I do believe that states are best suited to protect their citizens when it comes to consumer protection. As long as their is a national registry that keeps unscrupulous firms and individuals from jumping from state to state to wreak havoc financially then I can get behind individual state licensing.

I agree that consensus floats to the bottom as well and leads to looser standards than otherwise. We've seen that “too big to fail” is clearly a myth, so maybe it's not a bad idea making the barrier to 50-state footprints higher with higher regulatory fees. If you think about it, take a million or two off the CEO bonus and you'd be able to fund a decent amount of your licensing needs right there

I do believe that states are best suited to protect their citizens when it comes to consumer protection. As long as their is a national registry that keeps unscrupulous firms and individuals from jumping from state to state to wreak havoc financially then I can get behind individual state licensing.

I agree that consensus floats to the bottom as well and leads to looser standards than otherwise. We've seen that “too big to fail” is clearly a myth, so maybe it's not a bad idea making the barrier to 50-state footprints higher with higher regulatory fees. If you think about it, take a million or two off the CEO bonus and you'd be able to fund a decent amount of your licensing needs right there

Well, the Nationwide Mortgage Licensing System is up and running, and my state is using it. It's based directly on the NASD system; in fact the states contracted with NASD to run the thing based on their prior experience. I understand the issues companies working in multiple states have with licensing issues; the NMLS should fix that.

My worry is that in the ever-present zeal to bayonet the wounded Congress will do even more to cut the states out of the regulatory pie, or will reduce us to nothing more than subcontractors enforcing Federal law. After all, we've been the ones on the front lines; the ones taking the complaint calls from aggrieved borrowers; the ones conducting the interviews with elderly couples who have been screwed out of thousands of dollars and, ultimately, their home. Hell, I've even been the lead witness at a Federal trial that put 2 corrupt mortgage brokers in the Federal Pen.

I and my colleagues know what's needed in our state, and what will work here may not even be close to what's needed in far more populous states. I hope that when all the dust settles us state-level regulators will retain the ability to set consumer protection law that best fits the consumers in our several states.

I also want to make very clear that what I and the rest of the states expect in return for making the licensing system a single point of contact (the NMLS) is the ability to require Federally-regulated entities to conform to State consumer-protection law, in other words an explicit overturn/rejection of the Wachovia case. Any time I hear someone advocate for nationwide regulatory consistency what I really hear is “how far down can we push standards and get away with it”. After all, consistency is only ever found at the lowest common denominator.

Let each and every state write the laws that best protect their own citizens, and require every player in the industry to obey those laws. Will that add cost? Undoubtedly, but we've seen what happens when low cost becomes the sole guiding principle. It'll also force entities to decide if they're willing to spend the dosh for a nationwide presence or instead to specialize in a smaller area. I, for one, believe that the nationwide entities were the larger problem in our recent past.

This post just goes to show what a complete and utter failure there was in oversight in this mess. The Fed who oversees the national banks was known for having the least oversight in mortgage lending, and big banks used their weak regulatory stance to overrun state laws and regulations under federal protection.

Trying to manage the state licensing requirements for lenders is a joke, with each state having their own peculiar set of regulations and definitions that make it maddening to deal with (trust me, I had to deal with it).

The government does need to overhaul the licensing and regulation of the industry to an agreed upon standard that is adopted by the states. There should also be an NASD-type licensing structure so that one national database of lending employees is kept and managed.

Only when we level the licensing and regulatory playing fields will the consumer begin to see some modicum of consistent protection. It's going to take a lot of work.

Overturn the Wachovia case and force Federal entities to comply with each and every state's consumer protection laws.