Today it became cristal clear that we’ll soon be the witnesses of a historical circus. The Committee Chairman Christopher Dodd, one of the rare officials willing to take a radical action, denounced the savage lending practices and even blamed mortgage crisis on “neglect” by Fed, Greenspan.

“About the same time, Dodd said, Greenspan was touting adjustable-rate loans. ‘American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgages,’ Dodd quoted Greenspan in a speech in early 2004. … Greenspan noted Thursday that he retreated from those remarks about two weeks after he made them, saying he meant only ‘a narrow segment’ of households might benefit from nontraditional mortgages.”

“Greenspan also took issue with Dodd’s criticism. ‘To suggest the Fed was pushing subprime mortgages or even adjustable-rate mortgages is just not accurate,’ he said. ‘I was merely identifying an arithmetically obvious issue, that some mortgage borrowers, admittedly a very small segment, would do better with a different product.’”
 

Did you have ever heard of the 1994 Home Ownership and Equity Protection Act, or HOEPA which targets unfair and deceptive lending practices?

So there you have it. The painful reality is that while Americans were dreaming of a better future, many regulators were not a thing to protect hardworking citizens from financial crooks.

On Bloomberg.com, the U.S. Office of the Comptroller of the Currency, Rushton, exclaimed:

…. It is clear that some subprime lenders have engaged in abusive practices, and we share the committee’s strong concerns about them….

Alas and as always it is the lower-class that takes the first major hit. Here are the statistics one could read on the suntimes.com two days ago:

The council called on the Federal Reserve Board to be proactive and investigate systemic and specific corporate fair lending violations. Here are some of the highlights of the report:

•  •  For these seven lenders, the percentage of total home purchase loans to African Americans that were higher-cost was six times greater than the percentage of higher-cost home purchase loans to whites in the six cities (41.1 percent vs. 6.9 percent).

•  •  In the same cities, for the same lenders, the percentage of total home purchase loans to Latinos that were higher-cost was 4.8 times greater than the percentage of higher-cost home purchase loans to whites (32.8 percent vs. 6.9 percent).

•  •  In each of the cities examined, the seven lenders combined showed larger African American/white and Latino/white disparities than those exhibited in the overall lending market.

Although you will not hear much about the subprime mess on TV, credit counselors are overwhelmed by U.S. mortgage crisis. One of them at the at the Home Ownership Center of Greater Cincinnati is getting anxious:

“We knew it was going to be bad, but we didn’t think it would be this bad … Not all of the problem is in the subprime market. Many Americans with good credit but low income or no savings signed up for adjustable rate mortgages or interest-only loans to get into the market. As rates rise, they too feel the pinch” 

Another, working for the National Fair Housing Alliance, admitted:

“All the predatory lending that has gone on, all of the pushing of exotic loans on people of color, female-headed households, families with children, people with disabilities.

At the nonprofit Consumer Credit Counseling Service in suburban Cincinnati, they are even more gloom and doom:

… one client started out with a 3.9 percent interest rate on his 30-year mortgage. Now it’s rising to 11 percent — and he can’t meet the higher payments because once he bought the home he piled up debt furnishing the home. … Now he can’t refinance either, because of the debt. He just said, ‘There’s no way…

Up to this day too many people are unaware of socio-economic influences. We can change this pratically overnight: it is up to us to show our lawmakers that we plan on educating ourselves.