Cordray blasts Trump’s CFPB; Warren wants Wells answers
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More Wells questions: Wells Fargo’s botched attempts to repay customers who were charged improper fees on auto loans and home mortgages has drawn the attention of at least one U.S. senator. Sen. Elizabeth Warren, D-Mass., sent a letter to Wells CEO Timothy Sloan, asking about the bank’s customer-remediation programs and wants answers by the end of the month. Specifically, she wants to know why Wells is making customers “opt-in” before they can receive refunds.
Separately, the bank, which has been ordered by the Federal Reserve not to increase its assets as punishment for various misdeeds, has agreed to sell its assets in Puerto Rico, mostly auto loans, to Popular for $1.7 billion. Wells said the Fed edict was not the reason for the sale. Financial Times, American Banker
Help!: Fannie Mae reported a net loss of $6.5 billion for the fourth quarter, including a big one-time charge for tax reform, possibly triggering a request by the government-owned mortgage finance agency for a taxpayer infusion of $3.7 billion, its first in six years.
“Though the company has telegraphed for months that it may require a new cash infusion, it is a politically fraught issue and the latest illustration of the awkward nature of the government’s indefinite stewardship of Fannie and its smaller counterpart, Freddie Mac,” the Wall Street Journal says. Wall Street Journal, Financial Times, American Banker
Wall Street Journal
Easier to sell: The House passed a bill that would ensure that loans issued by banks retain their original interest rate even if they are later sold to nonbanks. Supporters of the bill believe it will make “the resale of high-interest loans more attractive to third-party buyers such as debt collectors” and “allow a new crop of financial firms to reach underserved borrowers.”
Enough?: MetLife said it is doing “everything humanly possible,” including hiring outside investigators, to help it track down about 13,500 pensioners it neglected to pay over the past 25 years, on average about $20,000 each. “MetLife sought to contact eligible pensioners only twice: when they turned 65, and again a few months after the age of 70,” the paper says. “If these efforts were unsuccessful, the company presumed the individuals would never be found.” Now it’s trying to find them. CEO Steven Kandarian called the episode “especially distressing to me” and “deeply embarrassing.”
New York Times
Perfect match?: The paper has a suggestion for “a potentially ideal merger partner” for Goldman Sachs: Bank of New York Mellon. “If the two were to combine, Goldman would get hold of more than $33 trillion in assets under custody and supervision — think clearing, cash management, global payments and the like. If only the asset-management and custody specialist weren’t in a different league.”
Speaking up: Not surprisingly, Richard Cordray, the first director of the Consumer Financial Protection Bureau, isn’t happy about President Trump’s plans for his old agency. In fact, they “trouble me deeply,” he writes in an op-ed. “Trump and White House budget director Mick Mulvaney, the bureau’s putative acting head, have bullied the CFPB and put their thumbs firmly on the scale in favor of the predators,” he writes.
Yet, “while the current outlook may seem dark, I have faith in the future of the CFPB and its work on behalf of consumers,” he adds. “Even at times such as these, I am confident that the CFPB and its mission will live on long after Trump has left office. The need for Americans to have advocates and allies to balance against the powerful interests will endure for as long as our republic does.”
Widening reach: A recent scandal in the Department of Veterans Affairs’ home mortgage program may have far-reaching consequences for borrowers beyond veterans. The government has alleged that several large VA lenders have been “churning” their customers, inducing borrowers into frequent refinances in order to generate originations fees for the lenders. But those “predatory lending practices” may also be inflating interest rates “paid by thousands of unsuspecting home buyers using FHA loans.”
“I regard the bitcoin craze as totally asinine. I expect the world to do silly things from time to time, because everybody wants easy money. It’s just disgusting that people are taken in by something like this. Our government’s lax approach to it is wrong. The right answer with stuff that bad is to step on it hard.” — Berkshire Hathaway Vice Chairman Charlie Munger.