Phil Hall is a financial journalist who previously worked as the editor of MortgageOrb, an associate editor at the ABA Banking Journal and a columnist at Credit Union News. His writing has been published in the New York Times, Wired and the Hartford Courant. And in this column Phil tells it like he sees it.

Holiday Gifts For The Housing Industry

Yes, it is that time of the year again. And once more, I get to play Santa and match the right gifts for those naughty and nice characters the impacted the mortgage and housing world. So, let’s see who will be received special gifts this season:

For Richard Cordray: A hearing exam. It would appear that the CFPB chief’s hearing is in terrible condition. After all, how else can one explain his chronic inability to listen to the growing chorus complaints from elected officials, the private sector, the media and even the CFPB Inspector General regarding the heavy-handed, sloppy and arrogant manner in which his agency is being run? Cordray, however, doesn’t need an eye exam – he had no trouble seeing American Banker’s harsh critique of the CFPB’s rickety consumer complaint database, to which he offered a very rare defense of his agency’s ineptitude.

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For Julian Castro: An executive position in the Hillary Clinton 2016 campaign. The HUD honcho happily jumped into partisan politics when he endorsed Hillary’s presidential bid at a televised rally design to attract Hispanic voters. Never mind that there is no precedent for an incumbent cabinet secretary rejecting Executive Branch neutrality in order to play favorites in the race for a party’s presidential nomination – and it is no secret that Castro has been biding his time at HUD before getting himself into national politics. Many pundits have already tapped him as Hillary’s running mate, playing up his youth and ethnic heritage while ignoring his accomplishment-free career. If Castro wants another Clinton in the White House, he should leave HUD full-time to work for it – and not just skip away from his office whenever the Clinton campaign beckons.

For Gretchen Morgenson: A scholarship for journalism school. The New York Times writer churned out an egregious December 7 article that relied on insinuation and sketchy commentators to smear MBA President and CEO David H. Stevens for allegedly working to destroy Fannie Mae and Freddie Mac. Morgenson’s work was astonishing for her utter ignorance on how federal housing policy is created – she repeatedly confused FHA and FHFA – and she seemed totally unaware that the big banks that supposedly use Stevens as their hatchet man in Washington have been moving away from the residential mortgage market due to Dodd-Frank regulatory burdens. With reporters like Morgenson, it is no wonder that people stopped reading and respecting the Times.

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Rep. Ed Royce: A Congressional Gold Medal. The California Republican achieved the impossible by creating a bipartisan effort to approve legislation that capped the compensation for the Fannie Mae and Freddie Mac chief executives. In that achievement, Royce hit the ultimate double-play: he got both sides of Congress to work together and he created GSE-related legislation that made it to the president’s desk.

President Obama: Nothing. Rather than hail Rep. Royce’s legislation as evidence of bipartisan cooperation and government finally doing something right, the president abruptly signed Royce’s bill without any fanfare or special announcement. Indeed, the White House buried the news of the presidential approval in a single sentence within a press release that was quietly released by the administration right before Washington departed for the Thanksgiving recess. For that sour action, the president doesn’t deserve a toy in his stocking.

Trey Garrison: A lucky horseshoe. One of the best business journalists has left the building – although he is now in another building. Garrison left the staff of HousingWire last month to start his own consulting business. I hope this lucky horseshoe bring him a surplus positive karma in 2016.

To the Progress in Lending readers: My deepest thanks. Yes, we made it through another year, and I am glad that you were here with me for the ride. Here’s wishing you the best for the holidays, and for a 2016 full of happiness and profits!

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What Mike Huckabee Got Right

How little do the presidential candidates think about housing policy as a major issue? Well, last month there was a forum in New Hampshire designed to spotlight the presidential candidates’ views on housing issues. However, the leading contenders from both parties ignored the forum, with low-polling Martin O’Malley arriving as the sole Democrat on the stage along with a handful of C-list Republicans that are polling in the low single digits.

But one of the candidates on that forum was the surprise star of that event, if only because he displayed a sense of cogent commentary that has not been evident in this campaign: former Arkansas Governor Mike Huckabee, better known for his provocative comments on hot-button social issues like same-sex marriage and using Obamacare to pay for birth control pills, offered a wise insight on housing policy concerns.

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When asked why there has been so little national political attention and mainstream media focus on the lack of affordable housing options, Huckabee broke a taboo by noting the political and the media elite are among the nation’s wealthiest and have no clue on how the low- and middle-income Americans live. Indeed, Huckabee hit a bulls-eye here – especially when one considers how little political and media attention go into serious discussion of poverty or wage stagnation. To his credit, Huckabee connected the struggles faced by many Americans with the lack of serious economic vibrancy.

“Half the people renting in America spend 30 percent or more of their income on their housing costs,” Huckabee said. “Every time someone is marginalized in the economy it affects the rest of the economy.”

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Huckabee, who has been a strong critic of the Consumer Financial Protection Bureau and an advocate of a smaller federal government, called on taking the regulatory oversight of the financial services world out of Washington and returning it to those who “have a better understanding of what’s happening on the ground.” Translated, that means putting the responsibility with the states.

“We need to keep more of the regulation closer to the people being regulated,” he said. “I will always believe that the best government is the most local government that is humanly possible.”

This makes a great deal of sense, considering the multiple layers of regulations that burden companies trying to work with consumers. And maybe it is time to openly question why we need both federal and state regulatory oversight – one or the other makes more sense, rather than the weird mix of duplicate and contradictory rules coming from Washington and the statehouses.

Huckabee also mixed the all-but-ignored question of housing with the anything-but-ignored question of immigration reform.

“If a couple of hundred thousand people come to the United States, isn’t it going to be more difficult to find housing for the people we add?” he asked. “People who are in the country without food and shelter ought to be our highest priority in the country.”

Huckabee broke another taboo with that last statement: he contradicted the prevalent but rather silly idea that immigrants will magically increase the homeownership rate. Indeed, how is that going to happen – especially when we are talking about the millions of illegal immigrants who are lucky enough to have a roof over their head after working long hours for putrid low wages?

Sadly, Huckabee’s remarks were mostly ignored beyond the forum audience. And while his presidential candidacy is getting relatively little attention, his comments on housing affirm that there is at least one presidential candidate who can look beyond the zingers and sound bites and appreciate that there is a major problem that no one wants to acknowledge.

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The Shadow Comfort Of Conspiracy Theories

I recently stumbled across an organization known as the Gold Anti-Trust Action Committee (GATA), which exists to “expose, oppose, and litigate against collusion to control the price and supply of gold and related financial instruments.” If you believe the GATA spin, this group has been successful in exposing “Western treasury and central bank efforts to intervene both openly and surreptitiously against a free market in gold.”

Uh huh? Yes, it is too easy to dismiss the idea that Janet Yellen is the 21st century answer to Auric Goldfinger on its own terms, but it doesn’t help when one considers the source of such stupidity.

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GATA was co-founded by one Chris Powell, the editor of a tiny Connecticut daily newspaper. Powell briefly made headlines two years ago when he insisted that the newspaper industry has gone into acute decline because “newspapers cannot sell themselves to households headed by single women who have several children by different fathers, survive on welfare stipends, can hardly speak or read English, move every few months to cheat their landlords, barely know what town they’re living in, and couldn’t afford a newspaper subscription even if they could read.”

Yes, that is an exact quote! Clearly, old sourpuss Powell is up to his clenched teeth in conspiracies.

Sadly, there are people who subscribe to the zany ideas that he is putting forward. Perhaps the most blatant financial conspiracy theory involves the decline and fall of the housing industry – and, with it, the U.S. economy – which has been explained via old-school scapegoating.

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Elizabeth Warren (yes, her again) made a name for herself insisting that the 2008 crash was the sole responsibility of lenders that conspired to go out of their way to foist problematic loans on stupid people that were incapable of understanding their borrower responsibilities. While Warren never bothered to explain the logic behind this – after all, the profit margin behind failed loans isn’t particularly muscular when compared to the harvest from well-performing loans – she successfully convinced too many people that there were no villains in the 2008 crash except for conniving mortgage originators.

Cut to today and Warren’s protégé, Richard Cordray, continues to push the conspiracy that mortgage lenders and servicers are going out of their way to bamboozle the American public. Even though the overwhelming majority of mortgage-related complaints filed with the Consumer Financial Protection Bureau’s controversial database are dismissed as being without merit, Cordray still insists that mortgage professionals are united in a conspiracy to ensure that consumers suffer and fail.

Why do characters like Powell, Warren and Cordray continue to get away with these antics? For starters, conspiracy theorists are shrewd enough to tap into the underlying distrust that many people have towards authority, taking the us-versus-them divide to unlikely conclusions. GATA embellishes the stereotype of secretive government agencies to a new depth, with tales of international collusion by the great powers over the planet’s gold supply. Warren and Cordray play the class warfare card by fabricating grand plans by supposedly deep-pocketed lenders to rob and swindle the humble working poor.

Conspiracy theorists also traffic in easy answers to questions that normally defy easy answers. Really, try to explain the international gold market or U.S. housing policies to a layman in 30 seconds. Then try to explain the hiccups and headaches of each sector in the same amount of time. Isn’t it easier to point at someone and declare that person to be at fault rather than try to present a fair yet expansive analysis that measures causes and effects?

Ultimately, conspiracies are guilty pleasures for some easy to amuse people. For this crowd, there is some silly fun in pretending that the world’s governments are secretly united in some grand gold control scheme. And on the housing conspiracies, the guilty pleasure of blaming supposedly wealthy lenders for ruining the economy can be a springboard for the expansion of suffocating restrictions and regulations that profit no one and, ultimately, create more harm than good. (Can you say “Dodd-Frank”?)

It would be lovely if we could just smirk and shrug off the aforementioned conspiracies as the harmless prattling of mischief makers. But as long as these conspiracy theorists continue to pollute the intellectual environment with their garbage, it becomes impossible to have an intelligent consideration of problems and the solutions they require.

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The CFP-Who?

The folks at the Consumer Financial Protection Bureau (CFPB) are under the impression that they are saving the American people from the evils of the financial services industry. Unfortunately for the CFPB, it appears that the majority of Americans never heard of the agency.

Earlier this summer, Zogby Analytics and the U.S. Consumer Coalition conducted a poll to determine how Americans view the various federal regulatory agencies. Only 19 percent of those contacted for the poll admitted that they were familiar with the CFPB – which might be fairly depressing, especially when one considers that one-quarter of those polled were unfamiliar with the U.S. Department of the Treasury, roughly one-third were unfamiliar with the Federal Reserve and more than half were unfamiliar with the Securities and Exchange Commission. Perhaps the MBA should offer courses in geology, since a lot of people appear to be living under that proverbial rock.

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In any event, those that were familiar with the CFPB had a favorable view of the agency (31 percent, compared with 14 percent indicating unfavorable views – everyone else had no opinion one way or the other). But it appeared that many people had no clue what the CFPB was doing. Let me share this information from the poll’s published results:

“More Americans are doubtful that the CFPB can ‘protect credit card information and personal data … from hackers’ than believe it has the capability,” the poll report stated. “One in three disagreed (34 percent) and only 29 percent agreed. Nor were they confident that the agency is ‘safeguarding credit card data… and will do everything possible to prevent it from getting it into the wrong hands. One in three agreed (35 percent) while 26 percent disagreed – but the remainder (40 percent) was either not familiar or not sure … Only 8 percent said that the CFPB’s data collection is better than NSA’s reviewing of domestic phone and text records, 12 percent said it is worse, and 43 percent said it is about the same.”

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After all of these years, it is more than a little pathetic that so many people have no clue Richard Cordray and his mischief makers are actually doing. But that is not to say that they’ve been completely off the radar. Case in point: the CFPB’s Consumer Complaint Database, which is chock-a-block with endless ranting and raving from unhappy Americans that have a bone to pick with their lenders. There have been thousands of complaints posted in this online database, but there is a big problem: the vast majority of them are unsubstantiated.

All of the major financial services trade associations have complained about this thoroughly misleading attack on the integrity and reputations of private sector lenders. Steve O’Connor, the MBA’s senior vice president of public policy and industry relations, probably said it best in a recent letter to Cordray.

“In MBA’s view, because more than 80 percent of complaints do not require action beyond an explanation, posting these unsubstantiated complaint narratives will only mislead the consumers the CFPB is charged with protecting,” O’Connor wrote. “We therefore urge that complaints be verified before narratives are posted. At the very least, the CFPB should establish procedures to take down complaints not requiring action.”

To date, Cordray and his team have publicly ignored the complaints about their complaint database – much the way they ignore any complaints leveled against this agency (cost overruns on the new headquarters, racial and gender discrimination in personnel policies, refusing to extend a good faith period following the implementation of the TRID guidelines, etc.)

And while the American public is, mercifully, lucky that they never heard of this mismanaged agency, the financial services world has the misfortune has the misfortune to be stuck with this bunch and their bumbling.

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The Next Crash

I would like to say something that will either permanently damage my reputation as an industry observer or enshrine me as a forecaster of superior skills: the homeownership market is heading for a crash, and the collapse will occur sooner rather than later unless the industry is serious about acknowledging its problems and working to find solutions.

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The facts are present for anyone that wants to review them: the homeownership rate is at its lowest level since the mid-1960s; home prices are rising while wages are not; more than half of new residential construction involves multifamily housing and not single-family residences; first-time homebuyers are conspicuously absent; inventory levels are mostly abysmal in too many markets; the post-2008 predictions that immigrants and Millennials will lead the revival of the housing market have proven to be disastrously incorrect; and the refinance market, which was supposed to shrink back to the fringes of the industry while the purchase market expanded, is unexpectedly showing signs of aggressive revitalization.

If you remove the federal government’s involvement in the housing market, there would be no housing market. In the past seven years, there has been no effort whatsoever to rebuild the secondary market in a way that allows private enterprise to flourish – Fannie Mae and Freddie Mac generate billions of dollars by default, since they have no competition. Efforts to create the framework of a covered bond market to encourage a new channel of private label securitization were never allowed to take shape. And the Federal Housing Administration has been stuffed with billions to keep it active.

As for affordable homeownership options, either through purchase or rentals, forget it. A surplus number of major metropolitan markets have become too expensive to provide adequate housing for their working class – and, increasingly, middle class – residents. Some areas have gone to inane extremes to address this issue: San Francisco has a ballot referendum in this November’s election to impose a moratorium on new luxury housing in the city’s Mission District while New York is holding lotteries to fill very limited low-rent units within new high-priced developments. Even Julian Castro, the smiling mannequin installed as the nominal head of the Department of Housing and Urban Development, admits something is wrong – he unexpectedly went off-script to describe the absence of affordable housing options as being a “crisis.”

Of course, there is also the Federal Reserve and the Godot-worthy wait for the long overdue rate increase. Janet Yellen has been tempting the financial markets with the tantalizing sizzle of a rate hike, but all she has is sizzle – the actual steak is nowhere to be found because the economy stinks and any rate hike at this time would be disastrous.

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Unlike 2008, housing will not bring down the wider economy. Most likely, any major blow to housing and the wider U.S. economy will probably originate across an ocean (in the Eurozone or China) and resonate with a force that it will make a mess in this country. Since housing is still far from a vibrant recovery, it will be extremely vulnerable if the nation trips back into recession.

Can this crisis be halted, or at least delayed? In terms of politically-based change, it will not happen until 2017, when a new power schematic in Washington might finally agitate for much-needed changes such as revising significant aspects of the Dodd-Frank Act, addressing the egregious authority handed to the Consumer Financial Protection Bureau (CFPB), and getting the government-sponsored enterprises out of federal conservatorship. I have to emphasize the word “might” because a continuation of the current set-up, with one party running the White House and the other running Capitol Hill, will doom us to more of the lethal status quo.

Prior to 2017, however, it is incumbent upon the mortgage industry to further the message of homeownership. There needs to be a vigorous effort to create new products that will enable responsible borrowers to participate in homeownership – outside of the equity-building mortgage product created last year by the American Enterprise Institute, I am hard pressed to name any intriguing new loan product that was put forth during the previous 24-month period. And it wouldn’t be a bad idea if the industry coordinated a high-octane marketing and education push to direct people away from renting and into considering the value of being a homeowner.

For those willing to go the proverbial extra mile, perhaps there needs to be some proactive outreach to developers and local governments to encourage the creation of more affordable single-family housing options for the potential newcomers to the homeownership sphere. The industry has to take more leadership here, if only because no one else is showing signs of leadership.

And, truly, the industry needs to find both its voice and its courage to stand up to grandstanding politicians and unelected regulators that continue to demean lenders and servicers while preventing creditworthy individuals from obtaining loans. There is an ongoing lawsuit brought by a Texas community bank that challenges the legality of the CFPB – when is anyone else in the industry going to join this effort and fight back against a regulatory force that does not have the best interests of either lenders or consumers in mind? For once, the industry has to stop being afraid of the CFPB and fight back against its unconstitutional authority.

Without making an effort to assert influence and redirect the national conversation in its favor, the industry will be a passive observer to another downfall. And if this collapse comes, as I fear it will unless steps are taken to prevent it, the tumble will be swift and harsh.

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The Arrogance Of The Unelected

There is a nasty turf war going on in Washington between the individuals elected by the American people and a handful of characters that were elected by no one. At this sad point in time, it appears that those who came to power without being elected have grabbed chunks of power in a manner that significantly alters the basic tenets of democracy.

In the past few weeks, we have seen three cases where unelected officials have repeatedly ignored the voice of the nation’s elected representatives and the laws they passed while pursuing agendas that are detrimental to the success of the economy. Let’s call out these individuals with a reminder of how they arrogantly run government to fit their needs.

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First, we have Richard Cordray, the director of the Consumer Financial Protection Bureau (CFPB). This failed politician, who was kicked out of office in Ohio by voters that rejected his mediocre work as the state’s attorney general, should not have been allowed into Washington at all – he was shoehorned into office by an illegal recess appointment that was declared unconstitutional by the U.S. Supreme Court, and only received Senate confirmation when Harry Reid threatened to unilaterally rewrite the rules of the Senate if the Cordray appointment was stalled.

Since taking office, Cordray has turned his agency into a shakedown squad that exists solely to use vague “enforcement” actions as a means of siphoning millions from the nation’s financial institutions. A new wave of shakedowns is set to happen when the TRID regulations take effect in October, and Cordray has stubbornly ignored the pleas from more than 300 members of Congress and all of the financial services industry’s trade groups to put a good-faith period after the TRID debut date. After all, any company that makes the slightest mistake in its TRID procedures could easily enrich the Cordray coffers by hundreds of thousands – if not millions – of dollars.

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Cordray has also blithely ignored sworn congressional testimony by members of his agency that the CFPB has engaged in blatant discrimination against its staff – as well as retribution against those that complain about this situation. The nickname that many CFPB staffers gave to the agency is “The Plantation” – and all that’s missing, it seems, is a second-hand Confederate flag hanging from the ceiling.

Second, we have Mel Watt, a one-time nonentity from the House of Representatives that was picked by President Obama to fill a four-year vacancy as the head of the Federal Housing Finance Agency (FHFA). Although the FHFA was set up in 2008 with the clearly defined mission of keeping the salaries of the Fannie Mae and Freddie Mac chiefs at $600,000 each, Watt utterly ignored that mission and unilaterally raised those salaries to a level where each executive could pocket up to $4 million a year in taxpayer funds.

Watt blandly defended his action by claiming that the “FHFA’s statutory responsibilities to ensure safety and soundness and a liquid national housing finance market.” But Sen. Mark Warner, D-Va., a member of the Senate Banking Committee, was more cogent, claiming, “These extraordinary pay raises fly in the face of the legislative intent.”

Last and certainly not least, we have Janet Yellen, whose appointment to chair the Federal Reserve was predicated solely on her gender and not her abilities – and if you don’t believe me on that, ask Larry Summers! Yellen has been subpoenaed by the House Financial Services Committee to explain a 2012 leak of confidential Federal Open Market Committee deliberations, but she believes that she is not obliged to appear. Her excuse: it would interfere with an ongoing internal investigation by the Fed’s Office of Inspector General (OIG).

“The timing, pace, breadth, and nature of that investigation are solely the province of the OIG and the Department of Justice,” Yellen wrote to the committee’s leadership. “Because this investigation is currently active, the OIG has indicated to us and to you that providing access at this time to records and information related to the OIG and Department of Justice’s investigation would risk jeopardizing that ongoing criminal investigation, and that the Department of Justice shares that concern.”

Yellen added that she would only provide access to the information requested by the committee when it “will no longer impede [the] ongoing criminal investigation.”

Between Cordray, Watt and Yellen, we have a new hierarchy of bureaucrats that ignore the law, sneer at subpoenas, create hostile work environments and waste millions of dollars. Is this your idea of how to run a government?

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Mary Jo White, Where Are You?

Back in January 2013, when President Obama nominated Mary Jo White to run the U.S. Securities and Exchange Commission (SEC), he facetiously promised a regulator who had a history of being tough on crime.

“You don’t want to mess with Mary Jo,” Obama said about the one-time U.S. Attorney. “As one former SEC chairman said, Mary Jo does not intimidate easily.”

Maybe she doesn’t intimidate easily, but she certainly doesn’t go out of her way to hunt down white collar criminals. After all, White originally left the public sector to earn a substantial living as a Wall Street attorney – a fact the president conveniently left out of his nominating address.

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But White’s nonchalance about jailing her Wall Street buddies was never a surprise. Back in January 2013, the Washington Post covered her SEC nomination with comments that White made before a New York University Law School event, where she reminded her audience on the importance of being able “distinguish between what is actually criminal and what is just mistaken behavior, what is even reckless risk taking,” adding that it was important “not bow to the frenzy” to put Wall Street executives in prison. Translation: public opinion is meaningless when you are the one calling the shots.

White’s chummy relationship with the major financial institutions was on display again last month when Citicorp, JPMorgan Chase, Barclays and Royal Bank of Scotland accepted guilty pleas to federal felony charges of conspiring to manipulate international currency values. The four big banks agreed to pay $9 billion in fines and no one connected with their operations faced the threat of indictment and prosecution.

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What is unusual about this situation was the fact that White’s SEC went out of its way to protect the big banks. To quote the New York Times’ editorial board coverage of this situation: “The plea deals were not completed until the SEC gave official assurance that the banks could keep operating the same as always, despite their criminal misconduct.”

If White had no problems keeping her Wall Street pals off the perp walk, another high-ranking SEC official, Commissioner Kara M. Stein, had major problems with the failure to enact any meaningful punishment for blatant white collar criminal activity. In a relatively rare public dissent, Stein put forth a blistering condemnation of how White’s SEC is coddling criminals.

“Allowing these institutions to continue business as usual, after multiple and serious regulatory and criminal violations, poses risks to investors and the American public that are being ignored,” Stein wrote.

Later in her dissent, Stein warned that the SEC under White was creating an environment where the notion of law enforcement against Wall Street crimes was seen as a miserable joke.

“I am troubled by repeated instances of noncompliance at these global financial institutions, which may be indicative of a continuing culture that does not adequately support legal and ethical behavior,” she added. “Further, I am concerned that the latest series of actions has effectively rendered criminal convictions of financial institutions largely symbolic. Firms and institutions increasingly rely on the Commission’s repeated issuance of waivers to remove the consequences of a criminal conviction, consequences that may actually positively contribute to a firm’s compliance and conduct going forward.”

White’s indifference to law enforcement of deep-pocketed financial executives does not exist in a vacuum – after all, former Attorney General Eric Holder conspicuously declined to press criminal charges against any financial executive who engineered the deliberately reckless decisions that led to the 2008 financial crash.

To date, White made no public comment on Stein’s criticism or her decision to give these four felonious institutions a slap on the wrist. Considering her carefully cultivated public persona as being tough on crime, the most obvious question to be raised is: Mary Jo White, where are you?

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Oh, Those Naughty Cyber Attackers!

You may not realize this, but I am so sexy that lascivious beauties from across the Internet go out of their way to make my acquaintance. Or at least people are trying to get me to believe that fantasy.

The other day, an email turned up in my in-box with the subject “Krystle BOOBS Norcross sent you a WINK.” And the message read: “Hi sweety, I saw your photo in the social network and realized that we live in the same town. How about spending a couple of hot weekends together and having fun without any needless questions?”

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Now this is interesting, since I live in a small town and I don’t know anyone here with the name (either self-proclaimed or ordained via baptism) of “BOOBS.” And I am not certain what social network she saw me on – it might have been LinkedIn, where a lot of people seem to enjoy my articles on the housing market. But being a journalist, I try to avoid “needless questions” when doing interviews – so I was a little peeved with that particular request from this intriguing lady.

In any event, Ms. Norcross included a link in her email and the invitation to click it so I can learn more about her. Hmmm, do you think Ms. Norcross was sincere in her desire that I join her for a couple of hot weekends together?

Actually, Eric Robichaud, the CEO at 401 Consulting in Woonsocket, R.I., deflated my sense of romantic self-delusion by informing me that Ms. Norcross has no carnal interest in me. In fact, there is no Ms. Norcross.

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“It is a Russian crime syndicate,” said Robichaud about my email. “They are trying to bait you to click the link so they can install spyware on your system to steal your identity and bank info. It’s not real at all. It’s link baiting.”

Why would the Russian criminals do this? And why me? Well, it is seems that this type of mischief is not personally directed at me.

“They build bot networks of millions and millions of computers this way,” Robichaud explained.

Admittedly, this anecdote involving Ms. Norcross represents one of the more ridiculous corners of the cybersecurity sphere. But it should be noted that the cyber miscreants are leaving no digital stone unturned. From trying to hack into the major financial institutions and federal agencies to tempting an obscure soul like me with a hot and steamy email from the supposedly delicious Ms. Norcross, they are working 24/7 to create damage.

So, where is our government in all of this? Every now and then, there is some blip of activity and a bold promise to do something, but it often seems that this hiccup of enthusiasm subsides when a new crisis ascends. But maybe there is finally hope that some aspect of this problem will be addressed.

One of the more intriguing developments here is a new bipartisan effort in Congress to establish a national data security and breach notification standard for financial institutions and retailers. Reps. Randy Neugebauer (R-Texas) and John Carney (D-Del.) introduced the Data Security Act in the House, while a similar Senate bill was introduced by Roy Blunt (R-Mo.) and Tom Carper (D-Del.). The legislation would replace the numerous state laws with a single slate of national data security requirements that would require a company experiencing a breach to notify all impacted customers, as well as federal and consumer credit agencies and law enforcement, if the breach affects more than 5,000 individuals. At long last, there is something that both parties in Congress can agree on.

The cybersecurity struggle often seems like a losing war, with the bad guys always finding new ways to wreak havoc. Let’s hope that the alleged Ms. Norcross and her comrades finally get unplugged and that Net-based security can become more of a reality.

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The Failure Of HUD’s Indian Housing Policy

On February 18, the U.S. Department of Housing and Urban Development (HUD) scooped out its annual serving of money as part of the Indian Housing Block Grant (IHBG) initiative. This year, more than $651 million was distributed to 586 tribes across 34 states.

HUD issued a press release that described the program using this language: “Eligible activities for the funds include housing development, assistance to housing developed under the Indian Housing Program of the 1937 Housing Act, housing services to eligible families and individuals, housing management services, crime prevention and safety, and model activities that provide creative approaches to solving affordable housing problems. The block grant approach to housing was enabled by the Native American Housing Assistance and Self Determination Act of 1996 (NAHASDA).”

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The same press release offered this quote from HUD Secretary Julián Castro: “Our nation is at its best when everyone has a fair chance to thrive. These funds will support the innovative work Native American tribes and families are doing to build a more prosperous future. Our partnership with these local leaders today will create better housing opportunities, more robust economic development and stronger communities tomorrow.”

Okay, so let’s try to make sense of this. Federal assistance for tribal housing stretches back to the 1937 Housing Act, and the block program has been around since NAHASDA became law in 1996, but Secretary Castro is talking about creating better housing opportunities on tribal lands for tomorrow? What’s wrong with this picture? After all of this time and all of the money poured into Indian housing, shouldn’t this sector of the economy be able to stand on its own feet by now without continued federal aid?

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The central problem here is poverty and limited economic opportunities for the residents of tribal lands. According to the various data sources that track this demographic, more than 25 percent of American Indians are living in poverty and only 61.6 percent of native adults are either part of the workforce or are actively looking for employment. As of the third quarter of 2014, American Indian unemployment was at 11 percent – the national rate was 6.2 percent.

And why is this situation so horrendous? Last year, Shawn Regan, a research fellow at the Property and Environment Research Center, published an article in Forbes to detail why this situation is so acute. Regan identified five key reasons why American Indians are lagging so far behind other sectors of the population: Indian lands are owned and managed by the federal government, which is no one’s idea of a good property manager; nearly all aspects of economic development on tribal lands fall under Uncle Sam’s control; the tribal lands operate under complex legal systems (created by Washington) that hinder growth, especially independent economic development; Washington has a long history of mismanaging native funds; and, in areas where energy development could bring in riches, the federal government has done everything possible to prevent such development from occurring.

Regan might have included a sixth problem: federal laws prevent Native Americans from easily pursuing the American Dream. Because much of the land in Indian Country is held in trust by the federal government, tribes have no right to sell the land they live on. This prevents traditional mortgage lending on Indian reservations. Furthermore, if the property is held in trust, the tribe must issue a 50-year lease to its member seeking to build a home – but only after getting the approval from the Bureau of Indian Affairs. The home and the leasehold interest are then mortgaged, but the land must remain in trust for the tribe.

Yeah, can you imagine if the government tried to pull those housing laws in predominantly black or Hispanic neighborhoods? This grossly unfair situation is only allowed to take place on tribal lands. Thus, traditional homeownership on tribal lands is less common while government-funding handouts are par for the course.

But those handouts are hardly generous. And despite Secretary Castro’s cheery insistence on a better day tomorrow, many tribes have become fed up with the lack of progress today. Two years ago, Paul Iron Cloud, CEO of the Oglala Sioux (Lakota) Housing Authority at Pine Ridge Reservation, S.D., offered a stark view of NAHASDA’s failings before a Senate hearing.

“Sadly, in 2013, our housing – and tribal housing on many similarly situated reservations and Alaskan Native communities – is far worse today than 17 years ago,” he said. “Though NAHASDA provides us and many other tribes and tribal housing entities valuable resources, because of stagnant and reduced funding levels as well as flawed funding allocation methods, we and a large number of other tribes today have the worst housing in the United States. NAHASDA funding levels limit us to building on average no more than 30 to 40 units a year, yet we currently need 4,000 new units and 1,000 homes repaired. The result is that we now have the most overcrowded housing in this country.”

Instead of the annual ceremony of dumping hundreds of millions of dollars into a system that is not making life better for the nation’s poorest demographic, maybe it is time to step back, get out the toolbox and start to build a better way for American Indians to share in the benefits of homeownership. IHBG and NAHASDA are not making this situation better – in fact, they have taken a travesty and prolonged it into a travesty.

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As Seen On TV

I don’t know why I still bother watching television news programs, because it often seems that genuine news is absent from the small screen. This is especially acute when it comes to turning on the TV in search of some intelligent coverage of the housing market and the mortgage industry – you can flick endlessly among the 24/7 news channels and evening news reports and there is almost nothing of value on this important economic subject.

But recently, a pair of high profile TV offerings on the fringes of the news cycle tiptoed into this realm. The fact that they picked up the subject of housing and mortgages is a surprise, but the level of attention they provided was even more shocking.

The first program was “The 700 Club,” hosted by the polarizing televangelist Pat Robertson. Last month, Robertson fielded a question from a 67-year-old viewer who wanted to get his opinion on reverse mortgages. “Retirement money does not cover our basic expenses,” the viewer stated, adding that she had to keep working in order to make ends meet. The viewer was curious if the reverse mortgage was the right way to go.

I am not certain what research went into preparing his answer, but Robertson seemed to have a shaky knowledge of the subject. He stated that a lender originating a reverse mortgage “will not take your house away from you as long as you are alive and living.” Of course, this is not correct – borrowers with reverse mortgages are still responsible for payments on property tax and home insurance, as well as maintenance expenses, and they could face foreclosure and possible eviction if they are derelict in regard to these responsibilities.

Robertson then added, “When you do leave, you don’t have to pay it off, but somebody has to pay it off, namely the United States taxpayer. So, it’s not a good deal for the taxpayers, but for most people it’s a pretty good deal.”

Well, again, Robertson is obviously confused again regarding who is ultimately responsible for the repayment of the loan – and the average taxpayer is obviously not the one stuck with the bill for someone else’s reverse mortgage. But, in fairness, he did get one point right when he told the viewer that sought his help, “Get an advisor to help you on it.”

Yeah, you don’t expect Pat Robertson to be someone who can talk about housing with any degree of expertise. On the other hand, Jon Stewart of Comedy Central’s “The Daily Show” has the reputation of knowing a thing or two about the sociopolitical subjects that come across his TelePrompter.

Alas, Stewart seemed to equal Robertson when it came to creating a baffling television experience. Last month, Stewart hosted U.S. Department of Housing & Urban Development Secretary Julián Castro to discuss matters relating to the Federal Housing Administration and Washington’s housing policies.

The problem with this interview, it seemed, was that Stewart had no clue how the housing finance system worked. The sublime Trey Garrison at HousingWire observed the following:

“Stewart also asked Castro if there is still the chance for another crash. ‘Once you give people mortgages, you are not selling them, bundling them, making derivatives, handing them over to other banks?’ Stewart said. ‘We’re not doing any of that stuff anymore?’ Castro equivocated for a moment, preparing to touch on the secondary mortgage market. ‘Just say no,’ Stewart interjected. ‘Just say no.’”

I have no problems saying no – at least in regard to worthless television programs that give wrong information about how this crucial element of the American economic engine functions. Bruce Springsteen said it best: 57 channels and nothin’ on.

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