Barnes Makes Consumer Protection His Issue

Article excerpt

Georgia's new governor is taking aim at predatory mortgage lending practices as part of an unorthodox consumer-protection agenda.

Gov. Roy Barnes is asking lawmakers for $132,000 to launch a special crackdown against what his Office of Consumers Affairs calls "home equity theft."

State officials say poorly regulated finance companies are preying on debt-strapped homeowners by making debt consolidation loans at annual interest rates of 40 percent or more. When the borrower predictably can't make the payments, the loan is "flipped" to another lender to stretch out the schedule, generating another set of service charges.

Barnes has an up-close appreciation of the problem. As an attorney, he was part of the legal team that helped attain a $100 million settlement in a class-action lawsuit against Fleet Finance Inc., alleging the lender systematically bought up high-interest second mortgages in poor, black neighborhoods.

Details of the state initiative aren't ready to be unveiled. It's uncertain whether the spending request will be backed by new legislation to cap interest rates or provide better oversight of the industry.

With his administration just 2 weeks old, Barnes is signaling unusual willingness to pick fights with monied Capitol interests.

One of his major campaign promises was making health maintenance organizations, or HMOs, offer members complete choice of physicians. He also has indicated support for a proposal by Rep. Tom Bordeaux, D-Savannah, that would let patients injured when their HMO refuses to authorize medical treatment sue the insurer for malpractice.

The powerful insurance industry is in a collective sweat over the governor's plan to hire consumer advocate lawyers to represent little-guy policyholders when insurance companies ask the state for rate increases.

That plan is modeled after the Consumer Utility Counsel, sort of a pocketbook public defender who argues the customers' side before regulators. …

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