The Consumer Financial Protection Bureau and the four prudential regulators have released a ¡°Memorandum of Understanding on Supervisory Coordination¡± that clarifies how they plan to coordinate their supervisory activities, consistent with the Dodd©\Frank Wall Street Reform and Consumer Protection Act. Dodd©\Frank requires the CFPB and the prudential regulators ¨C the Federal Reserve, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the National Credit Union Administration ¨C to synchronize important aspects of their supervision of insured...

Although it has taken steps to mitigate risk related to advances and collateral at the 12 Federal Home Loan Banks, the Federal Housing Finance Agency needs to do more to strengthen its supervisory framework for the FHLBanks' risk management practices, according to a new report by the FHFA’s official watchdog. The FHFA Office of Inspector General found in an audit released late last week that the agency has not implemented a majority of its own examiners’ recommendations to effectively manage advances and collateral risks within the FHLBank system. “Although preliminary evidence suggests...

The Government Accountability Office has cited “opportunities for improvement” in the Federal Housing Finance Agency’s internal controls in a recent report, including a still pending recommendation to beef up the FHFA’s information security controls. Mandated by the Housing and Economic Recovery Act of 2008, the GAO said its audit of the Finance Agency’s fiscal years 2011 and 2010 revealed that the FHFA had not fully implemented its information security program as per GAO’s recommendations in previous reports, resulting in “several new information systems vulnerabilities” over the last year.

In a move intended to maintain the integrity of data that helps guide the decisions of MBS investors, the Financial Industry Regulatory Authority last week fined Citigroup Global Markets $3.5 million for allegedly providing “inaccurate mortgage performance information, supervisory failures and other violations” in connection with subprime residential MBS. “Citigroup posted data for its RMBS deals that it should have known was inaccurate; and even after they learned that the data was inaccurate, Citigroup did not correct the problem until years later,” said Brad Bennett, FINRA executive vice president and...

The government’s multi-billion dollar investment bailout of Fannie Mae and Freddie Mac allowed the two government-sponsored enterprises to avoid an insolvency that could have triggered the collapse of the U.S. housing finance system, concluded a new report by the official watchdog of the GSEs’ regulator. The Federal Housing Finance Agency’s Office of Inspector General’s report – “Fannie Mae and Freddie Mac – Where the Taxpayers’ Money Went” – noted that the U.S. Treasury had dropped some $185 billion into the two GSEs since early September 2008 through the end of last year. “The enterprises’ shareholders lost...

The Securities and Exchange Commission has given Royal Bank of Canada the green light to issue residential mortgage covered bonds registered in the U.S. The SEC granted permission through a no-action letter shortly after RBC submitted plans for a program through which covered bonds backed by U.S. home loans will be offered to U.S. investors. RBC is a “foreign private issuer” under U.S. securities laws and, as a Form S-3 issuer, has a registered shelf with the SEC through which it can offer multiple securities on an immediate, continuous or even on a delayed basis. Covered bonds are debt securities backed by cash...

The “scalability” of the nation’s 12 Federal Home Loan Banks as well as their demonstrated ability to access global markets could play a significant role in their favor as policymakers ponder the future of the FHLBank System in a post-Fannie Mae and Freddie Mac housing market, the FHLBanks’ chief regulator told bank directors and executives last week. During a speech at the annual Federal Home Loan Banks Directors Conference in Washington, DC, Federal Housing Finance Agency Acting Director Edward DeMarco noted the banks already have strong relationships, including a cooperative ownership structure, with their nearly 8,000 front-line local lenders.

Freddie Mac’s new chief executive is expected to have his work cut out for him when he takes possession of the company’s corner office starting next week, industry insiders say, as it remains to be seen how much of a change agent anyone serving as CEO under government conservatorship can be.Last week, Freddie’s board of directors announced, with Federal Housing Finance Agency consent, the appointment of Donald Layton as CEO and elected him a member of the board.

The Federal Housing Finance Agency is still mulling over accepting principal reduction payments from the Treasury Department even as the debate between the factions for and against GSE loan writedowns is quickly dissolving into a partisan food fight. This week, two ranking House Republicans urged FHFA Acting Director Edward DeMarco to stand fast against mounting political pressure directed at him by the Congressional allies of the Obama administration as House Democrats took the gloves off, accusing the Finance Agency of falsely withholding pertinent information about the agency’s principal reduction analysis.

The ongoing feud between Congressional Democrats and the Federal Housing Finance Agency appeared to boil over this week as the FHFA’s head answered back to charges that he’s been holding back pertinent information about the agency’s analysis of principal reductions. In a May 1 public letter to FHFA Acting Director Edward DeMarco, Reps. Elijah Cummings, D-MD, and John Tierney, D-MA, accused the agency head of playing fast and loose with the facts regarding a previously unreported 2010 Fannie Mae pilot program to forgive a borrower’s mortgage debt, as well as the facts buttressing the FHFA’s position...