I’ve had people tell me in comments here, “no, no, no, the housing crisis had nothing to do with the government pressuring banks to make dodgy loans.” But they’re still doing it:
Assistant Attorney General for Civil Rights Thomas Perez has argued that bankers who don’t make as many loans to blacks as whites (because they make lending decisions based on traditional lending criteria like credit scores, which tend to be higher among white applicants than black applicants) are engaged in a “form of discrimination and bigotry” as serious as “cross-burning.” Perez has compared bankers to “Klansmen,” and extracted settlements from banks “setting aside prime-rate mortgages for low-income blacks and Hispanics with blemished credit,” treating welfare “as valid income in mortgage applications” and providing “favorable interest rates and down-payment assistance for minority borrowers with weak credit,” notes Investors Business Daily.
This is what happens when every single high-level appointment to the Justice Department is a leftist.
Well, obviously loans should be apportioned according to need.. otherwise banks will just operate so as to maximize their own profits, and how can we achieve social justice like that?
🙂
I actually don’t think it was the government pressure.
I’ve thought for some time it was probably the government pressure combined with some young ambitious exec out to make a name for himself saying “look at the profits were making, stop listening to all the stodgy old guys in this company.”
Because, of course, they had to make dodgy loans to everyone, else the blowback from charges of politically correct favoritism would have been too much. And in the short term, it was profitable. So loans they made. To everybody and their brother. But do I think the seed was planted with the governmental pressure to loan to minorities that caused proponents of traditional notions of risk management to have to defend themselves within companies, a defense they lost? Absolutely.
“And in the short term, it was profitable. So loans they made.”
And in the long term the government will back any risky loans. Win Win for banks. Not so great for the rest of us.
Once Obama is gone, every single federal agency is going to have to be thoroughly fumigated for leftists. I wish I had confidence that the Republican Party was up to the task.
“Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded — here and there, now and then — are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.
This is known as “bad luck.”
-RAH
I wish I had confidence that the Republican Party was up to the task.
They aren’t. That’s the problem. We need somebody to clean house and she hasn’t entered the race yet.
Once Obama is gone, every single federal agency is going to have to be thoroughly
fumigated for leftistsexamined to see if it should even exist anymore, and whether its budget can be reduced.FIFY
I haven’t seen much mention of it, but Obama issued an Executive Order last week creating a new Office of Diversity and Inclusion to increase hiring of minorities for federal positions. “To attain this, special initiatives have been created targeting specific groups, including Hispanics, African Americans, American Indians, women and gays and lesbians.”
This in addition to the good old Equal Employment Opportunity Commission.
Just when you think pandering has reached its zenith….
I’m NOT doubting that loaning money to people with low credit scores hurt the banks. But, having just bought a HUD house, I found as big a problem elsewhere in this mess.
If you go look at the HUD list, there are houses up to 3/4 million dollars listed. Fanny and Freddie ALSO loaned money to people who HAD good credit. But they loaned them money for a more expensive house than they could truly afford. Just loaning money to ‘po folks’ wouldn’t be good, but it goes way deeper.
In fact, before I ever started looking for my house, I read an article in the local media about a guy COMPLAINING that his real estate agent and his mortgage company (with Fannie / Freddie backing) had ‘conspired’ to talk him into his huge mortgage. Conspire was the word the mental midget used too.
This was a guy who was a senior manager at a technology company. By his own admittance he AND his wife had masters degrees, hers in Business Administration. Between them they made a huge 6 figure income, almost 7 figure he said. These were not, by my scale, average Americans. They were well educated and well connected. Their house was in one of the areas “IT” neighborhoods and, his wife just HAD to have it.
But he says they were ‘sold’ the house based on the market, the low % loan, and the fact that IF they needed to, they’d be able to sell in a year or so and MAKE money. When he couldn’t sell it later, his only conclusion was, that HE and his wife had been lied to and coerced. He said his agent and mortgage company should have seen the bubble, and should have warned him. In (kinda) his words, or in his rant,
.
.
“..my life is a mess, I’ve lost everything I ever worked for and I’m losing my family and it’s ALL somebody else’s fault!”
.
.
(Yeah? Well then, if my Michelin and Goodyear tires weren’t so good, I wouldn’t drive fast either!)
I say again, it wasn’t just poor people or people with low scores that torpedoed us. It was also well-to-do, greedy people who should have known better, IMHO. Don’t believe me?
Go look at the HUD list in your area.
Loaning money to people with a history of not paying their debts, then packaging those loans and selling them as investments, with the taxpayers on the hook should the loans fail.
What could possibly go wrong?
It’s amazing how otherwise intelligent people fail to understand what a derivative is. Hint: it’s the same as in mathematics. They’re not repackaging loans as investments, they’re speculating on the *rate of change* of various attributes of loans. So even if the bottom is falling out of the property market, a loan derivative could still be a good investment. Why? Because a panic is when you get a big rate of change.
But hey, it’s easier to just make up some non-intelligible story about how speculators are the bad guys cause that’s what Marx said.
Sure, because the US government made all those foreign banks buy into bond trading on junk mortgages… Sure…
Funny how all the really bad loans had very little to do with actual banks lending money and everything to do with banks desperately wanting mortgage paper to bundle.
Hey, Rand I’ve this bridge for you in Central London, wanna take a look?
Sheesh.
Actually Trent, a bond based on a mortgage portfolio can do wrong. That’s what they had Credit Default Swaps were for… Having your cake and eating it.
People should be in jail over this.
Not sure if I agree with you Trent. My understanding is a derivative is a contractual agreement to optionally buy or sell at a specified price and specified future time an underlying assets or non assets (although I’m not quite sure how it works with an index, even though I understand what an index is.) You pay for the option and the contract expires after the future date regardless of if it’s exercised. This option itself can be traded before the contract date is reached.
While this could be considered speculation on rate of change, it’s not rate of change in the mathematical sense.
OMG! People can’t quite agree on what a derivative is????
EEEEEEK!
Gosh. I hope that isn’t the case when it comes to traders…
/irony
Daveon, Trent and I both agree in general. I’m just picking at details. Don’t get your panties in a twist.