From the Folks Who Brought You the Subprime Mess in the First Place…
The mortgage industry is fighting the Federal Reserve’s attempts to put limits on lending following the meltdown of the subprime market, the New York Times reports today.
Keep in mind the industry put up the same kind of battle the last time the Fed tried to expand its powers under the Home Ownership Equity Protection Act, a tool it can use to restrict lending. The lenders won that time around a decade ago, and the Fed wound up applying that law to fewer than one percent of all mortgages, the Times noted.
Had the Fed been more forceful, consumer advocates say, much of the subprime lending abuses that took place and that have led to high default rates could have been avoided.
This time around, the mortgage industry -which apparently lacks any sense of irony – says that new rules on lending will make loans more expensive and restrict credit.
Keep in mind that we’re talking about the Fed here, not a quasi-Communist movement that wants to take over the private sector. All the Fed is considering asking is that lenders disclose to borrowers sales fees that previously had been hidden, make sure borrowers actually can afford their mortgages, and prohibit misleading advertising.
That’s hardly onerous – it’s just requiring lenders to play by the rules. Consumer groups already are worried the Fed is going to water down even those modest proposals in the face of industry pressure.
Goes to show you that not everyone learns from their mistakes, even the Fed.