Mark Winston Griffith
The Foreclosure Crisis: Regulators show up late to the Funeral
It doesn't happen often, but earlier this week a New York Times editorial took on a financial justice issue and got it right. Nailed it, in fact. On Monday, July 10, in an editorial entitled "Myths Spun by Lax Lenders", the Times took federal regulators to task for regulating the sub prime lending market long after the damage has been done, as foreclosures are leveling neighborhoods across the country. For those of us who have been trying to get regulators at all levels to get off their behinds and actually protect consumers, instead of lenders, the "too-little, too-late" action by the Feds, as the Times called it, is a bitter pill to swallow. In a way, the editorial is a bit "too-little, too-late" itself considering how long advocates have been trying to get the Times to flag this and other regulatory breakdowns, but, hell, we'll take it. And to be fair, the Times has been striking some of the the right notes on predatory lending for months now.
Perhaps the most useful assertion made in the editorial is the explosion of the myth that abusively priced mortgages are somehow a service to borrowers, as if making an adjustable rate mortgage underwritten to become ridiculously un-affordable in six months is an act of charity. The Times rightly pointed out that lenders need to be guided by regulators to make loans that the borrower can afford - duh! - and make loans that actually fit the needs of the borrower. In a tail-wagging-dog world, where the lending industry tells legislators and regulators what to do, this is a revolutionary idea.