On May 12, Senator Richard Shelby unveiled a discussion draft of a bill that would, among other things, undermine key banking and mortgage reforms established by the landmark Wall Street Reform and Consumer Protection law.
Center for Responsible Lending vice president Mitria Wilson offered the following remarks:
For five years, post-crisis lending rules have made the financial system safer by eliminating abusive financial products, reining in reckless behavior, and encouraging more effective oversight. The draft legislation released by Senator Shelby seeks to gut these protections and rollback the safeguards that helped this country recover from the worst financial crisis in recent history.
The draft bill favors large financial institutions over community lenders, undermines consumer protections designed to prevent another economic meltdown, and creates bureaucratic hurdles for mortgage lenders. This is an extreme measure that, if passed, would raise the cost of mortgages, trap borrowers in unsustainable debt, and allow for the same unfair and deceptive practices that brought about the recent crisis.
There are certainly ongoing challenges in the mortgage market that should be addressed including ensuring all creditworthy borrowers have access to fair and affordable credit. But we head in the wrong direction if we weaken - and in some cases eliminate - fundamental standards that keep mortgages safe, banks accountable, and people protected.
This is not a bill that serves the best interests of consumers or families.
This bill is scheduled to be marked up on Thursday, May 21 in the Senate Banking Committee.
For more information, contact Catherine An at 202-349-1878 or email@example.com.