from the president
As a deregulatory philosophy took hold of Washington in the early 2000s, prudent supervision of the mortgage market broke down. Predatory loan products edged out sustainable ones in low-wealth communities, presaging the foreclosure crisis that destroyed billions of dollars of equity. As private securitizers took on more and more risk, Fannie Mae and Freddie Mac lost sight of their mission and engaged in a destructive race to the bottom.
In “Bridging the Gap: Credit Scores and Economic Opportunity in Illinois Communities of Color,” our researchers found that Illinois communities of color had high concentrations of individuals with very low, “non-prime” credit scores.
The new CFPB will acquire much of its staff from the existing federal banking regulators. Under DFA, the existing agencies have 12 months to make the transition and this could be extended another 6 months. In addition, the Office of Thrift Supervision will be folded into the Office of the Comptroller of the Currency at Treasury.
“it is very hard for anyone to be rewarded for preventing a low-probability disaster. Had the Federal Reserve raised interest rates in the early 2000s rather than lowering them, it might have averted the financial collapse in 2008 and the ensuing global economic crisis. But we wouldn't have known that. All that people would have seen was a recession brought on by high interest rates. Officials bear the political costs of preventive measures but do not receive the rewards.”
Since I do not own stock in Chase, I used a shareholder proxy kindly provided by colleague Adam Rust of the Community Reinvestment Association of North Carolina (CRA-NC) to gain entry (through tight security) to the shareholder meeting. When I got my turn at the microphone, I explained that, as a customer of Chase and its predecessor banks in Chicago for nearly 28 years, I want to be proud of the bank where I do business.
We must ensure that the result of negotiations is not a toothless and ineffectual regulator that lacks the resources and authority it needs to keep financial products safe, sustainable, and available.
At the meeting of about 70 persons, which included representatives of all of the major French banks, Federal Reserve Board Director of Consumer and Community Affairs Sandra Braunstein and I shared information regarding how regulators, bankers and nonprofits use the publicly available data required under HMDA and CRA to evaluate if and how banks are serving the financial needs of lower-wealth persons and communities and small businesses.