An Obama Treasury department official behind the consumer protection language in the proposed financial reform legislation is a former head of the Center for Responsible Lending (CRL), the advocacy wing of a non-profit community development lender funded by none other than John Paulson — the billionaire who worked with Goldman Sachs to package bad mortgages into securities and offer them on the market.
President Obama’s deputy assistant secretary for consumer protection Eric Stein served as senior vice president of CRL. He also served as the President/SEO of CRL’s parent network, the Center for Community Self-Help.
While both groups pitch themselves as non-profits interested in helping the disadvantaged, the organizations dealt in the very kind of advocacy that advocated mortgages for those who couldn’t afford them. As BigGovernment’s Liberty Chick notes:
In direct response to the research produced by Self-Help and Fannie Mae, the CRA laws were subsequently expanded in 1995 to establish quotas for issuing mortgages to residents of underserved communities and to levy fines against lenders that did not meet those quotas. The new laws also required institutions to offer ATMs and local branch services in areas that were previously considered low usage, high risk areas for crime.
Stein is expected to be appointed to the proposed Consumer Financial Protection Agency. But as the John Locke Foundation’s Jon Ham puts it, Stein’s record shows he’ll do anything but protect the consumer.
Basically, they would buy the loan from the banks, encouraging the banks to make such loans. Then the loan would be kicked up to Fannie Mae. And we all know how that turned out.
