Bank Lawyer's Blog

Rent-a-Charter vs. Strategic Alliance

2016-02-15T21:58:00-06:00

In June 2004, I wrote a post about schemes by non-bank lenders, especially payday lenders, to "partner" with banks and thrifts in ways that would allow the non-banks to use the bank's or thrift's status to "preemept" "inconvenient state laws, such as those pesky usury limits. As I said at the time:

Apparently, the state-chartered banks involved in this practice are counting on the continued lack of objection by the FDIC, and the continued sympathy of state banking regulators who are eager to increase the number of state-chartered institutions that they regulate. In my opinion, this is a risky course.

I also pointed out at the time that national banks and federal savings banks could rest assured that their primary federal regulator would be scrutinizing their business arrangements with non-banks like Elizabeth Warren looking under her bed every night for a bad banker looking to steal all the cash she has hidden in the sock that she keeps under her pillow.

According to a recent client alert from Chapman and Cutler LLP, this bad old idea not only refuses to die, but has engendered state officials to take action to stop it in its tracks. While the alert discusses the State of Pennsylvania going after payday lenders who've aligned themselves with Native American tribes (which has been a problematic marriage for quite some time), it has wider implications for similar arrangements. In this instance, the Commonwealth of Pennsylvania alleged that the "true lender" for regulatory purposes was not a bank in Delaware that would have been exempt from Pennsylvania usury limits and licensing requirements but the non-bank website "originator" that did most of the origination work and derived most of the economic benefits from the loans. The authors note that in other jurisdictions, the court decisions have not been in lockstep on the issue of preemption, arrangements like the one challenged here are likely always to put the lenders in the regulatory crosshairs.

No clear rule has emerged although regulatory challenges almost certainly are more likely to be made when excessive interest rates and/or abusive sales or collection practices are involved. In this case, the loans imposed interest rates of 200% to 300%.

The alert notes that even though the court's decision involved only a motion to dismiss Pennsylvania's action, and that is a long way from a judgment on the merits, the red flags for financial institutions involved in such relationships are clear "because it demonstrates that plaintiffs will continue to raise the “true lender” theory and courts will not necessarily dismiss at an early stage (for failure to state a claim upon relief can be granted) “true lender” claims solely because a bank is the named lender on the loans, at least where there are allegations that the originating bank does not have substantive duties or an economic interest in the program."

In order to mitigate the risk of claims based on the “true lender” doctrine, companies that engage in internet-based lending programs through an arrangement with one or more banks should consider how the programs are structured. For example, consideration should be given to operations where the bank has substantive duties and/or an economic interest in the program or loans. We are aware that some internet-based lending programs are considering structural changes of this nature.

The firm also advises institutions to make certain that they comply with regulatory guidance governing relationships with service providers. They cite FIL-9-2016 and related FDIC guidance. I'd also suggest taking a look at the OCC's Bulletin 2013-29.

Or, for a change of pace, a bank considering one of these schemes might decide to take its entire capital to The Bellagio in Vegas, walk up to nearest roulette wheel, and lay it all on "00." I mean, if you like dancing along the razor's edge with insured deposits, you might as well go all-in. Plus, you get free booze as long as your money lasts. To hedge your bet, you might want to hold back enough to buy a one-way ticket to Havana (regular flights from the States start soon) just in case that method of income-generation doesn't work out as well as a strategic alliance with a non-bank payday lender.

Don't Ask, Don't Tell

2015-04-26T21:33:00-05:00

You may recall last year's pronouncement by the head of FinCEN, Jennifer Shasky Calvery, that 105 financial institutions were, thanks to the amazing guidance provided in February 2014 by FinCEN, servicing state-legal, federal-illegal marijuana businesses. Apparently, less than 10% of those are in Colorado, land of the free and home of the dazed, because according Colorado Rep. Jared Polis, only eight commercial banks and two credit unions in that state are banking the pot biz, and none of them want to be publicly named.

I assume that they don't want to happen to them what happened to publicity-challenged MBank out of Oregon. As recently related in published reports, that Oregon bank announced in January that it was open for (marijuana) business not only in Oregon, but in Colorado, and that it had the "tacit approval" of the FDIC to bank the unbankable. Within less than a week, because it was supposedly "overwhelmed" by the response from Colorado marijuana businesses, it pulled entirely out Colorful Colorado. Now, it's announced that it has pulled out of the entire marijuana business nationally, even in its home state of Oregon, apparently haven satisfied the munchies and gotten a good night's sleep. Like the Colorado exit, the industry-wide exit is supposedly due to the unexpected response of unbanked pot sellers and the bank's determination that "the bank is not big enough to provide and support all of the compliance components required."

It may be pure coincidence, but it appears that any time a bank is publicly "outed" as a banker to the stoned, the bank pulls out of the business. None of the 105 institutions cited by Ms. Calvery or the ten cited by Mr. Polis was named. Had they been, how many of them would have "pulled an MBank"? Most, if not all, is my guess.

Unlike banking payday lending, a perfectly legal business that the regulators are trying to eradicate, banking marijuana selling, a blatantly illegal business (under federal criminal laws), is just fine with the federal banking regulators as long as the bank flies under the radar screen. It's OK to service an illegal drug business as long as you (A) file the right kind of Cheech & Chong SAR or SARs, and (B) don't ever, ever, let anyone but the illegal business owners and bank officials know about it. Do you think that this state of affairs breeds cynicism and contempt for the rule of law? Me, too.

"Don't Ask, Don't Tell." It was bad policy for the US military and it's no better for the US banking business.

The Fed's Cold Comfort To Colorado MJ Businesses

2015-04-12T21:53:00-05:00

I'm traveling this week on business, but I didn't want to leave town without a comment on the visit of Esther George. head of the Federal Reserve Bank of Kansas City, to Denver last week. She was invited to meet with Colorado Representatives Polis and Perlmutter, who've been trying to find a way around the inconvenient fact that what might be legal in Colorado in the way of raising, refining, and selling marijuana for recreational use is still a violation of Colorado criminal laws, as is the handling of funds derived from such illegal activities by banks. According to Rep. Polis, George gave them the Mount Rushmore Response: impassive staring with no audible sound.

George was "circumspect" in her comments about banking for marijuana businesses, Perlmutter said.

"She wouldn't give us a 'yes, no or maybe,'" he said.

But George "expressed great interest in learning about the challenges" marijuana businesses are facing, said Perlmutter, D-Golden.

In other words, like Bill Clinton, she felt their pain in a rhetorical sense only.

The application of Colorado's Fourth Corner Credit Union, formed top bank the unbankable state-legal Mary Jane businesses in Colorado, for a FRB master account has been hung up for months at the Fed. It is likely in Washington, D.C., where it may be sucked into a black hole, eaten by a goat, or consigned to Elizabeth Warren's S&M dungeon.

What actually caught my attention was the assertion by Polis that eight banks and two credit unions were secretly banking marijuana businesses. In other words, eight banks, with the "tacit" collusion of bank regulators, are engaged in illegal drug money laundering.

I understand. The banking regulators are too busy trying to drive legitimate payday lending businesses out of business through Operation Choke Point to bother with federal criminal laws. This is perfectly understandable in the Humpty-Dumpty, Alice-Through-The-Looking-Glass world in which we live today.

New ILCs? Nahhh!

2015-04-08T21:54:00-05:00

Four and one-half years ago, we wondered if the three-year moratorium on FDIC insurance applications for new industrial loan companies (ILCs) and other restrictions placed upon ILCs by Franken-Dodd would spell the death knell for the ILC charter. While that moratorium expired a couple of years ago, no new ILC charter applications have been filed since then, and those few charter applications that were pending before the Care Bair put her Bairly legal 2006 moratorium on new ILC insurance-of-account applications have still not been approved by the FDIC. Therefore, a disinterested observer might be forgiven for assuming that the moribund charter might remain, as Fredo Corleone was to his brother, The Godfather, "dead to me."

However, American Banker reporter Ian McKendry thinks that for ILCs, perhaps there's a ray of sunshine peaking through the clouds (paid subscription required).

With optimism growing that de novo bank activity might rebound, some observers say attention could soon shift once again to the embattled industrial loan company charter.

[...]

[N]o federal law banning commercial or financial parents from pursuing ILCs has ever been enacted. And as the industry's continued recovery increases the likelihood of more new-bank applications overall, some observers believe interest in the ILC charter may ultimately pick up as well.

"You are going to see movement because there is pent-up demand," said Frank Pignanelli, who represents industrial banks as a partner at the Utah government relations firm Foxley & Pignanelli. "There is pent-up demand for capital to be used either through ILCs or other state-chartered institutions and I just don't think the FDIC can stop that any longer."

Other commentators think that just because a couple of de novo commercial bank applications have survived the FDIC gauntlet in the last five years, that is no reason to think that ILC de novo applications will fare as well, especially when the owner will be a commercial (as opposed to financial) business. They point to the fact that the two successful de novo bank charter applications involved unique situations, and clearly involved banks focused on serving specific communities where the need for a traditional community bank was clearly demonstrated (after considerable time and expense). The traditional attraction of the ILC charter has been to serve specific commercial businesses in financing their operations, including providing financing to customers who buy their products. The reason for Oh-My-Little-Sheila's original renegade moratorium, and the outcry that prompted and continues to "dog" the ILC charter, involved the efforts of retail giants like Home Depot and Wal-mart to enter the "banking" business, which scarred the living ca-ca out of the commercial banking business (which lives in mortal fear of the low-cost competitive advantage possessed by entities like Wal-mart as much as it does the tax-exempt status of credit unions). Critics see those concerns as still being the insurmountable roadblock to a resurgence of new ILCs that are FDIC-insured.

It's true, however, that there is no impediment built into federal laws for new ILC charters.

"We are pretty close to the possibility where you could see one of these applications fairly soon," said V. Gerard Comizio, a partner at Paul Hastings LLP. "It is now legal again for a nonfinancial company to get an industrial loan bank charter and deposit insurance for it."

Jerry's perfectly correct regarding legality. However, it was legal in 2006 for the FDIC to approve insurance of accounts applications for ILCs whose owners were engaged in commerce, and the FDIC punted, and has continued to punt, the ball down the field. Then again, Jerry's a guy whose opinion I respect, so I may have to turn my ILC frown upside down.

Or not. "Pretty close to the possibility where you could see" is, for me, a sight that is far beyond the visible horizon.

Lawmen Sue To Stop The (Reefer) Madness

2015-03-23T07:09:37-05:00

You would think that when all a state wants to do is let weed-lovers light up, their neighbors would just chill and let them have serious conversations, along the lines of the following:

The Dude: It's like what Lenin said... you look for the person who will benefit, and, uh, uh...

Donny: I am the walrus.

The Dude: You know what I'm trying to say...

Donny: I am the walrus.

But, no. The neighbors can't get their redneck noses out of Colorful Colorado's smokin' hot ganja biz.

A few months ago, Oklahoma and Nebraska sued Colorado in the US Supreme Court, asking Clarence Thomas to speak up loudly enough, and Stephen Breyer to venture back from his exploration of Martian law long enough, to stamp out Colorado's raging forest fire of legalized recreational pot sales. The wind blows east and south out of the Rockies, and those states apparently are worried about the deleterious effects on their citizens of second-hand smoke. Banks in Colorado didn't need another reason to avoid banking the recreational MJ business, but that lawsuit certainly didn't lessen the risk.

Recently, Sheriffs in Nebraska and Kansas, joined by six traitorous Colorado sheriffs, filed yet another lawsuit against Colorado's governor (appropriately named "Hickenlooper") over the same issue (legalization of recreational pot sales).

“This suit is about one thing — the rule of law,” Larimer County Sheriff Justin Smith said in a news release. “The Colorado Constitution mandates that all elected officials, including sheriffs, swear an oath of office to uphold both the United States as well as the Colorado Constitutions.”

The last time we saw federal supremacy thrown around so much it involved the OCC's march-to-the-sea over the blazing husk of the 10th Amendment in defense of the right of national banks to thumb their noses at guys like Eliot Mess, the"Sheriff of Wall Street." At that time state bank regulators and law enforcement officials weren't so keen on the federal supremacy clause (or the National Bank Act). Now that Franken-Dodd and the Cuomo v. Clearing House Corporation decision have put chinks in the preemption armor of national banks, that particular reason for hating federal preemption doesn't have as much steam. People who hate federal preemption in this situation are not people who want to save the state from those who would use federal preemption to break state laws, but people who want to break federal law in order to engage in a state-sanctioned activity.

Some legal experts think that the latest lawsuit has a chance of success of somewhere between "slim" and "none."

Sam Kamin, a law professor at the University of Denver, was skeptical of the sheriffs’ argument. He said no law requires local officers to act as de facto federal drug agents.

“Of the four (lawsuits), this is the one with the least merit,” Kamin said. “They have targeted not just the (marijuana store) regulation piece but they’re also essentially saying Colorado can’t legalize marijuana. No one has ever gone that far.”

Even if true, that leaves three more lawsuits that continue to add to the risk of banking marijuana businesses, whether or not they are "legal" under state law.

The Mistress of Spin

2015-03-03T21:38:00-06:00

A reader recently emailed that she was surprised by how brazenly Elizabeth Warren speaks out of both sides of her mouth. The specific event that caused her incredulity was Warren's initial public support of regulatory relief for community banks and her subsequent assertion that community banks didn't need regulatory relief because they were doing just fine financially. After telling her that speaking out of two sides of a mouth is a gift commonly demonstrated by those born with a forked tongue, I pointed out that Ms. Warren's been stretching the boundaries between lies and damned lies for, literally, years.

Back in 2008, she went on the warpath (this was in the days before anyone called her questionable claim of Native American ancestry) over what she claimed on her blog (yes, Liz was a blogger) was a proposal by national banks to claim preemption from all state foreclosure laws. The fact that those banks were claiming preemption only over extended foreclosure moratorium and similar laws, not the general binding nature of each state's foreclosure process law requirements, didn't enter her discussion. Instead, she made this spurious allegation as to the position of the banks:

State laws are pre-empted whenever a national bank holds the mortgage, so the states can't make them follow the local rules. Pre-emption has been used successfully by the credit card companies to fight off state regulation, so now the banks want to escape local restrictions on foreclosure as well.

That was not the position of the banks regarding foreclosure laws at the time. It was also not the position on national bank preemption of either the OCC (which issued preemption regulations and opinions) or of the federal courts. In fact, the then-applicable OCC regulation specifically stated that state debt-collection and foreclosure laws were not preempted. Warren's characterization that the banks were arguing that they were preempted from all state foreclosure laws and, therefore, could, apparently, seize homes at will, was false. Of course, as a practical matter, some national banks did, in fact, seize homes without due process (even those on which they did not hold a mortgage), and even the owner's pet parrots, but that was through incompetence, not intent.

While intellectual dishonesty has served her, and will continue to serve her, well as a US Senator, Ms. Warren's ability to let no fact stand in the way of a populist narrative should come as no surprise to anyone who's been paying attention to her public pronouncements for any length of time. I mean last year, she blamed the 2008 financial meltdown on Ronald Regan. Next up: ISIS was created by Billy Graham.

Changing of the Guard at DOJ

2015-03-01T21:55:00-06:00

The recent confirmation of Loretta Lynch as the none-too-soon successor to the current Commissar Attorney General of the United States, engendered a lot of speculation about whether or not the exit of "Fast and Furious" Holder will also spell the end of Operation Choke Point. In a Senate hearing, Ms. Lynch was less than enlightening on this point.

In response to questions by Senator Mark Lee, a Chock Point critic, she sounded positively tepid.

Lynch told the senator that should she be confirmed, she would work with him to ensure that law-abiding Americans aren’t targeted by the initiative.

“I look forward to hearing your concerns and working with you on them,” she said.

Let's hope that when she uses the term "working with you" she doesn't really mean "working you over." Time will tell.

On another issue, however, she differs markedly from her boss, the Department of Justice, and FinCEN, which have been falling all over themselves to aid the heirs to Cheech and Chong to light up their bongs. Unlike Barack, Loretta loathes the demon weed.

A federal prosecutor in New York, Ms. Lynch told the Senate Committee on the Judiciary she disagreed with the president’s no-big-deal take on pot, saying, “I certainly don’t hold that view and don’t agree with that view of marijuana as a substance.”

“I think the president was speaking from his personal experience and personal opinion, neither of which I’m able to share,” Ms. Lynch said. “But I can tell you that not only do I not support the legalization of marijuana, it is not the position of the Department of Justice currently to support the legalization. Nor would it be the position should I become confirmed as attorney general.”

A stated opposition to "legalizing" marijuana could be read as merely opposing legalization at the federal level. In addition, personally opposing legalization, even at the state level, does not necessarily translate into abandoning the current position of the DOJ as embodied in the "Cole Memorandum" and its spawn at the DOJ and FinCEN. That position appears to be that as long as a state legal marijuana business doesn't run afoul of eight listed activities which the DOJ thinks are "really, really bad" (as opposed to being merely "really bad"), then federal law enforcement will look away. In the case of banks that service such "legal/illegal" businesses, as long as they file special super secret SARs and perform initial and ongoing due diligence with a level of detail that would confound the NSA, the Feds will cut them a break, as well.

Pot's proponents claim that we should not take Ms. Lynch seriously. They note that she was testifying before a committee chaired by the marijuana-repulsed Chuck Grassley. I guess their point might be that she was "spinning" (i.e., committing perjury).

Assuming, however, that she was actually delivering her honest opinion to Senator Grassley, I think that Ms. Lynch's arrival on the scene may bode ill for the "three monkeys approach" to the future enforcement of federal drug laws against businesses that are engaged in state-legal-federal-illegal marijuana businesses. "Looking the other way" might prove to be a thing of the past for the DOJ, even before a Republican AG takes office in 2017 (should a Republican win the White House in 2016).

Moreover, the rogue banks in Colorado, Oregon, and elsewhere, who, in banking marijuana businesses, have been operating under the "don't-ask-don't-tell" benevolence of the FDIC and other federal banking regulators who take their cues from the head of the Executive branch (although they would deny that allegation until the end of time), may find that the examiners who have been giving them "tacit approval" to bank marijuana businesses as long as they don't make that fact public, are suddenly attacked by fits of rectitude and begin to take federal drug trafficking laws seriously again. If that happens, good luck with holding the agencies to their "tacit" approval.

Eric The Zombie Killer

2015-02-18T21:55:00-06:00

Like the Windy City, the Empire State wants to make sure that when voters complain about run down neighborhoods, abandoned buildings, and general urban malaise, they know who to blame. No, not Teflon-coated pols. Instead, everybody's favorite whipping boys: mortgage lenders.

The State of New York doubling down in its efforts to fight back against the rising tide of zombie properties, which are homes that are vacant or abandoned during the foreclosure process.

New York Attorney General Eric Schneiderman announced on Monday that he plans to resubmit an expanded version of a bill he first introduced in 2014 to the state legislature. Schneiderman’s bill, called the Abandoned Property Neighborhood Relief Act, is designed to reduce the number of zombie homes by informing homeowners of their right to stay in their home until a court orders them to leave.

According to Schneiderman’s office, the bill will also require mortgage lenders and servicers to identify, secure and maintain vacant and abandoned properties shortly after they are abandoned. Under current state law, lenders and servicers aren’t required to secure and maintain vacant properties until the end of the foreclosure process.

The bill would also create a statewide registry of zombie properties, designed to help local governments with the enforcement of property maintenance laws.

Additionally, if Schneiderman’s bill becomes law, any fines levied against banks, lenders or servicers for violations of the state’s abandoned property laws would be directed into a fund, which would be used by local governments to hire additional code enforcement officers.

Making lenders legally responsible for properties that they do not legally own is a scam that's been around, in one form or another, for years. It's generally been considered a bad idea by mortgage lenders, which is an understandable reaction from a business standpoint, since it increases the risk and cost of lending in areas that attempt to impose such liability. Chicago fought the FHFA in court over an ordinance that tried to do the same thing that Schneiderman's bill would try to do. Last year, Chicago settled with the FHFA, after the FHFA won at the district court level and the city recognized that the FHFA was not legally compelled to comply with such a law. While the FHFA agreed to voluntarily register properties with the city, "the city will not require Fannie and Freddie to comply with the city’s vacant and abandoned building ordinances and will not fine the FHFA for ordinance violation."

Expect New York's law, if enacted, to generate a similar reaction from the FHFA.

I just love the smell of litigation in the morning. It smells like...attorneys' fees.

Another interesting aspect of the proposed bill is the following Catch 22.

Schneiderman’s bill requires lenders and mortgage servicers to periodically inspect properties with delinquent mortgages to determine if the property is occupied.

But the bill also makes it unlawful for a lender or servicer, or a person acting on their behalf, to enter a property that is not vacant or abandoned for the purpose of “intimidating, harassing or coercing a lawful occupant” in an attempt to get them to abandon the home.

That high wire walk, as well as the bill's other provisions, ought to discourage lenders and/or make them price the high risk into the cost of loans made in New York. Ultimately, it's the customer who always pays the price.

As if there weren't enough reasons to move to Texas, Eric the Red gives New Yorkers one more.

I Left My Equity In San Francisco

2015-02-10T21:47:00-06:00

When a government takeover plan is so whacked that even a city official in San Francisco thinks that it's whacked, you know that it's officially jumped the shark.

San Francisco’s controller discouraged city lawmakers from going forward with a proposal to use eminent-domain to help homeowners avoid foreclosure, citing federal limitations and risks to the city’s borrowing costs.

“The city’s participation in an eminent-domain program will likely have broader negative impacts on the city’s participation in financial markets, at least for an initial period,” controller Ben Rosenfield wrote in a report released Thursday.

Rosenfeld had been asked by the city's Board of Supervisors to look into a proposal that the City by the Bay join the quixotic quest of the City by the Backside (Richmond) to seize underwater mortgages through the power of eminent domain, write the principal balances down to current fair market value, and, its proponents hope, benefit homeowners who then can then lower their monthly mortgage payments as ride rising home values upward as the economy continues to recover. The only people who get screwed under that arrangement are lenders, but to hell with those capitalist pigs, goes the reasoning.

Ben noted in his report that mortgage giants Fannie Mae and Freddie Mac have made it clear that cities that use eminent domain for such purposes would threaten the safety and soundness of those two formerly insolvent entities (and Uncle Freddie and Aunt Fannie certainly know unsafe and unsound actions when they engage in them, don't they?). Therefore, "[p]recluding any participation from Fannie Mae and Freddie Mac, the use of eminent domain would seem to be an inviable option." An "inviable option," indeed. Rosenfeld also observed that the eminent domain scheme "hasn’t yet been proven in any jurisdiction in the U.S."

It's doing great on Planet Bizarro, however.

A proponent of the plan was "disappointed" (i.e., threw a hissy fit).

“I’m disappointed that they seem to have bought into Wall Street’s scare tactics about eminent domain,” Avalos said in a statement. He said he plans to call a hearing soon to review the report.

I wonder if, at that hearing, he'll threaten to "socialize" mortgages? That would be the cherry on the top of this fruitcake.

All The Mail That's Fit To Print

2015-01-15T21:45:00-06:00

It's been awhile since I dipped into the BLB mailbag. It's about time to see what kind of flack I receive.

First up is an email I received from a gentleman who referred to himself as the Director of Public Relations for Citi. Without hurling a single epithet, he informed me that the dispute with a lawyer/house renovator whose home was broken into by contractors for CitiMortage was "resolved" on December 10, 2014. He did not indicate what that "resolution" might have entailed, but we assume, based upon the nature of the dispute ("Show Me The Money!"), it involved coin of the realm passing from Citi and/or its contractor to the homeowner/attorney. While Toni Braxton may yearn for her heart to be unbroken, we aren't aware of any way in which you can unbreak into a house.

Another recent blog post on a scholarly article written by University of Alabama Law Professor Julie Anderson Hill on the legal cunundrum for banks trying to bank state legal - federal illegal marijuana-related businesses in Colorado, I received an email from Professor Hill. She corrected me on the nature of the "Mary Jane" credit union formed in Colorado, Fourth Corner Credit Union. I thought that it was the first special purpose "Cannabis Cooperative" authorized under Colorado law. Instead, Fourth Corner is a state chartered credit union. Because of quirk's in Colorado law, it may open its doors prior to receiving deposit insurance from the NCUA (a processes that could take years), although its still needs approval by the Federal Reserve System of a master account. The organizers think that this approval process by the Fed is a sure thing, but neither Professor Hill or I are as confident. On the other hand, it's not that there is any precedent on which to base an opinion, so we're just going to have to wait and see. The organizers had, according to press reports, hoped to be up and running by January 1, 2015, but that hasn't occurred. Stay tuned.

Finally, a financial institution trade official asked if I thought that Maxine Waters had personally drafted the press release that contained the following words, allegedly spoken by her:

“The disparate impact standard is absolutely essential to providing for fair housing throughout our nation. I sincerely hope that the Supreme Court will make the right decision in this case by affirming that the Fair Housing Act unequivocally prohibits actions that have the effect of disproportionately denying housing to marginalized communities,” Waters said Friday.

“Failure to do so would be contrary to congressional intent; it would overturn decades of major progress in fair housing; and would be particularly devastating for minority individuals and communities,” she added.

Waters said unchecked discriminatory housing practices, such as subprime lending to minority communities, in the time leading up to the mortgage crisis continue to prevent working class families from joining the middle class.

“The disparate impact standard under the Fair Housing Act has been effectively used for decades to weed out practices that create barriers to housing for people on the basis of factors like race, color, religion and gender,” she said.

Given her previous problems in the socialization/nationalize arena, we are both doubtful that Rep. Waters wasn't acting as a mere sock puppet for the guiding hand of a professional PR hack. Then again, we could be wrong. Either way, we're rooting for the visiting team in the disparate impact game being played before the SCOTUS.

Surprisingly, there were no anonymous emails threatening my life or worse, regulatory retaliation. Perhaps with the spring thaw, the wombats and trolls will again be out in force.