Receiving Wide Coverage ...
Reaction: The reaction to the Consumer Financial Protection Bureau's proposal to prevent banks from using mandatory arbitration to block class-action lawsuits was swift and, for the most part, predictable. Not surprisingly, the financial industry (and Rep. Jeb Hensarling, R-Texas) blasted it.
"Consumers will get less and pay more," the American Bankers Association's president, Rob Nichols, said.
Trial lawyers praised it, as did the New York Times' editorial page. "Corporations get to pick the arbitration provider, they choose all of the rules of the process and there is virtually no right to appeal," said Julia Duncan, a lawyer with the American Association for Justice.
Somewhat surprisingly, the specter was raised of a potential legal challenge. Surprising because the CFPB has the authority to issue rules without approval of Congress. American Banker takes an in-depth look at the industry's potential challenges to the proposal here.
Two attorneys who represent lenders say the CFPB's own study of the issue is problematic. "It proceeds from an assumption that arbitration isn't beneficial and class actions are beneficial," Mayer Brown attorney Andrew Pincus told the WSJ. "I can easily see a challenge," said Baker, Donelson, Bearman, Caldwell & Berkowitz attorney Craig Nazzaro. The Supreme Court and other courts have upheld the legality of arbitration clauses, as well as the ability of companies to enforce the waivers of class-action lawsuits, said Nazzaro, a former in-house counsel at JPMorgan Chase.
A Forbes contributor argues the CFPB's proposal won't help consumers at all and instead will only increase the amount of fine print attached to credit-card offers. Arbitration wouldn't go away entirely under the CFPB's proposal, as companies can still force individual consumers to enter arbitration. The proposal only deals with allowing class-action lawsuits. Wall Street Journal, New York Times, Forbes, NPR
Wall Street Journal
To get a sense of the major roadblock to a full recovery in the housing market, consider the following. About three-quarters of first-time homebuyers say they would wait longer to buy a home in order to get something that would meet their long-term needs, even if it meant giving up a cheaper starter home, according to a recent Bank of America survey.
Thus, homebuilders are cutting back on the number of affordable starter homes they're constructing, citing a lack of profit on the housing type. This perpetuates the lack-of-supply problem that continues to bedevil the housing market, as National Mortgage News has reported.
Craig Wright has left the building. The erstwhile creator of bitcoin yanked his offer to give more proof that he's Satoshi Nakamoto, citing a lack of "courage" in a blog post. While two bitcoin experts, Gavin Andresen and Jon Matonis, met with Wright and supported his claim, a litany of doubters also emerged. (See here, here and here.) Wright apologized to Andresen and Matonis, while also seemingly clinging to his prior claim. "I can only hope that their honour and credibility is not irreparably tainted by my actions," Wright said. "They were not deceived, but I know that the world will never believe that now."
Donald Trump denied he would be willing to consider a Democrat as his running mate, and he's apparently not willing to keep Janet Yellen on the job as Fed chair, since "she's not a Republican," the presumptive GOP nominee said. "I have nothing against Janet Yellen whatsoever; I think she has been doing her job," Trump said, adding that she is "very capable."
"When her time is up I would most likely replace her because of the fact that I think it would be appropriate," Trump said, after noting that she's not a GOP member. That hasn't been the recent norm. Bill Clinton kept Alan Greenspan on the job and Barack Obama retained Ben Bernanke.
The Treasury Department has approved a rule to require financial institutions to verify the identity of the people who control companies if they attempt to open an account with the institution. The move is intended to crack down on tax evaders and money launderers, a month after the Panama Papers leak.
New York Times
The self-dubbed "debt king" wants to reduce the national deficit by forcing creditors to accept less. Donald Trump believes that he'd be able to cut a deal with creditors to take less than full payment on what they're owed. Good luck with that. "No one on the other side would pick up the phone if the secretary of the U.S. Treasury tried to make that call," said economist Lou Crandall. "Why should they? They have a contract" requiring payment in full.
Mother Jones: The magazine observes that Donald Trump's new finance chief was one of the lead investors behind OneWest Bank, which acquired the failed IndyMac from the federal government. Steven Mnuchin, a former Goldman Sachs partner, and his group bought IndyMac's assets for about $1.5 billion. OneWest was acquired last year by CIT Group. The Mother Jones piece emphasizes the fact that IndyMac's failure cost the FDIC's insurance fund about $13 billion. As taxpayers bailed out IndyMac, Mnuchin, his partners, which include Democratic Party uber-donor George Soros, and shareholders picked up more than $2 billion in dividend payments.