Incoming state Senate President Pro Tem Darrell Steinberg, D-Sacramento, had been scheduled to speak at today’s symposium at Cal on “The Mortgage Meltdown, The Economy and Public Policy,” but the state budget’s rapid decomposition and an impending special Legislative session kept him in Sacramento; in his place came state Sen. Mike Machado, D-Linden, who chairs the Senate Committee on Banking, Finance and Insurance.
Machado said he was fascinated by the depth and breadth of discussion he was seeing at the symposium, which he found very different than what usually happens when complex issues are discussed on the Senate floor. “We often have to sift it through and dumb it down… to ‘two, two and two’ — two for, two against, two minutes each.”
But the five hearings on mortgage lending and foreclosure avoidance that his committee has held in the past two years have convinced him that won’t work on this issue.
Machado argued today for strong enforcement of laws recently re-jiggered to weed out predatory lending, and against what he called “the mommy solution: kiss the ow-ee, put a lot of ointment on it and the problem will go away.”
He said California shouldn’t be rushing to impose stricter limits on state-regulated mortgage lenders, as that’ll create an uneven playing field because most larger lenders are regulated by the federal government and not the state — almost exactly what the governor said in vetoing such a bill in September. State-specific legislation will only harm the prospects for California’s housing market’s recovery, he insisted.
Government should work to educate consumers about the loans they’re buying and enforce new underwriting and disclosure requirements, not ban certain kinds of loans, he said. Machado said he’s fascinated by consumer advocates who come before his committee simultaneously asking for more restrictions on loan products and better access to loans — “a very interesting dichotomy.”
Machado noted Gov. Arnold Schwarzenegger has signalled that he wants mortgage-crisis bills to be included in the upcoming special session, and surely some of the bills vetoed within the past two months will be brought forward again. But lawmakers shouldn’t rush into this, he said, during “a period of realignment of the very fundamentals of our economy” lest they set about rebuilding the status quo on still-shifting foundations.
So perhaps “a little more attention to the state budget might be time better spent,” he said, not a “two, two and two” debate over mortgage finance.