Predatory Lending: Edwards Takes the Lead by Endorsing AFFIL Principles of Fairness in Lending

Ohio's place in the forefront of the mortgage foreclosure crisis highlights the larger issue of predatory lending in general. Abusive practices by lenders can lure or steer borrowers into loans with unnecessarily high interest rates or unfavorable terms, and some of the terms that lenders stick into loans simply ought to be banned.

Americans for Fairness in Lending is a non-profit organization dedicated to raising awareness of abusive credit and lending practices and calling for re-regulation of the industry. Sarah Byrnes, Campaign Manager for AFFIL, informed me in an email today that on September 13th former Sen. John Edwards (D-NC) became the first presidential candidate to endorse their Six Principles of Fairness in Lending. From their press release, Edwards said:

For too long, on Capitol Hill and in state legislatures around the country, the advocate members of AFFIL have been lone voices for consumer protection. For too long, politicians have ignored your voices, listening instead to the wishes of lenders and their lobbyists. Today I am proud to lend my voice in support of AFFIL’s principles for fairness in lending, and to let you know that when I am president, I will listen – and together, we will end the game.

Prof. Cathy Lesser Mansfield, Chair of the Board of AFFIL, said:

Since the 1980s, the federal government has moved quietly to virtually deregulate the lending industry in America – from fanciful mortgages that grossly overstate property values and borrowers’ ability to pay, to credit cards and payday loans with astronomic fees and interest rates designed to trap consumers in never-ending spirals of debt. We are asking all of the presidential candidates to articulate a clear position on these issues – do they stand for reasonable protection for consumers, or for polices that provide unfettered profits to banks and other lenders while impoverishing American families and neighborhoods?

AFFIL’s principles were developed before the subprime lending crisis, but that house of cards, which has fallen in on millions of consumers around the country, illustrates why a return to reasonable oversight and regulation of lending is long overdue in America. Allowing lenders to police themselves, as the current administration and some presidential candidates seem to favor, is like waiting for bears to clean their own cages. It isn’t going to happen.

The six principles are stated here.

Byrnes tells me that since Edwards signed on, Sen. Barack Obama (D-IL) and Gov. Bill Richardson (D-NM) have also endorsed the six principles. So where is the Sen. Hillary Clinton (D-NY) on this issue?

On a related note, the mission of AFFIL includes trying to alert young people about the risks of taking on consumer debt before they get into trouble. This can be a difficult demographic to reach, so they have put together this raucous video clip, hoping that it goes viral:



What do you think?