Clay intends to push bill offering consumer protections
By Chris King
Of the St. Louis American
With U.S. Rep. Barney Frank, a Democrat from Massachusetts, poised to assume control of the House Financial Services Committee from retiring chair Michael Oxley (R-Ohio), U.S. Rep. Wm. Lacy Clay, who serves on the committee, said he will have a much better chance of pushing legislation that would punish institutions that practice predatory lending.
If predatory lending were described by a street term, it might be BWB – Borrowing While Black.
Clay said, “The only reason we can find that people are pushed into loans with higher fees that require them to pay astronomical interest rates, which means they never pay down the principal, and which often results in the foreclosure of their homes, is race.”
A bill previously introduced by Clay that would have offered some protection to the minority lenders typically harmed by predatory lending, he said, received only “lip service” in a Financial Services Committee run by Republicans.
“With Barney Frank as chair of the Financial Services Committee, we’ll have a better chance of moving the bill onto the House floor and having it become law,” Clay said.
Steve Adamske, a spokesman for Frank, said Clay is correct.
“My boss is committed to doing something on predatory lending,” Adamske told the American.
“While it’s premature what the proper vehicle will be, Rep. Clay has been a leader on this issue and he’ll be at the table” when the legislation is crafted, Adamske said.
Speaking before a Subcommittee on Financial Institutions and Consumer Credit in 2004, Clay said, “We have to eradicate predatory lending without destroying the subprime lending market. The subprime market is an asset to all in the housing market when properly engaged by mortgage lenders and brokers.”
Last year, speaking before the same subcommittee, Clay said Congress “must protect the good players (in the subprime lending market) and weed out the bad ones.”
Subprime loans are loan programs available to buyers with low incomes or uneven credit histories. They are much more likely to result in home foreclosure.
To compensate for the greater likelihood that such customers will default, subprime loans have higher fees and interest rates than traditional loans. The legislation favored by Frank and Clay would place limits on these fees, punish offenders and offer protections to the consumer, such as ensuring greater transparency in the loan process.
Clay has previously been appointed by Frank to a task force to explore the penalties imposed by various state and local jurisdictions on predatory lenders and explore federal options for establishing penalties.
Clay also has worked with new House Speaker Nancy Pelosi (D-Calif.) on the issue of predatory lending.
Clay said he hopes Pelosi will support his bid to get appointed to the House Appropriations Committee, a powerful committee that writes federal spending bills. The House and Senate Appropriations Committees control about 40 percent of all federal spending.
Clay also said he is in line for a subcommittee chairmanship on the House Government Reform Committee, possibly the Federalism and Census Subcommittee, “which would be key with the coming 2010 Census and redistricting,” he said.
