After a short late-Summer hiatus, we are back to reviewing the consumer finance investigation and enforcement scene and are gearing up to tell you all about it. First though, a quick celebration. Approximately one year ago, BB&R launched, and we had no idea what to expect. In the ensuing year, we have added approximately 60 posts and have received over 7,000 hits. So, for those of you who have paused to read something that we have written or have clicked through to some of the links that we have provided. We appreciate you, and hope that you will enjoy the new content this year.
Now, let's get up to speed:
1. When we left you, Richard Cordray had just been nominated by the President to be Director of the Consumer Finance Protection Bureau. Congress took a late Summer break and returned to convene confirmation hearings in September. Here, Bloomberg brings us up to speed on the goings on at the hearings. Good stuff, unless you want to see something actually happen.
2. Do you find yourself wondering which rules the CFPB is now enforcing? They have been specified. A list of transferor agencies whose existing rules the CFPB now enforces can be found, here, and the Federal Register has published a list of the specific rules, here. The CFPB has not yet begun its own rulemaking, but it would be a mistake to confuse this agency with one that has no power, because focused enforcement of the existing rules is itself a monumental task that could bring about substantial change in our consumer finance industry. And, try not to forget that all 50 State Attorneys General are now formally empowered to enforce the same rules. If that doesn't make the hair stand up on the back of your neck, then you just aren't paying attention.
3. Admittedly, we are a bit late reporting on this, but if you have not yet read Fourth Circuit Judge Wilkinson's opinion in Horvath v. Bank of New York, et al., then you should take the time to read the opinion. It concerns a legal challenge to a foreclosure that included claims arising out of all of the arguments de'jour concerning mortgage fraud and the general ills of the industry. Writing for a unanimous panel, Judge Wilkinson notes that the arguments de'jour are merely "distractions" in what is really a "simple commercial case" that involves negotiability of commercial instruments. It is truly a paean to the principles of negotiable instrument law, and a fine example of a court staying true to its mission. In a couple of particularly meaningful moments in the opinion, the Court: (1) disposes of the argument that, by “splitting” the note and deed of trust by transfer of the note to an entity other than the original lender, the note holder has somehow lost the right to foreclose on the deed of trust, and instead the Court held that assignment of the note in blank, carried with it the underlying security set out in the deed of trust and gave the holder the right to foreclose on the security; and (2) denounced as absurd the notion that somehow the term “Lender” in the Deed of Trust could only permit the original lender to invoke the power of sale. The court concluded that the term “Lender” must be construed as applying to any subsequent purchaser of the note and deed of trust. We don't see a many opinions like this. It is a must read.
We at BB&R continue to be amazed by the ripples...wave-action, really, that continue to flow out of the financial meltdown that occurred three years ago. We have come through one recession and appear poised to fall into a second. Most economic metrics are not encouraging, and a political solution, if one exists, seems impossible in the present partisan climate. The Boom is clearly over. We aren't sure whether the Bust has it its floor just yet. But, we are certain that the recriminations will continue. Good times.