“New Consumer Protection Agency Faces Opposition,” NPR, July 21, 2011

This article (click here to download PDF) discusses the ongoing debate about the CFPB. The general objectives are reasonable but so is adequate congressional oversight and public transparency. It would be better to remove the CFPB from the Federal Reserve Board and place it within HUD or the FTC. The future of the MLDS/GFE rests upon the outcome of the pending regulations by the CFPB, as will the ultimate interpretations that likely affect broker compensation, QRMs, the 5% retention rule, etc.

The truth of the matter is regulators were in place prior to the CFPB to prevent the crises in the mortgage industry and in the housing market. They simply failed to act. This includes the SEC, the Federal Reserve Board, HUD, state insurance regulators, state regulators of licensed lenders, the OCC, the FDIC, among others. This was largely due to legislative pressure and special interest influence (heavily financed with campaign contributions) coupled with lack of resources that collectively resulted in the failure to act.

In addition, the big problem was the repeal of the Glass-Steagall Act by the Democrats and the Republicans without at the same time subjecting the investment bankers, the broker-dealers, the licensed lenders, the mortgage brokers, the real estate brokers, etc. to the same regulatory oversight that occurs directly or indirectly when a residential mortgage loan is delivered through the traditional system of origination relying on regulated financial depository institutions and their subsidiaries as the source of the loan funds.

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