Ensuring New Mexicans have the Resources to Succeed

Jun 5, 2017 Issues: Financial Services

By Congressman Steve Pearce (NM-02)

Credit is one of the most powerful devices of the financial system designed over time by modern societies. It gives people the freedom to spend money now – whether to cover a medical expense, an emergency repair, buy a home, or send their child to school – and pay it off later. While it accelerated the speed of innovation around the world, it also changed people’s spending habits, however, not always for the best.

In some countries, credit is simply not available to those who need it most, the people at the bottom of the income ladder. In the United States, we’ve developed a highly sophisticated system with opportunity available to all. While some people abuse this power and act carelessly in repaying their loans - resulting in bad credit scores and higher interest rates that they have to pay – credit is still available to almost everyone in this country.

That is, until the Consumer Financial Protection Bureau (CFPB), or Bureau, was created in the Dodd-Frank legislation passed when Nancy Pelosi controlled the House of Representatives, Harry Reid controlled the Senate, and President Obama was firmly installed in his first term.

This Bureau created by the Dodd-Frank Act was tasked with protecting consumers - a laudable goal. Very quickly though the Bureau began to show it had no idea how or why many elements of the credit markets were established. As they began to regulate those elements out of existence, credit to the poor began to dry up. People in New Mexico soon began to see their opportunities disappear because their sources of credit were diminishing before their eyes.

Half of the homes in the 2nd congressional district of New Mexico are manufactured housing. The Bureau took several actions that resulted in all but one or two banks to quit lending for those. It took a mother in Las Cruces several years to refinance her family’s mobile home, simply because no one in town was offering the specific line of credit she needed under her financial circumstances.

These harmful regulations even made their way over to traditional housing loans. With a tool called Qualified Mortgage, the Bureau dried up many of these loans or made the loans hard and complex to apply for...

Read Rep. Pearce's full op-ed in the Washington Examiner here