June 13 U.S. Federal Reserve staff approved a
multibillion dollar foreclosure settlement with banks earlier
this year without a formal vote of the board governors, a top
Fed official wrote in a letter to Congress.
Federal regulators reached settlements worth about $9.3
billion with 13 banks earlier this year to end case-by-case
reviews of whether they had wrongly seized homes.
Senator Elizabeth Warren of Massachusetts, a Democrat who
sits on the banking committee, and Representative Elijah
Cummings of Maryland, who is the top Democrat on the House
Oversight Committee, asked regulators for more information in
January about the reviews after the settlements were announced.
The lawmakers said the public needed to know more about the
process in order to trust it.
In a response letter to Warren dated June 11, Fed regulation
czar Daniel Tarullo said the board members did not vote on the
foreclosure settlement that was approved by the Fed staff. The
lack of vote, however, does not have any bearing upon the
settlement. (Tarullo letter:)
Tarullo said the Fed staff with "delegated approval
authority" consulted the board members before approving the
foreclosure settlement with the banks.
Fed's board of governors usually do not vote on matters
involving enforcement actions, Tarullo wrote, adding that any
board member can request review of actions taken by the staff.
The mortgage settlements proved controversial because they
ended reviews that had already cost the banks some $2 billion
but had not yet resulted in any relief to consumers. Banks
including Bank of America Corp, JPMorgan Chase & Co
and Wells Fargo & Co were part of the reviews.
Some 4.2 million people are receiving checks as part of the
deal, which ran into new problems in May when the Fed said some
borrowers received smaller checks than they should have.