Barack Obama: "predatory lenders... driving low-income families into financial ruin"

Posted at 10:25 AM, Aug. 29, 2007

Quoth Obama:

The implosion of the subprime lending industry is more than a temporary blip in our econ­omic progress. It is a cancer that, given today’s integrated financial markets, threatens to spread with devastating impact to housing and to our economy as a whole, unless we act to contain it.

It is also a parable about how an excess of lobbying and influence can defeat common sense rules of the road, placing both consumers and our nation’s economic well-being at risk.

While predatory lenders were driving low-income families into financial ruin, 10 of the country's largest mortgage lenders were spending more than $185m (€136m, £92m) lobbying Washington to let them get away with it," he wrote, citing figures from the Centre for Responsive Politics.

We can't link to the article without a subscription, but Financial Times correspondents Jeremy Grant and Eoin Callan in Washington posted a linkable, likable analysis of Obama's essay that offers another glimpse or two:

...Mr Obama blamed lobbyists working on behalf of lenders for obstructing tougher regulation of the subprime industry, adding: "Our government failed to provide the regulatory scrutiny that could have prevented this crisis.

Grant and Callan report that Senate Banking Committee chairman Christopher Dodd, also a Democratic presidential candidate and a Senator from Connecticut, and House Financial Services Committee chairman Barney Frank, D-MA, think Fannie Mae and Freddie Mac could help pick up the slack if the Bush administration would lift caps on the giant mortgage lenders' portfolios. But their main focus is Obama's 'radical proposal.'

Mr Obama said the government needed to "stop the unlicensed, unregulated, fly-by-night mortgage brokers who are hoodwinking low-income borrowers into loans they can't afford".

He added that "Washington needs to stop acting like an industry advocate and start acting like a public advocate".

Many thanks to Jerome a Paris of the European Tribune for alerting us about this via DailyKos.com.