Sen. Gramm Says Regulators' Responses Underscore Need For Defining 'Predatory Lending' Analysis Finds Evidence Of Problems Anecdotal

August 24, 2000

Sen. Phil Gramm, chairman of the Senate Committee on Banking, Housing and Urban Affairs, today released a committee staff analysis of responses from nine federal regulatory agencies to inquiries about the definition of "predatory lending" and the data each agency has collected about predatory lending.

The staff report found that:

The regulators do not have and did not provide a definition of "predatory lending."

The regulators do not have systematic or organized data on predatory lending, and collected data is anecdotal at best.

The regulators are still in the early data-gathering stage.

The regulators blur the distinction between subprime lending and predatory lending.

The regulators do not report any lack of existing legal authority to penalize those abuses that they identify.

"At least five bills have been introduced in Congress that purport to address problems with predatory lending," Gramm said. "Before we take up any legislation or establish new regulatory schemes, we will have to address a more basic problem ? defining predatory lending.

"As the regulators themselves admit, there is no definition of predatory lending," Gramm said. "I don't know how we can hope to address the problem before we have decided what it is. That is the first step, and we cannot skip it.

"If we act hastily to stop predatory lending without knowing what it is, we could end up cutting off legitimate loan sources and ending the home ownership dreams of millions of Americans. I, for one, am not willing to take that risk."

Click here to read the text of the staff report.


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