Bank Lawyer's Blog

Kickin' Back In Ol' Mexico

Baby if you’re good to go we’ll go down to Mexico
Get a place in Cabo, kick back in the sand
It’ll be just you and me and the moonlight dancing on the sea
To the Spanish guitar melody of a mariachi band
--Good to Go To Mexico, Toby Keith

For all you mortgage brokers, title insurance agents, and other "settlement servicer providers" in the U.S. who wail, gnash your teeth and rend your garments over the anti-kickback provisions of the Real Estate Settlement Procedures Act, have I got a deal for you (paid subscription required).

Carefree Mortgage, a privately held Sonora, Mexico, lender, is offering Web sites, referral fees, and a streamlined mortgage process to U.S. and Canadian real estate agents and mortgage brokers for referring clients who are interested in buying property in Mexico.

Ray Desmond, the president of Carefree Mortgage, said he began offering the personalized Web sites to these potential referral sources last month.

So far agents and brokers have started 200 of the sites, and referrals "are just starting to come in," he said in an interview Thursday.

Carefree Mortgage has agreed to pay referral fees to agents and brokers whose clients obtain financing from the company. The fees range from $300 to $2,000, depending on the property's price.

"This makes all of these realtors and brokers my own de facto sales force," and the referrals eliminate the need to pay loan officers a large commission, Mr. Desmond said.

In the U.S., paying fees purely for the referral of such business is illegal (with certain limited exceptions). But because the property is south of the Rio Grande, Carefree can pay U.S. real estate and mortgage brokers referral fees to its heart content, and there's not a darn thing that HUD can do about it.

Brian Sullivan, a spokesman for the Department of Housing and Urban Development, which enforces the law, said properties in Mexico fall outside its jurisdiction. "That's the acid test: where the property is located."

Sullivan did caution, however, that no pistoleros from these "sites" better cross the river and rustle any Texas cattle, or, by gum, they'll be hell--and the Texas Rangers--to pay.

No worries there, it seems. These sites are targeted at "above-prime" borrowers, those with "higher FICO scores." Hardly the breeding ground for desperate men bent on burnin', lootin' and other bad acts. Moreover, because only "the rich" might suffer if the land turns out to be a pile of guano, Senators Chris Dolt Dodd and Chucky Schumer aren't likely to call for an investigation if any purchasers get burned.

While not exactly a high volume business, this appears to be one where a man can make money the old fashion way: sitting on his duff, in front of his computer screen, making telephone calls. No applications to fill out, and no wondering if you've actually rendered the necessary number of additional services of the correct type or if the amount of the fee is reasonable in light of the value of the services provided. Nope, just herd those American sheeple into the right pasture in the land of mañana, hope they graze, and if they do, you snag a quick wad of pocket money, no embarrassing questions asked.

Which you then can blow on a top shelf tequilla,  camarones en salsa del topo, and a hot mujer named Salma.

I need to seriously consider this opportunity, right after I check out what Suzanne Summers has going over at QVC.

Good News, Bad News

When Nariman Behravesh, Chief Economist for Global Insight, gave a presentation last week to the Natgional Association of Homebuilders entitled "The U.S. Economic Outlook: How Much Fallout from The Housing Meltdown?", most commenters seemed to take away from his statements that the slumping housing market has been, and will continue to be, a drag on the U.S. economy. Others focused on his assertion that approximately 7% of homeowners have negative equity in their homes. That's the bad news.

Receiving less press coverage (because who wants to hear the good news?) were some other tidbits scattered about by Behravesh that would make a depressed real estate lending lawyer take heart and a bankruptcy lawyer hold off on buying that Lexus for the spousal unit. Among those are the following:

• 45% of homeowners own their homes free and clear. Of the 65% who have a mortgage, 76% are fixed rate.
• Only 13% to 14% of mortgages are subprime.
• While 7% of homeowners have negative equity, 60% have equity of 30% or more. Even the math-challenged, like the author of this blog, realizes that 93% of homeowners have some equity, in their homes, and the vast majority have beaucoup equity.
• The subprime "meltdown" has, thus far, had little impact on the prime mortgage market.
• Compared with the S&L crisis of the 1980s, today's U.S. banking system "is in very good shape.

Behravesh predicts a "soft landing for the U.S. economy. While economic growth and the housing market will trend lower this year and next, and the "boom in corporate profits" is ending, consumer spending will be assisted by employment and real wages growth, strong exports will boost the economy, and inflation will moderate.

I guess those of us who developed that great "work out" skill set during the last banking system meltdown will have to be content with milking our clients while they graze contentedly in the calm pastures of economic well-being, rather than skin them alive as they rush to the slaughterhouse. Ah, lawyers! Like cockroaches, they are the ultimate survivors, no matter what the environment.

Goodbye, Futon

Seven months old, yet never so timely.

Dive Bombed By Moonbats

"Big business never pays a nickel in taxes, according to Ralph Nader, who represents a big consumer organization that never pays a nickel in taxes."
--Dave Barry

A consultant for a (then) Big Five accounting firm once told me that the key to successful consulting was to convince a prospective client that there is a s**t storm on the way and that the consultant has the best umbrella. Whether there's any truth to the weather prediction is irrelevant. It's all about creating the perception of a problem. The same holds true of successful consumer advocacy.

The National Community Reinvestment Coalition urged lawmakers today to pass legislation immediately to shut down the "foreclosure mills" being operated by law firms, racing to kick out financially-troubled subprime borrowers from their homes. The law firms represent mortgage servicers, Wall Street investment firms and lenders.

Testifying before the House Financial Services Committee, a NCRC official recommended legislation that provides for 60-to-90 day stays in foreclosure proceedings nationwide to ensure that homeowners situations are properly assessed prior to facing needless and expensive foreclosure actions that strip equity.

The dreaded "land sharks" are doing their jobs so efficiently and swiftly that they're "stripping equity" away from subprime borrowers, in connection with mortgage loans where, according the consumer advocates, the amount of the loan exceeds the value of the collateral, leaving nothing to "strip." Makes sense to me.

What does "the homeowners situations are properly assessed" mean? In every state that I'm aware of, the lender has to, in effect, certify or demonstrate that the loan is in default and that the lender is entitled to foreclose. What more needs to be "assessed" that would take an additional 60 to 90 days?

Recent reports reveal that the average real estate loan foreclosure costs the lender a loss of $20,000 to $40,000. You can do the math. It's obvious that these evil lenders are out to drive themselves, as well as the borrowers, straight into the poor house. It's insane, but pure evil is bereft of any purpose other than "doing a bunch of junk" on everything and everybody.

The NCRC also wants Congress to enact a nationwide uniform stay of foreclosure period so that subprime borrowers have time to head for Las Vegas, Atlantic City or the nearest Native American casino, waltz up to the roulette wheel, and lay it all down on Black Number 35. "Redemption, here I come! Be good to me, baby! Be good to your pappa!"

So much for states rights.

If a "subprimer" needs a stay, I have a Five-Point winner of a program:

1. PAY...THE...FRIGGIN'...LOAN.

2. Declare bankruptcy. That will get you a nice stay, until they figure you out. Of course, you might have to forfeit the HD flat screen TV, so maybe that's not the plan of choice.

3. Hire your own land shark (rob a Shell mini-mart if you need a retainer), come up with some (real or plausible sounding) grounds, and secure a temporary restraining order. That might not buy you as much time as bankruptcy, but you'll have the benefit of spending quality time with the attorney of your choice.

4. Record "Woke Up This Morning (Got Yourself A Gun)," hire a pretexter to find out the loan officer's home phone number, call him in the wee hours, and play it, over and over, followed by "Who Let The Dogs Out?" You then need to disguise your voice and demand that all pending foreclosures be stayed, to avoid the unpleasantness that comes from the lender (and local law enforcement) focusing on only your loan.

5. Join Muqtada al-Sadr's Mahdi Army and go all jihadi on the lender until it agrees to stop the foreclosure. In this case, jail time is not a concern, it's a reward, as are the 72 virgins, in case the lender counters with a foreclosure "surge" of greater violence than you're prepared to meet. Keep an eye peeled for helicopters if you use this one.

Not content with lambasting attorneys, consumer advocates also went after the most unfair and loathsome practice in which any lender can engage: handling its own foreclosures in-house.

Consumer advocates have begun criticizing major mortgage lenders, such as Countrywide Financial Corp. and GMAC Financial, that also have in-house foreclosure businesses.

It is "mind-boggling" that in many states, people can lose their homes in foreclosure without any court hearing and that the foreclosure is done by a company with ties to the lender, says Ira Rheingold, general counsel for the National Association of Consumer Advocates in Washington.

"They should be completely objective and not have any financial interest in how the case is resolved," Rheingold added.

Like outside lender's counsel, Ira? Ira's poor mind is "boggled" by state foreclosure laws that have been around, and found compliant with due process requirements, for decades. In the sage words of noted legal commentator Ira ("Bugs") Bunny, "What a maroon!" This is the same Ira Rheingold who, last year, was aghast at the unfair, if obvious, application of federal preemption principles. Naturally, he's now calling for the US Congress to preempt state law. Having been skewered in these pages in the past, we almost feel that it's cruel to keep piling on. So, we'll let Bert Ely do it.

Bert Ely, a banking industry consultant in Alexandria, Va., disagreed, pointing out that lenders have every incentive to prevent foreclosures.

"No legitimate lender wants to foreclose, and the reason why is that the losses are very substantial," he said.

"Foreclosure is not a profitable activity, let me assure you."

Foreclosure is so costly to lenders — on average they recoup about two-thirds of a home's value — they should be able to foreclose using their own staff rather than having to hire outside attorneys, Ely said.

"The banks should be allowed to do it the cheapest way possible," Ely said.

Bert's also taken his lumps on this blog. Now, however, I agree with him, so he's aces in my book.

None of this, of course, is about helping the consumer. It's about another opportunity to call a press conference to justify the NCRC's and the NACA's existence. Neither group actually believes that the U.S. Congress is going to enact a moratorium that preempts state foreclosure laws. In golf, you drive for show and put for dough. In lobbying, you blather for both.

If, as Norman Cousins once asserted, cynicism is intellectual treason, then these clowns are the Benedict Arnolds of the intellect.

A Failing Grade

National banks and federal thrifts who have been subject to rigorous oversight to ensure that they adequately protect their customers' nonpuplic personal information and consumer information from unauthorized access (online and offline) will be pleased to note that the parent of the OCC and the OTS, the Treasury Department, recently received a failing grade for computer security. Sadly, Treasury wasn't the only bad student.

The federal government earned an overall grade of "C-minus" last year for securing its computer systems and networks from hackers, viruses and insider threats, a slight improvement from its performance in 2005.

According to data to be released by a House committee today, the Department of Defense led a group of eight agencies that received failing marks for computer security. Also receiving that dubious distinction were the departments of Agriculture, Commerce, Education, Interior, State and Treasury, as well as the Nuclear Regulatory Commission. The Department of Homeland Security earned a D, although its overall performance improved since 2005. The Department of Veterans Affairs did not provide enough data to earn a grade. In 2005, it received an F.

It was very comforting to read that the Department of Homeland Security received a "D." How "geeky" does an al-Qaeda operative have to be to hack into Homeland Security these days?

The "grades" are assigned as part of a review process required by the Federal Security Management Act.

The 2003 law, known as FISMA, requires agencies to meet a wide variety of computer security standards, ranging from operational details -- such as ensuring proper password management by workers and restricting employee access to sensitive networks and documents -- to creating procedures for reporting security problems.

FISMA has its critics.

Critics of the process have called the annual FISMA reports more of a paperwork exercise than an accurate representation of the security of federal agencies' computers and networks. They say the reports do not require or give agencies credit for taking certain types of security precautions, such as penetration tests to locate gaps in security defenses.

Davis Staff Director David Marin said the congressman plans to address those criticisms by awarding extra credit points in next year's grades to any agencies that beat a White House deadline for meeting new federal computer security standards. An administration memo issued last month requires agencies to ensure that any existing or newly purchased personal computers that use Microsoft Windows XP or Vista software platforms include certain default settings designed to decrease time and money spent securing those personal computers and in repairing systems that have been compromised by hackers or viruses.

Having just negotiated an agreement on behalf of a bank with a third party vendor to provide "penetration testing" (a phrase that invariably engenders Beavis-and-Butthead-like sniggering from certain quarters), I find it heart-warming to know that "extra credit" will be given to government agencies for doing what they already expect banks to do as a matter of fundamental safety and soundness. Maybe with the extra credit, Treasury can make it all the way up to a D- next year.

You couldn't make this stuff up if you tried. The word "irony" doesn't even begin to describe it. "Farce" might be more appropriate.

Putting Their Money Where Their Leaks Are

According to Grant Thornton, "73% of bankers plan to increase their technology spending" in 2007.

Protecting customer information ranked first among spending reasons in the Grant Thornton survey, followed by assuring the security of Internet services and verifying that systems operate properly.

Based upon my personal experience (and anecdotal evidence from others), I'd hazard a guess that the multi-factor authentication requirements (supposed to have been in  place by the end of 2006) play a large role in the increased spending. I'd also venture that examiners (in addition to their fixation on BSA) are prompting banks of all sizes to test their information systems that contain any customer or consumer information and to "plug any leaks" or vulnerabilities that they find.

It also makes good business sense to ensure that online banking is safe.

Another recent study on banking technology shows that online banking systems are playing a greater and greater role in keeping customers satisfied -- and loyal.

In fact, customer satisfaction ratings for online banking services actually is slightly higher than customer satisfaction for all bank services.

That's driven by easy-to-use online-bill payment systems.

The survey, from Foresee Results and Forbes.com, notes that online bill-payers are 7% more satisfied than other people who use online banking tools, and 31% more likely than other customers to buy other services from the bank.

The more bills a customer pays online, the happier they are with the bank, the survey notes. And those happy customers are the most likely group to try other self-service offerings from banks.

Banks know they must sell more products in order to grow, and many large banks are aiming to sell more to existing customers. It's cheaper than acquiring new customers and, as online banking becomes more entrenched, that's likely to continue to grow.

Heavy users of online services, especially bill payment and scheduled payments and transfers, are the "stickiest" customers a bank can find. Once a customer is using a bank's online banking tools, he or she is much less likely to switch to a new bank, no matter how long a teller line is.

Therefore, as long as you don't scare these customers either offline or, more likely, to a competitor, by having a security breach, or making your multi-factor authentication procedures burdensome (which one of my financial institutions unfortunately has done), these types of customers are likely in for the long haul. It makes complying with the Interagency Guidelines for Establishing Information Security Standards not only a matter of routine regulatory compliance, but a matter of smart business practice.

Still Born Bailout

It appears that Chucky Schumer's bailout plan has been bombed while taxing down the runway, so he's stopped calling it a bailout (paid subscription required).

Senators now appear to be leaning away from any legislative fix for the subprime market, instead hoping the private sector will offer workout loans and take other steps to alleviate pressure on troubled borrowers.

Senate Banking Committee Chairman Chris Dodd said Wednesday after a summit with regulators and industry officials that he hopes to avoid adding more laws to the books. He said he could not sanction a government bailout.

His comments came as two lawmakers who had appeared supportive of a bailout last week backed away from it. Sen. Charles Schumer said in an interview that his plan to appropriate money for nonprofit groups that help borrowers refinance troubled loans "is not a bailout."

"This is a restructuring, which is what any business does," the New York Democrat said in a brief interview Tuesday.

Yeah, that's what we'll call it! A "restructuring." Yeah, that's the ticket!

Dolt's Dodd's running for President (on the "Fat Chance" party ticket), and the last thing he'd support is raising taxes. So, Chuck can call it "a restructuring," a "reordering," a "resuscitation." He can call it "Ray" or he can call it "Jay." Whatever he calls it, it's Dead On Arrival.

While Chuckles engages in self (verbal) abuse, the banking industry is taking care of its own mess, and without government assistance, thank you very much. At least it is in Colorado.

As various bills to address Colorado's foreclosure problem wind their way through the state Legislature, banks have been jumping into the fray with their own attempts to help strapped homeowners.

JPMorgan Chase Bankwas the first lender involved in the Colorado Foreclosure Hotline, a statewide free hotline for homeowners in danger of foreclosure. The hotline -- at 1-877-601-HOPE -- started last October.

Callers are connected with local counselors to help them resolve their foreclosure issues, using a variety of solutions, including selling the home before foreclosure, creating a repayment plan and modifying the mortgage.

This month, the Colorado Housing Division released data that showed that at least 80 percent of the more than 7,000 people who had called the hotline in the previous five months had avoided foreclosure.

[...]

US Bank and Wells Fargo also have lent their support to the hotline, along with the Division of Housing, the Colorado Association of Realtors, Freddie Mac and the Colorado Mortgage Lenders Association.

[...]

Wells also recently launched a program it calls Steps to Success, which offers a variety of online and in-person services to help its customers better handle their finances.

Imagine that! Lenders acting in their own self-interest to avoid having to take a hit, without being ordered to do so by the legislature. You'd think that this was a private, market-driven economy if you didn't know any better.

Not to be outdone by those banks that actually pay income taxes, Colorado's credit unions are also jumping in to the fray.

Greenwood Village-based Bellco Credit Union, one of the state's biggest credit unions, last year began offering a product initiated by the Credit Union National Association (CUNA) called the Home Loan Payment Relief (HLPR) Mortgage. The idea is to help first-time and lower-income members, who might otherwise be frozen out of the market, qualify for mortgage loans.

The HLPR Mortgage features an interest rate 1 percent below the national average for a traditional three-year adjustable rate mortgage (ARM), locked for three years. Later increases are capped at 1 percent per year, up to 5 percent for the life of the loan.

The "HLPR Mortgage." Cute.

I suppose that I might have been a bit hasty in suggesting yesterday that merely because the federal financial institution regulators (including NCUA) issued a statement that encourages lenders to make, "for example," fixed rate loans to subprime borrowers suffering from ARM "payment shock," and because FDIC Chairman Bair has publicly called for the same "fix," lenders should assume that getting the borrower back into an ARM is not a preferred solution. To the contrary, it appears that not only can you "re-ARM" the borrower, you can "re-up" the interest rate, albeit gradually and with a 5% "cap."

I'm not certain that by refinancing subprime borrowers into another "locked" ARM, lender's aren't merely extending the "fixed rate" period and delaying the inevitable. By the time the day of reckoning comes, however, it may be three to eight years down the road and the Chucky's of the world will be on to their next road to Nowheresville.

Here's rare footage of Chuck Schumer "restructuring" his relationship with a Harrier jet fighter.

Window Dressing

Were you as excited as I was when you read the federal banking regulators "Statement on Working with Mortgage Borrowers"? I couldn't believe how flexible the banking agencies are becoming at letting banks work out whatever arrangements they desire with subprime mortgage borrowers who turn out to be subprime mortgage borrowers. More flexible than figure skater Sasha Cohen, if that's humanly possible.

You know subprime mortgage borrowers, don't you? They're the ones who don't pay the loans back as they promised they would, because, of course, THEY'RE LESS THAN PRIME MORTGAGE BORROWERS!!!!

The purported impetus for the Statement involves the interest rate "reset" that will cause "payment shock" in borrowers who didn't read their disclosure statements or loan documents when they borrowed money in the form of adjustable rate mortgages. In case you've been in a coma for the past year, that's a hot topic. "These borrowers may not have sufficient financial capacity to service a higher debt load, especially if they were qualified based on a low introductory payment." Sound like perfect candidates to roll those puppies over into another 2/28 with a teaser rate, eh?

No, that's not what the regulators have in mind.

Such arrangements can vary widely based on the borrower’s financial capacity. For example, an  institution might consider modifying loan terms, including converting loans with variable rates into fixed-rate products to provide financially stressed borrowers with predictable payment requirements.

In bureaucrat-speak, "for example" means "this is what we're talking about, idiot."

The Statement is full of cheery reminders that refinancing ARMs into fixed rates is the right thing to do.

The agencies encourage financial institutions to consider prudent workout arrangements that increase the potential for financially stressed residential borrowers to keep their homes.

[...]

The agencies will not penalize financial institutions that pursue reasonable workout arrangements with borrowers who have encountered financial problems. Further, existing supervisory guidance and applicable accounting standards do not require institutions to immediately foreclose on the collateral underlying a loan when the borrower exhibits repayment difficulties.

[..]

Financial institutions may receive favorable Community Reinvestment Act (CRA) consideration for programs that transition low and moderate income borrowers from higher cost loans to lower cost loans, provided the loans are made in a safe and sound manner. Financial institutions, working alone or in conjunction with reputable organizations such as the Center for Foreclosure Solutions sponsored by NeighborWorks, can assist borrowers in avoiding foreclosure through credit  counseling. Such programs also help financially stressed borrowers avoid predatory foreclosure rescue scams.

The bloom comes off the rose, however, when you read all the qualifiers.

Prudent workout arrangements that are consistent with safe and sound lending practices...

[...]

However, there may be instances when workout arrangements are not economically feasible or appropriate...

[...]

Institutions should identify and report credit risk, maintain an adequate allowance for loan losses, and recognize credit losses in a timely manner...

In other words, "we encourage you do a good deed, but we'll have a 23 year-old kid fresh out of examiner's training review those good deeds one or two years later and cite you for violating safe and sound banking practices for doing so. Why? Because we can, that's why."

Last Tuesday, the same day the Statement was issued, FDIC Chairman Sheila Bair testified before the House Financial Services Committee (paid subscription required), and blathered about the need to refinance ARMs into 30-year, fixed-rate mortgages. However, she also noted the fatal flaw in her call for banks to solve this problem: they don't own the loans.

But roughly 75% of subprime loans were packaged and sold as securities in 2006, so there are limits to how many troubled loans can be modified. With subprime loans being purchased and sold in global securities markets, it can be difficult to track down loans so they can be extracted and restructured. Moreover, agreements governing the creation of mortgage-backed securities can limit the ability of loan servicers to modify mortgages.

In addition, it's already been established that banks and other institutions regulated by the federal banking agencies did not originate a majority of subprime loans. In fact, only 23% of subprime loans were originated by banks. Those other lenders don't give a rip what Sheila Bair, or any other regulator who has no power over them, has to say.

This entire exercise seems to be addressing a problem, but doesn't accomplish a thing of practical value. It's nothing more than window dressing. What a kabuki dance these D.C. folks put on.

Buried

Buried under an avalanche of work. Send dogs. Send whiskey.

Send Lawyers, Guns and Money.

Well, I went home with the waitress
The way I always do
How was I to know
She was with the Russians, too

I was gambling in Havana
I took a little risk
Send lawyers, guns and money
Dad, get me out of this

I'm the innocent bystander
Somehow I got stuck
Between the rock and the hard place
And I'm down on my luck
And I'm down on my luck
And I'm down on my luck

Now I'm hiding in Honduras
I'm a desperate man
Send lawyers, guns and money
The shit has hit the fan

Send lawyers, guns and money.

Watters: Low Tide

Yes sir, folks. It appears from the public comments of the losers in yesterday's Watters v. Wachovia decision that they will be pressing Congress for a legislative "fix" to what ails them.

From the National Community Reinvestment Coalition:

This decision undermines effective state laws and regulatory enforcement mechanisms in place to protect consumers. We are disappointed because states have been extremely active in defending borrowers against abusive lenders, especially in attorney generals' offices. It's possible that the ruling has left some wiggle room on enforcement, based on our first read. This decision, though, strengthens our resolve for meaningful national anti-predatory lending legislation that covers all lenders throughout the country.

From our good friends at the National Association of Realtors:

NAR and its 1.3 million members pledge to work with Congress to ensure that the rights of states are upheld in all industries, and that consumer rights are protected.

NAR doesn't care about state banks. It wants to ensure that national banks never get into real estate brokerage and bring Wal-Mart-like efficiencies to bear, as explained in more detail in this Realty Times article:

Mary Trupo, NAR's public issues director, explains, "What this means is the ruling allows the OCC to preempt state regulatory pwoers, so for us, it could be something similar that happened with state insurance rules. The national banks used the OCC preemption rules to enter into the insurance brokerage business. Our concern is that this could open the door to do the same with real estate.

"Brokers and agents would be competing against an entity that isn't subject to state regulations," she continues. "And it still blurs the line between banking and commerce. This ruling is not addressing banks into real estate directly, but we see this as another building block in banks trying to enter into real estate brokerage. The effect on consumers is that competition could be limited and consumers don't normally benefit when competition is limited. If banks build a subsidiary, your local Realtor is competing with a big banking conglomerate, and consumers will have less choice."

Thinking like a damned lawyer, if I owned a successful real estate brokerage business and was thinking about an exit strategy, nothing would be sweeter than having banks enter the business as I was ready to exit. If history is any indication, banks will be behind the learning curve and will likely overpay me for my business. "After me, the deluge." Sorry, that's a terribly short-sighted and selfish thought. My bad!

From the Conference of State Bank Supervisors:

The Conference of State Bank Supervisorssaid it was “deeply disappointed” in the high court ruling. “We see it as a setback for financial consumers and state efforts to battle predatory lending, abusive mortgage lending practices and mortgage fraud. This decision does harm to the states’ historical role in advancing consumer protection and ability to respond to local issues,” said CSBS President and CEO Neil Milne. Milner said CSBS will “continue to pursue a more seamless and coordinated state regulatory system as we are currently doing in mortgage supervision.”

The CSBS doesn't want to push Congress too far, of course. Bad legislation on "predatory lending" could hurt its members just as much as it hurts national banks and federal thrifts. However, I expect the CSBS to be vigilant in ensuring that whatever pain is inflicted upon state banks by the U.S. Congress, national banks are equally "afflicted." Misery loves company.