With the Trump administration proposing to reduce federal oversight of mortgage lending, perhaps the most obvious lesson from the 2008 financial crisis, the need for stricter supervision of mortgage lending, has been lost, the New York Times editorial board said in an editorial Thursday.
The Consumer Financial Protection Bureau was created in 2010 to protect borrowers, and it increased the reports mortgage lenders are required to file each year. The new information makes it easier to identify predatory lending and discrimination.
The Trump administration is proposing to increase the number of small lenders exempt from the requirements and has announced it won’t penalize lenders who don’t comply with the requirements this year, the first year the new reporting requirements went into effect.
The CFPB’s role is to protect borrowers. In the past, federal financial agencies, such as the Comptroller of the Currency, have been more interested in the health of the lending institutions than the rights of borrowers.
Under the Trump administration, the CFPB has suspended a rule that would have curbed payday lending excesses, eliminated special lending protections for members of the military, and shielded student loan servicers from state regulations.
“There is a persistent myth that education is the solution, that well-informed borrowers will protect themselves,” the editorial board wrote. “But lenders almost always have more experience and information, and the gap tends to be largest for the biggest and most consequential transactions, like the purchase of a home or a taxi medallion.”
It’s maddening that a lesson learned at such great expense is already being tossed aside, the editorial board concluded.