We need a floor not a ceiling regarding protection against bad loans

And the issue of preemption arises…  

And how many billions of dollars did the top Wall Street investors make in bonuses last year buying and selling these bad loans which are now causing board-ups and affecting neighborhoods across the country?  Yes, some homeowners or real estate investors looking to make a buck knew what they were getting into but we’re hearing from homeowners across the country who were deceived and pressured to take these loans they now can’t afford.  If  strong protections aren’t put in place to help wrangle in the greed on Wall Street and make companies think twice about buying bad loans in the first place than the problem will only continue.  

Fine-Tuning a Bill on Mortgage SecuritiesFriday, November 2, 2007; Page A20, Washington Post Regarding the Oct. 31 editorial “Suing Subprime”: The editorial stated correctly that “the bill does not yet clearly preempt state law liability, meaning securitizers would have to assume that Mr. Frank’s proposed standards would be a floor on which states could pile additional requirements.” This would clearly cause problems, and we intend to amend the bill at markup on Tuesday to make it clear that with regard to securitizers, the bill will be preemptive. We do believe that states should be allowed to exercise their own discretion to impose stricter requirements on mortgage origination in general than we will have in the federal bill, but we do not believe that those requirements should be allowed to interfere with the provisions in the bill that deal with securitizer liability. Specifically, the bill provides a safe harbor for securitizers and sets out the standards that the securitizers must meet to qualify for it. We intend to offer language at the markup that will make it clear that safe harbor requirements will be set by one national standard and that whatever discretion the states exercise in other areas of mortgage regulation, they will not be allowed to alter the rules on securitizer liability. BARNEY FRANK U.S. Representative (D-Mass.)