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Report: Reining in Wall Street
Foreclosures, Failed Banks and Fees
What started in 2006 with the deflation of the U.S. housing market bubble and a rapid increase in the number of foreclosures has expanded into a ruinous financial and economic crisis that is global in scope. It is widely known that a primary cause of the current financial crisis was abusive lending, particularly the widespread practice of selling subprime mortgages to people who couldn’t afford them. The impact of this abusive mortgage lending was made worse for many consumers by a parallel explosion of virtually unregulated and unfair credit card, overdraft and payday lending practices. Worse, virtually all attempts by states to stop these abuses were preempted by federal bank regulators.
The crisis has not ended. According to the Center for Responsible Lending at least 282,190 more foreclosures will be filed in Ohio between 2009-2012. In Ohio, a total of 3,853,373 homeowners will lose $17,229 million in wealth due to the foreclosures still to come. Homeowners in the U.S. are expected to lose $1.9 trillion in home equity wealth due to foreclosures from 2009-2012.
While the financial crisis is global in scope, Ohio is one of its flashpoints. Ohio lives and families have been shattered and homes and neighborhoods shuttered due to unfair and predatory lending practices.
The solution is to enact a strong federal Consumer Financial Protection Agency that reinstates federal law as a floor not a ceiling of protection and has as its primary responsibility the enforcement of consumer protection laws. A new Consumer Financial Protection Agency would regulate financial products like mortgages, car loans, payday loans and credit cards – wherever purchased -- in much the same way the Food and Drug Administration ensures the safety of our medicines or the Consumer Product Safety Commission oversees toys, electronics and other household goods.
A CFPA bill has been approved for House floor action by two committees; similar legislation is being prepared for Senate committee action. The House floor and Senate committee votes are expected to occur in mid-December.
Ohio Attorney General Richard Corday supports a U.S. Consumer Financial Protection Agency: On August 18, 2009, Richard Corday joined 23 other attorney generals in their support of a U.S. Consumer Financial Protection Agency by sending a letter to Congress specifically supporting a CFPA and the preservation of stronger state laws .
This report provides analysis of the foreclosure problem in Ohio, reviews the lending and political activities of major predatory mortgage lenders doing business in the state, describes the effects on the taxpayer-backed FDIC insurance fund of the three national bank failures to date in 2009 in the state and summarizes the impact of high-fee payday and overdraft loans on Ohio consumers.
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