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Now, let’s talk about regs.
THE BIG STORY
{mosads}FORECLOSURE FALLOUT: The Justice Department’s newly unveiled settlement with Citibank over actions that contributed to the 2008 economic crisis includes the largest civil penalty of its kind ever handed down.
The $7 billion agreement — the conclusion of a two-year probe — centers on allegations that the bank knowingly pawned off defective mortgage-bond packages worth billions of dollars to investors.
Attorney Gen. Eric Holder announced the settlement, which he said should put Wall Street on notice that the DOJ hasn’t lost the scent in its hunt for contributors to the Great Recession.
But has justice been served?
Three takeaways from the settlement’s rollout for perspective:
1) $2.5 billion of the settlement cash will go back to consumers hurt by the misdeeds, including $820,000 for loan modifications for underwater homeowners, almost $300 million for refinancing for homeowners stuck in high rates and at least $50 million for community reinvestment and neighborhood stabilization programs in areas hardest hit by the mortgage meltdown.
But it is unclear how many people hurt by the foreclosure crisis would be helped by the relief, or if any will be made whole, officials acknowledged.
“It all depends on how many owners take advantage” of the programs, Associate Attorney Gen. Tony West told reporters at DOJ headquarters Monday.
2) Citi’s stock actually rose Monday, which also saw the bank issue a better-than-expected second quarter earnings statement.
3) Despite the lofty penalty, the government is not pursuing criminal prosecutions of either Citi or any of its executives. Holder, though, insisted the civil case’s resolution does not preclude criminal charges. At the same time, he and West said additional settlements related to residential mortgage-backed securities are likely to follow. West said “several” banks remain the focus of Justice Department probes, though he declined to specify which or exactly how many. http://j.mp/1wlEy5Y
ON TAP FOR TUESDAY
Lawmakers are descending on the District along with a powerful summer storm, as Congress enters another legislative workweek. The House turns its focus to legislation that would replenish the Highway Trust Fund through May 2015. The Senate will grapple with a bill to effectively overturn the recent Supreme Court decision exempting workers from providing insurance coverage for contraception.
On Tuesday, the Senate is expected to vote to confirm Norman Bay and Cheryl LaFleur to the Federal Energy Regulatory Commission (FERC). It has been a rocky road to confirmation for the two nominees, thanks to a disagreement between the White House and lawmakers over whether Bay, Obama’s preference to serve as the agency’s chairman, should be installed in the top spot. Under an agreement struck last month, LaFleur, currently acting chairwoman, will continue to lead the agency for at least nine months while Bay, who has never served as a commissioner, learns on the job.
Still, the deal doesn’t have everyone’s blessing. Sen. John Barrasso (R-Wyo.) took to the Senate floor to lambaste the agreement as a farce and urge his colleagues to oppose Bay’s nomination. Barrasso acknowledges the understood terms.
“But the President hasn’t put it in writing—hasn’t really told all of the Members that. And even if the President had, this is no way for the Senate to be able to enforce it.
“The truth is this is a gimmick. And it’s a gimmick invented by specifically by Senate Democrats so they can—once again—avoid standing up to President Obama and the Senate Majority Leader.
“Now let’s be clear what President Obama is asking the Senate to do.
“The President is asking the Senate to demote Cheryl LaFleur, demote her from being Chairman. She is a highly qualified woman, a Democrat with over 25 years of experience in energy, 4 years of experience as a Commissioner of FERC—in order to promote an unqualified man.” http://j.mp/1oLBRrv
The House Appropriations Committee will take up consideration of a $30 billion fiscal 2015 Interior and Environment Appropriations bill. The legislation, which controls funding for the Environmental Protection Agency, the Interior Department and other agencies, is chock-full of language designed to starve proposed regulations of necessary funding. http://j.mp/1s3Muer
The Senate Banking Committee will host Fed Chairwoman Janet Yellen, who is slated to deliver the central bank’s Semiannual Monetary Policy Report to the Congress. http://j.mp/1s3Muer
TOMORROW’S REGS TODAY:
The Obama administration plans to issue 282 new regulations, proposed rules, notices and other administrative actions in Tuesday’s edition of the Federal Register.
-The Pipeline and Hazardous Materials Safety Administration (PHMSA) will consider relaxing the safety requirements for trucks that transport hazardous materials, the agency said Monday.
The PHMSA may remove a rule that requires trucks that carry explosives used in blasting operations to apply for a special permit on a recurring basis. This could save the industry millions of dollars.
“We believe the net benefits of these proposals will be attractive to the explosives industry as it will allow them to do business in a faster manner, and consequently provide significant cost savings,” PHMSA wrote. http://j.mp/1tJrSK9
-The Federal Communications Commission (FCC) will consider updating the Emergency Alert System, a television alert that is used to warn the public about imminent dangers. The changes would make it easier for the president to address the entire country in the event of a nationwide emergency. http://j.mp/1yifxeJ
-The Fish and Wildlife Service (FWS) will consider designating a critical habitat for the endangered Mount Charleston blue butterfly. http://j.mp/1mP98mZ
-The Department of Veterans Affairs (VA) will consider improving its fire safety standards at VA facilities. The move would reflect changes to the National Fire Protection Association’s standards and better protect sick veterans at VA hospitals and other care facilities. http://j.mp/1qYZyzH
-The Surface Transportation Board will change the fees it charges for filing certain cases and pleadings with the board. http://j.mp/1n30sLE
-The Food and Drug Administration (FDA) will correct errors made in a rule it published last month about infant formula, which is intended to better protect young children who consume these products. http://j.mp/1n30N0G
NEWS RIGHT NOW:
BLOOD, DRAWN: Sen. Chris Coons (D-Del.) says the FDA’s rule prohibiting gay men from donating blood is a disgrace and should be changed. The ban was established in 1983 as a way to prevent blood donors from passing on HIV or AIDS, but Coons called the rule a “relic.” http://j.mp/1wlFmYz
ERNST & YOUNG will shell out $4 million to settle SEC charges that the firm broke lobbying rules. http://j.mp/1qaUTNk
I BELIEVE I CAN FLY: Federal officials are moving to protect endangered blue butterflies: http://j.mp/1oVTUNb. Also, check out the 1997 music video: http://j.mp/1tJLPjO
WARNING! WARNING! The president would be able to address the nation in times of crisis under new revisions to the Emergency Alert System. The television alert system is typically used to warn the public about dangerous weather conditions, such as tornadoes and flash floods, but the proposed rules would also give the president access to living rooms around the country. http://j.mp/1qaQKZP
ASLEEP AT THE WHEEL: Truck drivers hauling hazardous materials such as explosives would face fewer regulatory barriers under new rules from the Pipeline and Hazardous Materials Safety Administration. PHMSA says the rule could save industry more than $16 million. http://j.mp/1qZ9hWI
WORK STOPPAGE: The National Labor Relations Board (NLRB) will have its hands full revisiting about 100 cases following the Supreme Court’s Noel Canning decision, which could slow the board from pursuing what critics say is a pro-labor agenda. http://j.mp/U8jF1Y
SHOTS FIRED: Gun owners say a new rule from the Obama administration would trample on their Second Amendment rights. They’re joining the fight to rollback the Fish and Wildlife Service’s controversial ivory ban, which would prevent them from selling antique firearms that contain endangered elephant ivory. http://j.mp/1qUnft9
E-CIGS: E-cigarette companies say they support stronger regulations to prevent children from using e-cigs, The Hill’s Elise Viebeck reports. http://j.mp/1nzp9hI
STRONG ARMED: A consumer watchdog is filing charges against a Georgia company that it says intimidates people into paying debts they do not actually owe, The Hill’s Peter Schroeder reports. http://j.mp/1nzq4i6
QUICK CASH: U.S. payday lender Dollar Financial is running into trouble with British financial regulators, Reuters reports. http://j.mp/1qB71TN
BY THE NUMBERS:
$7 billion: The total Citibank will pay under the terms of the settlement announced Monday
$4 billion: The portion of that sum that represents the firm’s civil penalty for misleading investors and helping to precipitate the 2008 economic recession.
$2.5 million: The portion of that penalty that will be directed toward consumer relief programs.
0: The combined number of major institutions and individuals that have faced criminal charges connected to the crisis.
QUOTE OF THE DAY:
“We believe the size and scope of this resolution go beyond what could be considered the mere cost of doing business.” – Holder on the Citi settlement.
We’ll endeavor to stay on top of these and other stories throughout the week, so check The Hill’s Regulation page early and often for the latest. And send any comments, complaints or regulatory news tips our way, via bgoad@digital-stage.thehill.com or tdevaney@digital-stage.thehill.com. And follow us at @ben_goad and @timdevaney.