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Your Mostly Banking Policy Week in Review, By Liz Ryan Murray

November 14, 2010

What’s up in DC

New Boss for Fannie and Freddie President Obama will nominate Joseph A. Smith Jr., North Carolina Commissioner of Banks, as the new Director of the Federal Housing Finance Agency (FHFA). FHFA is the regulator and conservator for Fannie Mae and Freddie Mac and calls virtually all the shots for them. He’ll get to lead the agencies through the upcoming ugly fight on their future. He needs to be approved by the Senate, which should happen during the lame duck session.

New name floated for head of the CFPB. Republicans are floating Congresswoman Melissa “Wholly Owned Subsidiary of the ABA” Bean (D-IL) as the head of the new agency. It was a trial balloon by Republicans that got nowhere, but it shows that they’re serious about trying to undermine Elizabeth Warren, the agency and its mission.

Foreclosure News

OCC Shields the Banks…Again. The Washington Post reported that in 2007 state banking regulators started to initiate an investigation into foreclosure servicing problems across industry. But Wells and Chase wouldn’t cooperate. The states went to their federal regulator for help, but the OCC made them back off waving their federal preemption authority– and did nothing to follow-up on the complaints or the investigation.

Homesteading in vacant foreclosed homes. An interesting way of dealing with vacant homes out of Florida, a former developer is setting homeless families up into vacant homes, having them keep the property up and pay the taxes. The properties are unclaimed in the foreclosure mess so using “adverse possession” laws on the books in every state. “All 50 states allow for so-called adverse possession, with the time to forge a kind of common-law marriage with property varying from a few years (in most states) to several decades (in New Jersey)” This hasn’t been tested in court yet, but this could be a really interesting way of dealing with the flood.

Bank’s latest talking point in the foreclosure problems is that the people they are foreclosing on have plenty of time to fix things and that they’re deadbeats who just don’t want to pay their mortgages. They are trotting out how long it takes to complete a foreclosure – usually more than a year. What they leave out is that once someone gets behind, the servicer will not accept payments and sends checks back. Then the fees start piling up and people can’t catch up.

Number of the week:

Bank closures up to 143 this year.

Quote of the Week:

From James K Galbraith’s deficit commission testimony June 30th:

“The only way to reduce a deficit caused by unemployment is to reduce unemployment. And this must be done with a substantial component of private financing, which is to say by bank credit, if the public deficit is going to be reduced. This is a fact of accounting. It is not a matter of theory or ideology; it is merely a fact. The only way to grow out of our deficit is to cure the financial crisis.”

Liz Ryan Murray is the Director of Policy for National People’s Action. Her posts can be seen on this blog every Tuesday.
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