To the Editor:
On July 26, the nation's largest subprime lender, Ameriquest Mortgage Co., joined with one of the nation's oldest community-activist groups, Acorn, to announce a pilot lending program to provide financial counseling and up to $360 million in loans to people in 10 cities across the country. Your story ("Ameriquest Bets $360 Million Against Itself," page 20, July 27) completely failed to grasp the significance of this landmark fair-lending and consumer-protection agreement. Your cynical editorializing grossly misled your readers.
Consumer protection is a pivotal issue for America's lending industry. Predatory lenders victimize some of the most vulnerable members of our society. Yet the distinction between predatory and subprime lending is vital, as HUD Secretary Andrew Cuomo and Treasury Secretary Lawrence Summers have repeatedly emphasized. Subprime lending - providing capital to people with impaired credit histories - is an important part of the marketplace that, as Secretary Cuomo notes, has enabled millions of Americans with damaged credit to own homes. The program with Acorn will prove that making affordable loans to the poor - along with providing financial counseling about what customers can realistically afford - should result in fewer delinquencies.
Your story completely failed to mention Ameriquest's adoption of an industry-leading, "best practices" code of conduct, which sets the highest standards of corporate citizenship for the entire subprime lending industry. These best practices, including a seven-day rescission period and plain-English disclosures, far exceed the token, ineffectual recommendations debated to date.
Yet rather than applaud this responsive and innovative reform coalition, your story stated that Ameriquest is willing to "sacrifice millions" to prove that its business is "legitimate," implying irresponsibly that Ameriquest's business is somehow not legitimate. No one - certainly not Acorn or the civil rights leaders who endorse this lending program - has made such a claim. Given the opportunity to lend vocal support to fair lending practices, you elected, instead, to disparage efforts far beyond any previously made.
The derisive style of your report evidences a viewpoint that, tellingly, was not shared by any other news organization that covers the banking industry. Such a lapse of editorial judgment is unusual for the American Banker - it is especially regrettable that such lapse should result in an overreaching opinion piece that bore little resemblance to the truth on such a significant occasion.
Leadership Conference on Civil Rights
(Association of Community Organtizations for Reform Now)
President, Ameriquest Mortgage Co.