WASHINGTON - Adding his voice to the growing chorus of regulators who have spoken out against predatory lending, Federal Reserve Board Chairman Alan Greenspan on Wednesday announced that an interagency task force has been meeting to address the problem.
In a speech to the National Community Reinvestment Coalition here, Mr. Greenspan said the Fed is concerned about "abusive lending practices that target specific neighborhoods or vulnerable segments of the population and can result in unaffordable payments, equity stripping, and foreclosure.
"The Federal Reserve is working on several fronts to address these issues and recently convened an interagency group to identify aberrant behaviors and develop methods to address them," he said.
The interagency group consists primarily of the four bank and thrift regulators, the Department of Justice, the Federal Trade Commission, the National Credit Union Administration, and the Department of Housing and Urban Development.
The group has been meeting since Oct. 1 in both large sessions and smaller working groups focused on specific issues, but has so far reached no conclusions and recommended no action. People familiar with the discussion said that the group's original plan - to define predatory lending - has been shelved in favor of a joint policy statement defining specific illegal practices.
Regulators said they expect the group to produce the statement by yearend.
Among other options, the group may recommend strengthening existing enforcement efforts, encouraging industry self-regulation, proposing legislative solutions, or issuing new regulations.
Mr. Greenspan is the last of the four chief bank and thrift regulators to sound off on predatory lending. The practice has been denounced forcefully and often by Federal Deposit Insurance Corp. Chairman Donna A. Tanoue and Office of Thrift Supervision Director Ellen S. Seidman in recent months. Comptroller of the Currency John D. Hawke Jr. joined in Tuesday, saying that the OCC would soon issue an advisory letter to its examiners aimed at cracking down on national banks involved in predatory lending.
In an address to a group of fair-housing advocates on Monday, Ms. Seidman said that regulators "want to better coordinate our enforcement efforts and address gaps in the law."
Predatory lenders have also attracted some attention on Capitol Hill. On March 9, Rep. Janice Schakowsky, D-Ill., introduced a bill that would amend the Truth-in-Lending Act to protect consumers from predatory lenders.
Next week Rep. John J. LaFalce of New York, the ranking Democrat on the House Banking Committee, is also expected to introduce legislation aimed at curtailing predatory lenders.
- Remarks by Chairman Alan Greenspan on abusive lending practices - March 22, 2000 (Source: Federal Reserve Board)
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