A new mortgage rule issued by the Consumer Financial Protection Bureau (CFPB) that takes effect January 1 limits fees on new home loans to three percent. The regulation is "one of the most direct and important responses to the mortgage crisis," Sen. Elizabeth Warren (D-Mass.) and Rep. Maxine Waters (D-Calif.) argued in a recent editorial in American Banker. But 12 House Democrats and Sen. Joe Manchin (D-W.Va.) have joined with Republicans to cosponsorbills that would eviscerate the new cap and clear the way for lenders to steer Americans into riskier, higher-cost loans.
On Tuesday night, Chris Hayes, the host of MSNBC's All In, picked up Mother Jones' scoop about the 32 progressive House Dems who signed onto a letter written by a financial industry lobbyist opposing new investor protections for millions of Americans' retirement accounts.
A letter that a group of progressive Democrats sent to federal regulators opposing new protections for millions of Americans' retirement accounts was drafted by a financial-industry lobbyist, according to documents obtained by Mother Jones.
The Department of Labor, which oversees the federal law setting minimum standards for many retirement plans, would like to require retirement investment advisers to act in the best interest of their customers, as opposed to their own best interest.
Together, the liberal lawmakers who signed the letter have received tens of thousands of dollars in campaign money from the securities and investment industry in recent years.
In the letter, the lawmakers caution the Labor Department against proposing new regulations, warning that a strict new rule on retirement advisers may cause many of them to leave the market and thus "could severely limit access to low-cost investment advice" for "the minority communities we represent."
In 2011, Attorney General Eric Holder created a multi-agency working group called the Distressed Homeowner Initiative, the first ever effort aimed exclusively at targeting crimes against homeowners in the lead up to the financial crisis. Last October, the DOJ publicized its stunning success: 530 people had been charged criminally as part of the initiative. The actual figure, according to the DOJ, is 107—80 percent less. The DOJ claimed that the defendants had victimized more than 73,000 homeowners. That number is actually 17,185. And the department estimated that homeowner losses associated with the fraud was about $1 billion. The new sum is $95 million.
The DOJ's original tally included those people who were criminally charged in 2012, as well as defendants who were sentenced or convicted that year but charged before the task force had even been set up. The department also counted cases in which the victims weren't distressed homeowners.
"As a result, the announcement overstated the number of defendants that should have been included as part of the Distressed Homeowner Initiative," the Justice Department said upon release of the new numbers. Oops.
Three Bloomberg reporters deserve credit for outing Holder. A couple days after the attorney general first publicized the numbers last October, Phil Mattingly and Tom Schoenberg broke the story that some of the cases included in the DoJ's tally occurred before the initiative began. And Bloomberg reporter Jonathan Weil, after pestering the department for a list of all the people charged and their case details, wrote a column about the Justice Department's refusal to comply. That prompted the DoJ to reexamine its numbers.
As Weil noted at Bloomberg on Friday, this is the second time that Holder's Justice Department has inflated prosecution numbers related to the financial crisis. In December 2010, Holder held a press conference to talk up a sweep by the president’s Financial Fraud Enforcement Task Force. "All the Justice Department did was lump together a bunch of small-fry, penny-ante fraud cases that had nothing to do with one another," Weil writes.
More from Weil:
The Obama administration has been on the defensive for years over its lack of decisive, high-profile prosecutions related to the financial crisis. So it leads one to believe that might help explain why the feds have occasionally inflated their fraud statistics: to persuade the public that they were being tough on financial crimes.
Holder needs to come forward and explain exactly how this happened and why. He used a press conference with the cameras rolling to give out numbers that proved to be false -- and they appear to have been willfully false. He should be just as eager to hold another press conference to set the record straight, answer any questions about his apparent sleight of hand when it comes to financial-fraud metrics and apologize to the American people.
Six years ago, a major Pentagon investigation revealed that shady lenders were taking advantage of active-duty military by roping them into high-risk loans with astronomical interest rates. The Military Lending Act (MLA), which Congress passed in 2007, was supposed to fix the problem by capping annual interest rates on loans to service members at 36 percent. But lenders have found a way around the law, and lawmakers are fed up.
Here's the problem. When it passed the MLA, Congress left it up to the Defense Department to determine which types of loans would be covered by the interest-rate cap. At the time, Pentagon officials decided to only apply the interest rate cap to closed-end loans, which can only be used once and have to be paid back at a certain time. But the DoD allowed lenders to continue to offer service members high-interest open-end loans, which are like credit cards or lines of credit: they have varying balances, can be used multiple times, and have no set date for full repayment. These loans can sport interest rates of close to 800 percent.
Now members of Congress are pushing for the DoD, which has been reexamining the rule since June, to apply the interest-rate cap to open-end loans, too. Last week, a group of 23 Democratic senators—including Sens. Jack Reed (D-RI), Sherrod Brown (D-Ohio), and Elizabeth Warren (D-Mass.)—and 54 Democratic members of the House of Representatives wrote letters to the DoD demanding the Pentagon expand the interest-rate cap to cover more types of loans.