Wednesday, March 7, 2018

Heitkamp/Crapo Wall Street Deregulation Bill Bad News for Consumers

When is bipartisanship not a good thing? When it means Democrats and Republicans joining forces to do the bidding of banks and big corporate lenders at the expense of North Dakota families.

Sadly, that's the backstory of a big Wall Street deregulation bill -- S. 2155 -- that has gained the backing of a group of U.S. Senators including our own Heidi Heitkamp. Senator Heitkamp is one of twelve members of the Senate Democratic caucus who have partnered with twelve Republicans to cosponsor this legislation. Thanks to their support, it could come to a vote on the Senate floor any day now.

In the name of promoting “economic growth” in rural communities and providing “regulatory relief” for community banks and credit unions, S. 2155 would make our economy less secure by letting 25 of the biggest Wall Street banks revert to the reckless and slippery behavior that triggered the worst recession in national memory. This bill would also roll back safeguards against tricky or discriminatory lending, and it would create especially big risks for those who take out loans on manufactured homes.

The manufactured home mortgage market dominated by a handful of national lenders and ridden with conflicts of interest. Two of the biggest lenders, 21st Mortgage and Vanderbilt, are tied to Berkshire Hathaway, which owns Clayton Homes, the nation's largest manufactured-home builder and retailer. Such hidden connections encourage sellers to steer buyers toward high-cost loan products from allied companies -- and away from more affordable loans offered by competitors.

S. 2155 would let manufactured-home sellers push affiliated loan products as long as they give consumers at least one alternative. That's an invitation to the seller to point to a more expensive option in order to make the in-house choice look like the best deal. And there is nothing in the bill to stop salespeople from getting kickback payments from lenders as a reward for pitching their loans.

In addition to perpetuating the conflicts of interest and loan-steering that have long plagued this industry, this measure would discourage new lenders from entering the market and undo important steps taken by the Consumer Financial Protection Bureau to give manufactured homeowners the same basic loan safeguards as other homeowners. Bottom line: more people will be sucked into dangerously expensive loans at, say, 13 percent interest instead of 6-8 percent interest.

In short, this bill does a terrible disservice to the low-and- moderate-income and elderly Americans and people with disabilities who make up a disproportionate share of the manufactured-home population. It would make homeownership more costly for those who can least afford it.

There was a moment late last year when it looked like Senate banking committee Chairman Mike Crapo (R-ID) might have to abandon his effort to build bipartisan support for what was shaping up to be a giant bank giveaway bill. Unfortunately, Senator Heitkamp kept the talks going and wound up endorsing this one-sided legislation.

Writing in the Fargo-Moorhead Forum last week, two North Dakota bank executives praised Heitkamp for serving as “a key player in the negotiations.” She should think harder about the implications for the citizens and homeowners she is sworn to represent. If she does, she will reconsider her support for a bill that, with all its giveaways to the financial industry and all its perils for the rest of us, represents bipartisanship at its absolute worst.

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