Predatory Lending: Systemic Asset Stripping?
The Washington Post reports that federal regulators, at a recent Senate Banking Committee meeting, estimated that mortgages worth about $160 billion are now falling into delinquency. Is this predatory lending or just a few bad apples?
With a new Democratic majority and a mounting foreclosure crisis—facilitated in large measure by an explosion of high-risk, high-cost “subprime” mortgages—one might think that Congress would now be quick to act to pass legislation to rein in subprime lending. But not so fast!
To be sure, Senate Banking Committee members were happy to beat up on former Federal Reserve Chairman Alan Greenspan for lax enforcement of lending regulations. Sen. Robert Menendez (D-NJ), for instance, said federal regulators were “asleep at the switch.” And Sen. Jim Bunning (R-KY) grilled the former Federal Reserve Chair regarding how predatory lending could have spread “under Greenspan’s watch.” But as to enacting legislation to cap interest rates or to, say, restrict mainstream banks such as Wells Fargo from using subsidiaries to selectively market high-rate mortgages to minority communities… well, does Congress really want to prevent asset stripping from low-income communities?
Particularly interesting were the comments of Senator (and, whether you knew it or not, also presidential candidate) Christopher Dodd (D-CT), who seemed to want to sound tough and score political points, but without offending possible campaign contributors. On the one hand, Dodd called the foreclosure crisis a “perfect storm that is sweeping over millions of American homeowners today.” On the other, apparently the storm is manageable enough for Dodd to remain “undecided whether legislation [is] needed to regulate subprime mortgages.”
Posted by Steve Dubb on 04/04/2007 at 06:44 AM
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