The chairman of the House Financial Services Committee and all of the Republicans on his panel are now demanding that the Federal Reserve Board withdraw its loan officer compensation rule which becomes effective in two weeks.
In a newly surfaced letter addressed to Fed chief Ben Bernanke, committee chairman Spencer Bachus, R-Ala., writes that "There have been complaints among numerous stakeholders that the final regulation is 'intentionally vague,' that the Board has refused to provide formal guidelines, and the different members of the Board staff have offered differing interpretations of it's meaning."
Bachus adds that, "Given the importance of the rule in protecting consumers as well as in ensuring a fair application to small businesses or companies that may experience significant job loss due to its implementation," he and his fellow Republicans want the rule stopped for now.
Earlier this week, Senators Jon Tester, D-Mont., and David Vitter, R-La., wrote to the Fed, urging the agency to indefinitely delay implementation of the LO rule.
The Senators are concerned the measure is "inconsistent" with implementation of other TILA rules and could "unnecessarily disrupt" the mortgage market.
Among other things, the rule bans compensation based on rates and terms, and prohibits loan officers/brokers from being paid by both wholesalers and consumers on the same transaction.
