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Title: A Renewed Crackdown on Redlining
Source:
[None]
URL Source: http://www.businessweek.com/magazin ... ntent/11_20/b4228031594062.htm
Published: May 12, 2011
Author: Clea Benson
Post Date: 2011-05-12 10:09:33 by no gnu taxes
Keywords: None
Views: 8200
Comments: 17
Community activists in St. Louis became concerned a couple of years ago that local banks weren't offering credit to the city's poor and African American residents. So they formed a group called the St. Louis Equal Housing and Community Reinvestment Alliance and began writing complaint letters to federal regulators.
Apparently, someone in Washington took notice. The Federal Reserve has cited one of the group's targets, Midwest BankCentre, a small bank that has been operating in St. Louis's predominantly white, middle-class suburbs for over a century, for failing to issue home mortgages or open branches in disadvantaged areas. Although executives at the bank say they don't discriminate, Midwest BankCentre's latest annual report says it is in the process of negotiating a settlement with the U.S. Justice Dept. over its lending practices.
Lawyers and bank consultants say regulators and the Obama Administration are scrutinizing financial institutions for a practice that last drew attention before the rise of subprime lending: redlining. The term dates from the 1930s, when the Federal Housing Administration drew up maps using red ink to delineate inner-city neighborhoods considered too risky for lending. Congress later passed laws banning lending discrimination on the basis of race and other characteristics. "The agencies have refocused on redlining because, in the wake of the subprime explosion and sudden implosion, they are looking at these disadvantaged neighborhoods and not seeing any credit access," says Jo Ann Barefoot, co-chair at Treliant Risk Advisors in Washington, D.C., which consults with banks on regulatory issues.
The 1977 Community Reinvestment Act (CRA) requires banks to make loans in all the areas they serve, not just the wealthy ones. A Bloomberg analysis found the percentage of banks earning negative ratings from regulators on CRA exams has risen from 1.45 percent in 2007 to more than 6 percent in the first quarter of this year.
At the Justice Dept., a new 20-person unit dedicated to fair lending issues received a record number of discrimination referrals from regulators in 2010 and has dozens of open cases, according to a recent agency report. Potential penalties can reach into the millions of dollars. "We are using every tool in our arsenal to combat lending discrimination," Thomas E. Perez, the assistant attorney general for the Civil Rights Div., told a conference of community development advocates in Washington in April.
To some banks the crackdown has come as a surprise, say consultants and lawyers representing financial institutions in discussions with regulators. Like Midwest BankCentre, some lenders are being cited for failing to operate in minority and low-income census tracts near their branches, even when they have never done business there before. "If you put your branches only in upper-income areas, the regulators are not accepting that anymore," says Warren W. Traiger, a lawyer at BuckleySandler in New York, which advises banks on fair lending issues.
Mortgage refinancing activity doubled in white neighborhoods but dropped sharply in minority neighborhoods in a sample of major U.S. cities in 2008 and 2009, according to Paying More for the American Dream, an April study by a group of seven community development nonprofits. "The pendulum has swung back too far the other way," says Kevin Stein, associate director of the California Reinvestment Coalition in San Francisco, one of the report's authors.
Bank lobbyists say the stepped-up government scrutiny could backfire if financial institutions decide to shrink their operations rather than yield to pressure to do business in areas that don't make sense for them. "It would do a disservice to communities for a bank to suddenly pull back," says Robert Rowe, vice-president and senior counsel at the American Bankers Assn.
Meanwhile, in Missouri, things are starting to change. Midwest BankCentre Chairman Ronald T. Barnes recently announced the bank would open a branch in Pagedale, a town near St. Louis that is predominantly African American.
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#1. To: no gnu taxes (#0)
Well,he DID promise to buy them homes.
"I adore John McCain, support him 100 percent and will do everything I can to support his reelection. As everyone knows, I was honored and proud to run with him. And Todd and I were with him in D.C. just a week ago." (Sarah Palin,Dec 2009) ************************************ DID Palin say or write these things or not? (Me) I don't know or F ing care. (Mad Dog posted on 2009-12-26 16:36:33 ET,post # 105 http://libertysflame.com/cgi-bin/readart.cgi?ArtNum=5510&Disp=114#C114)
The insanity that undermined the entire US economy continues among the uber liberals. They can't be this stupid...so you have to ask yourself why they insist on doing it AGAIN. The answer is frightening.
Proxy IP's are amusing.....lmao
You need to be bitch slapped over this bullshit again, Paddy?
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." I was not aware of just how bad the flooding was; thanks for posting.
Reading your unmitigated bullshit is being bitch slapped?
Now, I know I’m not going to change the minds of any of the True Believers…those who read all of Reverend Al’s sermons, and say things like, “You know, global warming can mean warmer OR colder, wetter OR drier, cloudier OR sunnier, windier OR calmer, …”. Can I get an ‘amen’??
It's quite simple Paddy...at every turn you have been provided with hard data detailing that non-traditional lending led to the housing crisis. You have also been given data that CRA loans did not comprise anywhere NEAR the level or percentage of loans made and defaulted. At the same time, you were pressed for data that CRA loans defaulted at any kind of level that could have precipitated the down turn. Each time that information was requested, you provided....squatina.
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." I was not aware of just how bad the flooding was; thanks for posting.
truthiness
"Thats because your basically and idiot." No, just a waste of time.
Proxy IP's are amusing.....lmao
Just the name "Perez", ought to clue you in to the fact that illegal aliens are included too. Racial discrimination is mandatory under affirmative action. Whites need not apply.
I recall a re-run of MASH I saw where this uber right winger named Colonel Flagg... Like forcing banks to lend money to unqualified negroes? You have also been given data that CRA loans did not comprise anywhere NEAR the level or percentage of loans made and defaulted. If I start a fire in one small area of a house, and the entire house burns down, I guess I can then make the argument, "hey, I only burned a little bit of the house."
Now, I know I’m not going to change the minds of any of the True Believers…those who read all of Reverend Al’s sermons, and say things like, “You know, global warming can mean warmer OR colder, wetter OR drier, cloudier OR sunnier, windier OR calmer, …”. Can I get an ‘amen’??
Wha...huh?
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." I was not aware of just how bad the flooding was; thanks for posting.
war has to do something for entertainment. The voices in his head aren't speaking to him and his imaginary friends have found reasons not to come over anymore.
More concretely, there are three very specific ways in which the CRA nudged Countrywide and other mortgage companies to adopt lax lending standards. 1. The Creation Of Artificial Demand For Low-Income Mortgages. Banks that were regulated by the CRA often found it difficult to meet their obligations under the CRA directly. Long standing lending practices by local loan officers were a big problem. But as banks expanded their deposit bases and other businesses, they often found that they were at risk of regulators discovering they had fallen behind in making CRA loans. One way of addressing this problem was buying the loans in the secondary market. Mortgage companies like Countrywide began to serve this entirely artificial demand for CRA loans. Countrywide marketed its loans directly to banks as a way for them to meet CRA obligations. "The result of these efforts is an enormous pipeline of mortgages to low- and moderate-income buyers. With this pipeline, Countrywide Securities Corporation (CSC) can potentially help you meet your Community Reinvestment Act (CRA) goals by offering both whole loan and mortgage-backed securities that are eligible for CRA credit,” a Countrywide advertisement on its website read. 2. The Threat Of Regulation Is Often As Good As Regulation. It is highly misleading to claim that just because mortgage companies were not technically under the CRA that they were not required by regulators to meet similar tests. In fact, regulators threatened that if the mortgage companies didn’t step up to the plate by relaxing lending standards they would be brought under the CRA umbrella and required to do so. Here’s how City Journal explains the dynamic: To meet their goals, the two mortgage giants enlisted large lenders—including nonbanks, which weren’t covered by the CRA—into the effort. Freddie Mac began an “alternative qualifying” program with the Sears Mortgage Corporation that let a borrower qualify for a loan with a monthly payment as high as 50 percent of his income, at a time when most private mortgage companies wouldn’t exceed 33 percent. The program also allowed borrowers with bad credit to get mortgages if they took credit-counseling classes administered by Acorn and other nonprofits. Subsequent research would show that such classes have little impact on default rates. Pressuring nonbank lenders to make more loans to poor minorities didn’t stop with Sears. If it didn’t happen, Clinton officials warned, they’d seek to extend CRA regulations to all mortgage makers. In Congress, Representative Maxine Waters called financial firms not covered by the CRA “among the most egregious redliners.” To rebuff the criticism, the Mortgage Bankers Association (MBA) shocked the financial world by signing a 1994 agreement with the Department of Housing and Urban Development (HUD), pledging to increase lending to minorities and join in new efforts to rewrite lending standards. The first MBA member to sign up: Countrywide Financial, the mortgage firm that would be at the core of the subprime meltdown. 3. The CRA Distorted the Mortgage Market. With banks offering mortgages with high loan to value, delayed payment schedules and other enticing features, the mortgage companies would have quickly found themselves unable to compete if they didn’t offer similar loans. The requirement to offer risky loans from banks created a situation where other lenders found they had to offer similar products if they wanted to expand their business.
Now, I know I’m not going to change the minds of any of the True Believers…those who read all of Reverend Al’s sermons, and say things like, “You know, global warming can mean warmer OR colder, wetter OR drier, cloudier OR sunnier, windier OR calmer, …”. Can I get an ‘amen’??
I guess he's done defending the New Black Panthers.
Bullshit statement. The demand was there. And CRA loans are not "low income" loans. HARD data, Paddy. Do you know what that is? It isn't the bullshit that you post. Show the $$$$ amount of loans in default and show the % of that $$$$ amount that was CRA. Until then...
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." I was not aware of just how bad the flooding was; thanks for posting.
Go lick your own balls, Rudy.
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." I was not aware of just how bad the flooding was; thanks for posting.
If the data is available and you know what it is, why don't you show it? Again, as has been shown, the loans don't have to come from CRA institutions for CRA to be the problem. CRA was the "little fire" that caused the whole house to burn down.
Now, I know I’m not going to change the minds of any of the True Believers…those who read all of Reverend Al’s sermons, and say things like, “You know, global warming can mean warmer OR colder, wetter OR drier, cloudier OR sunnier, windier OR calmer, …”. Can I get an ‘amen’??
I have several times Padlock. So, since you're the one making the counter claim...buck up the data...
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." I was not aware of just how bad the flooding was; thanks for posting.
#2. To: no gnu taxes (#0)
#3. To: no gnu taxes (#0)
--GW Bush
#4. To: war (#3)
#5. To: no gnu taxes (#4)
(Edited)
--GW Bush
#6. To: war (#5)
At the same time, you were pressed for data that CRA loans defaulted at any kind of level that could have precipitated the down turn. Each time that information was requested, you provided....squatina.
Badeye posted on 2011-04-29 10:30:22 ET
#7. To: no gnu taxes (#4)
Reading your unmitigated bullshit is being bitch slapped?
#8. To: no gnu taxes (#0)
"We are using every tool in our arsenal to combat lending discrimination," Thomas E. Perez
"We (government) need to do a lot less, a lot sooner" ~Ron Paul
Godwinson posted on 2011-02-23 11:47:32 ET
http://libertysflame.com/cgi-bin/readart.cgi?ArtNum=18011&Disp=46#C46
#9. To: war (#5)
at every turn you have been provided with hard data detailing that non-traditional lending led to the housing crisis.
#10. To: no gnu taxes (#9)
--GW Bush
#11. To: war (#10)
Wha...huh? Ruh rho, Shaggy . . . . Bwahahahahahaha!
#12. To: war (#10)
#13. To: no gnu taxes (#0)
"We are using every tool in our arsenal to combat lending discrimination," Thomas E. Perez, the assistant attorney general for the Civil Rights Div.
#14. To: no gnu taxes (#12)
(Edited)
The Creation Of Artificial Demand For Low-Income Mortgages
--GW Bush
#15. To: Rudgear (#11)
--GW Bush
#16. To: war (#14)
HARD data, Paddy. Do you know what that is? It isn't the bullshit that you post. Show the $$$$ amount of loans in default and show the % of that $$$$ amount that was CRA.
#17. To: no gnu taxes (#16)
If the data is available and you know what it is, why don't you show it?
--GW Bush
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