Daily Archives: July 26, 2015

Consumer Financial Protection Complaint Database Extends Vital Role for Citizens

Five years ago, the Dodd-Frank financial reform bill was passed by Congress, and four years ago, the Consumer Financial Protection Bureau (CFPB) opened its door for business.

Last week, CFPB Director Rich Cordray celebrated his agency’s birthday with members of the Americans for Financial Reform (AFR), a coalition of more than 200 organizations that fought hard for Dodd-Frank and for the creation of the CFPB. The Center for Effective Government is proud to be a member of the coalition.

Cordray explained the vital purpose of the CFPB during his remarks to AFR: “Through fair rules, consistent oversight, appropriate enforcement of the law, and broad-based consumer engagement, the Consumer Bureau is working to restore people’s trust and confidence in the markets they use for everyday financial products and services.”

The CFPB has also helped strengthen the financial services companies it regulates by providing an incentive to improve customer service and reduce their exposure to lawsuits. “If we can help spur competition based on customer satisfaction, this has the potential to improve the functioning, transparency, and efficiency of the financial marketplace,” Cordray told AFR members.

Among its many accomplishments, the CFPB has repeatedly brought various governmental agencies together on behalf of American citizens and consumers. Over the last year, the agency partnered with the Comptroller of the Currency and 47 state attorneys general in forcing J.P. Morgan Chase to change its debt collection practices. It also partnered with the U.S. Department of Education to win $480 million in student debt relief for former students of the now-bankrupt Corinthian College, and it cooperated with the Federal Communications Commission to gain $100 million in refunds for customers of Verizon and Sprint, who were illegally charged fees on their cell phone bills.

But the CFPB’s greatest achievement has been the way it has created a vital and meaningful role for citizens to be active participants in their government. CFPB’s citizen complaint database, launched in June 2012 and described in greater detail below, has been at the core of the agency’s work.

Read on.

Chicago Teachers Union Online Petition Calls For Bank Of America Boycott Over Swap Deals

The Chicago Teachers Union has started an online petition as part of a boycott against Bank of America over controversial swap deals with the city and Chicago Public Schools.

The MoveOn.org petition, which had over 720 signatures as of Friday morning, states: “I pledge to Boycott Bank of America until they renegotiate toxic swaps that have cost Chicago Public Schools and the City of Chicago more than $1 billion. I also ask that the Illinois Attorney General, Lisa Madigan, begin public hearings to investigate the tremendous financial damage caused by toxic swaps on Chicago and our schools.”

CTU plans on delivering the petition to Bank of America’s CEO Brian Moynihan as well as Illinois Attorney General Lisa Madigan.

Read on.

Ex-Deutsche Bank Official Jain Cleared of Misleading Regulators Over Libor Rigging

German regulators told former Deutsche Bank AG co-Chief ExecutiveAnshu Jain this month that they no longer suspected he purposely misled German central-bank officials in a private 2012 query about market manipulation, according to a confidential letter reviewed by The Wall Street Journal.

The two-page letter from German financial regulator BaFin to Mr. Jain, dated July 15, marks an about-face on one of the harshest accusations BaFin made individually against Mr. Jain in a deeply critical May report to Deutsche Bank’s management board.

That report, dated May 11, broadly attacked Deutsche Bank’s culture and executives’ handling of attempted market manipulation and internal investigations, The Journal and others have reported. BaFin’s May letter emphasized suspicions that Mr. Jain had knowingly misled regulators in 2012 about when he became aware of potential manipulation of the London interbank offered rate, or Libor.

Read on.

From Battlefield to Boardroom: Facilitating the DoD Revolving Door

The Project On Government Oversight has learned of a new avenue the private sector is using to facilitate the revolving door between the Department of Defense (DoD) and defense contractors. The National Association for Corporate Directors (NACD) has a “board development program” specifically for high-ranking retired and soon-to-be retired military officers. As part of that program, NACD invites executives of companies—including many large federal contracting firms—to participate. It’s descriptively titled From Battlefield to Boardroom.

Since 2011 NACD’s conference has essentially become a recruiting fair to match exiting military officers with private companies looking to hire new leadership. Though the program claims to provide guidance through a speaker series and small group discussions on how the high-ranking service members can employ their leadership skills in post-military life, there seems to be the underlying priority of strengthening the relationship between the private and public sectors—facilitating the revolving door.

One-third of the two-day program is dedicated to networking, including six 15-minute networking breaks, two networking lunches, and one networking cocktail gathering. With the abundance of executives and board members in attendance, these frequent networking opportunities turn the conference into the perfect marketplace for contractors to snatch up the next generation of connections to the Pentagon. If retired or soon-to-be retired officers are unsuccessful at being directly recruited at the conference, the NACD program offers a free year-long membership in the NACD’s Director’s Registry to “precisely” match boards with their “ideal” candidate.

Several graduates of From Battlefield to Boardroom illustrate how the program is used as a tool to further a company’s influence in the federal government:

  • Mike Boera, a retired Air Force Major General, was hired shortly after completingthe 2015 program. His LinkedIn profile shows that he became the Executive of Intelligence, Information and Services (IIS) at Raytheon in March 2015. Before retiring from the Air Force, Boera held positions as Director of Air Force Programs and Director of Requirements, where he was tasked with developing programs, business plans, and budgets for different systems, including Command and Control (C2). His expertise in C2 is likely the quality that attracted Raytheon, since he describes his new role at Raytheon as “providing key leadership and insight within Command and Control (C2) Operations Center market for Raytheon IIS business sector.”
  • Nevin Carr, retired from the Navy after reaching the rank of Rear Admiral. After completing the 2015 program he became the U.S. Navy Strategic Account Executive to Leidos in May 2015. In the Navy, Carr served as the Chief of Naval Research and was responsible for the Navy’s research and technology development. As Michael Leiter, a Vice President at Leidos, described in the company press release announcing Carr’s new position, Leidos capitalized on this “invaluable experience and insight of the naval market” by appointing Carr to head their Navy Strategic Account. Carr’s new responsibilities include: “identifying and executing strategic initiatives to achieve customer mission success, and growing the company’s naval and maritime business.”
  • Janice Hamby, a retired U.S. Navy Rear Admiral who graduated from the NACD program, was named to Cubic Corporation’s Board of Directors in April 2015.NACD stated that Hamby was selected through its recruitment services. Cubic Corp.’s press release announcing the hiring of Hamby describes the value of her 30 years of experience in the U.S. Navy cybersecurity arena. Her previous position as DoD’s Deputy Chief Information Officer gives Cubic Corp. confidence that her “knowledge will strengthen the corporation and how [they] deal with these issues.

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New foreclosure climate brings law firm casualties

 

Law.com (sub. req.):

Kevin McCarthy, founding partner in the San Diego office of McCarthy & Holthus, said that although his firm “certainly is not experiencing the same types of issues” as firms like Zucker Goldberg, a “barrage” of changes in state and federal law has presented more challenges. McCarthy & Holthus has about 75 lawyers, he said, in eight different states, and focuses on “all aspects of default.”

McCarthy said his firm is not experiencing problems from bank clients not paying their legal bills, but he said that increased notice requirements, more oversight and prohibitions to so-called “dual tracking”—restricting lenders from seeking foreclosure while simultaneously negotiating loan modification—have all made his job tougher.

 

Combine the active CFPB with the increase in Fair Debt Collection Practices Act litigation, and the nature of foreclosure practice has changed.

“There has been an explosion of these types of suits,” Maurice said. “What you’re seeing across the nation … is a consolidation of firms who do foreclosure or even consumer credit collections.”

FDCPA is sending malpractice premiums at those firms “through the roof,” he said.

“In no other area of the law are you subject to strict liability,” Maurice said. “You can be sued for filing a complaint.”

The reasons for the volume of FDCPA suits, according to Maurice, lie in statute and case law.

The FDCPA, as enacted in 1978, exempted attorneys, but that exemption was removed a few years later—at the behest of debt collectors and over the objection of the Federal Trade Commission, according to Maurice. Court decisions including a U.S. Supreme Court ruling in Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich have exposed attorneys to FDCPA liability and removed the protections afforded by litigation privilege in such actions, he said.