Liberals enacting phase II of the subprime disaster.

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Liberals enacting phase II of the subprime disaster.

Postby Salty Dog » July 29th, 2012, 5:10 am

http://m.spectator.org/169477/show/b682 ... 8c0f30819/?



Posted by William Tucker on Friday Jul 27th at 5:09am

Do you remember that thing about how the banks wouldn't lend to blacks and Hispanics because they were racists? And do you remember how they passed the Community Reinvestment Act so that banks were forced to reduce down payments practically to zero and lend to a lot of people they knew were bad credit risks? And do you remember how Wall Street bundled all these risky subprime mortgages and sold them to investors around the world so that when it became clear that those people weren't going to be able to pay their mortgages banks everywhere were left holding the bag and all five of the Wall Street investment houses either went under or had to be bailed out by the federal government?

And do you remember how, when it was all over, liberals said it was actually the banks' fault for "deceiving" all those people into thinking they could afford to buy homes and that the banks should be punished for it and some of those people be allowed to keep their homes anyway? And do you remember how all this cost the government close to a trillion dollars and put the whole economy in a hole that we really haven't begun to dig ourselves out of yet?

Well, get ready because the whole thing is about to happen again.

Yes, believe it or not, the federal government is now starting another initiative to force banks to lend to low-credit-rated blacks and Hispanics -- not just anybody but specifically blacks and Hispanics -- and is threatening -- and already imposing -- huge punitive fines if they don't. Moreover, this time they're going even further. They're going to take over the credit rating agencies and force them to change their standards to accommodate blacks and Hispanics so that nobody will have any idea who is a bad credit risk and who is not. In so many words, the government is about impose its will on the whole home-lending market and force another round of bad loans so that the banks are going to be looted once again so that even the federal government may not be able to bail them out this time.

The principle instrument this time is not the Justice Department, Fannie Mae and Freddie Mac, as it was last time, but the brand-new Consumer Finance Protection Bureau, designed by good old Elizabeth "Nobody-Ever-Made-It-On-Their-Own" Warren, which should really be called the Bureau for Bringing Down the Entire Economy. As reported in last Sunday's New York Post by Hoover Institution Media Fellow Paul Sperry, the CFPB has just announced that it is adopting a 20-page "Policy Statement on Discrimination in Lending" issues by the Interagency Task force on Fair Lending in 1994 that kicked off Attorney General Janet Reno's draconic enforcement of the Community Renewal Act. Part of the policy statement reads, "Applying different lending standards or offering different levels of assistance to applicants who are members of a protected [i.e., minority] class is permissible in some circumstances. Providing different treatment to applicants to address past discrimination would be permissible if done in response to a court order." There are already plenty of court orders sitting around.

Just two weeks ago Wells Fargo caved to a Justice Department offensive and paid $175 million for alleged past discriminating against minority borrowers. All this occurred even though the bank received an "outstanding" grade in its most recent Community Reinvestment Act exam. The government did not even bother to prove discrimination in a single instance but relied instead on statistics showing lower rates of homeownership in minority neighborhoods. Thomas Perez, the Justice Department honcho who is spearheading this campaign, says banks discriminate "with a smile" and "fine print" and are "every bit as destructive as the cross burned in a neighborhood." Nice objective evaluation there.

As in most such cases, Wells Fargo chickened out about going to court and refused to admit any wrongdoing but agreed to all kinds of diversity training and sensitivity counseling. The bank will have to "prominently display" a notice informing minority customers that they cannot be turned down for loans just because they are receiving public assistance such as unemployment benefits, welfare payments or food stamps. (Maybe they can even use food stamps for the down payment.) Wells Fargo must provide minority customers $50 million for down-payment and closing-cost assistance, including "Borrower Assistance Grants" of up to $15,000 per individual. It was also ordered to pay $125 million to as yet unnamed victims of previous discrimination. But get this! If those past victims don't show up, the money must be handed over to community organizing groups. President Obama, you have a job waiting for you if you lose office this fall.

Almost a dozen banks are under similar investigation and will be soon falling like dominoes unless one of them musters the courage to stand up to the Justice Department in court.

But the real destruction is going to be wrought by CFPB, created by Dodd-Frank and just getting started. Last week Richard Cordray, who is serving as a disputed recess appointee without the consent of the Senate, announced that not only will CFPB be going after banks but will also target the credit rating agencies that evaluate people's creditworthiness based on past performance in paying debts. They too will be vetted for racial discrimination. In May 2011, the non-partisan Policy and Economic Research Council completed what it described as the first evaluation of Equifax, Experian, and TransUnion, the three credit rating agencies. The report concluded that in less than 1 percent of cases was a score changed by more than 25 points after a dispute process and that "consequential inaccuracies are rare." Moreover, "95 percent of disputing participants were satisfied with the outcomes of their disputes, suggesting widespread satisfaction" with the process. In other words, credit ratings are pretty accurate. Banks rely heavily on them and say that, if anything, the agencies tends to underestimate the rate at which minority buyers will default on mortgages.

So guess what happens next? Under the pretext of "regulating" the agencies, CFPB will hammer away, forcing them to upgrade the scores of blacks and Hispanics. Standards will be diluted or abandoned entirely and within a few years the banks will be flying blind with no reliable information on who is a good credit risk and who isn't. Does that sound like the formula for another mortgage meltdown? It sure does to me.

At this point in my story, it is customary for the journalist to proclaim that he isn't trying to protect the lenders but is really concerned with those unfortunate minority individuals who will end up with bad loans. Sperry follows this pattern by declaring, "In the end, it will be the minorities Obama and [Eric] Holder are trying to help who will be hurt most."

I think I'm going to have to depart from the tradition. I think what we are witnessing is the looting of America on behalf of minorities in a way that better end soon or we are going to bring the whole system down upon our heads.

With the current administration in power, the perception is growing among minorities that everything in the economy can be had for free and that President Obama and his administration are going to provide it for them. For instance, there is a scam going on around the country right now where con artists call up homeowners and tell them that President Obama has a new program where he is going to pay their electrical bills. All the homeowner has to do is provide his Social Security number and other personal information. The con game started in Michigan among minority populations in depressed cities such as Flint and Grand Rapids. It has now spread as far as far as Florida and Mississippi. More than 2,300 people in Michigan were bilked out of $1 million, another 10,000 have been swindled in New Jersey.

What is amazing is that all these people actually believe that President Obama is ready to pay their electrical bills. It is symptomatic of a rising tide of dependency and the growing sense that nobody has to be responsible for anything anymore and we can all live off "the rich." If we don't get these people out of office soon, there isn't going to be much left to pick over in the American economy.
Last edited by Salty Dog on July 29th, 2012, 5:33 am, edited 1 time in total.
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Re: Liberals enacting phase II of the subprime disaster.

Postby EddyP » July 29th, 2012, 5:17 am

It's amazing how little some people actually understand about the real state crash.
Kick its ass, Shelly.

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Re: Liberals enacting phase II of the subprime disaster.

Postby sfsuphysics » July 29th, 2012, 9:59 am

EddyP wrote:It's amazing how little some people actually understand about the real state crash.

All I knew, is that I was not leveraged at all in any way shape or form, no mortgage, not even a single dollar of debt on a credit card... yet some how it affected me to the point that I had to pay part of a trillion dollar bail out :D
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Re: Liberals enacting phase II of the subprime disaster.

Postby Magilla Gorilla » July 29th, 2012, 10:54 am

Once again, the people bailing on mortgages were actually those with a lot of money who bailed on second, third and fourth houses they bought. It was generally not poor people. Poor people have to stay in their house. They have nowhere to go.


The crisis was cause by idiots like those at AIG's finance wing bundling credit swap derivatives, figuring there's no way the house of cards could come tumbling down.
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Re: Liberals enacting phase II of the subprime disaster.

Postby EddyP » July 29th, 2012, 11:10 am

Magilla Gorilla wrote:Once again, the people bailing on mortgages were actually those with a lot of money who bailed on second, third and fourth houses they bought. It was generally not poor people. Poor people have to stay in their house. They have nowhere to go.


The crisis was cause by idiots like those at AIG's finance wing bundling credit swap derivatives, figuring there's no way the house of cards could come tumbling down.
Those are the bastards who should be found and crucified.

AIG was more about insuring the CDO derivatives, not creating them.

The whole "this is caused by the CRA" is ****. They are such a small number of the loans actually given, it's a joke. The root was the people writing loans had zero interest in making sure they were "good" loans in the first place. Underwriting? Who cares? The just needed loans so they could bundle them and sell them for big cash. The packaging of loans is a great thing that allows risk to be spread and generally keeps things stable. But then the bundled loans becomes the main product they are trying to sell, there's a problem.

Banks used to write loans and care about the risks they wrote because they wanted to make sure they got repaid. In the 2000s, bundling and selling the loans became such a money maker they were looking to write loans on anything. Standards got looser and looser until they didn't exist. Mix a dash of fraud in by hiding loans when they got rated. Another dash of stupidity by rating agencies for thinking a package of mortgage loans was somehow a diverse portfolio and thus easier to get AAA. And a final dash of stupidity in assuming housing prices would never fall.
Kick its ass, Shelly.

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Re: Liberals enacting phase II of the subprime disaster.

Postby _Andy » July 29th, 2012, 11:12 am

Once again, the people bailing on mortgages were actually those with a lot of money who bailed on second, third and fourth houses they bought. It was generally not poor people. Poor people have to stay in their house. They have nowhere to go.


I don't think that is correct.


http://www.newser.com/article/da03roq81 ... rdest.html

http://articles.businessinsider.com/201 ... le-lending

http://www.heraldsun.com/view/full_stor ... ure-crisis

And so forth..
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Re: Liberals enacting phase II of the subprime disaster.

Postby Bierboy » July 29th, 2012, 11:21 am

TARP did not cost a trillion dollars - it was more like $50 billion.
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Re: Liberals enacting phase II of the subprime disaster.

Postby EddyP » July 29th, 2012, 11:26 am

_Andy wrote:
Once again, the people bailing on mortgages were actually those with a lot of money who bailed on second, third and fourth houses they bought. It was generally not poor people. Poor people have to stay in their house. They have nowhere to go.


I don't think that is correct.


http://www.newser.com/article/da03roq81 ... rdest.html

http://articles.businessinsider.com/201 ... le-lending

http://www.heraldsun.com/view/full_stor ... ure-crisis

And so forth..

Agreed. It's not just 2nd and 3rds with this. Poor people were hit hard by this mess too.

So I'm clear, I don't excuse the individuals in this. People need to know what they can afford and what their REAL payment will be once the teaser rate or ARM adjusts. People were far too trusting that if they were approved, they could afford it.
Kick its ass, Shelly.

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Re: Liberals enacting phase II of the subprime disaster.

Postby ghoti » July 29th, 2012, 11:49 am

As George Bernard Shaw said, a government that robs Peter to pay Paul can always count on the support of Paul.
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Re: Liberals enacting phase II of the subprime disaster.

Postby MegaDeTH » July 29th, 2012, 12:15 pm

I scan an article on the housing situation, if it has the word "CRA" in it, it looses all credibility immediately as it's crap and false
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Re: Liberals enacting phase II of the subprime disaster.

Postby Salty Dog » July 30th, 2012, 1:18 am

Govt. Motors betting on subprime loans as well.


http://news.investors.com/article/62009 ... -sales.htm
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Re: Liberals enacting phase II of the subprime disaster.

Postby EddyP » July 30th, 2012, 11:58 am

Salty Dog wrote:Govt. Motors betting on subprime loans as well.


http://news.investors.com/article/62009 ... -sales.htm

Got a point? Or just want a chance to make a government motors joke?
Kick its ass, Shelly.

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Re: Liberals enacting phase II of the subprime disaster.

Postby Salty Dog » July 30th, 2012, 4:01 pm

EddyP wrote:Got a point?



Our govt relying on and forcing others to once again give out subprime loans is a disaster you would think we would know better then to repeat.
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Re: Liberals enacting phase II of the subprime disaster.

Postby EddyP » July 30th, 2012, 4:05 pm

Salty Dog wrote:
EddyP wrote:Got a point?



Our govt relying on and forcing others to once again give out subprime loans is a disaster you would think we would know better then to repeat.

Got it.

It's amazing how little some people actually understand about the real state crash.
Kick its ass, Shelly.

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Re: Liberals enacting phase II of the subprime disaster.

Postby ghoti » July 30th, 2012, 4:19 pm

I know I don't understand it. I did find Andy37's article he posted a while back about the desperate pressure of trying to repatriate US dollars sitting in foreign central banks as a root cause for these intractable real estate derivatives.
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Re: Liberals enacting phase II of the subprime disaster.

Postby EddyP » July 30th, 2012, 5:23 pm

ghoti wrote:I know I don't understand it. I did find Andy37's article he posted a while back about the desperate pressure of trying to repatriate US dollars sitting in foreign central banks as a root cause for these intractable real estate derivatives.

Oh, I'd like to read that. Any key words to search for?
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Re: Liberals enacting phase II of the subprime disaster.

Postby ghoti » July 30th, 2012, 5:48 pm

Andy37?
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