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Bankers defended force-placed insurance practices and dodged questions about alleged industry kickbacks and price gouging at a private but well-attended meeting hosted by the Federal Housing Finance Agency.
June 14 -
In an abrupt policy announcement, the Federal Housing Finance Agency declared Tuesday plans to ban force-placed insurance commissions even before its own industry review is complete.
March 26 -
The FHFA abruptly killed a Fannie Mae plan earlier this month that promised to save the GSE hundreds of millions of dollars in force-placed insurance premiums. Critics see industry pressure as the culprit.
February 25 -
Following allegations that the FHFA killed a Fannie Mae plan that would have saved homeowners and taxpayers hundreds of millions of dollars, the ranking member of the House Finance Committee has asked the regulator to explain its decision.
February 28
When the Federal Housing Finance Agency hired Charles Landgraf to advise it on force-placed insurance, he already had some familiarity with the issues. He'd been lobbying the agency on those issues for a whole year.
Landgraf a partner and veteran insurance lobbyist with the Washington law firm Arnold & Porter LLP represents the interests of Lloyd's of London on several topics, among them "
Landgraf remains registered as an active lobbyist on force-placed insurance. He did not return phone calls and emails, and the FHFA offered only a brief emailed statement.
"Mr. Landgraf provides technical expertise to FHFA's Office of General Counsel on conservatorship issues," said the FHFA general counsel Alfred Pollard, who is himself a former senior lobbyist for the Financial Services Roundtable. "Both FHFA and his law firm took appropriate steps, in line with established legal practice, to assure no conflicts exist."
Two sources familiar with Landgraf's work called the FHFA's description misleading. Landgraf has played a key early role in coordinating Fannie Mae and Freddie Mac's actions on force-placed insurance, they say.
"The FHFA presented him as being their outside expert," says one person who asked for anonymity to avoid angering the FHFA.
Consumer advocates and lobbying experts called Landgraf's selection as a senior consultant bizarre and inherently problematic.
"I have never seen this before," says Lee Drutman, a Johns Hopkins political science professor and Sunlight Foundation senior fellow. "If you were the government, why would you hire someone who is taking money from a private client on the issue?"
The force-placed market was an obscure corner of the insurance market before the housing bust, but it has become increasingly controversial amid allegations that it is
As the largest investor in the mortgage market, Fannie Mae devised a plan last year that would have ended those financial ties by buying insurance directly from underwriters.
The FHFA signed off on Fannie's plans repeatedly. However, in the face of fierce opposition to Fannie's plan among banks and insurers, the federal agency
Consumer advocacy groups alleged at the time that the FHFA's action reflected, in one advocate's words, "incompetence or corruption." Following heavy criticism, the FHFA proposed banning banks from collecting commissions and from reinsuring policies. But the agency has not yet taken a stance on bigger-picture reforms.
"This is a broken market, full of kickbacks doing damage to both homeowners and investors," says Ira Rheingold, one of several consumer advocates who spoke at the FHFA's closed-door meetings last week. "Seeing the FHFA bring in someone like [Landgraf] makes me very skeptical that the FHFA can do the right thing."
The FHFA did not respond to questions about when Landgraf was hired, what he is being paid, or why it believes his work does not pose a conflict of interest.
During
A review of Landgraf's past work suggests he is a passionate advocate for the insurance industry. His
Landgraf has been a staunch opponent of federal involvement in insurance regulation. In a 2010 "
The insurance industry has fought in the past to keep oversight largely the purview of state regulators. Consumer advocates have argued that this structure creates a poorly functioning regulatory patchwork, overseen by often weak state authorities, and is at odds with the federal oversight given to other financial products.