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“All you needed was a pulse to buy a house. Some loans were written with no money down, no proof of buyer’s incomes. They did not even check what people were saying. Most of those folks were jobless,” he said in an interview.

The lenders were careless and greedy but how does one expect to own a home with bad credit and no job? If many of these people paid nothing down then just what did they lose but a place to stay. You can rent a place to stay which is what they did before they bought and will have to do now. I’d say these people are in a sad state not because of greedy lenders but because of their own financial situation which would exist with or without the greedy lenders. Let’s not turn this situation into a civil rights issue when it isn’t.

“Let’s not turn this into a civil rights issue when it isn’t”?

But maybe it is! Do you remember the “redlining” hearings and legislation that were in the news 6-7 years ago? It seems banks were doing background and credit checks on borrowers before making loans. Since that resulted in turning down a higher percentage of loans in minority area, the banks were accused of “redlining.”

Here’s a paper from 2001 on the subject: http://repository.upenn.edu/dissertations/AAI3003637/

I don’t remember if any special legislation was passed, but I believe it was, threatening lenders with the full power of the trial lawyers of the US, etc, etc. At any rate, they got the message that they were not allowed to deny loans to the poor and oppressed, just because they were poor credit risks.

What the ..ll did we think was going to happen if we penalized lending institutions for using good business judgment?

Another illustration of the Law of Unintended Consequences of a liberal feel good program.