Obama, Holder BRINGING BACK SUB-PRIME!!!

[AgeOfEnlightenmentSCP]

Remember that forcing banks to make loans that allegedly never happened? They're doing it. AGAIN!

[AgeOfEnlightenmentSCP]

sweetness-light.com/archive/obama-demands-more-bad-loans-for-poor

news.yahoo.com/s/bw/20110506/bs_bw/1120b4228031594062

www.businessweek.com/magazine/content/11_20/b4228031594062.htm

[AgeOfEnlightenmentSCP]

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In the wake of the subprime implosion, the Obama Administration has stepped up its scrutiny of disadvantaged neighborhoods’ credit access

By Clea Benson
May 5, 2011

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 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 [sic], 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.

[glow=red,2,300]But you see, nobody is forcing anybody to make bad loans[/glow]

[ugonow]

The biggest subprime players are not even subject to CRA.

[ugonow]

"50% of subprime loans were made by mortgage service companies not subject comprehensive federal supervision and another 30% were made by affiliates of banks or thrifts which are not subject to routine supervision or examinations. As former Fed Governor Ned Gramlich said in an August, 2007, speech shortly before he passed away: “In the subprime market where we badly need supervision, a majority of loans are made with very little supervision. It is like a city with a murder law, but no cops on the beat.”

Not surprisingly given the higher degree of supervision, loans made under the CRA program were made in a more responsible way than other subprime loans. CRA loans carried lower rates than other subprime loans and were less likely to end up securitized into the mortgage-backed securities that have caused so many losses, according to a recent study by the law firm Traiger & Hinckley (PDF file here).

Finally, keep in mind that the Bush administration has been weakening CRA enforcement and the law’s reach since the day it took office. The CRA was at its strongest in the 1990s, under the Clinton administration, a period when subprime loans performed quite well. It was only after the Bush administration cut back on CRA enforcement that problems arose, a timing issue which should stop those blaming the law dead in their tracks. The Federal Reserve, too, did nothing but encourage the wild west of lending in recent years. It wasn’t until the middle of 2007 that the Fed decided it was time to crack down on abusive pratices in the subprime lending market. Oops.

Better targets for blame in government circles might be the 2000 law which ensured that credit default swaps would remain unregulated, the SEC’s puzzling 2004 decision to allow the largest brokerage firms to borrow upwards of 30 times their capital and that same agency’s failure to oversee those brokerage firms in subsequent years as many gorged on subprime debt. (Barry Ritholtz had an excellent and more comprehensive survey of how Washington contributed to the crisis in this week’s Barron’s.)"<<< -----No one can deny lenders were agressivaly marketing exotic mortgages,such as no down,no credit check,sweat equity, balloon arms,etc. of their own free will.The subprime was a huge lucrative market for them.These were then wrapped up into bundles of other notes and sold in the market. Then the bubble popped. To blame the meltdown on the government forcing banks to make bad loans to minorities is silly,imo.

[fairlycrazy23]

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.

So it is discrimination if you don't want to set up a bank in disadvantaged areas? Why should I not be allowed to discriminate against higher risk individuals?

Maybe these particular people should stick to renting until they move up the economic ladder, and if they never do they never own a home.

[AgeOfEnlightenmentSCP]

May 11, 2011 15:09:50 GMT -5 fairlycrazy23 said:

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.

So it is discrimination if you don't want to set up a bank in disadvantaged areas? Why should I not be allowed to discriminate against higher risk individuals?

Maybe these particular people should stick to renting until they move up the economic ladder, and if they never do they never own a home.

'disadvantaged' is a loaded word anyway. What exactly does that mean?

To me, it's just numbers. Some people will choose to qualify for home ownership, and other people will make different choices. Why should lenders- especially lenders with a blank check from the tax payers to cover their mortgages- make risky loans to individuals that don't care enough to meet the requirements of home ownership?

[AgeOfEnlightenmentSCP]

Better targets for blame in government circles might be the 2000 law which ensured that credit default swaps would remain unregulated, the SEC’s puzzling 2004 decision to allow the largest brokerage firms to borrow upwards of 30 times their capital and that same agency’s failure to oversee those brokerage firms in subsequent years as many gorged on subprime debt.

Last time I checked, Bill Clinton was President in 2000.

[AgeOfEnlightenmentSCP]

Um, gee ugo-- you don't suppose the big players have teams of lawyers that look at this sh** and conclude they'd better be stupid, too?

[jarhead1976]

This message has been deleted. deleted by me wrong thread.

[Politically_Incorrect12]

Great...so now banks have to look at skin color when deciding to make a loan.

[floridayankee]

May 11, 2011 15:13:28 GMT -5 AgeOfEnlightenmentSCP said:

Why should lenders- especially lenders with a blank check from the tax payers to cover their mortgages- make risky loans to individuals that don't care enough to meet the requirements of home ownership?

Home ownership is a right damnit!! It's in the Constitution right next to our right to health care.

[AgeOfEnlightenmentSCP]

May 12, 2011 9:46:56 GMT -5 floridayankee said:

May 11, 2011 15:13:28 GMT -5 AgeOfEnlightenmentSCP said:

Why should lenders- especially lenders with a blank check from the tax payers to cover their mortgages- make risky loans to individuals that don't care enough to meet the requirements of home ownership?

Home ownership is a right damnit!! It's in the Constitution right next to our right to health care.

You know the long term plan is to nationalize housing. It won't be long before the only place you can even buy a house is through government.

[AgeOfEnlightenmentSCP]

The Welfare Rights movement of the 1960's is alive and well and in the White House.

[marshabar1]

The banks that are being investigated must being doing very well in their little niches. The Cartel frowns on that and will destroy them as it always does.

The Federal Reserve came into existence at a time when small local banks all over the country were thriving and businesses were doing so well that they were able to finance their own expansions. The big New York bankers didn't want any of that happening so the formed the banking cartel called the Federal Reserve and forced Congress to sneak legislation through making them the central bank for the United States. Little successful banks all over the country were then put out of business.

No economic crisis in this country has ever been caused by anything but bank meddling and the extension of impossible loans. All they want is the interest and they'll get it any way they can including from bailouts.

They control the government and if the Justice Department is pushing these banks over the edge it is at the behest of the banking cartel.

[Politically_Incorrect12]

May 12, 2011 9:55:07 GMT -5 AgeOfEnlightenmentSCP said:

May 12, 2011 9:46:56 GMT -5 floridayankee said:

Home ownership is a right damnit!! It's in the Constitution right next to our right to health care.

You know the long term plan is to nationalize housing. It won't be long before the only place you can even buy a house is through government.

Isn't that the same argument used for school lending? Since the government is backing up those loans, why do they need the middle man? People should just be able to go straight to the government.

I have a feeling you are right about the same argument being used for home loans in the future.

[ugonow]

I don't know about where you live, but in my lily white surburb neighborhood, banks and mortgage companies were agressivly pushing no down, no credit, balloon ARMS, all kinds of risky loans because subprime was big bucks to them. And they dumped them onto the open market. CRA loans were nothing in the grand scheme of things the percentage of the bad loans out there due to CRA was minimal....but it is a nice easy scapegoat.

[floridayankee]

May 12, 2011 9:55:07 GMT -5 AgeOfEnlightenmentSCP said:

You know the long term plan is to nationalize housing. It won't be long before the only place you can even buy a house is through government.

If I have to wear a government issued uniform like they do in most futuristic sci-fi flicks, I'm out. Them things are pretty queer.

[Savoir Faire-Demogague in NJ]

And they dumped them onto the open market. CRA loans were nothing in the grand scheme of things the percentage of the bad loans out there due to CRA was minimal....but it is a nice easy scapegoat.

As long as FNMA and FHLMC buy these loans, banks and lenders will make them.
CRA loans may not have comprised a sizable segment of the entire mortgage/secondary market, but they were big enough to bring down the entire global financial system.

[ugonow]

The subprime industry was huge.And the jumbo products being pushed were not sustainable . CRA loans were a very small percentage of the loans involved.The vast majority of the subprime loans were made by lenders not even subject to CRA. But it is easier to blame the government rather than the banks themselves ,I guess. You know,that personal responsibility thing. The biggest mistake the government made was repealing Glass-Steagal,which opened the gates for their risky actions.

[fairlycrazy23]

It was government responsible for the housing mess, it can not be wholly blamed on any one thing (CRA), but because of numerous non-market forces injected by the government at various points the entire process was corrupted. Glass Steagal was not the problem we would have had the same situation if it was still in place.
CRA, government backed loans, low cost of money, burdensome regulations

[Deleted]

Team Obama cannot help itself. They are community organizers and activists. It's what they DO.

[hello fromWarsaw]

Allowing the WORTHY poor and WORTHY minorities to buy homes is great. When Pubs deregulate and cut enforcement until ANYONE can buy a house, a Boooosh disaster. Blaming Marxists is fearmongered idiocy.