Bank Lawyer's Blog

FDIC Absolutely Open For De Novo Business

In the article I discussed a couple of days ago, which was a report on public statements by FDIC supervisory personnel on issues of concern to banks of all sizes, one of the other topics that the FDIC discussed was de novo banks. Readers of this blog know that it's a topic that was near and dear to my heart from the days when The Care Bair first imposed a moratorium on FDIC insurance for new industrial bank charters.

Here's what Doreen Eberley, the FDIC's director of risk management supervision, had to say on the subject of new bank charters.

• De novo banks coming back? With one fairly recent exception, bank startups have been nil in recent years.

“We are absolutely open for business,” said Eberley, in terms of being willing to entertain new applications for deposit insurance. “There hasn’t been a lot of business, though, that we’ve heard about.” (FDIC grants deposit insurance coverage, but chartering is handled by state regulators and, for national banks, the Comptroller of the Currency.)

Eberley suggested that capital that might have gone to startups went into existing banks during the crisis and the post-crisis cleanup. She said that $40 billion in new capital came into banks under $1 billion—excepting some specialized institutions—between 2008 and 2012. It was simply cheaper for investors to buy into existing banks than to start from scratch. However, she suggested that as many community bank share prices are rising, de novo banking may appear attractive once more.

She also noted that most consolidation of community banks has involved mergers and acquisitions with other community banks.

The above is bureau-speak for "we are discouraging de novo bank charters, but refuse to admit it publicly." There have been only a very few de novo charter FDIC insurance applications approved since the economy tanked. As one state banking chief told me several years ago, the FDIC says that there are too many banks in this country, it's in the business of reducing the total number, and it's certainly not consistent with that plan to approve applications for insurance of accounts to new banks. That's what regulators tell one another over a couple of cool mugs of brew, but that's not anything any of them will cop to publicly. In fact, they'll deny it, if pressed.

The reason that "most consolidation of community banks has involved mergers and acquisitions with other community banks" is because of another worm hole in the FDIC time-space continuum: a distaste for private equity. Good luck assembling a group of private investors who look upon the investment in a community bank, or a group of community banks, as a great investment "play." Sure, a number of those groups grabbed some failed banks from the FDIC during the post-crash wave of bank failures, but the FDIC soured on private equity players and their nasty desire to make a return on their investment. If you exclude private equity players from the buying group, then, of course, what's left are other banks.

This is not to say that you cannot get a de novo bank started, nor that a group of investors who are interested in investing in community banks purely as a private equity investment "play" are never going to be able to obtain regulatory approval. It does mean, however, that it's going to be tough to accomplish, and the instances where they are approved are going much more rare than they used to be before the crash of 2008. Even those few that make it the finish line are going to take a lot more time, involve a lot more paperwork, and require a lot more expense than they did "in the good old days." The odds are , you'll be spending all that time and money and still die somewhere short of the home stretch.

FDIC "Clarifies" Guidance

A recent article in the ABA Banking Journal by Steve Cocheo

quotes an FDIC official as clarifying a point that needs to be clarified, especially in light of some confusing statements last year from another FDIC official: bankers need to treat regulatory "guidance" as something they ought to follow, not as something that is "optional." Speaking at an ABA Government Relations Summit in March, Doreen Eberley, FDIC’s director of risk management supervision, responded to complaints by bankers about the nature of "guidance" and "best practices."

One banker told the FDIC panelists that examiners should stick to regulations and stop bringing up guidances and best practices. Another banker said that in his experience best practices wound up being requirements that his examiners hewed to and expected the bank to adhere to.

Ms. Eberley tried to set the questioners, and presumably others in the audience, straight as to the FDIC's position.

• First, regulations are something banks are expected to comply with and noncompliance is enforceable.
• Second, guidance is also something banks are expected to comply with, though guidance is not enforceable. Eberley said compliance with guidance is not optional, though she admitted that that is sometimes misunderstood.
• Third, best practices are procedures and approaches that certain banking institutions use. They may represent strong ways to go about meeting a particular challenge, but performing them is not a regulatory expectation, Eberley insisted. One of the bankers had said that in his experience a best practice was non-negotiable, and demanded by his examiners.

Eberley seemed surprised that the banker had this impression about best practices. She said that she has found that examiners—exposed as they are to numerous banks’ approaches to common banking issues—often get asked for best practices by the banks they examine.

While she said that she’s been told that bankers value having such information, Eberley insisted that “we don’t examine for best practices.” She indicated it was essential to differentiate between guidance and best practices.

Practice pointer: "guidance is not optional." As to Ms. Eberley's statement that guidance "is not enforceable," I've discussed this in previous posts. In the first place, examiners treat it like it's enforceable, so if you want to argue technicalities on enforceability with examiners, and contest the enforceability of "matters Requiring Attention" in your reports of examination to the extent they are based upon the bank's alleged failure to follow "guidance," then by all means ignore guidance. However, I'd also suggest that you purchase "The Joy of Suffering: Psychoanalytic Theory and Therapy of Masochism" because you'll need it to adjust to your future life as a human pin cushion.

Another practice pointer: "guidance" embodies what regulator's believe are principles of safety and soundness. If they take enforcement action against you because they allege that you have been operating in an unsafe and unsound manner, that is a violation of law and guess who an administrative law judge or, should you reach that stage, a federal court, will defer to on the issue? If you guessed "the bank" or "no one," you need to reconsider the attractiveness of a career in the fast food industry.

Bill Isaac: A B-52 Cluster Snark Bomber

While my blog was knocked off the air for several days due to the massive DDoS attack on Typepad (my blog hosting service), former FDIC Chairman stepped up to the plate and held high the mighty fist of snark, which he shook at one of our favorite subjects for snark attacks: Operation Choke Point.

In an opinion piece for the American Banker (paid subscription required), Bill minced no words.

The Justice Department's "Operation Choke Point" is said to be targeted at online payday lenders that lend into states that prohibit payday lending. But the operation is being pushed far beyond its stated objective of targeting online payday lenders violating state laws and is having potentially devastating impact on lawful check cashing and small loan businesses. This in turn will cut off tens of millions of people from much needed access to money to meet emergency needs.

[...]

No matter what your personal view may be of payday lending or check cashing services, Operation Choke Point should be both alarming and repugnant. It is a direct assault on the democratic system and free-market economy that have made the United States the most powerful and prosperous nation in world history.

Without color of law and based on a political agenda, unelected bureaucrats at the Department of Justice are coordinating with some bank regulators to deny essential banking services to companies engaged in lawful business activities. Bankers operating under the yoke of an oppressive regulatory regime are being cowed into compliance.

If lawful payday lenders and check cashers can be driven out of the banking system because someone in the government doesn't like them or what they do, what lawful businesses are next?

Oh, let's see...hmmm...tax anticipation refund lenders...deposit advance lenders...rent-to-own businesses...pawn shops...car title lenders...subprime automobile lenders...any bank that charges an overdraft fee, a late payment fee, an NSF fee...basically, any business that serves the fog-brained poor who need unlicensed lawyers like Clarence Darrow Warren to do their thinking for them. And who better to pick what lenders ought to be able serve the disenfranchised than folks who make more on average than the folks they regulate? Especially those folks who have to take basic training courses about the businesses after they're hired to regulate them at such high salaries.

Keep ranting, Bill. We need all the bile we can muster to choke off the Choke Pointers.

States Pointing Out Problems With Choke Point

According to the American Banker (paid subscription required), state bank regulators are expressing their concern that the DOJ and federal bank regulators "Operation Choke Point" is throttling more than some bad guys the operation is supposedly intended to target.

Banking regulators in states that allow payday loans have become concerned that legally operating lenders are losing their banking relationships as a result of the multipronged federal effort, according to Margaret Liu, senior vice president at the Conference of State Bank Supervisors.

The worry is that banks — in the face of growing pressure from federal banking agencies and the Department of Justice, which is operating an investigation known as Operation Choke Point — are severing ties even with licensed payday lenders, Liu said Saturday.

"This is a troubling development," she said during a panel discussion at the spring meeting of the American Bar Association's business law section.

"It is one thing to be ensuring that a business partner, the client of a bank, is operating legally," she said. But a line is crossed when a payday lender "is being denied banking services because of concern about a federal agency advancing its own policy agenda, beyond appropriate supervisory responsibilities," she added.

The grievance will likely be the topic of future discussions between state and federal regulators, Liu said.

According to American Banker Kevin Wack, "there has been little public evidence" to back up assertions that the operation was shutting legal payday lending services out of access to the banking system. He then discusses a Washington Post article that featured a check cashing business in Minnesota whose owner was told by Wells Fargo to either drop the payday lending business or find another bank. The owner dropped the payday lending business. According to a follow-up interview with Wack, the owner told him that Wells Fargo's attitude was replicated by other banks he'd contacted. To all of them, payday lending is radioactive, notwithstanding that it may be legal, because the DOJ and federal bank regulators simply don't like it, and because they don't like it, the business brings with it increased regulatory scrutiny. Kids with regulatory proctoscopes poke into every nook and cranny of a bank's relationship with a payday lender, and make life miserably time-consuming and expensive. They also find all kinds of "heightened due diligence" that the bank needs to be performing on the payday lender, such as making sure every branch office in every locale across the nation is properly licensed under local municipal codes and determining whether any second cousin twice removed of any member of any cleaning crew that cleans any of those branch offices is now or ever has been a member of the Communist Party. You know, the usual and customary things any right-minded bank ought to be asking its business customers.

The article admits that although the CSBS is gagging on Choke Point, it is not clear how many of the 36 states that permit payday lending are also pushing back. It does note that New York, which doesn't allow payday lending, supports the federales. You all will recall that New York is the state where Spitzer-wanna-be Gentle Ben Lawsky is busy trying to drive business out of the state and to re-establish London as the financial capital of the world.

As a parting shot, Wack notes that the CFPB has entered the fray, which is a sign that defense lawyers are going to be fully employed for the foreseeable future.

...Christopher Peterson, a senior enforcement lawyer at CFPB, sent a warning shot Saturday to online payday lenders that lend money in states where they don't hold a license.

He said efforts to collect on those loans are "abusive" partly because the borrowers frequently don't know that their debts are legally void.

"Consumers don't understand, and it takes unreasonable advantage of their situation," Peterson said.

For nanny-staters like the CFPB, consumers will never fully understand anything and will increasingly need the CFPB to do their thinking for them in order to prevent lenders from the most "abusive" practice of all: making a profit.

When Curry Speaks, All Banks Should Listen

The Comptroller of the Currency Thomas Curry gave a speech the other day (paid subscription required), and emphasized a couple of points that vendor management folks at financial institutions with various charters--state and federal, bank and credit union--and the lawyers who represent them,  would be wise to heed.

Comptroller of the Currency Thomas Curry said his agency is increasingly concerned about the cybersecurity risks from banks relying too much on certain vendors and using service providers in foreign countries.

Banks can end up becoming dependent on certain vendors because of consolidation in the service provider industry, Curry said in his prepared remarks for the Consumer Electronics Show's Government Summit in Washington. They can also be exposed to risks when they assign critical functions to outside vendors, including those that use foreign-based subcontractors.

"Banks need to consider the legal and regulatory implications of where their data is stored or transmitted, and make a determination as to whether geographic limitations are needed in their contracts," Curry said. "Finally — and perhaps most importantly — we are concerned about the access third parties have to large amounts of sensitive bank or customer data."

Here are a few take-aways:

First, cybersecurity due diligence of your vendor assumes critical importance when that vendor has access to customer data and other sensitive information of the institution. Access to sensitive information ought to make that vendor a "critical" vendor regardless of the dollar "value" of the contract. The institution needs to be able to document that it examined the information security procedures and systems and found that they met industry standards.

Second, the provisions of the agreement between the institution and such vendors on confidentiality and information security need to be "robust." This is especially critical when one or a couple of vendors of the institution have access to a lion's share of sensitive data. Read OCC Bulletin 2013-29, FFIEC's handbooks on the outsourcing of technology services, and other regulatory guidance. Make sure you know what contractual assurances you need and then make sure they're in the agreement.

Third, the financial institution needs to monitor the compliance of these vendors with information security safeguards throughout the life of the relationship. If a critical vendor's not providing an annual SASE 16 audit report of an appropriate type (SOC 1 vs. SOC 2), and not addressing problems raised by such annual reviews, you've got a problem.

"We expect the board and management to ensure that appropriate risk management practices are in place, that clear accountability for day-to-day management of these relationships is established, and that independent reviews of these relationships will be conducted periodically," Curry said in his remarks Wednesday.

That's a red flag, no?

Fourth, you need to read between the lines of what Curry's saying about "certain vendors." Pay attention to what's happening in the marketplace. If an article appears in the press that notes problems with a critical vendor, investigate and assure your self that any problems are being addressed. Review the web sites of the regulators for enforcement actions, and pay attention to what you find if a vendor is the subject. Pay attention to your own due diligence. If you gather necessary information but don't act upon it appropriately, your regulator will not be pleased.

Fifth, foreign subcontractors have become a "hot button" concern. I would recommend that in your vendor agreements with critical vendors you have adequate restrictions on the use of subcontractors. Among those restrictions ought to be that the use of a non-US based subcontractor requires your prior written consent. I represent banks that would never consent, but that's a story for another day.

If the vendor pushes back, that vendor ought to be a cause for grave concern. They're not doing you a favor by selling you their technology, although a few of the larger ones act that way, especially if you're a smaller institution. These concerns are regulatory concerns, matters of safety and soundness. If the vendor is large and representing a number of financial institutions, none of these issues should come as surprise to them. If you have concerns about a vendor, give your federal regulator a call and tell him or her about those concerns. As Curry makes clear, your regulator will be interested. Very interested.

Shaming The Shameless

Venable LLP's Randy Shaheen and Amy Mudge might just be prime candidates for guest posts on Bank Lawyer's Blog. A recent "All About Advertising Law" post launched a snark attack that made this blogger proud. The victim was every banker's bête noire, the CFPB, and the cause for the caustic comments was the CFPB's apparent hypocrisy.

According to the American Banker, an outspoken critic of indirect auto lenders, Harry Douglas Lane, was in the audience at a recent CFPB forum and was called upon to speak as an audience participant. However, no one in attendance or the press covering the event was informed that the CFPB had paid for Lane’s flight to the forum as well as his hotel.

The lawyers point out that if a private advertiser had engaged in this sort of egregious omission, the FTC would likely have found that it acted inappropriately.

A company holds a press event to tout the success of its newly introduced product. Someone in the audience asks a question, which the Company subsequently uses in its advertising for the product. However, the Company fails to disclose that it actually paid for the audience member to fly into the press event. Is this a problem under the FTC’s Endorsement Guides? Most likely yes, since the payment of travel expenses would probably be a material connection between the consumer and the company.

[...]

As noted above, if advertisers had engaged in this sort of behavior, they almost certainly would have violated the Endorsement Guides, and the CFPB’s purported justification for its failure to disclose, that the critic had only a “limited” role in the Forum, would likely be met with deafening silence by the FTC staff and Bureau Director. Even if the CFPB and other government agencies aren’t literally covered by Section 5, isn’t the practice of disclosing material connections still common sense? After all, government agencies, like advertisers, are often pitching a product or ideas to consumers. Doesn’t the public (and the press) have the right to know that people who speak out in support of these ideas have a “material connection” to the agency advocating the policy?

The answer is "Yes." But, don't hold your breath. It took a "60 Minutes" expose to uncover the practice of Senators and Congress persons benefiting from insider trading, and get them to ban the practice. Even then, Congress, in the dead of night, rolled back part of that ban. Bloggers don't carry the same heft as CBS News and neither does the banking trade press. In addition, while the average voter is already chapped on general principles about the fact that members of Congress have access to oxygen, and, as a result, he or she will sit up and take notice at scandalous behavior by those clowns, he or she doesn't give a flying fig in a rolling donut that the CFPB might be paying witnesses without disclosing it in order to set up auto lenders for a fall. They're just banks, aren't they? Aren't they all a bunch of fat cats who are responsible for the economy collapsing, global warming, baldness, and Miley Cyrus? Set 'em up and take 'em down by whatever means necessary!

Still, the few of us who will follow this latest instance of rolling over a log to view the maggots crawling out appreciate the authors' closing observations.

Perhaps it’s time that what’s good for the goose is good for the gander.

Perhaps it is. Nevertheless, when the gander's the one cooking the goose, expect that the goose to be the only one who's roasted.

Fannie Slams The Door Shut

Alleged shenanigans in foreclosure proceedings by lenders' counsel in Colorado, which we've previously discussed here and here, have prompted some serious consequences for two of the law firms fingered in the investigations.

Fannie Mae is not going to send its foreclosure business to two specific law firms in Colorado, effective immediately, the government-sponsored enterprise can confirm.

"Fannie Mae has instructed servicers to cease referrals of new foreclosure cases to Aronowitz & Mecklenburg and the Castle Law Group and to transfer existing cases at those law firms to other firms," said Fannie Mae spokesperson Keosha Burns.

The GSE would not comment on why it so suddenly terminated its relationship with both firms.

As discussed in the previous posts, the Colorado Attorney General's office has been investigating whether the firms inflated costs of foreclosures, either directly or theough the use of captive service firms. The fact that Aunt Fannie would suddeenly drop the bomb on two law firms that handle the majority of its work in Colorado may be an indication that some action from the AG's office is forthcoming and the state regulator gave Fannie Mae a heads-up. If so, the results caused loan servicers in that state some heartburn.

The GSE's decision apparently caught more than a few servicers off-guard this week, and some were scrambling yesterday and today to find additional available legal counsel in the state, HousingWire was told by sources that wished to remain anonymous.

I'm confident that in the land of the over-lawyered, there will be plenty of sharks to eat the prey. One thing the United States does suffer from is an undersupply of lawyers.

HousingWire is one of the few trade press outlets that covers this story. As we've mentioned before, that's odd. It's got all the juicy elements fit for prime time: banks, lawyers, non-paying homeowners, large loan servicers, press-hungry state law enforcement officials: all the favorite enemies or heroes of a narrative, depending upon who's spinning the story. Yet, for some reason, certain major publications seem reluctant to jump on board. Inquiring minds want to know: "Why?"

Stay tuned. This will not be the last word on this troublesome topic.

ICBA Tries To Break The Choke Hold

The ICBA is starting to gag on Operation Choke Point. Before it and its members pass out from lack of oxygen, it's demanding that the Department of Justice loosen its grip on the windpipes of its members.

In a letter Tuesday to the DOJ, Independent Community Bankers of America president Camden Fine argues that the investigation known as Operation Choke Point has an overly broad scope and is hurting community banks' ability to compete with their larger peers.

[...]

[T]he ICBA letter suggests that the Justice Department is singling out smaller banks. "The indiscriminate targeting of community banks offering these services also places community banks at a competitive disadvantage with large banks," Fine writes.

The only lawsuit filed so far as part of Operation Choke Point was brought against a small bank in North Carolina, but large banks have also gotten subpoenas, according to sources.

As the linked article points out, huge banks have received investigative inquiries, but only a little bank has had an actual enforcement action taken against it. Bullies always start out with the smallest member of the group, hoping to intimidate those who might actually be able to fight back to be intimidated.

As the article also discusses, the complaints of the ICBA mirror those previously made by the ABA. Unlike the ABA, however, the ICBA's complaint includes the fact that community banks are being singled out for the harshest treatment. That distinction makes sense, inasmuch as the ICBA focuses on smaller banks, while the ABA leans more toward the interests of the bigger banks.

Both trade groups, however, make the very valid point that law enforcement authorities, and bank regulators, would do a lot less damage to banks and legitimate payment processors if, instead of beating up the banks they regulate, they went after the "bad guys" among the payment processors. If they did so, they might alleviate concerns of many that what the folks at the top are after is not a few bad apples, but entire industries engaged in perfectly legal businesses that "the enforcers" find "distasteful."

The Unbankable Turn To The Non-Banks

The marijuana banking conundrum in Colorado may be driving banks to distraction, but it's opening up the funding business to high-cost, low-publicity private money sources.

From hard-money lenders — investors who offer short-term, high-interest loans — to publicly traded real estate investment trusts focused on marijuana clients as tenants, the lack of conventional financing has created a sector that's gaining steam and drawing stares.

They are investors with an appetite for high risk and high returns, all of it hinged on an industry that's been around for a few years — retail sale of medical marijuana has been legal since 2009, but the business began to boom Jan. 1, when recreational retail sales began.

What the new breed of lender is doing is focusing on real estate as collateral for the loans it makes to the marijuana business, which theoretically lowers the risk if the marijuana business goes up in smoke. Of course, that assumes that the business operates in accordance with state law and that the federales never exercise their legal right to seize the assets of a drug business that violates federal law. Heightened risk justifies high interest rates.

The higher-risk-higher-rates-and-fees rationale makes sense unless you're in the payday lending, deposit advance, or tax anticipation refund loan businesses where the borrower is a consumer. In that case, the regulators will be all over you for taking advantage of the fog-brained poor consumer. Taking advantage of a smoke-brained Mary-Jane business is just fine, than you very much.

Obviously, there's so much money being made in the state-legal marijuana business that businesses that need the funds can foot the higher bills. On the other hand, what choice do they have? The high-cost private money lenders are the only game in town.

It would be extremely helpful to banks in Colorado if the federal banking regulators would rouse themselves from their torpor and give soem guidance on this business. They've issued guidance in the past on such high-risk, disfavored business as subprime lending, payday lending, third-party payment processors, money services businesses, etc. All we've seen thus far is the extremely problematic FinCen Guidance that raises more issues than it resolves.

The critical risk for bankers at the moment isn't in banking "direct" marijuana businesses. It's in banking the "indirect" marijuana businesses, those that service businesses that are directly involved in the marijuana business. The business that installs and services the drying and heating units. The landscaping business that installs and services the irrigation system. The trucking company that hauls the product. The alarm company that monitors the premises. And on and on.

The FinCen Guidance, in addition to dealing only with BSA issues, mentions "indirect" banking of a marijuana-related business only in a footnote:

FinCEN recognizes that a financial institution filing a SAR on a marijuana-related business may not always be well-positioned to determine whether the business implicates one of the Cole Memo priorities or violates state law,and thus which terms would be most appropriate to include (i.e., “Marijuana Limited” or “Marijuana Priority”). For example, a financial institution could be providing services to another domestic financial institution that, in turn, provides financial services to a marijuana-related business. Similarly, a financial institution could be providingservices to a non-financial customer that provides goods or services to a marijuana-related business (e.g., a commercial landlord that leases property to a marijuana-related business). In such circumstances where services are being provided indirectly, the financial institution may file SARs based on existing regulations and guidance without distinguishing between “Marijuana Limited” and “Marijuana Priority.” Whether the financial institutiondecides to provide indirect services to a marijuana-related business is a risk-based decision that depends on a number of factors specific to that institution and the relevant circumstances. In making this decision, the institution should consider the Cole Memo priorities, to the extent applicable.

Yeah, that clears it up. All any bank needs to do is to determine "the number of factors specific to that institution and the relevant circumstances," then go for it. No problem!

Banks in Colorado need just a wee bit more than that from regulators. Until they get it, any business that even touches a marijuana business is potentially problematic.

A Certain Level Of Disengenuousness

Housing Wire's Trey Garrison gives us fitting parting observations of last week's hearing by the House Financial Services Committee's Subcommittee on Oversight & Investigation concerning allegations that the CFPB is a veritable Paul Bunyon of stacked-high hypocrisy when it comes to employee discrimination.

There was a certain level of disingenuousness [sp.] that went beyond the usual political posturing at the House Oversight & Investigation Subcommittee investigating discrimination and retaliation at the Consumer Financial Protection Bureau Wednesday morning.

[...]

In a hearing with partisan heat just simmering, Democrats opened by demanding a standard of proof of the allegations that they’d never demand in any other similar investigation.

Meanwhile, Republicans – who want to keep pressure on the CFPB on as many fronts as possible – seemed to be embracing the vague, controversial legal theory of disparate impact, which says even if there is no discrimination, if the outcome isn’t racially balanced, then there is discrimination anyway.

Having U.S. Rep. Al Green, D-Texas, saying that he wants to make headway and not headlines in anything related to racial discrimination was, in fact, one of the ironies in a morning of ironies.

It's refreshing to see a reporter call them as he sees them. I also appreciate the well-deserved bi-partisan snark. It's as if one of the qualifications for serving in Congress is a post-graduate degree from Clown College. All Garrison is doing is pointing out the fact that both parties wear face paint and big red noses that go "beep-beep."

Trey also notes the irony of Representatives Green and Watters urging an expansion of the subject matter of the hearing to discrimination by all federal agencies, after doing their darndest to have the hearing cancelled, after initially calling for a hearing to be held. Those position pivots would have made the broken field maneuvers of Barry Sanders seem encased in in concrete, by comparison.

A final bit of snark addressed the fact that Rep. Watters noting that she was "overjoyed" with the subject matter of the hearing, racism. The Subcommittee's Republican Chairman just couldn't constrain his fist of snark.

“We welcome your new tone – remarkably different from tone of your letter,” McHenry said to Waters.

Give her a week. She'll feel equally strongly both ways.