Wednesday, May 04, 2005
The Bankruptcy Bill, Part 2
very busy.... here is something for your brain to chew on in the meantime....
After the passage of the credit card industry-written bankruptcy bill last month, you probably thought Congress was through screwing average Americans, at least for a little while. You were wrong. Now, we have the "Responsible Lending Act" from Ohio Rep. Bob Ney (R). Though Ney is from the state with the highest foreclosure rate in the country, he's working to make sure banks can continue ripping off unsuspecting consumers.
The bill essentially cements into law the rights of predatory lenders who seize on financially vulnerable Americans that have less-than-perfect credit records. This is a $9-billion-a-year industry – but apparently, these sharks want to cheat hard-working people out of even more of their home equity. And the supposedly "up-from-your-bootstraps" Republicans are helping create a system that actually kicks people in the face as they are earnestly trying to climb the ladder. Here are some of the worst features of Ney's bill:
RAISES FEES: The bill allows lenders to tack on another 2 percent in fees on subprime loans offered to people with less-than-perfect credit.
PENALIZES PEOPLE FOR SUCCEEDING: The bill allows lenders charge exorbitant penalties for paying off a high-interest loan early, essentially locking buyers into high-interest loans even if they have the money to pay it off. Additionally, as the Center for Responsible Lending notes, it actually lets banks "pay bonuses to brokers for steering buyers into expensive loans."
HIDES EXORBITANT FEES/SURCHARGES: The bill allows a lender to roll predatory lenders' exorbitant fees into the someone's loan. Sounds good, right? Not really: as the nonpartisan Center for Responsible Lending notes, "in many high-cost loans, borrowers never realize the significance of the exorbitant hidden fees on the loan because they don't pay for them in cash, but instead finance the points into the loan." In other words, not regulating this gives predatory lenders a devious way hide their high fees, but still make you pay them.
LIMITS CONSUMER RIGHTS: The bill actually limits borrowers legal rights in seeking recourse when predatory lenders screw them over. Disgusting "tort reform" efforts never cease to rear their ugly head in any of these bills.
PRE-EMPTS STATE LAWS THAT PROTECT CONSUMERS: Perhaps worst of all, the bill essentially pre-empts state laws that regulate predatory lending. We've seen this happen before from the House Financial Services Committee (which, with the exception of a few members, should officially be declared a subsidiary of Corporate America). In 2003, Congress passed legislation to pre-empt state laws protecting consumer privacy ("states rights" apparently only applies when it means persecuting minorities - it doesn't apply when it would mean protecting consumers).
There's an alternative to this bill being pushed by some Democrats that is far better (see a side-by-side comparison of the two bills). It is based, in part, on North Carolina's tough state law which studies prove reduced predatory lending but preserved consumer choice (North Carolina's law will be pre-empted if Ney's bill passes).
The problem is, just as we saw a faction of Democrats screw the middle class and support the bankruptcy bill, there is a faction of Democrats supporting Ney's bill. The question really is simple: how come there are still some Democrats who don't understand that the reason the party is in the minority is because on core economic issues, these weak-kneed factions make the party appear so willing to abandon America's middle-class?
After the passage of the credit card industry-written bankruptcy bill last month, you probably thought Congress was through screwing average Americans, at least for a little while. You were wrong. Now, we have the "Responsible Lending Act" from Ohio Rep. Bob Ney (R). Though Ney is from the state with the highest foreclosure rate in the country, he's working to make sure banks can continue ripping off unsuspecting consumers.
The bill essentially cements into law the rights of predatory lenders who seize on financially vulnerable Americans that have less-than-perfect credit records. This is a $9-billion-a-year industry – but apparently, these sharks want to cheat hard-working people out of even more of their home equity. And the supposedly "up-from-your-bootstraps" Republicans are helping create a system that actually kicks people in the face as they are earnestly trying to climb the ladder. Here are some of the worst features of Ney's bill:
RAISES FEES: The bill allows lenders to tack on another 2 percent in fees on subprime loans offered to people with less-than-perfect credit.
PENALIZES PEOPLE FOR SUCCEEDING: The bill allows lenders charge exorbitant penalties for paying off a high-interest loan early, essentially locking buyers into high-interest loans even if they have the money to pay it off. Additionally, as the Center for Responsible Lending notes, it actually lets banks "pay bonuses to brokers for steering buyers into expensive loans."
HIDES EXORBITANT FEES/SURCHARGES: The bill allows a lender to roll predatory lenders' exorbitant fees into the someone's loan. Sounds good, right? Not really: as the nonpartisan Center for Responsible Lending notes, "in many high-cost loans, borrowers never realize the significance of the exorbitant hidden fees on the loan because they don't pay for them in cash, but instead finance the points into the loan." In other words, not regulating this gives predatory lenders a devious way hide their high fees, but still make you pay them.
LIMITS CONSUMER RIGHTS: The bill actually limits borrowers legal rights in seeking recourse when predatory lenders screw them over. Disgusting "tort reform" efforts never cease to rear their ugly head in any of these bills.
PRE-EMPTS STATE LAWS THAT PROTECT CONSUMERS: Perhaps worst of all, the bill essentially pre-empts state laws that regulate predatory lending. We've seen this happen before from the House Financial Services Committee (which, with the exception of a few members, should officially be declared a subsidiary of Corporate America). In 2003, Congress passed legislation to pre-empt state laws protecting consumer privacy ("states rights" apparently only applies when it means persecuting minorities - it doesn't apply when it would mean protecting consumers).
There's an alternative to this bill being pushed by some Democrats that is far better (see a side-by-side comparison of the two bills). It is based, in part, on North Carolina's tough state law which studies prove reduced predatory lending but preserved consumer choice (North Carolina's law will be pre-empted if Ney's bill passes).
The problem is, just as we saw a faction of Democrats screw the middle class and support the bankruptcy bill, there is a faction of Democrats supporting Ney's bill. The question really is simple: how come there are still some Democrats who don't understand that the reason the party is in the minority is because on core economic issues, these weak-kneed factions make the party appear so willing to abandon America's middle-class?
from sirota blog
