Janice Schakowsky: “I thank the gentlewoman for yielding and for her leadership to protect consumers. H.R. 1210 would allow the largest…”

“I thank the gentlewoman for yielding and for her leadership to protect consumers. H.R. 1210 would allow the largest banks in the country to deal in the types of predatory and risky loans which brought down Washington Mutual, Wachovia, Countrywide, Lehman, Bear Stearns and, eventually, the entire economy. It undermines one of the most important titles of the Dodd-Frank Act and one of the most significant consumer protection rules implemented by the Consumer Financial Protection Bureau. Furthermore, this bill contains a provision which explicitly allows mortgage brokers to steer borrowers to riskier, more expensive loans, regardless of what they qualify for. Some supporters of this bill think that, if banks hold these loans and, therefore, their risks in their own portfolios, they will be careful not to originate bad loans, but this isn't true. It is not true. Several portfolio lenders went under during the crisis due to a failure to underwrite loans because they were focused on short-term benefits of up-front fees rather than the long-term performance of the mortgages that they originated. Investment banks also chased these short-term profits and bought up risky derivatives based on loans that were poorly underwritten without due diligence. More importantly, this bill does not change what types of loans a bank is allowed to make. It just removes consumer protections from the riskiest subprime loans.…”