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Charges of blame were flying Thursday for the meltdown of the high-risk mortgage market as pressure mounted for Congress to do something about rising foreclosures among homeowners unable to meet high payments."What we're looking at is a tsunami of foreclosures that is on the horizon," Sen. Robert Menendez, D-N.J., declared at a hearing of the Senate Banking Committee. Most heavily affected, he said, will be black and Hispanic homeowners who were pressured into taking out mortgages at rates they cannot afford.
Under fire from lawmakers, federal regulators said they lacked full authority to prevent the crisis spawned during the soaring housing boom of 2003-2005.
Sen. Christopher Dodd, D-Conn., the committee's chairman, laid out what he called a "chronology of regulatory neglect" as banks and other lenders loosened their standards for making riskier mortgage loans during the boom. He later said he plans to convene a special summit of regulators, mortgage lenders, consumer groups and others to work out a plan of relief for vulnerable homeowners.
"Our nation's financial regulators were supposed to be the cops on the beat, protecting hardworking Americans from unscrupulous financial actors," Dodd said. "Yet they were spectators for far too long."