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Financial Reform Bill Would Reopen Door to Predatory Lending
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Financial Reform Bill Would Reopen Door to Predatory Lending

Jim Carr and Julia Gordon write that a rollback of Dodd-Frank protections would once again let lenders make more money and take less risk while unleashing a new round of reckless and predatory lending practices.

Less than five years after the Dodd-Frank Act was signed into law, legislators on Capitol Hill are threatening to roll back significant portions of critical financial reforms.

The legislation proposed by Sen. Richard Shelby would gut the critical mortgage protections put in place to prevent another housing crisis. To justify their efforts, legislators claim that Dodd-Frank is preventing lenders from originating more loans and argue that the changes will boost American homeownership.

No one disputes that credit is tight these days. According to the Urban Institute, lenders would have made roughly four million additional mortgage loans during the period between 2009 and 2013 if historical norms that predated the housing bubble had been in place. But the report also notes that more loans could have been made using safe underwriting standards consistent with the Dodd-Frank safeguards.

The above excerpt was originally published in BankThink. Click here to view the full article.

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Jim Carr

Senior Fellow

Julia Gordon

Senior Director, Housing and Consumer Finance