Consumer Protection Out of the Shadows of Shadow Banking: The Role of the Consumer Financial Protection Bureau

Consumer Protection Out of the Shadows of Shadow Banking: The Role of the Consumer Financial Protection Bureau


Consumer protection remains the stepchild of financial regulation. Notwithstanding the fact that the economic doldrums we find ourselves in originated in the under-regulated subprime mortgage sector, relatively few academic commentators focus on the role that consumer protection can play in reducing such risks as well as in restoring the balance between consumer and producer in the financial markets. This essay suggests that consumer protection regulation has an important role to play in the regulatory structure of the shadow banking sector.

This essay does four things. First, it describes the role of shadow banking in the residential mortgage market — the shadow mortgage banking sector, as it were. Second, it contrasts two mortgages. One is emblematic of shadow mortgage banking during the Subprime Boom. The other is Dodd-Frank’s response to the excesses of the Subprime Boom — the “Qualified Mortgage.” It then evaluates whether “Qualified Mortgages” can restrain some of shadow mortgage banking’s excesses, and finds that they may be able to do so. It concludes by reviewing the first steps taken by the Consumer Financial Protection Bureau as it begins implementing Dodd-Frank’s mortgage-related provisions.

Full paper below…



Consumer Protection Out of the Shadows of Shadow Banking: The Role of the Consumer Financial Protection Bureau

4 Responses to “Consumer Protection Out of the Shadows of Shadow Banking: The Role of the Consumer Financial Protection Bureau”
  1. 1ofthemany says:

    mega money protection..yes. Oh guess it could be Agenda 21 coming down, think the people will fight that one with their very lives Lies all the way around. Hidden agendas as always. Was this one if the big boyz/girlz kindred buying up this property. we are supposed to help others not hurt them or profit off off them!!!! Disgusting!!!!

  2. To Tell The Truth says:

    Sad that it was not announced so other homeowners could try to recoup their properties or needy homeowners could have bid..what a sham all this is…everyone makes money off the disfranchised homeowners…

    • Collene says:

      I agree it is so discouraging that I had a perfect payment history for 24 years and lost our home illegally without being in arrears and without the MA state foreclosure laws being abided by. Our mortgage was never even recorded so after paying off our home to people that had no right collecting on it they sold it without notifying us or posting the illegal sale in the newspaper. No money ever switched hands at the illegal sale and we had a preponderance of evidence plus an expert witness and the unethical judge ignored all the facts of law after we paid almost $35,000 in legal fees. I am losing my will to live because not only did we lose our home of 24 years but we lost our retirement and our life savings. Our son returned home from his 2nd deployment in Iraq to find out the only home he ever knew was gone and we were homeless. I know people who haven’t made a mortgage payment in 3 years and are still in their home. We had a perfect payment history and were blindsided by an unadvertised illegal sale.

  3. To Tell The Truth says:

    Investor Buys County’s Entire Foreclosure Stock

    Posted by GLOZAL on August 7, 2012 at 10:51am
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    A Detroit metro area county no longer has to worry about their foreclosure backlog. For about $4.7 million, Bill McMachen, an investor in Macomb County in Michigan, purchased all of the county’s 627 foreclosed properties all at once and for one price.

    The county’s treasurer was offering up all of the county’s distressed homes in a foreclosure auction last week. And made one offer that McMachen found particularly attractive: One buyer could acquire all of the distressed properties at once if the purchaser agreed to pay the amount equal to all of the taxes owed on them, which was $4.72 million. McMachen was one of the only investors apparently at the auction who was ready to buy the entire bulk of the 627 homes all at once, instead of individually.

    McMachen paid an average of about $7,500 a piece for each of the homes. He says he may sell the properties in packages of 10 or so to some investors interested in individual properties. He also says he plans to donate some to charities and sell others to residents who are seeking affordable properties in moving to the suburbs.

    He estimates his purchase will eventually net him about $10 million by reselling the homes.

    Ted Wahby, the county’s treasurer, told AOL Real Estate that the sale allowed the county to sell all the foreclosures—the “good with the bad”—all at once and recoup the taxes that were still owed on the properties.

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