The burning issue of predatory lending by banks and other financial institutions, a topic which has become a major consumer concern in many minority communities, was the topic of discussion at a press conference held recently at the office of New York State Attorney General, Eliot Spitzer.
U.S. Congressmen Charles B. Rangel and Gregory W. Meeks, State Attorney General Eliot Spitzer, and a number of national consumer advocates, called on the office of the Comptroller of the Currency (OCC) to withdraw its proposed regulations that would exempt national banks from nearly all consumer protection laws.
Predatory lending means, according to ACORN (The Association of Community Organizations for Reform Now), imposing unfair and abusive loan terms on borrowers, often through aggressive sales tactics, which take advantage of borrowers’ lack of understanding of extremely complicated transactions.
The officials at the press conference, in one accord, condemned the proposed regulations, which would result in an unprecedented expansion of the OCC’s powers and shield banks from actions undertaken by State enforcement officials to halt predatory lending.
Outspoken Congressman Charles B. Rangel (D., Manhattan) attacked the Bush Administration for the move and said: “This administration has such a terrible record when it comes to protecting the consumer. They leave the people out there to fend for themselves.”
Congressman Rangel added: “There is no reason for the OCC to promulgate regulations to now prohibit State Attorneys General from the enforcement and protection they have provided to consumers for over 130 years. The OCC has limited experience in protecting consumers who are victims of predatory lending. The State Attorneys General have the experience and the staff to confront unscrupulous lenders and protect consumers, especially African Americans, Latinos and low-income persons, who face this problem quite often.”
“The proposed rules would disband a regulatory system that has worked well for over 130 years,” said Attorney General Eliot Spitzer, in a prepared statement. “We hope that the OCC will decide to work alongside the states to ensure that the banking system in this country is one from which banks, consumers, and communities can all benefit. However, if the OCC continues its misguided and wrongheaded mission to reduce the states’ abilities to enforce consumer protections laws, I will not hesitate to sue.”
According to the press statement, New York State Banking Superintendent Diana L. Taylor said: “One does not necessarily have to agree with the laws as they are promulgated, but the preemption sought by the OCC is not the way to change the law. The right way is in public, through the democratic process as it’s set up, with input from our legislators, consumers groups, advocates, individuals and affected institutions.”
“ We face a national issue. Governor Pataki and our Congressional delegation, especially Congress members Kelly, King, Maloney and McCarthy, have led the way in decrying what the Comptroller is seeking to do,” added Taylor.
Over the past decade, incidents of predatory lending have grown exponentially, with an estimated cost of over $9.1 million a year to American consumers.
Predatory lenders often target poor people and individuals whose credit is damaged. These lending arrangements are often on highly disadvantaged terms, including extremely exorbitant interest rates, steep bank fees and payments for undisclosed insurance products.
As a result of limited access to capital, minority groups are particularly vulnerable to predatory lending. Several published studies, including one conducted by the Center for Community Change, found that African Americans at all income levels are three times more likely to than whites to be denied loans from conventional banks. Black and Latino neighborhoods are six times more likely to rely on sub-prime lending institutions for financing, leaving them particularly vulnerable to predatory practices.
