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Title: Obama regime is now pushing for subprime loans again!!
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URL Source: http://randysright.wordpress.com/20 ... hing-for-subprime-loans-again/
Published: May 16, 2011
Author: randysright.
Post Date: 2011-05-16 11:39:06 by no gnu taxes
Keywords: None
Views: 1801
Comments: 2
If there is one thing that contributed more than anything else to our current economic downturn, it was the subprime lending disaster. Almost everyone agrees the subprime loans were a disaster. Yet the Obama regime is now pushing for subprime loans again. Is there any other possible explanation, other than the Obama regime wants to tank the economy totally? The subprime lending crisis has its roots in one of the worst pieces of legislation, which came from the Carter administration and a Democratic congress. The Community Reinvestment Act of 1977 requires banks to make loans in all areas they serve, not just the wealthy areas. While the CRA sounds like a fair idea, in order to make credit available to all, it is in fact a disaster. The CRA basically requires banks to ignore common sense and standard underwriting techniques. Banks are in business to make money. They lend money at interest, which is repaid. Interest serves two functions. First is the profit function and the second is it covers the element of risk. Not all loans nor all borrowers are equal. Some borrowers pay their loans back on time, every time. Some default every time. In certain poor areas, you have higher rates of default. In a sane world, where banks are allowed to properly judge risk and not have to undertake risky loans, certain areas simply would not get loans. It is not unfair to those who are not getting loan; it is fair to the owners of the bank. Of course, in the bizarre land of liberals, that makes no sense. In St. Louis, an Acorn like group calling itself the St. Louis Equal Housing and Community Reinvestment Alliance began filing complaints against Midwest Bankcentre. This is a bank that has operated primarily in St. Louis’ suburbs. The complaint? Midwest Bankcentre was not making enough loans in high-risk areas nor was it opening branches in those areas. Executives have denied discrimination and there is no proof the bank has discriminated against anyone on the basis of their ethnicity. Yet the Department of Justice is now going after Midwest Bankcentre for the business decisions it has made. Imagine this, the government is now telling a bank where it should be opening branches. The management and ownership of the bank are the ones who should be making that decision, not the government. Banks and all businesses operate in their own self-interest and there are prudent business reasons for doing what they do. There are certain areas banks choose not to operate in. There are certain areas other businesses choose not to operate in either. Nordstrom’s does not put one of its stores in right next to a crack house. There is a reason for this. Thanks to the CRA, all banks were scored on how willing they were to make loans to communities that were low and moderate income. Professional protest groups soon learned they could pressure banks to make these type loans by CRA complaints. If a bank has a low CRA score, the Federal Government can block a merger, acquisition or the expansion of the bank with new branches. Thanks to the CRA and its mania to “help” the low income, sanity went out the window. Credit scores and history were no longer considered in making loans. Regulators pushed banks to offer no down payment loans because requiring a down payment was discriminatory. We know how all of this ended. The real estate bubble burst because the government pressured banks to make too many risky loans. Having learned the lesson from this, you would think that safe guards would be put in place to prevent a repeat of that. No, now the Obama regime is pushing them again. The Obama Justice Department has a new 20-member team that is reviewing and acting on CRA complaints filed by regulators. If the Department of Justice sues a bank, the penalties for the bank could run into the millions. Banks are now being required to operate in areas they have never operated in before just so they can avoid this type of litigation. With the lessons learned from the subprime melt down fresh in our minds, there can be only one reason why the Obama regime is pushing these loans again. Insanity is defined as doing the same thing over and over again and expecting a different result. In this case, the Obama regime is not insane. They know exactly what the result will be.
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#1. To: no gnu taxes (#0)
You just love to be bitch slapped.
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.
Led by the traitor that let the New Black Panthers intimidate voters, Thomas E. Perez. "The new political appointee heading DOJ’s Civil Rights Division, Thomas Perez, hand- picked by Attorney General Holder and President Obama, dropped the case against the Black Panthers during the sentencing phase."
--GW Bush
#2. To: no gnu taxes (#0)
The Obama Justice Department has a new 20-member team that is reviewing and acting on CRA complaints filed by regulators.
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