House Passes Bill to Help Warren Buffett and Berkshire Hathaway

Wednesday, May 20, 2015
Warren Buffett (photo illustration: Steve Straehley, AllGov)

A bill approved by the Republican-dominated House would benefit a company owned by billionaire Warren Buffett while reducing protections for mobile home buyers.

 

The legislation, authored by Representative Stephen Fincher (R-Tennessee), would change consumer protection provisions created by the Dodd-Frank Act and almost exclusively benefit Clayton Homes, a company controlled by Buffett’s Berkshire Hathaway, according to The Seattle Times.

 

The newspaper, working with the Center for Public Integrity (CPI), had previously found Clayton—which controls 91% of the mobile home market—subjected its customers to high interest rates, excessive fees and predatory sales practices.

 

Clayton is headquartered in Tennessee, Fincher’s home state. He received far more campaign money from Clayton employees than any other candidate in the 2014 election cycle: $15,150, according to OpenSecrets.org.

 

Fincher’s bill would raise the interest rates allowed on some mobile home loans before they trigger extra protections for borrowers such as pre-loan counseling, CPI’s Alison Fitzgerald wrote. It also would allow mobile-home salespeople to work closely with buyers to arrange financing.

 

Unlike conventional homes, mobile homes can lose value quickly, often making them worth far less than what a borrower owes.

 

The investigation revealed that Clayton buyers are often stuck with loans that come with interest rates that can exceed 15%. Loans offered by Clayton-affiliated companies average 7 percentage points higher than conventional home loans usually cost. The average for all mobile home loans is 3.8% higher than for conventional homes.

Clayton dealers also get kickbacks for steering financing and insurance business to companies linked to their corporate parent, according to former employees.

 

Fincher’s bill is now in the Senate where it awaits a hearing by the Senate Banking Committee. Even if the bill passes the Senate, President Obama has promised to veto it, saying it would put consumers “at significant risk of being subjected to predatory lending and being steered into more expensive loans.”

 

Even without the extra help from Congress, Clayton has proven to be another good investment for Buffett: it earned $558 million before taxes in 2014, up 34% from 2013.

-Noel Brinkerhoff, Steve Straehley

 

To Learn More:

Congressional Proposal Might Only Benefit Firm That Was Subject Of Probe (by Alison Fitzgerald, Center for Public Integrity)

House of Representatives Passes Predatory Manufactured Housing Bill in Party Line Vote (by Katherine Lucas McKay, The Inclusive Economy)

Warren Buffett’s Mobile Home Empire Preys on the Poor (by Daniel Wagner and Mike Baker, Center for Public Integrity)

A Look At Berkshire Hathaway’s Response To ‘Mobile Home Trap’ Investigation (by Daniel Wagner and Mike Baker, Center for Public Integrity)

Comments

L. A. 'Tony' Kovach 1 year ago
This is perhaps a tad worse than the Seattle Times was in terms of accuracy. First, there have been no mobile homes built in the U.S. since June 15, 1976. Second, even if the authors above had used the correct terminology, Clayton Homes does not control 91% of the manufactured housing market. The combined Berkhsire Hathaway controlled firms are about 45% of the new homes being sold. Third, Berkshire Hathaway affiliated lenders do dominate manufactured housing lending on the personal property side. But the current regulations under the CFPB has been driving lenders out of the space, please see the article linked below, which includes an interview with a firm that withdrew due to CFPB regs. http://manufacturedhomelivingnews.com/sam-landy-umh-ceo-on-dodd-frank-and-the-preserving-access-to-manufactured-housing-act-s-682hr-650/ Fourth, if conventional housing was as restricted as manufactured housing, there would be serious problems in resales of houses or condos too! Due to the choking regulations, fewer loans available, harms the values of those in the lowest cost manufactured homes, specifically those under $20,000. I'd invite the authors to contact me for more insights that could set these and other errors straight. Thank you.

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