U.S. House Republicans will press for new details on Elizabeth Warren’s role in talks to settle federal and state claims that mortgage servicers improperly processed foreclosures.
House Financial Services Committee Chairman Spencer Bachus of Alabama is leading a group of lawmakers who are drafting a letter that requests copies of “any and all” communication between Warren, the White House adviser setting up the Consumer Financial Protection Bureau, and any state attorneys general or representatives of their offices since September 2010.
“It appears the CFPB has been deeply involved in the mortgage-servicing settlement negotiations and that role goes far beyond the mere offering of ‘advice’ under the Merriam- Webster’s definition or any other reasonable interpretation of that term,” according to a draft of the letter to Treasury Secretary Timothy Geithner, circulated today in Washington and obtained by Bloomberg News.
The letter was prepared after e-mails detailing some of the agency’s meetings on the settlement talks were released as the result of a public-records request from Judicial Watch, an independent group that describes itself as a “conservative, non-partisan educational foundation.”
The e-mails, which the group made public last week, show that representatives from state attorneys general offices scheduled time to hear a consumer bureau presentation stating that a $5 billion settlement with banks like JPMorgan Chase & Co. (JPM) and Wells Fargo & Co. (WFC) would be “too low.” The agency wanted the offices to “stress the confidential nature of the briefing,” one of the e-mails said. The e-mails also discuss a presentation from Warren on the bureau’s views of loan modifications.
Republican Representatives Randy Neugebauer of Texas, the chairman of the Financial Services investigations subcommittee, and Shelley Moore Capito of West Virginia, the chairwoman of the financial institutions subcommittee, have agreed to sign the letter, their spokespeople Matt Crow and Jamie Corley said today. Representative Patrick McHenry, a North Carolina Republican and Oversight and Government Reform subcommittee chairman, also intends to sign after reviewing the final letter, his spokesman Ryan Minto said.
House Republicans have been sparring for months with Warren over her role in the settlement negotiations. During a March 16 subcommittee hearing, Bachus questioned the propriety of her participation in the talks since the consumer bureau doesn’t officially begin operations until July 21. Warren responded that the bureau provided advice when asked.
The lawmakers followed that hearing with a letter requesting further information on her role in the talks.
“We provided advice to federal and state officials regarding a potential servicing settlement,” Warren wrote in her April 4 response. “In doing so, we have been an active participant in inter-agency discussions, sharing our analysis and recommendations in support of a resolution that would hold accountable any servicers that violated the law.”
President Barack Obama has yet to nominate a director for the bureau, which is located in the Treasury Department until it begins operations next month.
State and federal agencies last year began investigating mortgage servicers’ lapses in foreclosure procedures. Unprepared for the record number of loan delinquencies caused by subprime loans and the collapse of housing prices, servicers relied on inexperienced workers who failed to track paperwork or improperly signed legal documents.
The draft letter requests communications between Warren or other consumer bureau representatives with federal agencies, mortgage servicers and “any other interested party, including plaintiffs’ attorneys preparing class action lawsuits.”
House and Senate Republicans, who almost unanimously opposed the creation of the consumer bureau in last year’s Dodd- Frank financial regulation overhaul, have pushed throughout this year for changes to the agency’s oversight and funding. Warren has fought against the changes, leading to several tense exchanges during her testimony in front of the Financial Services and Oversight and Government Reform committees.
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