There is one word that accompanies the news from this administration more than any other. “Unexpected.”
WASHINGTON (Reuters) – New claims for jobless benefits unexpectedly rose last week, hardening the view the central bank will pump more money into the economy in hopes of boosting growth and lowering unemployment.
As this country fights for oxygen to breathe, Obama’s big spending, bigger regulation government’s tentacles continue to pull Uncle Sam under the water.
Sitting in a boat on the water, armed with a bat, ready to bash Uncle Sam as he struggles for air is the next Democrat financial crisis.
Potential paperwork errors on some of the $1.34 trillion of securitized home mortgages may give investors an opening to challenge the legality of deals, threatening to unnerve financial markets, according to Joshua Rosner, managing director at Graham Fisher & Co.
Some loans to borrowers with poor credit before 2007 may not have been transferred to mortgage trusts in the manner required by their pooling and servicing agreements. That raises questions about the ownership of the loans and may allow investors to force lenders to buy back the securities, Rosner wrote yesterday in a note to clients.
And it’s a big one:
“If plaintiffs bring suit it could rock the market,” Rosner, 44, said in a telephone interview. “If courts allowed those suits to proceed it would well feel much like 2008,” when the bankruptcy of Lehman Brothers Holdings Inc. led to the biggest market collapse since the Great Depression, he said.
And it all goes back to the sub-prime mortgage feeding frenzy:
Wall Street firms stopped selling almost all so-called private-label mortgage-backed securities in 2007 after defaults began to surge on loans to borrowers with poor credit. MBS values plunged as foreclosures climbed. More than 90 percent of mortgages are now issued by government sponsored enterprises, such as Fannie Mae and Freddie Mac, or are insured by the federal government.
Daniel Inviglio describes the Doomsday Scenario
Why is this so bad? The investors who hold that MBS might be able to claim that the bonds they hold were not created properly, contracts were breached, and the bank that originated the mortgages needs to buy back the bonds. This, of course, would require many billions of dollars in capital in excess of that banks have lying around. And remember these aren’t pretty bonds. They are mostly toxic and full of losses. Those losses would then be passed on to the banks.
Rosner imagines this leading to a Lehman-type weekend, where the financial industry again nears collapse. That might be a little melodramatic, but it isn’t impossible. If these investors have the legal standing that Rosner thinks, they would be sort of crazy not to force banks to take back these bad deals. After all, it’s better for the investors that they force these losses back to the banks who wrote the mortgages.
No matter what happens, it’s going to hurt those of us who pay taxes. Badly. Again.
Wall St. was quick to assign fault:
“If you didn’t pay your mortgage, you shouldn’t be in your house. Period. People are getting upset about something that’s just procedural,” said Walter Todd, portfolio manager at Greenwood Capital Associates.
Of course, that’s right, but it goes nowhere near explaining how this became so malignant.
There are many contributors to the current dire financial condition of this country, but no one is more responsible than Andrew Cuomo.
As Secretary of HUD under Bill Clinton, Cuomo set this entire fiasco into motion. But first, Henry Cisneros.
Redistribution pervades Obama’s administration but it is not new.
The roots of the whole debacle are by this point fairly clear. Clinton’s first HUD secretary, Henry Cisneros, required that mortgages serving low to middle income and underserved groups (read subprime loans) comprise at least 42% of Fannie Mae and Freddie Mac’s business. Since Fannie and Freddie are the primary purchasers of mortgages for packaging on the secondary mortgage market, this created a vacuum of demand, and encouraged primary lenders to make these bad loans for which they knew they could find a ready buyer in Fannie and Freddie.
Cisneros was Clinton’s redistributionist enforcer:
HUD held a series of “standing up for communities” rallies, financed by taxpayers, which encouraged local officials and special interest groups to lobby against Republican budget cuts. One piece of propaganda distributed by HUD’s New York office warned that the budget cuts “would dramatically expand America’s underclass” and that “thousands of families, many with children, would end up homeless.” HUD also sponsored a National Tenants Organization convention in Puerto Rico to defend the department. But that event was so political that even a HUD translator refused to take part and walked out of the proceedings in protest. According to HUD’s inspector general, an NTO official responded that “he really didn’t care whether HUD translated or not because the point was to get rid of Newt Gingrich.”
When Cisneros left HUD, he was lauded for the increase in homeownership rates that occurred on his watch. Part of his apparently winning strategy, Cisneros noted, was HUD’s “ability to convince lenders, builders and real estate agents that there was money to be made in selling housing to low- and moderate-income individuals.” Part of this “convincing” involved HUD-initiated legal action against mortgage lenders who declined higher percentages of loans for minorities than whites. As a result of such political pressure, lenders begin lowering their lending standards, which was another contributing factor to the housing meltdown in the 2000s
A giant, shovel-ready welfare program. And as is so common in the real world, the Law of Unintended Consequences takes its pound of flesh:
A key weapon in the Cisneros arsenal was the Clinton administration’s changes to the Community Reinvestment Act. The CRA was passed in 1977 and updated in 1995 to pressure lenders into making more loans to moderate-income borrowers by allowing regulators to deny merger approvals for banks with low CRA ratings. Even complaints brought by activists, such as the leftist group ACORN, were now counted against a bank’s CRA rating. The result was that banks began issuing more loans to otherwise uncreditworthy borrowers while purchasing more CRA mortgage-backed securities. As housing finance expert Peter Wallison noted, “The most important fact associated with the CRA is the effort to reduce underwriting standards. … Once those standards were relaxed … they spread rapidly to the prime market and to subprime markets where loans were made by lenders other than insured banks.”
Enter Andrew Cuomo, Clinton’s second HUD Secretary. Cuomo pushes GSE’s requirement of risky mortgages to 50%:
In 2000, Cuomo required a quantum leap in the number of affordable, low-to-moderate-income loans that the two mortgage banks—known collectively as Government Sponsored Enterprises—would have to buy. The GSEs don’t actually sell mortgages to borrowers. They buy them from banks and mortgage companies, allowing lenders to replenish their capital and make more loans. They also purchase mortgage-backed securities, which are pools of mortgages regularly acquired by the GSEs from investment firms. The government chartered these banks to pump money into the mortgage market and, while they did it, to make a strong enough profit to attract shareholders. That created a tug-of-war between their efforts to maximize shareholder value, which drove them toward high-end mortgages, and their congressionally mandated obligation to finance loans for those who needed help. The 1992 law required HUD’s secretary to make sure housing goals were being met and, every four years, set new goals for Fannie and Freddie.
Cuomo’s predecessor, Henry Cisneros, did that for the first time in December 1995, taking a cautious approach and moving the GSEs toward a requirement that 42 percent of their mortgages serve low- and moderate-income families. Cuomo raised that number to 50 percent and dramatically hiked GSE mandates to buy mortgages in underserved neighborhoods and for the “very-low-income.”
Cuomo knew how bad these loans were going to be, and he did all he could to make sure no one was going to know.
The HUD secretary is also required to produce voluminous rules that govern how the GSEs meet those goals, and the 187-page rules Cuomo issued opened the door to abuse.
The rules explicitly rejected the idea of imposing any new reporting requirements on the GSEs. In other words, HUD wanted Fannie and Freddie to buy risky loans, but the department didn’t want to hear just how risky they were.
HUD conceded in the rules that many consumer groups had urged it to insist that the GSEs provide “loan-level data” revealing how many of their loans contained high interest rates, prepayment penalties, or other requirements that presaged bad loans.
Cuomo made bad even worse:
But Cuomo wasn’t only stifling data that HUD could use to keep the GSEs out of trouble. He also went against his own recommendation—in a report issued jointly with the Treasury Department a few months earlier—that called for a prohibition against the GSEs purchasing loans “with high costs and/or predatory features.” Instead, Cuomo decided without explanation to adopt rules that prohibited nothing.
Profits from sub-prime mortgages are derived largely from Yield-Spread Premiums” or YSP’s. Up to 90% of sub-prime mortgages trigger them.
There are certainly those who believe that YSPs are at the heart of the crisis. Senator Chris Dodd, the chair of the banking committee, is trying to ban them, prodded by the fact that up to 90 percent of subprime mortgages quietly triggered these lucrative payments. When the Federal Reserve recently considered barring them and then backed off, a Times editorial charged that it had “balked on banning the practice whereby brokers maximize their commissions by signing up borrowers for the most expensive loan possible, even when the borrower qualifies for a cheaper.” The Illinois attorney general, Lisa Madigan, accused Countrywide of structuring their deals with brokers “in a manner that virtually guaranteed” that they were “more concerned with getting the highest YSP possible than getting their borrowers the best loan possible,” oblivious to “the possible fraud that this financial incentive would motivate.”
Cuomo tacitly endorsed them.
Cuomo hasn’t sued anybody over these outrageous payments to brokers—which are based on the “spread” between the high interest rate that brokers persuade unwary borrowers to accept and the par or going rate they would ordinarily have to pay. If Cuomo did sue, it might make for an awkward moment or two in court, since it was Cuomo who issued a rule in 1999 that dozens of federal courts have since found legalized the yield-spread premiums. He was the first HUD secretary to say they were “not illegal per se,” nullifying most of the 150 class-action lawsuits against them filed across the country.
All the “evil” bankers did was to take advantage of the infrastructure that Cuomo created. Then Democrats ran Fannie and Freddie as though the GSE’s were personal piggie banks. Barney Frank protected this fraud as though his life depended on it. Now he lies through his teeth about doing so.
Barney Frank in 2005: “Those of us on our committee in particular will continue to push for home ownership.”
Barney Frank in 2010: “I was very much in disagreement with this push into home ownership, and I think the Federal government should not be artificially doing that.”
Henry Cisneros see no government culpability in this mess:
“The real problem occurred not out of a governmental push, but out of a hijacking of the homeownership process by some unscrupulous interests.”
And what of Cisneros? Well, he joined the Board of Countrywide in 2001.
In 1998 Cuomo sued Accubanc for $2 billion because they were not making enough bad loans.
Every time liberals do something that they see as “fair” it screws the working people of this country and ends up as a disaster. Cuomo should doing time in Riker’s, serving as a sexual relief station for inmates. Instead, he’s going to be the next Governor of New York.
Sometimes life cannot be more ironic than it is.
DrJohn has been a health care professional for more than 30 years. In addition to clinical practice he has done extensive research and has published widely with over 70 original articles and abstracts in the peer-reviewed literature. DrJohn is well known in his field and has lectured on every continent except for Antarctica. He has been married to the same wonderful lady for over 30 years and has three kids- two sons, both of whom are attorneys and one daughter on her way into the field of education.
DrJohn was brought up with the concept that one can do well if one is prepared to work hard but nothing in life is guaranteed.
Except for liberals being foolish.
Sorry, but owning a house is not a ‘right’ but a privilege. People that can’t afford homes, shouldn’t buy them. It was the worst idea ever, sub-prime loans. I mean, really. Hey, see? We’re for the little guy!! WE put them in loans they couldn’t possibly pay back without worrying about the consequences.
Liberals really don’t understand the ‘actions have consequences’ mantra. How many times did Bush ask for investigations into Fannie and Freddie and was told ‘leave it alone, man, it’s fine!’?
🙄
I love that you started with the weird overuse of the word ”unexpected” by the Obama White House.
LOL!
I think it would be great for investors who lost so much if all these toxic incorrectly-written-up loans (bundled by banks that knew they were toxic) sold to investment houses to be bought by baby-boomers nearing retirement because they seemed safer were ”bought back” by the banks at huge losses.
I only had a few % of my total retirement in them but nearly lost all the value in them.
It would be nice to get that cash back.
But from what I know about Obama, he will only look out for a few types of people…..Union voters and Poor voters.
When he took over the two auto industry companies he threw private investors under the bus.
I would be dreaming if I thought he’d change his tune now.
Way back when gold was pegged at $33/ounce I did a science fair project of a gold smelt.
The space race industries threw out all their imperfect gold-plated electrical connectors by the 1/2 ton truckload!
I had a 1/2 ton truck.
I must have smelted out ~ 80 pounds of solid gold.
Over the years, especially after it was free to seek its own price, I have sold off much of it.
But now I am really glad to have so many pounds of it left.
Nothing Obama does now can take it away…..looks like he’s trying to prevent others from amassing much without paying him his cut, though.
Dad was right, it would be my safest, most reliable wealth for my whole life.
Amen. What a stupid, stupid idea- force banks to lend money to non creditworthy people, make the country guarantee them, and then wonder why the whole thing implodes. Whatever happened to common sense? And you have Barney Frank chiding anyone who voiced concern about an impending crisis– despite all the warning signs. These are the blithering idiots who run this country. I am praying that sanity returns in November..
Brilliant move, Nan. You deserve to make money.
This is one of the silliest memes out there, that the “entire” mortgage mess was created by the Community Reinvestment Act and Fannie Mae. Anyone who tries to promote this claim simply does not know what they are talking about. It is an analysis that is as shallow as a three year old’s wading pool.
There were 50,000 condos under construction in downtown Miami in 2006. I looked at a model of one: 1,500 square feet for $700,000. The condo building was never completed and sits 1/4 completed to this day.
How the hell did that have anything to do with the CRA?
AIG insured trillions of dollars of Wall Street created collaterlazed debt obligations. No one in any government agency forced Bear Stearns or Lehman or Citi to create or buy CDOs, and THAT is why the international banking system was jeopardized — not some mook in Brooklyn trying to get a piece of the American dream.
Indeed, even if the CRA applied to residential mortgage creation (and that is NOT what the CRA requires . . . I know because I did CRA work for a big bank years ago), that is not the same thing as “forcing” a bank to resell the loans, or lower lending standards to book more loans so you can sell them odd to Lehman, which turned around and created CDOs against those same weak mortgages. For every undercapitalized borrower conceivably brought in the door “because of the CRA” (again — it does not even apply to residential mortgages, especially those booked by non-banks), there were about 100 stampeded there by teaser rates from mortgage loan brokers who got paid on volume volume volume, not quality.
That’s proof? Seriously?
http://go2.wordpress.com/?id=725X1342&site=iusbvision.wordpress.com&url=http%3A%2F%2Fwww.nypost.com%2Fseven%2F09292008%2Fpostopinion%2Fopedcolumnists%2Fos_dangerous_pals_131216.htm%3Fpage%3D0&sref=http%3A%2F%2Fiusbvision.wordpress.com%2F2008%2F09%2F30%2Fobama-sued-citibank-under-cra-to-force-it-to-make-bad-loans%2F
http://www.cnsnews.com/public/content/article.aspx?RsrcID=36048
ACORN sued Citibank to force Citibank to make more bad loans as well.
Buycks-Roberson v. Citibank Fed. Sav. Bank Fair Housing/Lending/Insurance
And one of the plaintiff’s attorney’s?
Obama, Barack H. (Illinois)
FH-IL-0011-7500 | FH-IL-0011-7501 | FH-IL-0011-9000
Again
Any bank that wants to expand or merge with another has to show it has complied with CRA – and approval can be held up by complaints filed by groups like ACORN.
B-Rob You better get up earlier in the morning and with much better information if you want to beat up this crew!
ACORN
Made Business
Impossible
for Banks
which tried to
Do the Right Thing
and Foreclose
on Homes when the ”buyer”
Couldn’t make
his Mortgage Payments.
drjohn and Randy —
I had a long, link filled reply and lost it! But I will hit you with the highlights and supplement later:
1) Re Miami — I used that to show exactly how out of wack the real estate industry and lending standards got. Fannie was only relevent to this particular disaster to the extent that (a) they guaranteed condos [I have no idea if they did]; and (b) to the extent the mortgages met the requirements for a federal guarantee. But this failure had nothing to do with CRA, whatsoever. It just goes to show that anyone saying “CRA caused the problem” simply has no idea what they are talking about.
2) Read Michael Lewis’ book “The Big Short.” His sources, the guys who made a ton of money on the collateralised debt obligations and default swaps, said that they noticed in 2004 that mortgage originators were booking crappy loans and selling them off. Which is relevant because . . .
3) ACORN was picketing banks over predatory lending in the inner city well before 2004. Indeed, both the NAACP and ACORN were protesting banks alleging that they were steering sub-prime loans into the inner cities. And don’t just disbelieve them — because the Greespan-led Fed completed studies around that same time frame that showed that minorities were getting put into subprime, higher interest rate loans at a time when whites with identical credit ratings were put into conventional loans with lower interest rates.
4) I have not pulled that case you have linked where Obama represented ACORN. But since CRA does NOT have a private right of action, I know ACORN could not have sued alleging a violation of CRA. In addition, looking at the case numbering pattern, I am willing to bet that the lawsuits were filed in 2000, long before the crappiest CRA loans were being booked.
5) Adding 3 and 4 together, I am willing to bet that the Obama lawsuit was over predatory lending and discrimination, not the CRA.
6) You state that banks complied with CRA by booking residential mortgages in the inner city. This is simply out and out false. I know because I DID CRA LOANS for what is now part of Bank of America. There is no money in $50,000 mortgages, so banks would meet their CRA responsibilities by lending to churches, doiing SBA loans to small grocers, doing construction loans for community development corporations, etc. Those larger loans allowed them to make money while benefiting underserved inner cities, which was the purpose of CRA. THAT is the definition of a CRA loan, not some individual mortgage to some schmoe in the hood.
7) drjohn, you cite to a newspaper article by Stanley Kurtz. He, of course, neither adds any links supporting his claims, nor is he a business writer. But he prints the CRA pronouncement as if it explains what happened which. of course, it doesn’t. In fact, I do not believe I have seen a single bank officer claim that they booked subprime mortgages to meet CRA requirements. Because (ta da!) the definition of subprime loans was such that a $400,000 mortgage in the suburbs was a subprime loan that could be repackaged and resold. In addition, as I mentioned above, there are much better loans you could make
8) Bank lending practices got shoddy enough to have mortgages let in the inner cities to people who could not pay. But to blame that on the CRA is like blaming Henry Ford for a car crash. Banks (mainly mortgage origination arms of banks) did that lending in the hood because they found they could sell the mortgages off and make a quick skim of a few thousand bucks right after closing. When they were doing this, of course, ACORN was in the streets protesting the very thing you now blame them for.
Like I said, I will follow this up tonight with links. But I am sick of conservatives falsely claiming that the CRA caused the mortgage implosion. In fact, in was Wall Street greed that created a DEMAND for crappy loans in the inner cities. Why? Because if you had a loan, no matter how poorly collateralized or poorly documented, you could bundle it with a couple hundred others and sell it to the Germans, skimming off a few million dollars in the process. Everyone else who wanted a home already had one, so inner cities were the last market to be exploited. Mortgage brokers were happy to fill the demand and suckers in the hood were unsavvy enough to try to buy a home. No demand on Wall Street, no crappy inner city loans: simple as that.
Nan G — ACORN was also protesting predatory lending many many MANY years before those mortgages went bad. They were prescient. The fact that they tried to help people keep their homes years later, that is a bad thing?
The building boom B-Rob is talking about is an outcome from the CRA issues disscussed on this thread. When lending standards were reduced so that people who could not afford houses could buy them (no income verification, no down payment, etc.) that created a market for speculators or straw buyers. Builders built houses for buyers that didn’t exist– buyers who were really investors who hoped the house would sell before it was completed and they would make money. This hot market drove home prices up and created the bubble.
@B-Rob
They were protesting that in 2004, but the red flags were out long before then. ACORN also protested redlining, i.e. not making enough bad loans.
And I think you’re missing a major point. To remain CRA compliant, banks were forced to accomodate the demands of ACORN.
Fannie was a huge buyer of sub-prime mortgages, thanks to Cuomo, Clinton, Johnson and Raines. It was that securitization which allowed the subsequent Follies Cuomere
Cuomo was the architect of this disaster.
And I gave you the case title. It’ll be easy to find.
Just as I thought, the Obama lawsuit had nothing to do with CRA:
http://www.freerepublic.com/focus/news/2101106/posts?page=128
It was a redlining lawsuit filed in the mid 1990s (before mortgages were even being repackaged in large numbers) alleging that minorities were getting crappier loans than whites with the exact same credit score. Far from FORCING the bank to give subprime mortgages, they were saying “Give me the same mortgage you gave white people”, not those crappy subprime mortgages. This is also consistent with ACORN’s later activity, opposing and suing over predatory lending.
There are two possible explanations for why the cons ignore the allegations in the complaint and applicable law relating to this case: (a) you are trying to lie about what Obama and ACORN were trying to do prior to the subprime mortgage meltdown, or (b) you simply don’t understand what it is your were reading, but chose to follow a talking point that comported with your prior prejudices about Obama and ACORN.
In short, drjohn, ALWAYS verify what your source says. The fact that Kurtz failed to link to the lawsuit should have told you he was lying. And, in fact, he was lying.
drjohn —
“Redlining” is when you refuse to lend to minority neighborhood under the same terms as non-minority neighborhoods. Only if you equate “minority”with “bad” would your terminology be accurate. I, sir, reject it not only because it is inconsistent with law but also offensive. Moreover, check the link I posted about: ACORN was not asking for any special treatment; they were asking for the same treatment to be extended to minorities as whites.
Got a problem with that?
ACORN was NOT ”prescient,” brob.
ACORN knew what was coming because they helped engineer it!
LOL!
“prescient”
You are simply wrong and you are changing your position. You posted a link to an article that claimed that banks made subprime loans in the inner cities to comply with ACORNs demands. I explained (and the Obama lawsuit proved) that ACORN wanted NOTHING TO DO WITH SUBPRIME LOANS, which were the problem. They warned about subprime loans and Obama sued Citibank in 1995 over subprime loans. So it is simply a flat out lie to say the banks did anything to “accomodate the demands of ACORN”. If they had, ACORN would not have been protesting the subprime loans the banks were making! I did not “miss’ your point because your point was simply false, and proved false by the lawsuit you pointed to in the first place!
In addition, I explained to you what a “CRA loan” is in the banking industy. You still have not linked to any bank official or even a bank examiner blaming CRA for the subprime mess. Because the CRA had nothing to do with subprime lending!
OBP — Please explain to me what million dollar condos in downtown Miami and Miami Beach had to do with CRA. This should be interesting . . . just walk me through it, preferably with supporting links.
Please retire the meme. I heard Michael Medved say this a couple weeks ago and it is simply false.
Nan, you are simply flat out wrong and I explained why you are wrong. ACORN opposed the subprime predatory loans coming into the hood. They sued over it and they protested it. It is the height of mendacity to blame them for a practice that they OPPOSED ENOUGH TO SUE IN FEDERAL COURT to stop.
I mean, seriously, how does that work?
‘ACORN, you opposed subprime lending in the hood, so you are responsible for subprime lending in the hood”? I thought if you SUPPORTED something that went wrong, you were to blame. I did not know that you get blamed if you opposed it, too!
LOL . . . you cons crack me up!
Brob- The link you posted writes the following:
“In these lawsuits, ACORN makes a bogus claim of Redlining (denying poor people loans because of their ethnic heritage). They protest and get the local media to raise a big stink. This stink means that the bank faces thousands of people closing their accounts and get local politicians to lobby to stop the bank from doing some future business, expansions and mergers.
If the bank goes to court, they will win, but the damage is already done because who is going to launch a big campaign to get the bank’s reputation back?It is important to understand the nature of these lawsuits and what their purpose is. ACORN filed tons of these lawsuits and ALL of them allege racism….”
I think that’s the point- the lawsuits were to further an agenda, in what is commonly acknowledged as the most corrupt venue in the US.
@B-rob #14
I have no problem with that at all.
But forcing people into mortgages they neither deserve nor can fund is bad. It was Clinton’s, Cuomo’s and Barney Frank’s wet dream. And we now pay the consequences.
You have a problem with that?
Cuomo outright stated that consequent to his Accubanc lawsuit that default rates would rise. He knew he was forcing bad loans.
You have to be willing to connect the dots. The Community Reinvestment Act CRA was passed in 77 to address “redlining” (refusal to lend to qualified borrowers for property located in certain areas) as well as the general belief that large banks took deposits in one community but made most of the loans in other communities. In 95 the CRA was given “teeth” in that bank’s CRA rating was made public and regulators denied all sorts of applications if the bank had a poor CRA rating. ACORN and groups like it used CRA as a club to beat banks into funding all sorts of projects. The push to get low income people into homes coupled with the threat of a poor CRA rating caused banks to lower their credit standards. Fannie Mae and other secondary market conduits accepted these lower standards. These loan products called NODoc or LowDoc did not call for verification of income or employment. They did not require down payment.
Loan products cannot be restricted to just “low income” borrowers. These types of loans quickly became popular with speculators. It was the speculation in Real Estate especially in certain states, CA, AZ, NV, and FL that drove a hot market and led to building houses, condos and even commercial buildings that are now sitting empty and sometimes unfinished because the speculator never intended to occupy the house. And since the Speculator’s income was never verified, the speculator could not make the payments when the housing bubble collapsed and no one bought the house or condo.
The real cause of all of this mess is government manipulation of the free market. That is what leads back to CRA.
As for a link B-Rob, all I can offer is 35 years of banking experience.
CRA was another instance where Lefties trying to take care of people initiated unintended consequences. B-Rob, you can squirm all you want, but The ACORN actions and the CRA allowed for loans to minorities who failed to meet basic qualifications. Then, the loans were packaged as investments and sold in bulk so the individual risk of each loan was hidden. Then the Wall Street Banks traded these disguised mortgage packages at good ratings. Goldman Sacks was selling these packages as investments while they were shorting them. that is what caused the AIG and other companies to large to fail to fail. You can spin this all you want to, but the current world wide economic crisis was caused by marketing loans made to people who didn’t qualify as quality investments worldwide.
@ DKK — Again, you are changing the subject. No single court rating I have seen has EVER had the federal court in Chicago among the most corrupt in the US. Second, that is fine that you cite a commentary that called the lawsuit “bogus” because it claimed racism. ou may even believe the lawsuit was bogus. But I see you have no comment about the Fed study that tended to support exactly what ACORN claimed — minorities were steered into higher mortgage rate loans. In addition, if it was THAT bogus, the judge would not have granted class action certification, or allowed the lawsuit to continue after the routine motion to dismiss.
drjohn — I agree with you on one thing — those minorities did NOT DESERVE the loans they got. Their credit scores qualified them for BETTER LOANS. That is what ACORN was protesting, that higher interest rate loans were more likely to go bust and devastate minority neighborhoods. I have no comment about Cuomo because I have not read up on how a guy who left HUD about ten years ago is single-handlely responsible for an implosion in 2008 . . . as if no other administration was in charge of HUD after that and could not “stop” whatever Cuomo had done years before. I will not read you comment to claim that inner city minorities do not “deserve” mortgages but similary situated whites do; one could easily draw that implication from what you wrote, but I will grant you the benefit of the doubt.
OBP — if you actually have 35 years experience in banking, then you know what I say is true — the classic CRA loan was not a mortgage on a house in the hood. Again, I have yet to see ANY bank official actually blame the CRA for these residential mortgage practices you explained above. You know about the role of non-bank mortgage originators in this mess, many of whom (including some of my client’s employees) falsified documents to get loans approved with banks; you know about the schenanigans at closings, where checks traded hands so fast that borrowers left the room not knowing who they owed or what they owed. You also know about the Fed study I mentioned.
Nope. the CRA had very little (if nothing) to do with the ultimate implosion. In fact, the claim makes no sense. If the CRA was the “cause” of the shoddy lending, then the loans would have been going bad by the millions during the 2001 recession; they weren’t. It was the collateralization AFTER THAT that led to LIAR loans, no doc, etc. because you had a huge demand for loans. no matter how shoddy the lending standards. Why? Because banks were no longer holding them.
Still waiting for someone to blame the CRA for the CDO meltdown aspect of that . . . or is that Obama’s fault, too?
Randy, you wrote the following:
As I noted above, there is no rational argument supporting your claim that ACORN’s “actions” (opposing redlining and opposing predatory loans as far back as 1995) led to the debacle involving subprime loans in 2006 — 2008. In fact, other than OPB’s ellusive and Beckian “connect the dots” mantra, I have yet to see ANYONE of you explain how opposition to predatory subprime loans equals support of those same loans. It is nonsensical.
Second, you can claim the CRA was “responsible” for the problems, but there is no data, no analysis, no logic supporting such a claim for all the reasons I have pointed out before. I state it again — please show a single authority on banking who supports this theory! And, no, OBP’s seat of the pants “I’ve been in banking 35 years and I don’t need no stinkin’ support for my claims” does not count as “support.”
Third, exactly what makes you think most or all or even a significant portion of the loans that went bad were in “minority areas.” It is just not true; this is a nationwide epidemic problem.
On this issue, cons have swollowed poorly thought out, unsupported theories of causation that are not only wrong, but nonsensical. You tried to blame boogeyman ACORN for this, but it fleis in the face of 15 years of ACORN litigation and protest history. Lasty, no matter how YOU try to squirm (and y’all have squirmed so much you contracdict each other), one fact is true: without CDOs, banks would have hand to keep loans on their books. As soon as that responsibility went out the window, Katy bar the door . . . .
Brob- You said:
@ DKK — Again, you are changing the subject. No single court rating I have seen has EVER had the federal court in Chicago among the most corrupt in the US. Second, that is fine that you cite a commentary that called the lawsuit “bogus” because it claimed racism. ou may even believe the lawsuit was bogus. But I see you have no comment about the Fed study that tended to support exactly what ACORN claimed — minorities were steered into higher mortgage rate loans. In addition, if it was THAT bogus, the judge would not have granted class action certification, or allowed the lawsuit to continue after the routine motion to dismiss.
I cited to YOUR link- that is hardly changing the subject! YOUR link made that commentary about the lawsuits being bogus.
I have not read the Fed study, so I do not feel qualified to opine on it. But I do know that minorities have been charged higher rates for loans because they are not seen as good credit risks. But I don’t see that as the issue here. Instead, I would like to see real proof that the creditworthiness of the folks suing was equal to that of people who were not charged similarly high rates.
That brings me to your next comment. The fact that a lawsuit is brought does not mean it has merit. That the judge certified the class only means that the plaintiffs’ lawyer pleaded a proper class complaint, and had a legit appearing class representative. That is not a determination of the case on the merits- it is a procedural determination. Whether the case was bogus or not simply was not tested- the case settled. The fact that is survived a routine motion to dismiss- if in fact there was one– means only that the procedural elements of sufficiency were satisfied. Many a class action has been dismissed later on summary judgment because the plaintiffs could not satisfy their burden of proof. So to my point that these lawsuits were bogus, there is an “in terrorem” effect of simply bringing them. You get to bully banks and people and cost them a fortune in defense costs to satisfy an activist agenda. Yeah, I believe they were bogus.
Brob,
Forgot one thing. I did not say that the federal court was corrupt. I said that the venue– which is Chicago- was corrupt. The most corrupt courts in the US are the state courts in Cook County (you guessed it, Chicago) IL.
I think the present POTUS proves there is not, and never was, anything that wasn’t corrupt in Chicago. Not in the past 50 years anyway.
There are others who should also be in prison. For example, . . .
Top 3 Recipients of Fannie Mae and Freddie Mac Campaign Contributions, 1989-2008
Dodd, Christopher $116,900
Obama, Barack $120,349
Kerry, John S $109,000
Why would organizations backed by the Taxpayer need to Buy a Congressman?
Why would a Congressman have fed at the trough of Fannie Mae and Freddie Mac?
Some executives and some in Congress should have seen jail time, starting with all Senators who took cash from Fannie and Freddie.
A.I.G. was also a culprit in the frauds that energized the housing bubble, yet to this day, no-one from that company who raped and pillaged it, nor any Congressman who took favours from A.I.G., has been tagged and shipped off to jail.
@ DKK — No one who knows anything about courts would put Cook County in the top. You are relying on the early 1980s Operation Graylord prosecutions to draw that conclusion. Where I am (Cuyahoga County, Ohio) has two judges under federal indictment. The federal courts in Louisiana and Texas have had an impeachment and a conviction, respectively. And if you are talking about litigation hellholes, then all of Mississippi, Texas, Alabama and West Virginia, and Wayne County,Michigan and East St. Louis, Illinois might qualify. But Chicago courts? No.
But all that is a canard, meant to deflect from the obvious: ACORN opposed subprime lending and sued to have minority borrowers be treated the same as non-minorities. To blame ACORN for subprime lending ASSUMING (with no evidence whatsoever supporting this) that banks did subprime lending to comply with the CRA, is lunacy. In addition, this false claim against ACORN totally ignores the role of mortgage brokers who booked the loans for banks, and of the upstream buddlers who were pressing thr banks to get more and more loans in the pipeline. I mean, seriously, if your want to “connect the dots,” it does not require any oddly attenuated analysis of Fannie and Freddie, or ACORN. ACORN never booked a loan and never told anyone to lower their lending standards; they sued to have minorities treated like whites — no better, no worse. Fannie and Freddie never booked a loan, either. Maybe they relazed their guarantee standards; I don’t know. But what does THAT have to do with mortgage brokers falsifying documents, creating LIAR loans, then the banks selling the loans to Wall Street? THAT is where the problems started: when borrowers walked in the mortgage brokers office showing $30,000 in income and being told they qualified to buy a $200,000 house. Why? Because the broker, the bank, and Wall Street were all shoving the risk off to the bondholders. They did not care at all if the borrower could never satisfy the loan terms. So where is ACORN in this? Nowhere . . . because they were outside the loan broker’s office protesting the subprime loan the broker was about to book!
In addition, I cited to freerepublic because it was the first thing that came up. Freerepublic, to put it mildly, cannot be expecte to do an independent analysis of anything. It is a hyperpartisan internet rag for wingnuts. My main point in citing to it, though, was to show how flat out wrong it is to blame ACORN for subprime lending when ACORN sued over and protested subprime lending. It no way was the CRA responsible for the meltdown, because subprime lending has NOTHING TO DO WITH THE CRA! Indeed, when ACORN opposed my former employer’s expansion into Mass. back in the early 90s, their position was that the bank’s mortgage brokerage arm was VIOLATING THE CRA BY DOING ONLY SUBPRIME LENDING in minority neighborhoods! To blame the CRA and ACORN for subprime lending is like blaming a rehab program for the number of crackheads in a city: they were part of the solution, not the problem. It is the height of lunacy to try to flip the facts and the law on their head and blame ACORN for something that it consistently opposed.
You said that the case was not “tested” on the merits; I doubt that is quite accurate. The bank probably did a motion to dismiss (which was denied) then did some discovery. Obama’sld firm, in addition, was a very respected civil rights law firm: very dialed in with the big firms, very smart litigators. They do not take sh$t cases (unlike some ambulance chasers) so if they say there is a problem, there REALLY IS a problem. (Aside — I did fair housing defense for a while before concentrating on employment defense. Trust me on this: we know who are the hacks and who are the real deal. If you have a real good firm on the other side and they say there is a problem, you knwo there is a problem, because they get to pick and chose their cases. The Miner firm was the real deal, so you know Citibank’s attorneys said “we may have a problem” when ACORN got them to sue).
You say you are not familiar with the Fed study (actually, studies).
http://www.federalreserve.gov/bankinforeg/interagencystatement.htm
http://www.bos.frb.org/commdev/commaff/closingt.pdf
http://road.uww.edu/road/peltierj/Racine/Mortgages%20Minorities%20and%20discrimination.pdf
You did not google the studies, I guess. Yet you then opine that “But I do know that minorities have been charged higher rates for loans because they are not seen as good credit risks.” The Fed studies showed that, when all was said and done, minorities were “not seen as good credit risks” because . . . they were minorities. I saw this first hand with my old bank when a Black borrower’s loan application for a house in the gentrifying section of town was greeted with “Well a house in THAT neighborhood couldn’t be worth much.” Excuse me? How about reviewing the friggin appraisal before you judge the value of the property based on who lives in the neighborhood?!
You then claim “But I don’t see [discrimination] as the issue here.” Really? If the studies show that minorities were not extended credit on the same terms as similarly situated Whites, getting loans with higher interest rates and/or higher fees, how could that NOT be an issue in a subsequent default? Lenders extracted extra money from them based on race, yet you think that has nothing to do with an inability to satisfy the terms of the loan? Really? THAT is what ACORN was steamed about: that lenders were ripping off minority borrowers and weakening minority neighborhoods when the unfortunate default and foreclosure left their houses vacant and abandoned.
I remember when ”redlining” was the issue.
But banks would have been all right with quitting the redlining IF they could still decide to allow a loan to a person/couple based on their actual qualifications.
But that wasn’t what happened.
Racial quotas were forced on bank loans.
Banks were forced to lower the standards they used to say someone qualified.
That meant they were forced to lend to high risk characters at regular loan rates!
Nobody in their right mind does that unless they are forced.
Banks were forced.
Then, because of anti-discrimination laws (I think) they had to spread these bad basis points to all comers.
That’s when things really went bad.
Post modernism at its best! We cannot blame those who set up the criteria for allowing individuals to get loans they could not repay. We cannot blame those who harried the banks because they were not giving loans to those who could not pay. Instead, we blame those who made the loans. We blame those who bundled the loans. We blame those who sold the loans. In a post modern world, we can never blame the individual who committed the offence. He only did what society forced him to do.
We cannot blame Muslims for 9/11. Only “radical” Moslems even though their funding and support came from a wide cross section of the Muslim world. We cannot make individuals responsible for their actions because society made them do it. In the case of our President, the Republicans made him do it.
I have watched this thread for days. Everyone has presented good arguments, but the real issue is the individuals who initiated this are not being held responsible. The law makers who passed laws reducing qualifications for loans for minorities (economic as well as racial) are to blame. The individuals, who applied for a loan, signed the papers for repayment knowing they could not repay the loan are to blame.
Predatory lenders and bundlers were secondary criminals. If the original loan had not been made, then there would not have been predatory lenders and bundlers. Contrary to the posts, ACORN acting in the same manner as Jesse Jackson, filed suit as well as threatened to file suits on major banks to prevent mergers because their history of lending to minorities who couldn’t repay the loan was not high enough. Only a lefty practicing post modern philosophy can say that ACORN was not culpable in subprime loans.
The lawmakers who crafted and voted for CRA and subsequent amendments are the real criminals. They wanted to buy votes at tax payer expense and they did right well. If it had not been for CRA, ACORN would not have been able to black mail the lending institutions into giving more loans they knew could not be repayed. The issue here is simple. As long as this country does not require individuals to be responsible for their actions, the subprime loan mess is going to be small potatoes. I do not see the administration going after those congressmen who benefited from low interest loans because of their position. It took so long to go after Murtha that he passed away before they could charge him. What about the Black Panthers in Philadelphia polling places? How long does it take a murderer to be out of prison if he exhibited good behavior while in prison? We are all to blame because we do not insist on making individuals responsible for their actions.
I’m certainly not as knowledgeable as most on this board, but perhaps B-Rob can explain to me how a young man in his twenties received an Acorn loan of 300,000 in cash – I believe I have the facts right – on an income of $12,000/year. The loot was gone in months. Gone. Disappeared. $300,000 whoooosh. How much more do I need to know about ACORN, beyond the illegalities in the voting booths, both in the primaries and the GE and its incompetency and corruption not to believe anyone defending it. ACORN is a huge pile of manure, just as the D party, who created it, is. Manure, nothing but manure. I don’t care what you quote brob, they are all manure. They could not be hurtful to this country that the worst of the terrorists.
@ atti — I have no idea what the hell you are talking about. Was ACORN lending money? I don’t think so. What I do know is that they OPPOSED AND PROTESTED subprime lending in minority areas. If someone got that kind of money on that little income (and I have seen cases where that happened) the blame goes to the mortgage broker and the bank that loaned them the money. How the hell you blame a community organization that OPPOSED AND PROTESTED those kinds of practices remains beyond my comprehension. And comparing them to “terrorists”? Unhinged . . . .
@ Randy — you, too, are in La-La land. Fannie and Freddie did not DICTATE any loan criteria; they merely said we will guarantee those kinds of loans.
The banks did not have to extend a loan to anyone, or relax their lending standards. They chose to because there was a lot of money and very little risk in doing so. Likewise, no one forced the bundlers to bundle crappy loans; they chose to do so because, as long as you did not own any of the paper, there was little risk. The borrowers were not forced to get those loans. Some of them were defrauded, some were duped, some were greedy, but most just wanted to buy a home. Crazy that . . .
My beef is with you trying to blame ACORN for subprime lending when ACORN opposed that practice. That is what is so b.s. abotu your position.
You also said:
@ Nan G —
What you posted are your opinions. Unfortunately, they have no grounding in fact or logic. First off, read “The Big Short” by Michael Lewis and listen to “The great big pool of money” on This American Life. You will see that no one (and certainly not ACORN or the CRA) “forced” banks and mortgage brokers to loosen lending standards. The anti-discrimination laws had nothing to do with it, either. Your fairy tale and Randy’s all stem from the fact that you cons hate the dems, hate the anti-discrimination laws, hate ACORN, and hate the CRA, so you fabulate a grand theory that those four factors/actors were “responsible” for the meltdown. In reality, there is neither a factual, mathematic or even logical basis for your Beckian “connect the dots” theory because there were not nearly as many inner-city minority borrowers as suburbanites booking the same kinds of loans in ever larger dollar amounts!
And you know what totally destroys your theory? ACORN suing time and again, and making CRA-based objections to bank mergers, BECAUSE banks were doing subprime lending in minority neighborhoods! Ponder that — they sued and protested to stop subprime lending targeted at minorities, yet you try to blame them for the lending they opposed in federal court and before federal agencies.
I know, I know . . . those pesky documents destroy your theory. But that just means your theory is bogus and you need to move on to a better theory as to why this melt down occurred.
B-Rob: SHOOTING your mouth here too, and my friends are too polite for you defending
the wrong doing of those you represent, IT SHOW HOW your gang work
with intimidation and scare tactics and racist card thrown here to soil this blog again and again,
WELL it doesn’t work here also, as much as you can attack, because you know how tolerant
and classy this blog is about, and you take advantage of it,
remember where you are and tell the other of your groups, that THE AMERICANS WANT THEIR AMERICA BACK, and THEY ARE THE MASTERS ON THIS DECISION,
AND no matter what you say, nothing will change that.
BOHICA!!!!
I thnik that B-Rob is labeling the wrong people Cons. No one has drained the swamp of Cons yet in the house have they? WHy is the House waiting until after the election to address the Waters and Frank issues? B-Rob, I think you need to crawl back into the hole you crawled out of until you get the dirt out of your eyes.
the bronze: is that a dirty word in SPANISH?,
I know it’s not FRENCH. bye
@ ilovebeeswarzone, it is an old time honored Military acronym. Quite popular today amongst those who have done three or more deployments, been home for four to six months, missed years of their children’s lives, spent too many birthdays away from the house, too many Holidays being just a picture on the wall or the piano but got their lives back to somewhat normal and got Orders to saddle up again…
B=Bend
O=Over
H=Here
I=It
C=Comes
A=Again
BOHICA !
It is an American phrase, not French or Spanish but is pronounced in the same tone of voice as Merde!
OLD TROOPER 2, thank you for the info,I might say, it’s A PRESTIGIOUS name,
because it originate from the braves of AMERICA. I am specialy found of.
bye
@ Randy, never let it be said that Our Boy B-Rob has any understanding of the Constitution as written or any vague understanding of Article 1 of that document, the 10th Amendment that also limits the power of the Federal Government and strictly prohibits abuse of Authority by Elected, Appointed or Anointed Federal Employees.
Come November, sad sacks like him can get a “shovel ready” minimum wage job at my place as I can always use a manure shoveler in my corral or barn. I have a very low tolerance for “educated fools”, folks that make a living selling BS for logic and guardhouse lawyers but when the Free Ice Cream runs out and frivolous theory or litigation is no longer is in vogue I employ folks that can be made useful and I teach the work ethic on my spread one shovel load at a time.
The path that B-Rob promotes is not Constitutionally Legal, has no basis in Statute and is fully prosecutable under existing settled law. Wasteful and Illegal theft from the US Treasury and unethical conduct on the part of Federal Government will be seeing the tipping point by February 2011 as the entitlement class will see reduced funding for their programs and the Liberal Agenda will be totally fiscally unsustainable.
It all started, as Mata clearly stated, with the FDR Regime, Judicial errors, irresponsible deficit spending and Governance by fiat as opposed to Constitutional Law, was further bollixed up by the LBJ “Great Society” business that placed the Federal Government in the lending & housing business, Clinton’s CRA and the Feds Meddling in aspects of American life that are not valid under the Constitution.
Social and Economic Justice were stolen from Das Capital and need to go away. It was never the Framers and Founding Father’s intent to give those powers to the Federal Government. I read the Federalist Papers by a campfire in Montana in Summers in the Big Sky Country, tending cattle back several decades ago between watches so no one can try to fool me one how far off track things have gone.
When the Founding Fathers values and principles go away, the Republic will be just another failed experiment in the dustbin of history. I am not aligned with any Party but not content to see it all go away by acts committed by Fools, Thieves and Career Politicians. The Food Stamp and Entitlement Nation was not the one I spent the majority of my adult life to defend against all enemies, foreign or domestic.
Dr john, I’ve so been trying to dodge this thread since I really don’t want you to think I’m picking on you. I know we’re both conservative, but we do know how to bump heads by now, yes?
Because this is my industry, I’ve not only been aware of the title disputes over foreclosured properties for some time, I’m not surprised at this freeze. I am, however, somewhat bizarred out as to how you necessarily tie this mostly to Cuomo and HUD.
It was back in Sept of 2008 that I did the Perfect Storm post on the housing collapse. While I see the CRA as the catalyst for many of our problems, OBP is correct that the ultimate nail in the bubble collapse was a hot market (created by reg changes, increase GSE demands, creative loan packages to accommodate, creating a supply v demand frenzy) driving prices up to lead to the collapse. As I said back then, had we not had the unnatural and unsustainable price appreciation on homes, we wouldn’t be in this pickle. Foreclosures have been around for decades. You remove a defaulting, unqualified buyer in for a home worth the mortgage.
Problem is, the homes weren’t worth the mortgage. Hence the “toxic asset” problem. And in this correction period, even those of us who did everything right still will find ourselves upsidedown in our value to mortgage. And I guestimate that (crystal ball *still* dusty) for another few years at least.
As for the latest problem, it’s actually been in the making for some time since this has happened. With “lien holders” actually being strewn around the secondary mortgage markets, foreclosures are tough. And banks have been issuing limited warranty deeds for foreclosure sales for some time now in order to avoid the fallout as best as possible.
But what we have here isn’t a Cuomo problem, but a title process problem. While a few lawsuits have been cropping up in various states over the past year or two, it’s now come to a head. Many title types and I have been concerned with this… mostly to protect the new buyers. If the title has a cloud because of a dispute of ownership during the sale, we can screw up further an already dying-on-the-vine real estate market. And without a real estate recovery, we can have no recession/depression recovery.
The result of the foreclosure “freeze” by four major banks… and may extend to others… is less about a bailout than it is about a complete wedge in the world of real estate transactions, and an increase in litigation on the court dockets. We have three avenues to expect here (from an article I saw, but didn’t archive the link), from WSJ by Dawn Wotapka on Oct 12th:
Not only are new owners of foreclosured homes sweating litigation bullets, so are the title companies, who are in the business of insuring titles against claims.
Those that defaulted on their mortgages are not the victims here, as a default of the loan is a default. But that doesn’t mean many won’t come knocking at the doors of the new owners with a claim of victimhood, despite their default.
In reality, the new owners and title companies will be paying the ultimate price, as well as the US economy. As far as the foreclosure process? With the secondary market purchase of loans, it’s not always an easy papertrail to follow. Then there is whether or not all the proper papers were filed in the proper state/county jurisdictions.
As is usual, the only ones that will benefit from this are attorneys.
And lastly, not all the foreclosures are the “subprimes”. Since the inception of the housing crash, the defaults include everything from FHA/VA to jumbo loans.
As far as Cuomo? No clue why you or anyone else thinks this leads some smoking gun back to him as the prime suspect. He certainly may be one of many, but hardly the sole onus bearer. Nor are all foreclosure loans subprime. And in fact not all subprime or exotic loans are low and middle income. They are just some of many in the dominoes that fell in the past two years.
And not all subprimes went thru Fannie or Freddie either.
@ B-Rob, #33:
It’s interesting, how those who previously resisted efforts to curtail predatory lending practices now place the blame on those who were most often victimized by it, and on those who tried to do something about it. It’s kind of like blaming the victim of a robbery for the crime, while ignoring the one who escaped with his wallet.
It’s hardly surprising, though. Blame shifting is absolutely essential to the GOP’s current political strategy. It simply wouldn’t do for voters to remember that just before it all hit the fan, republicans had 12 continuous years of majority control of both the House and Senate, and that during the last 6 of those years they also had a republican in the White House.
What you’ve got there are arsonists blaming firemen after the factory has burned down. Obviously it’s their fault, because they’re the ones who can be seen at the site of the disaster. Obviously they haven’t done the job we foolishly entrusted them with.
Will heartily agree that CRA and the GSE’s are not the sole cause for the housing bubble creation/collapse. But it is equally as shallow to exonerate either of them from responsibility.
This is particularly amusing since I’ve already pointed out to you how absurd it is to have an “instructor/teacher/professor/lecturer” at Harvard with a single case under his belt as an attorney. And now we get to it what he did as a junior attorney… I think he got to give an affidavit… whoopee. It was in 1994, where he represented Calvin Roberson in a redlining case against Citibank. And oh my, I’m probably elevating him to even higher stature since he was one of four attorneys for Roberson.
His actual heyday in court, the one I was referring to, is when he argued for Ahmad Baravati in the 7th Circuit. Baravati was of Iranian descent (or direct?), and contested the reason for termination as fraud investigation that a Chicago securities firm used. Obama was no lone ranger on that one either, but at least he got some court room action… for a day or two. And his firm did prevail in the case.
Wow… I’m just bowled over with his experience to be a teacher/instructor/lecturer/professor. LOL
But back to Roberson/Citibank. Yes, this specific redlining case is indeed prior to Rubin/Clinton CRA changes in the back rooms of the WH, and just before the GOP took over Congress chambers in 1995. Technically, Obama and company filed their lawsuit five months before the CRA reg changes.
But not being good with numbers, I guess you wouldn’t have noticed your error that Obama was likely an attorney/suit filed in a 2000 lawsuit, when he was clearly a member of the IL Senate/politician since 1996. DOH! In fact *all* Obama’s pitiful law experience was concentrated in just a few years prior to his political career. You really need someone to keep you straight, don’t you, Billy Bob?
It could be you miss the point just because of your mental makeup, Billy Bob. Skipping ACORN’s lobby activities on Congress since, as you say, they don’t make loans themselves. seems rather deliberate a pass. Redlining has been illegal on a federal level for quite some time. I certainly don’t approve of it, and would be johnny on the spot to turn any lender in I see practicing it.
Redlining is somewhat a wide potpourri of things, ranging from refusing to make a loan, to charging exorbitant fees and/or conditions that are not fitting with the buyers qualification status, and based on minority or income status.
The fly in that ointment is you can’t lobby to have a “low income” or “minority” buyer be treated the same as non-minorities without them meeting the same financial qualifications. The reason the CRA regs were changed, and loan standards dropped, is you couldn’t treat them the same if they didn’t meet the criteria. Thus the advent of the exotic loans and lower standards. Anything to get them thru DU and LPI underwriting standards. You just couldn’t get this group thru either automated underwriting, or manual, with their income to debt ratios with old standards. Don’t get them thru, and you meet lawsuits and run into CRA merge regs.
Nor can you drop lending criteria just for a specific group of people save in very limited circumstance (i.e. HUD 184s, FHA, VA, USDA).
Herein lies the thorns in the CRA reg change rose bush. The lending criteria was stringent enough that the low income/minority buyers couldn’t meet the criteria. So the banks gave them high risk quotes, LIKE THEY DO EVERY SUBPRIME CANDIDATE BORROWER. Didn’t matter the color, race, or gender. If a buyer didn’t (and still doesn’t) meet the prime A loan criteria, you are charged a higher rate. Junk fees differ from mortgage banker/broker to mortgage banker/broker. Any buyer should be “shopping” for the best deal… just as you would if buying a car or TV. If you don’t… well, that’s just not society’s fault. too bad…
Now I didn’t really follow Obama’s Roberson/Citibank dance along the yellow brick road. I don’t know Roberson’s specifics to know if he actually did qualify for better rates or not. Truth be told, I don’t give a rat’s butt. But I will tell you that redlining lawsuits and CRA reg changes most certainly did play a part in creating the lax lending criteria – extended to not only low income/minority buyers… rightfully so – and then followed by a flood’load of EZ money buyers being released on the existing real estate inventory… which drove up the prices, which led to beaucoup toxic assets.
No one person or event, or rather a perfect storm of bad decisions and lax Congress combined.
Read more in depth again, Greg. Were they suing because low income/minority didn’t meet the standard lending criteria? Or were they suing because despite NOT meeting the criteria, they resented the low income/minority having to pay the higher rates non-minorities had to pay for the same credit standard?
Point is, if they were treated like others… loans based on their credit alone… they were either refused, or charged more – JUST LIKE EVERYONE ELSE. ACORN didn’t like this.
Can you say “clueless”?
@ Greg, coming to the defense of B-Rob is laughable as you both subscribe to the Party Line revisionist history bundle of half truths, suffer from economic illiteracy and are believing that the sense of “entitlement” has replaced “personal responsibility” and accountability as core American values.
You are mistaken on your blame shifting tripe as was Chris Dodd, Barney Frank, Pelosi, Raines, Reid and the rest of those that are nothing more than irresponsible Officials whose enabling and fingerprints can be found on the collapse of Fannie, Freddie on the paper trail of the hugest Public Debt in the history of the planet.
Finger pointing requires a basis of proof in fact and not just opines from partisan buffoons that can’t get their arguments straight after Mata provided you with the evidence in previous postings.
Regime Change will happen in November and prosecution for incompetence and malfeasance in office may not be necessary but is possible. You may want to pick your arguments more carefully. Your “heroes” Waters and Rangel may be the first to be tried not by a House Committee but by Federal Courts. Sworn testimony and no letter of censure for fallback.
I don’t know what you do for a living but I doubt if it is Private Sector.
I don’t believe the boundary that separates social parasites from those who are good and useful necessarily coincides with the private sector/public sector dividing line.
@ Greg, obviously you missed my point. There is a “Producing Class” that pays the Nations bills and a “Non-Producing Class” that consumes and relies on “Other Peoples Money” and there is a difference in the mentality, the values and the general attitude.
I read “entitled” in your posts and a hostility in the attitude. Do you resent the accumulation of wealth by the “Producing Class” or just believe that evil resides in the souls of those that expect others to pay their own way and not be obliged to provide “Bread and Circus” for those that are “Non-Producing”? There is a line and I am not standing in the Soup & Bread Line but am just demanding some accountability from those that toss my tax dollars about like a handful of mardi gras beads.
@ Mata — You show your ignorance when you imply that Obama was not qualified to teach at U. Chicago Law School (where he taught AND EXCELLED AT TEACHING for more than ten years) — because, by your count (not his, yours) he only had one litigation case under his belt. Well . . .
Mata, I guess you were not paying much attention during the last 30 years as O’Conner, Scalia, Kennedy, Thomas, Ginsberg, Breyer, Roberts, Alito, Sotomayor and Kagan (have I missed anyone?) were confirmed. Want to know how many of them have actual jury trial experience? Only Ginsberg and Sotomayor. O’Conner, Breyer, Alito and Kagan came from the legislative/administrative branches and did not even have ANY appellate experience. Thomas had only done appellate work for a couple years when he was fresh out of law school, then went into the administrative side of government. Roberts had scads of appellate experience, but no more jury trial experience than my 14 year old; ditto Ginsberg. Sotomayor is the only judge who had done litigation, appellate work, trial judging, and appellate judging before alighting to the Supreme Court bench. So by your seat pocket determination of the “proper” experience for a Con law professor, only ONE of the current Supreme Court justices would be “qualified” in Mata’s world. As a former law school professor of mine (who never worked as a lawyer) would say “Well, that CAN’T be right!” And it isn’t. Because neither trial experience nor appellate experience is required to be a law professor of excel. Sorta like the fact that VERY FEW NFL head coaches ever played in the league (I count Fisher, Singletary, Del Rio, Kubiak, and Wizenhunt out of 32 teams).
You also said:
And that is just it: ACORN was suing because UNLIKE WHITES, minorities were NOT being judged based on their credit; minorities with decent credit got worse loans than Whites with the same credit. Meaning they paid more and, by extension, were put into loans that would be harder to satisfy. The law requires that you descriminate based only on non-race based criteria. And, as I noted, the Fed studies tended to support the underlying theory of the claim, too. This was not something being pulled out of the air.
But that is not the best part, the part you cons keep ignoring . . . but can’t, of course: ACORN was protesting and suing over subprime lending in minority areas, NOT suing to get more subprime lending!
I will say it again: ACORN was protesting subprime lending, saying that it was destroying minority neighborhoods! That is what the 1995 lawsuit Obama filed was about, it is what their challenge to my former employer in the early 1990s was about, and it is what these articles in the early 2000s was about:
http://www.allbusiness.com/legal/banking-law-banking-finance-regulation/5647129-1.html
http://realtytimes.com/rtpages/20000727_safeguards.htm
http://www.eastbayexpress.com/eastbay/acorn-foresaw-the-foreclosure-crisis-in-2001/Content?oid=1371384
Let me quote from the article immediately above:
The facts are stubborn things. There is a long record of protests, litigation and legislation pushed by ACORN opposing the subprime lending practices that led to the meltdown. They opposed the slipshod lending in the inner-city areas and there are tons of documents on the net showing their consistent opposition. You, in contrast, cannot point to a single historic document of any kind from ANYWHERE supporting your claim that “banks lowered lending standards because ACORN requested/demanded/whatever” It is simply not true.
Here is a paper from 2002 (long before the meltdown) outlining the issue and ACORN’s involvement challenging Household Finance’s predatory lending practices. The juicy part starts at page 25.
http://www.law.columbia.edu/center_program/ag/resources/Library?exclusive=filemgr.download&file_id=92529&rtcontentdisposition=filename%3DPeacock,%20S-%20How%20the%20Household%20Settlement%20Uncorked%20a%20Law%20Enforcement%20Bottleneck.pdf
In short, it is the height of mendacity to blame ACORN for the bank practices that ACORN sued in federal court and protested in the streets and lobbied city hall and complained to federal regulators — to stop! ACORN was on the right side of this — opposing discrimination, opposing slipshod lending practices, opposing the fraud that Household, for one, admitted was happening in those loans. With not a single fact to support it, cons, for political reasons, are trying to place the blame on the very group that saw the canary in the coalmine dying and tried to speak up . . .
One last thing on the CRA since I think the “ACORN was to blame” claim has been obliterated by the historical record. I saw an article by some guy who ASSUMED lending standards among all mortgage lenders declined because banks had CRA concerns. He did not, of course, quote any lender anywhere supporting this assumption and, as I mentioned before, it makes no sense because mortgage lending was not a CRA compliance activity. These articles show the fallacy of the “CRA was to blame” claim:
http://scienceblogs.com/authority/2008/11/acorn_and_the_community_reinve.php
http://www.prospect.org/cs/articles?article=did_liberals_cause_the_subprime_crisis
And there is this one on the issue:
http://www.mcclatchydc.com/2008/10/12/53802/private-sector-loans-not-fannie.html
The CRA had nothing to do with the slipshod lending standards because the entities that booked the vast vast VAST majority of the loans were not even subject to the CRA! Independent mortgage brokers? Nope. Equity mortgage and refi specialists like Household Finance? Nope, not subject to CRA. CRA only applies to federally chartered banks and S&Ls. And as I explained before, banks did not have to and, therefore, did NOT do residential mortgages to satisfy their CRA responsibilities. One bank here set up a wholly owned sub that lends to non-profits and another arm that lends to churches. Or they lend to community development corporations that cobble vacant parcels together, remediate brownfields, then sell the land to developers. Some had correspondent banking relationships with minority owned community banks or church based credit unions. THAT is how you comply with CRA! Not by doing residential mortgage lending!
Now how did cons come to the conclusion that the CRA was implicated in the subprime mortgage meltdown? I don’t know . . . alchemy, possibly. Because I have not seen them cite to any bank official or regulator anywhere who identified the CRA as a factor in this implosion. I have not seen any study that would support the conclusion, nor a rational explanation as to how the CRA regulations on commercial banks somehow “forced” non-bank mortgage lenders to do anything.
I just don’t know where it comes from, factually speaking, and no one on this board has pointed to anything containing a factual basis for it; opinions, yes, facts or rational explanation, no. So it appears to be little more than an article of faith, part of their whole conservative economic mythos, up there with “deficits don’t matter,” “tax cuts increase tax revenue,” “cut waste, fraud and abuse and everything will be fine,” and “you can have a free lunch by spending more and cutting taxes.”
@ B-Rob,
Ok, Jocko, post his College transcripts then or retract that statement. I reckon that We can judge excellence. 😉
A resume with a whole lot of blank spaces comes off like snake oil.