Reply #44: Banks: Law can't bother us [View All]

[antigop]

http://tpmcafe.talkingpointsmemo.com/2008/05/06/banks_law_cant_bother_us/

With the mortgage crisis smeared across the headlines every morning, you would think that the mortgage holders would keep their heads down. You would be wrong. The national banks are floating a new idea: they shouldn't have to obey state law when they foreclose on someone's home.

Pre-emption has been a gravy train for the national banks, insulating their credit card business from state consumer protection laws. Some banks now want another ride on the pre-emption train, claiming that they shouldn't have to follow local foreclosure laws when they take people's homes.

Tomorrow Congressmen Brad Miller (D, NC) and Steve LaTourette (R, OH) will introduce HR 5380 to make it clear that the banks have to follow the state law foreclosure laws that they have always followed. Here is the scary part: this is expected to be a close vote.

HR 5380 is a small, but smart piece of legislation. It says that if the states want to pass laws to deal with the current foreclosure crisis, then they are free to do so. In other words, this bill says that Congress may not be ready to fix the crisis, but it will at least stay out of the way so that the states can do so.

If banks don't like the state laws, they are free to fight them in the state legislatures or the state courts. They can even make constitutional arguments about takings. But Congressmen Miller and LaTourette say they can't claim that Congress gave them a free pass.
...
But in the past few weeks, national banks have started making a new argument: state laws are pre-empted whenever a national bank holds the mortgage, so the states can't make them follow the local rules. Pre-emption has been used successfully by the credit card companies to fight off state regulation, so now the banks want to escape local restrictions on foreclosure as well.