President Trump officially chose Larry Kudlow, a CNBC television commentator, to serve as the next director of the National Economic Council, the New York Times reported. Kudlow is an unabashed prognosticator who relishes making the kinds of provocative statements that Mr. Trump has turned into an art form. He has lamented “growing government dependency,” touted tax cuts for the wealthy and lavished praise on high-flying corporate executives. Kudlow will assume the role of Mr. Trump’s top economic adviser, replacing Gary D. Cohn, who said he would resign after losing a battle over the president’s longstanding desire to impose large tariffs on steel and aluminum imports.
A bipartisan group of House members on Wednesday released a bill that would replace the director of the controversial Consumer Financial Protection Bureau (CFPB) with a five-person commission, The Hill reported. The bill from Reps. Dennis Ross (R-Fla.), Kyrsten Sinema (D-Ariz.), Ann Wagner (R-Mo.) and Bobby Scott (D-Ga.) would rename the CFPB and replace its director with a bipartisan panel. While the bill would easily pass the House, it would likely be filibustered in the Senate by Democrats who have protested changes to the CFPB. Under the bill, the CFPB would become the Financial Product Safety Commission, directed by a panel appointed by the president. No more than three commissioners could be from the same political party, and the president could remove a member for “inefficiency, neglect of duty, or malfeasance.” The bill is an attempt to rein in the CFPB director’s sole control over the agency’s extensive authority. Republicans have long insisted that the bureau, opened in 2013, is too powerful, immune from congressional oversight and dependent on the whims of the director.
A decade after the federal government rescued the first of many faltering financial firms, the Senate voted on Wednesday to pass legislation that would relax restrictions on large parts of the banking industry, representing the most significant changes to the rules that were put in place after the 2008 financial crisis, the New York Times reported. In a rare showing of bipartisanship, the Senate voted 67 to 31 to pass the bill, which is intended to help small- and medium-size banks but which critics say is a dangerous rollback of financial regulations intended to prevent another meltdown. The legislation faces an uncertain fate going forward, as House Republicans are expected to push for a much more expansive rollback of the 2010 Dodd-Frank Act. Senate Democrats who voted for the bill that passed yesterday have insisted that major changes along the lines of what the House passed last year will sink the effort but expressed hope that the legislation could herald a return to the kind of cooperation that has recently eluded Congress. The bill, which the Senate Banking Committee drafted over several years, would let hundreds of smaller banks avoid some federal oversight such as stress tests, which measure a bank’s ability to weather an economic downturn.
The U.S. Court of Appeals for the Fifth Circuit has ruled that a Texas businessman who was sentenced to two years in prison for bankruptcy fraud may use the sale of the proceeds of his house to pay his criminal defense attorneys, rejecting a U.S. bankruptcy trustee’s attempts to claim the home sale proceeds as part of his estate, Texas Lawyer reported. Curtis Harold DeBerry, the former owner of a failed produce company in Boerne, Texas, was eventually sentenced to two years in prison last year for hiding assets from creditors in bankruptcy. As part of DeBerry’s chapter 7 bankruptcy case, which he filed in 2014, he used the Texas homestead exemption law to protect his house from the bankruptcy estate. DeBerry sold his house later that year for $364,592, did not reinvest the proceeds and instead transferred the money to his wife and to San Antonio’s Goldstein[,] Goldstein & Hilley for the benefit of Gerry Goldstein and Cynthia Orr, two firm partners who represented DeBerry in a criminal matter.
A Senate banking bill that is designed to roll back rules made after the 2008 financial crisis would extend a helping hand to struggling student loan borrowers. On Thursday, Sen. Dick Durbin (D-Ill.) introduced an amendment to the bill that would give people who have taken out private student loans the power to cancel that debt if they file for bankruptcy protection, WSJ Pro Bankruptcy reported. The amount of private student loan debt currently stands at $165 billion, he said. The Democratic Whip’s amendment would eliminate the 2005 rule that made canceling private student loans very difficult, even for borrowers who face extreme financial problems. In a speech on the Senate floor, Sen. Durbin told his colleagues that bankruptcy judges have the power to cancel loans borrowed for homes, boats and other property. Their power, however, stops at student loans, he said. The measure has support from several Senate colleagues, including Jack Reed (D-R.I.), Elizabeth Warren (D-Mass.), Patty Murray (D-Wash.), Sherrod Brown (D-Ohio), Richard Blumenthal (D-Conn.), Tammy Baldwin (D-Wis.), Tammy Duckworth (D-Ill.), Sheldon Whitehouse (D-R.I.), Maggie Hassan (D-N.H.) and Chris Van Hollen (D-Md.).
Congress wants to accelerate a shake-up of one firm’s dominance over the credit scores used to vet many U.S. mortgages, the Wall Street Journal reported. Lawmakers last week proposed adding a provision to a bank-deregulation bill that would require mortgage-finance giants Fannie Mae and Freddie Mac to consider credit scores beyond Fair Isaac Corp.’s FICO score for determining a mortgage applicant’s creditworthiness. Fannie and Freddie backed nearly half of all U.S. mortgage dollars originated in 2017, according to Inside Mortgage Finance. The measure, should it become law, would be a big win for VantageScore, a credit-score system by VantageScore Solutions LLC, owned by three large credit-reporting firms: Equifax Inc., TransUnion and Experian PLC.
Mortgage servicers are about to have “more latitude” when it comes to dealing with borrowers entering or exiting bankruptcy, the Consumer Financial Protection Bureau announced yesterday, HousingWire.com reported. The CFPB announced a final rule relating to certain borrowers facing bankruptcy. The rule was initially released by the CFPB back in October, but now the bureau is finalizing the rule. According to the CFPB, the final rule is the same as the previously released version. In an announcement, the CFPB explained that its 2016 mortgage servicing rules requires servicers to send modified periodic statements or coupon books to certain consumers in bankruptcy, beginning April 19, 2018. The rule also dealt with the timing for servicers to move from providing or ceasing to provide modified periodic statements to consumers entering or exiting bankruptcy.
Consumers are on track to get one thing from Congress in response to last year’s massive Equifax Inc. hack: free freezes of their data held by the credit-reporting companies, the Wall Street Journal reported. The bipartisan agreement, set to be approved in the Senate by next week as part of a broader banking bill, would require credit-reporting companies to let consumers block access to their credit reports to potential lenders without paying a fee. Freezing access to credit data is a crucial measure consumers can take if they want to protect themselves from identity theft. Credit-reporting firms are mixed about the measure, which would erode a source of revenue, while consumer advocates worry it doesn’t go far enough to give people more control over their data. The provision would set a single national standard for credit freezes. Currently, 42 states allow credit-reporting firms to charge for the service unless an individual was a victim of identity theft. Eight states and the District of Columbia mandate waiver of the fees under all circumstances.
Seventeen Senate Democrats joined with Republicans yesterday to advance a bipartisan regulatory relief bill for the banking industry, an early sign that the bill can clear the Senate in the coming days, the Washington Examiner reported. The Senate voted 67-32 to end debate on a motion to proceed to the bill, more than the 60 votes needed for that procedural vote. S. 2155 would be the most significant legislative revision to the Dodd-Frank financial reform law since former President Barack Obama signed it in 2010. Nevertheless, it is much more modest than the wholesale replacement of Dodd-Frank sought by President Trump and House Republicans. The most significant provision of the bill is an increase in the size threshold at which banks are subjected to stricter oversight by the Federal Reserve. Today, banks with more than $50 billion in assets face the tougher regulation. The Crapo bill would raise the threshold to $250 billion, providing relief for regional banks like Suntrust and Fifth Third Bank.
Zombie debts have come back with a vengeance. Debt buyers pull these expired obligations out of cold storage and often use abusive and illegal tactics to collect. Zombie debts generally started out as legitimate obligations that had been settled, paid off, discharged in bankruptcy or rendered uncollectible because of various state statutes of limitation. However, these uncollectible bills are often repackaged with other delinquent loans and sold into the secondary market, generally for pennies on the dollar. Buyers of this debt then attempt to collect on all of it -- including the expired obligations -- bringing the expired debts back from the dead. "By all rights, this is debt that should have been extinguished, but it continues to come back to life," said Rowan Tepper, senior analyst at RewardExpert, which recently completed a study of zombie debt complaints that had been filed with the Consumer Financial Protection Bureau going back to 2011. This analysis found that complaints about zombie debts have soared in recent years, jumping 66 percent in the first nine months of 2017 compared with the same period the year before. However, the chance of being pursued by back-from-the-dead debt varies dramatically based on where you live. In several states zombie debts are running rampant, according to RewardExpert's research.