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This ought to dee-light regulation-loving libruls. Well, maybe not, as it shows how excessive regulation can backfire. From Mortgage News Daily.

Is this the plot of a bad movie? The chairs of the House Financial Services (FSC) and the Oversight and Government Reform Committees are after some ex-CFPBers. The government is very interested in some business relationships four former senior officers of the CFPB have formed since leaving Bureau employment earlier this year. In a letter to CFPB Director Richard Cordray, FSC Chairman Jeb Hensarling (R-TX) and Oversight Chairman Darrell Issa (R-CA) questioned whether the four left CFPB in order to profit from mortgage rules they helped to create! The four (Raj Date, Gary Reeder, Chris Haspel, and Mitch Hochburg) "while serving in senior leadership positions, helped to write a series of rules broadly affecting mortgage lending in the United States". One such rule, mandated by the Dodd-Frank Act, prohibits a creditor from making a mortgage loan without regard to the consumer's ability to repay the loan in order for the loan to be considered a "qualified mortgage" for which the law then offers certain protections from liability. Anyone in the industry knows that the combination of higher rates, higher LLPA's [loan level price adjustments], and increased costs due to the CFPB's actions on QM [qualified mortgage] all make it tougher for borrowers.

Raj Date formed advisory and investment firm Fenway Summer LLC (Fenway). Fenway focuses on those who do not meet the standards for qualified mortgages as set by the CFPB. Date hired Mr. Reeder, Mr. Haspel, Mr. Hochburg, and other CFPB employees to staff his firm. The letter says, "This conduct raises serious questions about the integrity of the CFPB's rulemaking process and the conduct of some of its most senior former officials. We are deeply concerned that this close relationship between the CFPB and its former officials ultimately could harm consumers...Although the CFPB is now two years old, it remains 'something of a mystery to many market participants as it ramps up operations.' This lack of transparency has apparently incentivized [Raj] Date and other CFPB alumni to create a cottage industry unique to the Bureau's regulatory agenda." Whadaya think - William Hurt, Kevin Costner, Benicio del Toro?

Of course, the CFPB is not the only government agency pursuing individuals and companies. Here we have the "SEC Enforcement Actions Addressing Misconduct That Led to or Arose From the Financial Crisis" at this site.

http://www.sec.gov/spotlight/enf-actions-fc.shtml
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