Tuesday, March 15, 2011

Spencer Bachus and the House Financial Services Committee vs. the Fed Rule

A few minutes ago I received an email from a good friend containing a link to a letter that the House Financial Services Committee and its chair, Spencer Bachus, signed and sent to the Federal Reserve and its chair, Ben Bernanke.  The letter, dated today, March 15, asks the Federal Reserve to delay its implementation of the Federal Reserve Rule on loan originator compensation past the April 1, 2011 scheduled date and to "provide proper written guidance to facilitate compliance by affected entities."  The letter states that regulation is "intentionally vague", that "the Board has refused to provide formal guidance and that different members of the Board staff have offered differing interpretations of its meaning.  Given the importance of the rule in protecting consumers as well as ensuring a fair application to small businesses or companies that may experience significant job loss due to its implementation, we recommend that the Board delay implementation of the final rule..."

While regular readers of this post know that I have been extremely pessimistic about efforts to delay the final rule, I must say that reading this letter and seeing the signatures on it from the House Financial Services Committee is heartening.  Some long time friends to the small independent mortgage entity are signers including Donald Manzullo R-IL  whom I have actually had the pleasure of hearing at a past NAMB legislative conference, our favorite Tea Partier Ron Paul (Texas), and Pete Sessions (R TX.).  Judy Biggert signed the letter as well (R IL).  Those of us who have been in the industry a long time remember that Judy Biggert was an advocate for our industry during the original fight to stop RESPA reform from 2002  to 2004.  Some well known national figures are signed on this as well--Peter King from New York and Michele Bachmann from Minnesota have penned their support as well.  There are many others, of course--the letter contains 31 signatures from Congress persons who were willing to sign their names on a letter taking a stand for the small business community.

As I look at the letter, I note that Barney Frank's name appears on the House Financial Services Committee.  Frank, who has given his name to the Dodd-Frank bill, did NOT sign the letter.  It must give him some heartburn to see his former committee send out a letter in the support of an industry he has worked so hard and openly to destroy.  It is a very Old Testament Mordecai versus Haman moment.  (See the Old Testament Book of Esther.)

Will it work?  I don't know, but a letter with so many prominent Congressional representatives might work.  In the past, such letters actually have made a huge impact.  And this letter, coupled with the letters from Senators David Vitter (R-LA) and Jon Tester (D MT) certainly bring pressure on the Federal Reserve and Bernanke that we as individuals could never hope to achieve.

Whether it works or not, I must congratulate everyone who is working behind the scenes to get this bill delayed.  And in 2012, we need to remember the names of the people on this list and the fact that they were willing to intercede for us.

Stay tuned.

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