Under Wall Street Pressure, House Dems Punt Reform

[ejbr]

From yesterday's Huffington Post

Intense lobbying pressure from Wall Street has slowed the progress of a major piece of financial regulatory reform legislation. Financial Services Committee chairman Barney Frank (D-Mass.) informed committee members Monday night that a vote on the creation of the Consumer Financial Product Safety Commission will be pushed back until September.

"We wanted to give consumer groups and their allies time to work with their members, organize and get their message out," said committee spokeswoman Elizabeth Esfahani. "So far in this debate, we've only heard from one side, the banking lobbyists, so we want to give both sides time to be heard."

<snip>

"In America, we don't say 'buyer beware' when people are buying prescription drugs or when they're concerned about lead paint in toys," said Durbin (D-Ill.), a cosponsor of the bill, when it was first introduced.

Warren, during a press event in March marking the introduction of the bill, highlighted how the commission would work and how it could have prevented the current crisis.

She offered the example of a loan with a low "teaser rate" and an obscured prepayment penalty. "Prepayment penalties are a way to try to fool into thinking the price is $1100 dollars a month -- that's the teaser rate -- when in fact the real price of this product is the equivalent of $1900 dollars a month. And if you try to refinance out of the product, you'll pay a prepayment penalty. That's how the company will make its money. You'll either pay higher interest later on, or you'll pay a prepayment penalty to get out of it."

When the price rises to $1900 a month or higher, the borrower can't refinance, can't make the payment, and goes into foreclosure.

"If there had been an agency, like the Financial Product Safety Commission, that had said, 'You just don't get to fool people on pricing,' then what would have happened is," she said, "there would have been millions of families who got tangled in predatory mortgages who never would have gotten them."

Preventing the proliferation of those loans could have stopped the housing bubble from forming -- and then popping.

rest of article here

______________________________________________________________________________________________________________

If you agree, do your part. Bring Banking Regulation into the 21st Century!

[groovedaddy]

1. Anyone hear the report on NPR yesterday that claimed banks WANT regulation?

That one kind of blew me away!

[ejbr]

2. hmmmm.

It's not April 1st...weird! Didn't hear it.

[groovedaddy]

3. Trying to find a link but no luck yet... n.t