WASHINGTON — House Republicans approved a set of lucrative perks for Warren Buffett on Tuesday, passing legislation to help his mobile home empire secure government protections on high-interest loans to poor people.
Buffett, the world’s third-richest man, is by far the biggest operator in the mobile home industry. His Clayton Homes company sells more mobile homes, also known as “manufactured housing,” than any other company. The two largest mobile home lenders are both Buffett companies — Vanderbilt Mortgage and 21st Mortgage and Finance.
The industry targets the poor. More than 84 percent of the industry’s customers earn less than the median household income.
The Buffett enterprises have faced allegations of predatory lending and collection practices, most recently detailed this month in an investigation by the Seattle Times and the Center for Public Integrity. Nevertheless, Buffett’s empire has had great success pressuring Congress to let it charge very high interest rates on mobile home loans while still qualifying for government protections from predatory lending lawsuits.
The GOP bill that passed on Tuesday would allow companies to charge very high interest rates on mobile home loans — up to about 14 percent in the current market — while still getting the benefit of the doubt in court for predatory lending cases. High-interest borrowers would lose key consumer protections, like mandatory housing counseling, and be exposed to a host of other predatory lending terms, including penalties that prevent homeowners from refinancing into less expensive loans. The bill also would allow mobile home salespeople to receive kickbacks for steering customers into high-cost loans.
The GOP bill was introduced by Rep. Stephen Fincher (R-Tenn.), who received $10,900 in campaign contributions from Clayton Homes employees in the 2014 election cycle, more than any other lawmaker. The second-highest recipient was House Financial Services Committee Chairman Jeb Hensarling (R-Texas), who shepherded the bill through committee and defended it on the House floor Tuesday, attacking the “far left” for allegedly trying to shut down mobile home lending.
“They want to protect consumers right out of their homes!” Hensarling said, echoing comments from Fincher. “They’re hitting Main Street, and low- and moderate-income Americans are suffering.”
Consumer groups, however, have lined up in opposition to the bill, including The National Manufactured Home Owners Association, the Center for Responsible Lending, and the Consumer Federation of America, as Rep. Jan Schakowsky (D-Ill.) noted on the House floor.
Clayton, Vanderbilt and 21st Mortgage employees combined to give $23,950 to Fincher in the 2014 election cycle, and $13,500 to Hensarling. They gave $11,000 to the National Republican Congressional Committee, and $13,000 to the Tennessee Republican Party. None of the firms contributed to the Democratic Party or its campaign arms. Employees of Berkshire Hathaway, the Buffett conglomerate that controls all three mobile home companies and dozens of other enterprises, typically favor Republicans. In the 2014 cycle, they gave over $2.1 million to GOP candidates and committees, roughly double what they spent on Democrats.
Buffett uses the Manufactured Housing Institute to lobby for his perks indirectly. Clayton general counsel Tom Hodges and 21st Mortgage president Timothy Williams both serve on the MFI board. Buffett’s employees give thousands of dollars a year to the group.
Berkshire Hathaway did not respond to a request for comment. Clayton Homes pointed to a prior statement attackingthe Seattle Times/Center for Public Integrity predatory lending reporting as “provocative” and “misleading.” The Center for Public Reporting’s response to those claims is here.
President Barack Obama issued a veto threat against the mobile home deregulation bill on Monday, and Democrats largely voted against it. Rep. Terri Sewell (D-Ala.), who frequently supports Wall Street deregulation, was the only Democrat to defend the legislation on the House floor.
“Manufactured housing must remain an option,” Sewell said, insisting, “In no way does this bill take away consumer protections. … I see this not as a predatory lending bill, but as an access to affordable housing bill.”
The bill does, of course, take away protections for consumers in the high-cost mobile home market, and there is no evidence that mobile home lending faces an existential threat from the predatory lending rules developed under the 2010 Dodd-Frank law. Clayton Homes posted a $558 million profit in 2014, the first year that the new rules went into effect. That figure was up from $416 million in 2013, as its home sales climbed to 30,871 from 29,547.
The bill passed by a margin of 262 to 143. Only one Republican, Rep. Walter Jones (R-N.C.), a frequent opponent of favors for financial firms, voted against it.
A total of 22 Democrats supported the bill, including Reps. Brad Ashford (D-Neb.), Sanford Bishop (D-Ga.), John Carney (D-Del.), William Lacy Clay (D-Mo.), Jim Cooper (D-Tenn.), Jim Costa (D-Calif.), Henry Cuellar (D-Texas), Peter DeFazio (D-Ore.), John Delaney (D-Md.), Gwen Graham (D-Fla.), Ron Kind (D-Wis.), Ann Kirkpatrick (D-Ariz.), Greg Meeks (D-N.Y.), Seth Moulton (D-Mass.), Scott Peters (D-Calif.), Collin Peterson (D-Minn.), Jared Polis (D-Colo.), Kathleen Rice (D-N.Y.), David Scott (D-Ga.), Terri Sewell (D-Ala.), Brad Sherman (D-Calif.) and Kyrsten Sinema (D-Ariz.).
Republicans shot down an amendment proposed by Rep. Maxine Waters (D-Calif.) that would bar any lender that had “been found to have engaged in unfair, deceptive, predatory, or abusive lending practices, or convicted of mortgage fraud” from taking advantage of the bill.
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Source: Huff Post