I think something like the Community reinvestment act is needed.
The number of Banking institutions in this country have fallen from 14,500 in 1932, to just over 7,000 now. And the mergers are continuing. Banks don’t have much incentive to put the money back into the community where they got it. And I think they should.
That said, how you implement it needs to make sense. Loans shouldn’t exceed what a person can afford. And if they are lower income, it needs to be a smaller loan.
I also think that most communities need to revisit affordable housing. Housing codes, which I’m all in favor of, drive the cost up. But nobody builds smaller units for lower income people. I think there is demand there, but I think that housing codes probably exclude such communities from being built.
The purpose of a bank isn’t to put money back into communities. The purpose of a bank isn’t for social engineering or community help or involvement.
Banks are there to make money, and if someone wants the services of a bank, they must do their part by keeping a good credit rating, staying with their job instead of constantly quitting them, and working to educate themselves so that they can get a better paying job - thereby increasing loan opportunities.
So, if loans should be smaller for low-income people, that pretty much eliminates almost any chance of a home loan for low-income people.
Giving home loans to low-income people has helped tremendously to this financial meltdown.
Affordable housing?
“Affordable housing” is a smokescreen that Dems have used to allow home-loans to low-income people, those with bad credit, no job, no collateral or those constantly quitting their jobs.
Low-income people are just going to have to get their acts together. Simple as that.
This bailout is the result of what Barack Obama, Barney Frank, the Congressional Black Caucus, Chris Dodd, and other Democrats have called “affordable housing.”
Low-income people can live in apartments until they improve their lot in life.
Taxpayers are going to foot the bill on the bailout and they have spoken (they don’t want any bailout) and they will continue to speak on this.
The days of home loans to low-income people, those with no collateral, no job, those who quit their jobs all the time and so on, is over.
Those days are over.
DING DING DING DING! We have a winner!
I am one of those lower income people who would just LOVE to have smaller units available.
If I had the money I would build some to see if there was indeed a market for smaller units.
In many areas it’s legal to build smaller homes but “normal-sized” land lots cannot be split into appropriately smaller lots.
For example, where I live you could build four 500-sf houses on a 10,000-sf lot, but you couldn’t split the lot into four lots. (In some neighborhoods you could split a 10K lot into two 5K lots, but you can’t create a lot smaller than 5K.)
The only legal option is to create and obtain approval of a condominium plan, and build the four small houses as condominiums.
That drives up the cost and as condominiums they would be priced out of reach of the low income market.
Most communities will not revisit affordable housing until (sigh) mandated by a higher level of government.
It is in the interest of local government that low income people live Somewhere Else.
Locals usually deal with unfavorable local conditions by appealing to a higher level of government. That’s why you get Washington sticking its nose into housing issues and why landlords run to their legislature when potential local rent controls are proposed.