April 2001 - Lenders Fend Off Subprime Laws

[sandnsea]

The current economic meltdown was completely preventable. Completely. They knew what they were doing. They made billions pushing the housing market and refi's, now that the bill has come due, they want US to pay for it. When will we stop trusting these corporate conjobs.

"Advocates in more than a dozen states and cities are pressing to pass laws limiting so-called predatory lending, rousing lenders into a coordinated counterattack that has managed to fend off or weaken some of the farthest-reaching proposals...

"Lenders say the proposals will curtail access to credit for many families and create an awkward patchwork of regulations across the country. Among the industry's advisers are Connie Mack, the former Republican senator from Florida, and Thomas F. McLarty, former chief of staff for President Bill Clinton...

"Last month, the Federal Trade Commission filed a lawsuit against the Associates First Capital Corporation, one of the country's biggest consumer lenders, charging it with routinely lying to and deceiving customers. Officials described it as the agency's most significant action against predatory lending. Citigroup, which purchased Associates last year, did not dispute the charges but said the lawsuit was counterproductive in light of its negotiations with the commission.

Advocates say more measures are needed to protect homeowners. ''This has exploded,'' said Irv Ackelsberg, a managing attorney at Community Legal Services in Philadelphia. ''You would have to be a rather distracted person not to notice that equity is being stolen all over the city. It's a public crisis...''
http://query.nytimes.com/gst/fullpage.html?res=9D07E2DE163EF937A35757C0A9679C8B63

[ixion]

1. a good start would be limiting the interest they can charge to no more than 15%

which is plenty. This 30% interest crap is worse than loan-sharking.

[mia]

2. Guess who gave away the keys to the kingdom?

[sandnsea]

3. He had help

They've been handed over, a key at at time, for years. I wish people would take this article seriously. We're being required to spend billions bailing out a situation that only happened because they insisted regulation was "anti-American" and would strangle business, bla bla bla.

[unblock]

4. thanks for pointing out that it was the originators -- not wall street -- who made this mess

there's plenty enough taint to go around. wall street went ahead and bundled it up and parceled it out even when it became apparent that originators were ignoring or side-stepping the guidelines. reall estate brokers were greedy to push buyers into more house than they could afford and to bid up prices. homeowners with crap credit were greedy to stretch themselves to the limit. and some mortgage brokers defrauded even the originators, who were themselves defrauding the financiers.

but the real blame goes to the originators -- the underwriters -- the ones who were supposed to be the checkers of credit and the gatekeepers for all this. they're the ones who were supposed to enforce the standards.

[sandnsea]

5. I blame the politicians

Who didn't have enough guts to stand up to anybody, and the free marketers who will continue to refuse to accept any form of regulation.