Graciela Aponte-Diaz, California policy director for the advocacy group Center for Responsible Lending, said she is glad to see the Department of Business Oversight going after lenders for steering customers into large, high-cost loans, but also noted that the group would like to see higher refunds going to customers. "That's money that should have gone to pay their rent and other expenses," she said.
"This opens up a window for the return of some of the reckless financial practices that caused the crisis," said Yana Miles, senior legislative counsel for the Center for Responsible Lending. Part of the problem with the mortgage crisis, however, was that some lenders sold mortgages with little or no effort to ensure the borrower could actually afford the loan. And once that loan was resold on the secondary market to investors, the originator no longer retained the risk.
“The only way to enforce fair-lending laws is to have an accurate picture of what the market looks like,” said Scott Astrada, the director of federal advocacy for the Center for Responsible Lending.
Though lawmakers are still hammering out details, and the Senate’s banking reform bill would need to be reconciled with one from the House of Representatives, there’s been a common theme, said Scott Astrada, director of federal projects for Center for Responsible Lending: That would be less regulation — even for big banks that arguably don’t need it. “On a thematic level, this is pretty much on the mantra of traditional, deregulatory ‘let’s use the magic of the market to fix everything,’” Astrada said. “This bill has been kind of hijacked by the stadium banks, the Wall Street... institutions
The Senate bill “would allow for the return of many of the same lending practices that caused the mortgage meltdown,” said Yana Miles, senior legislative counsel for the Center for Responsible Lending, a research and policy group that seeks to curb predatory lending.
It’s been a decade since the financial crisis led to the Great Recession, which cost millions of Americans their jobs, homes, and savings. The “sand states” of Florida, California, Arizona, and Nevada were especially hard hit. At the center of this storm was the foreclosure crisis, the direct result of reckless mortgage lending facilitated by lax regulation.
"Once again, the Department of Education has revealed that it is on the side of companies instead of standing by borrowers and their families," Whitney Barkley-Denney, a policy counsel with the Center for Responsible Lending, said in a statement. "Acting at the behest of servicers and their lobbyists denies an opportunity for comment by the 44 million Americans who share the burden of a still-growing $1.4 trillion in student loan debt.
“It’s not surprising that this administration is weighing in on the side of industry over students and taxpayers,” Whitney Barkley-Denney, the legislative policy counsel at the Center for Responsible Lending, told Politico. “This is just a different verse of the same song we’ve been hearing over the past year.”
Consumer advocates are highly critical. “It’s not surprising that this administration is weighing in on the side of industry over students and taxpayers,” said Whitney Barkley-Denney, legislative policy counsel at the Center for Responsible Lending, a consumer group. “This is just a different verse of the same song we’ve been hearing over the past year” from the Education Department.
These recent changes are just one piece of a broader trend that has swept across government since Trump took office—a gutting of anti-discrimination measures across the financial services, including mortgages, car loans, payday loans, and more. “This is a pattern we have observed, and it’s fairly alarming,” says Yana Miles, senior legislative counsel at the Center for Responsible Lending. “You have good policy that protects consumers and tries to address discrimination. We’re seeing these rules delayed, picked at, or invalidated.”