Report: Ohio a Flashpoint of Ongoing Foreclosure Crisis

Solution, Consumer Financial Protection Agency, Threatened By Special Interest Attacks

Ohio PIRG

COLUMBUS – Ohio will face continuing foreclosures totaling 282,190 from 2009 through 2012, but the key solution before Congress to prevent future financial crises faces an uncertain future due to lobbying by powerful special interests, according to a report released today by Ohio PIRG.

Legislation to establish a Consumer Financial Protection Agency will be considered on the House floor and in the Senate Banking Committee over the next two weeks, but is under attack by banks, mortgage companies, car dealers and the U.S. Chamber of Commerce.

“Ohio was a flashpoint for the collapse of the economy, largely due to predatory lending,” said Ohio PIRG Advocate Manfred Mecoy. “Now, Ohio’s House delegation has an important chance to vote to protect consumers from predatory lending by voting in favor of a strong Consumer Financial Protection Agency as a holiday gift to their constituents this month.”

Ohio PIRG released a briefing paper, “Foreclosures, Failed Banks and Fees: Why Ohio Needs A New Consumer Financial Protection Agency,” partly based on analysis by the non-profit, non-partisan Center for Responsible Lending. Among its key findings were the following:

The crisis has not ended. According to the Center for Responsible Lending at least at least 282,190 more foreclosures will be filed in Ohio between 2009-2012. In Ohio, In Ohio, a total of 3,853,373 homeowners will lose $17,229 million in wealth due to the foreclosures still to come. That figure includes homeowners whose property values will plummet due to nearby foreclosures.

Homeowners in the U.S. are expected to lose $1.9 trillion in home equity wealth due to foreclosures from 2009-2012.

The solution is to enact a strong federal Consumer Financial Protection Agency that reinstates federal law as a floor not ceiling of protection and has as its primary responsibility the enforcement of consumer protection laws.

“A new Consumer Financial Protection Agency would regulate financial products like mortgages, car loans, payday loans and credit cards – wherever purchased — in much the same way the Food and Drug Administration ensures the safety of our medicines or the Consumer Product Safety Commission oversees toys and other household goods,” added Mecoy. “But powerful special interests are lined up against reform even though their practices led to the economy’s collapse.” 

“Ohio’s Congressional delegation should reject the special interest demands to keep the system that failed,” continued Mecoy. “Consumers need protection from unfair financial practices and only the CFPA can guarantee that.”

Among the key provisions of the legislation that will be fought on the House floor include the following: 

• A vote to eliminate auto dealer and private student lender carve-outs added in committee. 
• A vote to weaken the bill’s reinstatement of federal consumer law as a floor not a ceiling of protection that allows states to protect consumers better.

“Our message to Ohio’s delegation is simple: Vote yes for a strong Consumer Financial Protection Agency, yes for stronger state laws and no against special interest carve-outs and weakening amendments that preserve the system that failed,” concluded Mecoy.