Government

Angling to get ahead of new fears that the U.S. market may veer off-track with European financial markets in a sovereign default scenario, several members of Congress released a statement Thursday that called for the implementation of the Dodd-Frank Act, citing the vulnerability of growth to changes in international derivatives markets. Recent news reports suggest added risk in the European financial and derivatives markets, which possible sovereign defaults may impact.

The Federal Reserve released a statement today announcing that Mark Bialek will head up internal investigations as inspector general of the Board of Governors of the Federal Reserve System and the Bureau of Consumer Financial Protection.

The Senate Banking Committee convened a hearing Tuesday to address concerns that large mortgage lenders continue to edge out their smaller rivals. Lawmakers called the current mortgage system unsustainable.

On Tuesday attorneys general from 48 states and territories aired their concerns about federal overreach in a letter to the Office of the Comptroller of the Currency, charging that the regulatory agency will sidestep state consumer financial laws and misinterpret the intent of the Dodd-Frank Act if it moves forward with a controversial preemption rule. The letter claimed that existing rules put the OCC in conflict with Dodd-Frank, state consumer financial laws, and past Supreme Court cases.

Following 97 months in federal custody for his role in a high-level money laundering scheme, Thomas Kontogiannis still faces heat in the courts, as he awaits sentencing in July for the part he played in a $92 million mortgage-fraud payout between 2003 and 2007. Prosecutors accuse the former Long Island financier of "mastermind[ing] the largest mortgage origination fraud on record," staging property sales with misrepresented mortgage loans that Kontogiannis sold to lending institutions in the secondary market.

Signaling new flak in ongoing exchanges between members of Congress and the Consumer Financial Protection Bureau, two House committees addressed Treasury secretary Timothy Geithner in a letter last week with concerns about Treasury Department adviser Elizabeth Warren's refusal to unveil her involvement with mortgage servicers and state authorities in their negotiations. The letter is the second to address widespread concerns about the CFPB's dealings, marking a defensive posture for the agency.

The saga of a nearly $3-billion fraudulent scheme that resulted in two bank failures, billions of dollars in losses, and the loss of over 2,000 jobs came to a close on Wednesday when courts found the culprits guilty on counts of fraud and false statements, among other charges. The sentencing follows several other convictions in a case authorities bill one of the largest instances of bank fraud in U.S. history.

Freddie Mac reported the decline of its overall mortgage portfolio by an annual rate of 3.5 percent over May, signaling losses for the government-sponsored enterprise in a mortgage market the federal officials want to hand back to private investors. Issuing its monthly volume update, the GSE's origination volume for single-family refinance-loan purchases dropped to $13.3 billion over May, reflecting 58 percent of total mortgage purchases and issuances.

On Thursday Consumer Financial Protection Bureau nominee Elizabeth Warren attended a virtual press conference, delineating six groups of nonbank companies that may soon fall under the agency's broad scope of authority. The agency is responsible for ensuring that both banks and nonbanks comply with consumer financial protection and fair lending laws, Warren said, reading from a prepared statement.

Nearing the conclusion of her tumultuous five-year term, outgoing FDIC chairman Sheila Bair made moves to shape the legacy she leaves behind in July, making the case for sounder policies needed to head off the potential for a replay of the 2008 financial crisis as markets and industries move forward. Meanwhile, analysts fault a mixed legacy for Bair, citing the major roles she played in expanding the FDIC's power and passing crucial language in the Dodd-Frank Act. Bair is set to leave her post as FDIC chairman on July 8.