Center for Responsible Lending says No Credit Crunch as a Result of Consumer Protection Reforms included in Dodd-Frank
| Date Published | 7/30/2012 |
| Author | Mike Calhoun |
| Theme | |
| Country |
Center for Responsible Lending Says No Credit Crunch
as a Result of Consumer Protection Reforms included in Dodd-Frank
Mike Calhoun, the President
of the Center for Responsible Lending, a non-profit, non-partisan research and
policy organization working to eliminate abusive financial practices in the
USA, made three main points in his testimony before the US House Committee
on Oversight and Government Reform Hearing:”Credit Crunch: Is the CFPB
Restricting Consumer Access to Credit?”
-Lack of regulation led to
the foreclosure crisis that has destabilized the housing market and mortgage
lending: Federal regulators could have stepped in to curb abusive
lending practices in the years leading up to the foreclosure crisis, but this
failed to happen. Instead, the private label securitization system bypassed
government oversight by bundling an increasing number of subprime and Alt-A
mortgages into mortgage-backed securities, and the widespread failure of these
mortgages precipitated the still ongoing foreclosure crisis.
-Dodd-Frank, and the
creation of the CFPB, are important reforms to prevent a future housing crisis:
Creation of a consumer protection agency that consolidates the
consumer protection responsibilities of the independent banking regulators,
along with reforms to the mortgage market and CFPB supervision of larger
nonbank participants, are critical reforms that will help prevent a future
housing and foreclosure crisis.
-Dodd-Frank implementation
can level the playing field without restricting access to affordable credit: The
consumer protection reforms included in Dodd-Frank will be good for both
consumers and the safety and soundness of our consumer finance system. In
particular, the Ability to Repay and Qualified Mortgage provisions in the
Dodd-Frank Wall Street Reform and Consumer Protection Act can ensure broad
access to credit, help the vast majority of creditworthy borrowers access safe
and affordable mortgages, and prevent the kinds of dangerous lending that led
to the current foreclosure crisis.
Link to full report.