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Smoking-gun edict shows the Federal Govt was behind the Housing meltdown

Discussion in 'U.S. Politics' started by Little-Acorn, Dec 20, 2011.

  1. Little-Acorn

    Little-Acorn Well-Known Member

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    In case the hundreds of other documented examples of the Fed govt threatening lenders with lawsuits etc., and huge govt entities like Fannie Mawe and Freddie Mac setting up gigantinc programs to buy risky mortgage loans from those who made them, thus absolving the original lenders of the risk of making those loans...

    Here's an official Policy Statement laying down the plans for dioing those things. Authored in 1994 by the Clinton administration and carried out rotely by the people who are trying hard now, to pretend that the resulting crash of the U.S. economy was someone else's fault.

    The more time goes by, the more of these "smoking gun" documents emerge... and the more shrill and strident the leftists' denials become.

    -----------------------------------------------------------

    http://finance.yahoo.com/news/Smoking-Gun-Edict-Shows-Gov-ibd-3846212214.html

    Smoking-Gun Edict Shows Gov't Behind Housing Meltdown

    Investor's Business Daily – Mon, Oct 31, 2011 4:38 PM EDT.

    President Obama says the Occupy Wall Street protests show a "broad-based frustration" among Americans with the financial sector, which continues to kick against regulatory reforms three years after the financial crisis. "You're seeing some of the same folks who acted irresponsibly trying to fight efforts to crack down on the abusive practices that got us into this in the first place," he complained earlier this month.

    But what if government encouraged, even invented, those "abusive practices"?

    Rewind to 1994. That year, the federal government declared war on an enemy — the racist lender — who officials claimed was to blame for differences in homeownership rate, and launched what would prove the costliest social crusade in U.S. history. At President Clinton's direction, no fewer than 10 federal agencies issued a chilling ultimatum to banks and mortgage lenders to ease credit for lower-income minorities or face investigations for lending discrimination and suffer the related adverse publicity. They also were threatened with denial of access to the all-important secondary mortgage market and stiff fines, along with other penalties.

    Bubble? Regulators Blew It

    The threat was codified in a 20-page "Policy Statement on Discrimination in Lending" and entered into the Federal Register on April 15, 1994, by the Interagency Task Force on Fair Lending. Clinton set up the little-known body to coordinate an unprecedented crackdown on alleged bank redlining.

    The edict — completely overlooked by the Financial Crisis Inquiry Commission and the mainstream media — was signed by then-HUD Secretary Henry Cisneros, Attorney General Janet Reno, Comptroller of the Currency Eugene Ludwig and Federal Reserve Chairman Alan Greenspan, along with the heads of six other financial regulatory agencies.

    "The agencies will not tolerate lending discrimination in any form," the document warned financial institutions.

    Ludwig at the time stated the ruling would be used by the agen cies as a fair-lending enforcement "tool," and would apply to "all lenders" — including banks and thrifts, credit unions, mortgage brokers and finance companies.

    The unusual full-court press was predicated on a Boston Fed study showing mortgage lenders rejecting blacks and Hispanics in greater proportion than whites. The author of the 1992 study, hired by the Clinton White House, claimed it was racial "discrimination." But it was simply good underwriting.

    It took private analysts, as well as at least one FDIC economist, little time to determine the Boston Fed study was terminally flawed. In addition to finding embarrassing mistakes in the data, they concluded that more relevant measures of a borrower's credit history — such as past delinquencies and whether the borrower met lenders credit standards — explained the gap in lending between whites and blacks, who on average had poorer credit and higher defaults.

    The study did not take into account a host of other relevant data factoring into denials, including applicants' net worth, debt burden and employment record. Other variables, such as the size of down payments and the amount of the loans sought to the value of the property being bought, also were left out of the analysis. It also failed to consider whether the borrower submitted information that could not be verified, the presence of a cosigner and even the loan amount.

    When these missing data were factored in, it became clear that the rejection rates were based on legitimate business decisions, not racism.

    Still, the study was used to support a wholesale abandonment of traditional underwriting standards — the root cause of the mortgage crisis.


    (Full text of the article can be read at the above URL)
     
  2. dogtowner

    dogtowner Moderator Staff Member

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    well, facts probably won't matter to the lefties, never have before.
    but thx for the post, very well done.
     
  3. Openmind

    Openmind Well-Known Member

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    Well, if that were true, we would ONLY experience housing bankrupcy in the "Black" community, right?

    We, the "chosen caucasians" would have no problem!

    You're so full of BS, it's coming out of your nose!
     
  4. Gipper

    Gipper Well-Known Member

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    Yes without question the biggest culprit for the banking/mortgage crisis is the US government. How could it not be?

    But like so many other great events in history, the libs will write the history and never mention the real perpetrator. Just as they have done with the Great Depression for decades.

    As is well known by some, if the media were truly unbiased and working hard to reveal the truth, liberalism would not exist.

    I know of two guys I used to work with who became mortgage originators in the 90s. Both are very wealthy and semi retired in their early 50s. Those were the days...
     
  5. dogtowner

    dogtowner Moderator Staff Member

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    the notion that the financial market would intentionally make bad loans is counter intuative. only the threat of government could make this happen.
     
  6. Dawkinsrocks

    Dawkinsrocks Well-Known Member

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    Dream on.

    Mortgage companies made ever increasingly risky loans as the Market became frenzied

    Interest only, then no repayment at all with the interest being added to the loan each month.

    Then show all the profit of the 25 year loan in year one to defraud investors and acquiesce into thinking these companies are really successful.

    That is what happened and your ignorance on this subject is scary

    You will believe any old claptrap if it fits your extreme right wing view won't you.

    It is the gullibility of Americans that has allowed it's governments to get away with such appalling crimes which in turn make the world hate the US.

    Oops, sorry, it is because they are jealous of your freedoms (snigger
     
  7. Little-Acorn

    Little-Acorn Well-Known Member

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    Threats of government, coupled with offers from that same government to buy up all the risky mortgages, thus absolving the lenders from any risk if/when the borrowers started to default.
     
  8. Dawkinsrocks

    Dawkinsrocks Well-Known Member

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    No, you are wrong

    The mortgage companies that started the fraud were not subject to government regulation

    Look, try to investigate this from number of sources and you will understand that you are wrong
     
  9. Little-Acorn

    Little-Acorn Well-Known Member

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    You have to love it when some chronic whiner ignores the points you have made and the documentation you have provided, simply replies "No, you are wrong", repeats a statement you have already debunked... and then demands that YOU prove HIS statement right!

    :D :D :D
     
  10. dogtowner

    dogtowner Moderator Staff Member

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    he hasn't the time to mush through these long boring articles as he refers to them.
    there are none so blind as those who will not see.
     
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