WASHINGTON The Federal Reserve Board on Monday announced that it will hold three public hearings to discuss how the central bank can use the Home Equity and Protection Act of 1994 to curb predatory lending.
There has been rapid growth in subprime lending in the last few years, Fed Governor Edward M. Gramlich said. Most of this has been positive but there have also been some abuses. The difficulty is that we dont want to squelch the growth, but we do want to do what we can to stop the abuses.
Under the 1994 law, lenders making high-cost home-secured loans are subject to price limits and disclosure requirements that go beyond those required under the Truth in Lending Act. The law gives the Fed the power to set the trigger levels that categorize a loan as high-cost. The Fed also has the authority to declare certain lending practices unfair and deceptive.
The hearings are to be held in Charlotte, N.C., on July 27, Boston on Aug. 4, and San Francisco on Sept. 7.