Decker, ur blamming this on Bush? The Dems made it easier fro minorities and others to get loans they had no hope of paying back. They ran companies that made those loans possible, Clinton pushed for more loans like this by overhauling Carater's own urban investment legislation.
"Gramm’s gravest alleged sin is pushing the 1999 Gramm-Leach-Bliley bank-deregulation bill. Barack Obama has identified the legislation as ground zero of the financial implosion, the deregulatory predicate for Wall Street’s excess."
The law allowed commercial and investment banks to consolidate, repealing the New Deal-era Glass-Steagall Act that prevented banks from offering customers insurance, investment or commercial banking services. Gramm-Leach-Bliley tore down the artificial walls between financial institutions. Was this the disastrous mistake that it is now portrayed as on the stump? No.
One, Democrats in good standing supported the final bill. Robert Rubin and Larry Summers, Clinton Treasury officials whom Obama relies on for advice, supported it. Joe Biden voted for it, it passed the Senate with 90 votes, and President Clinton signed it. Heaven knows, Washington can make bipartisan mistakes, but if the bill were so obviously the road to financial perdition, presumably some of these Democrats much keener to regulate the economy than Gramm would have voted “no.”
Two, the bill was a foregone conclusion. Europe already had so-called universal banking in which financial institutions could undertake varied operations. U.S. banks were finding loopholes in the law to keep up with foreign competitors, and increasingly bumped up against the 60-year-old regulatory constraints. The Gramm bill just blessed the world as it was already evolving.
Three, the legislation appears to have alleviated the current crisis rather than making it worse. Big, diversified financial institutions have been weathering the crunch better than anyone else and have occasionally swooped in to lessen the pain. Bank of America acquired Merrill Lynch, which would have been impossible prior to Gramm’s deregulation. Otherwise, Merrill would either have gone under or been bailed out by the taxpayers. Similarly, J.P. Morgan wouldn’t have taken over Bear Stearns, and Barclays Bank wouldn’t be considering buying Lehman Brothers.
Please don't lay this at Bush's feet. There is a long history associated with this disaster and u Libs will have to own up to ur share of the blame.
There is a large segment of society that lives beyond its means. The Bush people know that.
What can government do about lending practices geared towards those living beyond their means or those on financial fringe of home ownership in the first place?
Ta Da! Predatory Lending oversight laws. Those do the trick. Those reign in any attempt to fleece the flock, so to speak.
Predatory Mortgage Lending:
Predatory Mortgage Lending is the process of making high-cost home loans without regard to the borrower's ability to pay it back, which causes the home loan more often than not to end in foreclosure. In addition, predatory loans may contain features like credit life insurance or transactional fees that increase the cost of the loan. Sub-prime mortgages are loans that have high interest rates and fees that are made to borrowers deemed by lenders to be higher credit risks. For example, the prime interest rate for a home mortgage in January of the year 2000 was 8.375% for borrowers with the best credit rating. A sub-prime loan may carry an interest rate of 9% or 10% and sometimes a rate as high as 18% for borrowers with less-than-perfect credit qualifications.
Who Do They Target?
Predatory mortgage lenders target borrowers that have substantial equity in their homes and that have low or fixed incomes. This assures a predatory lender that if the borrower defaults on the loan and the home goes into foreclosure, the lender will recover its' losses through the sale of the home. By focusing on homeowners who have sizable equity in their homes, predatory lenders tend to target elderly homeowners. Predatory lenders also seek out homeowners with limited knowledge about finance or who have limited English skills. Consequently, predatory lenders tend to target low- to moderate-income households or areas with non-English speaking ethnic groups. Many times, these areas are minority-populated areas which are underserved by traditional banks.
Solution:
These practices must be stopped by strict state laws which prohibit practices of predatory mortgage lending such as huge balloon payment requirements and prepayment penalties as well as APR rates that increase over time.
http://www.copirg.org/financial-privacy-security/stop-predatory-lenders/predatory-lending-fact-sheetNot 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 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.
http://www.washingtonpost.com/wp-dyn/content/article/2008/02/13/AR2008021302783_pf.htmlAs you can see HH, what good are state predatory lending laws if the Bush Adm preempts them and permits predatory lending to go on unchecked? Your attempt to lay this at the feet of democrats falls way short b/c your info does not address the heart of the matter--anti-predatory lending laws.
