U.S. Rep. Alan Grayson (D-Fla.) wrote to key banking regulators requesting more capital buffers for banks facing losses from recent foreclosure issues. Grayson addressed the letter to key financial regulators, including Treasury Secretary Timothy Geithner and the Financial Stability Oversight Council, a new umbrella committee that comprises of nearly all federal financial regulators. Grayson wrote that he was particularly concerned about the title insurance market and the amount of indemnities banks would be paying those companies for mishandled foreclosures. In October, Bank of America (BAC) struck a deal with Fidelity National Title  Insurance (FNF) to pay the insurer should legal problems with the foreclosures create any title liability. BofA suspended foreclosures across the country to find and replace faulty affidavits, and Fidelity said the problems would not harm its business. BofA began replacing 102,00 affidavits Oct. 25 and expects less than 30,000 cases to be delayed. “Both banks and regulators are claiming that the problems are simply process-oriented document errors that aren’t really causing harm to the public at large. I suspect that no one really knows the extent of the problem, or the potential liability,” Grayson wrote. Until the extent of the affidavit crisis is understood, Grayson said he wanted additional capital buffers and a new round of stress tests for the banks. Grayson is up for reelection in his district Tuesday against Republican Dan Webster and Tea Party candidate Peg Dunmier. Write to Jon Prior.

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