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Wednesday, March 28, 2007

Schumer Shows Up to the Sub-Prime Party; Forgets Gift

It’s classic Chuck Schumer: a Sunday press conference proposing some sort of legislative action to solve the crisis du jour. Sunday is typically a slow "news" day so Schumer’s remarks help the dailies fill their Monday news holes.

Sunday’s adaptation was a proposal to create a new federal system and agency to oversee the mortgage brokers and loan officers and to establish a "suitability standard" barring lenders from issuing loans to consumers who cannot afford them is a common sense approach.

But actions speak louder than words so it’s hard to take this announcement seriously. Indeed, last week, four-days prior to Schumer’s press conference, the Senate Banking Committee in which Schumer is the number two ranking Democrat, held hearings to investigate why so many sub-prime mortgage owners have found themselves facing defaults.

And after briefing his office about the dozens of Long Islanders facing mortgage defaults after receiving unsuitable loans and being victimized by their now disgraced broker Peter Dawson, I looked forward to these guys get a little comeuppance from our Senator. Unfortunately Schumer was nowhere to be found.

Banking regulators and executives from mortgage companies including Sandy Samuels, Executive Managing Director of Countrywide Finance Corp. and Brendan McDonagh, CEO of HSBC Finance Corp., provided sworn testimony about their roles in the sub-prime crisis. Senator Schumer quite literally had to opportunity to directly address the executives responsible for, according to Schumer’s own numbers, 42,000 voting constituents facing foreclosure in New York City, Nassau County and Suffolk County alone.

Did Senator Schumer have other pressing matters? As a matter of fact yes, Senator Schumer did have other things on his mind that day. He spent a good chunk of the day playing the role of partisan pit bull threatening to subpoena administration officials involved in the entirely legal sacking of U.S. Attorneys. When not riding the party line, he made time for lobbyists from the "Buffalo Niagara Partnership" and championed their request for $11 million in pork spending.

Up until now Senator Schumer has paid little attention to the mortgage market. In fact, prior to Sunday’s announcement, the only lending industry activism on his website is a 1999 press release co-announcing legislation with Jesse Jackson aimed a credit card fees. Not exactly a burning issue.

So, while Senator Schumer plays catch-up and chases headlines, Dawson’s victims will take their fight for suitability standards to the Nassau County court system. Knowing Washington’s propensity for empty promises, I like our chances a little better.

What we need now is leadership and real action in Washington, not a Senator interested in finding ways to make the nightly news.


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