“The continuing financial implosion shaking America has at its core one single, unifying thread: the making of unsuitable home loans during the mortgage frenzy that resulted in a massive wave of foreclosures,” said Assemblyman Ted Lieu in a statement last week. “The collapse of financial giants Ameriquest, New Century Financial, Indy Mac, and Lehman Brothers; the taxpayer bailouts of Bear Stearns, Fannie Mae, Freddie Mac, and AIG; the impending disintegration of Washington Mutual; and the fire sale of the venerable Merrill Lynch would not have happened if more effective laws and regulations were in place to prevent predatory and unsuitable home loan practices.”
The assemblyman, whose district includes much of the Argonaut distribution area south of Santa Monica, believes that corporate greed and the lack of regulation is a principal factor in the collapse of these financial giants.
“As Gordon Gecko in the movie Wall Street famously said, ‘Greed is goodÖ. Greed is right, greed works’,” said Lieu. “What we have learned, however, is that unmitigated, unchecked, unregulated greed has wreaked havoc and chaos in the mortgage industry and shaken the once strong financial pillars of Wall Street. The arguments made by former Federal Reserve Chairman Alan Greenspan that government should largely stay out of regulating the mortgage — and specifically the subprime — industry were, in hindsight, absolutely and categorically wrong in every way possible.
“Several states have passed effective laws that, had they been in place, would have prevented predatory practices and the making of massive numbers of bad loans. The largest state in the nation, California, is on the verge of passing its own mortgage reform law (Assembly Bill 1830), assuming California’s governor listens to the people and not a small minority of those in the industry who continue to believe we should do nothing,” said Lieu.
The assemblyman believes that AB 1830, which he is sponsoring, could be the answer to fixing the home mortgage crisis in California.
“We need to reform this broken mortgage system. Taxpayer bailouts do not reform the system, they just prolong the pain,” said Lieu. “What we need are effective, common-sense regulations, such as those contained in Assembly Bill 1830 on mortgage reform, to become law.
“Enough is enough.”