Predatory Lending Practices March On and On

Asheville Citizen-Times
January 26, 2010

Consumer advocates oppose a recent proposal by Sen. Christopher Dodd (D-Conn.) that would make the proposed Consumer Financial Protection Agency (CFPA) part of another government body -- most likely federal banking regulators. They insist that the CFPA needs to be independent to adequately protect consumers, especially given that they spend over $9.1 billion annually as a result of predatory mortgage lending practices, according to the National Association of Consumer Advocates. A new watchdog committed to consumer financial products would prevent "unfair, deceptive, or abusive" behavior. The legislation also likely will not pre-empt state laws, meaning that North Carolina's ban on payday loans and others like it would remain in place. Additionally, a report from the Center for Responsible Lending (CRL) indicates that strict predatory lending laws imposed at the state level cost just $1 per mortgage, which should eliminate concerns that reining in the payday industry would make housing unaffordable. In related news, the CRL is pushing for stricter oversight of auto loans, which it says use overpriced add-ons, higher interest rates, dealer kickbacks, and other such charges to boost costs. While efforts to address such issues failed in North Carolina last year, observers say the Obama administration continues to push for an independent CFPA -- so change is still possible at the federal level.

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