President Trump’s call for a one year 10% rate cap on credit cards has gotten a lot of attention and a surprisingly favorable reception. It’s a reworking of a bill proposed last year by Bernie Sanders and Josh Hawley in the Senate and Alexandria Ocasio-Cortez and Anna Paulina Luna in the House. The 10% rate cap was a terrible idea in 2025 and it’s a terrible idea now. It really doesn’t matter which end of the horseshoe it comes from. While it might sound great to get cheap credit, there’s no free lunch here.
Category: Uncategorized
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Debunking Debanking: The OCC’s Debanking Report Is a Nothing Burger
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The OCC released the preliminary findings from its “Review of Large Banks’ Debanking Activities” undertaken pursuant to an Executive Order on debanking.
The findings are a nothing burger. The OCC did not adduce any examples of any individual or business being denied financial services because of viewpoint or line of business. Instead, all it found were that large banks required more complicated internal approval processes for lines of business that present reputation risk. That’s 100% legal. Let me repeat that again: the OCC did not find any evidence of denial of services, just of heightened review for certain lines of business that pose reputational risk. Moreover, the OCC did not adduce any evidence of banks discriminating against individuals on the basis of their politics or religion. Instead, all it found was evidence of prudent banking practices. Yawn.
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Unconscionable Ambulance Fees
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The Washington Post had a pretty shocking story about ambulance bills. $9,000 for a 40 minute ambulance ride at normal speeds, no siren, no unusual life support measures. What I found striking about the story was less the outrageous pricing than that no one was talking about how the ambulance company’s fees are almost assuredly unenforceable and probably an unfair trade practice. (more…)
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CFPB Ultra Vires Acts?
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The CFPB is apparently rushing to address the problems posed by it supposedly running out of funding in early 2026: it is looking at taking steps to expedite a revision of the 1033 open banking rule and also trying to find a way to outsource the calculation of the Average Prime Offer Rate (APOR) to private parties. Good luck with that during the holiday season.
All of this suggests that Russ Vought’s hit squad didn’t properly coordinate with the folks who actually know what the Bureau has to do (to the extent anyone’s even left in the building).
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APOR Consequences If the CFPB’s Funding Is Illegal
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In a prior post I noted that if the CFPB’s funding is illegal, it creates a time bomb for the entire US housing market because the Bureau will not be able to update the Average Prime Offer Rate (APOR) that is used to determine the presumptive legality of mortgages.
The situation is actually worse. If the Bureau’s funding is illegal, it isn’t just a problem going forward. It also implicates the legality of everything the Bureau has done since the Fed stopped running a profit, that is from the 4th quarter of 2022 onward. That is every rulemaking and every enforcement action and every termination of a consent decree becomes suspect if the Bureau’s been acting without legal funding. And that includes the APOR.
If the Bureau’s funding is illegal, then the APOR is arguably frozen at either the end of Q3 or Q4 2022. I think Q4 2022 because until the end of that quarter it wasn’t know if the Fed was running a profit.1 Here’s why it matters. The APOR for a 30 year mortgage was 6.79% at the end of Q3 2022 and 6.28% at the end of Q4 2022. Right now it’s 6.26%, but it’s been substantially higher at points between 2022 and today. That means that some mortgages that would be QM under the APOR that was listed when the mortgages were made would not be QM if the APOR were frozen at a Q3 or Q4 2022 level. That’s a potential mess for lenders, who face putbacks (they would be in breach of their reps and warrants), a borrower defense to foreclosure, and state AG enforcement.
Now it would seem easy enough to say “justified reliance” and grandfather everything old in. But I’m not sure that’s how it will work, and that uncertainty is enough of a problem in and of itself.
- The difficulty in knowing how/when to measure the Fed’s profitability is yet another factor that points toward the absurdity of the OLC’s opinion. Any corporate lawyer will tell you that if you have an incurrence test in your bond, you need a relevant incurrence date. And if you have a maintenance test, you should still know the date of a breach because there’s a notice requirement. There’s nothing at all like this for the CFPB, however. The timing of the Fed’s financial reporting is not synced with the timing of the CFPB draws, which suggests that the draws are not meant to relate to anything in the content of the reporting, including profitability. ↩︎
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50-Year Mortgages? The Numbers Don’t Add Up
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The Trump administration has tried to seize the affordability mantle by proposing a move to 50-year mortgages. Unfortunately, the math doesn’t add up: a 50-year mortgage is a pretty bad idea.
The United States is unique globally in that our dominant mortgage product is the 30-year, fixed-rate, fully-prepayable, fully-amortized mortgage. The 30-year fixed is the American mortgage, and it is a wonderful financial product. It’s also one that only exists because of substantial government involvement in the market. But shifting it out to a 50-undermines the benefits of the product. (more…)
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CFPB Funding Sophistry from the Office of Legal Counsel
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It takes real skill to bankrupt a government agency, particularly one that is barely functioning. Yet that’s exactly what Russell Vought is trying to do. Vought, you might recall, is the acting Director of the CFPB, and last February he made a big show of declining to draw down funds for the CFPB from the Federal Reserve System, claiming that the Bureau had more than adequate funds on hand. Vought then embarked on a campaign to fire most of the CFPB’s workforce, resulting in significant attrition, even if his efforts remain tied up in court. But now Vought—and remember that this is the guy who also runs the Office of Management and Budget—is claiming that the CFPB will run out of money in early 2026. He claims that the CFPB, relying on a newly issued opinion from the Department of Justice’s Office of Legal Counsel, can only draw down funds on the Federal Reserve System when the system runs a profit, which it is not currently doing.
Three observations about this incredibly cynical play.
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The Letitia James Indictment Falls Short
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I’m unaware of the federal government having previously charged anyone for fraud based on renting out a second home. Yet that’s what we have with the Letitia James mortgage fraud indictment. We don’t have all the facts available, but based on what is in the indictment, it’s clear why the career prosecutors in the Eastern District of Virginia refused to bring a case: James doesn’t appear to have made any misrepresentation in her mortgage because the mortgage does not directly prohibit rentals.
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Faux Tuition Freezes and Nerd Subsidies: Trump’s Half-Baked Ideas for Higher Education Reform
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There’s been plenty of coverage of the First Amendment implications of President Trump’s proposed “Compact for Academic Excellence in Higher Education” that was offered to nine universities in exchange for supposedly gaining preferential access to federal grants. But the proposal also has a pair of tuition regulation requirements that have not gotten so much attention, but are in some ways equally troubling.
The “deal” being offered would require, among other things, that university signatories agree to freeze tuition for U.S. students for five years and, if endowments exceed $2 million per undergraduate, grant free tuition for students pursuing “hard science” programs.
This sort of federal price regulation is, as far as I’m aware, completely unprecedented. It’s also completely half-baked policy thinking. The impulse to control the cost of higher education is commendable, but the President’s proposal shows a complete lack of understanding of higher education economics and of the science education in particular. Instead, what he has proposed are faux cost controls and a bizarro nerd subsidy that would apply to almost no schools. In other words, rather than serious policy proposals to deal with costs of higher education and to encourage the study of the sciences, the administration has put forth a set of meaningless headline grabbing proposals that would only make things worse. -
Typepad and the Future of Credit Slips
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As many of you have seen, Typepad is closing down on September 30. They have hosted this blog since 2006.
The good news is that we are moving the blog to a WordPress site. The URL, creditslips.org, will remain the same. We hope the new format is a little cleaner than our current site. We hope that work is done in a week or two. Until then, it seems that Typepad is having more problems as we get closer to the shutdown date. In fact, it ate the first draft of this posit. Please have patience if the Typepad site suffers from periods when it is not accessible.