GAO: Fed Needs More Anti-Predatory Clout

Federal oversight of the mortgage lending subsidiaries of bank holding companies needs to be improved to deal with concerns about predatory lending, according to the General Accounting Office.Specifically, the GAO believes that the Federal Reserve Board should be given more authority over the nonbanking mortgage lending companies that are owned by financial or bank holding companies. "Our report recommends that Congress consider making statutory changes to provide the [Fed] with clear authority to monitor, examine, and take enforcement actions against nonbank mortgage lending subsidiaries," GAO auditor David Wood told the Senate Special Committee on Aging. Over the years the Federal Reserve Board has resisted calls to examine these subsidiaries. As a policy, the Fed only enters these subsidiaries if there are extraordinary circumstances. Sen. Larry Craig, R-Idaho, chairman of the Senate Special Committee on Aging, plans to meet with the Fed about the GAO's recommendations.