States' DoJs tried to stop subprime predatory lending but Feds removed consumer protection laws.

[Robbien]

Eliot Spitzer wrote a special Op-Ed in the WaPo for Sunday's paper in which he blows the whistle on the Feds

http://www.kansascity.com/273/story/492991.html

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 enacted laws aimed at curbing such practices, including New York in 2003.

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 problem.

. . .

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 pre-empting all state predatory lending laws, thereby rendering them inoperative against national banks. 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.

Throughout our battles with the OCC and the banks, the mantra of the banks and their defenders was that efforts to curb predatory lending would deny access to credit to the very consumers the states were trying to protect. But the curbs we sought on predatory and unfair lending would have in no way jeopardized access to the legitimate credit market for appropriately priced loans. Instead, they would have stopped the scourge of predatory lending practices that have resulted in countless thousands of consumers losing their homes and put our economy in a precarious position.

Which is why no one is calling this subprime mess a crime. A Fraud. It isn't because Bush Admin pre-empted laws protecting consumers and made predatory lending legal.

Why is Spitzer telling us now and not earlier? And why is he telling us on a Saturday night/Sunday morning where it will get the least amount of coverage possible?

[spag68]

1. Spitzer

Told all of us here in NY years ago. Many articles in the times and other NY papers about it, but no one paid any attention, as it seemed to apply to those "poor" people and not to the middle class.

[Hydra]

2. If you really want to know what happened

Watch Money as Debt on google.

Banks making no-interest loans make nearly a 100% profit- that money never existed before the loan was made.

At that point, what matter is it if you make 100% profit or a 120% profit, especially since the borrower is more likely to pay on time and completely?

All of this mess was calculated and deliberate. Disaster capitalism, I believe is the term.