Bernanke’s Call for New Financial Rules a Familiar One for Housing Advocates
Federal Reserve Chairman Ben Bernanke drew some headlines Tuesday when he said in a speech that it’s time to overhaul the nation’s financial regulatory system, and to appoint a powerful new regulator to oversee powerful financial institutions.
It’s something housing and community advocates also have been pushing — especially as they tried in vain for years to get lawmakers and regulators to pay attention to the reckless and predatory lending that was leading to the mortgage crisis. Today, they’ll be on Capitol Hill, still fighting that battle.
In Congressional testimony on Wednesday, the National Community Reinvestment Coalition (NCRC) will also call on lawmakers to fix the financial regulatory system. But don’t expect the NCRC and other advocates to simply echo Bernanke. They’re far angrier — and they have good reason to be.
From the NCRC:
“Rules creating more accountability in the mortgage process are critical to restoring integrity and trust in the financial system,” said John Taylor, president and CEO of NCRC. “Shockingly, we’re two years into the foreclosure crisis and there is still no law outlawing the very practices that led to the deepest recession our country has seen in decades.”
That’s not all that’s shocking: these practices were no secret during the housing boom. Again, from the NCRC:
For more than a decade, community leaders, civil rights proponents and housing groups have raised concerns about unfair, deceptive and abusive lending practices that have undermined homeownership aspirations for millions of working families. Those pleas for better regulatory policy and oversight not only went ignored, but in some cases were contradicted by regulatory policy that made predatory lending more virulent and prevalent in low- income neighborhoods and communities of color.
Over that same period, thousands of pages of local, state and federal testimony, peer-reviewed policy papers and speeches forewarned of a pending crisis stemming from lax regulatory oversight and enforcement. Yet no serious federal response was made.
It’s about time that Bernanke and Congress begin taking on financial regulatory reform. But they have a long history of ignoring the very causes of the mortgage crisis itself, as the NCRC rightly points out, so don’t rush to pat them on the back just yet.