Housing bailout bill creates national fingerprint registry

The Senate housing bill approved by a committee this week was already drawing fire from fiscal conservatives and financially responsible homeowners opposed to bailing out housing speculators.

Now it may be time to add privacy advocates to the chorus of voices urging President Bush to veto the bill, which could put taxpayers on the hook for billions of bailout dollars in new taxes or deficit spending.

Buried in the text of the revised legislation, approved by the Senate Banking Committee by a 19-2 vote this week, is a plan to create a new national fingerprint registry. It covers just about everyone involved in the mortgage business, including lenders, "loan originators," and some real estate agents.

"We know that today the rules governing mortgage brokers and lenders are inadequate," Sen. Dianne Feinstein (D-Calif.) said in a statement. "There is just a thin patchwork of regulation that varies from state to state. This legislation will create basic minimum standards for states to utilize to protect consumers." Feinstein and Mel Martinez (R-Fla.) wrote a separate bill introduced in February that has been glued onto the revised Senate housing legislation.

What's a little odd is the lack of public discussion about this new fingerprint database. No mention of it appears in the official summary of the revised Senate bill. No fingerprint database requirement is in the House version of the legislation approved earlier this month. No copy of the revised Senate legislation is posted on the Library of Congress' Thomas Web site, which would be the usual procedure.

The feds' new fingerprint database would function like this: Any "loan originator" must furnish "fingerprints for submission to the Federal Bureau of Investigation" and a wealth of other unnamed government agencies. Loan originator is defined as someone who accepts a residential mortgage application, negotiates terms on a mortgage, advises on loan terms, prepares loan packages, or collects information on behalf of the consumer. Real estate agents are covered if they get "compensation" of any sort (including kickbacks) from loan originators.

It's true that some states already have fingerprinting requirements. Colorado requires "mortgage brokers" (a narrower category) to get fingerprinted. So do Kansas, Mississippi, and Montana, for instance.

In the proposed federal system, what remains unclear is what happens to the fingerprints once submitted. The legislation talks about a "background check"--which would imply a one-time use--but also creates a Nationwide Mortgage Licensing System and Registry that "provides increased accountability and tracking of loan originators." Neither Feinstein's nor Martinez's offices returned our phone calls and e-mail messages asking for clarification on Friday morning.

The bill does specify that the registry will be run by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators. Those two groups are currently developing a "central repository" of information with document collecting and fingerprinting that "will be accessed through a secure Web site over the Internet."

"I imagine that, yes, a fingerprint registry might stop an ex-con from handling loans, but I doubt it will make even a dent in the lending problems the bill aims to stop," says John Berlau, director of the Center for Entrepreneurship at the free-market Competitive Enterprise Institute. "And I would venture to guess that the vast majority of the problem mortgages were handled by employees with no criminal record. Rather, this seem like another thoughtless idea that lets politicians brag that they are 'getting tough' about a particular problem."

Berlau makes a good point. Creating a database of fingerprints of "loan originators" and a subset of real estate agents might make sense. It might not. But it surely would have been reasonable to have an informed debate on the topic before politicians rushed to enact federal legislation before the Senate's Memorial Day recess, and it would surely be wise to insist on security and privacy protections when the bill goes to the full Senate. Unfortunately, there's little reason to believe either will actually happen.

News.com's Anne Broache contributed to this report.

[BillDemp]

This is yet another case of our government becoming a police state where the assumption is that you are guilty until proven innocent. Our freedoms and privacy have decayed more under the current Congress and President than at any time in history. "The land of the free" will soon be a misnomer with many other countries in the world enjoying far more freedom, privacy, and justice than we do. It is beyond depressing to be a member of the generation that is ruining our once great country. May future generations forgive us as they attempt to repair the damage. I only hope they are able to elect somebody smarter than the current crop we have in office.

[spruceman]

I suspect nowadays that the average Russian enjoys more freedom than we do. How ironic! Just look at all the restrictions placed on us at the local, state, and federal levels and add them up. Each added restriction is yet another nail in a coffin that would have the Founding Fathers turning in their graves.

[m.o.t.u.]

As the "sub-prime" disaster so recently proved, some key industries / business activities require some form of Government Regulation. The housing sector is to important to be left in the hands of people who act so corruptly in the "free market".

It would be nice to go back to the "good old days", and I suspect back then people conducted themselves with a good degree more business ethics, than is common-place now.

I suspect the real enemy of individual freedoms is not the Government, but the people themselves, behaving in ways that force Authorities to respond. Without the sub-prime sharks
, there would be no need for this regressive legislation.

Kind Regards.....

[SpiritMatter]

Yes humans need behavoural guidelines for a society to successfully function, but we don?t need a monstrous spiderweb of bureaucratic laws with enforcement spiders everywhere waiting to catch all the citizens that get caught in their web, in order to accomplish it. If we scaled back our government to the level that the Constitution authorizes and used government to protect and defend the two most important values recognized by our founding fathers as necessary for a truly free society, freedom and equality, we would have a nation filled with hope for their future and an amazing willingness to cooperate with, respect and obey the laws of the land. It is injustice and repression that breeds a lack of respect for the law. Without millions of laws and regulations burdening the citizens, our government, executive, legislative and judicial, could create the fertile soil of a successful society by protecting and enforcing the practical application of the simple values of equal justice and equal opportunity for all. Our government could protect and enforce everyone?s right to equal access to information, education, business ownership, employment, living location, dispute resolution, safety, protection from pollution etc.

Without the burden of millions of laws and regulations, our citizens could actually enjoy the inalienable rights that the ?land of the free? promised.
I am always amazed how many people in the "Land of the Free" do not seem to understand what responsible freedom is and what produces and protects it.

1) Freedom is the inalienable right of any human to choose to think, say and do,whatever one wants, with the restriction that the choice does not significantly infringe on the equal rights of any other human. Freedom is the right to think,say or do what your neighbor and/or government in times past would persecute, jail and kill you for. Many people say they believe in freedom, but they often only mean the freedoms that they personally value not the freedoms their neighbor might value. If you were to ask a loyal Saddam supporter in Iraq before the U.S. attack, if they were free, they would probably say yes because the freedoms they valued would be legal. They would claim that only crminal law breakers have a problem with Saddam. If this definition of freedom were true then all nations and empires have been free. I am sure Hitler felt like he was "free" in Nazi Germany!

2) Politicians are always talking about supporting freedom through the establishment of democracies in non-democratic nations. It seems like they fail to understand that freedom is not created by democracy. Freedom, in order to exist in any nation, must be established and protected by a covenant agreement such as the U.S. Constitution which is agreed to by the government and the governed. A democracy without this condition is simply another form of tyranny. It is the U.S. Constitution with its' checks and balances and the Bill of Rights that is responsible for producing and protecting freedom in the U.S. of A.!

[Pete Bardo]

Does anyone else think this could just be a ploy to prevent the housing bailout from passing? This is a major deviation from the House version of the bill. That would send it to another committee to work out a compromise, if the Senate passes the bill at all. That would postpone the final enactment of the bill in any case. It's not an unheard-of strategy. Tack enough extremely distasteful stuff on a popular bill so that it's rejected, then sit back and say, "We tried, but, the guys across the aisle wouldn't let us do it!"

[Marc Myers]

I don't think there's anything excessive about requiring a background check on people who will be handling millions of dollars of other people's money. If this is an attempt to keep the bill from passing, that's OK with me. I get really tired of my tax money being used bail out rich people who made a bad bet and lost.

[gwhitham]

The US government is so paranoid. Pretty soon everyone will not only have to provide fingerprints but soon after that you will have to provide a stool sample.

[George Orwellian]

Declan,



Why don't you create a questionnaire for the presidential candidates regarding privacy issues, and ask about creating a cabinet-level Privacy Czar?

Tanks Advance



--

Harvey Mars

[michael_o]

And the problem with fingerprinting mortgage brokers is...? These people handle huge amounts of other people's money and give advice on financial issues that can have a great impact then stock advising to average American's. They should have significantly more scrutiny. Raising alarmist privacy objections dilutes those objections when they're valid.

[chuck_whealton]

I don't have a problem with helping people who are living in their one single home, goofed and/or were taken advantage of, or simply encountered some bad luck.

I do have a problem bailing out speculators who helped fuel this ridiculous, overpriced, market. They wouldn't be helped if it were the stock market, there's no reason to help bail THOSE people out for their bad real estate investments. Not only did they make a bad decision for themselves, but they helped boost prices for everybody else who simply wanted a place to live.

As for fingerprinting mortgage brokers, although I'm not against it, I'm not sure what it'll get. The term "Ex-Cons" was used. Face it, I'd be willing to bet that most, if not all, of the sleezy loans that were made were via "legitimate" brokers who had never committed an offense in their lives - or at least never been CAUGHT. I think I'd be willing to trust a so-called "Ex-Con" who has a demonstrated track record of cleaning their act up than most bankers out there.

[holmantx]

A measure creating a federal fingerprint registry totally unrelated to national security passed a U.S. Senate committee this week. The legislation would require thousands of individuals working in the mortgage and real estate industries ? and not suspected of anything ? to send their prints to the feds. Justifications listed in the bill for this database are ?increased accountability and tracking of loan originators,? ?enhanced consumer protection? and ?facilitating responsible behavior in the subprime mortgage market.?

I think it should also be a regulation that a photographic database be maintained of all federal employees, including elected officials and their staff . . . of their bare breasts; headshots including upper torsos unclothed. No eyewear. This is important. These photographic identification tools are vital, not only to national security but also to public safety, and the health and welfare of the nation. And I promise only the security screeners at our airports will be authorized to stare directly at the photographs, and only in the line of duty, from the hours of 10:00 AM to 12:47 PM. I'm serious, now.

[dalesplacecn]

There are many types of workers who have been subject to fingerprinting & background checks for a number of years, for example nurses. For those of us so subject, the real issues are several. Does this really enhance the "protection" of our clients / the public? The databases are horribly maintained and contain many errors. You would not believe the number of "criminals" around that have never been, in fact, even arrested. And there's the minor detail, that these databases (errors and all) are accessable my MANY different organizations. Just how IS this data being used and by whom?

It's all well and good protecting "the public" - but who is protecting those ofl us in the databases? The answer is no one. Until the issues of confidentiality, security, & accuracy are addressed, the entire system needs to be scrapped.

Dale Sampson, RN

[Quemannn]

Basically, realtors are getting too much from each transaction, more than a homeonwer could have earned in equity during a 5-to-7-year period. Besides, some loan servicers are manipulating payment records to either block or jeopardize customers' refiance chances. Those people who should comply with ethical code of conduct must get fingerprinted. At a time like this, when millions of poor Americans lose their homes, tons of money goes into the few wrong hands. Besides, people losing their homes are called homeowners of the problem mortgages?

[wolverb]

Once again those tolerant, freedom loving democrats are trying to eliminate some more of our rights and are expanding big brother to keep us in check by having our finger prints on file with the government. The democrats are always telling us that they are the champions of civil liberties and of the constitution. But anytime a bill is brought before congress that will strip us of more rights it usually comes from them. The democrats have destroyed the first Amendment, the second Amendment, the 13th and 14th amendment just to name a few.

[compubomb]

This is yet another BS bill which will give the government more power. That is all. To tackle this current debacle involving predatory lending which in the end screwed the financial market is to be placed on the fed and the banks and financial institutions which made it so easy to borrow money. If someone cannot qualify to borrow money under an FHA standard, then in reality, they shouldn't be able to gain any type of loan. When you allow someone to borrow almost 100% on a property, what is the incentive if the market turns to hold onto that property ? also who is left with the bill ? Also, how in the first place did the bank think it was economically feasible to allow people to borrow 100% on property by just showing "stated assets" ? They opened the Pandora's box and now they should pay for their misdeeds, the public is not the appropriate scapegoat, but rather the victims of opportunist aka the financial industry.

[tallyhooo]

Why would any who has nothing to hide, has not broken the law, and has no intention of ever breaking the law even worry about getting fingerprinted!????? What am I missing here?

[zyper]

Barack Obama is a co-sponsor to this fingeprint registry.....Seig Heil

[screwed_in_america]

once upon a time in america, there was a very well organised scheme to dupe the humble and those others, who would will to live above and beyond their means. There were those who seen opportunity to live in homes they could not afford, but yeah!!!! There were those who said "Oh yes, you can" And so they did, and did well, and for the first ten years, everything was peachy, living the high life in homes they could only afford, if they just paid a percentage of the note. (Bingo) After ten years, the mortgage payment doubled to a price unaffordable, and the big thing the lenders did not see, (oil futures) and the only hope for the companies that made these loans to people who could not afford the homes they were granted to live in for the last ten years, the last nine years, the last eight years, the last seven years, the last six years, the last five years, the last four years, the last three years, the last two years, the last one year, (the one thing they did not see) FOSSIL FUELS WOULD SKYROCKET) Killing the wallet of america, The mortgage companies walked out onto a plank blindly, with greed on their brain. A few forclosures would have built their bottom line a little stronger, because they could have swooped in and resold to other high hopes folks, wanting the american dream, willing to play a ten year game, and hope like hell they could make the payments when they doubled, all the time, knowing they could just walk away if they chose. Well I am offended by a bail out, these companies made bad decisions, over inflated property values, ripped off the american people with their housing futures scheme, and now, these two freddy and fannie,, should be unplugged and liquidated, All I see is something quite like the cookie monster, only the cookies are mortgages being thrown by the likes of bear stearns, country wide, ect.... ect...
there is no government repair for this fiasco, it will be a perpetual problem for the next ten years, the forclosures are going to be stupendous,, and hell, were only on the tip of the iceberg here. These bad loans are ten years deep.--- the new empty homes set about the country like monuments of a time when manipulation of money was at its peak. (It was at its peak!) Remember Bush three weeks ago "not going to do a bail out" Personally, As a tax payer, I didn`t have anything to do with the money minipulation criminal activity that created this mess, leave my tax dollars out of it.

[LoadeDice]

Just remember folks this congress is Dem. majority and Rep?!? President. you won't find a big enough pooper scooper to pick after this group. Me, I'm liking into the constitution party. But not before I have a chance to vote against Obama, not that McCain is offering anything.
Dave F.

[Dschuessler1]

So here we are in the midst of the greatest economic crisis ever experienced in this country, and probably the world, and what do the power people do? Protect themselves. The "bailout" will protect those that had millions and billions invested in the mortgage industry from the lender side. I sold a home not long ago and lost 47000.00 on the deal just to get out from under it. There wasn't anyone there saying "oh poor baby you made a mistake and we'll fix it for you." at the expense of the rest of the country. The bailout will keep the money people in the money and put their debt on the middle class. As a society we owe the governement 146000.00 each before this bailout. If you're rich you don't have to pay much in the way of tax, if you're poor you don't pay taxes, if you work your butt of trying to make ends meet, you just got hit with another big debt that you didn't earn. Our Government, which is "by the people and for the people," has known this was coming since before JFK was in office. The average working family is being forced to pay for the mistakes made by the government and by big business. No one has ever offered to bail me out of the mistakes I have made in the past. I made them and I have had to pay the price. By passing this debt, about 1 000000000000.00, thats what a trillion looks like, off to the tax payers, THE GOVERNMENT HAS SIGNED THE DEATH CERTIFICATE ON THE MIDDLE CLASS. The middle class has been shrinking under the load of the government shortfall for a while now, The rich are getting richer and the poor are getting poorer. You will be one or the other because the middle class is not going to be there.

The bailout does not offer a payback of the funds, they will say it does or say they are working on a plan but the truth of the matter is this. The United States is the greatest debtor nation in the world. Before today we, as a country, have 90 trillion dollars of liability. The baby boomer population has reached it peak with 79 million people going in to retirement in the next ten years, all expecting to receive a check from the government. It won't be there.. The people that were born between 1946 and 1964 are fully vested in Social Security. We are the first generation that has paid this tax to the government our enrire working lives, only to find out that our government shouldn't have been trusted. If I ran a business this way, I would end up in prison for FRAUD, EMBEZELLMENT, and just outright theft.

We are not a Democracey, we are a Republic. We are supposed to be represented by an elected official that takes our combined voices to congress and the White House. When was the last time any one from the goverenment on any level ask you what you thought? Did you get to vote on wheather or not we went to Iraq, what about Viet Nam? Do you have a Lobbiest running around having meetings with congress people to gain support for what you want? I don't feel that anyone in Washington cares about me as a person or a citizen. Unless they need my vote, I don't exist except as a taxpayer ID number. I hope you have a plan that will allow you to have the future you desire, I hope my plan works....