Bair: Try Market Fix for Predatory Lending

A conservative, pro-market solution would be an appropriate way to combat predatory lending, a former assistant secretary of the Treasury has told the Mortgage Bankers Association of America's Enforcement Summit in Washington.Sheila Bair, the dean’s professor of financial regulatory policy at the University of Massachusetts at Amherst, said the subprime mortgage industry could look to the remittance industry, where government-encouraged competition succeeded in lowering costs significantly. The main roadblocks to an efficient subprime market, Ms. Bair said, are a continued limit on supply in underserved areas, the reputational risk for potential lenders, and a lack of consumer understanding that keeps people from being able to choose the best product. Ms. Bair left her post as assistant secretary of the Treasury for financial institutions in June 2002 to join the university.