From Investors Business Daily.
More proof that the government sanctioned the housing crisis through coercion.
……Rewind to 1994. That year, the federal government declared war on an enemy — the racist lender — who officials claimed was to blame for differences in homeownership rate, and launched what would prove the costliest social crusade in U.S. history.
At President Clinton’s direction, no fewer than 10 federal agencies issued a chilling ultimatum to banks and mortgage lenders to ease credit for lower-income minorities or face investigations for lending discrimination and suffer the related adverse publicity. They also were threatened with denial of access to the all-important secondary mortgage market and stiff fines, along with other penalties.
The threat was codified in a 20-page “Policy Statement on Discrimination in Lending” and entered into the Federal Register on April 15, 1994, by the Interagency Task Force on Fair Lending. Clinton set up the little-known body to coordinate an unprecedented crackdown on alleged bank redlining.
The edict — completely overlooked by the Financial Crisis Inquiry Commission and the mainstream media — was signed by then-HUD Secretary Henry Cisneros, Attorney General Janet Reno, Comptroller of the Currency Eugene Ludwig and Federal Reserve Chairman Alan Greenspan, along with the heads of six other financial regulatory agencies.
“The agencies will not tolerate lending discrimination in any form,” the document warned financial institutions.
Ludwig at the time stated the ruling would be used by the agencies as a fair-lending enforcement “tool,” and would apply to “all lenders” — including banks and thrifts, credit unions, mortgage brokers and finance companies.
The unusual full-court press was predicated on a Boston Fed study showing mortgage lenders rejecting blacks and Hispanics in greater proportion than whites. The author of the 1992 study, hired by the Clinton White House, claimed it was racial “discrimination.” But it was simply good underwriting.
It took private analysts, as well as at least one FDIC economist, little time to determine the Boston Fed study was terminally flawed. In addition to finding embarrassing mistakes in the data, they concluded that more relevant measures of a borrower’s credit history — such as past delinquencies and whether the borrower met lenders credit standards — explained the gap in lending between whites and blacks, who on average had poorer credit and higher defaults.
The study did not take into account a host of other relevant data factoring into denials, including applicants’ net worth, debt burden and employment record. Other variables, such as the size of down payments and the amount of the loans sought to the value of the property being bought, also were left out of the analysis. It also failed to consider whether the borrower submitted information that could not be verified, the presence of a cosigner and even the loan amount.
Bubba didn’t heed his own “It’s the economy, stupid” motto.
Banks consider the bottom line; the applicant’s credit record and ability to make payments. Dems play the race card, exploiting minorities for votes.
Obama continued the storm trooper tactic by sending Hank Paulson and Ben Bernanke to threaten banks into accepting TARP. He also sicced the FDIC on a Massachusetts bank because it wouldn’t lend to unqualified applicants, regardless of skin color.
This is the same socialist regime that used taxpayers’ money to bailout and takeover 2/3rds of the auto industry, failed banks, and insurance companies, while giving payoffs to union pals.
The collapse of banks and the housing market is a Democrat-engineered disaster. They created that Frankenstein and staved off any attempt to regulate or rein it in. The Dems have a longstanding practice of Keynesian economics; the socialist intrusion of government into every aspect of free market enterprise. It lays to waste economic infrastructures and results in exactly what we are experiencing now; the stifling of business, record job losses, and incredible deficits and debt.
No one wants to admit that we’re in a new depression.