On March 22, HLS Professor Elizabeth Warren appeared on NBC’s Dateline in a three-part investigative series “Inside the Financial Fiasco,” on how risky home loans helped cause a chain reaction that led to failures on Wall Street and the near collapse of the American economy.
Commenting on the role that predatory lending played in the collapse of the housing market, Warren said, “It blew up because it was based on a scam. Down at its heart, it was based on selling mortgages to people who simply weren’t going to be able to pay them off.”
According to Warren, the increase in risky loans by mortgage companies wasn’t about getting as many people into homes as possible. Rather, mortgage companies focused on profits, paying sales reps higher commissions for bringing in riskier loans. “Mortgage brokers got paid a higher premium for selling every customer a worse product,” said Warren. Watch video.
The second of the three-part series, “Debt in America and its Collectors,” airs on March 27. On March 29, the program will focus on “Schemes.”
Warren is currently the chairwoman of the influential Congressional Oversight Panel (COP) monitoring the Treasury’s economic rescue plan. The committee is charged with reporting to Congress on the Treasury’s use of the $700 billion approved by Congress for the Troubled Asset Relief Program (TARP). Read more about her work with COP.