Subprime Smackdown
Bank Lawyer’s Blog:
According to Ben Bernanke, sometime next week the Federal Reserve Board will finally issue the useless regulations “cracking down on subprime and exotic lending” first proposed last December that even an empty suit like Jim Cramer understood “mean nothing.” It’s a classic case of fighting the last war while your enemies wage War 2.0.
As I’ve said before, most, if not all, of my clients will simply refuse to make any loans that fall under the restrictions of an expanded HOEPA, as they refuse to do today under the more constricted HOEPA regulations. While Bernanke stated that the FRB has listened to criticisms of the proposed regulations and incorporated some of the suggested revisions into the final regulations, he didn’t give any clues as to what those revisions might be. Again, from my standpoint, it’s a moot point. Most community banks will avoid these loans as they would the annual ACORN convention.
Speaking of ACORN, expect consumer advocates to bleat disapprovingly. They thought the proposed regulations were too lax. I can’t imagine how bent out of shape they’re going to be if the Fed actually adopted some of the suggestions made by lenders. Well, actually, I CAN imagine it, and it won’t be pretty.
One of the more interesting aspects of The New York Times article about Bernanke’s speech is that the last portion of the article is devoted to the poster child for consumer advocacy, FDIC Chairman Sheila Bair. This being The New York Times, you can bet that the reporter was proud of Ms. Bair’s support of a tough crackdown on residential real estate lenders.
Among those who argued that the proposals did not go far enough was Sheila C. Bair, the Republican head of the Federal Deposit Insurance Corporation and senior members of the House Financial Services Committee.
Ms.
Bair…