OKPOLICY.ORG
Yesterday’s New York Times had a sobering profile of the housing market in Cleveland, which has experienced the post-boom collapse earlier and more deeply than most of the rest of the nation. While the situation in Cleveland, as elsewhere, has many causes and more than enough blame to go around, the piece includes a telling passage about what happened when Cleveland tried to take action against the predatory lenders who took over the subprime lending market in the early 2000’s to make unaffordable loans to homeowners crammed full of high costs and fees.
As early as 2000, a handful of public officials led by the county treasurer, Jim Rokakis, went to the Federal Reserve Bank of Cleveland and pleaded with it to take some action. In 2002, the city passed an ordinance meant to discourage predatory lending by, among other things, requiring prospective borrowers to get premortgage counseling. In response, the banking industry threatened to stop making loans in the city and then lobbied state legislators to prohibit cities in Ohio from imposing local anti-predatory lending laws.
In Oklahoma, too, we were told that passing meaningful anti-predatory lending reforms would cut off credit to those most in need. Ultimately, the lobbyists for the major sub-prime lenders got an industry bill through the Legislature in 2003 and put an end to consumers’ efforts to protect homeowners from the worst abuses.
