FOR IMMEDIATE RELEASE: March 6, 2002

SCHUMER: PREDATORY LENDING LAWS NOT KEEPING PACE WITH BANKING INDUSTRY

New study documents predatory lending patterns of banks in Buffalo, Syracuse, other US cities; Demonstrates need to bring regulations up to speed with fast-paced financial industry

US Senator Charles E. Schumer made the following statement today at a press conference sponsored by the National Training and Information Center (NTIC) to release a new study documenting the lending patterns of banks and sub-prime affiliates in 10 US cities, including Buffalo and Syracuse:

"One of the biggest obstacles to community development is predatory lending. And although we've taken steps in recent years to fight this scourge with the Community Reinvestment Act and other measures, the effort is on-going.

"While the marketplace for financial services has evolved dramatically in recent years, CRA regulations have changed very little, giving predatory lenders the opportunity to weasel their way around the law and prey on low and moderate-income areas.

"The effects of predatory lending, as terrible as they are to the individual or family that has been victimized, are even more of a threat to our nation, because of the potentially devastating impact that they can cause to entire communities.

"Left unchecked, predatory lending threatens to undermine the progress that our country has made toward providing members of all communities with an important opportunity – the opportunity to own a home.

"The good news is that CRA can be used as a tool to reign in predatory lenders. But as this report shows, there are specific ways in which regulators could and should modernize "this old reg" to ensure that it works for our neighborhoods in today's marketplace.

"For example, HMDA -- the Home Mortgage Disclosure Act -- is the best tool we have available in tracking the prevalence of lending disparities, but there is room to make it much, much better. Expanding HMDA to include applicant's credit scores and the interest rate, fees and points offered on the loan is something I back 100 percent.

"For years, consumers have been kept in the dark about what their credit rating is and how it is determined. In fact, the major credit scoring companies explicitly forbid lenders and real estate agents from telling consumers what their score is and how their spending patterns affect their rating.

"That's why I introduced bi-partisan, right-to-know legislation that will require lenders to provide consumers with their credit score and an invoice which shows how the score was determined. Credit companies will be forbidden from forcing banks and relators to sign non-disclosure contracts which keep credit scores a secret.

"This bill will give consumers access to the same information that lenders and credit reporting agencies have used for years to make loan decisions and determine credit worthiness. And it will arm families with the information they need to improve their credit rating and open previously closed financial doors.

"We simply must lift the veil of secrecy that shrouds credit scoring, and I was very pleased to see that addressed as a recommendation coming out of this new study. Furthermore, HMDA should be applied to small business loans. The key to communities is not just fair lending for individuals but also for small businesses.

"As you know, the problem is that there are very strong and vocal opponents of CRA and there is the worry that opening up the legislation jeopardizes the gains we've made with CRA to date. I would hate to lose the ground we have gained.

"That said, it's important that we start a dialogue about how to modernize CRA. This report is the perfect jump start for that debate. Thank you to the NTIC and all the groups joining us here today for your dedication and continued hard work on this issue."

Schumer was joined at the event by Amanda Pascall of Syracuse United Neighbors and Rose McClain of Buffalo's Eastside P.R.I.D.E.

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Click here to read the full NTIC report, This Old Reg: The Community Reinvestment Act Needs Renovation.