Schumer Vows a Full Court Press on Mortgage Industry Regulation
Senator Charles Schumer (D-NY) is making more than his fair share of headlines today by cranking up the heat on the mortgage industry at a Reuters-sponsored Regulation Summit in Washington. Beyond suggesting that the GSEs need to consider so-called partial charge-offs for 'underwater' borrowers facing difficulty making their mortgage payments, Schumer also vowed Wednesday to pass federal regulation of mortgage brokers, and said that a formal investigation on rating agencies may be in the offing. From Reuters' coverage of its own event:
"We will get that passed this year. There will be regulation of mortgage brokers, as there should be, at the federal level," said Sen. Charles Schumer, a New York Democrat and chairman of Congress' Joint Economic Committee. He also called for reform of credit rating agencies. "I am seriously looking at, and our committee is going to hold hearings, on the credit rating agencies ... "Maybe the structure should change. There's a built-in conflict of interest," Schumer said in remarks at the Reuters Regulation Summit in Washington.HW readers know that rating agencies -- Standard & Poor's, Moody's Investors Service and Fitch Ratings -- have been taking plenty of heat as of late from investors and regulators alike. A recent proposal earlier this week by Moody's to alter how it rates structured finance issuances, part of an attempt to rebuild investor confidence, has led to plenty of eye-rolling among various commentators. Late Wednesday the Wall Street Journal reported that Standard & Poor's is set to release its own plan aimed at countering conflict of interest claims. A Senate bill targeting federal regulation of mortgage brokers was introduced late last year by Senator Chris Dodd (D-CT) -- the Homeownership Preservation and Protection Act (S 2452) -- which would, among other provisions, prohibit the use of yield spread premium on all non-traditional mortgages as well as estalish a fiduciary relationship between brokers and borrowers. It's unclear if the current Senate bill has bipartisan support or not; it has been referred to the Senate Committee on Banking, Housing, and Urban Affairs for markup.