President Barack Obama said Thursday the mortgage finance practices that led to the economic meltdown were “immoral, inappropriate and reckless,” but not necessarily illegal, making it difficult to punish key players, specifically in the subprime debacle. Obama made those statements after a reporter asked the president during a news conference why the administration never filed any lawsuits or enforcement actions against corporate leaders who led lending institutions prior to the 2008 crash. “If someone has engaged in fraudulent actions — if they have violated laws on the books, they need to be prosecuted,” President Obama said. “One of the biggest problems about the collapse of Lehman, the financial crisis and the subprime lending fiasco is that all of that stuff wasn’t necessarily illegal.” The president used that question as a gateway to discuss the Consumer Financial Protection Bureau, and the agency’s role in fleshing out and enforcing rules that will affect mortgage, auto and other consumer lending practices. The president said the “idea is to have a consumer watchdog in place letting consumers know what fair practices are and make sure banks have to compete for customers on the quality of their services and good prices.” Obama’s CFPB director nominee Richard Cordray made it passed the Senate Banking Committee Thursday. Cordray’s nomination now goes to the Senate, putting him a step closer to obtaining the agency’s top enforcement role. Write to Kerri Panchuk.
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