Law and regulation

The Consumer Financial Protection Bureau's crackdown on mortgage servicers' operations will increase the pressure on lenders to improve their processes, paperwork and communications with borrowers. American Banker journalists discuss how both banks and nonbank servicers can get ahead of the new regulatory scrutiny.

I myself am a HMDA wonk, but one with a rather love-hate relationship to the numbers. I love what they reveal, but hate the headaches that come from wrestling with data.

How the central bank will apply bank-centered rules to systemically important financial institutions is one of the biggest unanswered questions of the post-financial crisis regulatory system.

JPMorgan Chase & Co. (JPM), the biggest U.S. bank, revised its gauge of market gains and losses to incorporate new regulatory requirements, resulting in a jump in the frequency of losses last year.

Everett Stern, who last year filed a lawsuit urging further U.S. investigation of his ex-employer HSBC, has decided to run for Congress on a platform of getting tougher on banks and cleaning up Washington.

The rule prohibits big foreign banks from allocating capital and liquidity in a manner they deem to be most efficient. This may be an acceptable price to pay if the overall result were enhanced stability, but trapping capital and liquidity in particular jurisdictions is likely to make large banks less resilient in times of crisis.

It's unclear who is behind the online campaign "Stop the Choke," but its message is clear: oppose the Justice Department investigation of the banking system's ties to firms that could be involved in fraud.

VantageSouth Bancshares (VSB) in Raleigh, N.C., has redeemed all outstanding shares issued to the Treasury Department under the Troubled Asset Relief Program.

A financial reform group hoping to block the government's $13 billion settlement with JPMorgan Chase faces a steep uphill climb.

Bankers are mulling new ways to serve consumers with low incomes and poor credit profiles after the crackdown on deposit advances, but the prospect of smaller profits and continuing uncertainty about regulations may dissuade a serious effort.

The volume of complaints lodged by distressed borrowers to four of the largest U.S. banks has stabilized, the monitor for the national mortgage settlement says.

The biggest banks are coming off a year when their stocks and profits soared. Yet below the surface, they face a number of vexing problems: more regulation, less lucrative trading, an inability to do big deals and lower multiples than many smaller rivals. American Banker staffers discuss whether such factors may some day encourage shareholders to agitate for breakups.

"Servicers now face compensatory fees, not for mistakes or unreasonable delays, but simply as the cost of doing business," Mortgage Bankers Association President David Stevens says.

Steven Antonakes, the CFPB's deputy director, gave a speech which indicated the agency has shifted to a hard-line stance regarding compliance with a new mortgage servicing rule that went into effect last month. "Business as usual has ended in the mortgage servicing industry," he said.

Even legislators can run into trouble with creditors.

As Credit Suisse Group AG (CSGN) sees it, time has run out on New York Attorney General Eric Schneiderman’s pursuit of Wall Street banks for mortgage fraud that helped trigger the financial crisis.

JPMorgan Chase & Co. dropped Al-Rajhi Bank, the world's largest Shariah-compliant lender, as a correspondent banking client amid a push to improve risk controls, said two people with direct knowledge of the move.

Sens. Tim Johnson and Mike Crapo run the risk of proposing a second-rate solution for the market to gain mass support for their new legislation.

Risk-weighted regulations doom banks to lend too much, on too easy terms, to "infallible" borrowers –some of whom, as a result, will eventually prove to be very risky.

Pressured by overseas governments and institutions, the Fed nevertheless stayed the course in finalizing tough new rules for roughly 100 foreign banks doing business in the U.S. — a sign that the central bank's emphasis remains on national stability over international cooperation.