"Bridging Bank" Would Serve as Mechanism for Mortgage Restructuring, Meet Needs of At-Risk Consumers

Washington, DC – Today, Congressman Joe Baca (D-Rialto) introduced legislation to create a special purpose bank, known as the Bridging Bank, dedicated to serving at-risk consumers and those who have fallen victim to subprime and predatory lending practices, thus enabling these individuals to move back to the financial mainstream.  The Bridging Bank to Recovery Act of 2009 creates a new financial institution that will serve two primary objectives: to act as a mechanism for mortgage loan restructuring, and to meet broader financial needs by offering a full range of traditional financial products and services to the under-banked and unbanked consumers.

“American families are suffering through the worst financial crisis since the Great Depression,” said Rep. Baca.  “Sadly, options are even further limited for many consumers who lack a sufficient credit score, or were victimized by the rampant predatory lending of the past few years.  My legislation offers a tangible solution to this problem.  By creating a separate financial institution to reach out to these consumers, we can build a path for at-risk individuals to strengthen their futures and return to the mainstream banking system.”

The Bridging Bank created by Rep. Baca’s legislation will operate to serve exclusively those consumers who lack sufficient credit to be served by mainstream banks, many of whose financial lives were left in shambles because of subprime loans.  The Bridging Bank will offer a full range of traditional financial products and services to these underserved customers.  In addition, the bill will provide for mandatory financial literacy classes to customers to satisfy their individual and financial needs and goals.     

The Bridging Bank will also help to curb the foreclosure crisis by focusing efforts on mortgage restructuring for many impoverished and under-banked individuals.  The bank will be able to write-down the mortgage loan principal amount based on the homeowner’s ability to pay, as determined by enhanced underwriting criteria designed specifically for these consumers. 

“For our nation, our communities, and our neighborhoods to fully recover from the current recession – we must ensure underserved Americans have access to the financial and banking tools necessary to move forward,” said Rep. Baca.  “I am proud to introduce this responsible bill, which will help to curb the number of foreclosures in impoverished communities and help more suffering Americans to meet their financial goals and get back on their feet.”