Predatory Lenders Still Seen Targeting Minorities
Frank, chairman of the Financial Services Committee, warned lenders that regulators would crack down on groups shuttling minorities into subprime loans designed for people with weak credit histories or low incomes.
"We are still seeing more blacks and Hispanics being pushed into subprime mortgages than they should be and that's where you'll see more regulation," the Massachusetts Democrat said in response to a question after a speech at Boston University.
More than 2 million subprime borrowers face higher mortgage costs and the possible loss of their homes if they cannot meet the payments. Studies have found that blacks and Hispanics were likely to be charged higher interest rates on subprime loans than whites with similar credit ratings.
Frank helped craft legislation to curb predatory practices aimed at minorities seeking home financing and has pushed for more oversight of lenders in the wake of losses tied to mortgage securities.
Calling the current U.S. economic downturn the worst in a decade, Frank said there was clear evidence that too little regulation can be damaging.
Innovation in products and practices must be fostered, but regulation is needed to stem potential abuses, he added.
"We've got to enhance the ability of regulatory entities to do their job and to pay them well," said the trained lawyer who has represented Massachusetts in Washington since 1981.
Frank also said it was wrong to turn owning a home into one of Americas' biggest dreams.
"I wish everyone in America earned enough money and had enough sense to own a home," Frank said, adding however that many people are pushed into improperly buying one instead of renting.
"Home ownership is a good thing but Americans also made a great mistake where home was equated to home ownership," Frank said.
Reporting by Svea Herbst-Bayliss, editing by Richard Chang
© 2008 Reuters