Democratic presidential candidate Hillary Clinton on Wednesday said Wall Street was partly to blame for the subprime mortgage mess and urged the investment community to support her proposals aimed at preventing home loan foreclosures.
In a speech in New York, Sen. Clinton said Wall Street was not solely responsible for the wave of foreclosures that threatens to crimp U.S. economic growth but “certainly had a hand in making it worse.”
“Wall Street helped create the foreclosure crisis, and Wall Street needs to help solve it,” she said.
Clinton called on Wall Street and the mortgage industry to support voluntarily her proposals to freeze for at least five years the monthly interest rate on subprime mortgages, which are extended to borrowers with spotty credit.
She also urged them to observe a 90-day moratorium on subprime foreclosures to give financially troubled borrowers time to work with lenders to avoid losing their homes.
If Wall Street did not voluntarily support her efforts, Clinton said she would consider legislation that would give legal protection to mortgage servicers and others who work with borrowers to modify their mortgages.
Clinton said mortgage lenders and brokers who lowered underwriting standards were also deserving of blame for the housing market mess, as were regulators who failed to provide adequate oversight.
She pinned some of the responsibility on ratings agencies for giving high marks to securities later deemed to be much riskier, and on speculators who bought multiple properties in the hope of profiting from a strong housing market.