The Revolving Door Spins, the “Consumer” Bureau’s Mortgage Servicing Rules Stink

By | October 24, 2012

The latest example of bankers running our country is the weak mortgage servicing standards proposed by the Consumer Bureau.

Revolving Door Smacks Consumers Around

Hmmm… how come the rules are so bad, given mortgage servicers’ rampant fraud, predatory servicing and gross incompetence, all of which has been well documented by law enforcement (albeit not effectively prosecuted)?

I have no inside scoop. But here’s someone who does: Leonard Chanin. He supervised all of the Consumer Bureau’s rule makings as its “Assistant Director for Regulations.” Guess what? Last month he left the Consumer Bureau to join Morrison & Forrester.

MoFo describes itself on its website as

one of the leading banking and financial services law firms in the world, advising domestic and foreign banks, insurance companies, credit card companies, mortgage bankers, investment banks, investment management companies and investment advisers, and other financial institutions on regulatory and litigation, as well as transactional, matters.”

Mofo further explains:

“It is fair to say that we have played an important role in shaping the evolution of financial services law in the United States.  We have been involved in every federal legislative and regulatory initiative involving or affecting banking over the past 30 years, including proposals addressing bank powers, the regulation of consumer lending, fair lending, mortgage lending reform, privacy and information sharing, electronic fund transfers and other payment systems, capital requirements, and other matters affecting the banking industry.”

Mr. Chanin’s switch from ostensible consumer protector to MoFo partner is not surprising; it’s a homecoming. He went from ‘of counsel’ in MoFo’s lobby shop (the D.C. office) to bank regulator at the Fed to banking industry rule writer at the Consumer Bureau to MoFo partner. According to American Banker, Chanin was an Elizabeth Warren pick. Really? Warren couldn’t find someone with a consumer advocate pedigree to be top rule writer for consumers? Or is American Banker wrong?

I mean, American Banker quotes a banking industry lobbyist saying this about Chanin:

There was a level of comfort the banking industry had with Leonard, because they dealt with him for many years during his tenure at the Fed… I think this would be a setback for the CFPB because they’re right in the midst of an avalanche of mortgage lending regulations.”

I don’t know that Chanin’s typical. A different top Consumer Bureau lawyer left at almost the same through what sounds like a very different door. Deepak Gupta, “the CFPB’s former senior enforcement counsel [ ] left to start a consumer advocacy law firm” according to the same American Banker report.

Regardless of Chanin’s typicality, I note that a month before its top rule maker departed for partner pay at the banks’ big lobby shop, the Consumer Bureau proposed mortgage servicing standards that are weaker than the enforcement fraud mortgage settlement. Hmmm…

I can’t prove a quid pro quo; I have no inside information. I’m just pointing out the public record.

You decide what it means.


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