Corporate lobbying is a common practice in the United States, where businesses and corporations use their resources to influence policy decisions and regulations that impact their operations. In the banking industry, corporate lobbying has been used to push for changes that benefit banks at the expense of borrowers. One of the areas where this is evident is in the realm of lending practices, where banks have lobbied for policies that encourage illegal lending practices. This report will explore the ways in which corporate lobbying has allowed banks to push for illegal lending practices, and the consequences of these practices.
One of the ways in which banks have lobbied for illegal lending practices is by pushing for the deregulation of the financial industry. In the early 2000s, banks began lobbying for the repeal of the Glass-Steagall Act, which separated commercial banking from investment banking. This repeal allowed banks to engage in riskier lending practices, such as subprime lending, which led to the housing market collapse of 2008.
Banks have also lobbied for policies that protect them from legal action for engaging in illegal lending practices. For example, in 2018, Congress passed a law that weakened the Fair Credit Reporting Act, which regulates how credit reporting agencies handle consumer information. The law also protects banks from lawsuits related to data breaches or other data security issues.
The consequences of these illegal lending practices are significant. Subprime lending practices led to the housing market collapse of 2008, which resulted in widespread foreclosures and economic turmoil. In addition, risky lending practices can trap borrowers in a cycle of debt, with high interest rates and fees that make it difficult to pay off their loans.
In conclusion, corporate lobbying has allowed banks to push for illegal lending practices that benefit their bottom line at the expense of borrowers. By influencing financial industry regulations, pushing for deregulation, and protecting themselves from legal action, banks have been able to engage in risky lending practices that have had significant consequences for the economy and consumers. It is important for policymakers to consider the impact of corporate lobbying when making decisions that impact the financial industry and borrowers.
Sources:
- Public Citizen. (2019). The Corporate Lobbying Machine and the Failure to Protect Consumers. Retrieved from https://www.citizen.org/our-work/government-reform/corporate-lobbying-machine-and-failure-protect-consumers
- Dayen, D. (2018). How Bank Lobbyists Literally Write the Rules for Wall Street. The Intercept. Retrieved from https://theintercept.com/2018/05/10/bank-deregulation-bank-lending-rule/
- Horowitz, A. (2018). Congress just made it easier for companies to get away with data breaches. NBC News. Retrieved from https://www.nbcnews.com/business/consumer/congress-just-made-it-easier-companies-get-away-data-breaches-n849566
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