Posted Jul 11, 2007 11:37 pm CDT
In the wake of what many consider widespread problems with American bank lending practices, a federal thrift regulator may soon introduce an aggressive set of proposed rules to curb abuses.
“If adopted, the proposal would be the most aggressive regulatory response this year aimed at tightening oversight of financial institutions, although it would cover just some of them,” reports the Wall Street Journal (sub. req.).
Specifically, the Office of Thrift Supervision is focusing on “unfair and deceptive” lending practices that could include prepayment penalties on adjustable-rate subprime mortgage loans and charging a higher interest rate on a credit card balance because a cardholder has made late payments on unrelated debt, the paper reports, citing unnamed sources.
While any regulations would not govern all lenders, they could set standards that other federal agencies might emulate. Federal banking regulators recently issued guidelines for mortgage lenders, but guidelines are not as easily enforced as specific rules set by government agencies, the newspaper notes.