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Obama Demands More Bad Loans For ‘Poor’

From a cheering BusinessWeek:

A Renewed Crackdown on Redlining

In the wake of the subprime implosion, the Obama Administration has stepped up its scrutiny of disadvantaged neighborhoods’ credit access

By Clea Benson
May 5, 2011

Community activists in St. Louis became concerned a couple of years ago that local banks weren’t offering credit to the city’s poor and African American residents. So they formed a group called the St. Louis Equal Housing and Community Reinvestment Alliance and began writing complaint letters to federal regulators.

Apparently, someone in Washington took notice. The Federal Reserve has cited one of the group’s targets, Midwest BankCentre, a small bank that has been operating in St. Louis’s predominantly white, middle-class suburbs for over a century, for failing to issue home mortgages or open branches in disadvantaged areas. Although executives at the bank say they don’t discriminate, Midwest BankCentre’s latest annual report says it is in the process of negotiating a settlement with the U.S. Justice Dept. over its lending practices.

Lawyers and bank consultants say regulators and the Obama Administration are scrutinizing financial institutions for a practice that last drew attention before the rise of subprime lending: redlining

"The agencies have refocused on redlining because, in the wake of the subprime explosion and sudden implosion, they are looking at these disadvantaged neighborhoods and not seeing any credit access," says Jo Ann Barefoot [sic], co-chair at Treliant Risk Advisors in Washington, D.C., which consults with banks on regulatory issues.

The 1977 Community Reinvestment Act (CRA) requires banks to make loans in all the areas they serve, not just the wealthy ones. A Bloomberg analysis found the percentage of banks earning negative ratings from regulators on CRA exams has risen from 1.45 percent in 2007 to more than 6 percent in the first quarter of this year.

But you see, nobody is forcing anybody to make bad loans.

At the Justice Dept., a new 20-person unit dedicated to fair lending issues received a record number of discrimination referrals from regulators in 2010 and has dozens of open cases, according to a recent agency report. Potential penalties can reach into the millions of dollars. "We are using every tool in our arsenal to combat lending discrimination," Thomas E. Perez, the assistant attorney general for the Civil Rights Div., told a conference of community development advocates in Washington in April

Mr. Perez is the same gentleman who opposed prosecuting the New Black Panthers. He also has led the charge on Arizona’s immigration law.

Like Midwest BankCentre, some lenders are being cited for failing to operate in minority and low-income census tracts near their branches, even when they have never done business there before. "If you put your branches only in upper-income areas, the regulators are not accepting that anymore," says Warren W. Traiger, a lawyer at BuckleySandler in New York, which advises banks on fair lending issues.

So the government can now tell banks where to put their branches? How wonderful.

Mortgage refinancing activity doubled in white neighborhoods but dropped sharply in minority neighborhoods in a sample of major U.S. cities in 2008 and 2009, according to Paying More for the American Dream, an April study by a group of seven community development nonprofits. "The pendulum has swung back too far the other way," says Kevin Stein, associate director of the California Reinvestment Coalition in San Francisco, one of the report’s authors…

And why would they lie? (By the way, notice the creative new names that ACORN has come up with.)

Meanwhile, in Missouri, things are starting to change. Midwest BankCentre Chairman Ronald T. Barnes recently announced the bank would open a branch in Pagedale, a town near St. Louis that is predominantly African American.

The bottom line: Lenders have been caught off guard by stepped-up enforcement of laws to prevent discrimination against minorities and the poor.

No, the "bottom line" is that while we are being distracted by other news, the Obama administration is once again forcing banks to give mortgages to people who can’t afford them. Which is precisely what got us into the financial mess we are in today.

Where is the outrage? Where are the Republicans?

(Thanks to Petronius for the heads up.)

This article was posted by Steve on Saturday, May 7th, 2011. Comments are currently closed.

13 Responses to “Obama Demands More Bad Loans For ‘Poor’”

  1. Petronius says:

    Here they go again –– DOJ mandates more subprime loans.

    Bloomberg Businessweek

    A Renewed Crackdown on Redlining

    by Clea Benson, 5 May 2011

    Community activists in St. Louis [targeted] Midwest BankCentre, a small bank that has been operating in St. Louis’s predominantly white, middle-class suburbs for over a century, for failing to issue home mortgages or open branches in disadvantaged areas. Although executives at the bank say they don’t discriminate, Midwest BankCentre’s latest annual report says it is in the process of negotiating a settlement with U.S. Justice Dept….

    * * *

    “We are using every tool in our arsenal to combat lending discrimination,” Thomas E. Perez, the assistant attorney general for the Civil Rights Div., told a conference of community development associates….

    To some banks the crackdown has come as a surprise…. Like Midwest BankCentre, some lenders are being cited for failing to operate in minority and low-income census tracts near their branches, even when they have never done business there before.

    * * *

    Midwest BankCentre Chairman Ronald T. Barnes recently announced the bank would open a branch in Pagedale, a town near St. Louis that is predominantly [97%] African American.

    http://www.businessweek.com/magazine/content/11_20/b4228031594062.htm

    Jimmah Carter’s 1977 Community Reinvestment Act (CRA) requires banks to make loans to people who live in low-income neighborhoods without racially discriminatory terms, consistent with safe and sound business practices.

    Under Bill Clinton, the DOJ used the CRA to threaten banks with legal action if they did not give preferential mortgage terms to non-whites who would ordinarily be considered bad credit risks. The practice was also extended to student loans.

    Now, with the economic damage from the 2008 subprime meltdown still lingering, the Nerobama regime has gone a step further. The government is using the CRA to force banks who have never operated in ghetto neighborhoods to expand into those areas, open new branches there, and then make loans to the locals, without regard to safe and sound practices.

    Perez gives the bank the choice of either being bled to death by the DOJ in endless litigation, or being bled to death by the denizens of Pagedale and criminal community organizers based in St Louis.

    The Midwest BankCentre case seems to be the flip-side of the NLRB suit to punish Boeing for locating its factory in South Carolina, a right-to-work State.

    http://www.heraldonline.com/2011/04/22/3008581/boeing-nlrb-dispute-could-be-long.html

    So now the US government tells American companies where they must do business, and where they cannot do business. And it tells them they must do so even if it means operating at a loss.

    The effect in both cases (Midwest BankCentre and Boeing) is to restrict business freedom and replace the American capitalist system with a government-directed economy, subservient to the interests of gangster community organizers and labor unions.

    A further effect may be to force American business managers to shrink their operations, or move their businesses overseas, rather than submit to government directives that don’t make business sense to them.

    Thomas E. Perez is, of course, the same Nerobama appointee who is responsible for (1) dismissing the New Black Panther voter intimidation cases, (2) refusing to enforce voting rights for military service members, and (3) suing Arizona sheriff Joe Arpaio for arresting criminal illegal aliens.

    http://www.washingtontimes.com/topics/thomas-e-perez/

    • Liberals Demise says:

      I saw on the Fox that Fannie reported an $8.5 Billion loss for the first quarter
      of this year. Why anyone would think that government can run a business is
      beyond me. Here is the proof they can’t feed the dog properly.
      Why these people have a drivers license stifles me.

    • tranquil.night says:

      Nothing to do with Economics, all about redistribution and a faux racism/classism struggle which is powered by the desire for political power and control, funded by us.

    • proreason says:

      hey, all you communist losers….COME ON DOWN !!!

  2. Petronius says:

    “Where are the Republicans?”

    Yes, good question, Steve.

    Where were the Republicans to lead the fight against the Community Reinvestment Act (when Liberals are about to put the screws to you, they will invariably use the word “investment”) and the ACORN lawsuits that forced banks to lend money to deadbeats of all tribes, races and nations who live here, yet who increasingly do not work here?

    Did the Republicans object when Maxine Waters and her comrades on the committee raised cries of “racism” against the whistle-blowers, those witnesses who knew that a housing bubble, defaults, foreclosures, bankruptcies, and collapse were on the way? That the destruction of real estate values, jobs, wages, and pensions were on the way? And that Franklin Raines and Fannie Mae were bundling risky subprime mortgages into securities and laundering them on Wall Street?

    And will these Republicans now quietly go along with the flow, so that they may keep getting invited to all the snazzy Chevy Chase parties and Georgetown soirées? So that they may enjoy their lazy Sunday mornings on their gated estates in Potomac or Great Falls, curled up with their legislative aide and their copy of the Washington Post? Or do they simply figure that’s the price the rest of us have to pay so that they can enjoy their piece of the pie, and so are not disposed to argue?

    And what will the regime’s end game look like? America as one vast aluminum trailer park from sea to shining sea? Homeless squatters and Obamavilles? Government theft from producers and redistribution to non-producers on a massive scale? Medicare cuts visited on the baby boomers in retirement? Astronomical tax increases that leave the young with little incentive to work and save? Everyone on food stamps? Everyone on ObamaCare? On unemployment? Rev. Wright’s sermons on loudspeakers? Price controls, gas lines, shortages, rationing, union dues, riots in the streets, martial law?

    Picture an insolvent government plugging the Fiscal Gap with wads of freshly-printed currency and the bodies of its bankrupt walking-dead zombie citizens –– what a vision for America in the 21st century. That’s real “transformation.”

    Is this how America will be remembered?

  3. tranquil.night says:

    “In the wake of the subprime implosion, the Obama Administration has stepped up its scrutiny of disadvantaged neighborhoods’ credit access.”

    You mean by restricting credit to subprime borrowers? Because logic seems to want to dictate that the people who weren’t able to pay the money back caused the problem, not the people forced to lend the money.

    So naturally the Obamaville solution is to force the lenders to make more bad loans again. Silly wingnut, economics is for rubes and racists!

  4. proreason says:

    The country isn’t cratering fast enough to suit Spike.

  5. BannedbytheTaliban says:

    I know SG doesn’t have anything to do with the ads, but I can help but laugh at the “Free Government Supported Phones” banner at the bottom of my screen.

    Also, why stop at banks. The socialist democrats should force car dealers, doctors, supermarkets, golf courses, etc. to all build in the projects. Aren’t the poor being underserved by those businesses too.

    • tranquil.night says:

      “Aren’t the poor being underserved by those businesses too.”

      I know. Take that evil Walmart for example. Just look how they’ve gotten their money tentacles into everything from developing charter schools and programs to low-income and senior health charities.

      http://walmartstores.com/communitygiving/203.aspx

      It must be regulated – who knows, they’re probably funding radical Islamist schools. Yeah, that’s it! That money belongs in the benevolent hand of the State!

  6. Right of the People says:

    It’s time for the pitchforks and torches everyone.

  7. untrainable says:

    Q:) What do you call lending discrimination based on the client’s ability to pay off the loan?

    A:) Racism
    B:) Racism
    C:) Racism
    D:) Racism
    E:) Racism
    F:) Common Bloody Sense
    G:) Safe and sound business practice

    Discrimination isn’t bad. I think the world has forgotten the real meaning of the word. Discrimination isn’t RACISM. Discrimination is a word used to describe the ability to see fine distinctions and differences. Used to express the power of making fine distinctions. You discriminate every time you shop? Did you read the label? Did you check the calorie count? Did you look for a sale sign? THEN YOU WERE DISCRIMINATING!!! Racism is being screamed so often these days that it is quickly becoming meaningless. THANKS PRESIDENT OBAMA!

  8. Dupree says:

    That’s R.A.C.I.S.T.!

    Radical
    Administration
    Coercing
    It’s
    Socialist
    Tyranny

  9. MZmaj7 says:

    This is nuts.


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