Foreclosures and financial protection
--134,923: Maryland homeowners behind on their mortgages at the end of June.
--163,479: Maryland foreclosures it predicts between this year and 2012. (If that comes to pass, it would be one in every seven homes with a mortgage, according to my quick check of Census Bureau data.)
The center has numbers for every state -- under the headline "The Impact of Bad Lending" -- and it's reminding us of this now because it's trying to rally support for the proposed Consumer Financial Protection Agency.
As real estate columnist Kenneth Harney notes, the agency would oversee real estate and mortgage matters, plus "credit cards, debit cards, consumer loans, payday loans, credit reporting agencies, debt collection, stored-value cards and even investment advisory and financial advisory services, to name only part of the list."
No thanks, says the American Bankers Association. It issued a statement last week to say it has major concerns about "the very broad, ill-defined authority that is granted to this new agency that could be used to justify essentially any regulatory action."
(The bankers do think more regulatory muscle is needed -- just not flexing in their direction. In Congressional testimony, Edward L. Yingling with the bankers group said regulators ought to better enforce rules among "non-bank providers of financial services.")
Another proposal is for a "council of regulators" to keep an eye out for big economic risks like, let's see, an easy-money-fueled housing bubble. But Douglas Elliott of the Brookings Institution is skeptical this would work. He's quoted in a Forbes piece as saying he fears the regulators would be ineffective because we like our tulip manias, thank you very much:
"[Financial bubbles] are invariably quite popular. They arise because a large portion of the population accepts some tenet, such as the inevitability of rising house prices," says Elliott. Imagine if the council had tried to stop the housing bubble in 2005. Instead of averting the Great Recession, they'd be remembered as the regulators who murdered the great wealth-generating housing boom for no reason.
How would you suggest the country try to avoid bubbles in the future? More regulation? Less regulation? Different regulation?
Anti-bubble czar?
Categories: The foreclosure mess
Comments
Wow! Those are some staggering numbers. While I am not a normal proponent of regulation, something has to be done about some of these issues. The financial world loves these bubbles because they can manipulate them to make tons of money. The banks/mortgage companies and others pushed this real estate bubble and made so much money during the boom, sometimes "tricking" people into buying homes they could not afford in addition to the people that were just stupid buying homes way out of their range. I know people that were making over $200k as mortgage brokers in 06/07 just giving loans to anyone with a pulse. Households making a combined $90K buying a $400K home with $10K (or nothing) down because their mortgage lender told them that’s what they qualified for.
The banks have been driving me crazy. They caused a good deal of this mess and have been bailed out by taxpayers without any real punishment. How do they thank us? They jack up credit card rates and stop loaning money to responsible people trying to keep their business afloat. Drives me crazy!! Rant over.
Posted by: M | October 29, 2009 9:12 AM
So... the folks positing the formation of this new oversight agency.... are these the same brain trust that are currently trying to expand and extend the home buyer tax credit?
we are doomed people.
sell out, pack up and move on.
Posted by: MrRational | October 29, 2009 12:13 PM
I am all for more common sense regulation. The problem is our politicians and regulators don't have any common sense.
Seriously I do think we need more or at least different regulation but I don't trust congress or regulators to get it right. Look at the Madoff scandal. The regulators were notified of discrepancies and ignored it.
Posted by: Ned Carey | November 3, 2009 11:26 AM