The U.S. consumer financial watchdog said yesterday that it had fined subsidiaries of Citigroup Inc. $28.8 million for giving "the runaround to borrowers" on mortgage servicing by keeping them in the dark about options to avoid foreclosure or making it difficult for them to apply for relief, Reuters reported. CitiMortgage will pay an estimated $17 million to compensate wronged consumers, as well as a civil penalty of $3 million, the Consumer Financial Protection Bureau said. CitiFinancial Services will refund approximately $4.4 million to consumers, and pay a civil penalty of $4.4 million. The CFPB said that the subsidiaries neither admitted nor denied the findings in the consent orders.
In a lengthy complaint, the the Consumer Financial Protection Bureau (CFPB) on Wednesday said that Navient, which oversees $300 billion in student loans for 12.5 million borrowers, failed customers “at every stage of repayment,” according to a New York Times commentary on Saturday. It’s not enough, in other words, that students must struggle with onerous debt after college. Navient added to the burden, the bureau said, by making those loans harder to repay. Navient failed to apply borrower repayments accurately, the bureau said, and the company did not make clear what its customers needed to do to keep their payments low, according to the commentary. Worst of all, though, it accused Navient of hurting disabled military veterans, who can seek loan forgiveness under a federal program. Navient, the lawsuit said, inaccurately told credit reporting companies that veterans taking advantage of this program had defaulted on their loans.
To amend the Internal Revenue Code of 1986 to include student loan repayers as members of targeted groups for purposes of the work opportunity credit and to provide for a credit against tax for student loan program startup costs.
The Dodd-Frank financial overhaul’s most passionate defenders will leave the executive branch tomorrow and some of its loudest critics will grab the levers of power, the Wall Street Journal. The question is no longer how far the law’s impact will ripple across the economy, but how much of it will be dismantled. Dodd-Frank’s backers have accomplished much of what they set out to do since President Barack Obama signed the law in July 2010. A new consumer finance agency is policing products from mortgages to credit cards. The ability of big banks to make bets and borrow money has been restricted. Opaque derivatives transactions now move through regulated clearinghouses. The government says that taxpayers won’t be on the hook again if a huge financial firm fails, though its new plans and legal authorities are untested. Most major rules required by Dodd-Frank are complete, with notable exceptions such as restrictions on what the law’s backers see as excessive Wall Street compensation. For every five rules Dodd-Frank mandated, about four have been drafted or finalized, according to the most recent estimate from the law firm Davis Polk & Wardwell LLP, which has been tracking the law’s implementation. Whether all those changes are benefiting the economy or holding it back remains a matter of substantial debate — one that will begin in earnest once Donald Trump is sworn in as president on Friday. The law has unquestionably imposed higher costs on the financial sector, but policy makers disagree about whether those costs were worth it in the name of making the system less susceptible to another meltdown.
