Assistant Treasury Secretary Wayne Abernathy has warned against adopting new laws at either the federal or the state level that ban specific financial products, comparing such laws to "financial Corvairs" that could blow up on their well-intended sponsors on impact."The enforcement approach should target bad conduct, not so-called 'bad' products," he said at the National Home Equity Mortgage Association's annual conference in Boca Raton, Fla. Laws that aim at curtailing certain loans or loan features could result in "legislative redlining," Mr. Abernathy said, and end up cutting off credit to specific areas and markets that government and industry have spent years trying to bring into the financial mainstream. The assistant secretary for financial institutions also called for two sets of laws to deal with abusive lending practices, one at the national level and the other at the state level. "The approach [to stopping predatory lending practices] should be in the best interests of the customer, and the answer is already before us in the dual banking system," he said. Under Mr. Abernathy's plan, borrowers would determine which set of rules is more effective. "Customers who are comfortable with state laws can patronize the institutions chartered by their states, and those who are more comfortable with federal oversight can patronize those institutions," he said.

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