CFPB Held to Have an Unconstitutional Structure

We have previously written about some of the overreaches by the Consumer Financial Protection Bureau (CFPB).  Last week, the D.C. Circuit Court of Appeals held in PHH Corporation v. CFPB that the structure of the CFPB is unconstitutional.  Taking issue with the fact that the CFPB was headed by a single director removable by the President only “for cause”, the court fashioned a narow remedy by striking the director’s “for cause” removal protection.  The court also held that the CFPB’s retroactive application of a new interpretation to years-settled law was an affront to the Due Process Clause and remanded the case for further considerations in light of this holding.  For more information on this case, please read our recent OnPoint.

Seeing is Believing: ALTA’s New Survey Standards

orange theodolite prism lies on a background of geodetic maps of the areaFor those of you who read our commentary regularly, you’ll see that we span the commentariat world from musings of perhaps little practical utility but great import (at least to us) to the more mundane.  Today, mundane. Let’s talk title policies and survey standards.  There’s good news here and often good news doesn’t travel fast enough, so here we go.

Title policies “insure over” information that a survey would discern.  It’s precious little good to have a title policy yet find out there’s a missile silo just behind the setback line owned by the US Government.  So title companies require a survey and will generally insure over any nasty surprises the survey would have uncovered. Continue Reading

Zika Keeps Investors Away From ABS East, But Not From CLOs

Although registration was up this year for IMN’s 22nd Annual ABS East conference held at the Fontainebleau Miami Beach earlier this month, attendance was lower than it’s been in previous years as many industry participants decided against attending due to concerns about the recent Zika outbreak in Miami. The CLO sector, however, continued to be well represented and the consensus of the conference attendees was that CLOs have a very positive future ahead. Continue Reading

A Report From the Risk Retention Front-Lines

Your correspondent is fresh from the front-lines of the risk retention wars where great armies of lawyers, bankers and advisers are fixedly staring at each other, staring out of the redoubts of their respective defensive crouches in a complex, multidimensional chess game.  All are fervently hoping against hope that something or someone does something to create clarity and allow our business to pivot around this new set of rules so it can continue to thrive.  I think all of us in the finance world are justifiably proud of the fact that if we are given a set of rules, we’ll figure out how to conduct business.  But the uncertainty here is freezing everyone in place, a giant front court pick that we can’t seem to get around.  But one thing is certain and that is that Christmas Eve is coming and with it this Rule will become effective.  After having obsessed about the Risk Retention Rule for years now, we are broadly no closer to clarity about how one should play in the soon to be upon us risk retention world.

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Remember Europe? Harshing My Mellow

Maybe it’s because I have been in Europe this past week (Munich at Octoberfest actually – Men in way-too-short leather shorts, dirndls, beer steins the size of a politician’s ego, the most astonishing amount of drinking, etc. Good heavens.) I have been wondering: Has anyone been paying attention to what’s happening in Europe lately? You’ve read about Europe periodically in this commentary because we think that the financial success of the European Experiment continues to matter a lot for financial markets in the US and for the US economy more broadly. Here’s a flash, it is still broke. Continue Reading

Why Regulation Fails

I’d like everyone to go out and buy a copy of Professor Paul Mahoney’s slender new book, Wasting a Crisis – Why Securities Regulation Fails.  Paul is a brilliant guy.  Until this spring, he was the dean of the University of Virginia School of Law where he is the David and Mary Harrison Distinguished Professor of Law and the Arnold H. Leon Professor of Law, teaching securities laws.  This is a great book and an important read.  Paul argues cogently that: Continue Reading

The Marketplace Lending Industry Sneezes and Securitization Catches a Cold – Bad Law in the Madden Decision

For the past year or so, Dechert has been keeping a close eye on the marketplace lending industry and the tension between innovation, which portends the development of an entirely new non-banking financial space, and the instinctual reaction of the regulatory state to resist and restrict innovation. Earlier this summer, we published an OnPoint providing a comprehensive review of recent hurdles and developments affecting the marketplace lending industry, including the potentially far-reaching Madden v. Midland Funding case from the Second Circuit. The Supreme Court has now denied cert in the case and so the Second Circuit’s decision will stand. Continue Reading

“Shaking” Things Up: Seismic Risk Assessments

Closeup of a seismograph machine earthquake

Returning to our theme that nothing’s easy and everything keeps changing, here is one out of left field. Let’s talk Probable Maximum Loss (“PML”) and seismic risk. ASTM International, the market standard setting organization for everything from toilet bowls to condoms, has just issued an amended seismic standards: Standard Guide for Assessments of Buildings (E2026-16) and their Standard Practice for Probable Maximum Loss Evaluations for Earthquakes (E2557-16) (the “Standards”)[1]. These Standards establish an industry norm for the requirements to evaluate the financial risk for real estate in zones with seismic activity. Each investigation of real estate is “graded” between a Level 0 investigation (high uncertainty) and a Level 3 investigation (very low uncertainty) based on the qualifications of the assessors and the work done during the investigation. The Standards refer to a Level 0 investigation as a “desktop” investigation, maybe (in a completely subtle way) to imply something about the proximity of the assessors to the potentially shaking site.

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