MISSDem
Help! Need response to Republican co-workers who say that the government required lenders to make loans to people who they knew were not going to be able to pay back the loans. One said that her husband worked for a bank at the time and that they told him and others who worked there that this was the way they would have to do business in order to get "money from the government". I didn't know how to respond. They said this happened under Clinton.
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x5093247
The co-workers are telling you the truth. Lending standards were lowered and threats were made that to not use the money to help minority and low-income borrowers would result in penalities and possible revocation of the bank's chater.
But the stupidity has to go somewhere, and here comes the DUmmies to fill the void.
Taverner
1. This is a thinly veiled attack on Equal Opportunity Lending
MISSDem
Response to Reply #1
6. But is it true that the lenders were required to make loans to people who could not pay the loan back?
Taverner
Response to Reply #6
9. Not really
They were only required to make loans available to all races
Not really. Yes, they are require to not discriminate. BUT, the gov't keeps track of how many loans are being closed from minority and low-income applicants, too. And if you don't meet the quota, then they bring down the hammer.
Gman
4. So the bank would cheat to get money from the government?
The bank would put it's reputation, and it's financial security at risk to get money from the goverbnment and make bad loans??
If you're told to do it or the Fed gov't going to hit you with discrimination lawsuits, you bet you'll do what they say.
Warpy
5. The last pResident is the one who urged them to do that and it turned into quite a scam in the last few months of the housing bubble.
Crooked mortgage companies would get a mark to lie on the loan application and not question it. They would never inspect any of the properties--one of which had a 3-5 year old corpse in it. The crooked company made closing costs and a fee when they sold the mortgage to an unsuspecting bank or a hedge fund that didn't care. Those institutions turned them around again, either to Fannie and Freddie or hacked up into exotic "assets." In the meantime, they got a property off the books and were able to keep the comps artificially pumped up.
This was the fabled Ownership Society, up to your ass in debt your declining wages meant you could never pay, while vultures all the way up the food chain collected fees on it all.
Now all the fantasy money is just evaporating and they're all so terribly surprised about that.
That's a lie, warped primitive, and you deserve to be physically beaten for saying so.
It was your reps in Congress, namely Dodd and Frank, who wanted these loans to be made and who, when it was brought to their attention in 2005 that Fannie and Freddie were making bad choices, claimed they didn't see it and praised these loans you now call "Ownership Society" loans.
Wall Street knows it's the fault of liberal Dems, and that's all that matters.
WVRICK13
10. The First Rule To An Intelligent Response is the person you are talking to has to have a brain in order to comprehend the answer. Being republicans they are obviously without brains and therefore incapable of understanding anything other than the party talking points.
In a battle of wits, you're completely unarmed.
Believe me, you don't want to come to this site and try and take me, or anyone of us, on. Especially on this topic. I'll slap you silly, son.
Cant trust em
14. There is a difference between making sure that all groups have access to loans than making sure that people who are not qualified for loans are approved. Equal opportunity lending is a way to make sure that different peoples and communities are not discriminated against (red lining neighborhoods is a common practice). This doesn't force banks to give $500K loans to people who don't have good credit.
I'm not a housing expert, but that's my take.
Sub-prime loans had nothing to do with the applicants credit, you idiot. They had good credit, they just overstated their income. Banks don't do 100% financing on people with bad credit, you dolt. Given how much they claimed they made, they budgeted. Problem is, a lot of them lied.
NorCalDem
17. They are referring to legislative changes made by Clinton in 1999 to the CRA (Community Reinvestment Act) that effectively eliminated the Glass-Steagall Act. The CRA was originally put into place in 1977 (i think) under Carter and required commercial banks to offer loans/mortgages to those that had checking/savings accounts at their bank. It was originally designed to help poor and underserved communities. (Google or Wikipedia the CRA for nore info).
The key point is that when Clinton ended Glass-Steagall in '99, it struck down the law that prevented banks from offering all types of financial services (e.g. investment and commercial banking, insurance, etc.). That's what allowed the banks to package up the loans as derivatives and sell them on wall st. This effectively ballooned several hundred billions $$'s worth of shaky loans into 10's of Trillions of dollars in securities. This was BAD!
Now, three problems with the talking point are:
1.) The proposal to strike down G-S was partially engineered by Phil Gramm (R-TX). So it wasn't entirely Clinton's idea.
2.) Both the house and Senate were solidly Republican controlled in 1999, and Clinton was the ultimate 'lame-duck.' Not only was his administration winding down but he had been politically neutered (no pun intended) via Impeachment proceedings brought on by the Republican's. Basically Clinton was going along with their plans, but his name is ultimately on it so they can blame him for it.
3.) Here is the killer. The banks that are covered by the CRA are not actually the banks that are facing the biggest financial trouble! The largest foreclosure rates in this country are in places like Vegas, and Florida, not in the inner cities or the heartland! It's the 'house flippers' and the sub-prime predatory lending in places NOT covered by the CRA that contributed to the bulk of the problem.
The bottomline is that the CRA and specifically the parts that were altered in '99 are CERTAINLY NOT responsible for a global meltdown and trillion's of dollars of evaporated wealth, and ponzi schemes all over the globe, etc., etc. They hurt us, undoubtedly. But are they the cause? certainly not!
There's so much wrong with this I don't even want to take the time. Verbally saying it to the face of this idiot primitive, yes. Taking the time to type it all out, no.
The CRA got the ball rolling, Clinton didn't help the situation, but the Dems in Congress lowering the lending standards in order to try and get more minorities and low-income families in houses (that they couldn't afford to begin with)
IS the cause of this mess. There were peripherals to that, i.e. people buying homes hoping to flip them for more money based upon rising prices. But that wouldn't have happened were it not for the lowering of the lending standards in order to get more minorities and low-income families in houses in the first place.
L. Coyote
18. Tell them the Supreme Court required the People to accept an illegal Fascist pResident who invaded another country based on lies and who tortured people to death!
Play leap frog, and jump to the very top!!!! Don't mess around, cut to the chase.
Translation:
When all else fails, go completely whacko on them.
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