Federal regulatory agencies like the Federal Reserve, Office of Thrift Supervision, and the Office of the Comptroller are considered by many to be regulating the activities of banks to protect consumers.  Not so, says a New York Times opinion article on July 19th.In this article, we see that, though granted sweeping powers in 1994 to effect changes in lending to protect consumers, regulatory agencies didn't act at all until 2008, after it was obviously too late to avoid the current situation.

During the last dozen years, federal regulatory agencies also invalidated many state-initiated fair-lending laws that might have shielded a large number of consumers from predatory lending.  The activities of these agencies bears out, at least in part, the statement that they are really in the business of keeping banks profitable and protecting them from failure.  Regulators like the Office of Thrift Supervision and the Office of the Comptroller of the Currency get their budgets almost entirely from fees paid by the banks they oversee.  Another factor in the failure to protect consumers is a "rush to the bottom" when banks are allowed to shop regulators, seeking out the least regulatory environments possible.

Looking back at the policies that created the current lending crisis is important in the planning and enactment of new policies that will foster consumer protection rather than more bank profits.  This look back is something our government leaders should be doing with diligence.  But, there is something we consumers and future borrowers can do as well.  At the individual loan level, you have control of the situation.  By utilizing a certified mortgage planner, rather that responding to what appears to be the latest fantastic offer, you can take charge of your mortgage process and a future free of foreclosure fear or the need to constantly be on watch for a new loan to repair past damage.