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WASHINGTON, D.C. – On February 27th, Congressman Patrick McHenry (R-NC-10) sent a letter to House Financial Services Committee Chairman Barney Frank (D-MA) requesting a Committee hearing in response to several reports that investors may be abusing the public policy process to enrich themselves on the backs of struggling homeowners.
“These reports indicate the existence of highly questionable practices among some investors who are gaming the public policy process to their own financial benefit. As the Committee with primary jurisdiction over capital markets, we have an obligation to look into these potentially abusive practices,” said Congressman McHenry.
Regarding a recent bill before the Financial Services Committee, Bloomberg News reported, “The push for the bankruptcy-law change is opposed by lenders, who say it would make it easy for borrowers to default while at the same time enriching the hedge funds that are positioned to profit from the decline in the housing market.” (Paulson & Co. Gives $15 Million to Borrower Advocates, October 12, 2007).
“As you may know, several articles have been written about one particular hedge fund manager, John Paulson, who bet against borrowers in the housing market to reap major financial gains – roughly $3 to $4 billion. In October, he gave $15 million to the Center for Responsible Lending, which has been leading the charge in lobbying for a law that would let bankruptcy judges restructure mortgage loans. By forcing servicers to accept lowered monthly payments, market values would likely fall even further, and Mr. Paulson would most definitely benefit financially,” Congressman McHenry said in the letter.
Click here for the full text of the Congressman’s letter.
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