Raw Story has reported after The Washington Independent today picked up on a research study paper done at UNC-Chapel Hill's Center for Community Capital (Go Tarheels!) that the Bush Administration kept states from enforcing prdatory-lending laws, enabling further the housing crisis.
The report essentially confirms what former-New York governor Eliot Spitzer argued in a now famous Washington Post column in February 2008. (How useful to attempt to shut THIS guy up...)
The research paper, according to Raw Story, calls the findings "remarkable," saying that the link between anti-predatory lending laws and foreclosures remains "unexplored," yet important. (For the left, I imagine, this will produce quite a bit of "Well, duh" responses, but here's the details:)
Raw Story characterizes the study as possibly "the first scientific evidence" to confirm the 'Well, duh' response.
In 2004, the Office of the Currency Comptroller, an obscure regulatory agency tasked with ensuring the fiscal soundness of America's banks, invoked an 1863 law to give itself the power to override state laws against predatory lending. The OCC told states they could not enforce predatory-lending laws, and all banks would be subject only to less-strict federal laws.
Now, a research paper (PDF) from UNC-Chapel Hill's Center for Community Capital shows that those anti-predatory lending laws had actually worked. States that had stricter regulations on issuing mortgages were found to have fewer foreclosures. "We believe that these findings are remarkable, since they suggest an important and yet unexplored link between and foreclosures," the study's authors state.
The study may be the first scientific evidence to back up claims made by many critics that the Bush administration and earlier administrations allowed last year's financial crisis to happen by not enforcing common-sense regulations on lenders.
Here is the original Comptroller of Currency press release which invokes, in me, at least, a laughing-to-keep-from-crying response to its wording.
OCC Issues Final Rules on National Bank Preemption and Visitorial Powers; Includes Strong Standard to Keep Predatory Lending out of National Banks
WASHINGTON – The Office of the Comptroller of the Currency issued two final rules today that reflect the federal character of the national banking system. The regulations enhance the ability of national banks to plan their activities with predictability and to operate efficiently, subject to effective and efficient supervision.
The first rule codifies a series of court decisions and OCC interpretations, and establishes symmetry with federal thrifts regarding the types of state laws that apply to national banks, and includes a strong anti-predatory lending standard. The second rule clarifies the scope of the OCC’s visitorial authority under federal law.
The new rules respond to numerous questions the OCC has received in recent years about the extent to which state laws apply to national banks and the authority of state or other agencies to examine or take actions against national banks. National banks are already subject to a comprehensive set of federal requirements, and the overlay of multiple state law standards would impose unnecessary and excessively costly burdens.
- snip -
“We have seen only isolated cases of abusive practices among national banks,” Mr. Hawke added. “But when we have identified problems, we have taken quick and effective action. Our enforcement actions have resulted in the payment of hundreds of millions of dollars in restitution to national bank customers.”
Spitzer, who continues to counter ludicrous corporate and right-wing-produced revisionism on the Wall Street fiascos, concluded then, some may remember, with a response concerning this and the subsequent developments in the time that had occurred up to his editorial in early 2008. He declared that when history writess "the story of the subprime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners, the Bush administraton will not be judged favorably." The concluding paragraph reveals the irony of the GOP adminstration's assault on state's rights.
The PDF at the Raw Story link for the original UNC study is not working for me, so if anyone can open it and read it, and finds that there are inconsistencies with what I've written in my diary, please let me know.
Mary Kane, the author of The Washington Independent article opines after reporting on the study that it needs to serve as a didactic reminder, for Republicans and Democrats alike, that all regulations are not detrimental to the interests of business, as any new regulatory reform takes place and the banks that were bailed out lobby against those proposed new reforms:
The same banks that found their way around these state anti-predatory laws are the ones getting government bailouts, and financial incentives to modify loans. And bonuses for top employees.