Posted on 11/27/2008 12:54:29 AM PST by Lorianne
Citigroup as Exhibit A — how some of our country’s best-paid bankers were overrated dopes who had no idea what they were selling, or greedy cynics who did know and turned a blind eye. But it wasn’t only the bankers. This financial meltdown involved a broad national breakdown in personal responsibility, government regulation and financial ethics.
So many people were in on it: People who had no business buying a home, with nothing down and nothing to pay for two years; people who had no business pushing such mortgages, but made fortunes doing so; people who had no business bundling those loans into securities and selling them to third parties, as if they were AAA bonds, but made fortunes doing so; people who had no business rating those loans as AAA, but made a fortunes doing so; and people who had no business buying those bonds and putting them on their balance sheets so they could earn a little better yield, but made fortunes doing so.
Citigroup was involved in, and made money from, almost every link in that chain. And the bank’s executives, including, sad to see, the former Treasury Secretary Robert Rubin, were clueless about the reckless financial instruments they were creating, or were so ensnared by the cronyism between the bank’s risk managers and risk takers (and so bought off by their bonuses) that they had no interest in stopping it.
These are the people whom taxpayers bailed out on Monday to the tune of what could be more than $300 billion. We probably had no choice. Just letting Citigroup melt down could have been catastrophic. But when the government throws together a bailout that could end up being hundreds of billions of dollars in 48 hours, you can bet there will be unintended consequences
(Excerpt) Read more at nytimes.com ...
***After Citi (bank, corp, group or whatever it was at the time) was sued by Obama for not giving loans to low-income folks, I imagine they had got a bit gun-shy on refusing loans. (So send them all to jail!)***
I don’t know if 0bama was directly related to forcing banks to give such loans, but I’ll be glad to hear if you have any citations about it. But, I DO know that Jimmah Carter started it all with a law that imposed LARGE FINES on the banks for refusing to grant mortgages to people who could not repay them. Then Clinton made it much stiffer and with even larger fines. Some of the people at the banks were innocent. The greed came later. And the greed was big time.
Since unemployment is only at about 6%, I'd venture to guess that on 90% of the loans in default, the borrowers lied on their loan applications about their income. The banks were not checking on income and were accepting "stated income" as the basis for the loan. Those loan applications all had a clause wherein the borrower hereby "swears under penalty of perjury that the information provided above is true and correct".
I believe that in every case where a borrower lied on their loan application about their income level and then went into default, they should be charged with felony perjury.
I dare say that would stop a lot of the defaults, especially among those who are defaulting merely because they are now finding that the property they unlawfully obtained by fraud is no longer worth what they paid for it.
***Mr. Freidman makes no mention whatsoever of those individuals, Dodd, Franks, Meeks, Watters, etc., who with the usual skill of Dem bureaucrats, forcefully drove our economy into failure. ***
You forgot Jamie Gorelick, the famous inventor of the Wall, which prohibited the CIA and the FBI from sharing information on the terrorists. Pres. Bush corrected that shortly after his election. Still Gorelick, one of Clinton’s appointments to Fanny Mae, is still on its payroll, even after it cooked the books to show a profit and give people like Gorelick a hugh bonus.
Doed is more than a litle “off” every day.
I had only read about it on FR threads, so I had to do some more research myself. Here was a good one that I found. As an aside, I imagine that with more and more banks not able to make money in their more traditional way (loaning money out at a fair interest rate) they pushed gov’t to allow them to enter into the more risky trading markets using derivivatives to make up for the loss in interest revenue.
“I’ve been fighting alongside ACORN on issues you care about my entire career. Even before I was an elected official, when I ran Project Vote voter registration drive in Illinois, ACORN was smack dab in the middle of it, and we appreciate your work.” — Barack Obama, Speech to ACORN, November 2007
Do you remember how we told you that the Democrats and groups associated with them leaned on banks and even sued to get them to make bad loans by abusing the Community Reinvestment Act....
In these lawsuits, ACORN makes a bogus claim of Redlining (denying poor people loans because of their ethnic heritage). They protest and get the local media to raise a big stink. This stink means that the bank faces thousands of people closing their accounts and get local politicians to lobby to stop the bank from doing some future business, expansions and mergers. If the bank goes to court, they will win, but the damage is already done because who is going to launch a big campaign to get the bank’s reputation back?
It is important to understand the nature of these lawsuits and what their purpose is. ACORN filed, or threatened to file, tons of these lawsuits and ALL CRA suits allege racism (usually the press involved and such with the threat of the CRA lawsuit is enough to get the bank to give in and put them in a catch 22, they also had a willing Janet Reno Justice Department to work with - see below for more on Reno).As we have said in our series or articles analyzing every aspect of this story (links at the very bottom of this post), the series of ACORN harassment lawsuits and intimidation against banks to lower credit standards was not the sole reason for the mortgage crisis, it was one important layer of many that brought us to the mortgage crisis and the largest financial scandal in the history of the world.
Case Name
Buycks-Roberson v. Citibank Fed. Sav. Bank Fair Housing/Lending/Insurance
Docket / Court 94 C 4094 ( N.D. Ill. ) FH-IL-0011
State/Territory Illinois
Case Summary
Plaintiffs filed their class action lawsuit on July 6, 1994, alleging that Citibank had engaged in redlining practices in the Chicago metropolitan area in violation of the Equal Credit Opportunity Act (ECOA), 15 U.S.C. 1691; the Fair Housing Act, 42 U.S.C. 3601-3619; the Thirteenth Amendment to the U.S. Constitution; and 42 U.S.C. 1981, 1982. Plaintiffs alleged that the Defendant-bank rejected loan applications of minority applicants while approving loan applications filed by white applicants with similar financial characteristics and credit histories. Plaintiffs sought injunctiverelief, actual damages, and punitive damages.
U.S. District Court Judge Ruben Castillo certified the Plaintiffs’ suit as a class action on June 30, 1995. Buycks-Roberson v. Citibank Fed. Sav. Bank, 162 F.R.D. 322 (N.D. Ill. 1995). Also on June 30, Judge Castillo granted Plaintiffs’ motion to compel discovery of a sample of Defendant-bank’s loan application files. Buycks-Roberson v. Citibank Fed. Sav. Bank, 162 F.R.D. 338 (N.D. Ill. 1995).
The parties voluntarily dismissed the case on May 12, 1998, pursuant to a settlement agreement.
Plaintiff’s Lawyers Alexis, Hilary I. (Illinois)
FH-IL-0011-7500 | FH-IL-0011-7501 | FH-IL-0011-9000
Childers, Michael Allen (Illinois)
FH-IL-0011-7500 | FH-IL-0011-7501 | FH-IL-0011-9000
Clayton, Fay (Illinois)
FH-IL-0011-7500 | FH-IL-0011-7501 | FH-IL-0011-9000
Cummings, Jeffrey Irvine (Illinois)
FH-IL-0011-7500 | FH-IL-0011-7501 | FH-IL-0011-9000
Love, Sara Norris (Virginia)
FH-IL-0011-9000
Miner, Judson Hirsch (Illinois)
FH-IL-0011-7500 | FH-IL-0011-9000
Obama, Barack H. (Illinois)
FH-IL-0011-7500 | FH-IL-0011-7501 | FH-IL-0011-9000
Wickert, John Henry (Illinois)
FH-IL-0011-9000
UPDATE:Hotair.com comments on this story HERE.
New York Post Article HERE:
THE seeds of today’s financial meltdown lie in the Community Reinvestment Act - a law passed in 1977 and made riskier by unwise amendments and regulatory rulings in later decades.
CRA was meant to encourage banks to make loans to high-risk borrowers, often minorities living in unstable neighborhoods. That has provided an opening to radical groups like ACORN (the Association of Community Organizations for Reform Now) to abuse the law by forcing banks to make hundreds of millions of dollars in “subprime” loans to often uncreditworthy poor and minority customers.
Any bank that wants to expand or merge with another has to show it has complied with CRA - and approval can be held up by complaints filed by groups like ACORN.
In fact, intimidation tactics, public charges of racism and threats to use CRA to block business expansion have enabled ACORN to extract hundreds of millions of dollars in loans and contributions from America’s financial institutions.
The Woods Fund report makes it clear Obama was fully aware of the intimidation tactics used by ACORN’s Madeline Talbott in her pioneering efforts to force banks to suspend their usual credit standards.Yet he supported Talbott in every conceivable way. He trained her personal staff and other aspiring ACORN leaders, he consulted with her extensively, and he arranged a major boost in foundation funding for her efforts.
And, as the leader of another charity, the Chicago Annenberg Challenge, Obama channeled morefunding Talbott’sway - ostensibly for education projects but surely supportive of ACORN’s overall efforts.
Thank you for that very clear (and disturbing) outline of events going all the way back to the sixties.
Thomas Friedman says ... “And the bank’s executives, including, sad to see, the former Treasury Secretary Robert Rubin, were clueless”
Robert Rubins, former Treasury Secretary, his son Jamie Rubin, former asst. to bill clinton, & married to Christiane Amanpour, CNN’s reporter........
Clueless.... I don’t think so!!!!!
Personally, I don’t see anything wrong with no money down mortgage loans, assuming, of course, that the borrower has the credit history and income and insurance to back up the loan.
One strategy for those going into an area for just a few years is to buy the house at adjustable rate because they intend to be in it 4 years or less. This is common with the military who prefer living in a house to government quarters or to renting. In decent times they can break even with 4 years of growth in the real estate market when they have to sell. This is made possible by the ARM and the zero down payment.
If you’re just going to break even after 4 years and move on, it would make more sense to rent. At least there you have no risk, and if you’re not going to make money anyway, why add risk?
1. Military families sometimes like to live in houses and neighborhoods rather than government quarters. There are a number of reasons related to quality of housing, quality of life, and lack of micro-management of one’s life by community managers (who, believe it or not, will measure your grass :>)
2. Sometimes the market increases greater than average growth, and a person can actually make money on the deal.
3. Tax deductions.
bttt!
These few, these proud Democrats, are some of the very small number of government leaders who will ever know what it feels like to crash the global economy. I think, however, they are too stupid to ever realize the success and scope of their efforts!
I love your pics! Oh, that they become reality some sweet day!!
TYVM.
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