so you think the banks caused the housing mess? think again.
Posted in the Foreclosures Forum
Since: Jan 12
#1 Feb 12, 2012
This past week witnessed the announcement of a settlement between several major banks, several state attorneys general and the Justice Dept. In case it has escaped their attention, the current financial debacle started with Washington, not the banks.
In the late 1960's congress passed something called the Community Reinvestment & Redevelopment Act. This act was intented to address an urban myth known as redlining.
Supposedly, banks and savings institutions were controlled by evil White racists who refused to lend money to minorities. Banks of course have always discriminated. If you have little or no income or your credit rating sucks, a bank will not grant you a loan. Banks make these decisions on the basis of information from credit reporting agencies, and that information does not include the loan applicant's race or ethnicity.
But no matter. The liberal Left was successful in goading Congress to pass a law which coerced banks into people whose "income" often consisted of Food Stamps, a welfare check, etc. Thus was born what came to be called the liar loan.
Furthermore, the law gave radical community groups like ACORN (for whom Pres. Obama once worked) the authority to monitor the banks' compliance with the new law. Given this incentive, many people who would have found it difficult to finance a 40 oz. bottle of malt liquor, found they could swing a nice 3 bdrm. place in the 'burbs, and the AFDC check would just about cover the payments.
To add insult to injury, the law further required that financial institutions open more branches in inner city neighborhoods, which community activists claimed were under-served. These areas tend to be high crime zones. It was no accident that bank robberies increased exponentially during the 1970's.
So now here come the politicians and the lawyers, and they're going to solve the problem and teach those bad ol' bankers a lesson. Yeah, good luck with that.
#2 Feb 29, 2012
How about the agents working for the mortgage companies, who filled in the applications for the loans with false information? If you made $30,000 and wanted to buy a house for $400K they put in the application that you made $100K?
#3 Mar 7, 2012
You are wrong sir. Racial discrimination in lending persisted throughout the housing boom with banks disproportionately steering minorities into sub prime loans when their credit and finances were the same as Whites who received more favorable terms. Banks knew exactly what they were doing but nevertheless behaved irresponsibly causing the crash that inevitably followed in 2008, creating huge unemployment and plunging millions of Americans into homelessness.
They behaved that way because they are solely motivated by PROFIT and anticipated big profits from defaults. And it worked. Today are making record profits - on basically stolen assets. The banking industry needs much stronger regulation. Too bad not enough people understand how that scam worked. You are one.
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