WASHINGTON – The Federal Reserve and U.S. Office of the Comptroller of the Currency are under fire by consumer advocates and former officials for doing little to police the U.S. mortgage market before its $2.8 trillion boom went bust as the housing market waned.
The Fed, responsible for the stability of the nation’s banking system, didn’t publicly rebuke any firm for failing to follow up warnings on home-lending practices between 2004 and 2006, Bloomberg News said, while the OCC, responsible for overseeing 1,793 national banks, took only three public mortgage-related consumer-protection enforcement actions.
“There was tension between the responsibilities not to mess up some banks’ businesses and the responsibility to consumers,” Edward Gramlich, a Fed governor from 1997 to 2005, who is writing a book about the mortgage market at the Urban Institute in Washington, told Bloomberg. As a result, “we could have real carnage for low-income borrowers.” The rise in foreclosures and failure of several lenders is also seen as threatening the housing market’s recovery.
Officials at the Fed and the OCC say their policing was rigorous and resulted in private enforcement actions, but they say they aren’t allowed to disclose even statistics on such non-public actions. The OCC considers that data “proprietary and confidential,” spokesman Kevin Mukri told Bloomberg, echoing his Fed counterpart.
