"Sherman, set the WABAC machine to 1993"
(WABAC pronounced: wayback)
Posted on 07/28/2012 7:28:45 AM PDT by billflax
Welcome to the bizarre world of banking regulation. Despite the recent disaster wrought by affirmative action lending, Washington ratchets up still more politically correct requirements and shifts the measure of discrimination towards “disparate impact.” Even unbiased behaviors are subject to penalty unless they benefit protected classes.
It’s no longer blind justice meted equally before the law. “Diversity” has become Washington’s Holy Grail, discharging unequal justice in preference for specific outcomes. The burden on businesses expands beyond banning discrimination into virtually requiring reverse discrimination.
Recall before the Great Recession, banks supposedly did not sufficiently extend credit for minorities and less affluent customers. After considerable prodding, lenders lessened standards to accommodate federal guidelines. Politically correct underwriting practices begot financial turmoil.
Washington Mutual was only permitted to consummate a merger in 1999 after committing $120 billion (over ten years) to poor and minority borrowers. And get this: throw two percent of earnings to radicals like ACORN. WaMu subsequently suffocated under toxic debt securities.
While debased dollars and manipulated interest rates spurring mal-investment were the primary catalysts, politically charged housing quotas doused the flames of financial distress with an accelerant. It was as certain as gravity that groups heavily represented as subprime borrowers would also disproportionately stiff lenders.
As the crisis unfolded, the initial outcry blasted banks for evicting helpless homeowners. The only people losing property were those who hadn’t honored their mortgages. When borrowers put little down and don’t pay their debts it’s curious they “lost” something, leastwise “their” homes, but political correctness necessitates blaming banks.
Mounting defaults began toppling banks at taxpayer expense. Even those of us who despised TARP must concede most banks repaid Treasury at a profit. However, as my editor John Tamny surmises, by accepting bailouts, banks surrendered their moral footing to fend off Washington’s social engineering schemes.
(Excerpt) Read more at forbes.com ...
It looked good on paper when they did it a decade ago.
So what if it failed. It looked good on paper.
So good, in fact, that they are going to do it again.
[Care to guess what the result will be in 5-10 years?]
>>We need to bounce political correctness out of banking policy.
We need to bounce it out of EVERYTHING. It violates natural law, evolution, natural selection. I thought leftists believed in science?
Aha - I stand corrected.
ping
It isn’t just plain political correctness here in the loan industry. It is racism by the administration, purposefully to allow his voters to get something they did not earn; something they did not pay for, nor will ever.
Pushing, cajoling, threatening banks to make these loans caused the whole problem in first place. Banks were just smart enough to push off the liability for the debt to the government (essentially us) through bundled mortgages and, later on, credit derivatives.
The government will never realize that it is not smarter than business - not by a very damned looooonnnnnngggg shot. Never will be. All you have to be is a charismatic liar and socialist to get elected in Obama’s case. It takes much more than that to succeed in business.
It seems to be very profitable to launch joint ventures with government social engineers if you make the right political contributions. Maybe if I slip McCain a few bucks (sorry - I meant "invest in his campaign") and suggest he author a "Clothe the Homeless Act of 2013" with an individual mandate for people to buy from me, I can end up as rich as the banks and the insurance companies. :)
"Sherman, set the WABAC machine to 1993"
(WABAC pronounced: wayback)
ping
No sir, you are absolutely mistaken. Mortgage backed securities were a problem - LAST TIME. They still happen regularly, true, but it was nowhere near as simple as you made it.
These new intiatives in Dodd Frank are in commercial lending - not consumer lending. And no, they are not typically packaged and sold.
Besides blacks that are often cited as not being loan worthy, a second and perhaps larger group is single white women. They were duped into purchasing houses and then learned they had bit off more than could chew.
Not only could not maintain them because they lacked the skills and had to work two jobs and still had to have daddy help to keep the lights on.
And political correctness KILLS, Ft Hood to be exact, you know the work place violence incident.
Besides blacks that are often cited as not being loan worthy, a second and perhaps larger group is single white women. They were duped into purchasing houses and then learned they had bit off more than could chew.
Not only could not maintain them because they lacked the skills and had to work two jobs and still had to have daddy help to keep the lights on.
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