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the latest SECONDARY MARKET The agency and the Senate do not see eye to eye over data collection. A T "With much fanfare, a parade of senior officials congratulated one another for their efforts—the hundreds of subpoenas they had served, the thousands of hours their team had devoted to the case, the millions of documents they had read." he Consumer Financial Protection Bureau's (CFPB) ambitious effort to build a National Mortgage Database was not taken lightly by lawmakers during a recent Senate committee hearing. Senators expressed discomfort over the idea of having a federal agency track consumer behavior, despite CFPB director Richard Cordray's continued emphasis on the anonymity the database will provide to individual consumers. The National Mortgage Database is a joint effort with the Federal Housing Finance Agency (FHFA) and will include information such as borrower profiles, payment history, and mortgage product and terms, but it will not provide information that would give away borrowers' personal identities, according to the agencies. Sen. Mike Johanns (R-Nebraska) expressed concern over the idea that somehow, someway, the government is getting control over information on how people pay their mortgage. Johanns also bluntly stated that to many people, the idea of the database is going to sound "creepy" and people are going to be bothered by the fact that there is a federal agency collecting data on the behavior of individuals. Throughout the hearing, Cordray responded to privacy concerns by stressing consumer information will be anonymized and individuals will not be personally identifiable, explaining the bureau has no interest in watching individual consumers, but instead holds an interest in understanding how financial products impact consumers. Cordray also explained that without the database, the agency can't do its job. "You have to have information about consumers if you're going to understand what is going on in the consumer marketplace. There's no two ways about this," he said. He also added that if Congress wants the bureau to write rules, the CFPB needs to have aggregate data and information on the market. "If we don't have data and information, we can't do that and we can't do our job, and you would be upset with us and rightly so," he explained. One vehicle on the consumer marketplace that the bureau has made available is its Consumer Complaint Database, which was expanded in March. According to Cordray, the main complaints found in the database were related to mortgage servicing. Credit card complaints came in second. He also added that the practice of dual-tracking is a great concern, noting that CFPB's new servicing rules that take effect in January will make a significant difference. se c on da r y m a r k e t back-slapping, the government's complaint fails to state a claim." The document goes on to argue that the government cannot prove S&P knowingly issued rating opinions it did not believe, dismissing exchanges between employees offered by the plaintiffs as proof of intent to defraud investors. "The complaint's allegations—even taken as true for the purpose of this motion—reveal a robust internal debate among S&P employees about the likely future performance of complex financial instruments at the beginning of what turned into a global economic tsunami. The isolated snippets that the government has chosen to extract from that internal debate, when properly viewed under applicable law, are far from sufficient to allege fraud under the heightened pleading standard that applies to such claims," the motion reads. Finally, S&P points out that the government's complaint "fails to identify how, if [at] all, the performance of the specific RMBSs [residential mortgage-backed securities] contained in any of the CDOs identified should have actually impacted the rating of the CDO tranche at issue." A na ly t ic s ttorneys for Standard & Poor's (S&P) filed a motion to dismiss a civil lawsuit from the federal government accusing the ratings agency of inflating ratings and misrepresenting the creditworthiness of certain securities. Led by Attorney General Eric Holder, the Department of Justice announced in early February a complaint against S&P for allegedly defrauding investors in an attempt to gain more business. At the time, Holder noted his department had identified more than $5 billion in losses to federally insured financial institutions resulting from collateralized debt obligations (CDOs) rated by S&P between March and December 2007. S&P's lawyers struck back hard in their motion. "With much fanfare, a parade of senior officials congratulated one another for their efforts— the hundreds of subpoenas they had served, the thousands of hours their team had devoted to the case, the millions of documents they had read," the filing reads, referring to the Justice Department's press conference announcing the suit. "Notwithstanding all the s e r v ic i ng Capitol Hill Clashes with CFPB Rating agency decides against pursuing litigation in suit against the government. Or ig i nat ion S&P Rescinds Lawsuit —S&P The M Report | 75