Federal consumer bureau data-mining hundreds of millions of consumer credit card accounts, mortgages

◼ Officials at the Consumer Financial Protection Bureau are conducting a massive, NSA-esque data-mining project collecting account information on an estimated 991 million American credit card accounts. - Richard Pollock/Washington Examiner

It was also learned at a Congressional hearing Tuesday that CFPB officials are working with the Federal Housing Finance Agency on a second data-mining effort, this one focused on the 53 million residential mortgages taken out by Americans since 1998.

The mortgage information is being compiled in a database that can be "reversed engineered" by hackers seeking information for identify theft, according to an expert cited during the hearing.

The revelations came in a hearing of the House Financial Services Committee, during which CFPB Director Richard Cordray was repeatedly pressed about federal officials rummaging around in the private financial affairs of millions of Americans.

8 Things in Washington That Could Hit Your Wallet This Year

◼ Several developments in Washington could have a significant impact on the economy and, ultimately, on your wallet in 2014, whether you are a business owner, a homeowner in a high-risk flood area, or an online shopper. - Rodrigo Sermeno/PJ Media

Shocker: No One Wants to Buy Student Loan-backed Securities

◼ Worried by reports of rising defaults, investors turned up their noses at a new $225 million bond issue by Sallie Mae, the federal agency that packages individual student loans into large securities. The loan company canceled the offering after two weeks on the market. - The American Interest

◼ Investors Say No to Sallie Mae Bond Deal - Wall St. Journal

Securities backed by student loans have become popular for the extra yield they provide over safer debt, despite a significant rise in defaults on such loans. Overall, the portion of student borrowers who are late on their debt payments by 90 days or more climbed to 31% in 2012, from 24% in 2008, the Federal Reserve Bank of New York said in a recent report.

In the case of the canceled Sallie Mae offering, rising defaults could have crimped the cash flow of the federally backed loans supporting the new securities, because more defaults would mean less excess, or residual, income after holders of the original loans were paid.

Despite new evidence the Community Reinvestment Act led to riskier lending and played a key role in the subprime mortgage crisis, the Obama administration is broadening the anti-redlining regulation´s authority and scope, spooking bankers.

◼ Clinton Added Teeth To CRA, Obama Turned Them Into Fangs - IBD

Through executive orders, Clinton set strict numerical lending targets for banks in "underserved" neighborhoods, while ordering regulators to crack down on alleged bank redlining.

The new rules for the first time mandated that banks use "innovative" or "flexible underwriting practices." Compliance required banks to pass a heavily weighted "lending test" or suffer holds on expansion plans.

The CRA overhaul "has been a disaster," said ex-BB&T CEO John Allison in his recent book on the financial crisis. He argued it's forced "banks to participate in making high-risk housing loans to low-income buyers who would not meet traditional bank lending standards."

Added Allison, who now heads the Cato Institute: "The default rates on these low-income loans are extraordinarily high."

..."DOJ wants banks to have a physical presence in the inner city," Washington-based Buckley Sandler LLP recently told clients, adding that "banks should carefully monitor loan data to determine whether an appropriate volume of loan originations emanate from minority areas."

Last week State Attorney General Kamela Harris was reportedly whooping up what the Wall Street Journal calls an “election windfall” for California from the Obama Administration’s new $25 billion foreclosure settlement with commercial banks.

◼ Loan Bailout Rips Off Middle Class - Wayne Lusvardi/Cal Watchdog

Reportedly, $18 billion of this shadow bailout will be for California. Only $5 billion will be in actual cash. The rest will be in loan write-downs. Of the $5 billion, only $1.5 billion will be to compensate borrowers who suffered foreclosures from 2008 to 2011. This will be in the form of $2,000 “gifts” having no connection to the unpaid balance on loans or anything else.

The other $3.5 billion will be for state and local government regulatory programs. So government will end up getting 70 percent of the cash. Big whoop!

Liberal columnist Michael Hiltzik of the Los Angeles Times calls the Obama foreclosure bailout “the Big Whoop” –- a slang term sarcastically meaning “big deal,” typically used in the negative to indicate something is not a big deal (“So you got $2,000 from Obama four years after you lost your house? — Big whoop!”.)

...The loan write-offs are likely to eventually lead to more, not fewer, foreclosures. Forgiven homeowners will face the reality that they still can’t make payments even on lowered loan balances with even lower interest rates. Without incomes from well-paying jobs, all this will be is a tax write-off for commercial banks....

There is an indication that banks have already begun processing foreclosures in preparation for Obama’s “Big Deal.” In the fourth quarter of 2011 in California, 61,517 Notices of Default were filed, according to the Dataquick real estate data service. Of these, 60,289, or 98 percent, were homeowners who were delinquent on multiple loans, such as a primary mortgage and a home equity loan....

And loan-defaulted homeowners with Fannie Mae and Freddie Mac loans cannot participate in this bailout, which may lead to more voter outrage....

Another huge problem with the foreclosure bailout program is the component to help those with “underwater” mortgages — meaning the loan is more than the market value of the home.

Any public housing agency in California is required to include a clause in any subsidy program that any increase in value of the property has to go to the agency. Otherwise, it would be a violation of the “gift of public funds” prohibitions. More at the link.