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Assemblymember Ted Lieu: “Governor Schwarzenegger Continues a ‘Hands Off, Do Nothing’ Approach to Foreclosure Crisis That Occurred On His Watch"

Ted Lieu.jpg By Ted W. Lieu
Chair
California State Assembly Rules Committee

Governor Schwarzenegger’s solution to the massive mortgage crisis threatening the economies of our state and nation is apparently the following: do nothing. Let’s be clear, the foreclosure crisis happened on his watch and he continues to do virtually nothing about it.

What was his administration thinking when—through lax enforcement and lax regulations—they allowed predatory practices to occur and unsuitable loan products be sold? Who was the Governor benefiting when he vetoed every single financial literacy bill passed by the legislature during all of his years in office, bills that would have armed Californians with valuable tools to protect themselves? Where is his administration now when over 1,300 foreclosure filings occur every day in California, the worst foreclosure rate in the nation for the 20th consecutive month? Is the Governor even aware we have a massive foreclosure crisis, one that is likely going to cause over $700 billion of taxpayer funds be used to bail out Wall Street? Because he sure isn’t acting like it:

• He vetoed AB 1830, a comprehensive mortgage reform bill that would have fixed the root causes of the mortgage meltdown by banning predatory practices and exotic, overly risky loan products. Multiple newspaper editorial boards across California all urged that AB 1830 become law, but the Governor ignored them and the public, catering instead to special interests in the mortgage industry.

• He vetoed AB 1502, which would have required the State Board of Education to include financial literacy in future school curriculum, as many other states do. He vetoed AB 2123, which would have established the California Financial Literacy Initiative to help educate Californians on personal finances by providing access to quality resources and teaching materials. A prime factor in the mortgage meltdown has been the lack of financial literacy.

Particularly disturbing is the Governor’s repeated sentiment expressed in these vetoes that he prefers an administrative response. If there had been any kind of significant administrative response in the first place, then there may not have been the need for these bills. The Governor and his administration may continue to hope they can get away with doing virtually nothing. That’s a shame. For our part, my colleagues and I in the legislature will continue to push for the real reforms needed to solve the foreclosure crisis.

Ted W. Lieu represents the 53rd Assembly District. Prior to being elevated to serve as Chair of the Assembly Rules Committee, he served as Chair of the Assembly Banking and Finance Committee. He is the author of several mortgage bills, including AB 1830 and AB 1502, vetoed by the Governor.

Posted on October 02, 2008

Comments

....and kudos to the Governor for vetoing both. At last he gets it. Overly liberal lending practices are not the Governor's fault. They are the result of Democratic pressures on lenders to create loan programs for lower income people who then bought houses well above their capacity to pay. That's also what drove housing prices to unsustainable levels. The chickens have come home to roost Assemblyman. Now get out of the way and let the free market sort out this mess.

Posted by: Dave Winnett at October 2, 2008 09:32 PM

The foreclosure crisis has its roots firmly fixed in the lax lending policies pushed through by the Clinton administration. A lack of lender review of borrower qualifications is responsible for allowing people to get into loans that they had no right getting in the first place. Exotic and risky loan products were responsible for only a small fraction of the defaults we're now seeing. Attempts by republicans during the Bush administration to regulate Fannie Mae and Freddie Mac were quashed by the democrats.

The governor of CA is not responsible for that. The only thing he could have done is thrown away more CA taxpayer money on the various pieces of legislation you reference. People need to take responsibility for their actions - not the government. STOP FRITTERING AWAY TAXPAYER MONEY.

Posted by: CB at July 1, 2009 05:15 PM

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