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From: Gordon, Ashley (CFPB)  
To: _DL_CFPB_AllHands  
Cc: Adamske, Steven ; Moore, Megan; Hunt, AnitaMaria ; Wallace, Kim ; Wolin, Neal ; Warren, Elizabeth (CFPB); Fitzpayne,Alastair ; LeCompte, Jenni; Murray, Colleen ; Coloretti, Nani  
Subject: CFPB Press Clips 5.17.11 
Date: Tue May 2011 12:38:54 EDT 
Press Clips 5/17/2011 
Click publication title find its location this e-mail. Click article title its source website. 
Consumer Financial Protection Bureau 
Reverse Mortgages 
  MSN Money Banks attack consumer safeguards  
  American Banker Consumer Protection Gets More Emphasis, Separate House FDIC  
  Reverse Mortgage Daily CFPB Reform Bill Introduces Commissioner Who Will Oversee Banks continue efforts keep consumers 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 each American's access credit  
  USA Today What impact will users feel from plan cut debit card fees?  

 Huffington Post Confidential Federal Audits Accuse Five Biggest Mortgage Firms 
Defrauding Taxpayers 
 New York Times New York Investigates Banks Role Financial Crisis 
 Wall Street Journal New York Probes Banks Over Mortgage Securities 
 American Banker Higher Capital Minimums May Bring Mortgage MA Wave 
 American Banker Turn Dodd-Frank Resolution-Plan Proposal into Advantage 
 Boston Globe Mass. investigating top for-profit college 
 American Banker Growing Banks Seek Balance Bigger Scale With Old Community Feel 
MSN Money Banks attack consumer safeguards May 13, 2011 1:35pm Liz Weston 
The financial industry and its friends Congress are trying gut the Consumer Financial ProtectionBureau before even gets off the ground. 
Only one thing powerful enough beat special-interest money Congress, and that's public opinion. 
Which why now good time for you speak up. 
Banks are maneuvering gut the nascent Consumer Financial Protection Bureau before even gets off the ground. 
Yes, the same industry that brought you, among other goodies, the subprime mortgage crisis, anytime, any-reason rate hikes your credit cards, $39 fees for over-limit charges and hugebonuses for insiders while the economy imploded wants able keep unleashing such "financialinnovations" unsuspecting public. the banks have set their sights crippling the bureau. They've gotten their functionaries theHouse Representatives craft bills that would: 
Give veto power over the bureau the same regulators that failed prevent the last crisis. 
Replace the bureau's single director with five-member commission, further dilute its decision-making powers and authority. 
Prevent the bureau from even launching until Senate-confirmed director place, effectively holdingthe bureau hostage politics. 
Bureau held hostage 
The banks' representatives Congress know the majority lawmakers wouldn't along with theseshenanigans. Even the bills passed the House, the changes likely wouldn't make through the Senate. they found way around majority rule hold the bureau hostage. Forty-four Republican senators, including some who originally voted create the bureau, now say they won't confirm adirector unless major changes are made the bureau's structure, including instituting the multimembercommission, allowing other regulators have veto power and subjecting the bureau's funding annual congressional review the latter being the best way known humankind create weak and easilyintimidated agency. 
Make mistake: This all about power. Banks are terrified any regulator that might actually force them play fair with consumers. Proponents this nonsense are harrumphing that the bureau "too powerful," when what they mean that bureau might actually put the interests regular people aheadof those Congress' big donors. 
Those trying kill the bureau try paint killer jobs and innovation, when fact its mandate isto protect people from unsafe and deceptive financial products. Rather than craft more regulations, Elizabeth Warren, who setting the bureau President Barack Obama's request, has made clearthat the bureau will enforce those already the books and prevent banks from hiding tricks and traps the fine print. 
'Gotcha' capitalism 
Warren points out the obvious: Banks and other financial companies have replaced free-marketcapitalism with "gotcha" capitalism, where consumers are lured lowball upfront prices only slammed with unexpected and poorly disclosed fees. you have any doubt that real regulator needed, just look recent survey showing most banks failed produce list their fees even though federal law has required them maintain andprovide such lists since 1991. you can't even get bank tell you what your checking account will cost, how can you trust honest about the loans offers the other financial products it'spushing? its core, our recent financial crisis stemmed from risky and deceptive lending practices. Ourlawmakers have done little keep another financial crisis from happening, and now the banks'handmaidens are determined undo the little that Congress has done. 
What astonishes that more voters aren't calling their lawmakers the carpet for this flagrant kowtowing the financial industry. guess you were delighted about the bank bailouts, thought thosefat bonus checks bankers were great idea and don't care your government run for the benefit ofWall Street, then it's nothing. 
Otherwise, it's time contact your lawmakers and tell them stop trying kill the Consumer Financial Protection Bureau before even gets off the ground. 
You might say something like this: want you represent interests, not those Wall Street. Stop the banks' efforts gut the Consumer Financial Protection Bureau." 
Back Top American Banker 
Consumer Protection Gets More Emphasis, Separate House FDIC 
May 17, 2011 Joe Adler 
WASHINGTON  the government builds new regime for writing consumer protection rules, anexisting bank regulator has put twist enforcing them. 
For most the past decade the Federal Deposit Insurance Corp. had combined safety and soundnessoversight the same division with consumer compliance. But the wake the crisis and the creation the Consumer Financial Protection Bureau draft rules for all banks, the agency split the functionsinto two distinct arms, launching the Division Depositor and Consumer Protection. 
With the reorganization, the FDIC embraced model akin what tried after the thrift crisis the1980s and '90s. The agency said the new structure strengthens its focus compliance, retainsauthority 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 sparkle Elizabeth Warren's eye," the FDIC was "focusing consumer concerns that other bank regulators were ignoring, such overdraft lending and credit compliance related subprime issuers that they had jurisdiction over," said Travis Plunkett, legislative director for the Consumer Federation America. 
The new division does not appear about adding more responsibilities, but instead about giving the consumer role, including compliance exams and development guidance, more emphasis. 
"With safety and soundness, there are good times and there are bad times. The bulk our examination efforts and staffing are the risk management side," said Mark Pearce, former state regulator andconsumer advocate who directs the new division. "Having its own division structure ensures that maintain that consistent and dedicated focus consumer protection." 
Richard Riese, director the American Bankers Association's Center for Regulatory Compliance, said the division's importance that consumer compliance oversight "is now reporting line the [FDIC]chairman without going through safety and soundness." 
That increased stature comes all the agencies take new role under the Dodd-Frank Act:synchronizing their enforcement with the CFPB. The new agency, which will not formally inherit authorities until July and has yet have permanent director, will enforce its rules for companieswith assets more than $10 billion. But the FDIC and Federal Reserve Board will share enforcement for smaller banks with state charters, while the Office the Comptroller 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 onmoves the consumer protection bureau, including when the FDIC concerned about the effect ofproposed consumer rules community banks. 
"It was worthwhile doing regardless CFPB," but "it certainly has significant additional advantages interms coordinating with the CFPB," said Michael Calhoun, president the Center for Responsible Lending. 
Pearce, who was Calhoun's predecessor the center, agreed. 
"Having all the consumer protection efforts within one division hopefully will make easier for towork with the bureau collaborative and cooperative fashion," Pearce said. 
"Dodd-Frank encourages consultation," Pearce added. "We hope that consultation will real. TheFDIC  the primary federal regulator with the most community banks under supervision. Understanding the perspectives community banks and their operations  and bringing thatperspective bear the policy arena with the bureau something that intend do." announcing the new structure August, shortly after Dodd-Frank's enactment, the FDIC said thenew division would "provide increased visibility the FDIC's compliance examination and enforcement program." also houses staff specializing educating customers about deposit insurance. addition the new consumer division, the FDIC created office focusing the agency's authority under Dodd-Frank toresolve systemically important firms. 
Under the reorganization, which took effect mid-February, the former DSC was renamed the Divisionof Risk Management Supervision. 
After Pearce was hired the new division added two well-known figures from the policy and advocacy worlds. Jonathan Miller, who was key Democratic aide for the Senate Banking Committee during the drafting Dodd-Frank, was named deputy director the division charge 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 works with the new consumer bureau. 
"The staff that division have deep experiences from the public-interest point view and theregulatory point view helping protect consumers," said. "They will speak the same language. 
"It will very good thing for the CFPB hear from the FDIC, from people they know have strongcommitment consumer protection  hear from the point view the banks regulated theFDIC." 
This not the first time such reorganization has been attempted. 1994, after the savings and loancrisis, the agency formed the Division Compliance and Consumer Affairs, separating consumer protection from safety and soundness supervision. Eventually, after the industry had recovered and theFDIC had new leadership, went back the previous model. 2002, the two functions were consolidated the Division Supervision and Consumer Protection. 
"Obviously, the FDIC has had consumer protection responsibilities for long time and over that history there have been different ways organize our efforts," Pearce said. "We've had separate divisions inthe past, and merged those divisions together, and we've now taken look things and  having aseparate division makes sense." 
Before coming the FDIC, Pearce was chief deputy banking commissioner North Carolina, where the Center for Responsible Lending based. 
The state "was the forefront lot [consumer] issues," Calhoun said. "They set one the first foreclosure diversion programs.  saved thousands households. But North Carolina alsorightfully regarded having regulatory environment that friendly banks well." extent, the FDIC's decision split consumer compliance and safety and soundness regulationcorresponds with the broader debate leading the CFPB's creation. 
The Fed, which for years has had distinct consumer-oriented arm, lost its rule-writing authority thenew bureau under Dodd-Frank amid criticism the central bank failed its duties leading the crisis. report from the American Bankruptcy Institute cites the 61% figure the percentage increase offilers ages and over from 2002 2007, but fails mention anything about reverse mortgages. RMD contacted Rep. Velazquezs office seeking clarification her statements, but several attempts forcomment made email and phone were not returned press time. 
Rep. Carolyn Maloney (D-N.Y.) voiced her strong support the amendment, which she said wouldbring leadership and accountability the bureaus new offices for servicemember affairs and financial protection for older Americans. 
To have this additional protection and focus legitimate and appropriate, and will only serve ensure that the CFPB carries out its consumer protection mission with older Americans and with ourmen and women the military, she said. 
The amendment added the bill that passed vote late last week. 
Back Top 
Daily Kos 
Banks continue efforts keep consumers the dark 
MAY 16, 2011 07:00 PDT Joan McCarter 
The point banking supervision make the banks comply with the law and protect consumersfrom unnecessary financial risk the form shady practices banks. 
Nonprofit groups such Consumers Union and the Sunlight Foundation are pushing for opensystem that would allow anyone scan the raw submissions. Industry groups including the American Bankers Association argue that making them public could allow frivolous complaints damagereputable brands.... 
The hotline has become focal point philosophical debate about the bureaus rolewhether itshould aim improve consumer financial products primarily working directly with companies bringing public attention unfair practices. 
One could argue that the banks and financial institutions were complying with the law and providing good customer service and fair products, then they wouldn't have worry about even having any dirtylaundry air. Public exposure bad bank and financial institution practices has two key goals: providing information consumers they can make educated decisions about where put theirmoney, and keeping pressure institutions keep their noses clean. setting the bureau, Elizabeth Warren has argued for very 21st century, public approach: crowdsourcing. 
Warren has said that public database would allow consumers look for patternsa process knownas "crowd- sourcing"and make their decisions accordingly. 
"Through crowd-sourcing technology, consumers can deal collectively with those who would takeadvantage themand can reward those who provide excellent products and services," Warren said speech Oct. 28.... 
Warren addressed the consumer complaint system April meeting with groups that campaign for more open government, according blog post the agencys website. The groups urged Warren tomake the complaints public despite bank objections, said Angela Canterbury, director public policy the Project Government Oversight, watchdog group. 
"These concerns about consumer complaints the part industry reflect old-fashioned sensibility," Tom Lee, director Sunlight Labs the Sunlight Foundation, said interview. 
Lee, who attended the meeting, pointed out that report from the American Bankruptcy Institute cites the 61% figure the percentage increase offilers ages and over from 2002 2007, but fails mention anything about reverse mortgages. RMD contacted Rep. Velazquezs office seeking clarification her statements, but several attempts forcomment made email and phone were not returned press time. 
Rep. Carolyn Maloney (D-N.Y.) voiced her strong support the amendment, which she said wouldbring leadership and accountability the bureaus new offices for servicemember affairs and financial protection for older Americans. 
To have this additional protection and focus legitimate and appropriate, and will only serve ensure that the CFPB carries out its consumer protection mission with older Americans and with ourmen and women the military, she said. 
The amendment added the bill that passed vote late last week. 
Back Top 
Daily Kos 
Banks continue efforts keep consumers the dark 
MAY 16, 2011 07:00 PDT Joan McCarter 
There's fundamental aspect consumer financial protection that the banks just don't seem grasping, apparent this statement about the banks efforts keep the dark about fraud. Atissue here complaint line for consumers created the Consumer Financial ProtectionBureau, and whether these complaints should available public database. 
"The point banking supervision get the system working properly, not air dirty laundry and scare capital away from banks," Richard Riese, senior vice president the bankers associationsCenter for Regulatory Compliance, said interview. 
The point banking supervision make the banks comply with the law and protect consumersfrom unnecessary financial risk the form shady practices banks. 
Nonprofit groups such Consumers Union and the Sunlight Foundation are pushing for opensystem that would allow anyone scan the raw submissions. Industry groups including the American Bankers Association argue that making them public could allow frivolous complaints damagereputable brands.... 
The hotline has become focal point philosophical debate about the bureaus rolewhether itshould aim improve consumer financial products primarily working directly with companies bringing public attention unfair practices. 
One could argue that the banks and financial institutions were complying with the law and providing good customer service and fair products, then they wouldn't have worry about even having any dirtylaundry air. Public exposure bad bank and financial institution practices has two key goals: providing information consumers they can make educated decisions about where put theirmoney, and keeping pressure institutions keep their noses clean. setting the bureau, Elizabeth Warren has argued for very 21st century, public approach: crowdsourcing. 
Warren has said that public database would allow consumers look for patternsa process knownas "crowd- sourcing"and make their decisions accordingly. 
"Through crowd-sourcing technology, consumers can deal collectively with those who would takeadvantage themand can reward those who provide excellent products and services," Warren said speech Oct. 28.... 
Warren addressed the consumer complaint system April meeting with groups that campaign for more open government, according blog post the agencys website. The groups urged Warren tomake the complaints public despite bank objections, said Angela Canterbury, director public policy the Project Government Oversight, watchdog group. 
"These concerns about consumer complaints the part industry reflect old-fashioned sensibility," Tom Lee, director Sunlight Labs the Sunlight Foundation, said interview. 
Lee, who attended the meeting, pointed out that Inc. (AMZN) publishes unedited consumer complaints about products its website "and global capitalism has not ground halt." 
The whole point the Consumer Financial Protection Bureau just that: consumer protection. It's worked for the automobile industry, which has been subject similar system since 1966. TheNational Highway Transportation Safety Administration maintains public database. It's been fine for them, says Wade Newton, Wade Newton, spokesman for the Alliance Automobile Manufacturers."We compete consumer satisfaction.... The idea that have channel get feedback from ourcustomers good thing." 
Back Top 
Credit Union Times 
Consumer Protection Bureau Clash Follows Party Lines 
May 18, 2011 Claude Marx 
Maybe Bill Clinton was right. 
Everybody Congress and the Obama administration said they are for consumer protection.However, the debate over the new consumer bureau, seems the caseto paraphrase the former presidentthat depends what the meaning "consumer protection" is. 
The disagreements about the structure and leadership the Consumer Financial Protection Bureau are mostly breaking down along party lines. Being against consumer protection would like beingagainst apple pie. 
Last year, the Democratic-controlled Congress passed financial overhaul bill that created the bureau,which supposed begin operating May. 
Republicans fought the bill every turn and were especially opposed the new bureau. They arguedthat would duplicate the efforts existing regulators, punish those who didnt cause the financialcrisis and add regulatory burdens. 
Thats the argument that some credit union lobbyists made. They contended that since credit unions were among the angels the financial crisis, they didnt need additional regulatory burdens. 
Proving that many Washington policy clashes nothing ever really settled, the GOP trying re-fight that battle. House Republicans (who now control that chamber) are track pass series ofstructural changes the agency. 
Senate Republicans are threatening filibuster the confirmation anyone President Obamanominates run the bureau Obama and Senate Democrats dont agree structural changes the bureau. Senate Democrats, who hold majority seats but not the needed break filibuster, sayno dice. 
Obama could circumvent lawmakers and name new director recess appointment, which wouldallow him her serve until the end 2012. 
Such move would give Obama what wants the short term. would have someone running abureau that quite important him. And picked Elizabeth Warren, who came with the idea and charge setting the bureau, hed sending the political equivalent bouquet roses tohis liberal base. Thats important leading election since many the left think Obama has gonewobbly. 
The downside such move that would alienate congressional Republicans, whose votes heneeds certain bills. But since the GOP has said defeating Obama next November its No. priority, comity and bipartisanship may short supply during the next months.
Back Top 
How the Credit Rating Bureaus Favor Celebrities 
May 16, 2011 Alain Sherter Getting mistake fixed your credit report can ordeal  unless youre Mick Jagger. Reports theNYT: 
The three major agencies, Equifax, Experian and TransUnion, keep V.I.P. list sorts, according toconsumer lawyers and legal documents, consisting celebrities, politicians, judges and other influential people. Those the list  and they may not even realize they are  get special help fromworkers the United States fixing mistakes their credit reports. Any errors are usually correctedimmediately, one lawyer said. 
And the great unwashed? Disputes straight into the proverbial (and automated) black box, whereoverseas phone reps spend grand total two minutes trying sort our your problem. The credit bureaus are supposed 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 use credit data. one experttold the Times: 
There neutrality the credit reporting agencies, said John Ulzheimer, who has been expertwitness more than credit-related cases and president consumer education SmartCredit. com. They work for the lenders who buy credit reports from them, and anyone who suggests otherwiseis not being intellectually honest. 
Second, getting the bottom why, say, grandma suddenly stopped payment her Harley-Davidsonis expensive. Thats why some bureaus pay their outsourced contractors little cents try resolve customer complaint. Its also why reps commonly have dispute quotas requiring them blowthrough dozens fraud, identity theft other complaints per day. fact, Kevin Drum points out, thecredit agencies actually make money peddling services protect consumers from the bureaus own mistakes. 
Locked-in state 
Put another way, why would these companies wrack costs helping people who arent even theircustomers? the credit bureaus dont need consumers, contrast, consumers need the bureaus. Unless you havesatchels cash laying around, you obviously need decent credit history when comes to, say, buying car, attending college or, increasingly, even getting job. The upshot: Most consumers are captive companies that have little use for them. 
Under the law, meanwhile, consumers have little recourse forcing the credit bureaus correct anincorrect report. Given the importance good credit record these days, thats wrong. Its also economically counterproductive  people cant spend borrow their credit unfairly marred. 
The solution? Well, the Consumer Financial Protection Bureau survives the Republican hit-job inCongress, will have authority develop stricter dispute-resolution rules. The goal here ensurethat when mistakes crop your credit report, everyone can get some satisfaction. 
Back Top 
American Banker 
Prepaid Unemployment Benefit Cards Draw Fire from Consumer Group 
May 17, 2011 Will Hernandez 
Prepaid debit cards for unemployment benefits are under fire from consumer group that claims theyhave unnecessary and undisclosed costs. 
The National Consumer Law Center has singled out prepaid card issuers, particularly U.S. Bancorp andJPMorgan Chase Co. The organization was especially critical U.S. Bank, which charges $10 $20 overdraft fees prepaid cards issues Arkansas, Idaho, Nebraska, Ohio and Oregon. 
"There excuse for permitting overdraft fees drain funds from cash-strapped unemployed workers," the group said report, which was released May 10. 
But U.S. Bank counters that overdraft coverage opt-in feature for cardholders. "The terms are clearly disclosed cardholders are aware the fee should they need use it," bank spokeswoman said. She stressed that overdraft protection option states can choose add unemployment card program. 
The spokeswoman also challenged the group's claims that the overdraft charges might violate federal law. 
"All our products and services through rigorous regulatory compliance review," she said. 
The consumer group, which did not respond request for additional comment the report, also criticized Tennessee's prepaid debit unemployment card, which JPMorgan Chase issues. The reportclaims Tennessee's card had the most "junk fees" and claims that the state does not offer freewithdrawals ATMs. 
However, the Tennessee Department Labor and Workforce Development said cardholders maymake withdrawals for free MoneyPass JPMorgan Chase automated teller machines. ATM withdrawals elsewhere cost for the first two transactions and cents for each additional withdrawal. 
JPMorgan Chase said the states ultimately determine their fee schedules. 
The consumer group urged the Consumer Financial Protection Bureau ban overdraft and other"unfair" fees and improve transparency and competition requiring issuers place all fee schedules central location. remains unclear how the bureau will address prepaid debit cards. bureau representative last monthsaid did not have anything share yet regarding prepaid cards. The bureau, however, reaching outto industry players. 
Steve Streit, Green Dot Corp.'s chairman, president and chief executive, said last month that theprepaid card provider has been "very positively impressed [the bureau's] genuine outreach the industry and their high level understanding both our products and the customers serve." 
Green Dot recently was involved pilot test with the U.S. Treasury Department distribute 2010 tax refunds reloadable prepaid card accounts. 
Bonneville Bank, subsidiary Bonneville Bancorp, Provo, Utah, bank holding company, issued the cards. Green Dot has application buy Bonneville Bancorp pending regulator approval. 
Back Top 
iWatch News 
Unregulated FICO has key role each American's access credit 
May 17, 2011 Amy Biegelsen 
Like Kleenex Xerox, the word FICO has become shorthand for entire industry, this case thecredit scores that determine every Americans access loans, credit cards, apartment rentals andinsurance. 
Despite name that vaguely sounds like must federal something-or-other, FICO actually stands forFair Isaac Corp., Minneapolis company that creates proprietary mathematical algorithms used calculate consumer credit scores. But FICO, which had $605 million revenue last year, not directlyregulated any government agency and its credit rating formulas are secret. 
Credit scores boil down consumer payment histories short and long-term debts ranging from homeimprovement loan phone bills into three-digit number between 300 and 850. score over 650, for example, generally considered pretty good, while score 580 not. 
The scores largely determine whether people can qualify for mortgages, car loans, insurance, credit cards other major financial transactions. Bad scores can mean applicants will denied outright orpay higher rates. According Fair Isaac, A 100-point difference your FICO score could mean over $40,000 extra interest payments over the life 30-year mortgage $300,000 home loan. 
That number passport whether people can get ahead life, said Mierzwinski, director the 
U.S. Public Interest Research Groups consumer program. And nobody knows what its derived from. 
Consumer groups also complain that without knowing how the formula put together, theres way sure its reasonable accurate. Furthermore, they say errors credit reports can devastating,and difficult fix. one extreme example, Virginia man killed himself 2006 after repeated attempts correct aninaccurate credit history that blocked him from getting mortgage, according the National Consumer Law Center. Kenneth Baker, who had always paid his bills time left suicide note referring hisordeal failing clear his credit record the delinquencies and judgments that belonged another man with the same name. impartial government agency will soon issue its evaluation whether FICO and the credit bureaus are playing fair. 
The new Consumer Financial Protection Bureau has been specifically tasked with producing July study analyzing disparities reports the credit bureaus sell creditors and consumers. 
"You can buy [credit] bureau scores directly from the bureaus for fee, but the score they sell you may not the same score that lender might use. CFPB studying how much the scores you can buyfrom the bureaus are different from the ones the lenders use, and whether that difference important inhow lenders judge your credit worthiness," said Corey Stone, assistant director the agency's credit information markets team. 
FICO officials did not respond iWatch News requests for interview. 
How scoring works 
The FICO formulas dont anything their own; they are purchased credit risk information companies and applied individualized consumer data. 
TransUnion Corp., Equifax Inc. and Experian Plc  the three major credit bureaus  vacuum information customers payment histories with banks, retailers, credit cards, utility companies,landlords, mortgage loans, student loans, phone bills, and even parking tickets.Think this way: Ifcredit scores were chili, FICO would write various recipes then sell them the credit bureaus, which gather the raw ingredients themselves. 
The industry huge. 
Experian and TransUnion each say they have credit histories 500 million consumers worldwide. 
Experian, the industry leader, saw its revenue grow $3.9 billion last year while No. Equifax reportedsales nearly $1.9 billion. TransUnion, the third-largest credit bureau which was privately owned last year, had revenue more than billion, according one industry analysts estimate. 
Together, the three companies plus FICO control all this data and control the access credit for every American, said Chi Chi Wu, staff attorney the National Consumer Law Center. The main forcethats been keeping them somewhat line 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 complaints rather than acting advance stop any problems, leaving private lawsuits take theslack. 
The FTCs power make administrative rules that could proactively stop financial services abuses arecomplex, cumbersome and time-consuming, resulting rule making proceedings lasting many years,agency Chairman Jon Leibowitz told Congress last year. 
The new Consumer Financial Protection Bureau (CFPB), the other hand, will able write rulespolicing large participantsin certain financial markets. That means could potentially require reports and conduct examinations make sure the credit scorers currently comply with the law, not justenforce complaints after the fact. 
Equifax and TransUnion did not respond requests for comment. 
"We support the CFPBs study credit scores and believe will inevitably conclude that consumers arebest served focusing less the different types consumer credit scores available, and more onthe underlying document that used generate score  the credit report  and how can empowering tool for consumers," Experian said statement. 
Privacy concerns says that the U.S. form credit reporting relatively rare other countries. Privacy laws prevent companies from collecting personal data France and Argentina, while government agency compilesthe information some countries. 
FICO contends that credit scoring not invasion privacy because evaluates the same creditbureau report, application form, and bank file information that lenders already look at. 
A score simply numeric summary that information, the FICO website says. Scoring has provento accurate and consistent measure repayment for all people who have some credit history. 
Defenders FICO say federal law giving consumers free access one credit report each year alsogives them more power over their financial futures. 
Terry Clemans, executive director the National Credit Reporting Association, Inc. not convinced.While consumers can get free credit report each year, buy additional ones, says there guarantee they will reflect the score that credit bureaus give creditors. 
Its real roll the dice for consumer rely any score they can buy, because the score the lender buys may not even close, Clemans said. 
That because credit bureaus commonly buy multiple FICO algorithms. The credit bureaus use different ones generate scores depending what the end use will  general overview aconsumers credit history, for example, one tailored indicate default risk mortgage lender. 
Experian uses FICO-branded scores for its creditor reports, Clemans says, but the scores the companysells consumers are not calculated with FICO algorithm. 
Critics also say that the opaque credit scoring algorithms ignore the distinction between person whosuddenly falls behind payments because huge medical bill, and genuinely irresponsible borrower with flatscreen-TV habit. former FICO executive says those distinctions are eventually reflected the credit scoring formula. 
Efficient scoring cuts costs for consumers 
FICO trying build the best predictive model they can, said Tom Quinn, FICOs former vicepresident scoring who now works for the consumer education website If the data predicts different pattern, between people with different kinds debt, then that would picked upeventually. They let the data tell them whats fair. credit score also helps protect consumers from discrimination, Quinn said. The creditor looking atjust the information the credit, said, versus back the old days when you sat front loanofficer. 
The computerized system credit scoring and distributing also makes more efficient process credit applications, ultimately reducing the cost credit consumers. 
According Hoovers Inc., clearinghouse for company profiles and industry information, the newest FICO formula reduces penalties for multiple accounts and more lenient occasional late payments,which don't necessarily indicate poor credit risk. Additionally, authorized credit card users (such teenagers parent's account) longer benefit from activities the account owners, whichprevents artificial score inflation. 
Another concern consumer groups: Credit bureaus have little, any, financial incentive treatconsumers fairly. 
Before extending credit consumer, auto dealer landlord buys the customers credit scorefrom one the three big credit bureaus assess the risk default. That means the customer for thecredit bureaus the creditor, not the consumer, critics say. 
Consumers cant choose Equifax over Experian, said. I cant say I dont like the way TransUnionhandled data. even normal market forces, which are supposed keep the market line, dont. for increased transparency how scores are calculated, Quinn says the new consumer agencyshould have some insight into how FICO models are developed ensure fairness and accuracy. But too much sunlight might ultimately undo the consumer benefits that having trusted metric has brought. 
There are years and years and years intellectual property that have been built into these scores and[companies] should have right have that protected, Quinn said. If company like FICO were toreveal the coding for the model, then [consumers] could potentially use that manipulate their score for short-term benefit.  The creditor will lose confidence the tool and ultimately raise the cost creditfor everyone. 
The value the proprietary data underlying their business not lost the three credit bureaus, whichtogether spent more than million lobbying during the past four years (see related table). 
What will happen with oversight FICO and the credit bureaus may become clearer the newConsumer Financial Protection Bureau pulls itself together. The bureau, created the Dodd-Frank financial reform law, officially opens July 21, but political gridlock threatens stall the appointmentof director, and the agencys powers will limited until has one. Fair Isaac Corp. prepares for more attention, final note about its unusual moniker: The companywas named after its 1956 founders: Bill Fair, mathematician, and Earl Isaac, engineer. 
Back Top 
USA Today 
What impact will users feel from plan cut debit card fees? 
May 16, 2011 Sandra Block 
The battle about plan slash the fees retailers pay banks every time shopper uses debit card hasreached epic proportions, with both sides spending millions dollars 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 swipe fees "$12 billion gift retailers." Retailers have characterized proposals topostpone the fee reduction another bailout for the banking industry. 
Caught the cross hairs are consumers, who tend have dim view banks but don't have lot offaith retailers, either. March poll sponsored the Merchant Payments Coalition, group representing retailers, found that 70% likely voters favor reduction swipe fees, once the rule wasexplained them. But survey Javelin Strategy Research, bank consulting firm, found that 60%of consumers don't expect prices fall swipe fees are reduced. 
Danielle Haskell, 41, Monrovia, Calif., says retailers should pass savings from lower debit cardfees their customers, but adds, "I'd shocked out this world that ever happened." 
Sheila Sutherland, 61, Upstate New York, says that banks limit consumers' use debit cards which some have threatened  she'll back using cash: "I'm sick bank robbery  and it's the banks that are doing the robbing." 
The broad financial reform legislation that Congress enacted last year required the Federal Reserve toissue rules that place "reasonable" limits debit card fees. December, the Federal Reserveproposed capping fees cents per transaction, down from average cents. Since releasing the proposal, the Federal Reserve has received more than 11,000 comment letters. 
Amid the controversy, this much clear: The Fed rule, scheduled take effect July 21, could have far-reaching effects how consumers spend and save, ways that will both welcome and distasteful. 
Here are five ways reduction swipe fees could affect you: 
Discounts and perks for debit card users. the Federal Reserve's proposed rule enacted, debit card fees will sliced 70%, but the fees retailers pay when shoppers use credit cards won't beaffected. According the National Retail Federation, debit card fees average the cost transaction and would lower; credit card fees average and wouldn't change. That meansretailers will have huge incentive encourage customers use debit cards instead credit cards. 
Possible enticements include: 

Across-the-board discounts. Currently, many gas stations offer customers discount for using cash. reduction swipe fees could lead three prices the pump: one for cash, one for debit and one forcredit, says Mallory Duncan, general counsel for the National Retail Federation. 

Enhanced loyalty rewards. Retailers that already offer special deals for loyalty card holders could offereven lower prices when members use debit cards, Duncan says. For example, consumers who use grocery store club card might get additional discount steaks they pay with their debit cards, says. 

Extra services. Consumers who purchase luxury items and high-end appliances typically use creditcards, and small discount might not enough get them switch debit. result, retailers will look for other ways add value, Duncan says. For example, retailer might offer debit card users freedelivery, the case clothing, free alterations, says. 

Higher bank fees. Last month, Chase scrapped pilot program charge non-customers touse its ATMs. But while ATM fee appeared exceed what consumers will tolerate, many other fees will rise the Fed proposal enacted, bank analysts say. Most banks will end free checkingunless customers maintain minimum balance, predicts Robert Hammer, CEO R.K. Hammer, abank advisory firm. Customers who want paper credit card statements copies canceled checks will also have pay fee, says. 
Other services that are subsidized debit card fees include 24/7 customer service and online banking, says the Financial Services Roundtable, trade group. Without "reasonable" swipe fees, the group says, financial institutions "will required charge consumers for these services." 
Some consumer groups are concerned that banks' efforts make for lost debit card fees couldmake more difficult for low-income consumers afford basic bank account. The National Community Reinvestment Coalition, for example, has called the Fed delay the reduction swipefees until analyzes the potential impact low-income communities. 
The fee increases won't limited big banks, says Fred Becker, chief executive the NationalAssociation Federal Credit Unions. More than two-thirds NAFCU members said they're considering eliminating free checking the swipe-fee proposal adopted, Becker says, and more than half saidthey may lower interest rates savings accounts. 
Credit unions and small banks have been vociferous opponents the swipe-fee provision, even thoughthe legislation exempts institutions with assets less than $10 billion. "We don't think, practical matter, that two-tiered system will work," Becker says. It's unclear whether processing systems canbe adapted accept two different fees for debit cards, says. Credit unions and small banks also fear that retailers will refuse accept their debit cards. 
The Merchants Payments Coalition has dismissed that concern, arguing that it's bad business discriminate against customers based the debit cards they use. The group also contends thatMasterCard and Visa network rules require merchants accept all their debit cards, without regard tothe issuer. 
Better credit card rewards. Faced with sharply diminished revenue from debit cards, financialinstitutions are seeking ways encourage customers use credit cards instead, says Bill Hardekopf, chief executive One tried-and-true way offer airline miles, cash other rewards. March, for example, Capital One offered match 100,000 airline miles for customers whosigned for its Capital One Venture Rewards card (the program ended early April after Capital One gave away the billion miles allocated for the program). Customers who sign for the new ChaseFreedom Visa can earn $100 cash back they spend $500 the first three months.Other card issuers are offering cash back certain categories purchases, such gas groceries. qualify for these attractive rewards, though, card holders need excellent credit. The economicdownturn led jump credit card defaults, and financial institutions are still unwilling take risks,Hardekopf says. Their ideal customer, says, someone with high credit score who uses credit cards frequently  generating lots transaction fees  then pays the full bill every month. The waycard issuers compete for that elusive customer, Hardekopf says, "is upping rewards." 
Less favorable interest rates. More than half credit unions are considering lowering rates depositsif the swipe fee proposal enacted, according NAFCU survey. quarter said they would raise rates loans. 
Penalty interest rates for credit card holders could also skyrocket, Hammer says. Some banks are already charging penalty rates 30% new purchases when card holders make latepayment. few charge even higher rates for delinquent customers, says. Banks that haven't already boosted penalty rates probably will the future, depending how much they lose swipe-feerevenue, Hammer says. 
Fewer rewards, higher fees for debit cards. the past, banks had strong incentive rewardcustomers for using their debit cards, says Ken Lin, chief executive Credit, website that helps consumers improve their credit scores. Debit cards generated nearly much swipe fees ascredit cards, without the risk that customers wouldn't pay the bill, says. 
But cap fees would make such rewards programs unprofitable, Lin says. SunTrust, Wells Fargo,JPMorgan Chase and PNC Bank have already informed customers plans curtail phase outrewards programs. letter customers, SunTrust stated that the Fed proposal "will impact the economics theindustry's check card programs. result, SunTrust will longer offer the SunTrust Rewards Program for any SunTrust-issued check card." 
Once the cap fees goes into effect, Lin says, don't think you'll see anymore rewards-based debit cards." 
Also, banks might charge debit card holders annual fee unless they use their card specific number times month, Hammer says. Sixty-seven percent NAFCU members said they're consideringimposing annual monthly fee for debit card users. 
While consumers may miss the rewards and grouse about annual fees, they're unlikely abandondebit cards favor credit cards any time soon. Debit card payment volume exceeded credit card volume for the first time 2009, according Javelin, trend believed have continued 2010. Withmemories the recession still fresh, debit cards have become the preferred payment choice for consumers who want live within their means, analysts say. 
"The thrift mentality has taken over," Hammer says. 
"Banks are going have figure out how deal with it. 
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Confidential Federal Audits Accuse Five Biggest Mortgage Firms Defrauding Taxpayers 
May 16, 2011 4:42 Shahien Nasiripour 
WASHINGTON set confidential federal audits accuse the nations five largest mortgagecompanies defrauding taxpayers their handling foreclosures homes purchased withgovernment-backed loans, four officials briefed the findings told The Huffington Post. 
The five separate investigations were conducted the Department Housing and UrbanDevelopments inspector general and examined Bank America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial, the sources said. 
The audits accuse the five major lenders violating the False Claims Act, Civil War-era law crafted weapon against firms that swindle the government. The audits were completed between Februaryand March, the sources said. The internal watchdog office HUD referred its findings the Department Justice, which must now decide whether file charges. 
The federal audits mark the latest fallout from the national foreclosure crisis that followed the end long-running housing bubble. Amid reports last year that many large lenders improperly acceleratedforeclosure proceedings failing amass required paperwork, the federal agencies launched their own probes. 
The resulting reports read like veritable indictments major lenders, the sources said. State officials are now wielding the documents leverage their ongoing talks with mortgage companies aimed atforcing the firms agree pay fines resolve allegations routine violations their handling offoreclosures. 
The audits conclude that the banks effectively cheated taxpayers presenting the Federal HousingAdministration with false claims: They filed for federal reimbursement foreclosed homes that sold for less than the outstanding loan balance using defective and faulty documents. 
Two the firms, including Bank America, refused cooperate with the investigations, according tothe sources. The audit Bank America finds that the company the nations largest handler ofhome loans failed correct faulty foreclosure practices even after imposing moratorium that lifted last October. Back then, the bank said was resuming foreclosures, having satisfied itself that priorproblems had been solved. 
According the sources, the Wells Fargo investigation concludes that senior managers the firm, thefourth-largest American bank assets, broke civil laws. HUDs inspector general interviewed pair South Carolina public notaries who improperly signed off foreclosure filings for Wells, the sourcessaid. 
The investigations dovetail with separate probes state and federal agencies, who also haveexamined foreclosure filings and flawed mortgage practices amid widespread reports that major mortgage firms improperly initiated foreclosure proceedings unknown number Americanhomeowners. 
The FHA, whose defaulted loans the inspector general probed, last May began scrutinizing whethermortgage firms properly treated troubled borrowers who fell behind payments whose homes wereseized loans insured the agency. unit the Justice Department examining faulty court filings bankruptcy proceedings. Severalstates, including Illinois, are combing through foreclosure filings gauge the extent so-called robosigning and other defective practices, including illegal home repossessions. 
Representatives HUD and its inspector general declined comment. 
The internal audits have armed state officials with powerful new weapon they seek extract what they describe punitive fines from lawbreaking mortgage companies. coalition attorneys general from all states and state bank supervisors have joined HUD, the Treasury Department, the Justice Department and the Federal Trade Commission talks with the fivelargest mortgage servicers settle allegations illegal foreclosures and other shoddy practices. 
Such processes have potentially infected millions foreclosures, Federal Deposit InsuranceCorporation Chairman Sheila Bair told Senate panel Thursday. 
The five giant mortgage servicers, which collectively handle about three every five home loans,offered during contentious round negotiations last Tuesday pay billion set fund help distressed borrowers and settle the allegations. 
That offer also floated the Office the Comptroller the Currency February was deemed much too low state and federal officials. Associate U.S. Attorney General Tom Perrelli, who hasbeen leading the talks, last week threatened show the banks the confidential audits the firms knew the government side was not playing around, one official involved the negotiations said. Heultimately did not follow through, persuaded that the reports ought remain confidential, sources said.Through spokeswoman, Perrelli declined comment. 
Most the targeted banks have not seen the audits, federal official said, though they are generallyaware the findings. 
Some agencies involved the talks are calling for the five banks shell out much $30 billion,with even more costs incurred for improving their internal operations and modifying troubled borrowers home loans. 
But even that number would fall short legitimate compensation for the bank's harmful practices, reckons the nascent federal Bureau Consumer Financial Protection. taking shortcuts inprocessing troubled borrowers' home loans, the nation's five largest mortgage firms have directly saved themselves more than $20 billion since the housing crisis began 2007, according confidentialpresentation prepared for state attorneys general the agency and obtained The Huffington Post inMarch. Those pushing for larger package fines argue that the foreclosure crisis has spawned broader and more costly social ills, from the dislocation American families the continuedplunge home prices, effectively wiping out household savings. 
The Justice Department now contemplating whether use the HUD audits basis for civil andcriminal enforcement actions, the sources said. The False Claims Act allows the government 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 them face, the sources said. 
Earlier this month, Justice cited findings from HUD investigations lawsuit filed against Deutsche Bank AG, one the world's biggest banks assets, for least billion for defrauding taxpayersby "repeatedly" lying FHA securing taxpayer-backed insurance for thousands shoddy mortgages. March, HUD's inspector general found that more than percent loans underwritten FHA-approved lenders sample did not conform 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. declined specific. 
The agencys review later expanded flawed foreclosure practices. FHA, unit HUD, could still takeadministrative action against those firms for breaking FHA rules based its own probe. 
The confidential findings appear bolster state and federal officials their talks with the targetedbanks. The knowledge that they may face False Claims Act suits, addition state actions based amultitude claims like fraud local courts and consumer violations, will likely compel the banks offer the government more money resolve everything. 
But even that may not enough. 
Attorneys general numerous states, armed with what they portray incontrovertible evidence ofmass robo-signings from preliminary investigations, are probing mortgage practices more closely. 
The state Illinois has begun examining potentially-fraudulent court filings, looking the role playedby unit Lender Processing Services. Nevada and Arizona already launched lawsuits against Bank America. California keen launching its own suits, people familiar with the matter say. Delawaresent Mortgage Electronic Registration Systems Inc., which runs electronic registry mortgages, subpoena demanding answers questions. And New Yorks top law enforcer, Eric Schneiderman,wants conduct complete investigation into all facets mortgage banking, from fraudulent lending defective securitization practices faulty foreclosure documents and illegal home seizures. review about 2,800 loans that experienced foreclosure last year serviced the nation's largest mortgage firms found that least two them illegally foreclosed the homes "almost 50" active-duty military service members, violation federal law, according report this month from theGovernment Accountability Office. 
Those violations are likely only small fraction the number committed home loan companies,experts say, citing the small sample examined regulators. April report flawed mortgage servicing practices, federal bank supervisors said they could notprovide reliable estimate the number foreclosures that should not have proceeded." 
The review just 2,800 home loans foreclosure compares with nearly 2.9 million homes that received foreclosure filing last year, according RealtyTrac, California-based data provider. 
The extent the loss cannot determined until there comprehensive review the loan files and documentation the process dealing with problem loans, Bair said last week, warning damagesthat could take years materialize. 
Home prices have fallen over the past year, reversing gains made early the economic recovery,according data providers and CoreLogic. Sales new homes remain depressed, according the Commerce Department. More than quarter homeowners with mortgage owemore that debt than their home worth, according And more than million homes arein foreclosure, according Lender Processing Services. 
Rather than punishing banks for misdeeds, the administration now focused helping troubledborrowers the hope that will stanch the flood foreclosures and increase consumer confidence, officials involved the negotiations said. 
Levying penalties can't accomplish that goal, official involved the foreclosure probe talks argued last week. 
For their part, however, state officials want levy fines, according confidential term sheet reviewed last week HuffPost. Each state would then use the money desires, for facilitating shortsales, reducing mortgage principal, using the funds help defaulted borrowers move from their homes into rentals. report last week, analysts Moodys Investors Service predicted that while the losses incurred the banks will sizable, the credit rating agency does not expect them meaningfully impactcapital. 
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New York Investigates Banks Role Financial Crisis 
The New York attorney general has requested information and documents recent weeks from threemajor Wall Street banks about their mortgage securities operations during the credit boom, indicating the existence new investigation into practices that contributed billions mortgage losses. 
Officials Eric Schneidermans, office have also requested meetings with representatives from Bank America, Goldman Sachs and Morgan Stanley, according people briefed the matter who werenot authorized speak publicly. The inquiry appears quite broad, with the attorney generals requests for information covering many aspects the banks loan pooling operations. They bundledthousands home loans into securities that were then sold investors such pension funds, mutualfunds and insurance companies. unclear which parts the byzantine securitization process Mr. Schneiderman focusing on. Hisspokesman said the attorney general would not comment the investigation, which its early stages. 
Several civil suits have been filed federal and state regulators since the financial crisis erupted 2008, some which have generated settlements and fines, most prominently $550 million dealbetween Goldman Sachs and the Securities and Exchange Commission. 
But even more questions have been raised private lawsuits filed against the banks investors andothers who say they were victimized questionable securitization practices. Some litigants have contended, for example, that the banks dumped loans they knew troubled into securities and thenmisled investors about the quality those underlying mortgages when selling the investments. 
The possibility has also been raised that the banks did not disclose mortgage insurers the risks theinstruments they were agreeing insure against default. Another potential area inquiry  the billions dollars credit extended Wall Street aggressive mortgage lenders that allowed them tocontinue making questionable loans far longer than they otherwise could have done. 
Part what prosecutors have the advantage doing right now, here elsewhere, watching thecivil suits play out different parties fight over who bears the loss, said Daniel Richman, aprofessor law Columbia. Thats very productive source information. 
Officials Bank America and Goldman Sachs declined comment about the investigation; Morgan Stanley did not respond request for comment. 
During the mortgage boom, Wall Street firms bundled hundreds billions dollars home loans into securities that they sold profitably investors. After the real estate bubble burst, the perception tookhold that the securitization process performed the major investment banks contributed the losses generated the crisis. 
encouraged reckless lending because pooling the loans and selling them off allowed many participants avoid responsibility for the losses that followed. 
The requests for information Mr. Schneidermans office also seem confirm that the New York attorney general operating independently peers from other states who are negotiating broadsettlement with large banks over foreclosure practices. opening new inquiry into bank practices, Mr. Schneiderman has indicated his unwillingness toaccept one the settlements terms proposed financial institutions  that is, broad agreement regulators not conduct additional investigations into the banks activities during the mortgage crisis.Mr. Schneiderman has said recent weeks that signing such release was unacceptable. unclear whether Mr. Schneidermans investigation will pursued criminal civil matter. Inthe last few months, the offices staff has been expanding. March, Marc Minor, former head thesecurities division for the New Jersey attorney general, was named bureau chief the investor protection unit the New York attorney generals office. 
Early the financial crisis, Andrew Cuomo, the governor New York who preceded Mr.Schneiderman attorney general, began investigating Wall Streets role the debacle. But thoseinquiries did not result any cases filed against the major banks. Nevertheless, some material turned over Mr. Cuomos investigators may turn out helpful Mr. Schneidermans inquiry. 
Back Top Wall Street Journal New York Probes Banks Over Mortgage Securities May 17, 2011 Ruth Simon 
New York Attorney General Eric Schneiderman has opened investigation into the packaging ofmortgage loans into securities, the latest sign increased scrutiny the mortgage industry. 
Mr. Schneiderman will hold meetings with executives several major banks, including Bank AmericaCorp., Morgan Stanley and Goldman Sachs, according people familiar with the investigation. Heintends discuss securitization mortgage loans and other mortgage practices and has requested related documents from the firms, these people said. The meetings over securitization are expected tohappen the coming week. 
Spokesmen for Bank America, Goldman Sachs and Morgan Stanley declined comment. 
The New York inquiry comes just banks are trying resolve mortgage related problems various fronts. Federal officials and state attorneys general continue their efforts negotiate settlement theinvestigation questionable mortgage servicing practices, including "robo-signing," that came light last fall. 
Banks are also edging closer resolving civil-fraud charges related mortgage-bond deals. The Securities and Exchange Commission talks with number major Wall Street firms settleallegations fraud their sales collateralized debt obligations CDOs. Wall Street's trillion sales these complex pools mortgages and other loans lay the heart the financial crisis. 
Mr. Schneiderman, who took office this year, appears continuing the aggressive footsteps his predecessors, Andrew Cuomo and Eliot Spitzer. 
They have powerful legal tool their disposal. The 1921 Martin Act, revived Mr. Spitzer weapon against Wall Street, seen one the most potent prosecutorial tools against financialfraud. The sweeping definition fraud the Martin Act doesn't require prosecutors prove intent todefraud, contrast federal securities laws. The act has been used prosecute Wall Street firms for securities manipulation, improper allocation initial public offerings stock and misleading stockresearch Wall Street. 
Mr. Schneiderman has said for months that intends pursue investigations related the mortgage meltdown. has expressed concerns over the mortgage-servicing talks that broad deal could allow companies escape liability for future legal claims. 
The New York attorney general has also broadened his scrutiny the mortgage industry, investigating firms that have profited from the foreclosure boom. 
Mr. Schneiderman recently issued subpoenas two investment firms that own stakes paperwork-processing firm, according people familiar with the investigation. 
The firm, Pillar Holdings Inc., was spun off from the law firm Steven Baum, which handled nearly40% all foreclosure cases filed New York. Mr. Schneiderman investigating whether theinvestment firms profited from questionable foreclosure practices, people familiar with the matter said. 
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American Banker 
Higher Capital Minimums May Bring Mortgage MA Wave 
May 17, 2011 Paul Muolo 
Not only are mortgage bankers facing the prospect lower loan originations this year, but May 2013their minimum capital requirements will rise, increasing the likelihood merger and acquisition boom, according industry advisers. 
"They had better prepared," said Chuck Klein, managing partner Mortgage Banking Solutions Woodway, Texas. "The [capital] minimum rises but even they're $2.5 million, may not enough." 
Ideally, nonbank depositories that are selling loans Fannie Mae, Freddie Mac receiving guarantees from the Federal Housing Administration should have million million capital, Klein said. 
"It only takes one big hiccup rack losses," said. 
Klein said and his partners MBS are busy these days fielding phone calls from worried mortgagefirms. "We're lot discussions right now," Klein said, but declined name specific firms because confidentiality agreements. 
The government-sponsored enterprises and the FHA are phasing their capital minimums over three years, giving smaller lenders more time either raise additional funds find mortgage partner.Certain warehouse providers require minimum capital base million but that figure, too, will riseby 2013. 
Meanwhile, most lenders have reported their first-quarter production numbers (the publicly traded onesat least) with majority showing gain compared with the first quarter 2010 but steep decline from the fourth quarter, when rates bottomed out early December. 
Over the past months, roughly 70% loan production has entailed refinancings. With many eligible mortgagors already engaging refi, mortgage bankers said they now believe that purchase moneytransactions will dominate the business the second half the year. The wholesale/brokerage share fundings continues suffer, accounting for less than 10% fundings the first quarter, accordingto preliminary survey figures compiled National Mortgage News and the Quarterly Data Report. 
Brokers are still mad over new federal compensation rules that went into effect early April, which limithow they can compensated and prevent them from discounting their services consumers. The National Association Mortgage Brokers contemplating continuing court challenge the rule.Another broker trade group, the National Association Independent Housing Professionals, stillsorting through its options but not inclined use the courts this time. 
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American Banker 
Turn Dodd-Frank Resolution-Plan Proposal into Advantage 
May 17, 2011 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 withconsolidated assets over $50 billion and nonbank companies deemed systemically important submitannual resolution plans among the most challenging and has far-reaching implications. 
The proposal, issued for comment the Federal Deposit Insurance Corp. and the Federal Reserve,makes clear that this not just another compliance exercise. Rather, the preparation the resolution plan would require fundamental assessment bank's legal entity structure, how products andservices are delivered customers and, ultimately, the overall strategy the organization. Boards directors and senior management will need actively engaged making decisions and ultimatelyapprove the annual resolution plan submitted the FDIC and the Fed. 
Discussions with institutions indicate that many consider the preparation resolution plan adaunting task due the complexity the exercise and the short time frame for submitting the initialplan. The good news that banks begin through the process, some have already identified opportunities enhance shareholder value. the same time, the exercise could challenge existingbusiness models and require fresh look the institution's strategic plan. 
Here are some areas that need immediate consideration you draft resolution plan. important component analysis the bank's legal entity structure, including how subsidiariesare capitalized and funded. This analysis likely highlight the complexity within specificorganization and where the key interdependencies are for operational, technology, human resources, treasury and other shared services. addition, regulators will focused cross-border exposures; intercompany guarantees; back-toback trades; exposures booked one jurisdiction and managed another; and anything that couldpose impediment timely resolution. Senior management and the board directors will need consider the trade-offs between the value the current structure, operations, tax implications andinterdependencies against the risk that the FDIC and the Fed will require changes impose additionalcapital requirements that orderly resolution the organization could accomplished. 
Regulatory reform has already prompted many banks reassess their business models compliancecosts and capital requirements increase. The preparation resolution plan will provide further insights into the organization's opportunities  and obstacles. Banks will need evaluate and make decisions around the value derived from businesses that involve, for example, cross-border exposure activities that pose significant systemic risk the financial system, since regulators may force changessuch requiring legal entities able stand fully its own from capital, funding and management perspective, even mandate that business activity divested. This will test thestrategy the institution and will require crucial decisions around core versus noncore businesses andultimately the value certain activities compared with the compliance costs and regulatory requirements. 
Boards directors and senior management should not view resolution plans isolation from otherregulatory reform efforts. Rather, banks should use the resolution planning process reassess howcapital and funding allocated subsidiaries  especially light heightened requirements for both 
 and help put transparency risks and possibly introduce additional risk mitigation activities. Sinceresolution plans are focused legal entities, equally important that institutions also evaluate their governance and risk management processes  including identifying roles and responsibilities keyindividuals  for subsidiaries ensure the board directors and senior management have holisticview the risk and activities the enterprise. 
The preparation resolution plan will critical yet complex process that has wide implications forthe future individual banks and the industry whole. While the proposed requirements seem onerous, the process can help leaders identify opportunities realize improved operational efficiencies,reduce costs and allocate capital and funding across the enterprise more efficiently. 
Banks that can act quickly and take advantage these opportunities will much bettercompetitive and regulatory position. 
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Boston Globe 
Mass. investigating top for-profit college 
May 17, 2011 Todd Wallack 
The states growing investigation into the for-profit college industry now includes the countrys biggest player, the University Phoenix. 
The chains parent corporation, Apollo Group, which based Phoenix, yesterday said has receiveda demand for information about its recruiting and financing practices from Massachusetts Attorney General Martha Coakley. 
She recently sent similar requests Kaplan Career Institute Boston, owned The Washington PostCo., and the Everest Institute campuses Brighton and Chelsea, which are owned CorinthianColleges Inc. 
The University Phoenix the largest for-profit college the country, serving more than 400,000students more than 200 campuses, including three schools Massachusetts. Last fiscal year, reported $4.5 billion revenue, mostly from federal student grants and loans. documents filed with the Securities and Exchange Commission, Apollo said Coakleys office looking into whether for-profit educational institutions used unfair deceptive practices therecruitment students and the financing their educations. The company was asked provide nine years worth detailed information about its Massachusetts operations. statement, the school said was reviewing the letter but proud the education provides. 
Apollo Group committed being leader higher education and setting the gold standard intransparency, accountability, and robust student protections, said Chad Christian, company spokesman. 
State and federal officials across the country are investigating whether for-profit schools used high-pressure fraudulent tactics recruit students. The office Kentuckys attorney general, JackConway, said leading 11-state investigation. Coakleys office declined comment. 
The Government Accountability Office last year found recruiters schools gave deceptive orquestionable information investigators posing prospective students. Many students have complained the schools did little prepare them for jobs, leaving them unable pay their studentloans. 
We have lots indicators that the problems are systemic, said Pauline Abernathy, vice presidentfor the Institute for College Access Success, advocacy group Oakland, Calif. 
The for-profit school industry has exploded recent decades students increasingly look forspecialized training land jobs. According federal data, there were more than 3,000 for-profit schools serving least 1.8 million students 2008. 
But students the schools tend graduate with higher debt and more likely default than those nonprofit and public schools, federal data show. Though for-profit schools account for percent ofcollege students, they account for about half all student loan defaults, Abernathy said. 
The Department Education recently imposed new restrictions recruiters and proposed rules tocut 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, whomight have more trouble paying back their loans. They also insist they serve vital niche providing specialized training students who are not served other schools. 
Rebekah Mroz, 22-year-old single mother, recently sued Sullivan and Cogliano Training Centers Inc. Brockton, claiming falsely promised train her become certified medical assistant. Forexample, the lawsuit said, admissions officer assured Mroz she would receive training drawingblood and other medical tasks. 
But the school never provided live instruction, just coursework computer supervised proctor,according the lawsuit. When Mroz asked about learning draw blood, she said she learned that the program was actually for people who want become administrative assistant medical office. 
They advertised training program that they didnt teach, said her attorney, Marian Glaser ofBoston. 
Glaser said Mroz was stuck with $6,500 student loans. March, Plymouth Superior Court judge, Robert Cosgrove, rejected the schools request dismiss the suit, ruling part that the schools ads possessed tendency deceive readers.According the suit, the Council Occupational Education, regional accrediting agency, alsoordered the school stop advertising that offers training for medical assistants. 
The schools attorney, Steven Kramer Wellesley, acknowledged the ads were problematic, but saidthe school moved quickly correct them. And Kramer said that both the admissions officers and the forms Mroz signed made clear she was enrolling office program. 
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American Banker 
Growing Banks Seek Balance Bigger Scale With Old Community Feel 
May 17, 2011 Kate Davidson 
Second three parts 
Large community banks that aspire the next rung face critical challenge: expanding size and scope while maintaining their small-bank identity. 
Banks the cusp midsize status  not quite regionals, but not quite community banks anymore either  must find ways prove they will good corporate citizens their new markets, diversifyproducts and evaluate top-tier management meet the demands larger institution. 
The real trick will come making structural changes invisible possible outsiders. 
"There are two opposite things going on," said Mark Fitzgibbon, analyst Sandler O'Neill Partners LP. "Underneath, you're trying evolve and become much more complicated company, but thecustomer, you're trying maintain that small, hometown, local feel. It's delicate balance." 
The industry has resembled barbell recent years, with the number midtier, regional banksshrinking. Analysts and investors are looking new crop banks fill the gap, including First Niagara Financial Group and People's United Financial Inc. the Northeast, IberiaBank Corp. andHancock Holding Co. the Southeast and Umpqua Holdings Corp. the West. those companies expand into new territories via acquisitions, smaller banks are apt portray themas big out-of-town banks. Community outreach, such sponsoring local events, donating charitable causes financing community development projects, cannot underestimated, said Jason O'Donnell,an analyst Boenning Scattergood Inc. 
"What ends happening most cases the financial impact these philanthropic endeavors tendsnot significant, but the good will that's created the community huge," O'Donnell said. 
Several analysts said Buffalo's First Niagara example company using outreach. Shortly afterentering Philadelphia 2009, the company pledged $650,000 help close funding gap and keep the city's public swimming pools open, and establish program for free swimming lessons localYMCAs. 
When First Niagara moved into Connecticut this spring, agreed the lead sponsor the NewHaven Open Yale, part the Olympus U.S. Open Series, time when the tennis tournament'sorganizers said its future was doubt. 
John Koelmel, First Niagara's president and chief executive, said the company's goal establishitself the leading corporate citizen the new markets enters. 
"For it's about building those relationships, leveraging what exists, otherwise doing what needto better solidify those relationships that will important our long-term success better define how can contribute the long-term success and viability the markets that serve," Koelmelsaid. 
Another way break the big bank stigma dividing bank's footprint into smaller territories run byregional presidents, each whom has certain degree autonomy, along with mission build customer relationships and act the face the local bank each market. 
"It's their market, and they're responsible for it," said Daryl Byrd, the president and chief executive IberiaBank Lafayette, La., which has regional market presidents. 
Each Iberia's markets has its own advisory board made community leaders that meets twice week, Byrd said. The goal help members network, while the same keeping the bank touchwith its constituents. the Gulf South Bank Conference last week, for instance, Iberia hosted event for the advisory boards visit charter schools New Orleans. 
Advisory board members "were amazed this different way educate," Byrd said. "We got hugekudos, and that's idea they can take back their communities they choose." 
Such moves also benefit the company. "That tends provide with networking structure," Byrd added. 
There trade-off between localized decision-making and efficiency, O'Donnell cautioned. 
"Having large leadership team each core market  that's going create potentially someefficiency problems," O'Donnell said. "Conversely, you have leadership those markets, then you can make some poor decisions and that can come back bite you later." 
Finding and keeping the right people new markets critical, analysts said. Banks must work hard connect with customers, especially after acquisitions, lest they feel ignored unloved their growingbank. 
"You have make sure that you've locked the best commercial lenders and that you havemanagers the markets that you've acquired that are known commodities both commercial andretail customers those communities," said Matthew Kelley, analyst Sterne, Agee Leach Inc. some cases, limiting the pace change after acquisition can help mitigate customer shock, O'Donnell said. For instance, Hancock, Gulfport, Miss., which set buy Whitney Holding Corp. inNew Orleans, has said plans keep the Whitney name branches Texas, where Hancock hasno presence, and Louisiana, where the Whitney brand stronger. 
Midsize companies also need continually reevaluate upper level talent, Fitzgibbon said. think you become regional bank, you really need demonstrate the market that you'vebrought people with experience variety different kinds institutions and with broad enoughbackground that they can help you run this much larger company," Fitzgibbon said. 
First Niagara hired David Ring, former executive Wells Fargo Co., its New England regionalpresident this year. also hired new chief financial officer, Gregory Norwood, former president and chief risk officer for Ally Bank Detroit. 
The $23.8 billion-asset People's United Bridgeport, Conn., made similar move February, when ithired Kirk Walters, former senior executive vice president and director Santander Holdings USAInc., the parent Sovereign Bank, its chief financial officer. 
Ray Davis, the president and chief executive Umpqua Portland, Ore., said keeping employees happy keeps customers happy, too. That started with building culture Umpqua that empowerspeople make decisions their own, said. 
Over the last years, Umpqua expanded from six-branch bank 185 offices across the PacificNorthwest. the process, Davis said, Umpqua developed its own formula-based system for measuringservice, called return quality. 
"This has enabled our people compete our markets with more than price, and that huge," Davissaid. addition, Umpqua's employees have helped the company make Fortune magazine's "100 BestCompanies Work For" for the past five years. think most the time most companies  it's not just banks  most companies that just grow for thesake growth, basically they forsake their culture too many times," Davis said. 
"The challenge for  have able look back and say $30 billion [of assets that] we're stronger than were $12 billion," added. 
Editor's Note: This the second series about the plight today's midtier banks and the prospects for future ones. What's next: Some midtiers are fiercely fighting stay independent. 
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From: Martinez, Zixta (CFPB)  
To: _DL_CFPB_AllHands  
Cc: English, Leandra (CFPB)
	Subject: Weekly Outreach Calendar May 20, 2011
	Date: Mon May 2011 17:10:49 EDT
Events Meetings w/External Groups May 16-20, 2011 
Monday, May 16, 2011 Meeting FSR DSilberman Meeting 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 Your Money Matters: Financial Consumer Protection for Todays Economyw/Representative Chris Van Hollen 
EVale Call Time NAFCU 
Wednesday, May 18, 2011 TILA RESPA Interagency Roundtable TILA RESPA Press Teleconference TILA RESPA Hill Briefing DSilberman Meeting Pew Safe Card Project HPetraeus Meeting OSA  Americas Promise Alliance Thursday, May 19, 2011 EWarren Call Time Community Bankers (New York Alabama) EVale Remarks New Hampshire/Vermont Community Bankers GHillebrand New Media staff Meeting Americans for Financial Reform PMcCoy Meeting LoanSifter CStone Meeting Pew Research 
Friday, May 20, 2011 HPetraeus Meeting with Wright-Patterson Credit Union 
Zixta Martinez Assistant Director for Community Affairs Consumer Financial Protection Bureau 202.435.7204 
From: Adeyemo, Adewale (Wally) (CFPB)  
To: Abney, Wilson (CFPB) ; Adeyemo, Adewale(Wally) (CFPB) ; Alag, Sartaj (CFPB); Antonakes, Steve(CFPB) ; Antonellis, Sherry (CFPB) ; Assebab, Catherine (CFPB) ; Bach, Mary(Stacey)(CFPB) ; Basham, Stephanie(CFPB) ; Bateman, Jon(CFPB) ; Bernstein, Ethan (CFPB) ; Betts, Kristina (CFPB) ; Black, Brad (CFPB); Blanton, Mary ; Blenkinsopp, Alexander (CFPB) ; Blow, Marla (CFPB) ; Blumenthal, Pamela(CFPB) ; Boateng, W.(Kwadwo)(CFPB) ; Boenau, Susan(CFPB) ; Botelho, Michael (CFPB) ; Breslaw, April (CFPB) ; Brolin, John(CFPB) ; Brown, Allison(CFPB) ; Brown, Amy (CFPB); Brown, Charles (CFPB) ; Brown, Lawrence (CFPB) ; Brown, Robert  (CFPB) ; Brown, Trina (CFPB) ; Burniston, Tim (CFPB) ; Burton, Matthew(CFPB) ; Callan, Nicole(CFPB) ; Campbell, Michael(CFPB) ; Canfield, Anna(CFPB) ; Cantrell, Diane (CFPB) ; Carroll, Peter (CFPB) ; Chandler, Deidra(CFPB) ; Chanin, Leonard(CFPB) ; Chopra, Rohit(CFPB) ; Chow, Edwin (CFPB) ; Chuhaj, Yuri ; Cochran,Kelly (CFPB) ; Coleman, John (CFPB) ; Coney, Steven (CFPB) ; Cordray, Richard(CFPB) ; Coyle, Raymond(CFPB) ; Craft, Nadine (CFPB) ; Cronan, Russell (CFPB) ; Cronin, Katherine(CFPB) ; Cumpiano, Flavio(CFPB) ; D'Amico,Christina ; Darling, Eben (CFPB) ; Date, Rajeev (CFPB) ; Davidson, Terri L; Decker, Sharon (CFPB) ; Deutsch, Rebecca (CFPB) ; Dickman, Marilyn(CFPB) ; DiPalma, Nikki  (CFPB) ; Dokko, Jane(CFPB) ; Donoghue, Kristen(CFPB) ; Dorsey, Darian (CFPB) ; Duncan, Timothy (CFPB) ; Egerman, Mark (CFPB) ; Elliott, Brandace(CFPB) ; English, Jared(CFPB) ; English,Leandra (CFPB) ; Forrest, David (CFPB) ; Fravel, Wesley (CFPB) ; Frotman, Seth(CFPB) ; Fuchs, Meredith(CFPB) ; Galicki, Joshua(CFPB) ; Gao, Jane (CFPB) ; Geary, John (CFPB) ; Geldon, Daniel(CFPB) ; Gelfond, Rebecca(CFPB) ; Glaser, Elizabeth(CFPB) ; Goldfarb, Rachael(CFPB) ; Gonzalez, Roberto (CFPB) ; Gordon, Ashley (CFPB) ; Gordon, Michael(CFPB) ; Gorski, Stephanie(CFPB) ; Gragan, David (CFPB); Granat, Rochelle ; Gregorio,Laurie (CFPB) ; Griffin, Mary (CFPB) ; Grover,Eric (CFPB) ; Gupta, Neeraj  (CFPB) ; Hackett, Richard(CFPB) ; Hammonds, Jamice(CFPB) ; Hancock, Gary (CFPB) ; Hannah, Stephen (Rick) (CFPB) ; Harpe, Pam (CFPB) ; Hart, Maria (CFPB); Harvey, Imani (CFPB) ; Haynes-Gholar, Tywana (CFPB) ; Healey, Jean(CFPB) ; Herchen, Emily(CFPB) ; Herring, Maia(CFPB) ; Hillebrand, Gail (CFPB) ; Holmes, Cordelia (CFPB) ; Horan, Kathleen(CFPB) ; Horn, Richard (CFPB) ; Howard, Jennifer (CFPB) ; Hrdy, Alice(CFPB) ; Hupp, James (CFPB); Jackson, Monica(CFPB) ; Jackson, Peter(CFPB) ; Jimenez, Dalie (CFPB) ; Johnson, Christopher (CFPB) ; Keane,Micheal (CFPB) ; Kearney, Thomas(CFPB) ; Kennedy, Leonard(CFPB) ; Kern, Shaun (CFPB) ; Kim, Lynn (CFPB) ; Kitt, Brett (CFPB); Klein, Heather (CFPB) ; Krafft, Nicholas (CFPB) ; Kunin, Noah (CFPB) ; Ladd, Christine(CFPB) ; Lauderdale, Steve(CFPB) ; Leary, Jesse(CFPB) ; Leiss, Wayne(CFPB) ; Lepley, Richard (CFPB) ; Lev, Ori (CFPB) ; Levisohn, Ethan (CFPB); Lilly, Antona(CFPB) ; Logan, Amanda (CFPB) ; Lombardo,Christopher (CFPB) ;Lopez-Fernandini, Alejandra (CFPB) ; Lownds,Kevin (CFPB) ; Lucero, Tamara(CFPB) ; Mann, Benjamin; Mann, Seth (CFPB); Markus, Kent; Marshall, Mira(CFPB) ; Martin, Alyssa(CFPB) ; Martinez, Adam (CFPB) ; Martinez, Zixta (CFPB) ; McCoy, Patricia(CFPB) ; McDonald, Alicia(CFPB) ; McQueen, Suzanne(CFPB) ; Megee,Christine (CFPB) ; Mestre, Juan (CFPB); Mewhorter, Shawn(CFPB) ; Meyer, Erie (CFPB)