Banks Press CFPB in Talks

Banks are demanding that the Consumer Financial Protection Bureau relinquish the right to sue over certain flawed mortgage originations, in exchange for their participation in a proposed multibillion-dollar settlement of alleged foreclosure abuses.

The banks say their inability to secure a sufficiently broad release from the new bureau, which was sidelined in earlier discussions as it launched, would be a deal breaker. The five biggest U.S. mortgage banks, state attorneys general and Obama administration officials are pushing to finalize a deal before the end of the year that would be worth $19 billion or more.

The development is the latest potential roadblock for the settlement effort. Throughout the nearly yearlong negotiations, banks have consistently sought extensive legal releases, while states and federal officials have resisted. In recent weeks, the banks have raised concerns that the CFPB will resist releasing claims over mortgages that were originated before the bureau was chartered last year. A CFPB spokeswoman declined to comment.

Rest from the WSJ here…