The Consumer Financial “Protection” Bureau steps into the fray

posted at 11:21 am on January 11, 2013 by Erika Johnsen

Just to clarify, “protection,” in the Obama-administration context, is hereafter joining my list of words that deserve to be indelibly surrounded by quotation marks (re: “investments”).

The Consumer Financial “Protection” Bureau is all set to hit the ground running with bright-eyed regulatory gusto in 2013, now that they have finally worked through some of the studies and rules required by the 2010 Dodd-Frank financial overhaul, although many businesses and lawmakers have been worrying that the CFPB has afforded itself way too much unchecked authority to simply issue rules that strike the administration’s big-government fancy without proper congressional or judicial oversight (yet another grand idea born from the auspices of The Most Transparent Administration, Evah). This week, the CFPB released mortgage standards ostensibly meant to quell the type of risky lending that caused the housing-market collapse:

Today, we’re issuing one of our most important rules to date, the Ability-to-Repay rule. It’s designed to assure the reliability of mortgages – making sure that lenders offer mortgages that consumers can actually afford to pay back. This is a simple, obvious principle that needs to be cemented in the housing market.

In the run-up to the financial crisis, we had a housing market that was reckless about lending money. Lenders thought they could make money on a loan even if the consumer could not pay back that loan, either by banking on rising housing prices or by off-loading the mortgage into the secondary market. This encouraged broad indifference to the ability of many consumers to repay loans, which dramatically increased mortgage delinquencies and rates of foreclosures. …

Consumers should be able to trust the American dream of homeownership without worrying about losing the roofs over their heads and the shirts off their backs. The Ability-to-Repay rule will help ensure that lenders and consumers share the same basic financial incentives – that both of them win when borrowers can afford their loans. With this confidence, consumers can be active participants in the market and choose which of a wide variety of products they believe is best for them.

Hmm — completely rewrite history, much? By all means, let’s simply gloss over the fact that the federal government’s policies largely and directly incentivized financial institutions to engage in the type of behavior they did in the lead-up to the financial crisis, by just piling on more unchecked federal intrusion. Yes, financial institutions are certainly capable of acting like sharks — but who is it that has relentlessly abetted such shark-like behavior?

No matter what it is the munificent federal government claims to be “protecting” us from, I find the noblesse oblige of these moral-political busybodies much more terrifying than the private-sector profit motive. We’ll see how this plays out:

Bankers and consumer advocates called the Consumer Financial Protection Bureau’s new rules on mortgages a good start but each leveled criticisms of the new regulations at a hearing in Baltimore on Thursday.

Banking industry representatives and credit union officials each said they are concerned that new regulations from the CFPB could hamper their ability to make more home loans. Consumer groups, on the other hand, said the rules don’t go far enough in protecting consumers from being steered into mortgages they can’t afford.


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the best consumer protection is to implement the current laws and put bankers in jail…

nathor on January 11, 2013 at 11:28 AM

Today, we’re issuing one of our most important rules to date, the Ability-to-Repay rule.

BWAAAHAAAAHAAAA.

The Congress and Executive are no doubt exempt …

ShainS on January 11, 2013 at 11:29 AM

but who is it that has relentlessly abetted such shark-like behavior?

There you go being nice again. The government didn’t abet the loan industry they insisted on them being sharks to the poor.

chemman on January 11, 2013 at 11:32 AM

What couldwillgo wrong. Fixed it for myself!!

Deano1952 on January 11, 2013 at 11:34 AM

nathor on January 11, 2013 at 11:28 AM

Yes lets do insist that anyone that breaks the law be tried and held accountable to the fullest extent of the law. You do know that with the geometric increase in laws that on average you commit three felonies a day you can be charged with. You and that newscaster that waved the high capacity magazine should go to jail with those bankers you hate.

chemman on January 11, 2013 at 11:34 AM

These people weren’t ‘steered’ into mortgages they couldn’t afford – the feds FORCED banks to make crappy unstable loans to borrowers who couldn’t repay them. The feds FORCED them to loan money for non-financial goals, preferring demographic ones instead, even though it violated every shred of financial common sense to do so.

As always, the feds f*cked this up with too much legislation and intrusion, and to fix it… MORE REGULATION! F*cking morons.

Midas on January 11, 2013 at 11:35 AM

We’ll see how this plays out

my guess is a CF of the first magnititude…

RedInMD on January 11, 2013 at 11:35 AM

at least they are telling you exactly who they are going to screw.

tom daschle concerned on January 11, 2013 at 11:35 AM

the best consumer protection is to implement the current laws and put bankers in jail…

nathor on January 11, 2013 at 11:28 AM

The time and energy you waste on willful ignorance is astounding. Should you actually put your noggin to good use you might eventually get out of your Mom’s basement.

HotAirian on January 11, 2013 at 11:36 AM

the best consumer protection is to implement the current laws and put bankers in jail…

nathor on January 11, 2013 at 11:28 AM

Go to hell, you f*cking moron.

Midas on January 11, 2013 at 11:36 AM

“Consumer Protection”? Yeah that fits about like “Affordable Care” does. What a crock!

indypat on January 11, 2013 at 11:38 AM

nathor on January 11, 2013 at 11:28 AM

Yes lets do insist that anyone that breaks the law be tried and held accountable to the fullest extent of the law. You do know that with the geometric increase in laws that on average you commit three felonies a day you can be charged with. You and that newscaster that waved the high capacity magazine should go to jail with those bankers you hate.

chemman on January 11, 2013 at 11:34 AM

And let’s not forget Chris Dodd, Barney Frank and Maxine Waters!

NavyMustang on January 11, 2013 at 11:38 AM

Today, we’re issuing one of our most important rules to date, the Ability-to-Repay rule. It’s designed to assure the reliability of mortgages –

Everyone should think this is a great idea. However, the liberal base will think it is a novel idea having no freakin’ clue that the market was doing this very well before the government got involved in the mortgage business. This is like an Emily Litella moment from the old SNL.

DaveDief on January 11, 2013 at 11:39 AM

The sooner people realize that Obama & Co.’s goal is the destruction of the middle class for the purpose of establishing a Marxist USSoA, the sooner we can stop this nonsense.

davidk on January 11, 2013 at 11:40 AM

Just to clarify, “protection,” in the Obama-administration context, is hereafter joining my list of words that deserve to be indelibly surrounded by quotation marks

‘Toon: Obama’s “Protection” Racket

Resist We Much on January 11, 2013 at 11:40 AM

You’d think always being right would feel better than this. But every time the Democrats confirm what we always knew (and they’d denied and demagogued…and blamed Bush for), it just feels kid of hollow, you know?
Obama’s taking all the fun out of proving them liars.

Kenz on January 11, 2013 at 11:42 AM

RWM: http://cnsnews.com/cartoons/glenn-foden/

davidk on January 11, 2013 at 11:42 AM

Yes lets do insist that anyone that breaks the law be tried and held accountable to the fullest extent of the law. You do know that with the geometric increase in laws that on average you commit three felonies a day you can be charged with. You and that newscaster that waved the high capacity magazine should go to jail with those bankers you hate.

chemman on January 11, 2013 at 11:34 AM

I think more eyeballs should be upon those who handle the largest amounts of $. if you handle billions, you should make sure you dont step over the line.

Go to hell, you f*cking moron.

Midas on January 11, 2013 at 11:36 AM

The time and energy you waste on willful ignorance is astounding. Should you actually put your noggin to good use you might eventually get out of your Mom’s basement.

HotAirian on January 11, 2013 at 11:36 AM

let me introduce you to the bank that was too big to jail:

http://www.economist.com/news/finance-and-economics/21568403-two-big-british-banks-reach-controversial-settlements-too-big-jail

And I am still waiting for any banker to be jailed for the libor fix. when you steal billions, you get seem to get an “get out of jail card”

nathor on January 11, 2013 at 11:46 AM

IOW, there going back to the same standards used before the government got involved via the CRA.

antipc on January 11, 2013 at 11:47 AM

Today, we’re issuing one of our most important rules to date, the Ability-to-Repay rule.

Let’s try this rule out on the Federal Government for a while, first, huh?

trigon on January 11, 2013 at 11:53 AM

the Ability-to-Repay rule

Wow, what a concept.

petefrt on January 11, 2013 at 12:01 PM

Only lending money to people who can pay it back?
Wow – I’m sure the lenders would never have thought of this own their own and have would few incentives to actually follow through with it even if they did.

gwelf on January 11, 2013 at 12:04 PM

Those who steal from private individuals spend their lives in stocks and chains; those who steal from the public treasury go dressed in gold and purple.
– Marcus Porcius Cato – (Roman Statesman – 190 B.C.)

Speakup on January 11, 2013 at 12:13 PM

largely and directly incentivized

Um, the government REQUIRED banks to lend to those who could not repay their loans. And some of those folks lived in and still have some very swank digs.

Do you all recall the embarrassing incident on CNN where they interviewed a woman about to lose her 800,000 dollar house? When the CNN twinkie asked what the woman did for a living she said she drove a bus part time.

dogsoldier on January 11, 2013 at 12:26 PM

Consumer Financial “Protection” Bureau

apostic on January 11, 2013 at 12:45 PM

Fine. Just only write mortgages to people with an over 800 credit score. Liberals won’t like the results, though.

Ward Cleaver on January 11, 2013 at 12:45 PM

Fine. Just only write mortgages to people with an over 800 credit score. Liberals won’t like the results, though.

Ward Cleaver on January 11, 2013 at 12:45 PM

it would work in plunging the house prices enough so that those ppl could afford them:P

nathor on January 11, 2013 at 1:03 PM

it would work in plunging the house prices enough so that those ppl could afford them:P

nathor on January 11, 2013 at 1:03 PM

that is, if they would still have a job after the whole economy colapses

nathor on January 11, 2013 at 1:04 PM

This is another 800-page rule that was not released until 5:30 p.m., after Richard Cordray spent the day blogging and bragging about it and getting all sorts of flattering headlines. This agency is so damn political it is ridiculous. Nver have we seen a regulatory agency do such grandstanding over a regulation that it was required by law to write and which essentially closes the barn door after the horse is way out of the barn and down the road.

Totally typical for this Administration – do nothing of real susbtrance, but grandstand the hell out of it and claim you are “helping the middle class.” The only people this rule helps are lawyers.

rockmom on January 11, 2013 at 1:12 PM

The Consumer Financial “Protection” Bureau steps into the fray

Their first order of business should be to shut down the government except the military.

cajunpatriot on January 11, 2013 at 1:13 PM

So how many months weeks days before we find that there are quotas attached to this so that a certain Percentage of these loans must be made to blacks to Latinos to various minorities and if you can’t find enough minorities that can actually afford to pay the banks will get heavy fines. Or if they are making loans to people in that affluent neighborhoods but not in the poor ones they will be fined. Hmmmm anyone ever hear of that happening before?

odannyboy on January 11, 2013 at 2:15 PM

The Adjustment Bureau?

TerryW on January 11, 2013 at 2:21 PM

Wasn’t the President part of a lawsuit that prevented banks from having such a reliability qualification ?

Jabberwock on January 11, 2013 at 3:04 PM

the Ability-to-Repay rule: My guess this rule means that if a lending institution lends to any liberal, it will be the bank’s fault if the liberal can’t repay. Owe will insist on bank punishment.

And yes, wouldn’t it be nice if they instituted this rule in the US Congress? Apparently the government feels it necessary to protect us from each other. Who is protecting us from THEM?

Does a bank have to consider each consumer’s portion of the US debt when deciding if we have the ability to repay?

katablog.com on January 11, 2013 at 3:50 PM

Hmmm….

So we are back to loaning money only to people who don’t need it?

Is all the BS about “Redlining” going away? Or does the bank still have to make sure minorities and other people traditionally seen as NOT having the ability to repay get “their fair share” of loans?

Dear Mr and Mrs Smith,
you are not a minority, and we simply cannot find one to offset your loan.

Application Denied.

1st City Bank, FDIC.

Snowblind on January 11, 2013 at 4:18 PM

And once again, the government gets involved in something they have no business being involved in, mess it up and then “fix” it with more regulations. And they treat citizens as small children who have no idea how to take care of themselves. When we were applying for a mortage some years ago, our bank approved us for an amount that was more than we were comfortable with. We could have made the payments but if one of us got laid off, we’d have been in trouble. We opted for a smaller loan and thus a smaller house and haven’t regretted that decision. Even if mortgage companies are pushing loans on people at the governments behest, they still have the ability to say “no thank you.” And the responsibility to do so.

hopeful on January 11, 2013 at 4:45 PM

Richard Cordray and the CFPB can jump up my a$$.

mimi1220 on January 11, 2013 at 9:17 PM