York Times. It is not at all clear what fiscal year 2012 funding level will be approved by Congress, said the memo, which was signed by Jeff Heslop, the S.E.C.s chief operating officer.

While the S.E.C. offsets its budget with fees from Wall Street banks and other financial firms and in recent years has even turned a profit for taxpayers Congress sets the agencys spending levels each year. Lawmakers in April raised the S.E.C.s budget for the next few months by $74 million, to $1.18 billion. President Obama had requested $1.25 billion for the agency, and Dodd-Frank called for $1.3 billion.

The Commodity Futures Trading Commission received $202 million. Although that was a 20 percent increase over the previous year, the budget fell short of the $261 million the agency said it needed to enforce Dodd-Frank. The law requires the commissions staff for the first time to oversee swaps, a type of derivative. The industry is seven times the size of the futures business now under its jurisdiction, Mr. Gensler said.

With $202 million, we can grow moderately, he said. But we need more resources to protect the public and oversee the swaps market.

After the budget increases, regulators ended a yearlong hiring freeze. But both agencies say they are reluctant to significantly increase staffing for fear of having their budgets cut in October.

Please keep in mind that this round of hiring will focus on the agencys very highest priorities, and many divisions/offices may receive approval for very few, if any, of their priorities at this time, the internal S.E.C. memo said. The memo further instructed officials to compile a list of the top 10 priorities for hiring, which will then be reviewed on a case-by-case basis.

The agency said it had not been able to fill nearly 200 positions this year owing to budget constraints. The S.E.C. had five open spots for experts in complex trading and received about 1,000 applicants for the roles; it could afford to hire just one person.

The agency also lacks money to adequately train the enforcement lawyers already on staff, Mr. Khuzami said. Some lawyers who wanted to attain their brokerage licenses to better understand the

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industry had to put off prep classes.

I dont think people realize how serious the problem is and how serious the consequences are, said Harvey Pitt, who was chairman of the S.E.C. from 2001 to 2003.

The regulators, for instance, have had to slow down the adoption of Dodd-Frank rules. The S.E.C. has put off creating several offices mandated by the law, including a bureau that will oversee the credit rating agencies and a special office of women and minority inclusion.

The commodities agency, which planned to complete its 50 new rules by July, is now hoping to finish by early fall. Once the rules are complete, the agency will not have the funds to enforce them, Mr. Gensler said. Some 200 firms registering with the commission as swaps dealers may have to wait months for the agency to process their applications unless it can hire several new employees in the department.

Regulators fear that Congress will soon slash their budgets, which could send the agencies scrambling to cut costs again much as they did in recent months amid the threat of a government shutdown.

Until recently, employees from the commission were instructed not to order certain office supplies items like three-hole punches and heavy-duty staplers. The ban was lifted after the new budget was instituted.

Some regulators were also paying for their own travel. When Mr. Gensler, a former Goldman Sachs executive, headed to Brussels to help the European Parliament create new derivatives rules, he paid out of his own pocket.

Another commissioner from the commodities agency who attended a conference in Boca Raton, Fla., paid for a night at the Sheraton using his familys promotional points. Mr. Gensler attended via a videoconference.

Back to Top

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From:

To: Cc: Bcc: Subject: Date: Attachments:

Mestre, Juan (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=mestrej> _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands>

HSPD-12 Card (PIV Card) Enrollment to the Access Control System (1801 L Street) Wed May 04 2011 10:39:55 EDT

Good Morning -

The Kastle Access Control System located at 1801 L Street has been moved and installed on the 7th floor, Room 7519 (CFPB Credentialing Office). This system allows your HSPD-12 Credential (PIV Card) to be used for building access afterhours, weekends, and holidays. Beginning Thursday, May 19, 2011, security staff will program CFPB employee PIV cards into the Kastle Access Control System every Tuesday and Thursday, between the hours of 9:00 am and 12:00 pm. Appointments will be scheduled in 15 minute increments.

Instructions

If your card has not already been programmed you should make an appointment to do so. Please bring your PIV card and know the PIV card Personal Identification Number (PIN) at the time the PIV card is entered in the Kastle system. If you have forgotten your PIN number, you will need to schedule an appointment at a HSPD-12 Credential Enrollment Center (https://www.schedulemsp.com/tc/login.do? url=usaccess) to reset your PIN prior to scheduling an appointment with CFPB security staff.

Employees who have previously been issued a Kastle card must return the card at time their PIV Card is entered into the Kastle system.

Who to Contact

To schedule an appointment with CFPB security staff, send a meeting request for the desired date and time (Tuesday or Thursday) in 15 minute increments; title PIV Card Access Appointment, to John Starr at John.Starr@treasruy.gov . Please include additional available dates and times in case we are unable to honor your first request. Appointments will be scheduled on a first come first served basis.

Thank you for your cooperation and support of the security program.

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v/r,

Juan Mestre Implementation Team - Security and Emergency Management Consumer Financial Protection Bureau (CFPB) 1801 L Street, N.W. Washington, D.C. 20005 Room #: 7517 E-Mail: Juan.Mestre@treasury.gov OFC#: 202-435-7045 FAX#: 202-435-7133
(b) (6) (b) (6)

Page 2285 of 2347

From:

To:

CFPB.culturerocks </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cfpbculturerocks> CFPB.culturerocks </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cfpbculturerocks>; _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands>

Cc: Bcc: Subject: Date: Attachments:

CFPB Lunch & Learn: CFPB's Research Office Wed May 04 2011 08:54:26 EDT

StartTime: Fri May 06 12:00:00 Eastern Daylight Time 2011 EndTime: Fri May 06 13:00:00 Eastern Daylight Time 2011 Location: Invitees: Recurring: No ShowReminder: No Accepted: No When: Friday, May 06, 2011 12:00 PM-1:00 PM (GMT-05:00) Eastern Time (US & Canada). Where: Conference Room 503 - Conference Bridge Number 202-927-2255 (Code: 218890) Note: The GMT offset above does not reflect daylight saving time adjustments. *~*~*~*~*~*~*~*~*~* You are Invited to a CFPB Lunch & Learn! Topic: An Inside Look at CFPB's Research Office Date: Friday, May 6, 2011 Time: 12:00 pm - 1:00 pm Place: Room 503 1801 L St. Facilitators: Jane Dokko and the other Members of the Research Team

Purpose: How many economists does it take to change a light bulb? Come learn the answer and find out what researchers in the Research Office really do.

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From:

To:

Slagter, Dennis (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=slagterd> Darling, Eben (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=darlinge>; Black, Brad </o=ustreasury/ou=do/cn=recipients/cn=blackb>; Burden, Gail (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=burtong>; Coyle, Raymond (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=coyler>; Cronin, Katherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cronink>; Dickman, Marilyn (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dickmanm>; DiPalma, Nikki (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dipalman>; Glaser, Elizabeth (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=glasere>; Gorski, Stephanie (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=gorskis>; Harpe, Pam (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harpep>; Harvey, Imani (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harveyi>; Herchen, Emily (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=herchene>; Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk>; Mann, Seth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=manns>; Megee, Christine (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=megeec>; Plunkett, Alexander (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=alexanderp>; Royster, Felicia (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=roysterf>; Sensiba, Vicki (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sensibav>; Tamberrino, Mary (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tamberrinom>; Tingwald, James (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tingwaldj>; Wanderer, Agnes (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=wanderera>

Cc: Bcc: Subject: Date: Attachments:

RE: MS Project & MS Visio Brief Questionnaire Tue May 03 2011 19:14:12 EDT

Eben, pls advise CIO that all CHCO pcs should be equipped with the most robust suite of tools available now and in the future. This is an intensive project-management oriented team.

Page 2287 of 2347

Thx Dennis

Dennis Slagter Chief Human Capital Officer Consumer Financial Protection Bureau 202-435-7143 (1801 L St)
(b) (6)

This e-mail may contain Privacy Act/Sensitive Data, which is intended only for the individual to which it is addressed. It may contain information that is privileged, confidential, or otherwise protected from disclosure under applicable laws. Do not disclose sensitive data to others within or outside of CFPB unless they have a legitimate need for the information based on their official duties. If you are unsure of the appropriateness of information disclosure, please contact the General Counsel or the Privacy Team for guidance.

From: Darling, Eben (CFPB) Sent: Tuesday, May 03, 2011 3:59 PM To: Black, Brad; Burden, Gail (CFPB); Coyle, Raymond (CFPB); Cronin, Katherine (CFPB); Darling, Eben (CFPB); Dickman, Marilyn (CFPB); DiPalma, Nikki (CFPB); Glaser, Elizabeth (CFPB); Gorski, Stephanie (CFPB); Harpe, Pam (CFPB); Harvey, Imani (CFPB); Herchen, Emily (CFPB); Lownds, Kevin (CFPB); Mann, Seth (CFPB); Megee, Christine (CFPB); Plunkett, Alexander (CFPB); Royster, Felicia (CFPB); Sensiba, Vicki (CFPB); Slagter, Dennis (CFPB); Tamberrino, Mary (CFPB); Tingwald, James (CFPB); Wanderer, Agnes (CFPB) Subject: MS Project & MS Visio Brief Questionnaire Importance: High

Esteemed HC Colleagues,

Pardon the brief intrusion but I need to gauge your need for Project & Visio *right away* (i.e. by 430 today).

Please take a quick moment and respond to this email as follows:

I use Visio (Daily/Weekly/Monthly/Never) I use Project (Daily/Weekly/Monthly/Never)

Page 2288 of 2347

N.B. If you do not answer, for the purposes of this exercise it will be assumed that you do never use either of the aforementioned programs.

Please note that OCIO is trying to provide CFPB customers with what they actually need near-term vs. wish list, given the bounds of existing interagency agreements and MOUs. The latter category (wish list) will be serviced by forthcoming enterprise-wide licenses for these types of software packages.

Thanks all,

Eben P. Darling Department of Treasury CFPB Implementation Team 202.435.7272 (P) Eben.Darling@treasury.gov

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From: To:

Hart, Maria (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=hartm> Basham, Stephanie (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=bashams>; Botelho, Michael (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=botelhom>; Brown, Charles (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=brownchar>; Cronin, Katherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cronink>; Darling, Eben (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=darlinge>; Dickman, Marilyn (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=dickmanm>; Fravel, Wesley (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=fravelw>; Glaser, Elizabeth (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=glasere>; Gupta, Neeraj (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=guptan>; Hannah, Stephen (Rick)((CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=hannahs>; Harpe, Pam (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harpep>; Harvey, Imani (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=harveyi>; Herchen, Emily (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=herchene>; Hillebrand, Gail (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=hillebrandg>; Horan, Kathleen (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=horank>; Jackson, Monica (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=jacksonmo>; Keane, Micheal (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=keanem>; Kunin, Noah (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=kuninn>; Lopez-Fernandini, Alejandra (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lopez-fernadinia>; Lownds, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=lowndsk>; Mann, Seth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=manns>; Meyer, Erie (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=meyerer>; Michalosky, Martin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=michaloskym>; Murrell, Karen (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=murrellk>; Plunkett, Alexander (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=alexanderp>; Prince,

Page 2292 of 2347

Cc: Bcc: Subject: Date: Attachments:

Victor (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=princev>; Reilly, Elizabeth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=ericksone>; Royster, Felicia (CFPB) </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=roysterf>; Ruihley, Joshua (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=ruihleyj>; Scurlock, Angelika (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=scurlocka>; Sena, Theresa (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=senat>; Sensiba, Vicki (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=sensibav>; Slagter, Dennis (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=slagterd>; Stapleton, Claire (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=stapletonc>; Tamberrino, Mary (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tamberrinom>; Tingwald, James (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tingwaldj>; Tucker, Kevin (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=tuckerke>; Wanderer, Agnes (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=wanderera>; West, Catherine (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=westca>; Williams, Anya (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=williamsany>; Yuda, John (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=yudaj> Hart, Maria (CFPB) </o=ustreasury/ou=do/cn=recipients/cn=hartm> Timesheet Pay Period 9 Tue May 03 2011 15:01:55 EDT Timesheet Pay Period 9.xlsx

Good Afternoon,

This is an notification that Im your new timekeeper. Please complete the attached time and attendance form (annual/sick leave usage or projected usage). The form will reflect Pay Period #9 (April 24th May 7th ). It is important that all timecards be submitted on time so that we can ensure accurate and timely salary payment.

Page 2293 of 2347

Forward your completed timecard to maria.hart@treasury.gov and to your supervisor, no later than noon on Thursday, May 5th.

**Reminder: Timecards will not be processed unless your supervisor is copied on the email.

Thanks, Maria

Page 2294 of 2347

Timesheet Pay Period 9.xlsx (Attachment 1 of 1)

Consumer Financial Protection Bureau - Time Sheet

NAME:
Sun

PAY PERIOD:
Mon 25 Tue 26 Wed 27

9
Thu 28 Fri 29 Sat 30 Total

April 24th - April 30th

REG ANN SICK LVE HOLDAY ADMIN CREDIT HRS EARNED CREDIT HRS USED Regular Hours Worked Annual Leave Sick Leave Leave (Court, FFLA, etc.) Please specify type: Holiday Admin Lve/Hazardous Weather

24

TOTAL TIME FOR WEEK 1 Sun Mon Tue Wed Thu May 1st - May 7th
REG ANN SICK LVE HOLDAY ADMIN CREDIT HRS EARNED CREDIT HRS USED Regular Hours Worked Annual Leave Sick Leave Leave (Court, FFLA, etc.) Please specify type: Holiday Admin Lve/Hazardous Weather

0.00 Fri 6 Sat 7 Total

TOTAL TIME FOR WEEK 2 NOTE: Maximum amount of credit hours earned that allowed to be s carried from one pay period to another is 24 hrs. total.

0.00

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Timesheet Pay Period 9.xlsx (Attachment 1 of 1)

Period 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

2010 Week 1 01/03/09 01/17/09 01/31/09 02/14/09 02/28/09 03/14/09 03/28/09 04/11/09 04/25/09 05/09/09 05/23/09 06/06/09 06/20/09 07/04/09 07/18/09 08/01/09 08/15/09 08/29/09 09/12/09 09/26/09 10/10/09 10/24/09 11/07/09 11/21/09 12/05/09 12/19/09

Week2 01/10/09 01/24/09 02/07/09 02/21/09 03/07/09 03/21/09 04/04/09 04/18/09 05/02/09 05/16/09 05/30/09 06/13/09 06/27/09 07/11/09 07/25/09 08/08/09 08/22/09 09/05/09 09/19/09 10/03/09 10/17/09 10/31/09 11/14/09 11/28/09 12/12/09 12/26/09

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From: To: Cc: Bcc: Subject: Date: Attachments: Reason:

HELPDESK (DO) </o=ustreasury/ou=do/cn=recipients/cn=helpdesk> Global_All </o=ustreasury/ou=do/cn=recipients/cn=global_all>

Emergency Email and Blackberry Maintenance Tue May 03 2011 12:10:30 EDT

Emergency Email and Blackberry Maintenance, Tuesday, May 3, 2011 at 10:00PM

When:

Tuesday, May 3, 2011 from 10:00 PM to 11:00 PM

Impact: Users will experience intermittent Blackberry email service interruption during the maintenance window. Telephone service will not be affected and no emails will be lost; Outlook and Webmail will not be affected.

Should you have any issues or questions, please contact the DO IT IMS Service Desk at 202-622-1111 for assistance.

Page 2297 of 2347

From:

To: Cc:

Blenkinsopp, Alexander (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=blenkinsoppa> _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands> Adamske, Steven </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=adamskes>; Moore, Megan </o=ustreasury/ou=do/cn=recipients/cn=mooreme>; Hunt, Anita Maria </o=ustreasury/ou=do/cn=recipients/cn=hunta>; Wallace, Kim </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=wallacek>; Wolin, Neal </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=wolinn>; Warren, Elizabeth (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=warrene>; Fitzpayne, Alastair </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=fitzpaynea>; LeCompte, Jenni </o=ustreasury/ou=do/cn=do resources/cn=user accounts/cn=standard users/cn=engebretsenj>; Murray, Colleen </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=murrayco>; Coloretti, Nani </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=colorettin> CFPB Press Clips 5/3 Tue May 03 2011 11:23:13 EDT

Bcc: Subject: Date: Attachments:

Press Clips 5/3/2011

Index

Click publication title to find its location in this e-mail. Click article title to go to its source website.

Consumer Financial Protection Bureau American Banker Warren Now Looks Likely to Get CFPB Nomination Politico Morning Money Political Impact: Warren Nomination Ahead? Wall Street Journal (blog) Bank Groups Chief Expects Warrens Nomination Soon

Page 2298 of 2347

Bloomberg Bachus Says Consumer Bureau Proposal Isnt Attack on Motherhood New York Times (blog) Treasury Urges Small Banks to Embrace Dodd-Frank The Hill (blog) Treasury defends Dodd-Frank to community bankers Dow Jones Newswires US Consumer Finance Agency Plans Draw Concern

CQ Today Freshman Assault on Financial Regulations Might Have Campaign Benefits (no external hyperlink available) Port Huron Times Herald (Michigan) Consumers need fierce defender Reverse Mortgage Daily CFPB Second Quarter Spending Totals $36 Million

U.S. PIRG Consumer Blog USA Today backs consumer bureau; big fight coming Wednesday, I discuss on C-Span (with video)

Consumer Credit Reuters U.S. credit card execs see sunny days beyond regs Credit.com A World Without Subprime Loans? Baltimore Sun Mortgage problems damage credit scores in different ways Roll Call For-Profit Colleges Field Team of Top Lobbyists New York Times (blog) Consumer Reports Offers New Comparison Tool

Housing Huffington Post Banks Should Pay for the Foreclosure Crisis The Tennesseean Banks try to hasten foreclosures in state Housing Wire Mortgage servicing is too light on technology, MBA panel says

American Banker Warren Now Looks Likely to Get CFPB Nomination May 3, 2011

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By Kate Davidson

WASHINGTON The White House keeps insisting it has not made a final choice for director of the Consumer Financial Protection Bureau, but there is a growing expectation that Elizabeth Warren will soon get the nod.

The head of the Independent Community Bankers of America said Monday that he thinks Warren has a "better than even chance" of being nominated, probably within the next two weeks. Several other industry observers put that figure even higher, saying it has become increasingly clear in recent weeks that Obama was leaning toward Warren, even if that meant a contentious nomination battle that may force him to make a recess appointment.

But political analysts said the timing of the nomination could not be better for the president, who is now flush with the political capital after the death of Osama bin Laden.

"In the wake of the bin Laden announcement, the White House has to be brimming with confidence," said Brian Gardner, a political analyst at Keefe, Bruyette & Woods Inc. "That was a significant development for them, and it probably makes it a little bit easier for them to go ahead with a recess appointment if it were to come to that."

Warren was appointed last year to serve as the Treasury's point person in setting up the new agency, and her chances of receiving the formal nomination have waxed and waned since then. Although Republicans have always raised concerns with her as a potential pick, those objections grew louder as a result of Warren's involvement with a pending legal settlement with the top five mortgage servicers.

Still, speculation that Warren will get the job has mounted, and if Obama wants to nominate her he has to do so soon. The Senate has only nine legislative weeks left to confirm a director before the agency officially assumes its rulemaking and enforcement authorities.

In an interview Monday, Cam Fine, president of the Independent Community Bankers of America, said "everyone in town knows that her name is in play and that she's under serious consideration for the position."

He noted that while community banks have some concerns with the CFPB, Warren has gone out of her way to reach out to the community banking sector, holding dozens of meetings with groups around the country. He said she has repeatedly pledged not to impose a new layer of burden on small banks. "All of that strikes community bankers as very favorable," Fine said. "If you take her at her word, she does not want to do anything to harm or impede community banks from servicing their local markets. You would have to look favorably on a nomination, because clearly she understands our model."

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Still, Fine said, "We will withhold our judgment on how Ms. Warren would be as a director until her words are put into action."

In a research note published Monday, Jaret Seiberg, an analyst for MF Global Inc.'s Washington Research Group, pegged the odds to 70% that the White House will nominate Warren, as time is running out and no other viable alternatives have emerged.

But that doesn't mean she will get the job. Seiberg said it is nearly impossible for the Senate to confirm her in time. While many banking observers said that will naturally lead the administration to provide Warren with a recess appointment, Seiberg said Obama could also pick another candidate.

"Depending on the reaction to the nomination, the administration may decide it is politically more advantageous to let Republicans kill the Warren nomination and then to name a less controversial candidate to the post," he said. "This allows the administration to charge the GOP opposes consumer protection without incurring the political firestorm that would ensue if he recess-appointed Warren to the job."

Though bin Laden's demise may help Obama politically, Seiberg said it would not provide enough momentum to confirm Warren.

"Killing bin Laden certainly strengthens the president's poll numbers, but at the end of the day, the fight over Elizabeth Warren is not a referendum on the president," he said. "It's a referendum on whether Republicans are comfortable with Professor Warren running the CFPB. I think that she continues to have an uphill fight in combating the perception that she is too radical for Republicans to accept."

Appointing Warren during a recess would further inflame Republican opposition, and may even put off some moderate Democrats, Gardner said.

"There have been some non-financial-related appointments where they have floated people and it didn't go anywhere, and they did go this route," Gardner said. But "even the president's party wouldn't be very happy about it."

Rumors have also circulated that Warren's nomination may come as part of a package of financial services nominations.

Mark Oesterle, a counsel with Reed Smith and former chief counsel to Sen. Richard Shelby, the

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Banking Committee's top Republican, said that regardless or recent events, each candidate will be vetted under the same process.

"I think the real question is whether she's demonstrated she's of the mind-set, temperament, background, capability whatever they were looking for of doing the job," Oesterle said. "The question of how much political capital the president has to spend remains to be seen."

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Politico Morning Money Political Impact: Warren Nomination Ahead? May 3, 2011 By Ben White

A few birds whispered to M.M. that the bounce Obama will certainly get from this historic accomplishment will likely strengthen his hand with Congress, perhaps enoughif he strikes right away to get Elizabeth Warren through the Senate as the confirmed head of the CFPB. Obama presumably also has a stronger hand on the debt ceiling and budget debates, at least for a short time.

ALSO TODAY: CFPB CALL - Per release: Americans for Financial Reform (AFR) will host a conference call with reporters and bloggers on Tuesday, May 3, 2011 at 12:00 p.m. to hear first-hand accounts from victims of deceptive financial products and schemes and why efforts to weaken the CFPB are wrong for consumers. On Wednesday, a House Financial Services subcommittee will markup legislation to weaken the CFPB.

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Wall Street Journal (Washington Wire blog) Bank Groups Chief Expects Warrens Nomination Soon May 2, 2011 By Alan Zibel and Maya Jackson Randall

The White House isnt saying much about whether Harvard law professor and consumer advocate Elizabeth Warren will be named to lead the new Consumer Financial Protection Bureau.

But the head of a key banking industry group believes it will happen soon.

Camden Fine, president and chief executive of the Independent Community Bankers of America, said Monday that he sees a better than even chance that President Barack Obama will nominate Ms. Warren to lead the new bureau.

I think the president is going to feel like he needs to give her a shot, said Mr. Fine said in an interview at a conference held by his trade group in Washington. He told a crowd of around 1,000 bankers gathered to lobby on Capitol Hill this week that he expects the nomination to come within two weeks.

Whether the White House will nominate Ms. Warren has become a guessing game in Washington. Ms. Warren is a special adviser to the president charged with setting up the bureau, which officially launches this summer. She is a popular figure among many Democrats and consumer advocates, but disliked by many Republicans and banking industry groups.

The bureau must have a director in place by July 21 to get a slate of broad powers to attack fraudulent and abusive financial practices. Ms. Warrens candidacy likely would trigger a contentious Senate

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confirmation battle, and Mr. Fine added that any nominee even someone other than Ms. Warren would face harsh resistance.

Obama, he noted, could avoid that fight by appointing her during a congressional recess either during the Memorial Day or Independence Day breaks.

Still, a White House spokeswoman said the president is considering a number of candidates for the position of director, but no decisions have been made, and we will not comment on speculation about potential candidates before the president makes his decision.

On Monday, Jaret Seiberg, an analyst with MF Global, estimated that there is now a 70% chance of Ms. Warrens nomination. Time is running out to confirm a candidate and no other viable alternatives have emerged, he wrote.

Most observers believe that the narrowly divided Senate is unlikely to confirm Ms. Warren. In the meantime Mr. Obama could appoint Ms. Warren to the post through the end of 2012 through a socalled recess appointment.

Mr. Fine he did not commit to supporting her candidacy, calling it a tough issue for the community bankers. But he praised her for reaching out to many small bankers around the country.

As least as far as I can tell, shes very sincere about the plight the smaller banks, Mr. Fine said. Others, he noted, arent so thrilled.

There is no doubt that Wall Street is terrified of her, he said. She really is the spawn of Satan to them.they will come out against her with a vengeance.

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Bloomberg

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Bachus Says Consumer Bureau Proposal Isnt Attack on Motherhood May 2, 2011 By Phil Mattingly

U.S. Representative Spencer Bachus, the chairman of the House Financial Services Committee, said his proposal to change the leadership of the Consumer Financial Protection Bureau is hardly a radical concept.

Youd think Im attacking motherhood or apple pie, Bachus, an Alabama Republican, said today as he defended the legislation at an Independent Community Bankers of America conference in Washington.

Bachuss committee plans to begin work this week on efforts to reshape or repeal part of the DoddFrank Act, the financial- regulation overhaul approved by Congress last year before Republicans took control of the House. Two subcommittees are scheduled to mark up 10 bills to change the law, including measures to restructure the consumer bureau.

Elizabeth Warren, the adviser appointed by President Barack Obama to stand up the agency, has clashed with Republicans in congressional testimony, speeches and television interviews over the structure of the agency, which is to start work on July 21.

Bachus introduced a bill in March that would replace the post of director with a five-member bipartisan commission, saying the structure imposed by Dodd-Frank places too much power in the hands of one person.

It has nothing to do with Elizabeth Warren, it really has nothing to do with her, Bachus said.

After a pause, Bachus drew laughs from the bankers when he said, I will not take a lie detector test.

Knife in the Ribs

In response to Republican criticism, Warren and Obama administration officials noted that the Financial Stability Oversight Council, a panel of regulators responsible for oversight of the entire banking system, has the power to overrule any regulation crafted by the bureau.

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Warren, in an interview last month on Comedy Centrals The Daily Show With Jon Stewart, said some in Washington, are trying to put a knife in the ribs of the new agency.

Bachus, who has called the FSOC oversight insufficient, will need broad support from Republicans and bipartisan backing in the Democrat-led Senate and White House to win enactment of his proposal. Bachus told reporters today that he believes he can get the support of some Senate Democrats.

Senate Banking Committee Chairman Tim Johnson, a South Dakota Democrat, has said he will fight efforts to undo the law. Representative Barney Frank of Massachusetts, the top Democrat on the Financial Services committee, said he also will oppose the Republican efforts to change to the law that bears his name.

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The New York Times (DealBook blog) Treasury Urges Small Banks to Embrace Dodd-Frank May 2, 2011 By Ben Protess

The Obama administration has trumpeted its recent overhaul of financial rules as a stern warning to Wall Street.

Community bankers, on the other hand, need not fear the new regulatory regime, the administration says.

Financial agencies are working to make sure regulations protect the system but dont hurt small banks or prevent them from doing their job, the deputy secretary of the Treasury, Neal S. Wolin, said in a speech on Monday to the Independent Community Bankers of America, a powerful lobbying group in Washington.

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We are committed to working with you whether through financial reform or small business programs to make sure that community banks are able to play their important role in a stronger financial system and a strengthened economy, he added.

In response to the near collapse of the financial system in 2008, Congress last year passed the DoddFrank Act, which imposed restrictions on asset-backed securities, the derivatives industry and proprietary trading some of Wall Streets main profit centers. But the law largely exempted about 7,000 community banks and thrift institutions, nearly all of which hold less than $10 billion in assets and a third of which hold less than $100 million.

Still, financial lobbyists and Congressional Republicans have painted community banks as victims under the new regulatory regime.

Mr. Wolin said those complaints were misleading.

In fact, the lawmakers who drafted the legislation took great care to protect and strengthen the country s rich network of community banks, he said, adding that regulators were searching for ways to make regulations better, less duplicative and less burdensome.

The law, he said, recognized the importance of community banks and understood that they did not cause the crisis.

Dodd-Frank, Mr. Wolin said, actually helps many small banks by putting them on more equal footing with their competitors. The law, for instance, enforces new capital and liquidity requirements for big Wall Street firms rules that do not apply to the community banks.

Mr. Wolin also said small banks had a friend in the new Consumer Financial Protection Bureau, which subjects payday lenders and mortgage firms to new requirements that match up with restrictions facing the banking industry.

Elizabeth Warren, who is setting up the consumer agency, has held regular meetings with industry trade groups, including the independent bankers association, to make certain that the perspectives of small banks and credit unions are well-represented within the consumer agency, he said.

Mr. Wolin did take aim at Wall Street lobbyists and Republican lawmakers, who are seeking to derail Dodd-Frank. In the House and Senate, lawmakers have crafted bills that would repeal the law

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altogether.

There are many critics who are attempting to slow down or defund implementation, or who seek to repeal the statute entirely, he said. I want to remind them that in the absence of the proper protections in effect, in the absence of the protections that this legislation puts in place our system descended into a crisis that had tremendous costs to businesses, to the economy and to the American people.

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The Hill (On The Money blog) Treasury defends Dodd-Frank to community bankers May 2, 2011 By Bernie Becker

A top Treasury official signaled to a group of community bankers on Monday that the Dodd-Frank Wall Street reform bill would not have a negative impact on them.

In a speech in Washington, Neal Wolin, deputy Treasury secretary, pushed back against those who have said the regulatory overhaul would hurt small banks, saying that Dodd-Franks authors understood that community banks had not caused the crisis and that the law gives small banks a chance to be more competitive.

I understand that there is concern that the reforms in Dodd-Frank will be overly burdensome or costly for small banks, Wolin said in his prepared remarks for an Independent Community Bankers Association conference. But regulators are working to strike the right balance. Theyre working to making sure that regulations protect the system but dont hurt small banks or prevent them from doing their job.

Wolins comments come after some in the banking community have said that small banks would face excessive regulations under Dodd-Frank, and as the House Financial Services Committee is preparing to take aim at the law this week. Rep. Spencer Bachus (R-Ala.), the chairman of that panel, also

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addressed the ICBA summit on Monday, telling attendees that Dodd-Frank would harm small banks, even though they didnt contribute to the financial crisis.

Bachuss committee is scheduled to mark up this week, among other measures, a bill he introduced that would place a bipartisan, five-member panel atop the new Consumer Financial Protection Bureau instead of a single director, an idea that has been endorsed by ICBA. Legislation that would make it easier for the Financial Stability Oversight Council to overturn CFBP rulings is also on the committees agenda.

At the conference on Monday, Bachus made the case that his CFPB bill would put the new bureau in line with other government entities that are led by commissions rather than directors, including the Securities and Exchange Commission and the Federal Deposit Insurance Corp. He added that the House had voted to have the CFPB run by a commission during the debate over Dodd-Frank, but the plan was later dropped in conference.

Some in Washington have reacted to this idea as though Im attacking motherhood and apple pie, Bachus said. You would think the idea of having a bipartisan commission govern an independent agency was simply unheard of.

For his part, Wolin said that that the team implementing the CFPB would at times create panels to gather input from small banks when considering whether to propose a regulation, and that CFPB staff were already reaching out to community banks and credit unions.

He also said that Dodd-Frank, among other things, rolled back the funding leg-up that larger banks had, and would bring tougher standards on capital for those bigger institutions.

And he noted that Camden Fine, ICBAs president and chief executive, had said that financial reform bodes well for community banks.

As community bankers, you understand the devastation of the financial crisis, Wolin said. You know the families who have lost their homes. You know the small-business owners who have closed up shop. And many of you like those businesses have suffered from the effects of a financial crisis that you did not cause.

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Dow Jones Newswires US Consumer Finance Agency Plans Draw Concern May 2, 2011 By Doug Cameron

Two leading financiers on Monday expressed concern about the agenda being pursued by the new U.S. consumer finance watchdog, fearing it may restrict access to some products rather than educate buyers and investors about potential risks and rewards.

The remit and structure of the Consumer Financial Protection Bureau remains under intense scrutiny ahead of its planned July launch, with an initial focus on improving disclosure in mortgage products. "I think the grave concern is will they mandate the products that can be offered," said Ken Griffin, founder and chief executive of Citadel, the Chicago-based fund manager and financial services firm. Griffin and fellow panelists at the Milken Institute Global Conference said mortgage firms will work around any prescriptive measures, such as requiring a 20% equity deposit on new mortgages.

"I think they want to go after choice," said Tom Wilson, chairman and CEO of insurer Allstate Corp. (ALL). "It's a paternalistic element I don't agree with."

The agency is also working on improving the transparency of credit card products and some broader consumer education elements are also being developed, according to Elizabeth Warren, the academic tapped to oversee its creation. Warren, seen as a potential director of the agency, has been canvassing its agenda and planning with bankers in recent weeks. "The much bigger part of what we do will be supervision and enforcement," she told an audience of bankers in Kentucky earlier this month.

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CQ Today Freshman Assault on Financial Regulations Might Have Campaign Benefits May 2, 2011 By Ben Weyl

Republican freshmen will be in the spotlight as the House Financial Services Committee takes up several bills this week to roll back parts of last years financial regulatory overhaul.

The newcomers are sponsoring a half-dozen bills to eliminate or curb components of the law that affect derivatives, credit rating agencies and other parts of the financial sector. As with GOP efforts to gut the 2010 health care overhaul (PL 111-148, PL 111-152), the legislation has little chance of being enacted. But it offers Republican leaders a chance to raise the profiles and bolster the campaign coffers of their newest members.

The Capital Markets subcommittee is set to mark up seven bills Tuesday, five of them introduced by freshmen Republicans, that would loosen some of the laws restrictions. The Financial Institutions panel will follow May 4 with three more bills, one of which is sponsored by a freshman.

Democrats and groups that supported the regulatory overhaul (PL 111-203), known as the Dodd-Frank law after its sponsors, say the markups are part of a concerted attempt to aid politically vulnerable lawmakers, including by giving them access to deep-pocketed donors on Wall Street who oppose many of the laws provisions.

An aide to Chairman Spencer Bachus, R-Ala., dismissed the charge, noting that Bachus has consistently said he intended to use the talents of all his members, some of whom have business backgrounds.

For example, freshman Michael G. Grimm, R-N.Y., is a former stockbroker; he has introduced a bill (HR 1610) to exempt non-financial companies that use derivatives to hedge risk from having to meet margin requirements in the Dodd-Frank law.

Steve Stivers, R-Ohio, a freshman and former banking lobbyist, has sponsored a measure (HR 1539) that would repeal a provision that makes credit rating agencies liable if their ratings of asset-backed securities are found inaccurate.

AIMING TO DEFANG

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Nan Hayworth, a first-term Republican from New York, is the author of a bill (HR 1062) to repeal a provision that requires publicly traded companies to disclose their employees median compensation separate from CEO pay packages.

Hayworth rejected the claim that her bill was intended to raise money. She campaigned on repealing the Dodd-Frank law, she said, but with that goal out of reach, Republicans were instead aiming to defang and unburden as much of the regulatory overreach as possible.

David Schweikert, a freshman Republican from Arizona, is sponsoring legislation (HR 1070) to exempt certain companies from registering with the Securities and Exchange Commission. If youre a member and you care about jobs and you care about economic growth, you need to fix a whole bunch of rules in Dodd-Frank, he said.

The fifth freshman-sponsored bill (HR 1082) to be taken up Tuesday was introduced by Robert Hurt, RVa. It would exempt private equity fund advisers from having to register with the SEC, as mandated by Dodd-Frank.

On May 4, the financial institutions subcommittee is scheduled to mark up a bill (HR 1315) to make it easier to overrule the Consumer Financial Protection Bureau, a new agency created by the Dodd-Frank law that is loathed by Wall Street. Its author is Sean P. Duffy, R-Wis., another freshman.

Also on the agenda are a bill (HR 1121) to replace the bureaus director with a five-member commission, sponsored by Bachus, and a draft measure that would require the bureau to have a director confirmed by the Senate before taking on its new powers; that bill did not list a sponsor as of April 29.

Hurt, Schweikert and two other GOP freshmen Robert Dold of Illinois and Michael G. Fitzpatrick of Pennsylvania also have been designated vice chairmen of subcommittees. In doling out responsibility, Bachus has been very kind, very trusting, Schweikert said.

FUNDRAISING EDGE

Bachus is expected to hold a fundraising event soon for the dozen freshmen on his committee, though some on the panel have already been the recipients of industry donations.

According to the Center for Responsive Politics, Dold received $703,224 from the finance, insurance

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and real estate industries through Dec. 31, 2010, for his 2010 campaign. Stivers received $563,892 from those industries through last year, and Hayworth received $310,615. All won highly competitive seats and are likely to face serious challenges next year.

One industry lobbyist said handing freshmen bills to introduce is a good way for them to cut their teeth and make a splash, though he denied it would lead to improved fundraising on Wall Street.

But Bartlett Naylor, a financial policy advocate with Public Citizen, called the measures shakedown bills.

I think the question has to be raised as to whether this is an effort to introduce freshmen lawmakers to a very lucrative source of campaign finance, he said.

At the same time, Democratic lawmakers greet this strategy with something of a shrug. They note that it is a common practice of both parties to give high-profile legislation to new members in hopes of aiding their re-election.

I imagine all those bills were actually prepared by the committee leadership or the House leadership and given to them to introduce and speak about, said Brad Miller, a North Carolina Democrat who sits on the panel.

It certainly helps fundraising within the committee to be seen as active in the committee, he added, unless of course youre acting on the wrong side of [industry] as I am.

Barney Frank of Massachusetts, the top Democrat on the panel and an architect of the regulatory overhaul, said giving freshmen a chance to be in the limelight is a perfectly reasonable way to help vulnerable lawmakers and that he did the same thing when he was chairman.

Frank acknowledged that bill sponsorships were indeed intended to help fill lawmakers campaign coffers, and that he did not see it as a real issue as long as they were being ideologically consistent.

Its very reasonable if they believe in it, he said. Its wrong if you were to let that dictate your position, but if it dictates who you put up front, thats perfectly reasonable.

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Port Huron Times Herald (Michigan) Consumers need fierce defender May 3, 2011 Editorial

President Barack Obama should not hesitate a moment longer before nominating Elizabeth Warren as director of the new Consumer Financial Protection Bureau.

Warren is eminently qualified. A professor at Harvard, she is a recognized expert on consumer and bankruptcy law. She has been the president's point person in designing a consumer agency with the means and the mission to actually protect consumers.

She also is a bulldog, a fierce and fearless defender of ordinary Americans who have been cheated in the marketplace. No one speaks more passionately or more articulately about the need to protect consumers from scoundrels and shysters.

Her ability and courage are matched by the intensity of those who oppose her.

The barons of Wall Street, who control a significant number of votes in Congress, have gone to war against Warren. They hope to gut the new consumer bureau, which was created last summer when Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Those who oppose Warren apparently see consumer protection as little more than a disguise for overzealous regulation. They tremble at the prospect of a well-funded, well-led consumer bureau that actually looks out for the interests of middle-class consumers.

The most outspoken of these opponents is U.S. Rep. Shelley Moore Capito, the daughter of a former West Virginia governor and chairwoman of the House Financial Services subcommittee.

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What we don't hear from Warren's critics are answers to questions such as these:

Was over-regulation the cause of the housing bubble or the collapse of the banking industry? Or might it have been the virtual absence of regulation?

What is so wrong about prohibiting mortgage brokers from making greater commissions by steering the least sophisticated borrowers to the riskiest loans?

Shall we as a nation continue to look the other way while insurance giants siphon off millions of dollars from the families of troops slain in Iraq and Afghanistan?

Will the economy collapse if credit card and mortgage contracts are written in plain language?

Who got hurt in the financial meltdown of 2008? Was it Wall Street, which mended itself with $700 billion in taxpayer loans, including $1.5 billion to pay bonuses to rogues and hustlers? Or was it ordinary Americans who lost their retirement nest eggs and saw their property values sink by a third?

It is time for the president to nominate Warren and let the chips fall where they may. Let's find out who in Congress sides with America's besieged middle class.

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Reverse Mortgage Daily CFPB Second Quarter Spending Totals $36 Million May 2, 2011 By Elizabeth Ecker

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The Consumer Financial Protection Bureau published its second quarter spending update today, amounting to a total of $36 million.

The spending for the quarter ending March 31 included $13 million in outlays and $23 million in gross obligations, with the largest second quarter expenditures being those relating to staff and administrative services, such as those from the Department of the Treasury, according to the CFPB. The largest expense was a human resources support contract award for $3 million.

In terms of funding, the CFPB received three funding transfers from the Federal Reserve System. Those were pursuant to a request in August for $18.4 million and a second, supplemental request in December for $14.37 million. The first requests in addition to a third request in March for $27.93 million amounted to a total of $60.7 million in Federal Reserve funding in Q2.

The CFPB is scheduled to launch on July 21 under the Dodd-Frank Act. The Obama Administration has yet to nominate and confirm a director for the bureau, although recent reports indicate there is a short list of candidates for the position, including White House Special Advisor Elizabeth Warren, who has been tasked with setting up the CFPB in advance of its launch. Warren appeared on the Daily Show last week, where she defended the CFPB against attempts to defund and defang the bureau.

View the CFPB spending update.

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Reuters U.S. credit card execs see sunny days beyond regs May 2, 2011 By Maria Aspan

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* U.S. card executives optimistic about regulatory delay

* Credit losses down from peaks, new tech offers growth

* But lenders still struggle with loan demand, fee cuts (Updates with share prices)

By Maria Aspan

MIAMI BEACH, Fla., May 2 For the first time in years, U.S. credit card executives are looking beyond the losses of the financial crisis -- and they're even losing less sleep over the prospect of tighter government oversight.

Losses from credit defaults keep falling, an explosion in smartphone payment systems and other technology has raised the prospect of new long-term revenue growth, and executives now believe they can mitigate the effects of the latest regulatory overhaul of the U.S. card industry.

"I am optimistic ... Nothing has been done that can't be rolled back quickly," longtime credit card executive Stephen Eulie said in an interview last week.

Eulie, who has worked at JPMorgan Chase & Co (JPM.N) and Citigroup Inc (C.N), is now the head of First National Bank of Omaha's [FINNB.UL] card unit, which runs credit card programs for companies, including Chrysler Group LLC (FIA.MI).

He spoke to Reuters last week on the sidelines of an annual credit card industry conference hosted by the publisher, SourceMedia. As in recent years, much of the conference was dominated by discussion about new regulation -- from the lingering effects of a sweeping credit card law passed in 2009, to the so-called Durbin amendment to last year's Dodd-Frank financial reform law.

That provision would slash processing fees merchants pay banks every time a customer uses a debit card to buy something. The fee cuts would cost U.S. banks an estimated $13 billion in annual revenues under rules the Federal Reserve proposed in December.

U.S. banks are also struggling to grow other sources of revenue, as consumers resist adding to their credit card balances. Revolving consumer credit fell at an annual rate of 4.1 percent, to $794 billion, in February, according to Fed data.

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Now banks are increasingly looking to new technology, such as mobile phone and ecommerce payments, to grow businesses in developing countries where people do not regularly use credit and debit cards.

Citigroup and American Express Co (AXP.N) executives emphasized those opportunities at the conference, using their keynote speeches to discuss new types of payments technology instead of regulation.

"We need to figure out ways in which we can grow our business in a way that aligns with what Durbin's rules are," former Citigroup credit cards chief Paul Galant, who now runs a new payments group for the bank, told Reuters in an interview.

"The cards businesses are incredibly vibrant and power virtually all of us today. These businesses are not going to disappear because of a single law."

CLOUDS CLEARING

The Fed was supposed to finalize its rules on debit fee limits a week before the conference, but said in March it needed more time to sort through an overwhelming number of comments on its proposals.

The delay has given some bankers and credit card executives hope a broad industry campaign in Washington to repeal or delay the debit fee cuts will ultimately be successful. Opponents of the crackdown are pushing for a vote soon on a proposal from Senator Jon Tester that would delay the rule for two years.

While "the odds are looking better for a DC fix, I don't think it's something that can be relied upon by the industry, because there are so many procedural hurdles" in Congress, Morgan Stanley (MS.N) analyst Adam Frisch said during a panel discussion at the conference.

Key Republican lawmaker Representative Spencer Bachus urged hundreds of small U.S. banks on Monday to "slay the dragons" when they battle Congress over the debit fee crackdown.

The debit card fee restrictions are only part of a slew of regulation affecting the payments industry since 2009. A sweeping credit card law passed that year restricted the fees and interest rate changes that lenders could levy on their customers.

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The Dodd-Frank law of last year also created a new consumer financial protection bureau that is expected to further scrutinize consumer lending practices.

Yet the atmosphere -- and attendance -- at the annual conference was the sunniest in years. About 750 bank employees, consultants and vendors descended on the Fontainebleau resort in Miami Beach, sipping pineapple-flavored water and sharing post-panel cocktails on a patio overlooking the ocean.

The crowd included employees of Bank of America Corp (BAC.N), JPMorgan Chase, Citigroup, American Express, MasterCard Inc (MA.N) and Visa Inc (V.N), as well as other large U.S. lenders and networks.

It was the conference's best attendance since 2008, when consumers started losing their jobs -- and stopped paying credit card bills -- in record numbers. As losses surged during the financial crisis, few lenders could afford either the expense or the reputation of sending employees to hobnob at a beach resort with the size and opulence of a French chateau.

But last week those employees were eager to talk about new business -- and to trade tips for recouping the revenue losses of whatever regulations are finalized. Banks, including JPMorgan Chase and Bank of America, have already started discontinuing perks on debit cards or added fees to checking account services that were once free.

As one conference attendee said, the industry is no longer focusing just on how to stop regulations: "Now it's, 'How do we get around it?'"

The shares of the top six credit card lenders were mixed on Monday, with American Express shares closing up about 1.2 percent and Citigroup closing down about 2.2 percent.

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Credit.com A World Without Subprime Loans? May 3, 2011 By Christopher Maag

Norman Googel thought he had done a pretty good job running payday lenders out of his state. As an assistant attorney general in West Virginia, Googel used the states usury law to close down payday lender storefronts, which had been using the charters of out-of-state banks to skirt state law.

We cracked down on that approach, Googel says. After that we thought, Well, now were done with payday lenders.

But in 2005, Googel received his first complaints about online payday loans. Internet loans quickly proved even more insidious than loans from brick-and-mortar stores. Their high fees sometimes amounted to interest rates as high as 780%, Googel says.

And because online payday loans are tied directly to the borrowers bank account, consumers often find themselves in a hole they can never escape.

Pretty soon people cant pay their mortgage, their car payments. They cant buy groceries, Googel says. Some people are just completely ruined. Its much harder to stop online payday lending.

The dangers of subprime loans are well-documented. In past articles, Credit.com has explored problems with payday loans, prepaid debit cards, subprime mortgages, high-fee credit cards and bank overdraft fees.

Nevertheless, subprime loans only exist because they accommodate a market demand, one that is unlikely to disappear. What, then, would happen if suddenly subprime loans were banned altogether?

The short answer: Many bad things.

If people need a loan, theyre going to get it, says Steven Schlein, spokesman for the Community Financial Services Association, the trade association for payday lenders. They might get it from an illegal web site. Some may go to the mob. Or maybe they go to a local bar where they hear they can get an illegal, short-term loan.

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Many consumer advocates agree. Simply outlawing certain types of loans doesnt necessarily leave consumers better off.

Lets say I get paid on Tuesday, but my rent is due Monday, says Rachel Schneider, innovation director at the Center for Financial Services Innovation. Banning payday loans doesnt solve the very real problem of cash flow mismatch for low-income people.

What would a world without subprime loans look like? To understand that, we need to look first at the many different kinds of subprime loans, and the ways in which they often hurt consumers who need them most. Next would be an examination of some real-life examples of what can happen when financial tools like payday loans are banned. Finally, we would try to imagine a world where subprime loans still exist, but are made more affordable and more useful for the average consumer through a combination of public regulation and private competition.

A Subprime Primer

Lets handle one question first: What is a subprime loan? The answer is probably best understood by recognizing what it is not. A prime loan is given to someone with prime credit, often defined as anyone with a credit score above 700. These people qualify for prime interest rates, which currently run about 4.7% on a typical 30-year fixed rate mortgage.

Anything below that is called subprime.

Of course, that is just technical definition. In reality, the lines between prime and subprime get blurred. During the housing boom, many people with prime credit received mortgage loans with subprime interest rates thanks to incentives from banks that paid brokers bigger bonuses (consumer advocates called them kickbacks) for every percentage point above prime they managed to write into the contract. In a study, the Federal Reserve found that 20% of subprime mortgages were given to borrowers who actually qualified for cheaper prime loans. And in other cases, some who took out subprime loans didnt even have a credit history. The proliferation of subprime loans issued between 2000 and 2007 led to the recent recession.

Subprime lending isnt limited to the mortgage industry. Auto title and tax refund anticipation loans, pawn brokers, rent-to-own stores, bank overdraft fees and payday loans also are forms of subprime loans.

Any of these loans can serve a useful purpose. Payday, tax anticipation and title loans, as well as pawn

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brokers, help people in financial emergencies get money now. Rent-to-own stores offer people new furniture and appliances with little or no money up-front, and no monetary penalties for failure to make regular payments. Subprime mortgage and car loans help people with low credit scores secure transportation and a place to live, and regular payments over time can help them improve their credit scores.

The documentation or collateral required to get a subprime loan varies. Some subprime loans require no collateral at all. A typical payday lender, meanwhile, requires borrowers to write a check in advance equal to their loan amount. Two weeks later, the store cashes the check and takes its fees directly from the borrowers bank account. Rent-to-own stores take a modest up-front payment, while auto title loans have uniquely stringent prerequisitesthey require borrowers to hand over the title of their cars and sometimes a copy of the keys.

Many consumer advocates say thats a serious problem.

Think about it. For most of the country, if you dont have a car, you cant really have a job. Youre really stuck, says Gary Rivlin, a former reporter for The New York Times who wrote Broke, USA, a book about high-priced financial products marketed to low-income people. Theres something really dastardly to it.

The Catch

As mentioned, many subprime loans dont require a credit check. Nor do they usually involve much other underwritingthe banking industrys term for guesstimating the chances that any given customer will actually repay a loan.

The lack of underwriting is both the blessing and the curse of subprime loans. Its a blessing because it means that anyoneanyonecan get a loan, regardless of income or credit history.

Im in the business of helping people get financing who are either credit-impaired or are on the middle to lower end of the economic spectrum, says Scott Allen, owner of Cash Time Auto Title Loans and president of the Arizona Title Loan Association.

Its a curse because no underwriting means higher risk for the lender that the borrower will fail to repay. Subprime lenders price according to that risk, charging significantly higher fees and interest rates.

Increased risk of fraud also contributes to higher costs. Remember that check the payday loan borrower has to write in advance? If the borrower writes a fake check, the lender loses money. That winds up

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being passed down to borrowers.

Youre lending on a short-term basis with a high transaction cost to borrowers who dont have a good history of repayment, Allen says. You have to charge a high interest rate in order to have a profitable business model.

When Does Subprime Become Predatory?

Federal regulators and consumer advocates have no problem with subprime lenders charging higher interest rates for riskier loans. They do have a problem with subprime loans that are so expensive that borrowers have little chance of repaying. They call such loans predatory, and accuse many payday and auto title lenders and others of preying on the working poor.

Obviously, a 391% annual percentage rate, thats bad, Schneider says. If someone doesnt have $300 now, theyre not likely to have it in three weeks.

Subprime lenders dispute this. I think that argument is total B.S., says Schlein. The average payday loan costs $15 to $17 per $100 borrowed, Schlein says. Because the loan only lasts two weeks, comparing that fee to a banks annual interest rate is an unfair sleight of hand.

Really you have all these elitists like Rachel Schneider, theyve never lived paycheck to paycheck, and they think they can manage other peoples finances, Schlein says.

The problem with Schleins defense of payday loans comes down to one word say consumer advocates: Churn. Most people who take out a payday loan dont have the money to pay the principal plus the fees at the end of two weeks, according to research by the Center for Responsible Lending. The average borrower flips a payday loan seven times before they can eventually afford to repay it, incurring new fees with every flip. Someone who borrows $300 may wind up paying $450 in fees, and still owe the original $300, the center found.

The payday industry gives out $27 billion in loans a year. Of that, $20 billion goes to borrowers who roll over their loans every two weeks.

Which means three-quarters of all payday lenders business is self-generated phantom demand, the center found, created by payday loans themselves.

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It seems fairly clear that for repeat payday loan borrowers of payday loans, something is structurally amiss in their financial lives, Schneider says.

Payday loans arent the only form of expensive short-term credit, of course. Tax anticipation loans cost borrowers between 77 and 140% APR, according to a study by the Consumer Federation of America.

The average car title loan comes with an annual interest rate of 264%, according to a study by the Tennessee Department of Financial Institutions. Online title loans have APRs as high as 652%, according to another Consumer Federation study. A quarter of borrowers who receive a title loan renew that loan seven or more times, the center found, trapping them in a cycle of debt. One out of seven title borrowers lose their cars.

Its not just gaudy title loan shops offering expensive, short-term credit. When consumers overdraw their bank accounts, the average transaction that puts them over the limit is worth $20, according to research by the Center for Responsible Lending. The average overdraft fee is $34. That translates to an interest rate of 170%.

Nationally, that means banks earn $23.7 billion in fees every year by extending just $21.3 billion in short -term credit, the center found.

This may be one of the few issues on which consumer advocates and payday lenders agree.

If we have to turn our fees into an annual percentage rate, why dont the banks have to put overdraft fees into APR? Schlein says. We would like people to make a comparison between our fees versus a 700% or 800% APR on overdraft.

A World Without Subprime Loans

Subprime loans fill a need for borrowers with poor credit while simultaneously trapping many in a cycle of debt. What if they were to disappear altogether? Its not as though the millions of Americans who use payday, auto title or other types of subprime loans will suddenly find themselves so rich they no longer need short-term loans.

The president could sign a bill tomorrow that puts a 36% cap on interest rates, says Rivlin, author of Broke, USA. But you still have the problem that half the population is a few paychecks away from having no money.

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That could leave consumers looking to options that are even worse than what currently exists. There have always been loan sharks and illegal lenders looking to profit from consumers short-term financial jams. Barring legitimate companies from making high-interest loans would open the door to such informal players.

Youre definitely going to have a black market and grey market lending. I dont know, maybe the mafia, says Schneider.

Short of turning to the mob, borrowers would likely also use more online payday loans, which are virtually unregulated and offer even more predatory terms than conventional payday loans. In 2009, a new law in Washington State took effect that limited consumers to eight payday loans per 12-month period.

Within a few months the laws sponsor, state Rep. Steve Kirby, started hearing reports of more consumers entering the wild, wild west of online payday loans, Kirby told the Tacoma News Tribune. By February 2011, Kirby proposed overturning his original measure.

Its much harder to stop online lending, Googel says. Internet payday lenders go to great lengths to hide their true whereabouts, and its often difficult just to find out their true business names.

Theres also evidence that payday and other subprime loans may serve a good purpose despite their risks and high cost. North Carolina and Georgia banned payday loans in 2001 and 2004 respectively. In both cases, households bounced more checks and filed for bankruptcy at higher rates after the laws were passed, according to research by the Brookings Institution.

After a natural disaster, communities with payday lenders tend to be more well off than communities without payday stores, reporting lower rates of foreclosure, deaths, alcohol and drug treatment, plus higher birth rates, according to research by Adair Morse at the University of Michigan.

Research and anecdotal experience appear to agree: Banning high-cost subprime loans doesnt work.

Putting a cap on the interest rate, that doesnt stop any citizens from going online to borrow at higher rates, says Schneider, which just leads to more loans being made outside of formal means.

Weed Out the Worst

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Outright bans may not be effective. But letting people continue to fall into debt traps isnt such a great idea, either.

Giving somebody a loan they cannot afford is not a way to help them out of financial difficulty, says Kathleen Day, spokeswoman for the Center for Responsible Lending.

Consumer advocates, independent researchers and some industry insiders propose an alternative, three-tiered strategy. First, unscrupulous companies should be weeded out. Second, mainstream businesses need incentives to enter the subprime market and find ways to provide credit that is better for consumers while still being profitable. Third, consumers need better education about how to make wise financial decisions.

The real problem here is that consumers of all incomes need access to credit to smooth out their income, Schneider says. The question is how to actually accomplish that in a reasonable way.

The DoddFrank Wall Street Reform and Consumer Protection Act, passed by Congress last year, already goes a long way toward ending some predatory abuses, Day says. The Consumer Financial Protection Bureau, which was created by the law, will have the power to regulate payday loans when it assumes power this summer. The act also bars lenders from making loans they know borrowers cannot afford, a protection from predatory mortgages like those made during the housing boom.

Weve already shown that better regulations can cut down on abuses without limiting access or raising costs of credit, Day says.

Even cracking down on Internet payday lenders is not impossible. After tracking down their correct addresses (most of which happen to be located inside the United States), Googel sends them letters asking them to stop giving loans to West Virginia residents.

To his surprise, most of them actually do.

The majority have ended up complying, Googel says.

Congress could go further, advocates say, by regulating overdraft fees, which will earn banks somewhere in the neighborhood of $38 billion this year, according to the Moebs economic research firm.

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Overdraft fees are very expensive short-term loans, says Janis Bowdler, director of the wealth building policy project at La Raza, a Latino civil rights group. At $35 per overdraft, that can add up really quickly for most families.

Help New Players Compete

Yet more weeding out could be accomplished by helping reputable companies compete in the notoriously cutthroat subprime market, and to offer financial services intended for low-income people, experts say. Some credit unions are doing it already. The North Carolina State Employees Credit Union offers payday loans for up to $500 with an interest rate of 12%.

A number of small credit unions in the Midwest and South offer the StretchPay payday loan with interest rates of 18% on loans up to $500.

There are these [alternatives] out there, Rivlin says. But theyre few and far between. Theyre also small, and so they dont have the advertising budget of a payday lender or, say, a big bank like Chase.

Decades ago, consumers who needed small loans would go first to their local bank. That market dried up significantly as the rise of credit cards enabled people to charge more purchases and postpone payment, Schneider says. But that doesnt help people with limited or poor credit histories who cannot qualify for credit cards, leaving them to use payday lenders and other expensive services.

One way to inject more competition into the subprime market is to return to the older form of lending, which involved larger loans repaid over a longer period of time. Higher loan amounts would allow lenders to do underwriting, says Bowdler. By spreading the payments out over several months, borrowers would avoid the double hit of repaying the full loan amount plus a hefty fee in two weeks.

The FDIC already has a program called the Alliance for Economic Inclusion, which helps financial institutions couple lower-interest payday and other subprime loans with no-fee bank accounts and other services that appeal to the working poor.

The best way is to extend out the payment terms, and give loans that are small dollar but longer repayment, Bowdler says.

Back to Credit School

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Finally, everyone agrees that better consumer education could help people avoid debt traps such as car title loans, or at least to better understand the terms and use such loans more wisely. Adair Morse of the University of Chicago has found consumer education to be surprisingly effective. Consumers who received payday loans that included written warnings about the cost of such loans over time were much less likely to take out multiple loans than consumers who received no such warnings, Morse found in a study published in the American Economic Review.

People have to know what an interest rate of 25% or 30% actually means, says Tom Quinn, Credit. coms expert on credit scoring. Consumers can use subprime loans to establish a payment history and gradually improve their credit score. But that has to be done with education.

The reality is that no one alive today is likely to see a world without subprime loans. Such loans take so many different shapes, and they evolve so quickly, that banning them might be a fools errand. Besides, in some cases subprime loans can actually help consumers, as long as the terms do not become predatory.

The question, then, is how to build a world where subprime loans work for consumers, rather than against them.

Right now, once they get that first payday loan, theyre doomed, Googel says. We see how our consumers have been really hurt by usury loans. So we need to try and stop that.

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Baltimore Sun Mortgage problems damage credit scores in different ways FICO debunks some myths on credit scores and mortgages May 2, 2011 By Eileen Ambrose

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Homeowners who are falling behind on a mortgage often worry just how much they might be damaging their credit score.

How much will a score be dinged if a payment is late a month or more? Or worse, what happens if the homeowner must resort to a short sale or winds up in foreclosure?

FICO, which produces the widely used credit score of the same name, says it has been getting many such questions from regulators, lenders, loan servicers and others who advise consumers with mortgage troubles.

So to answer those queries and to dispel some myths the company analyzed the effects of different mortgage scenarios on consumers with poor, good and excellent scores.

Lenders use credit scores to decide whether to extend credit and under what terms.

One of the big myths, FICO scores director Joanne Gaskin says, is that a short sale is better for a credit score than a foreclosure.

A short sale is a deal between the lender and homeowner, who finds a buyer to purchase the house for less than what's owed. In a foreclosure, the lender seizes the house and attempts to sell it to recoup its money.

In both cases, a lender gets back less than what's owed on the loan.

"Both are considered a default. There is little difference in impact," Gaskin says.

FICO scores range from 300 to 850; the higher the number, the better. In its analysis, FICO looked at three scores: 680, which is low; 720, good but not prime; and 780, something to brag about.

In a foreclosure or short sale, the low score would shed 85 to 105 points; the middle score would drop 130 to 150 points; and the high score would plunge 140 to 160 points. (When problems arise, the better your score, the harder you fall.)

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In certain cases, a short sale could be less damaging than a foreclosure. Credit scores are derived from information that lenders and others send to credit reporting agencies. Some lenders report a short sale without including the amount of debt the borrower didn't repay.

When a balance shortfall isn't reported, a score would be 35 points higher in a short sale than a foreclosure, FICO says.

That's not much, but there are better reasons to consider a short sale, says John Ulzheimer, president of consumer education for SmartCredit.com.

With a short sale, you're more likely to maintain the property and its value, which is good for the neighborhood and the lender, says Ulzheimer. And lenders might look more kindly on you in the future.

For example, if you're current on your mortgage and undergo a short sale, you still could qualify for a mortgage insured by the Federal Housing Administration. But after a foreclosure, homeowners must wait three years to be eligible for an FHA-backed loan.

Another myth about credit scores is that being one month late on the mortgage payment won't affect a score much, Gaskin says.

But once you're late, the damage is done. Being 30 days behind can be almost as bad as 90 days.

FICO found that those with low scores lost 60 to 80 points whether they were 30 or 90 days late. Those with top scores lost 90 to 110 points after being late one month; and dropped an extra 20 points if they were tardy three months.

"That first 30 days late makes a significant impact and it takes a good deal of time to repair that credit," Gaskin says.

A homeowner with a low score, for instance, needs nine months to recover from a late mortgage payment. But a consumer with a high score will need three years to bounce back from a 30-day late payment, FICO says.

Indeed, the higher the FICO score, the more damage delinquencies and defaults cause and the longer it takes to return to that old score.

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Vickie Gipson, director of foreclosure prevention at St. Ambrose Housing Aid Center in Baltimore, says she recommends that homeowners who are trying to recover from financial problems start rebuilding their score by paying bills on time.

"What you have to do is really look forward," she says. "When you face these kinds of devastating circumstances, yes, there is an impact, but you can get through it."

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Roll Call For-Profit Colleges Field Team of Top Lobbyists May 2, 2011 By Bennett Roth

They may not have ivy-covered campuses or rowing teams, but for-profit colleges that award degrees in nontraditional studies such as herbal sciences and golf management have hired the Ivy League of lobbyists to wage a high-dollar battle against federal rules that they claim could put them out of business.

There has been an all-hands-on-deck, said one lobbyist hired by a for-profit school, joking that there were so many lobbyists roaming Capitol Hill on the issue that they are stumbling over each other.

There may well be a shortage of lobbyists if they keep up the pattern of hiring every former Member of Congress and K Street lobbying shop, said Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers.

Nassirian has been an outspoken critic of for-profit colleges, which he and others argue are making handsome profits by encouraging students to go deeply in debt with federally backed loans for programs that are of disputed merit.

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Last year the Education Department moved to clamp down on for-profit colleges by drafting rules that would cut off federal loans to programs where students had high default rates and debt compared to projected annual income.

The schools have responded that the gainful employment rule was unfairly designed and could force them to shutter programs. They furiously lobbied Congress, prompting the House, with bipartisan support including Minority Leader Nancy Pelosi (D-Calif.) to approve a rider to this years budget that would have barred the department from implementing the rules.

However, in the final negotiations, Congressional leaders dropped the provision, which was opposed by powerful Senate Democrats, including Majority Whip Dick Durbin (Ill.) and Health, Education, Labor and Pensions Chairman Tom Harkin (Iowa), whose panel held a series of hearings on for-profit colleges.

Among the influential opponents of these for-profit colleges is Steve Eisman, the equity trader who foresaw the subprime mortgage crisis and profited by short selling those stocks. Eisman, who was profiled in Michael Lewis best-selling book The Big Short, testified before Harkins committee last year about his concern that the for-profit college industry boom, driven by easy access to federal loans, could be as destructive as the mortgage meltdown. The for-profit colleges have responded that Wall Street traders such as Eisman are attacking these schools to depress their stocks so these short sellers can make more money. The Education Department inspector general is looking into those charges at the request of two Senators.

Officials from these education companies say their next step will likely be determined by how extensively the administration revises the rule on student loans. Education Department spokesman Justin Hamilton said Friday that regulations would be published soon.

Everyone in this town seems to have a lobbyist fighting for them, except for these students, Hamilton said. We need to make sure that they are getting what they are paying for, skills for a good-paying job.

The debate includes other Wall Street players that now own for-profit colleges. For example, Goldman Sachs has a financial interest in the Pittsburgh-based Education Management Corp., which runs forprofit colleges. Its board chairman is former Maine Gov. John McKernan (R), the husband of Sen. Olympia Snowe (R-Maine).

Last week 118 lawmakers wrote a letter to President Barack Obama urging the Education Department to withdraw the regulations. The letter signed by prominent Republicans such as House Education and Workforce Chairman John Kline (Minn.) and a number of veteran Democrats including Reps. Alcee Hastings (Fla.) and Robert Andrews (N.J.) argued the rules would hurt the most at-risk students. The group urged the department to work with Congress to develop polices that would truly protect

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taxpayers funds and measure and improve educational quality across all sectors of higher education.

If the rules are not changed to their satisfaction, college officials say they will keep pressuring lawmakers to attach provisions to future budget bills or other legislation to prevent the restrictions from taking effect.

The legislative vehicle option is still around, said Harris Miller, president of the Association of Private Sector Colleges and Universities. The group, which represents for-profit schools, spent $247,000 in federal lobbying in the first quarter of this year, more than double what it spent for the same period of 2010. As part of its lobbying effort the group has retained the Podesta Group, led by Tony Podesta, an influential Democratic fundraiser.

The association has been joined by others who have put together all-star teams to lobby on the issue. For example, Kaplan University, which is owned by the Washington Post Co., paid $110,00 to Akin Gump Strauss Hauer & Feld in the first quarter of this year to lobby on the issue and $90,000 to Ogilvy Government Relations. Vic Fazio, a former Democratic Congressman from California, is a leader on the Akin Gump team, while GOP operative Wayne Berman leads the Ogilvy effort. The Washington Post Co. has also retained the Democratically connected firm of Elmendorf Ryan to make its case.

Last summer, the heads of two private equity firms that have financial stakes in for-profit colleges, Avy Stein, managing partner of Willis Stein & Partners in Chicago, and Lincoln Frank, managing partner of Quad Partners in New York, launched the Coalition for Educational Success to fight against restrictions on their schools.

According to Quad Partners website, the group has 13 schools in its portfolio, which are also listed by the coalition as members. They include the Marinello Schools of Beauty, offering training in the salon/spa industry; the Culinary and Star Academies, which provide training in commercial cooking and baking and restaurant management; and the Pacific College of Oriental Medicine, which offers doctoral, masters, bachelors and associate degree programs in acupuncture, herbal medicine and massage.

Steins firms portfolio includes the Education Corp. of America, whose schools offer degrees in golf management, interior design, renewable energy, culinary arts and business.

To lead its lobbying efforts, the coalition hired Penny Lee, a former adviser to Senate Majority Leader Harry Reid (D-Nev.) who is now president of Venn Strategies, a government public affairs firm.

The coalition originally hired Lanny Davis, former general counsel for President Bill Clinton, to be its advocate, but it dropped him after news reports that Davis was representing Ivory Coast President Laurent Gbagbo, who has been accused of violating human rights. Davis, however, is now working with the National Black Chamber of Commerce, which last week issued a news release attacking the

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Education Department for its regulations on for-profit colleges.

Lee defended the for-profit schools, saying they fill a necessary void by offering training for nontraditional students. What matters is the quality of education, not the ownership of these schools, she said.

Other lobbyists for the coalition are the Wexler & Walker Public Policy Associates, which includes former Rep. Robert Walker (R-Pa.), and Chicago-based Singer Consulting. The firms head, William Singer, reported in his first-quarter lobbying disclosure that he had spoken with Durbin and White House Chief of Staff William Daley about the for-profit colleges.

Pressure to turn back the Education Department rules has also come from John Sperling, a prominent Democratic donor who is also the founder of the Apollo Group Inc., the parent company for the University of Phoenix. Sperling, who has been to Capitol Hill to lobby against the regulations, contributed $105,093 in the last election cycle, including $2,400 to Reid and $28,500 to the Democratic Congressional Campaign Committee, according to the Center for Responsive Politics.

Even though for-profit colleges lost the last round on Capitol Hill, Arthur Keiser, chancellor of Keiser University in Florida and chairman of the APSCU board, said the schools had no choice but to keep up their lobbying campaign. You either fight back, he said, or you die.

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U.S. PIRG Consumer Blog USA Today backs consumer bureau; big fight coming Wednesday, I discuss on C-Span (with video) May 2, 2011 By Ed Mierzwinski

USA Today's lead editorial today is "Our view: GOP prepares to gut new consumer protection bureau"

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-- it also includes a rebuttal from an opponent of the CFPB, Rep. Shelley Moore Capito, who will preside over a House subcommittee vote Wednesday, where instead of hi-lighters to "mark up" the bill, they'll be using what Professor Elizabeth Warren called on The Daily Show last week a "knife to the ribs" of the most important consumer protection reform since deposit insurance.

Saturday morning, I discussed the importance of and the threats to the CFPB on C-Span Washington Journal with host Pedro Echevarria also (video and transcript).

My previous blog explains the problems with the three bills that the subcommittee will likely consider (the Public Interest Vote will be No on these bills). The committee will consider HR 1315 (Duffy-R-WI) to strengthen an existing veto by other regulators over the CFPB's (its website) consumer protection decisions. It will also consider HR 1121 (Chairman Bachus-R-AL) to replace its yet-to-be-named director with a 5-member commission. It will also consider an as yet unfiled proposal by Rep. Capito to delay the CFPB's start date of July 21 until it has a Senate-confirmed director. In addition to that previous blog, see PIRG and Americans for Financial Reform-backed testimony from Hilary Shelton of the NAACP and Professor Adam Levitin at a hearing on the bills.

Meanwhile, the bank-friendly regulator known as the Office of the Comptroller of the Currency (OCC), which ignored a decade of unfair and dangerous practices by national banks while simultaneously preempting state Attorneys General from taking remedial action, marches on without a Senateconfirmed director, just an unelected, unnominated acting bureaucrat at the helm. Go figure.

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Huffington Post Banks Should Pay for the Foreclosure Crisis May 2, 2011 By Peter Dreier

The epidemic of foreclosures that began in 2008 has been devastating America's families, communities and economy.

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Nowhere is this more true than in California, where one in five U.S. foreclosures has taken place. Since 2008, more than 1.2 million Californians have lost their homes, and the number is expected to exceed 2 million by the end of next year. More than a third of California homeowners with a mortgage already owe more on their mortgages than their homes are worth.

As a result, home values in the state are estimated to plummet by $632 billion. That translates into a loss of more than $3.8 billion in property taxes. One foreclosed home in a neighborhood can reduce property values for the rest of the houses in the neighborhood, and a cluster of foreclosed houses compounds the physical, economic, and social devastation.

And just as local governments are starving for revenues, they are asked to deal with the increased costs -- estimated at $17.4 billion over four years -- caused by the foreclosure mess. These include public safety, maintenance of abandoned and blighted properties, inspections, trash removal, sheriff evictions, unpaid water and sewer charges, and the provision of emergency shelter.

We can't solve California's fiscal disaster without addressing the foreclosure crisis. It doesn't make sense to make severe cuts to state and local budgets only to allow Wall Street banks and their overpaid CEOs to drain billions more from our states. The banks created the housing crisis with toxic lending practices and they need to be part of this solution.

A bill sponsored by Assemblyman Bob Blumenfield (Democrat, Los Angeles) -- the Foreclosure Mitigation Fee (AB 935), which is currently going through legislative hearings -- would require banks to pay their share of foreclosure costs. Backed by a broad coalition of consumer, community and labor groups, the bill would impose a $20,000 fine on banks for each foreclosure. If the bill passes in California, it could encourage other states to support comparable legislation and help energize a movement to reign in Wall Street abuses.

The fee would generate about $12 billion in revenue over next two years. This would go entirely to local communities in order offset the multiple costs borne by our neighborhoods because of foreclosures and shared between public safety, public education, local governments, redevelopment activities and small businesses.

Los Angeles County alone will face an estimated 381,461 foreclosures through 2012, costing local governments $918 million in lost property taxes and $2.8 billion to pay for the problems. Riverside and San Bernardino counties have been particularly hard hit by the foreclosure earthquake. But no county, city, or small town in California has been spared the devastation.

Indeed, the foreclosure tsunami and the housing market crash are the primary causes of the severe budget crisis facing California's municipalities and counties, forcing local officials to slash services and lay off tens of thousands of employees.

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But many Californians are asking, why should taxpayers and communities have to pick up the tab, and face such hard times, for a crisis they didn't cause? They -- and the families caught in the maelstrom -are the victims of this human-made disaster.

And let's be frank. Wall Street's reckless and predatory lending practices were responsible for the mess we're now in. Bankers pushed homeowners into high-cost loans they couldn't afford. They engaged in deceptive and often illegal activities, like not informing consumers that they qualified for conventional loans, tricking them into more costly and risky subprime mortgages.

Wall Street banks bundled these risky loans into "mortgage backed securities" that were given the sealof-approval of ratings agencies (Moody's and Standard & Poor's), and then sold them to foreign governments, pension funds and other unwitting investors. When the scam imploded and Wall Street's bets went sour, the bankers were bailed out by the taxpayers. Goldman Sachs got $53 billion in bailout funds; Bank of America received $230 billion; Wells Fargo pocketed $43 billion. Meanwhile, the top executives got outrageous compensation packages. Last year, for example, Wells Fargo CEO John Stumpf received $17.1 million in salary and bonuses.

But California residents lost billions in savings in their homes, neighborhoods were devastated, businesses crashed and laid off employees, and local governments spiraled downward into fiscal hell.

The largest banks -- Bank of America, JP Morgan Chase, Wells Fargo, and Citigroup -- are among the top lenders foreclosing on California families. Not surprisingly, these are among the banks that have been flooding Sacramento with political cash in order to thwart legislation designed to make them -- the real culprits of the foreclosure massacre -- pay for the suffering they've caused.

Since 2007, the financial industry has spent $70 million to buy political influence in the state Capitol -that's nearly $50,000 per day. Almost $46 million went for campaign contributions to candidates and elected officials, while more than $23 million went for lobbying expenses.

Six banks alone - B of A, JP Morgan Chase, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley -- have invested more than $9 million in political cash. Lobbyists and industry associations, like the California Bankers Association, the California Independent Bankers Association, and the California Mortgage Bankers Association, have doled out $4.5 million in what some call our system of legalized bribery.

The key organizations behind this pro-consumer bill include the Alliance of Californians for Community Empowerment, the Service Employees International Union, the California Reinvestment Coalition, the community organizing group PICO California as well as the California Council of Churches, California Association of Retired Americans, California Labor Federation, California Nurses Association, the

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Center for Responsible Lending, and the State Building and Construction Trades Council. They correctly believe that California's economy can't recover without addressing the cost of the foreclosure crisis.

AB 935 doesn't solve the entire foreclosure calamity. But it does have several very positive aspects. First, it may create an added incentive for banks to modify more loans so that families can remain in their houses. So far, most banks have pushed the pause button when it comes to renegotiating troubled mortgages with owners who could lose their homes through no fault of their own. Second, the revenues collected from the foreclosure fee will reimburse local governments for some (though certainly not all) of the costs our communities are now facing from foreclosures.

Until we make the banks pony up for the devastation they've caused, the taxpayers are left holding the bag, subsidizing the reckless behavior of excessively paid top bank officers, who threw a huge party for themselves and are making the rest of us clean up their mess. That's not shared sacrifice.

Right now, Californians are bearing the full expense of the foreclosure mess. Shouldn't the big banks be part of solution to the problem they helped create?

Peter Dreier is E.P. Clapp Distinguished Professor of Politics and chair of the Urban & Environmental Policy Department at Occidental College. A version of this article appeared in the Los Angeles Daily News.

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The Tennesseean Banks try to hasten foreclosures in state Bill would hurt homeowners chance at best price May 3, 2011 By Susan Lynn

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Tennessee has one of the least restrictive foreclosure processes in the country. But Tennessee bankers hope to make foreclosure simpler in Tennessee.

Tennessee is one of only five non-judicial review states. We rank near the top for ease and speed of foreclosures; no courts, no judges, no long, drawn-out process. All a bank need do is:

1. Serve a single letter of notification to the homeowner.

2. Publish three public notices of foreclosure in the area newspaper.

3. Sell the property at auction.

The only way to slow down the process is to file for bankruptcy protection. Coincidentally, Tennessee has one of the highest bankruptcy rates in the country.

But House Bill 1920, written by the Tennessee Bankers Association,would simplify the process further to a single notice in the newspaper with no property description or even an address in the ad; just the deed book and page number from the county register of deeds office. The deed book and page number? Who could possibly understand where the property is while sitting at their kitchen table? One printing? Have I missed something? Isnt the point to encourage interest in the auction?

Foreclosure is a forced sale, and the debtor must make up any shortage between the difference in the amount received from the foreclosure sale and the amount that they owe to the bank. Advertisement of the sale serves to ensure that our free-market system of competition will increase the likelihood that bidders attend and drive up the price so that the debtor will incur as small of a deficiency as possible. The three advertisements and description help by notifying the public of the sale.

In other states, banks have to go before a judge it can take a year or more to foreclose. Tennessee bankers are fortunate to operate in a non-judicial review state.

Current law helps banks

There is a time-worn reason why the law requires that notices be published three times in the newspaper: The legal term is constructive notice it relieves banks of liability should a debtor claim that he or she did not receive notice by mail. The thrice publication is considered ample notice that the debtor could not have missed. Situations abound where elderly, separated or divorcing people had no

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idea their home was being foreclosed upon. Some were too embarrassed to seek help. But notice in the paper helped rescue their home.

In other instances, buyers, upon seeing an ad, have made an offer to the debtor and foreclosure was prevented. Each of these circumstances would be much less likely with fewer notices and such a vague description.

Banks also complain that notices are currently too long and thus advertising is costly. But the length of the ad is actually their own fault. The current law only requires a brief description and does not require the lengthy legal language that the banks customarily print; but even as it is done now, the average cost of an ad is about $230.

This is not a conservative or liberal issue, but one of fairness. A property owner deserves to get the best price for their home in a forced sale. The public deserves to know that a government-proscribed procedure, foreclosure, is creating an opportunity. In return, the bank is deemed to have acted in good faith when foreclosing on a home.

HB 1920 is scheduled to be heard today, May 3, in the House Judiciary Committee.

Susan Lynn, who lives in Mt. Juliet, is a former Tennessee legislator.

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New York Times (Bucks blog) Consumer Reports Offers New Comparison Tool May 2, 2011 By Ann Carrns

Consumer Reports has long offered rankings and comparisons of products as diverse as cars, vacuum

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cleaners and televisions. Now the magazines online counterpart, consumerreports.org, has teamed up with the bill comparison site Billshrink.com to help shoppers evaluate the services that go along with some of those products.

Billshrink, which was the subject of a previous Bucks post, aims to help consumers find the best deals on the services they use every day, like cellphone, television and cable service, as well as credit cards and even gasoline. Started three years ago, Billshrink lets consumers enter their own actual billing and use data they can allow the site direct access to their personal account information, if they wish and analyzes which provider and plan would save them the most money. If the consumer switches service as a result of the inquiry, Billshrink collects a fee from the new provider. The company has no preference for one provider over another, Schwark Satyavolu, Billshrinks chief executive, said. We consider ourselves the Consumer Reports of services.

Now, when visitors to consumerreports.org shop for, say, cellphones, they will also see a link to Billshrink, which will take them to a co-branded Web site where they can perhaps find a wireless plan that makes more sense than the one they currently have. (Visitors are first warned that they are leaving the Consumer Reports Web site). Visitors to the television set rankings can link to cable or satellite plans, and car shoppers will be offered the chance to search for better gasoline prices.

Consumer Reports, which forgoes advertising to maintain independence, will collect part of the fee Billshrink earns if the customer switches service, said Carol Lappin, director of business development for Consumer Reports. If theres an opportunity for people to really take charge of household bills and not overpay, thats great, she said. Any revenue Consumer Reports gets from the arrangement will go to finance its nonprofit consumer research mission, she said, and visitors are told of the fee arrangement when they click on the Billshrink link. Were not accepting anything directly from the provider, she said. Theres a vendor in the middle, so were arms length.

Ms. Lappin say the Billshrink tool is potentially helpful for consumers even if they just use it for research but ultimately contact their new vendor directly to make the switch. By bypassing Billshrink, consumers eliminate the chance of generating a fee. All that matters to us is that consumers get the information they need, Ms. Lappin said.

The service is available free to non-Consumer Reports subscribers (a subscription is required to access full ratings information).

Do you mind if Billshrink and Consumer Reports earn a fee from your decision to switch plans, or is that fair since the goal is to save you money?

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Housing Wire Mortgage servicing is too light on technology, MBA panel says May 2, 2011 By Kerri Panchuk

A general lack of investment in mortgage servicing technology is partly to blame for the dramatic rise in at-risk mortgages prior to the financial crisis, mortgage professionals said Monday.

Tech investments on the servicing side are needed to restart the secondary mortgage market, said Joe Filoseta, CEO of mortgage services technology firm DepotPoint. Filoseta said a lack of timely mortgage performance evaluation tools left investors in the dark and on the hook leading up to the credit crunch.

"This particular episode has truly exposed" weaknesses when it comes to what kind of platforms have been created to detect risk on the servicing side of the industry, Filoseta said during the Mortgage Bankers Association conference in New York. "We need to be able to see day-to-day what is going on in a particular portfolio," he asserted.

Filoseta said technology investments in mortgage finance are rarely made on the servicing side of the business, but the crisis has made it clear that trend should change.

His sentiments were echoed by Brendan Keane, senior vice president of the Valuation Group at CoreLogic, who told a panel during the MBA National Secondary Market Conference & Expo that "there is going to be an increase in due diligence on the loan level and the issuer level. These ratings agencies and buyers are going to be interested in who is making these loans," Keane said.

Clifford Rossi, executive-in-residence at the Robert H. Smith School of Business, said there are several key ingredients needed to restore confidence in the market, including prime origination and servicing data, upgraded technology, improved system integration and a renewed focused on data valuation and screening tools that detect risk.

"It's not about how many widgets you push through the system, it's about the quality of the widgets,"

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Rossi explained when describing the innovations that are needed to correct flaws in risk assessment and detection.

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From:

To: Cc:

Martinez, Zixta (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=martinezz> _DL_CFPB_AllHands </o=ustreasury/ou=do/cn=recipients/cn=_dl_cfpb_allhands> English, Leandra (CFPB) </o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=englistl> Weekly Outreach Calendar May 2-6, 2011 Tue May 03 2011 10:39:16 EDT

Bcc: Subject: Date: Attachments:

A few additions. ZQM

Events & Meetings w External Groups May 2-6, 2011 Monday, May 2, 2011 EW Meeting w Arkansas Bankers EW Meeting w Independent Community Bankers Asso (ICBA) EW Meeting w Illinois Bankers EVale Meeting w Connecticut Bankers DSilberman Meeting w PNC DSilberman Call w Green Dot

Tuesday, May 3, 2011 EW Call w National Credit Union Roundtable EW Meeting w Georgia Bankers ICBA Reception

Wednesday, May 4, 2011 EW in Little Rock, Arkansas EW Meeting w Consumer/Civil Rights groups in Little Rock, AR RDate Remarks Morgan Stanley Services Conference. Closed Press.

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HPetraeus Meeting w CUNA EVale Meeting w TN Bankers Asso

Thursday, May 5, 2011 EW in Little Rock, AR EW Meeting w AR Community Bankers EW Remarks at William J. Clinton School at the University of Arkansas. Open Press. LChanin Remarks at Payment Card Institute. Open Press. EV Meeting w Independent Bankers Asso of Texas (IBAT) RCordray Meeting w US Chamber of Commerce CStone & GHillebrand attending Consumer Data Industry Asso Briefing on Credit Reporting Accuracy PTwohig Meeting w Consumer Federation of America (CFA) DSilberman Meeting w CFA CStone Meeting w Equifax EV Meeting w MN Community Bankers

Friday, May 6, 2011 EW Calls w Community Bankers (NY, WV) HPetraeus Visit to Fort Bragg w Senator Kay Hagan

Saturday, May 7, 2011 HPetraeus Commencement Address at Methodist University

Last Week: Events & Meetings w External Groups Apr 25-29, 2011

Monday, April 25, 2011 EW & DSilberman Meeting w NetSpend

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Tuesday, April 26, 2001 DSilberman Quarterly Update w Chase CWest Meeting w Bank CEOs EVale Meeting w 100 community bankers & Connecticut Banking Commissioner in Hartford, CT

Wednesday, April 27, 2011 MBlow Meeting w Center for Financial Services Innovation GHillebrand Meeting w AARP ZQM Quarterly Meeting w Interagency Community Affairs PTwohig Meeting w Consumer Financial Services Association PMcCoy Meeting w Consumer Bankers Asso PMcCoy Meeting w American Enterprise Institute EVale & RChopra Meeting w Credit Union Student Choice EVale Meeting w former ABA President Ed Yingling

Thursday, April 28, 2011 EW keynote to AFL-CIO Lawyers Conference EW Meeting w Community Bankers DSilberman Meeting w Wells Fargo DSilberman & EVale Meeting w Citibank

Friday, April 29, 2011 EW Meeting w Americans for Financial Reform DSilberman Quarterly Meeting w Bank of America in North Carolina HPetraeus Meeting w Military Advocacy groups GHillebrand Meeting w The San Francisco Foundation

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Zixta Q. Martinez Assistant Director for Community Affairs Consumer Financial Protection Bureau 202.435.7204 www.consumerfinance.gov

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