Also at The Albany Project
The recession we are in now is in large part due to fraud throughout the housing/mortgage industries.
There was appraisal fraud, Wall Street fraud, and, for millions of homeowners facing economic devastation, predatory lending fraud.
New York Gov. Eliot Spitzer has an op-ed in the Washington Post today that convincingly argues that Bush protected predatory lenders against state-level regulation that would have lessened the economic catastrophe ahead.
How Spitzer nailed Bush, below.
Spitzer, when he was New York's attorney general, noticed that the brave new world of mortgages-for-everyone contained high fees, eventually crushing interest rates, onerous pre-repayment terms, and other fine-print problems for subprime borrowers who could least afford such problems.
So he went after the most egregious subprime lender predators:
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.
But Bush would have none of that:
In 2003, during the height of the predatory lending crisis, the federal Office of the Comptroller of the Currency 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.
But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation.
The Bushite OCC decided, five years ago when the housing/mortgage crisis was less obvious than now, to protect predatory lenders, and screw the people who held mortgages from predatory lenders.
Spitzer notes that he, and every other state attorney general in the country (of both parties), wanted the states' rights to provide basic consumer protections against predatory lending.
But Bush preferred to protect the predatory lenders, who had given him millions over the years.
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.
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.
Spitzer's op-ed reminds that Bush, and Republicans in Congress who did nothing about predatory lending when they had majorities, are 100-percent responsible for the current recession.
And that the Republicans are the party that profits from, and therefore protects, predatory lenders.
And also suggests that Republicans who have profited from predatory lending will be reaping the whirlwind at the ballot box in November.