The superpowers of the subprime lending industry, who gathered here Wednesday for a meeting of the Home Equity Lenders Leaders Organization, scored a coup by attracting Rep. Richard Baker.
The Louisiana Republican's presence was a feather in the cap of the fledgling group since he sits on the House Banking Committee and heads its subcommittee on government-sponsored enterprises.
The existence of the six-month-old group reflects the recent successes of the fast-growing subprime loan industry. In the last 10 years, the once- obscure niche has more than doubled its volume of loans to borrowers with blemished credit records. Along the way, it has attracted competition from many conventional lenders.
"We've grown from a mom and pop organization to a $200 billion industry," the group's chairman, Gary Judis, told those attending the meeting. More than 30 executives from giant home equity companies, rating agencies, other trade organizations, and law firms attended.
"But we can't continue to grow unless we're proactive about legislation," said Mr. Judis said. He is also chief executive of Aames Financial Corp., Los Angeles.
The trade group's ambition to gain legislative clout was underscored by the presence of Rep. Baker.
The lawmaker is one of the industry's few congressional advocates; he supported a recent bill that would soften restrictions on high-cost mortgages. In his talk to the group, Rep. Baker emphasized his commitment to a free-market economy.
"The government in the current day decides profits and determines your survival," he said. "That's wrong."
"It's very important for your organization to continue its efforts," Rep. Baker added. "Your business is not easy to understand." He recommended that industry leaders contact banking panel members individually in an attempt to educate them.
Rep. Baker, who is seeking reelection, faces a primary contest Saturday.
The lenders group is setting up a political action committee to solicit private contributions from the industry for use in supporting friendly politicians.
Sarah Rosen, an aide to the assistant secretary of housing, also encouraged the group to approach legislation proactively. She is responsible for the Department of Housing and Urban Development's rules enforcing the Real Estate Settlement Procedures Act.
"This industry needs to start thinking about what we need most to accomplish on the part of the most vulnerable consumer," Ms. Rosen added.
Ms. Rosen encouraged the group to set up a committee including representatives of consumer advocacy organizations and industry representatives in an effort to clarify Respa provisions many deem unintelligible.
Her remarks and Rep. Baker's came on the heels of a Department of Justice bias investigation of subprime lender Long Beach Mortgage, Orange, Calif.
Mortgage industry professionals were worried that the probe would set a precedent requiring wholesale lenders to police their brokers, but details of the case's settlement proved to be fairly favorable to the industry, observers said.
