Posted on 02/21/2008 11:49:08 AM PST by Etoo
Several years ago, state attorneys general and others involved in consumer protection began to notice a marked increase in a range of predatory lending practices by mortgage lenders. Some were misrepresenting the terms of loans, making loans without regard to consumers' ability to repay, making loans with deceptive ''teaser'' rates that later ballooned astronomically, packing loans with undisclosed charges and fees, or even paying illegal kickbacks. These and other practices, we noticed, were having a devastating effect on home buyers. In addition, the widespread nature of these practices, if left unchecked, threatened our financial markets. 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.
For example, in 1999 my office sued Delta Funding Corp., a large mortgage lender, for engaging in a wide range of predatory practices. In 2002, attorneys general and banking regulators from all 50 states entered into a settlement with Household International, the parent company of Household Finance, that resulted in restitution of $484 million to the victims of the company's predatory lending practices. In 2006, attorneys general and banking regulators of 49 states entered into a $325 million settlement with Ameriquest Mortgage Co. for engaging in a host of predatory lending practices. Several state legislatures enacted laws aimed at curbing such practices. North Carolina passed a predatory lending law in 1999, Georgia in 2002 and New York in 2003. 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. 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 pre-empting all state predatory lending laws, thereby rendering them inoperative against national banks. 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 in 2005 of possible discrimination in mortgage lending by a number of banks, including national banks, the OCC filed a federal lawsuit to stop the investigation against the national banks. Throughout our battles with the OCC and the banks, the mantra of the banks and their defenders was that efforts to curb predatory lending would deny access to credit to the very consumers the states were trying to protect. But the curbs we sought on predatory and unfair lending would have in no way jeopardized access to the legitimate credit market for appropriately priced loans. Instead, they would have stopped the scourge of predatory lending practices that have resulted in countless thousands of consumers losing their homes and put our economy in a precarious position. When history tells the story of the subprime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners, the Bush administration will not be judged favorably. The tale is still unfolding, but when the dust settles, the administration will be judged as a willing accomplice to the lenders who went to any lengths in their quest for profits. So willing, in fact, that it used the power of the federal government in an unprecedented assault on state legislatures, as well as on state attorneys general and anyone else on the side of consumers.
It’s hilarious that someone as manifestly corrupt as Eliot Spitzer would throw stones from his glass house at someone else’s marble one.
Bush’s fault.
Bush also wrote the script to Ishtar, and started the AIDS epidemic.
Caveat Emptor.
His own over-the-top corruption made him a lame duck about a week after his inaugeration.
He's absolutely invisible in New York these days.
How many articles did this 'newspaper' publish pointing out these "predatory lending" practices.....or were they "looking the other way"?
What a joke.....doesn’t he realize that the govt.under the Carter administration invoked the CRA clause for
banks....so that the little guys could have home ownership.
The feel good Democrats, Spitzer being one of them, relaxed all the sound underwriting principles to acheive this. But somehow it’s now Bush’s fault.
What was the Bush administration supposed to do that 50 state governments working together couldn’t do?
“For example, in 1999 my office sued Delta Funding Corp., a large mortgage lender, for engaging in a wide range of predatory practices...”
WOW! I didn’t realize the Bush Administration had that much power in 1999!
It’s amazing there is no mention of Clinton!
Mr f-ing steamroller speaks while his approval ratings hover at 20% which coincidentally equals to the number of NY government employees.
not contributing enough to my political campaign.
Just like Kerry’s Cambodia episode. They think nobody is really reading the fine print.
Not sure if it took effect though as I started in mortgage banking in the early 80's and at that time there wasn't a whole lot of attention paid to CRA other than if they could qualify for FHA or VA loans.
By the late 80's there were separate departments which dealt specifically with originating and processing CRA loans. As I was in management in the closing-shipping area, we would take over the CRA loans once underwriting approved them. I watched it go downhill and am so glad I didn't have to deal with any of it after July, 2000.
what spitzer ignores, as he always does, is
that, in truth, what the bush administration defended was the rule of law
after banks, and similar financial institutions, were allowed to be national in every sense
their regulatory guidance, judgement and source of legal complaint resides with the national agencies responsible for that regulation
the banks, and similar financial institutions, must follow the regulatory guidance they are legally subject to
when legal thugs like spitzer seek to bully corporations into adopting certain practices the thugs demand, even though the regulatory regime under which the banks believe they are required to operate does not make that demand, the banks, naturally appeal to those authorities they were told to follow, and ask for a ruling
which they got
to the chagrin of legal thugs like spitzer
what the states attorneys general needed to do was to appeal to congress for federal legislation covering the regulatory agencies the banks took there legal guidance from, not attempt to supplant them with 50 sets of their own rules, which, to most of the states did not even site actual state law but simply their greivance about legal practices they did not like
I’m wondering how ACORN fits in to all this.
Seems they pressured the ‘financial institutions’ to invest in their ‘community projects’ and now they’re ‘helping’ them out??!!??
quote:
“If you google ‘mortgage counseling,’ you will get the HUD approved list of mortgage counselors, which has to reveal their affiliation. Many are affiliated with ACORN and La Raza. $200 million to La Raza and ACORN. At election time. Seems like a coincidence. Why do we need mortgage counselors if we just raised the FHA limit to $725,000? Wouldn’t the government handle that ‘mortgage counseling?’”
You mean eventhough I defaulted on several loans, I can buy a house with only 20% interest? That’s it, I just gotta buy a house> Yeah, I promise to pay. Then I promise to blame everyone else when I don’t.
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