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FRM Working Draft Report 8-31-10

FRM Working Draft Report 8-31-10

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Published by James Pindell

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Published by: James Pindell on Aug 31, 2010
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08/31/2010

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Proposed Report for Committee DiscussionAugust 31, 2010Subject to Change
1
Proposed ReportProposed Report of the Joint Legislative
Committee to Review the State’s Regulatory
Oversight Over Financial ResourcesMortgage, Inc.August 31, 2010
 
Proposed Report for Committee DiscussionAugust 31, 2010Subject to Change
2
Table of Contents
:
I. Charge of the Committee
………………………………
... 8
 
II. Joint Committee Membership
…………………………
... 8
 
III. Background and Chronology
……………………………
9
 
IV. Executive Summary
…………………………………….
12
 
V. Purpose of the Report
…………………………………
15
 
VI. The Banking Department
………………………………
15
 A. Overview of New Hampshire Banking Laws
………………
15
 B Actions and Testimony of the Banking Department
………………… 17
 1. Structure of the Regulatory Scheme2.
FRM‘s Track Record of Examinations and Licensing
 3. Financial Recordkeeping by FRM4.
Commissioner Hildreth‘s Recusal
5. Interagency Cooperation and Communication6.
Limits of the Banking Department‘s Jurisdiction and Authority
7. Confidentiality of Bank and Mortgage Broker RecordsC. Management and Operational Functioning of the Banking Department
…..
24
 Finding 1: The Banking Department Was Ineffective in the Use of itsExamination AuthorityFinding 2: Banking Failed to Recognize the Significance of MultipleConsumer ComplaintsFinding 3: Banking Failed to Follow through on EnforcementFinding 4: Banking Failed to Acknowledge the Potential Impact of itsRegulatory FailureFinding 5: Banking Commissioner Failed Adequately to Alert Staff andMaintain his Recusal
 
Proposed Report for Committee DiscussionAugust 31, 2010Subject to Change
3Finding 6: The Banking Department Did Not Use its Authority to ShareRecords with Securities RegulatorsD. Statutory Reform regarding
Banking Department‘s A
uthority .....................
29
 Recommendation 1: The Legislature Should Consider Expanding the Scope of Banking Department ExaminationsRecommendation 2: The Legislature Should Consider Clarifying the StatutesRegarding Confidentiality of Banking Documents andEncourage Appropriate Information Sharing
VII.
 
The Bureau of Securities Regulation
……………………………….
33
A. The New Hampshire Securities Act
……………………………………
33
 B. Actions and Testimony of the Bureau of Securities Regulation
…………
35
 1. History of BSR Complaints and Enforcement Activities2.
BSR‘s
Opinion about what C
onstitutes a ―
S
ecurity‖
Subject to the Act3.
 
Testimony regarding BSR‘s Investigative and Examination Powers
 4.
BSR‘s Lack of Information from Department of Banking
 C.
Analysis of BSR‘s Management and Operational Functioning
……………
42
 Finding 1
:
BSR failed to appropriately pursue FRM after receiving notice of fraudulent and illegal activitiesFinding 2
:
BSR arguably narrow view of its investigative and enforcementauthority prevented it from taking necessary actionsFinding 3: BSR
‘s arguably narrow view of which of FRM‘s investment and
lending vehicles constitute a Security under NH Law appeared tomake it easier for FRM to perpetrate its illegal behaviorFinding 4
:
BSR failed to manage and supervise the work of its hearings officer

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