This link has been bookmarked by 6 people . It was first bookmarked on 12 Apr 2010, by luzzbiv.
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13 Apr 10
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Texas had strong consumer-protection regulation.
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Georgia lacked any similar protections (and the Bush administration blocked the state’s efforts to restrict subprime lending directly).
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the contrast between Texas and Georgia suggests that consumer protection is an essential element of reform.
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12 Apr 10
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Why didn’t the same thing happen in Texas? The most likely answer, surprisingly, is that Texas had strong consumer-protection regulation. In particular, Texas law made it difficult for homeowners to treat their homes as piggybanks, extracting cash by increasing the size of their mortgages. Georgia lacked any similar protections (and the Bush administration blocked the state’s efforts to restrict subprime lending directly). And Georgia suffered from the difference.
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And the contrast between Texas and Georgia suggests that consumer protection is an essential element of reform. By all means, let’s limit the power of the big banks. But if we don’t also protect consumers from predatory lending, there are plenty of smaller players — both small banks and the nonbank “mortgage originators” responsible for many of the worst subprime abuses — that will step in and fill the gap.
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Judith Hunter"So what’s the moral of this story? As I see it, it’s a caution against silver-bullet views of reform, the idea that cracking down on just one thing — in particular, breaking up big banks — will solve our problems. The case of Georgia shows that bad behavior by many small banks can do as much damage as misbehavior by a few financial giants.
And the contrast between Texas and Georgia suggests that consumer protection is an essential element of reform. By all means, let’s limit the power of the big banks. But if we don’t also protect consumers from predatory lending, there are plenty of smaller players — both small banks and the nonbank 'mortgage originators' responsible for many of the worst subprime abuses — that will step in and fill the gap. "
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