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Government bullied sub-prime lenders for the love of anti-discrimination Recently on an MR thread the question arose as to whether Latinos and blacks were really at the root of the sub-prime crisis. Here’s Stan Liebowitz, who is the Ashbel Smith professor of Economics in the Business School at the University of Texas at Dallas, with a definitive “yes”. Thanks to “The Fellist” for the link. THE REAL SCANDAL How feds invited the mortgage mess PERHAPS the greatest scandal of the mortgage crisis is that it is a direct result of an intentional loosening of underwriting standards - done in the name of ending discrimination, despite warnings that it could lead to wide-scale defaults. At the crisis’ core are loans that were made with virtually nonexistent underwriting standards - no verification of income or assets; little consideration of the applicant’s ability to make payments; no down payment. Most people instinctively understand that such loans are likely to be unsound. But how did the heavily-regulated banking industry end up able to engage in such foolishness? From the current hand-wringing, you’d think that the banks came up with the idea of looser underwriting standards on their own, with regulators just asleep on the job. In fact, it was the regulators who relaxed these standards - at the behest of community groups and “progressive” political forces. In the 1980s, groups such as the activists at ACORN began pushing charges of “redlining” - claims that banks discriminated against minorities in mortgage lending. In 1989, sympathetic members of Congress got the Home Mortgage Disclosure Act amended to force banks to collect racial data on mortgage applicants; this allowed various studies to be ginned up that seemed to validate the original accusation. In fact, minority mortgage applications were rejected more frequently than other applications - but the overwhelming reason wasn’t racial discrimination, but simply that minorities tend to have weaker finances. Yet a “landmark” 1992 study from the Boston Fed concluded that mortgage-lending discrimination was systemic. That study was tremendously flawed - a colleague and I later showed that the data it had used contained thousands of egregious typos, such as loans with negative interest rates. Our study found no evidence of discrimination. Yet the political agenda triumphed - with the president of the Boston Fed saying no new studies were needed, and the US comptroller of the currency seconding the motion. No sooner had the ink dried on its discrimination study than the Boston Fed, clearly speaking for the entire Fed, produced a manual for mortgage lenders stating that: “discrimination may be observed when a lender’s underwriting policies contain arbitrary or outdated criteria that effectively disqualify many urban or lower-income minority applicants.” Some of these “outdated” criteria included the size of the mortgage payment relative to income, credit history, savings history and income verification. Instead, the Boston Fed ruled that participation in a credit-counseling program should be taken as evidence of an applicant’s ability to manage debt. Sound crazy? You bet. Those “outdated” standards existed to limit defaults. But bank regulators required the loosened underwriting standards, with approval by politicians and the chattering class. A 1995 strengthening of the Community Reinvestment Act required banks to find ways to provide mortgages to their poorer communities. It also let community activists intervene at yearly bank reviews, shaking the banks down for large pots of money. Banks that got poor reviews were punished; some saw their merger plans frustrated; others faced direct legal challenges by the Justice Department. Flexible lending programs expanded even though they had higher default rates than loans with traditional standards. On the Web, you can still find CRA loans available via ACORN with “100 percent financing . . . no credit scores . . . undocumented income . . . even if you don’t report it on your tax returns.” Credit counseling is required, of course. [my emphasis - Ed] Ironically, an enthusiastic Fannie Mae Foundation report singled out one paragon of non-discriminatory lending, which worked with community activists and followed “the most flexible underwriting criteria permitted.” That lender’s $1 billion commitment to low-income loans in 1992 had grown to $80 billion by 1999 and $600 billion by early 2003. Who was that virtuous lender? Why - Countrywide, the nation’s largest mortgage lender, recently in the headlines as it hurtled toward bankruptcy. In an earlier newspaper story extolling the virtues of relaxed underwriting standards, Countrywide’s chief executive bragged that, to approve minority applications that would otherwise be rejected “lenders have had to stretch the rules a bit.” He’s not bragging now. For years, rising house prices hid the default problems since quick refinances were possible. But now that house prices have stopped rising, we can clearly see the damage caused by relaxed lending standards. This damage was quite predictable: “After the warm and fuzzy glow of ‘flexible underwriting standards’ has worn off, we may discover that they are nothing more than standards that lead to bad loans . . . these policies will have done a disservice to their putative beneficiaries if . . . they are dispossessed from their homes.” I wrote that, with Ted Day, in a 1998 academic article. Sadly, we were spitting into the wind. These days, everyone claims to favor strong lending standards. What about all those self-righteous newspapers, politicians and regulators who were intent on loosening lending standards? As you might expect, they are now self-righteously blaming those, such as Countrywide, who did what they were told. Comments:2
Posted by onlooker on Sun, 10 Feb 2008 00:27 | # “As you might expect, they are now self-righteously blaming those, such as Countrywide, who did what they were told.” That’s okay, don’t let it bother you. Barack Hussein Obama, when he gets elected, is going to fix everything. 3
Posted by Cato the Elder on Sun, 10 Feb 2008 00:31 | # The sub-prime mess was caused by many factors. This was only one of them. But ultimately, the banks would not have lent such enormous amounts of money if the interest rates were not lowered close to zero (adjusted for inflation) after 9-11. Greenspan’s printing of an ocean of cheap money was the primary cause. Note also that the UK is about to witness a similar or even bigger disaster even though there wasn’t a racial shakedown going on - not on an American scale so far as I know. Check out this program: http://www.youtube.com/watch?v=0_mzhJh-JlQ It is almost a carbon copy of what happened in America. It seems that the Anglo-American model of capitalism encourages too many to pursue the route of easy money without hard work. It is going to ruin the United States. 4
Posted by onlooker on Sun, 10 Feb 2008 01:26 | # Mr. G. Worker, Of course I was being sarcastic with my previous comment. We can all easily deduce by learning from history that this sub-prime debacle was carefully and meticulously planned. It was a planned major ripoff just like the S&L crisis back in the 80’s. The ‘powers that be’ know the taxpayers will pay for it…and the beat goes on…. 6
Posted by Riley DeWiley on Sun, 10 Feb 2008 09:56 | # I can’t prove it but I still think the failure of the immigration amnesty bill was the straw the broke the camel’s back. They had been giving 30 year mortgages to people without legal status, so they had to be betting that the law would not be enforced. When they found out it might be, it kind of queered the market. The subprime meltdown and the failure of that bill happened at about the same time. Riley 7
Posted by Fred Scrooby on Sun, 10 Feb 2008 16:30 | # The Realist makes good points (all of them known perfectly to the core of behind-the-scenes string-pullers who are imposing race-replacement, a core which prominently includes a particular extremely influential group whom The Realist is always trying to exculpate):
How do we know this core of string-pullers already understands all the points The Realist makes above? Because all the points he makes are obvious. These string-pullers may be filthy dirty rotten stinking genocidal bastards but they’re not stupid. They do see the obvious. Then why are they doing it? Because they’re filthy dirty rotten stinking genocidal bastards. 9
Posted by Fred Scrooby on Sun, 10 Feb 2008 17:14 | #
Yes but who is it who insists on “inclusiveness” and non-discrimination and gets them? Hint: it’s not “minorities,” by themselves are powerless. It’s the Jews. How do Jews do it if there are only five million of them in the U.S.? 1) All five million are in the élites (I’m exaggerating but not by much!), and 2) each of the five million has a hundred times more JN passion than the average Euro élite member has WN passion, so it’s as if those five million are five hundred million where ethnicity-motivated wars are concerned, and moreover, they all instinctively work toward the same goal! When you’ve got the same Jewish pressures coming at you from fifteen-gazillion different facets of society — academia, Hollywood, the legal profession, the major parties — it’s hard to stand up against. Right about here, JJR would chime in and say, “Where there are two Jews there are three opinions: they DON’T all work toward the same goal; not even all of them support Israel!!!” Ahhh but the answer is they all work toward the goal of getting Euros race-replaced: THERE ARE NO JEWS IN THE DIASPORA WITH THE SOLE EXCEPTION OF THE “JEWISH TASK FORCE” (MAY GOD BLESS THEM!) WHO DON’T WANT EUROS RACE-REPLACED SO PASSIONATELY IT’S ALMOST A RELIGIOUS TENET WITH THEM. THEY WANT IT MORE THAN ANYTHING ELSE EXCEPT ISRAEL’S WELL-BEING. THEY WANT IT MORE THAN COMMUNISM, WHICH IS SAYING A LOT, SINCE COMMUNISM IN THE MODERN ERA IS BASICALLY A JEWISH POLITICAL MOVEMENT. IN FACT, THE REASON JEWS WANTED COMMUNISM SO BADLY WAS TO GET RACE-REPLACEMENT OF EUROS, TO GET THE WHITE GOYS COFFEE-COLORED. FOR JEWS, RACE-REPLACEMENT OF EUROS COMES FIRST, COMMUNISM SECOND. THAT’S HOW BAD THEY WANT RACE-REPLACEMENT. That’s how they do it (with the help of things like all Jews are sort of born with a sense they’re on a war footing, so they sort of “hit the ground fighting for JN” right out of the womb, compared to Euros who take a lifetime to realize they’re in an ethnic fight and don’t start to figure things out till retirement age when it’s too late, plus Jewish nepotism/ethnicity-based networking which is very real, potent, and augments their strength by sort of concentrating the effect of their small numbers, and hey let’s call a spade a spade: Jewish talent for pure money-making, unexcelled by any other ethnicity. And when they do make money they’re idealistic and apply it politically to get their way, something the bovine Euro wealthy like Donald Trump and Warren Buffett don’t do because too stupid and unidealistic. (Which is not the Jews’ fault, is it!) All this stuff counts of course, and way more than makes up for their relatively small population numbers, way more, when clueless Euros are the ones they’re competing with. It all works less well against Arabs because being racial Semites the Arabs instinctively know Jewish ways too well: same basic race. It hasn’t been the minorities who’ve “insisted on inclusiveness and non-discrimination” and actually gotten it, gotten it in spades. The minorities aren’t anywhere near that powerful. It’s the Jews using the minorities as an anti-Euro tool in the tribal wars Euros don’t even know are being waged. 10
Posted by torgrim on Sun, 10 Feb 2008 17:16 | # Riley; “I can’t prove it but I still think the failure of the immigration amnesty bill was the straw that broke the camel’s back…” Watching this housing boom from a *very* personal viewpoint, especially in California, I can only deduct that the forces that granted “no qualificational loans”, had other motives besides literally covering the land with housing tracts, paving over some of the most fertile land in the US, and building below, old and failing levees. No, the powerful, must ensconse the immigrant, legal and otherwise into the property class. With mortgages to banks and large portions of the economy tied to the massive immigration, it will now be essential that the Amnesty “problem” be addressed. Just the nature of the age difference in Ca., between first time home buyers, guarantees, that “miniorties” will be the largest “qualifiers” for loans. That is what all the slogan, spewing, Obama supporters mean when asked, “why do you support Obama?”. The mantra is always, “Change!” “Change”, means race-replacement. 11
Posted by Fred Scrooby on Sun, 10 Feb 2008 17:40 | # Torgrim makes excellent points. He’s completely right. When you look at a car engine you don’t know how that thing works but there are people who know exactly how it works, every last detail. Same with an airplane, a sewage treatement plant, a nuclear power plant, the international space station, everything. And same with the current excessive incompatible immigration/forced race-replacement policy: you look at it and have no idea what’s going on, how it works, anything about it, but there are people who know exactly what’s going on and why, and how it works in minutest detail. It’s all under control, it’s all carefully planned and guided, it’s all being done deliberately by the élites who know exactly what they’re doing, following plans hatched in some quarters in the mid-70s, in others in 1945, still others the thirties, and others, the 1880s. They’ve all converged and are methodically getting rid of the Euro race. They don’t want you to know, of course, which is why no one’s talking about it openly. But let no one doubt for one second they know what they’re doing. Do all the dupes know, the people who shoot their mouths off for the cameras? No, not all: plenty are simply dupes, especially the females among them. Do all the core of behind-the-scenes string pullers know race-replacement’s the plan? Absolutely. Will they ever come out in the open and say so? Well ... what’s your guess as to the answer to that? 12
Posted by Fred Scrooby on Sun, 10 Feb 2008 20:00 | # “A reader calling himself ‘Euronation’ has sent in an excellent article describing the influx of Asians into California and how it is being encouraged by corporate elites. ‘EuroNation’ is a registered investment advisor in Newport Beach, California. Here is the article in full:”
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Posted by kurt9 on Sun, 10 Feb 2008 20:03 | # What I notice is how the media rants and raves about how “non-assimulating” minorities such as Hispanics and Blacks have been disproportionately affected by sub-prime lending, but that Asians have not. Is this an example of biased reporting, or is this a real phenomenon? If this phenomenon is real, that black and Hispanics but not Asians have been affected by the subprime lending practices, is this not evidence that human biodiversity is real? 14
Posted by Prozium on Sun, 10 Feb 2008 21:48 | # I have been following the financial blogs closely since early January. The sub-prime mortgage crisis is only the tip of the iceberg. The cancer in the housing sector has already spread far beyond sub-prime and has seized up the entire credit market. The monoline insurers and the big banks are on the ropes, desperate to raise capital, and the Fed has been frantically bailing them out through their Term Auction Facility. The next shoe to drop is the bubble in the commercial real estate market which has expanded in sync with residential housing. The talking heads are dissimulating. It’s much worse than they are letting on. http://blog.odessa-syndicate.com/2008/02/10/consumed/ 15
Posted by James Bowery on Mon, 11 Feb 2008 00:54 | # onetwothree, I think a case can be made for awarding civil damages to the lenders—damages paid by the government. This doesn’t mean they shouldn’t foreclose on bad debt but it does mean that the government is culpable here more than the lenders. In particular, the lenders who did not “comply” should be compensated for damages done to them by the government’s systematic program of coercion. 16
Posted by torgrim on Tue, 12 Feb 2008 05:58 | # Fred; “it’s all being done deliberately by the ‘elites who know exactly what they are doing, following plans hatched in the mid-70’s” A agree Fred. “On November 2,1999, Bill Clinton signed the Act repealing Glass-Steagall, thereby opening the doors for the money center banks to aquire brokerage business, investment banks, insurance companies and a variety of other financial institutions without restriction- Alan Greenspan turned his attention to encourageing the process of bank securitization of home mortgages. In an address to American Community Bankers, a regional banking organization, at a conference on mortgage market, the Fed Chairman stated: from; Securitization-The Last Tango, by F. William Engdahl Here it is, right from the Fed Chief. 17
Posted by Guessedworker on Tue, 12 Feb 2008 12:31 | # From today’s Daily Telegraph:-
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Posted by Lurker (not Mk II) on Tue, 12 Feb 2008 13:42 | # According to a NY Times editorial several weeks ago Goldman Sachs made countless billions as the central player in the subprime debt crisis (longtime WNs would likely know exactly where GS stands in the “NWO” hierarchy.) What happened? Here’s what I can piece together, in MR-exclusive commentary: Jewish bankers knowingly extend mortgages to sure-fire deadbeats, normally foolish,<u>unless</u> the lender could offload the IOUs before maturity. And that’s exactly what happened: mortgages were sold as safe investments to unsuspecting investors around the world (what could be safer than a geographically-diversified bundle of real estate-backed U.S. mortgages?) The Jews pocket the cash at full value created from thin air—we’re talking possibly hundreds of billions of dollars—and everyone else loses. Even—perhaps especially—the black or hispanic homebuyers who lose everything in life-destroying foreclosure. 19
Posted by Fred Scrooby on Wed, 17 Sep 2008 23:40 | # The Realist has posted an “action alert” demanding an end to the “affirmative-action lending” that has brought about the Wall Street catastrophe we’re witnessing as we rub our eyes in stunned disbelief at the magnitude of it (and wonder why arrests and plans for trials aren’t being reported?): http://inverted-world.com/index.php/activism/activism/protest_affirmative_action_housing_policies/ Why has there been not a peep about planned prosecutions of those crooks responsible for this true meltdown, when Ivan Boesky, Ken Lay, Michael Milken and any number of others who didn’t do a hundredth the damage were put on trial and given prison sentences? Why aren’t heads rolling? This mega-scandal broke almost a year ago and no arrests yet???? Bill Clinton should be the first arrested. We can work our way down from there. 20
Posted by Fred Scrooby on Thu, 18 Sep 2008 00:03 | # Bear Stearns belly up. Lehmann Brothers belly up. Merrill Lynch saved from the same fate at the last minute two days ago by a white-knight purchase for 50¢ on the dollar. Gargantuan AIG loses 90% of its share value since January including 50% in just one day, the day Lehmann Bros. bit the dust just a couple of days ago. Goldman Sachs and at least three other Wall Street giants on the ropes and may collapse any day now. Freddie Mac and Fannie Mae in government receivership (while the political appointee who headed Fannie Mae finagled himself an income of 70 million dollars in something like seven or eight years as head of the agency). Legendary giants all, every one of them humungous, all falling like so many ducks in a row and the end isn’t in sight, and everyone knows it’s because the egalitarians insisted on mortgages for unqualified Negroes and Mexicans and threatened federal punishments of any banks that might be suspected of not complying, forcing them all into line with ‘90s Clintonism, “the first Negro presidency.” Would this have happened without a Jewish radical-egalitarian intelligentsia entrenched in this country and ramming stuff like this down throats every step of the way in order punish the Euros for that pogrom in 1190 and bring them and their society down? Not in a trillion years. When will radical Jewish spearheading of insane race-denial, race-egalitarianism, and aggressive assaults on Euro society end? Never. It won’t end. Unless Euros step to the plate and finally end it. Had enough yet, Euros? If yes, only you can end it. No one’s going to do it for you. 21
Posted by Fred Scrooby on Tue, 23 Jun 2009 12:48 | # Over at Vdare.com this morning a must-read piece by Steve Sailer about Italian crook Angelo Mozilo and his role (with the help of Jews galore in government and the bureaucracy siding, as Jews always do, with non-whites against whites) in bringing on the financial collapse: http://www.vdare.com/sailer/090622_mozilo.htm When resentment-filled Jews (resentment at not being completely white) and resentment-filled Italians (ditto) get together in an alliance aimed at getting rich while simultaneously punishing your white country and, if possible, bringing it down out of revenge, you’re in big trouble. 22
Posted by The Medicist on Wed, 24 Jun 2009 17:33 | #
So it is just Jews and Italians who attempt to get rich at the expense of others and the country? I mean the whole Jews thing has been beaten to death and is expected, but isolating the Italians? Freakin’ Italians?!?! Guido Italians from New York? I’m actually pleased that your personality type predominates in a forum like this. It serves to remind Americans once again that the White racialist movement is cuckoo. As well, with Whites dwindling as a percentage of the population, the good chunk of Whites wholly or partly Med will be unlikely to join the movement, or what there is of it. Of course, there’s the argument that Meds are not needed, but another 15-35 million (Whites) against you can’t help! Good luck relocating these numbers. But you already know this. Just admit your main purpose here is to let off steam, you fist-pumping train wreck. 23
Posted by Fred Scrooby on Wed, 24 Jun 2009 18:09 | # Try reading the linked article, Guido. The whole thing, including the part, as told by his sister, about his resentment against whites in this country because he felt like a dagoe. If you can’t read, which wouldn’t surprise anyone, there are photos you can look at: check out the subject’s Neanderthal physiognomy orange skin. What I wrote in my comment stands. Every word. You don’t like it? You know what you can do. 24
Posted by Fred Scrooby on Wed, 24 Jun 2009 18:10 | # the subject’s Neanderthal physiognomy and orange skin. 25
Posted by Lurker on Sat, 15 Aug 2009 06:14 | # In fact we dont really know whether Mozilo suffered anything, apart from the most appalling fake tan ever applied to a human being. As I think someone said on iSteve, “he’s certainly a person of color, albeit one not found in nature”. All we know is that his sister claims to remember their mother claiming to sis that he claimed to her (mum) that some whites had victimized him. Three people in this chain, if he lied initially then his claims of victimization are false, but maybe mum made it up, maybe sis made it up. Its all suspect. The guy is obviously up to no good anyway, I think he’s just tacked on a pat victimization story for the MSM to lap up. We certainly shouldnt be buying this conman’s crap for the purposes of divide and rule amongst whites. Post a comment:
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Posted by onetwothree on Sun, 10 Feb 2008 00:07 | #
...all of which highlights the importance of there *not* being a bailout.