States Tried to Help Out With Foreclosure Crisis – Bush Stopped Them

From the Washington Post: Eliot Spitzer, Governor of New York:

 Predatory Lenders’ Partner in Crime: How the Bush Administration Stopped the States From Stepping In to Help Consumers

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. Several state legislatures, including New York’s, enacted laws aimed at curbing such practices.

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. more

2 Responses

  1. That’s really not surprising at all. The Bush administration has been focused on increasing secrecy and avoiding accountability since it stepped into office. With the largest increase in government in 40 years and a huge concentration of power in the federal government and executive branch, it seems logical enough that the administration would try to cut out the states from even trying to hold mortgage lenders accountable for poor lending. And now that the market is holding these banks accountable, the Bush administration’s solution has been more central government bailouts. Create a problem, then look like a hero by proposing to solve that very same problem.

  2. The Bush administration can’t get out of its own way. You wonder just where the bottom is in this mess.

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