Receiving Wide Coverage ...
Fight at Recess! President Obama defied Congressional opponents and made good on an earlier threat to make a recess appointment of Richard Cordray as the first director of the Consumer Financial Protection Bureau. His legal grounds for doing so are a matter of dispute (hinging, apparently, on whether Congress is truly “in recess”) and a court challenge seems likely. But media outlets called Obama’s move politically savvy, following Senate Republicans’ filibustering of Cordray’s nomination. “In one fell swoop, Obama managed to tap into voter frustration with Washington, distance himself from an unpopular Congress, buck up the liberal base and reassert himself as a latter-day Teddy Roosevelt, fighting for a ‘fair deal’ for the middle class,” Politico wrote. The headline of the Journal’s editorial pretty much summed up the writers’ take: “Contempt for Congress.” An analytical story in the Times led with the upshot for nonbank financial firms such as payday lenders: they’re fair game for the bureau now that it has a permanent head. But wait … some on the right are arguing that the CFPB’s authority over the shadow lenders doesn’t actually kick in unless the director is confirmed by the Senate. Oboy. It seems like there will be peace in the Middle East before this fight is settled. Additional coverage: Wall Street Journal, New York Times, Washington Post.
From PayPal to Yahoo: Scott Thompson, who led PayPal’s transformation from being merely a facilitator of transactions on eBay to a disruptive force in payments, joined Yahoo as the struggling Internet pioneer’s new CEO. New York Times, Washington Post, Wired, Fast Company
The Fed’s White Paper: We fear that we just lost a substantial portion of our audience with the words “white paper.” But this one, in which the central bank’s staff analyzes the shambles that is the U.S. housing market for the Senate Banking Committee, is generating a good deal of buzz in the blogosphere. It covers the big issues – what to do about distressed properties, how to create the right incentives for mortgage servicers, how to help distressed borrowers. This being a white paper (from the Fed, no less), there’s a good deal of on-the-one-hand-on-the-other inconclusiveness about the answers. But Matt Levine at “DealBreaker” is intrigued by the paper’s suggestion, near the end, that there be a national electronic lien registry – essentially a MERS for the people. “This is … so … obviously … right,” he writes. Right now, the publicly available information systems (county records) are ridiculously antiquated, and the modernized one (namely MERS) is opaque. “Having a public national registry that actually uses a damn computer, so that mortgages can be transferred and serviced and examined in at least a twentieth-century manner, seems like a no-brainer way to split that difference,” Levine says. In a lengthy and nuanced point-by-point critique of the white paper, Yves Smith at Naked Capitalism notes that on another issue, “the Fed is openly crossing swords with the FHFA,” which has focused its management of Fannie Mae and Freddie Mac on saving taxpayers money, to the detriment (some have argued) of the housing market. “Although the document is studiedly neutral in its tone,” Smith writes, “it makes clear in its coded way that it regards the GSE focus on short term loss minimization as destructive.” Coded, indeed. Quoth the Fed: “Some actions that cause greater losses to be sustained by the GSEs in the near term might be in the interest of taxpayers to pursue if those actions result in a quicker and more vigorous economic recovery.” Expanding the Home Affordable Refinancing Program to loans not already in the GSEs’ portfolios would be one such action. There’s a lot else to chew on here, folks, but we’ve got to move on before this turns into the Mid-Afternoon Scan. Additional coverage in the Financial Times.
Wall Street Journal
A story on the front of the “Money & Investing” section reports that car lenders are actively seeking to make loans to people who’ve fallen behind on their mortgages but are otherwise good risks. This strategy is informed by the trend of the last few years in which consumers have prioritized car loan and credit card payments ahead of their mortgages, a reversal of the historical norm.
Wait, did we just wake up in 1999? Another story on the front of “Money & Investing” profiles a Citigroup analyst who’s been instrumental in winning the firm IPO underwriting business from Internet companies. Despite the 2003 global settlement that sought to firewall research from investment banking, analysts are still allowed “to participate in selling the IPO shares to investors. For a company picking underwriters, this means it can interview analysts about their views of the company -- in other words, a company could potentially fish for the most favorable research.”
“A government report on Wednesday criticized how a federal regulator handled the failure of five corporate credit unions and urged faster action to identify and prevent future problems.”
New York Times
Simon Johnson analyzes Ron Paul's positions on banking.