Morning Report: CFPB will no longer “push the envelope” 2/13/18

Vital Statistics:

Last Change
S&P Futures 2643.5 -11.8
Eurostoxx Index 372.7 -0.2
Oil (WTI) 58.8 -0.5
US dollar index 83.8 -0.3
10 Year Govt Bond Yield 2.54%
Current Coupon Fannie Mae TBA 103.591
Current Coupon Ginnie Mae TBA 103.688
30 Year Fixed Rate Mortgage 4.37

Stocks are lower this morning on no real news. Bonds and MBS are up small.

Small Business Optimism rebounded in January as expansion plans hit a record high. The net percentage of businesses saying “now is a good time to expand” was the highest since 1973, when the survey began. A more benign regulatory and tax environment is helping drive sentiment. In fact, “finding quality workers” is a bigger concern now than “taxes and regulations.” Small businesses added .23 workers last month on average.

The CFPB released its strategic plan for the next 5 years, and it marks a departure from the Cordray CFPB. CFPB Acting Director lays out his strategic vision in the opening statement: “This Strategic Plan presents an opportunity to explain to the public how the Bureau intends to fulfill its statutory duties consistent with the strategic vision of its new leadership. In reviewing the draft Strategic Plan released by the Bureau in October 2017, it became clear to me that the Bureau needed a more coherent strategic direction. If there is one way to summarize the strategic changes occurring at the Bureau, it is this: we have committed to fulfill the Bureau’s statutory responsibilities, but go no further. Indeed, this should be an ironclad promise for any federal agency; pushing the envelope in pursuit of other objectives ignores the will of the American people, as established in law by their representatives in Congress and the White House. Pushing the envelope also risks trampling upon the liberties of our citizens, or interfering with the sovereignty or autonomy of the states or Indian tribes. I have resolved that this will not happen at the Bureau. The rest of the document reiterates the role of the CFPB and Mulvaney’s commitment to those duties.

Donald Trump laid out his priorities in a budget document yesterday. These sorts of things are never intended to become law (Obama had one that garnered exactly zero votes), but are more to lay out philosophies and priorities. The document did contemplate an increase in the guaranty fee that Fannie Mae charges borrowers by 10 basis points. At the margin, this would make Fannie loans somewhat less attractive relative to FHA / VA however it probably won’t matter all that much. The amount of money involved ($26 billion over 10 years) is not major. Separately, shareholders of Fannie Mae and Freddie Mac stock had hoped the document would discuss the GSEs retaining their profits. That didn’t happen.

Hurricane-related delinquencies rose in November, but fell everywhere else, according to CoreLogic. 30 year DQs fell overall from 5.2% a year ago to 5.1%. The foreclosure rate fell from 0.8% to 0.6%.

28 Responses

  1. If there is one way to summarize the strategic changes occurring at the Bureau, it is this: we have committed to fulfill the Bureau’s statutory responsibilities, but go no further.

    Certainly correct. The issue is always in the breadth of a particular authorization to perform a general task. Suppose the task is to “assure the public of fair loan dealings”. Perhaps that could be done simply by referring complainants to their own lawyers. That would be a minimalist approach. Just a phone bank. Or a computerized phone tree.


    Liked by 1 person

  2. #TheResistance gets a total pass….

    Liked by 1 person

  3. Aaron Blake of The Fix at WaPo patiently explains to SJW types that Anglo-American law is a common and correct descriptive used by lawyers and scholars all the time and formerly much used by BHO when he was POTUS. He warned against outrage by Trump’s opponents blinding them.

    At last count about 800 refugees from the PL have mainly commented on how they know the American AG used it as dog whistle racism in response to Blake carefully explaining that it is not.


    • Reminds me of the standard strike suits you used to see after a company misses earnings… Investors who bought the stock prior to the announcement file a lawsuit claiming the company should have disclosed the damaging information and tries to get the company to reimburse their losses.

      I am sure in the prospectus it said that the ETN can go to zero if volatility spikes.


  4. Interesting.

    What’s Schumer’s goal here?


  5. DACA executive order blocked again…

    Are these judges just playing legal Calvinball and just making shit up to support their ideological and partisan desires?

    Common sense says that something enacted by executive order can be taken away by executive order.


    • Brent:

      DACA executive order blocked again…

      At some point the executive has to say screw this lawless court and just start enforcing the law.


    • Some executive orders grant a temporary but open ended personal right which could give the affected person a due process argument if the right is withdrawn without notice and an opportunity to be heard.

      I haven’t read this one and am certainly not offering a judgment. But I’d bet that if the EO withdrawing the right was couched in terms of “60 days from this date your status will revert – if you have cause to maintain your current status you must respond in writing to this address plainly stating your claim within 20 days.” Then a procedure for hearing would be set out along with a warning that failure to respond within the stated time would permit the status to revert.

      Then it would be difficult to argue a due process violation.

      I also think that if the original temporary right had an expiration date certain it would be difficult to maintain a DP argument.

      So my opinion of these rulings would depend on the nature of the original order and the nature of the withdrawing order.


      • Mark:

        Some executive orders grant a temporary but open ended personal right…

        Where does the president derive the authority to grant personal rights to anyone, much less non-citizens?

        Addendum: And if one assumes that the President does have the unilateral authority to grant certain rights simply by declaration (ie outside of any other due process requirements), then why wouldn’t he also have the unilateral authority to revoke such a right simply by declaration (ie outside of any other due process requirements)?


        • That’s a good pair of questions.

          They should be asked in each potential case.

          But obviously there are executive powers to grant personal rights within the ambit of the Constitution. There are the A. II, Section 2 powers, but also powers implied within the duty of faithful execution of the laws passed by Congress.

          WRT immigration violations, there is this:

          “…he shall have Power to Grant Reprieves and Pardons for Offences against the United States, except in Cases of Impeachment.”

          Courts take the English common law power to commute a sentence or to lessen a punishment as within the power to grant reprieves.

          As to the automatic reversal or due process reversal of a commutation or reprieve or imposition of a penalty – the circumstances could require an inquiry if they aren’t clear as they are with say a thirty day stay of execution.


        • Mark:

          That is an interesting argument, but I don’t think it applies with regard to DACA. First of all, DACA was explicitly implemented as prosecutorial discretion, not as as a reprieve or pardon. (The official title of the order establishing DACA was “Exercising Prosecutorial Discretion with Respect to Individuals Who Came to the United States as Children”.)

          Also, I think the authority to issue a reprieve or pardon must be understood as applying retroactively, ie only after the offense has occurred. If a pardon or a reprieve can be issued with regard to continuing and on-going illegal activity, it cannot sensibly be seen as a pardon or a reprieve from punishment, but instead amounts simply to an exemption from the law. And the president does not have the authority to give blanket exemptions from immigration law.

          Also, as an aside, I would dispute the notion the authority to grant pardons or reprieves amounts to an authority to grant personal rights.


        • You certainly may be correct. It takes briefing. We are not doing that.

          Remember that there is no ongoing violation called “being in the US illegally”. There is only the preexisting violation of either having entered illegally or having overstayed one’s lawful entry permission.


        • Mark:

          It takes briefing.

          It would take one hell of a briefing to convince me that there is no difference between an exercise in “prosecutorial discretion” and an executive pardon.

          Remember that there is no ongoing violation called “being in the US illegally”.

          My understanding is that presence in the US without authorization or documentation is indeed an ongoing violation, albeit a civil rather than criminal one. I believe that entering the US illegally is itself a criminal violation, but that most deportation proceedings are civil proceedings which focus not on the crime of entering the US illegally, but instead on the civil violation of presence in the US without authorization.

          Please do correct me if that is not right.


        • You are correct.


        • Only thing I can think of is the Emancipation Proclimation.

          Liked by 1 person

  6. This is interesting.

    I wonder what’s going to happen to Flynn. His judge recused himself, the new judge ordered Meuller’s team to turn over some information and the sentencing was delayed until June.


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