Tip to Balloon Juice for this link to an old Washington Post op-ed from February of this year:
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.
***
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.
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.
***
When history tells the story of the subprime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners, the Bush administration will not be judged favorably. The tale is still unfolding, but when the dust settles, it will be judged as a willing accomplice to the lenders who went to any lengths in their quest for profits. So willing, in fact, that it used the power of the federal government in an unprecedented assault on state legislatures, as well as on state attorneys general and anyone else on the side of consumers.
This was written by Eliot Spitzer, between Call Girls, as John Cole said.
This also doesn’t include the Bush Admins change of the SEC rule allowing Lehman, Morgan Stanley, Goldman, and the others to leverage their bullshit up to 40:1.
Obvious what this calls for is more tax breaks.
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own up to the failure that is everything–EVERYTHING–that they touch?
Nope… the ownership society is for everyone but them.
regulating how much leverage investment banks could have.
FDIC regulates leverage in commercial banks, but the whole point of being an investment bank (well, a lot of it anyway) is to be free of the regulatory regimes that applies to commercial banks.
Are you referring to the repeal of the Second Glass-Steagall Act, which mandated a separation between commercial banking and investment activities from 1933 until 1999? This was repealed under Clinton Adminstration with legislation originally backed by Republicans only, but converted to a bipartisan bill in conference committee, known as the Gramm-Leach-Bliley Act.
http://www.nysun.com/business/…