Profits among big banks are soaring, their chief executives are in line to reap more millions of dollars annually under higher federal ceilings on dividends, and Sen. Bob Corker has just introduced a misbegotten bill to delay for two years a Federal Reserve plan that would limit excessive bank charges to retailers when their customers pay with a debit card. Yet despite all these and other extravagant political gifts to the banking industry — including one particularly lucrative proposal hidden in a pending $20 billion settlement on banks’ mortgage fraud charges — congressional Republicans are livid that the head of the new Consumer Financial Protection Bureau is advising that mortgage disclosure terms be made more transparent.
House Republicans excoriated bureau chief Elizabeth Warren, a widely respected consumer advocate, in a hearing last week for her efforts to make mortgage loans more transparent. This came on the heels of a bill they have just passed to whack the bureau’s financing from $143 million to $80 million, and eliminate Warren’s salary completely.
Their anger and sabotage of this valuable new agency — an incredibly smallish one for the task — is beyond ridiculous: It is ludicrous. Mortgages must be made more transparent, and rules on their issuance must be tightened. The new Consumer Protection Bureau should not be pushed off the course it has set.
The banking industry needs to be corrected and closely monitored. Its abusive mortgages practices not only led to the global financial meltdown of 2008, from which the nation won’t fully recover for years: It also led millions of consumers into foreclosures and loss of their equity as well as their homes. Millions more foreclosures are still pending this year in a housing market in which fully a quarter of all home mortgages are under water — a situation where the value of the home is worth less than the mortgage owed.
Many banks, moreover, have been found to have wrongly foreclosed on homes without proper legal documentation of their faulty mortgages. Technically, these foreclosures should be overturned and compensation payments made to those who wrongly lost their homes. In many other cases, consumers were duped into signing mortgages that brokers knew the customers couldn’t afford to pay when hidden interest-rate escalators jacked up their mortgage payments. Many more have recently been duped by fraudulent practices under federal mortgage modification programs.
With all of the apparent fraud and irregularities that are now known to have been foisted on consumers, congressional Republicans should not be trying to cripple or dismantle the very sort of agency that, had it previously existed, might well have prevented the mortgage crisis and the financial meltdown that resulted from it.
The agency was created under the new Dodd-Frank financial regulatory law that Congress authorized last year to tighten regulation to prevent more banking and investment industries’ abuses. It should be protected. If Republicans get their way, that won’t happen. Informed American consumers should rally in support of the agency, and tell Republicans to keep it strong, rather than wreck it in return for banking lobbyists’ donations.