Posted on 02/05/2008 5:42:47 AM PST by OESY
...From the current hand-wringing, you'd think that the banks came up with the idea of looser underwriting standards on their own, with regulators just asleep on the job. In fact, it was the regulators who relaxed these standards- at the behest of community groups and "progressive" political forces.
In the 1980s, groups such as the activists at ACORN began pushing charges of "redlining"- claims that banks discriminated against minorities in mortgage lending. In 1989, sympathetic members of Congress got the Home Mortgage Disclosure Act amended to force banks to collect racial data on mortgage applicants....
In fact, minority mortgage applications were rejected more frequently than other applications- but the overwhelming reason wasn't racial discrimination, but simply that minorities tend to have weaker finances.
Yet a "landmark" 1992 study from the Boston Fed concluded that mortgage-lending discrimination was systemic....
No sooner had the ink dried on its discrimination study than the Boston Fed, clearly speaking for the entire Fed, produced a manual for mortgage lenders stating that: "discrimination may be observed when a lender's underwriting policies contain arbitrary or outdated criteria that effectively disqualify many urban or lower-income minority applicants."
Some of these "outdated" criteria included the size of the mortgage payment relative to income, credit history, savings history and income verification. Instead, the Boston Fed ruled that participation in a credit-counseling program should be taken as evidence of an applicant's ability to manage debt....
Banks that got poor reviews were punished; some saw their merger plans frustrated; others faced direct legal challenges by the Justice Department....
These days, everyone claims to favor strong lending standards. What about all those self-righteous newspapers, politicians and regulators who were intent on loosening lending standards?
As you might expect, they are now self-righteously blaming those, such as Countrywide, who did what they were told.
(Excerpt) Read more at nypost.com ...
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Bump for later reading.
It’s discrimination when you don’t lend to the poor minority borrowers, it’s also discrimination when you do.
“As you might expect, they are now self-righteously blaming those, such as Countrywide, who did what they were told.”
Agreed.....expected.
another Lawyer welfare program brought to you by the Democrat ‘party’!
This is right on the money. Another do-gooder liberal mandate from the know-it-alls in DC has unintended consequences.
The same thing happens with the quota system in college admissions. Colleges are required to have a minimum percentage of black students to get federal funds etc., which means less openings for more qualified whites and Asians.
And then when the dropout rate and failure rate among those black students is over 50%, they act amazed. They should not have been there in the first place, just as these bad loans should have never been made also.
Liberalism fails every time it’s forced on us.
It figures.
A symptom of the cancer that was created in the 1960s.
And here’s an even better unintended consequence of the unintended consequence, young first time buyers who can afford a house, and have budgeted for it are going to find it harder and harder to get loans for homes now.
The people who are being ignored in this mess are the ones who bought their houses for $30-80k and are now being taxed for a $250k house because the banks financed half million dollar houses in their neighborhoods. Now, instead of allowing the market to correct itself, the big gov is going to bailout the banks so the local gov can continue to gouge the people who paid their mortgages and eventually tax homeowners even more to cover the bailout.
I still have 0 sympathy for the banks who chose to make these bad loans. If someone's credit report shows very clearly that they are in no way prepared to pay a mortgage and the bank offers the loan anyway, then it is the bank's fault. These banks don't deserve any bailout for the problems that they brought onto themselves.
Absolutely correct!
... it’s also discrimination when you do.
No, no, NO! It's discrimination when you expect them to pay it BACK.
Good.
They probably didn't need political favors to carry out their expansion and merger plans. ;)
Countrywide in particular was no victim in this - they were more than happy to push the envelope to grow their business. The article is engaging in a bit of revisionist history.
Not a surprise to anyone who has been paying attention.
Mortgages to Illegal Immigrants Come Under Fire
From the link....
According to a report given to the governor last year, immigrants made up more than 80 percent of new homeowners in suburban Cook County from 2000 to 2005.
Congress knew exactly what it was doing....
I also find it hard to believe that banks are really taking a hit here. Even when issuing these bad loans, I can't imagine the banks would be stupid enough to not have some sort of safety net so that they don't completely go under.
If only every bad loan case were that simple.
And Countrywide wasn’t a bank.
The rats are not interested in bailing out the banks and note holders. The rats want another entitlement: homeowning for the masses. The rats may bail out financial institutions to facilitate the new entitlement. The rats will demand that poor credit individuals must obtain credit at the same or lower rate as credit worthy individuals. SHE has already proposed the first step in this process. SHE has demanded a freeze on foreclosures and interest rates.
The left realizes that they made a mistake. They forced lending institutions to make loans to the non credit worthy. In their opinion, the mistake was not to demand that banks were allowed to charge higher interest rates for those individuals. The left wants to correct their mistake. They see a perfect opportunity to create a new entitlement.
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