Nominee to Lead OCC Joseph Otting Criticized by Consumer Advocates

In The New York Times:

Mr. Otting worked closely with Treasury Secretary Steven Mnuchin when the two men ran OneWest. Formerly known as IndyMac, the lender had to be taken over by the federal government in the financial crisis of 2008 and was sold to a group of investors that included Mr. Mnuchin the next year. Mr. Otting was chief executive of the bank from 2010 to 2015, when it was acquired by the CIT Group for $3.4 billion. * * *

Critics have repeatedly raised concerns about OneWest’s foreclosures and use of illegal tactics like “robo-signing” in the wake of the financial crisis. The bank has also faced attacks over the practices of its reverse mortgage subsidiary Financial Freedom, which announced an $89 million settlement with the Justice Department last month.

 

Senate Democrats pressed Mr. Mnuchin to account for the bank’s behavior under his tenure at a heated confirmation hearing in January, and Mr. Otting is likely to face similar scrutiny.

“The president’s choice for watchdog of America’s largest banks is someone who signed a consent order — over shady foreclosure practices — with the very agency he’s been selected to run,” said Senator Sherrod Brown, Democrat of Ohio, referring to a 2011 consent decree between OneWest and the Office of Thrift Supervision, which was later folded into the comptroller’s office.

“If Mr. Otting didn’t deal fairly with the customers at his own bank, it’s difficult to see why he’s the best choice to look out for the interests of customers at more than 1,400 banks and thrifts across the country,” said the senator * * *

CFPB's Cordray threatened with contempt charges by House panel

American Banker reports:

The House Financial Services Committee is threatening to file contempt charges against Consumer Financial Protection Bureau Director Richard Cordray for allegedly lying about the bureau's investigation into the Wells Fargo scandal.

In a 15-page report released Tuesday by Republican staff, the committee claimed that the CFPB has not produced records showing that it conducted a full investigation of Wells’ branch sales practices or that it was aware of problems with phony accounts before the L.A. city attorney took action against the bank.

The full article is here.

 

"The IRS is using private debt collectors. Here’s what you should know."

The Consumer Financial Protection Bureau explains in this blog post.

"The Doctor Is In. Co-Pay? $40,000."

That's the name of this article by Nelson Schwartz. It describes the concierge doctors and high-frills medical care available, without significant wait times, to very wealthy people willing to pay steep prices. It contrasts that with what the non-rich get. (For instance, wait times for doctor appointments have been going up in recent years in most places.) 

Can criminal-justice debt abuse be combated through consumer law-type reforms?

That's the topic of Fighting Fines & Fees: Borrowing from Consumer Law to Combat Criminal Justice Debt Abuses by law prof Neil Sobol. Here is the abstract:

Although media and academic sources often describe mass incarceration as the primary challenge facing the American criminal justice system, the imposition of criminal justice debt may be a more pervasive problem. On March 14, 2016, the Department of Justice (DOJ) requested that state chief justices forward a letter to all judges in their jurisdictions describing the constitutional violations associated with the illegal assessment and enforcement of fines and fees. The DOJ’s concerns include the incarceration of indigent individuals without determining whether the failure to pay is willful and the use of bail practices that result in impoverished defendants remaining in jail merely because they are unable to afford bail.

Criminal justice debt, also known as legal financial obligations (LFOs), impacts not only those incarcerated but also millions of others who receive economic sanctions for low-level offenses, including misdemeanors and ordinance violations. LFOs, which include bail, fines, and fees, are imposed at every stage in the justice process, including pre-conviction, sentencing, incarceration, and post-release supervision.

Werner & Peterson Op-ed: Wells Fargo case shows how fine print can erode freedom

Here.  Excerpt:

On June 7, a Utah judge will decide whether more than 50 consumers defrauded by banking giant Wells Fargo in its fake account scandal will be forced to pursue claims one by one in a secret arbitration system. Even as the bank’s PR machine loudly trumpets a focus on restoring consumer trust, Wells Fargo is insisting once again that defrauded customers should be barred from having their day in court.

* * *

A recent report from the nonprofit Level Playing Field found just 215 Wells Fargo customers pursued claims against the bank in arbitration since 2009, despite millions of fake accounts exposed by the CFPB. Looking at the numbers, it is not surprising so few consumers file. Of the 48 cases that advanced to a final hearing, only seven consumers in eight years received a dime from Wells Fargo with the bank paying out just $349,549. Indeed, consumers paid more restitution to Wells Fargo in arbitration than the other way around.

 

House Expected to Vote on Financial Choice Act, Bill to Cripple CFPB, by Friday

The House Rules Committee voted to permit House consideration last night. The Hill story is here.  Excerpt:

The House Rules Committee on Tuesday night cleared for a vote on the House floor a Republican effort to strip much of the Dodd-Frank Act.

The powerful panel -- the last stop for every bill considered by the House -- cleared the Financial CHOICE Act 9-4 along party lines and with few amendments. The full House is scheduled to vote on the bill by Friday morning, and it is expected to pass it without Democratic support.

Trump to Nominate Banker Joseph Otting to head OCC

The OCC regulates national banks and has some power over consumer protection issues. The Financial Times has the story here. Excerpt: 

If confirmed by the Senate, Mr Otting is likely to be “a reliable ally” for Mr Mnuchin and “a steady proponent for bank deregulation”, said Isaac Boltansky, analyst at Compass Point in Washington.

Jeanette Quick: Washington's quiet revolution to destroy consumer protection

Here, in The Hill.  Quick served as senior counsel to the Senate Banking Committee and senior attorney for OCC.  Excerpt:

Trump is well on his way to effecting change in financial regulation through his appointments, and Congress appears poised to stall new financial regulation through changes to the rulemaking process, most significantly through the Regulatory Accountability Act (RAA).

 Many proposals to “reform” the rulemaking procedures are designed to hinder regulation, just as many agency heads are selected to prevent their agencies from regulating. As Steve Bannon has stated, “Cabinet appointees ... were selected for a reason and that is the deconstruction [of the administrative state] ... the way the progressive left runs, is if they can't get it passed, they're just gonna put in some sort of regulation ... in an agency ... that’s why this regulatory thing is so important.”

 

FTC and Florida take action against robocall ring that pitched worthless credit card rate-reduction programs

The Federal Trade Commission announced today that, in a case filed by it and the Florida Office of the Attorney General, a federal district court judge has entered eight orders against an intertwined web of Orlando-based individuals and companies that bombarded consumers with illegal robocalls from “Card Member Services,” pitching worthless credit card interest rate reduction programs.

In addition to imposing financial judgments, the orders permanently ban most of the defendants from robocalling, telemarketing, and providing debt relief services. The FTC alleges the scheme operated from 2011 until the court issued injunctions at the agencies’ request stopping the calls in mid-2015.

According to the complaint, filed in June 2015, the defendants, doing business as Payless Solutions, illegally called thousands of consumers nationwide – including many seniors – claiming that their credit card interest rate reduction program would save consumers at least $2,500 in a short period of time and would enable them to pay off their debts more quickly. After convincing consumers to provide their credit card information, the defendants charged them between $300 and $4,999 up-front, but provided nothing in return.

The FTC's full press release is here.