WASHINGTON — U.S. Sen. Jeff Merkley, D-Ore., put the blame for the current housing crisis squarely on a failure of federal regulators in his first speech on the Senate floor Wednesday.
“This fiasco is first and foremost the consequence of colossal regulatory failure,” said Merkley, tracing the history of deregulation of the financial industry from 1994 onward. “The result is that home ownership has suffered and our national economy is in deep trouble.”
Merkley continued his calls for a reform of lending practices — especially loans that offered low initial payments followed by spiking interest rates — that have become associated with the housing crash. He’s also called for disclosure of bonuses paid to mortgage brokers to steer borrowers to subprime loans, even if they qualified for a prime loan.
“We allowed brokers to earn huge bonus payments, unbeknownst to the homeowner, to steer unsuspecting homeowners into these tricky and expensive mortgages,” Merkley said.
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