HARWOOD: same page as schumer?
DODD: i think you are probably talking about the portfolio increase at fannie and freddie. chuck is talking about some legislation and that is fine. i thikn we're in the middle of a crisis. how large or small is subject to some debate. i'm convinced right now the pres and regulators of fannie and freddie have the authority to do what needs to be done to raise those portfolio limits and to get that liquidity out there. you don't need a legislation from congress to do that. we maybe dealing with the gse legislation in the coming weeks, when we come back. but you don't need to wait for that in order for this to happen. i'm not opposed to looking at legislation, we will. but in the meantime something needs to be done immediately, in my view, with regard to liquidity at least to make that possibility available. and that can be done with existing law.
HARWOOD: criminal chargers for lenders?
DODD: certainly i do. i think some of these activities that wnet on were violation of basic principles of fairness. to watch some people on fixed incomes be drawn into these adjustable rate mortgages when they had very little obligations at all. getting them into second mortgages that basically pushed them out of their homes. let me mention one factor here, if you take a 1/8, which is the size of a sq block in an urban area and if one home in a fragile neighborhood is foreclosed the value of every other home will decline by $3000-$5000 immediately on the foreclosure on one property. there are ripple effects on what's happened here. those that have been engaging in these practices that under exisiting law, the law i mentioned in 1994, i think criminal charges certainly be somehting that us attorneyrs and others are looking at.
HARWOOD: taking advantage vs. opportunity for some that couldn't otherwise get it?
DODD: i'm a huge supporter of sub-prime lending. there's a very big difference between sub-prime lending and predatory lending. predatory lending is the kind we've been describing here. people have been going in and taking innocent people who are on fixed incomes in many cases and luring them into financial arragements they can never possibily beat. that is an action that deserves very strict penalites, in my view and punishments for those who engage in it. sub-prime lending, making it possible for people who don't necessarily have great assets but want to get into home ownership. and providing that opportunity realistically. telling them exactly what the fully indexed rate will be so they can understand that. having a clear idea what their incomes are like so they can manage those numbers. there's nothing that does more to stabilize a neighborhood, a community, nothing that creates greater wealth for someone than getting that american dream of being able to own your own home.. there's great value in doing what we can. that's why i'm such a storng supporter of modernizing the fha. they clearly would allow a different avenue for people to get cheaper more stable, reliable credit than just the sub-prime market. but sub-prime markets well managed and well done can make a huge difference for people. so i hope people don't think the words are interchangable. predatory and sub-prime. they are not at all.
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