Banks Press CFPB in Talks

December 14, 2011
Wall Street Journal P. C3
mortgage lending news

The five largest mortgage banks -- Ally Financial Inc., Bank of America Corp., Citigroup Inc., J.P. Morgan Chase & Co., and Wells Fargo & Co. -- the Obama Administration, and state attorneys general are working on an agreement to settle claims related to the use of "robo-signing," in which employees approved documents without proper review, and other questionable foreclosure practices. However, the settlement, which could be worth about $19 billion, could be held up as banks seek broad releases from state and federal authorities, including the Consumer Financial Protection Bureau, that would relinquish the authorities' right to sue over flawed mortgage originations. The CFPB is said to be resisting the banks' demands that it forgo the authority to sue, but banks say that without the release the deal is dead. Because Republicans have not confirmed the CFPB director nominee, Richard Cordray, he was unable to participate in negotiations and the agency would not have the authority to agree until mid-July. Negotiations with CFPB were halted when Congressional members objected.
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