FACT CHECK: NEW AD BY COLEMAN ALLY A BLATANT LIE

What Did Al Franken REALLY Say About Subprime Lending?

SAINT PAUL [10/30/08] - After a Norm Coleman ally released a new attack ad that blatantly lies about Al Franken, Communications Director Andy Barr released the following statement:

“Another day, another lie designed to help Norm Coleman fool Minnesotans about his record of selling out Minnesota families to the special interests. But we’re highlighting this one so you that Minnesotans can see that Al Franken was, in fact, leading the charge against predatory lending as early as 2002. Meanwhile, Norm Coleman has spent the last six years voting against cracking down on predatory lenders, voting against protecting the most vulnerable Minnesotans from losing their homes, and taking hundreds of thousands from big banks and lenders.”

QUOTE FROM THE AD

Many sub-prime lenders are doing a real service. They’re doing exactly what we want.

HERE’S WHAT AL ACTUALLY SAID

Here’s the entire portion of Al’s 2002 National Press Club speech that deals with subprime lending. The line taken out of context in the AJS ad is underlined.

“Here’s what I can tell you about predatory lending. First of all, it has increased tremendously over the last several years. Very often these are refinancing years. What happens is unscrupulous lenders will target a neighborhood, find uneducated, unsophisticated people and mislead them — people like Clarence Page — (laughter).

“For example, a guy in a suit will go to a neighborhood. He’ll look for like an unrepaired roof, knock on the door. ‘Ma’am, I’ve noticed that your roof needs fixing. How about we refinance your mortgage, and I can give you some cash to fix your roof.’ The woman refinances her mortgage. Now, the problem is, this is a predatory loan. There’ll be all kinds of hidden fees, prepayment penalties, which will prevent her from ever refinancing again, balloon payments, and very often — this is very often — built-in rate increases, so the mortgage goes up — the payments go up in a year.

“Now, all of this will be buried in the fine print, and often borrowers end up not being able to make their payments and end up losing their homes or their businesses. It’s theft. Now, don’t get me wrong. Many sub-prime lenders are doing a real service. They’re doing exactly what we want — lending to people who couldn’t borrow money to buy a home or start a business. It’s the predators that we want to get rid of it.”

THE FACTS

Both The National Association Of Realtors AND The NAACP Agree: Not All Subprime Lending Is Predatory. According to the National Association of Realtors, “While abusive lending does occur primarily in subprime markets, not all subprime loans are abusive or problematic. In fact, responsible subprime lenders have played an important role in helping millions of consumers achieve homeownership. NAR supports federal legislation and regulation that prevents predatory lending while maintaining a role for responsible subprime lending.” According to the NAACP, “Predatory lending almost always occurs in the ’subprime market.’ ‘Subprime loans’ are those that are intended to serve people who do not qualify for traditional loans, including those with blemished credit histories or without a traditional credit history. While not all subprime loans are predatory, most predatory loans are subprime. Predatory lending is especially prevalent in the refinancing market.” [National Association of Realtors, Subprime Lending; NAACP Press Release, 11/16/07]

MEANWHILE, COLEMAN VOTED AGAINST CRACKING DOWN ON PREDATORY LENDERS AND AGAINST PROTECTING THE MOST VULNERABLE AMERICANS AND TOOK MORE THAN $600,000 FROM THE BANKING AND CREDIT CARD INDUSTRIES

Coleman Has Taken Almost $600,000 From Commercial Banking, Financial Services And Credit Card Industries, More Than Any Federal Candidate From Minnesota. According to the Center for Responsive Politics, Coleman’s campaigns have accepted a combined $608,178 in campaign contributions from the commercial banking, and finance/credit card industries. Coleman has taken more from these two industries than any other candidate for the US Senate or House from Minnesota. [Center for Responsive Politics, accessed 10/30/08; Center for Responsive Politics, accessed 10/30/08]

Coleman Voted For Industry-Backed Bankruptcy Bill That Toughened Laws On Borrowers And Made It Harder For Them To Protect Their Homes. In March 2005, Coleman voted for final passage of the Bankruptcy Reform bill. According to the Pioneer Press, the bill “requires people who earn more than their state’s median income, and who have some means to repay their debts according to a means test, to file Chapter 13 rather than Chapter 7. Under Chapter 13, the court sets up a repayment plan. In Chapter 7, debts are typically erased … The new law also restricts the number of times a person can file for bankruptcy and get relief. It also makes more debt nondischargeable, requiring debtors to pay up, particularly their credit card bills. In effect, this makes it more difficult for debtors to focus scarce resources on assets they want to protect, such as a home or car. Credit card issuers and other financial services companies, who lobbied for the bill, cheered the changes.” [S256, Vote 44, 3/10/05; Pioneer Press, 4/26/05 (emphasis added)]

• Star Tribune Said The Bankruptcy Bill “Places The Interests Of Lenders Above Those Of Consumers.” In a March 2005 editorial, the Star Tribune called the bankruptcy bill as “a lopsided bill that places the interests of lenders above those of consumers.” The Tribune wrote, “Independent research simply doesn’t support the excessive reach of this bill. They concluded, “This bill isn’t about striking a reasonable balance between borrowers and lenders. It’s about giving the industry new tools to collect from the vulnerable consumers they have increasingly pulled into their market.” [Star Tribune, Editorial, 3/9/05]
• Banking Industry Spent More Than $100 Million Lobbying For The Bankruptcy Bill. In December 2005, the New York Times reported that the banking industry had spent more than $100 million lobbying to pass the bankruptcy bill. [New York Times, 12/11/05]

COLEMAN REPEATEDLY VOTED AGAINST PROTECTING THE MOST VULNERABLE AMERICANS UNDER BANKRUPTCY LAWS

Coleman Voted Twice Against Protecting People With High Medical Expenses When They File For Bankruptcy. In March 2005, Coleman voted against “two proposals focused on people whose significant medical expenses for illness force them to file for bankruptcy,” according to the Associated Press. “The first would have allowed people to keep at least $150,000 of the equity in their primary residence. If, in addition, medical bills exceed 25 percent of the person’s income, the second proposal would have exempted them from a new test in the legislation measuring income and assets of bankruptcy applicants to determine if debts can be discharged.” [S 256, Vote 16, 3/2/05; S 256, Vote 17, 3/2/05; Associated Press, 3/3/05]

Coleman Voted Against Protecting Victims Of Identity Theft From Provisions Of Bankruptcy Bill. In March 2005, Coleman voted against an amendment to the Bankruptcy Reform bill that would “exempt people with debt from [the] means-testing requirement if their debt was caused by identity theft,” according to Gannett News Service. [S.256, Vote 21, 3/3/05, Gannett News Service, 3/4/05]

Coleman Voted Against Protecting Individuals Forced Into Bankruptcy Because They Did Not Receive Child Support Or Alimony Payments. In March 2005, Coleman voted against an amendment to the Bankruptcy Bill to “provide special protection … for debtors whose financial predicament results from their failure to receive alimony and/or child support,” according to the Aberdeen American News. “The amendment sought to exempt such debtors from the means testing in the bill that determines whether one has to repay debt under Chapter 13 of the bankruptcy code.” [S 256, Vote 36, 3/10/05; Aberdeen American News, 3/13/05]

Coleman Voted Against Allowing Elderly To Protect Their Homes When They File For Bankruptcy. In March 2005, Coleman voted against an amendment “setting $75,000 as a minimum, nationwide homestead exemption for bankruptcy filers 62 and older,” according to the Pioneer Press. [S.256, Vote 14, 3/2/05, Pioneer Press, 3/6/05]

Coleman Voted Against Exempting Low Income Workers from Means Test in Bankruptcy Bill. In March 2005 Coleman voted against an amendment that “would simplify the bill’s means test for debtors who fall below their states’ median income,” according to National Journal’s CongressDaily. In explaining the amendment, Senator Durbin said, “In order to prove that you are below median income, you have to go through an expensive and extensive process under this bill.” He said that under his amendment, “debtors in bankruptcy falling below median income need only provide calculations or other information showing the debtor’s situation satisfies the below-median-income standard. In other words, you don’t have to hire a lawyer.” [S.256, Vote 31, 3/9/05; National Journal's CongressDaily, 3/8/05]

Coleman Voted Against Protecting Disabled Workers Who File For Bankruptcy. In 2005, Coleman voted against an amendment to the bankruptcy bill that, according to Congressional Quarterly, “would change the bill’s definition of current monthly income to specify that the definition exclude income from a debtor’s former job and income from any activity the debtor can no longer engage in due to disability.” [S.256, Vote 37, 3/10/05; CQ Votes]

MEANWHILE, COLEMAN VOTED AGAINST CRACKING DOWN ON PREDATORY LENDERS

Coleman Voted To Allow Predatory Lenders To Collect Claims In Bankruptcy Court. In March 2005, Coleman voted against an amendment to the Bankruptcy Reform Bill that would “bar high-cost mortgage lenders from using the bankruptcy courts to collect debts on loans they made in violation of federal predatory lending laws,” according to National Journal’s CongressDaily. [S.256, Vote 22, 3/3/05; National Journal's CongressDaily, 3/4/05]

COLEMAN VOTED AGAINST PROTECTING WORKERS WHOSE COMPANIES FILE FOR BANKRUPTCY

Coleman Voted Against Allowing Employees To Recoup Back Pay And Healthcare Costs If Their Employer Declared Bankruptcy. Coleman voted against an Amendment to the Bankruptcy Reform bill that would have allowed employees to recover up to $15,000 in back pay or other compensation owed to them if their company declared bankruptcy. The amendment would also have entitled retirees to payment equal to the cost of buying health insurance for a period of 18 months if an employer reduced retiree health care benefits as part of a bankruptcy plan. [S.256, Vote 24, 3/3/05]

Coleman Voted Against Protecting Workers Whose Companies File For Bankruptcy. In 2005, Coleman voted against an amendment that, according to Congressional Quarterly, would strike the 180-day limit on the accrual period for the employee wage priority to protect the back pay and severance for workers whose employers are in bankruptcy.” [S.256, Vote 32, 3/9/05; CQ Votes]

COLEMAN REPEATEDLY VOTED AGAINST TOUGHENING REGULATION ON LENDERS AND PUNISHING BAD CORPORATE ACTORS

Coleman Voted Against Setting Credit Card Interest Rating Ceiling. In March 2005, Coleman voted against an amendment to the Bankruptcy reform bill that would “limit consumer interest rates at 30 percent” for loans or credit cards, according to the Associated Press. [S.256, Vote 20, 3/3/05, Associated Press, 3/3/05]

• Star Tribune: “Voters Might Expect The New Bankruptcy Bill To Contain Some Regulation Of Lenders As Well As New Strictures On Borrowers. But The Senate Isn’t Interested.” In their editorial criticizing the Bankruptcy Bill, the Star Tribune wrote, “Voters might expect the new bankruptcy bill to contain some regulation of lenders as well as new strictures on borrowers. But the Senate isn’t interested. It rejected an amendment by Sen. Mark Dayton, D-Minn., that would have capped consumer interest rates at 30 percent per year. Was that cap unreasonable?” [Star Tribune, Editorial, 3/9/05]

Coleman Voted Against Amendment Requiring Credit Card Companies To Disclose More Information To Customers About Their Total Financial Obligations. In March 2005, Coleman voted against an amendment to the Bankruptcy Overhaul bill “that would have required credit card companies to provide detailed information about the long-term costs of paying only the minimum balance every month,” according to National Journal’s CongressDaily. “It also would require credit card companies to inform consumers how much they would have to pay every month in order to eliminate their balances within three years.” [S.256, Vote 15, 3/2/05; National Journal's CongressDaily, 3/2/05]

COLEMAN DID THE BIDDING OF BIG BANKS AND LENDING INSTITUTIONS AND VOTED AGAINST ALLOWING BANKRUPTCY JUDGES TO RE-WRITE TROUBLED MORTGAGES

Coleman Voted Against Allowing Bankruptcy Judges To Restructure Primary Mortgages. In April 2008, Coleman voted to kill an amendment to allow bankruptcy judges to restructure terms of primary mortgages. According to the Washington Post, “The legislation would allow bankruptcy judges for the first time to alter the terms of mortgages for primary residences. Under the proposal, borrowers could declare bankruptcy, and a judge would be able to reduce the amount they owe as part of resolving their debts. Currently, bankruptcy judges cannot rewrite first mortgages for primary homes. This restriction was adopted in the 1970s to encourage banks to provide mortgages to new home buyer.” [Vote 88, 4/3/08; Washington Post, 2/22/08]

• Banks And Lending Institutions Made Defeating This Proposal “A Top Priority.” In February 2008, the Washington Post reported, “The nation’s largest lending institutions are lobbying hard to block a proposal in Congress that would give bankruptcy judges greater latitude to rewrite mortgages held by financially strapped homeowners … The banks argue that any help the proposal might provide to troubled homeowners in the short run would be offset by the higher costs that borrowers would have to pay to get mortgages in the future. The reason, banks say, is that they would pass along the added risk to borrowers in the form of higher interest rates, larger down payments or increased closing costs. If banks were unable to pass on the entire cost, they could be forced to trim their profits. ‘This provision is incredibly counterproductive,’ said Edward L. Yingling, president of the America Bankers Association. ‘We will lobby very, very strongly against it’ … Lobbyists for major banks have made the proposal’s defeat a top priority. They have been meeting at least weekly to coordinate their efforts and have fanned out on Capitol Hill to meet with lawmakers and their staffs.” [Washington Post, 2/22/08 (emphasis added)]
• Los Angeles Times: Lender Threats That Rewriting Mortgages Hurts Borrowers “Aren’t Credible.” In a March 2008 editorial, the Los Angeles Times defended attempts to allow bankruptcy judges to rewrite troubled mortgages. They wrote, “The proposals have lenders in an uproar because they would be forced to accept some of the risk of homes losing value, as they do when they lend money for commercial buildings or rental housing. If they’re not shielded from that risk, they say, they’ll charge higher interest rates, require larger down payments and turn down riskier borrowers. Those threats, however, aren’t credible. The lending binge that led to the sub-prime fiasco has already prompted regulators to demand a return to more cautious mortgage practices, including better evaluation of borrowers and higher down payments. Such steps would guard lenders against much of the risk posed by borrowers going bankrupt.” [Los Angeles Times, Editorial, 3/8/08 (emphasis added)]

This entry was posted on Thursday, October 30th, 2008 at 12:50 and is filed under Press Releases. You can follow any responses to this entry through the RSS 2.0 feed.