The Cauldron

Ohio Attorney General Marc Dann delivered a free lecture about the predatory lending crisis sweeping the nation at the Cleveland-Marshall College of Law on Apr. 14. The event was held at 4:00 p.m. in the Moot Court Room, was sponsored by the law school's Democratic Law Organization (D-LO).

Cleveland-Marshall Dean Geoffrey S. Mearns provided the introductions. It drew an unusually large audience, an indication of high interest in a topic, which (quite literally) hits home for a lot of people. Cleveland has been thrust into the national spotlight as one of the cities most affected by high rates of foreclosure, and the state of Ohio as a whole also has not escaped this unsavory limelight.

Dann, a Democrat and former Ohio Senator, combined sharp criticisms of the federal government with an overview of what the state is doing to fill the resulting vacuum of responsibility. He also stated that his entry represented a significant shift in the way his predecessors had viewed the office; for him, the office existed to serve as advocates of not just institutions, but the people of the state. He emphasized consumer protection laws, anti-trust and securities fraud cases, and protection of ethical businesses - all of which, he said, the Federal Administration has abandoned.

He described the evolution of a system which rewards businesses which "cheat and cut corners" while incentives for honest and ethical businesses disappear. This phenomenon has been dubbed 'Wall St. versus Main St.' and also the 'Wall St. compensation system,' which in a nutshell severs the logical link between company performance and CEO pay.

This culture of rewarding unethical behavior, Dann said, "Was the catalyst for the sub prime crisis. There was no way it could have happened without the watchdogs looking the other way." He described a complex, deregulated system in which home loans were "bundled, securitized, given a fake credit rating and sold to investors." The absurdity of the situation was such, he said, "Suddenly people whose credit score could not have bought a dollhouse could suddenly buy a 4-bedroom colonial in Solon or Shaker Heights." He unequivocally stated those involved in these lending acts, from the mortgage brokers who actually made the deals to the CEOs at the top who pushed these policies belong in jail.

"The Federal government did not, and is not acting," he said. "We are more than willing to assume that responsibility. We won't - and can't - wait for them to act." He then discussed Ohio's foreclosure prevention effort called 'Save the Dream' in which more than 1100 attorneys are working for free to help homeowners at risk of foreclosure. He also discussed a case that is being built against several agencies involved in the fiasco, although he pointed out that whether or not enough evidence can be gathered is still being determined.

The audience had a chance to ask questions afterward. One man asked about former Federal Reserve Chairman Alan Greenspan, who has recently been accused by many of partial responsibility in bringing about the crisis. A couple of women had driven up from Florida to prevent a foreclosure on a Cleveland property, and complained of how they had been dismissed by the local courts.

Dann is a 1987 graduate of the Case Western Reserve University School of Law. He is most often recognized for his premier role in the investigation of the "Coingate" scandal in which $50 million of Ohio's workers compensation reserve fund was given to Tom Noe, a coin dealer and Republican fundraiser. More information on the Save the Dream program can be found at AG4Ohio.com.

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