Busted: Bankers and The Global Economy

December 2, 2010

Federal Reserve Expects to Strip Americans of Mortgage Right

Even as residents of the United States are losing their homes in record numbers, the Federal Reserve wants to put the burden on homeowners by stopping their ability to cease foreclosures, including the ability to escape predatory home loans with onerous terms. So goes the Fed’s proposal to amend a 42-year-old provision of the federal Truth in Lending Act. This has raised the ire of labor, civil rights and consumer advocacy groups along with a slew of foreclosure defense attorneys.

For the first time in a while, scuttlebutt exists about stripping some of the power being lavished the Federal Reserve and instead, allowing this aspect of law to be handled by the new Consumer Financial Protection Bureau, which begins its work next year.

Since 1968, the Truth in Lending Act has given homeowners the right to rescind illegal loans for up to three years after the transaction was completed if the buyer wasn’t provided with proper disclosures at the time of closing. During the financial crisis, the Federal Reserve continued to expand its own authority through 21,000 transactions that lend tens of billions of dollars to Goldman Sachs and other giants of Wall Street, as well as British, German and French banks, including other big businesses and smaller banks from Puerto Rico through the United States. The Republicans are now trying to use this as political capital, mandated by many newly elected members of Congress that campaigned on platforms to rein in the Federal Reserve’s freedom to act independently of Congress.

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