The Predatory Role Of Some Lenders In The Repos Crisis
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The predatory role of some lenders in the raging repos crisis has had a negative impact on the economy. They have made their killing and little wonder that it is they who are now crying foul against mild suggestions about regulating high cost mortgage loans. But what is more worrying is that the Federal Reserve is buying these arguments against introducing regulatory measures. There is no doubt that lack of regulation led to the sub-prime mortgage frenetic activity and the subsequent economic crash.
One thing that is clear is that the government is duty bound to protect and forewarn the consumers about large investments that people contract. The house that is the home is not just something made of bricks and mortar but it is the pillar on which stands the strength of the family; the stability of the family is the national stability.
It is urgent that the Federal Reserve turns deaf to the pleas of the mortgage industry. The latter is arguing that regulations will push it out of business. Man-eaters have to be jailed and cribbed in and not allowed to run free to snatch more meals. The Feds as well as the Congress should give a patient hearing to the consumers who want fair play in the market.
The mortgage industry anticipating tough regulations, is not going to take it lying low – they are gearing to fight back with force. Federal Reserve Governor Randall Kroszner wanted new rules for the mortgage industry in the wake of the housing crisis. The industry moguls are complaining that at this time of credit crunch, strict rules will lead to more expenses, more paperwork and more lawsuits. While the consumer groups are complaining that the changes are not far reaching, the Feds are leaning towards the lenders and narrowing down the perimeters of the plan. Economists have been blaming the lax lending standards for the foreclosure crisis the nation is facing today. These with low interests led to the ballooning of market values. With the bursting of the balloon investors have lost confidence.
The remedial proposal that is pending will not cover existing mortgages but extend only to the new ones. The mortgage companies would have to show that the borrowers could afford the loan and that fees would not be hidden – must be clear and unambiguous. Often these fees were rolled into the capital. Consequently interest began to be charged. Misleading advertisements would also be reined in.
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