Ask yourself why foreclosure rates are so high
by DCreformer, Wed May 09, 2007 at 07:46:10 AM EDT
The high mortgage foreclosure rates the country is seeing recently have caught everyone's attention - but have you asked yourself why it's happening? Why were there 1.2 million foreclosure filings in 2006? And why is the number continuing to rise?
The answer? The mortage lending industry spent nearly $210 million on Washington lobbying and campaign contributions over the past seven years, all in order to stop Congress from taking action to restrict lending abuses. They were generous...and they were successful.
As consumer and housing advocates won successes in states around the country for more regulation of mortgage lenders, the industry went to work in Congress. Their goal was to block strict regulatory legislation and pass federal legislation pre-empting state restrictions - their tool was money. Below are some eye-opening numbers on lobby expenditures and PAC donations from the largest subprime mortgage lenders, their trade associations, and corporate parents.
Note: All numbers in the tables come from a new report from Common Cause titled Ask Yourself Why...Mortgage Foreclosure Rates Are So High. The report, with more detailed figures, can be found here.
|Federal Lobby Expenditures:|
$187,446,230! Over a seven-year period, that will buy you a lot of influence. But let's break it down a little further:
|PAC Donations, 1999-2006:|
But who are these donations going to? For starters, how about a name we all know well? Then-Rep. Bob Ney (R-OH) had introduced a bill replacing strict state regulation with looser federal "restrictions." In 2005, he reintroduced the bill with Rep. Paul Kanjorski (D-PA) as a co-sponsor. Since 1996, Ney received more than $173,000 from the mortgage lending industry; Kanjorski received $140,500. The bill was strongly bipartisan, with 18 Democrats and 22 Republicans co-sponsoring - if Ney's Abramoff-related issues hadn't derailed the process, it probably would have long since passed.
But the fact that it hasn't doesn't mean the danger is over. Industry lobbyists continue to push for weak legislation, with PAC contributions leading the fight. Since 1999, the chairmen and ranking minority members of the House and Senate committees dealing with the legislation received almost $500,000 in PAC donations:
|PAC Donations to Current Charimen and Ranking Minority Members of the House Financial Services Committee and the Senate Banking, Housing and Urban Affairs Committee:|
|REP. BARNEY FRANK (D-MA)||REP. SPENCER BACHUS (R-AL)||SEN. CHRIS DODD (D-CT)||SEN. RICHARD SHELBY (R-AL)||TOTALS|
There are signs that some in Congress are tiring of the unending news about foreclosure rates. But if they want to do something to stop the trend, they need to act fast. In 2006, foreclosure filings were 42% higher than in 2005 - for a total of 1.2 million homes, or roughly one in every 92. Unfortunately, 2007 doesn't look like it's going to be any better unless something is done; March 2007 foreclosure filings were 47% higher than in 2006.
And those are just the national rates - when you look at some individual states, the numbers are heartbreaking. In Georgia, 2006 foreclosure rates increased 67% over 2005 rates - that's one in every 41 households. Colorado's 2006 rates were 85% percent higher than 2005's, for a rate of one in every 33 households. And in Nevada, it's hard to believe anyone still has a roof over their head - 2006 saw a 300% increase in foreclosures over 2005! And lest the industry shrug these numbers off as just the rural and poor states, consider this: Texas, California, and Florida together accounted for 34% of national totals of 2006 foreclosures. (numbers from PR Newswire, 01/25/07)
So what can we do to make sure Congress is held accountable to the public - the people who can't pay their mortgages and are losing their homes - and passes real regulatory reform? In Ask Yourself Why...Mortgage Foreclosure Rates Are So High, the solution is clear. As long as the subprime lending industry is spending over $187 million lobbying Congress, and making $22 million in PAC contributions, the average joe, the ordinary American can't compete. What we need is full public financing of Congressional campaigns. Once the big corporate special interests are disarmed, our representatives will be forced to listen to their constituents and make public policy decisions to benefit all Americans, not just those who can write big checks.