(SACRAMENTO) — Large national banks with a substantial presence in California, including Chase, Citibank, Wells Fargo and Bank of America, have refused to testify at a hearing originally scheduled this week by the Assembly Select Committee on Consumer Financial Protection and Assembly Banking & Finance Committee. The hearing was planned to investigate the banks’ practice of suspending and reducing the home equity lines of credit (“HELOCs”) of homeowners across California.
Representatives from the large banks were invited to explain the justification behind the tying up of millions of dollars of credit lines throughout the State. The hearing has now been cancelled due to the banks’ unwillingness to participate.
“It’s very frustrating,” says Assemblyman Ted Lieu, Chair of the Assembly Select Committee on Consumer Financial Protection. “I have heard from many constituents who have had their HELOCs stripped away from them, often without any apparent legitimate basis. The banks owe the people of the State of California an explanation for these credit line suspensions that have had significant adverse effects on individuals, families and the California economy. It’s very suspicious that the banks would turn down an opportunity to explain themselves.”
Large national and regional banks have been suspending HELOCs and reducing credit lines since 2008 as a result of declines in the values of the properties securing those credit lines. But many borrowers and consumer advocates have stated that banks have gone too far — suspending HELOCs en masse for their own benefit and often in the absence of circumstances warranting such suspensions. Many of these banks have been sued in California and other states for engaging in HELOC practices alleged to be in violation of federal regulations and state consumer protection statutes.
Several California residents whose HELOCs had been suspended during the past two years were scheduled to testify, as well as professional appraisers and consumer advocates.
“There were plenty of borrowers and consumer advocates lining up to give their side of the story. The primary purpose of the hearing was to ask important questions of the banks and to seek some accountability. The banks apparently have something to hide,” stated Lieu. “As long as this HELOC suspension issue persists, I will continue to demand answers and to insist that California borrowers receive the fair and legal treatment that they deserve.”
Assemblymember Ted W. Lieu is Chair of the Select Committee on Consumer Financial Protection. He represents the 53rd Assembly District, which includes El Segundo, Hermosa Beach, Manhattan Beach, Redondo Beach, Torrance, Lomita, Marina Del Rey, and portions of the City of Los Angeles.