Expansion of Predatory Lending Bars Urged

The Clinton administration proposed a major expansion of a 1994 law aimed at preventing so-called predatory lending abuses, based on a task force of government, industry and consumer representatives that held hearings this spring in six cities. A report released by the departments of Treasury and Housing and Urban Development calls for Congress to change laws and for the Federal Reserve and HUD to strengthen regulations governing lenders in the fast-growing market of “subprime” loans--those that go to people with tarnished credit. The report urges changes in four areas: improving consumer literacy and disclosures to consumers; prohibiting harmful sales practices; restricting abusive terms and conditions of high-cost loans; and improving the market structure by encouraging investors to research whether they’re buying problem loans.