More on the FDIC’s Fight Versus Other Bank Regulators on Servicer Abuses; Rep. Miller Backs More Aggressive Action

We’ve mentioned that the FDIC has been pushing to reform the securitization process, including imposing standards on servicers. That has put it at odds with the bank-friendly Treasury and Office of the Comptroller of the Currency (the SEC has proposed securtization reforms but of a much more modest nature than the FDIC’s). This behind the scenes battle is heating up further because Dodd Frank calls on bank regulators to draft new rules to improve the operation of the mortgage securitization market. The FDIC intends to include mortgage servicer behavior in those provisions and want the rules ready in January.

The pressure to take action has increased with a spate of hearings last month (two Senate Banking Committee, one House Financial Services, the Senate Judiciary Committee, HUD, plus the release of a blistering COP report and related chat with Geithner) and the FCIC report due out next month. The publication of a letter to banking regulators signed by 50 experts urging action was joined by a letter by Representative Brad Miller, which is apparently also garnering Congressional support. The trigger for both missives is the failure of the authorities to act on provisions in Dodd Frank related to securitizations