WASHINGTON, DC – Chairman
of the Federal Reserve Board, Ben Bernanke, announced today that the Federal
Reserve is recommending new rules to benefit consumers, including a ban on
yield spread premiums, also known as steering payments. The new rules
also require lenders to provide borrowers with a straightforward explanation of
the cost of their loan.
Upon announcement of the new
proposal, Oregon’s Senator Jeff Merkley made the following statement:
“I have advocated for a long
time that we protect American consumers by ending secret steering payments.
I’m pleased that today we’re finally seeing action.
“Prospective homebuyers turn to
their mortgage broker for guidance in a complex financial decision. By
allowing trusted brokers to take secret payments for steering families into
loans they can’t afford, we’ve turned the American dream of homeownership into
a nightmare for millions of families.
“Today, the Fed made a
common-sense recommendation to end these deceptive practices and empower
families looking to buy a home. If the Fed had put these rules to protect
homebuyers in place six years ago, we would have avoided a large part of the
housing crisis that spurred the current recession.
“When made final, these rules
from the Fed will benefit homeowners, but the fact that the Fed is proposing
them now – rather than years ago – underscores the need for a consumer
financial protection agency whose sole purpose is to protect consumers.
The Fed is closing the barn door not just after the horses have fled, but after
the barn has burned down. A consumer financial protection agency could
have ended this corrupt practice before it did so much damage to millions of
families. We need an agency that has the mission and the will to move
quickly to address the kinds of deceptive financial practices that wreak havoc
on working families.
“It’s time to put consumers
first and take a responsible approach to the long-term economic stability of
our families and the country.
“I’m proud to see progress
today. I look forward to working with Chairman Bernanke and the Obama
Administration to develop a consumer protection agency that heads off the kinds
of financial scams, like steering payments, that have damaged our economy and
hurt working Americans.”
In April 2009, Merkley introduced
the Transparency for Homeowners Act to ban steering payments.