Predatory Lenders' Partner in Crime - How the Bush Admin Stopped the States From Helping Borrowers

[JohnWxy]

http://www.washingtonpost.com/wp-dyn/content/article/2008/02/13/AR2008021302783.html
washingtonpost.com > Columns

Predatory Lenders' Partner in Crime
How the Bush Administration Stopped the States From Stepping In to Help Consumers


By Eliot Spitzer
Thursday, February 14, 2008; Page A25
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Even though predatory lending was becoming a national problem, the Bush administration looked the other way and did nothing to protect American homeowners. In fact, the government chose instead to align itself with the banks that were victimizing consumers.

Predatory lending was widely understood to present a looming national crisis. This threat was so clear that as New York attorney general, I joined with colleagues in the other 49 states in attempting to fill the void left by the federal government. Individually, and together, state attorneys general of both parties brought litigation or entered into settlements with many subprime lenders that were engaged in predatory lending practices. Several state legislatures, including New York's, enacted laws aimed at curbing such practices.

What did the Bush administration do in response? Did it reverse course and decide to take action to halt this burgeoning scourge? As Americans are now painfully aware, with hundreds of thousands of homeowners facing foreclosure and our markets reeling, the answer is a resounding no.

Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.

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[rudy23]

1. When did the prostitute stories hit the media---two weeks after this?

This is maybe why no one else is going down this road.

[JohnWxy]

2. good observation. You're probably right. The fascists don't 'take' to the truth being told.

Also, note that the media is staying away from all this relevant and well known (to those covering financial and poliltical news) don't bring these things up. You have to look around for it.

M$M (including, now, PBS) is doing their job of keeping the public il-informed. they won't even mention that the Dems tried to propose legislation reigning in predatory lending but when the Repubs ruled it never got anywhere. the much ballyhoooded Frontline "report" on the Credit Meltdown never spoke of Repubs frustration of Democratic efforts to stop predatory lending.

..... and THERE IS NO ECONOMIC ARGUMENT TO SUPPORT ALLOWING PREDATORY (READ: FRAUDULENT) LENDING PRACTICES.

[DCKit]

3. As the Executive Branch, was it, in any way, proper for the WH to become involved?

Was it LEGAL or did they bypass the law with regulation?

[JohnWxy]

4. once legislation is passed it is enforced through regulation by the Exec branch. But Spitzer

...explains it much better than I can. From the article linked:

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"Let me explain: The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency (OCC). The OCC has been in existence since the Civil War. Its mission is to ensure the fiscal soundness of national banks. For 140 years, the OCC examined the books of national banks to make sure they were balanced, an important but uncontroversial function. But a few years ago, for the first time in its history, the OCC was used as a tool against consumers.

In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.

But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation. "
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I remember about the time mentioned above, 60 Minutes interviewed a woman (a lobbyist for the financial industry, who the Bush administrattion had installed as the head of OCC) who defended the OCC's preventing the states from eneacting laws against predatory lending practices. I remember at the time I thought how the Repubs invoke states' rights when it's convenient and forget such an argument when they choose to..

... Remember, REpubs BELIEVE IN NOTHING. THEY ONLY ASSERT WHATEVER IS EXPEDIENT TO THERE OBJECTIVES AT THAT MOMENT.

TOMORROW, IF IT SERVES, THEY WILL TAKE THE OPPOSITE POSITION.

[JohnWxy]

5. Greenspan ignored warnings - Wall Street Journal

from Roubini's Global EconoMonitor site:


http://www.rgemonitor.com/roubini-monitor/199103/wsj_greenspan_added_to_subprime_woes_by_blocking_crackdown_on_predatory_lending_and_preventing_further_supervision_of_lenders


"the Wall Street Journal reports the views of former Fed Governor Gramlich - to be presented in a forthcoming book - that Greenspan "blocked a proposal to increase scrutiny of subprime lenders under the Fed's broad authority. That added scrutiny might have helped curtail questionable lending practices now blamed for soaring defaults by mostly low-income borrowers."

The fact that the unregulated subprime boom occurred while federal and state regulators were effectively "asleep at the wheel" is widely known by now. But now the role that the Fed and Greenspan played in allowing this reckless subprime bubble to grow with no control with becoming clearer."