Academic journal article ABA Banking Journal

A Term in Search of an Issue?

Academic journal article ABA Banking Journal

A Term in Search of an Issue?

Article excerpt

Phil Gramm didn't become chairman of the Senate Banking Committee by being shy. The noted opponent of the Community Reinvestment Act didn't mince words in his ABA speech regarding the current hot button--predatory lending.

"The first time that I heard the term 'predatory lending' was during consideration of the bankruptcy legislation," the Texas Republican said. "Predatory lending was a good political term. Despite the talk about predatory lending, nobody could answer my question, Why would bankers lend to people they didn't think could pay back the loans?"

Gramm said he wrote to nine financial regulators asking for a definition of the term. "You would not be surprised to hear," he said, "that none of the agencies we wrote could define the term." He added, "I want to know what predatory lending is before we pass a law to enforce against it."

The Texas Republican said he was all for enforcement where real abuses exist, but that he worried about unintended ripple effects from the current hubbub. …

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