On December 10th, Kweisi Mfume, President and CEO, National Association for the Advancement of Colored People (NAACP), joined U.S. Reps. Charles Rangel and Gregory Meeks, State Attorney General Eliot Spitzer and State Superintendent of State Banking Diana Taylor asked the U. S. Office of the Comptroller of Currency (OCC) to rescind its proposed regulations exempting national banks from most consumer protection laws. Mfume explained, "OCC's proposed regulations would result in an unprecedented expansion of the its powers, while also shielding banks from actions undertaken by state enforcement officials to halt predatory lending, which is a major consumer issue in many Black and Latino communities."
Mfume said: "For the United States Office of the Comptroller of Currency to promulgate regulations that exempt national banks from consumer protection laws designed to prevent usury and other predatory lending ills is unconscionable. Predatory lending weighs more heavily on people of color because banks target ethnic minorities and the working poor. The resulting cycles of debt lead to staggering transfers of wealth from those who have not, to those who already have.
"This nation was founded upon and continues to rely on a dual banking system. The various states that have enacted laws targeting pernicious schemes to strip home equity and hard earned dollars from working poor and middle class families are to be commended, not preempted. The NAACP joins the chorus of voices calling upon Comptroller John D. Hawke Jr. to withdraw the OCC proposed regulations insofar as they exempt national banks from nearly all state consumer protection legislation."
Attorney General Spitzer expressed hope that the OCC would decide to work alongside the states to ensure that the nation's banking system is one from which banks, consumers and communities can all benefit. Spitzer added that if the OCC continues its "misguided and wrongheaded mission to reduce the states' abilities to enforce consumer protection laws," he would not hesitate to sue.
The NAACP and New York officials criticized an OCC ruling this summer, which held that national banks do not have to comply with state predatory lending laws.
Over the past decade, incidents of predatory lending have grown exponentially, costing American consumers more than an estimated 9.1 billion dollars a year.
Predatory lenders often target poor people and individuals whose credit is damaged. These lending arrangements are often on highly disadvantaged terms, including extremely exorbitant interest rates, steep bank fees and payments for undisclosed insurance products.
Individuals and whole communities suffer the effects of predatory lending, as foreclosures and homeowner displacement lead to de-stabilization and frustrate attempts at revitalization and rehabilitation.
As a result of limited access to capital, racial and ethnic groups are particularly vulnerable to predatory lending. According to a published study by the Center for Community Change, African-Americans at all income levels are three times more likely than whites to be denied loans from conventional banks. Black and Latino neighborhoods are six times more likely to rely on sub-prime lending institutions for financing, leaving them particularly vulnerable to predatory practices.
New York and other states have enacted laws to protect their citizens from predatory lending practices.
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