The Federal Financial Forum

From: Forbes

Did you hear the one about Goldman Sachs selling investors mortgage-backed securities that plummeted in value soon after?

By chance you haven’t the National Credit Union Administration, an independent federal agency that regulates federal credit unions, is suing Goldman Sachs on that allegation and is seeking $491 million in damages.

From the NCUA press release:

Editor’s Note:  The following article discusses the DC Circuit Court of Appeal’s decision to vacate an SEC rule because the agency failed to appropriately analyze the costs and benefits of their regulation.  In the attached Opinion, the court held that “the Commission acted arbitrarily and capriciously for having failed once again — as it did most recently in American Equity Investment Life Insurance Company v. SEC. . . and before that in Chamber of Commerce, 412 F.3d at 136 — adequately to assess the economic effects of a new rule. Here the Commission inconsistently and opportunistically framed the costs and benefits of the rule; failed adequately to quantify the certain costs or to explain why those costs could not be quantified; neglected to support its predictive judgments; contradicted itself; and failed to respond to substantial problems raised by commenters.”  The court decision further emphasizes the imperative that agencies adhere to the good government laws that regulate the regulators.

Editor’s Note:  Those indivduals who are interested in having the said rule reproposed should break the government monopoly over the docket  subsequent to the close of the public comment period by developing a “shadow  docket” based on the concept of an Interactive Public Docket (IPD) developed by the Center for Regulatory Effectiveness.

An IPD for the “definition of  fiduciary” would consist of a new Discussion Forum contained in the right hand side  of this page.  Affected  stakeholders  would continue to provide up to date information on the DOL proposal while DOL is working on the rule.  CRE would make periodic submissions to the DOL based upon information received in the IPD.  Most recently CRE used the IPD to obtain substantial changes in the FHFA rule dealing with transfer fees.

From: Financial Times

By Hal Scott

America’s Dodd-Frank act is one year old on Thursday. The act made some useful corrections in the regulation of American financial markets, but it has failed to respond effectively to the root causes of the financial crisis and its impact on the global financial system. In the short term, it has hindered economic recovery. Worse, in the longer term, it has actually made future crises more likely, while potentially damaging the international competitiveness of America’s financial institutions.

From: Heritage

What Is the Consumer Financial Protection Bureau (CFPB)?

• Created by Dodd–Frank: The CFPB is an independent bureau within the Federal Reserve System that was designed by lawmakers to regulate a vast array of financial products and services.
• Already Regulating: The bureau officially opens on July 21, although staff have already begun to craft new regulations (e.g., real estate settlement procedures and definitions of newly regulated entities).
• Already Investigating: The CFPB is prohibited from some regulatory activities until a director is nominated by the President and confirmed by the Senate. Absent a director, however, the CFPB can conduct investigations as a form of policymaking.