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Monday Morning Cup of Coffee


A look at stories across HousingWire's weekend desk, with more coverage to come on bigger issues:

Staff at the Office of Thrift Supervision will begin their transfer to the Office of the Comptroller of the Currency Monday.

Under Dodd-Frank, the OCC will absorb the OTS and operate as a single agency beginning Thursday – the same day the Consumer Financial Protection Bureau opens.

Congress established the OTS in 1989 in response to the savings and loan crisis that claimed many small nondepository lending institutions throughout the decade. The OTS since supervised, chartered and regulated the thrift industry.

Lawmakers joined the two agencies to end the practice of "regulatory shopping," which allowed a financial institution to simply file with the Securities and Exchange Commission that it was shifting supervisors.

The move was made most famous by Countrywide Financial Corp., which changed regulators when the OCC began raising concerns. In 2007, Countrywide moved under the oversight of the OTS, just three years before its fall toward bankruptcy and the acquisition by Bank of America (BAC: 9.8316 -1.68%).

President Obama will nominate Richard Cordray as the director of the CFPB Monday.

The CFPB will launch July 21 and assume the role of de facto regulator for the entire mortgage industry. Cordray is the former Ohio Attorney General, who lost his re-election bid last fall after pursuing several lawsuits against mortgage servicers and lenders.

Elizabeth Warren, the bureau's architect and special adviser to the Treasury, was long the front-runner for nomination but was also a long-shot for approval by many lawmakers in the Senate. Warren recruited Cordray as the bureau's head of enforcement earlier this year.

"Richard Cordray has spent his career advocating for middle class families, from his tenure as Ohio’s Attorney General, to his most recent role as heading up the enforcement division at the CFPB and looking out for ordinary people in our financial system," Obama said in a statement Sunday.

The White House is scheduled to make a formal announcement at an event later Monday.

On Wednesday, the House Financial Services Committee will vote on a bill aimed at repealing a section under the Dodd-Frank Act designed to hold credit rating agencies accountable for their assessments of securities issuance.

Rep. Steve Stivers (R-Ohio) introduced H.R. 1539, or the Asset-Backed Market Stabilization Act of 2011, in April. If passed, it would repeal section 939G of the Dodd-Frank Act.

The section actually repealed part of the Securities Act of 1933, which exempted credit rating agencies from having to consent to issuers for including the ratings in registration statements with the SEC.

As a result of the Dodd-Frank Act, credit rating agencies would have to consent before registration and therefore be held liable to investors in certain cases should unpredicted or unexpected losses occur.

However, many fear credit rating agencies would refuse to consent, leaving out their ratings from statements and prospectuses when a security is issued.

Matthew Roslin resigned from his executive vice president and chief legal officer positions at Flagstar Bank (FBC: 1.195 -1.24%), according to a filing with the SEC on Friday.

Roslin will remain with the company, one of the largest mortgage lenders in the country before the housing downturn, on an interim basis and will maintain oversight of all legal matters until a replacement is made.

The Troy, Mich.-based bank is currently embroiled in a lawsuit from Assured Guranty (AGO: 15.64 -2.92%). Assured alleged more than 0 million in mortgage-backed securities issued by Flagstar were fraudulent and is seeking more than million in damages.

Several small Florida-based companies filed a lawsuit against the German-based Knauf Gips, alleging the firm lied about defective Chinese drywall that forced these companies to pay out million in a legal settlement.

Banner Supply Co. led the complaint against Knauf seeking more than 0 million in damages. Banner bought roughly 100 million square-feet of Chinese manufactured drywall from Knauf. When Banner began receiving complaints about orders from the drywall, Knauf allegedly sent an executive to Florida to investigate.

Banner alleges the investigation falsely assured them of safety while allegedly knowing the sulfur emitting from the drywall would corrode construction materials.

Regulators closed four banks over the weekend, bringing the total number to 52 for the year. The failed institutions last week are expected to cost the Federal Deposit Insurance Corp. 9.1 million.

The Georgia Department of Banking and Finance closed High Trust Bank and One Georgia Bank. The Georgia-based Ameris Bank acquired all 1.6 million in deposits and 8.8 million in assets from both banks.

The two closings are estimated to cost the FDIC Deposit Insurance Fund 0.4 million.

The Florida Office of Financial Regulation closed First Peoples Bank. The Premier American Bank will assume all 9.7 million in deposits and purchase essentially all 8.3 million in total assets.

The closing is expected to cost the DIF .4 million.

The Arizona Department of Financial Institutions closed Summit Bank over the weekend. The Foothills Bank will assume all .4 million in deposits and agreed to purchase essentially all million in assets.

The FDIC estimates the closing to cost the DIF .3 million.

Write to Jon Prior.

Follow him on Twitter @JonAPrior.


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