More Idiocy From the Government - "Lend to Minorities With Bad Credit"
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tk421
Did no one learn anything from the housing collapse? Telling banks they must lend money to people with bad credit and no jobs is asking for more trouble. The public must now pay for poor minorities to get loans from the bank, because that is who will ultimately be paying for this crap. How is someone on public assistance going to afford a fucking mortgage, it's outrageous.
http://www.investors.com/NewsAndAnalysis/Article.aspx?id=577794&p=1
So, that's the new policy? A bank that refuses a loan to a "minority" with bad credit and no job is racist, forget the fact that they can't possibly pay it back.In what could be a repeat of the easy-lending cycle that led to the housing crisis, the Justice Department has asked several banks to relax their mortgage underwriting standards and approve loans for minorities with poor credit as part of a new crackdown on alleged discrimination, according to court documents reviewed by IBD.
Prosecutions have already generated more than $20 million in loan set-asides and other subsidies from banks that have settled out of court rather than battle the federal government and risk being branded racist. An additional 60 banks are under investigation, a DOJ spokeswoman says.
Settlements include setting aside prime-rate mortgages for low-income blacks and Hispanics with blemished credit and even counting "public assistance" as valid income in mortgage applications.
In several cases, the government has ordered bank defendants to post in all their branches and marketing materials a notice informing minority customers that they cannot be turned down for credit because they receive public aid, such as unemployment benefits, welfare payments or food stamps. -
coyotes22
Its all about the votes, bro! -
Writerbuckeye
Those who fail to learn from history... -
jhay78
Actually, programs like these make perfect sense. When things go bad, you just blame "the failed policies of the Bush administration" and go on your merry way with your wrecking ball. -
coyotes22
Writerbuckeye;827012 wrote:Liberals fail to learn from history...
FIFY,,,,,, yep
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majorspark
DOJ now employing Jesse Jackson shakedown tactics. -
gutccrunner609;827038 wrote:unreal......These government officials that Obama hired are almost worse then he is. His inability to judge character is haunting.
LMFAO...who's to say Obama didn't know what he was getting and that was exactly what he wanted? They still work for Obama so it's tacit approval at best.
Higher interest rates for everyone else as a result is another hidden "tax"...who said taxes aren't going up? -
cruiser_96
See, here's the problem: we - better stated, THEY - link race with credit. NO REASON for that. Spending is a choice. White, black, asian, african... the same principles apply... DON'T TAKE ON MORE THAN YOU CAN AFFORD TO PAY!!!!!!!!!!!!!!!!!!!!!!!!
So what happens, the Justice Dept. steps in and tells banks how to run their business!? Unreal. Unbelievable. A shame, as a matter of fact. -
Writerbuckeye
cruiser_96;827531 wrote:See, here's the problem: we - better stated, THEY - link race with credit. NO REASON for that. Spending is a choice. White, black, asian, african... the same principles apply... DON'T TAKE ON MORE THAN YOU CAN AFFORD TO PAY!!!!!!!!!!!!!!!!!!!!!!!!
So what happens, the Justice Dept. steps in and tells banks how to run their business!? Unreal. Unbelievable. A shame, as a matter of fact.
Go back and read about the Community Reinvestment Act (CRA), created under Carter and expanded greatly under Clinton. It was basically the same thing: banks were told to make more loans to people in certain areas (those that were historically poorer) and were not given much choice. The pressure was on, and they did it.
It's ultimately what led to the mortgage meltdown we're still recovering from.
This administration has proven, once again, to be the most irresponsible and foolish in decades when it comes to basic economics. -
BGFalcons82
Writerbuckeye;827785 wrote:Go back and read about the Community Reinvestment Act (CRA), created under Carter and expanded greatly under Clinton. It was basically the same thing: banks were told to make more loans to people in certain areas (those that were historically poorer) and were not given much choice. The pressure was on, and they did it.
It's ultimately what led to the mortgage meltdown we're still recovering from.
This administration has proven, once again, to be the most irresponsible and foolish in decades when it comes to basic economics.
I agree with your CRA logic. However, I believe the arrogance shown by the Obama Administration is done with a purpose.
Most on the right believes the CRA was one of the root causes of our economic situation of the past 4 years. The Dems forthrightly deny this claim. They say it was the Bush tax cuts, the unregulated industrial complex, and greedy Wall Street financiers that caused it. Fannie, Freddie, and the CRA were defended ad infinitum by Barney, Nancy, Dodd, Biden, and Obama. This latest idea of lending to people with little to no credit is MEANT to mimic the CRA. The program isn't nearly as large as the CRA, and since bankers have already seen the abyss, they are far less likely to jump into it this time. Therefore, it's set up as a strawman. They know it won't cause the devastating effects of the CRA, so when the program is implemented and does not have the same effects as the CRA, they'll be able to state, "see, it wasn't the lending to people incapable of repayment that got us into the mess, it was Bush, Wall Street, blah blah blah." It's a political gesture, a tricked-up program design to impugn those blaming the D's, and ultimately horrible policy.
If the above isn't true, then you must surmise we clearly have the most moronic Administration of all time. -
sleeper
The Democrats will never learn. -
coyotes22
sleeper;827870 wrote:The Democrats will never learn.
Its all Bush's fault! Dont you know that lower taxes leads to economic failure? -
BoatShoesWriterbuckeye;827785 wrote:Go back and read about the Community Reinvestment Act (CRA), created under Carter and expanded greatly under Clinton. It was basically the same thing: banks were told to make more loans to people in certain areas (those that were historically poorer) and were not given much choice. The pressure was on, and they did it.
It's ultimately what led to the mortgage meltdown we're still recovering from.
This administration has proven, once again, to be the most irresponsible and foolish in decades when it comes to basic economics.
Please do a simple internet search with an open mind and read the much weightier evidence against this assertion...the real estate bubble was both commercial and residential and the residential was largely exurban. it did not lead to the mortgage meltdown and was not likely a large contributor according to a multitude of reputable sources. Now I'm not saying it's great policy but it was not the cause of the mortgage meltdown according to most people smarter than I am. Please all of this information is available. Stop repeating lies simply because you didn't like the program.
What are the basic economics that this administration fails to understand? Oh the exact same ones that you fail to understand. -
Con_Alma
This is really all that matters and is the true point of this thread.BoatShoes;827887 wrote:... Now I'm not saying it's great policy ...
No only is it not "great policy" but rather it's awful policy. -
Manhattan Buckeye"What are the basic economics that this administration fails to understand? "
A balance sheet? Perhaps if the head of the administration worked a darn day in his life he'd try to figure out who is paying him (other than the taxpayers).
BTW, from what I understand CSCO is doing more massive layoffs, not that much of a surprise but it still sucks for these engineers and support staff. -
jhay78
BoatShoes;827887 wrote:Please do a simple internet search with an open mind and read the much weightier evidence against this assertion...the real estate bubble was both commercial and residential and the residential was largely exurban. it did not lead to the mortgage meltdown and was not likely a large contributor according to a multitude of reputable sources. Now I'm not saying it's great policy but it was not the cause of the mortgage meltdown according to most people smarter than I am. Please all of this information is available. Stop repeating lies simply because you didn't like the program.
I'm curious what the expected consequences would be of institutionalized, repetitive, reckless lending of mortgages to people based not on economic feasability but rather race and group status? How could we expect anything less than "meltdown"? -
believer
Carter SquaredBGFalcons82;827810 wrote:If the above isn't true, then you must surmise we clearly have the most moronic Administration of all time. -
BoatShoesjhay78;827953 wrote:I'm curious what the expected consequences would be of institutionalized, repetitive, reckless lending of mortgages to people based not on economic feasability but rather race and group status? How could we expect anything less than "meltdown"?
Well if you care about evidence instead of a priori assumptions about future outcomes, if the CRA is any guide, the CRA has overcome market failures to increase access to credit for low-income, moderate-income, and minority borrowers at relatively low cost, did not hurt CRA banks in terms of profitability relative to non-CRA banks and were less risky and less likely to make subprime loans than non CRA all while not contributing substantially to the mortgage crisis according to the FDIC, the Federal Reserve, the Bank of International Settlements and several private sector firms or economists.
Barr, Michael S. (May 2005). "Credit Where it Counts: The Community Reinvestment Act and Its Critics". New York University Law Review 80: 513.
Canner, Glenn; Wayne Passmore (May 1997). "The CRA and the Profitability of Mortgage-Oriented Banks". Finance and Economics Discussion Series (Board of Governors of the Federal Reserve System) 19 (1997-7)
I'm not going to sit here and take one side or the other and suggest that encouraging lending to under served communities or classes is good one way or another but the fact is that there is not evidentiary support for the claims ITT that such policies will be necessarily bad and stupid. If I read that Eric Holder wants to encourage lending to poor communities my first thought is not to jump to unsupported and ungrounded beliefs based upon my preconceived worldview but rather to look at the evidence gathered by people way smarter than I am. -
Writerbuckeye
Whenever the government interferes with the market in ways like this, it seems as if there are always bad consequences.
Always. -
BoatShoesWriterbuckeye;828121 wrote:Whenever the government interferes with the market in ways like this, it seems as if there are always bad consequences.
Always.
No. Plenty of commentators to the left of Cato believe the CRA to be a good policy and there is much evidence throughout the history of our Republic where our government has used various regulatory schemes and mechanisms to ensure prosperity, efficiency and competition in our free market system in mitigating market failures from the special preferential tax status for non-profit firms to licensing schemes to the Erie Canal and so on and so forth. -
Footwedge
I have read the entire article and I don't believe any of it. Why hasn't IBD sourced this editorial? Where are the links to the government's "law" on making bad loans to minorities? I want to see the meat on this. Credit scores are complilated on a myriad of factors, and none of them have a goddam thing related to one's skin color. It's all done electronically.tk421;826776 wrote:Did no one learn anything from the housing collapse? Telling banks they must lend money to people with bad credit and no jobs is asking for more trouble. The public must now pay for poor minorities to get loans from the bank, because that is who will ultimately be paying for this crap. How is someone on public assistance going to afford a ****ing mortgage, it's outrageous.
http://www.investors.com/NewsAndAnalysis/Article.aspx?id=577794&p=1
So, that's the new policy? A bank that refuses a loan to a "minority" with bad credit and no job is racist, forget the fact that they can't possibly pay it back.
If IBD can provide proof of their assertions, I'll be the first one to chastise the shit out out of it. But I've seen far right winged newspapers lie before to accentuate a demented agenda.
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majorspark
I don't see the long term economic benefit of the state subsidizing long term economic commitments to those that otherwise would not possess the financial means to make that commitment on their own. If you need a government subsidy to make your mortgage payment you have no business having one. Whats wrong with renting? This idea that "owning" a piece of real estate is essential to the American dream is a joke. I advise my children to not commit to a long term mortgage unless they have 25% ownership and have additional assets to back up a majority ownership in the estate.
Regional economic conditions change all the time. This is a big country. If one is mobile and not tied down to a particular geographical region, there is a place to take your talents to and make money. If you are renting you are tied to a short term lease. Essentially you are mobile. When the average American takes out a long term mortgage they are anchoring their roots to a geographical location. If the local economy sinks your anchor will drag you down with it. -
gutmajorspark;828658 wrote:Whats wrong with renting? This idea that "owning" a piece of real estate is essential to the American dream is a joke.
The real value in owning a home is it's the largest source of savings most people will have, that's why it has favored tax status. Also, as a hard asset it offers protection against inflation. The dynamics change a little based on equivalent rents, but with where interest rates are now and rents soaring partly due to the housing collapse, it's a great time to make that investment. A leveraged investment in an asset that historically has slightly outperformed inflation? I'll take that all day every day - yes, I'm well aware of the housing bust but many have overcorrected and those values will climb back above water inside the typical 30-yr timeframe.
Anyway, everyone knows that. Really just wanted to comment on how an aspect of the housing bust that didn't get a lot of attention was this idiotic idea that more home ownership is a good thing...% of homeowners shot well past their historical peaks, and probably well past an "efficient" or "optimal" level of home ownership in an increasingly mobile society recognizing that not everyone should be committing to 5+ years in the same place. So other than investors, the real organic buying base essentially was exhausted...then you have the bubble burst and a reversion to the mean COMBINED with excess supply because we were building like crazy. I think that's a big factor that hasn't gotten a lot of play in that supply had shot well past sustainable demand some time even before the bubble burst. That's a major reason why homes are sitting at 2000 prices, or worse, when with normative supply those homes would be significantly undervalued. If you do the math, 2003/2004 prices are where we should be but of course that fails to consider the downward pressure from excess supply. -
Manhattan Buckeye"The real value in owning a home is it's the largest source of savings most people will have, that's why it has favored tax status."
That, and that it is a carrot to maintaining the asset - someone has to own the house, whether it is the tenant, bank or government.
The supply issue is correct, we don't have enough people confident in their incomes to purchase a house and with Dodd-Frank the banks aren't lending. It is a vicious cycle that could absolutely destroy our economy. Housing prices have fallen 40% in our old neighborhood, and could fall another 30%, it isn't that the hard asset isn't worth anything - it is, heck a kitchen update can cost up to $40,000, what isn't worthy is the ability to service the debt and the bank's risk flexibility. -
majorspark
I understand this. Real estate is most times a wise investment. It does not square with me for government to create financial incentives via the tax code or through some convoluted government program that encourages many individuals to commit to a 30yr contract, when otherwise they could not afford it. Why should the state encourage stupidity? Its not like a savings account it has higher risk. You can't renege on your contributions to a savings account. The bank can seize your property and bring the individual to financial ruin if they default on the contract.gut;828683 wrote:The real value in owning a home is it's the largest source of savings most people will have, that's why it has favored tax status. Also, as a hard asset it offers protection against inflation.
So will I. If I can afford to make the investment. There is a lot of good deals out there. If you can afford it. If you can't maybe Uncle Sugar can help.gut;828683 wrote:The dynamics change a little based on equivalent rents, but with where interest rates are now and rents soaring partly due to the housing collapse, it's a great time to make that investment. A leveraged investment in an asset that historically has slightly outperformed inflation? I'll take that all day every day - yes,
Too bad the financially unstable drowned waiting for the waters to recede. The government may subsidize your stupidity but no government life raft for you. That is reserved for those deemed to big to fail.gut;828683 wrote:I'm well aware of the housing bust but many have overcorrected and those values will climb back above water inside the typical 30-yr timeframe..