Dems from the House and Senate are hashing out a final finance-reform bill. Yesterday, they added a section that would impose new rules on mortgage lenders, the WSJ reports.
Among other things, it would enshrine into law what seems like the most basic tenet of banking: Lenders can only give mortgages to people who have a "reasonable ability to repay" based on their income, credit history and indebtedness.
The section a response to the securitization-driven mortgage mania of the housing boom, when an unemployed hamster could get a seven-figure, negative-amortization loan.
The banking industry has argued that it goes too far, and could make it harder for qualified borrowers to get loans, the WSJ says.
This goes too far? Did the banking industry really say that a loan qualifier of "reasonable ability to repay" goes too far? Nevertheless, the bill passed with a nonpartisan vote.
I'm sure we've missed the nuisances of the bill that caused objections from the banking industry, but still ....