Wednesday, November 02, 2011

How The Clinton Administration Blackmailed The Mortgage Industry To Make Loans To Unqualified Minorities And Trigger The Mortgage Meltdown

Courtesy of
While the financial industry deserves much of the opprobrium currently directed towards it, they are not solely responsible for America's economic problems. It turns out the federal government bears a healthy share of the responsibility.

Investors Business Daily has uncovered a smoking gun document that show the Clinton Administration laid the groundwork for the mortgage meltdown through civil rights terrorism. The 20-page document, entitled "Policy Statement on Discrimination in Lending", was entered into the Federal Register on April 15th, 1994, by the Interagency Task Force on Fair Lending to coordinate an unprecedented crackdown on alleged "racist" bank redlining. Prompting this action was an October 1992 Boston Fed study which showed that mortgage lenders were rejecting Blacks and Hispanics in greater proportion than Whites, and the Clinton Administration automatically presumed racism. So Bill Clinton sicced no fewer than 10 federal agencies on the financial industry, ordering 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.

But the Boston Fed study was soon discredited. Private analysts 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. In addition, the study failed to account for a host of other relevant denial factors, 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. The study also failed to consider whether the borrower submitted information that could not be verified, the presence of a co-signer and even the loan amount. After the missing data was factored in, it became clear that the rejection rates were based on legitimate business decisions, not racism.

Nevertheless, knowing that the presumption of innocence does not exist in the civil rights industry, lenders found it necessary to put race at the top of their list. Banks that failed to lend preferentially to credit-poor minorities were denied expansion plans by the Fed in an era of nonstop financial mergers. HUD threatened to deny them access to Fannie Mae and Freddie Mac, which it controlled. And the Justice Department sued them for lending discrimination and branded them as racists in the press. Civil rights inquisitors openly stated that applying different lending standards to applicants who are members of a protected class and providing different treatment to applicants to address past discrimination would be permissible.

In a separate story on Real Clear Markets entitled "Housing, and Reckless Disregard for Risk", Steven Malanga appends more of the blame on Fannie Mae rather than civil rights enforcers. He writes, "It was Fannie Mae who showed those on Wall Street how it was possible to eliminate the traditional due diligence conducted by lenders, which 'soon became the playbook for financial executives across the country', and executives at Fannie Mae who, when all else failed, viciously and personally attacked those who questioned its practices, in the process destroying a few careers. But Malanga's end conclusion is the same -- too many risky loans were made.

Yet despite the fact that the terminally-adulterous Slick Willie Clinton created this problem in the first place, he gets better press than Bush II and Obama simply because there was more prosperity during Clinton's time. Forgotten is the fact that Bill Clinton also committed a monumental war crime in 1999 when he ordered American forces to unleash the 78-day carpet bombing of Serbia, which had not threatened or attacked the United States.

This just further illustrates the increasing toll which forced diversity exacts upon our nation. Forced diversity imposes serious financial and social costs; not only have vast sums of money been invested in diversity, but society has been atomized and antagonized by it. Most ordinary people pledge "allegiance" to diversity primarily to preserve employability and social standing; their true opinion of diversity is expressed in residential patterns. When Lisa Murkowski and Don Young kissed Native ass at the AFN Convention, they were not speaking for mainstream Alaskans.

America cannot continue to exist in its present form unless we place common nationality ahead of individual heritage. We will not forever tolerate minorities being allowed to play racial politics while Whites who merely oppose minority racism are branded as racists.

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