Minorities a convenient scapegoat for U.S. financial woes

[QueEx]

<font size="5"><Center>Minorities a convenient scapegoat
for U.S. financial woes</font size></center>


By Cynthia Tucker
September 28, 2008

In the midst of a severe financial crisis - a meltdown fueled by clueless homebuyers, greedy lenders and money-grubbing financiers - some observers have decided to blame "minorities" for the mess. Though wiser heads have proclaimed the emergency too serious for partisan gamesmanship, some in the conservative commentariat still can't resist playing the race card.

Several days ago, Neil Cavuto, host of Fox News' Your World, proclaimed, "Loaning to minorities and risky folks is a disaster."

On WorldNetDaily, a compendium of loopy half-truths, pundit Drew Zahn declared that "when federal regulators demanded parity between racial groups in lending, the only way to achieve a quota would be to begin making intentionally bad lending decisions."

The conservative National Review Online trotted out a favorite whipping boy, the Community Reinvestment Act, claiming that the legislation was the result of "racially inflammatory campaigns" that forced banks to "make mortgages available to people without much in the way of income, assets or credit."


Why would anyone inject skin color into a debate over credit?

There is certainly no evidence to support this claptrap. Federal regulators have never "demanded parity between racial groups in lending." Not ever.

The CRA - designed to stop banks from "redlining," or withholding loans from entire neighborhoods - has long been under attack by conservatives, but for entirely different reasons. Critics called it vague, contradictory and useless. They claimed it was unfair to banks and thrifts, which were regulated, while other financial institutions were left to lend money as they saw fit.

That's where the argument tying the CRA to the credit crisis breaks down. The lending frenzy developed during the past few years, a period during which banks and thrifts made less than 25 percent of mortgage loans. (The law has been in place for 30 years, during most of which time there was no mortgage meltdown.)

"The heart of the crisis was caused by unregulated and lightly regulated mortgage brokers and independent mortgage bankers and affiliates that are not subject to the CRA. It would be quite odd if an act ... caused institutions not subject to its purview to do things that were inappropriate," said University of Michigan law professor Michael Barr, who has studied this legislation.

I hold no brief for dumb homebuyers, be they white, black or brown. But minority homeowners were frequently the victims of aggressive practices by mortgage brokers who received higher commissions for steering buyers into high-cost, subprime loans, even if the buyer would have qualified for a prime loan. The Center for Responsible Lending, a nonprofit research group, examined 50,000 subprime loans nationwide and found that blacks and Hispanics were 30 percent more likely than whites to be charged higher interest rates, even among borrowers with similar credit ratings.

Again, lenders didn't push those loans to comply with any "affirmative action in lending" programs. They did it to make money. That's the same reason Wall Street's masters of the universe created all those exotic investment vehicles - instruments they didn't understand any better than some homebuyers understood their adjustable rates.

If Wall Street was motivated by greed, President Bush was motivated by his belief in an "ownership society." In 2003, about the time that conventional lending standards evaporated, he said, "We want more people owning their own home. It is in our national interest that more people own their home."

The White House bragged on programs to make borrowing easy, including an initiative to allow the Federal Housing Administration to insure mortgages for first-time homebuyers without a down payment. The administration touted a record increase in homeownership, and Alan Greenspan dismissed the idea of a housing bubble.

Suffice it to say, the credit crisis is an all-American disaster, a melting pot of greed, recklessness and myopia. Those all-too-human traits aren't limited to any particular race or ethnic group.

Cynthia Tucker is editorial page editor for The Atlanta Journal-Constitution. Her column appears regularly. Her e-mail is cynthia@ajc.com.


http://www.baltimoresun.com/news/opinion/oped/bal-op.viewpoint28sep28,0,6004405.story

 

[thoughtone]

Oh yes! Get ready for the angry white male to reassert himself.

source: Media Matters

Cavuto suggests Congress should have warned that "[l]oaning to minorities and risky folks is a disaster"

Summary: On September 18, Fox News' Neil Cavuto conflated giving home mortgages to minorities with risky lending practices, suggesting that there should have been "a clarion call that said, 'Fannie and Freddie are a disaster. Loaning to minorities and risky folks is a disaster.' "

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[VegasGuy]

thoughtone
This message is hidden because thoughtone is on your ignore list.

My question is, if lending to minorities caused this mess, does it not follow that minorities lending to the wealthy proffer a similar outcome?

-VG

 

[geist]

I knew eventually someone would follow that line of thought. Nevermind the fact that many people who took an ARM could have qualified for a fixed-rate mortgage, but the shit was pushed on them, which is what "predatory lending" is.

I remember when I bought my joint, a dude I knew growing up as a kid was trying to push an ARM on me! I thought about it and was like how is my shit gonna go up after a couple of years? Naw Homie. Went to a new home owner seminar and they schooled on a lot of stuff, so the next bank I went to I did a little homework and said the magic words.

Yeah, you could blame people for not knowing. But really all most people wanted to do was get up out of the hood or turn the 'hood around, by buying a piece of shit house and fixing it up. Which got like that because of redlining, now it's going to go back to redlining now that these banks and firms are getting tight again. Watch. None of this shit wouldn't have happend if they was legit with these loans from the giddy-up.

 

[Fuckallyall]

From CNN.com


Commentary: Bankruptcy, not bailout, is the right answer

Story Highlights
Jeffrey Miron: Government encouraged lenders to relax their standards

Mortgages were given to people unqualified to repay them, he says

Miron: Rather than a bailout, government should let firms go bankrupt

Talk of economic Armageddon is scare-mongering, Miron says

By Jeffrey A. Miron
Special to CNN
Editor's note: Jeffrey A. Miron is senior lecturer in economics at Harvard University. A Libertarian, he was one of 166 academic economists who signed a letter to congressional leaders last week opposing the government bailout plan.

CAMBRIDGE, Massachusetts (CNN) -- Congress has balked at the Bush administration's proposed $700 billion bailout of Wall Street. Under this plan, the Treasury would have bought the "troubled assets" of financial institutions in an attempt to avoid economic meltdown.

This bailout was a terrible idea. Here's why.

The current mess would never have occurred in the absence of ill-conceived federal policies. The federal government chartered Fannie Mae in 1938 and Freddie Mac in 1970; these two mortgage lending institutions are at the center of the crisis. The government implicitly promised these institutions that it would make good on their debts, so Fannie and Freddie took on huge amounts of excessive risk.

Worse, beginning in 1977 and even more in the 1990s and the early part of this century, Congress pushed mortgage lenders and Fannie/Freddie to expand subprime lending. The industry was happy to oblige, given the implicit promise of federal backing, and subprime lending soared.

This subprime lending was more than a minor relaxation of existing credit guidelines. This lending was a wholesale abandonment of reasonable lending practices in which borrowers with poor credit characteristics got mortgages they were ill-equipped to handle.

Once housing prices declined and economic conditions worsened, defaults and delinquencies soared, leaving the industry holding large amounts of severely depreciated mortgage assets.

The fact that government bears such a huge responsibility for the current mess means any response should eliminate the conditions that created this situation in the first place, not attempt to fix bad government with more government.

The obvious alternative to a bailout is letting troubled financial institutions declare bankruptcy. Bankruptcy means that shareholders typically get wiped out and the creditors own the company.

Bankruptcy does not mean the company disappears; it is just owned by someone new (as has occurred with several airlines). Bankruptcy punishes those who took excessive risks while preserving those aspects of a businesses that remain profitable.

In contrast, a bailout transfers enormous wealth from taxpayers to those who knowingly engaged in risky subprime lending. Thus, the bailout encourages companies to take large, imprudent risks and count on getting bailed out by government. This "moral hazard" generates enormous distortions in an economy's allocation of its financial resources.

Thoughtful advocates of the bailout might concede this perspective, but they argue that a bailout is necessary to prevent economic collapse. According to this view, lenders are not making loans, even for worthy projects, because they cannot get capital. This view has a grain of truth; if the bailout does not occur, more bankruptcies are possible and credit conditions may worsen for a time.

Talk of Armageddon, however, is ridiculous scare-mongering. If financial institutions cannot make productive loans, a profit opportunity exists for someone else. This might not happen instantly, but it will happen.

Further, the current credit freeze is likely due to Wall Street's hope of a bailout; bankers will not sell their lousy assets for 20 cents on the dollar if the government might pay 30, 50, or 80 cents.

The costs of the bailout, moreover, are almost certainly being understated. The administration's claim is that many mortgage assets are merely illiquid, not truly worthless, implying taxpayers will recoup much of their $700 billion.

If these assets are worth something, however, private parties should want to buy them, and they would do so if the owners would accept fair market value. Far more likely is that current owners have brushed under the rug how little their assets are worth.

The bailout has more problems. The final legislation will probably include numerous side conditions and special dealings that reward Washington lobbyists and their clients.

Anticipation of the bailout will engender strategic behavior by Wall Street institutions as they shuffle their assets and position their balance sheets to maximize their take. The bailout will open the door to further federal meddling in financial markets.

So what should the government do? Eliminate those policies that generated the current mess. This means, at a general level, abandoning the goal of home ownership independent of ability to pay. This means, in particular, getting rid of Fannie Mae and Freddie Mac, along with policies like the Community Reinvestment Act that pressure banks into subprime lending.

The right view of the financial mess is that an enormous fraction of subprime lending should never have occurred in the first place. Someone has to pay for that. That someone should not be, and does not need to be, the U.S. taxpayer.

The opinions expressed in this commentary are solely those of the writer.








Find this article at:
http://www.cnn.com/2008/POLITICS/09/29/miron.bailout/index.html?iref=mpstoryview

 

[muckraker10021]

I knew eventually someone would follow that line of thought. Nevermind the fact that many people who took an ARM could have qualified for a fixed-rate mortgage, but the shit was pushed on them, which is what "predatory lending" is.

Absolutley correct. The RepubliKlans and their media whore accomplices at FAKE News and the entire RepubliKlan noise machine have been spewing the lie that Black & Brown people are responsible for this deleveraging of toxic-waste mortgage backed securities.

Lehman Brothers, Merrill Lynch, Bear Stearns & a myriad of others including insurance firm AIG, which incredibly was insuring these mortgages against default were leveraging this toxic mortgage paper using leverage as high as 60 -1.
<SPAN STYLE="background-color:YELLOW"><b>
The article below gives the complete story of how the Subprime market "blew up" predicated on STEERING Black & Brown home buyers into junk mortgages even when 50% of them qualified for normal fixed rate, lower rate mortgages.</b></span>

The RepubliKlans know that the majority of Americans are "low information voters" which is a euphemism for stupid.

Full Article Link - http://www.brookings.edu/~/media/Fi...tgage_crisis_vey/0529_mortgage_crisis_vey.pdf

Article Excerpts Below-

[pdf]http://www.keepandshare.com/doc/3004985/subprime-pdf-july-25-2011-11-50-am-277k?da=y[/pdf]

 

[thoughtone]

source: Huffington Post

Conservatives Seek To Shift Blame For Crisis Onto Minority Housing Law

Blame for the current economic crisis has been laid on many doorsteps, including the Gramm-Leach-Bliley Financial Services Modernization Act of 1999; credit default swaps; hedge funds; the Commodity Futures Modernization Act of 2000; Alan Greenspan; and Phil and Wendy Gramm.

But it has fallen to right-wing pundit Ann Coulter to blaze a truly simple path through the maze of credit derivatives, collateralized loan obligations, tranches, securitization transactions, and Thomson Financial League Tables.

This gentle lady spells out the source and origin of the current economic crisis:

"THEY GAVE YOUR MORTGAGE TO A LESS QUALIFIED MINORITY!"

Coulter is putting forward an argument popular (who could be surprised?) among besieged conservatives, that "social engineering" is the root cause of the current economic crisis -- in the form of a 31-year-old law passed during the Carter administration by a Democratic Congress, the Community Reinvestment Act of 1977, "intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods, consistent with safe and sound operations."

In Coulter's words, traditional yardsticks of a mortgage applicant's ability to make payments were replaced with "nontraditional measures of credit-worthiness, such as having a good jump shot or having a missing child named 'Caylee';" the result, Coulter continues, is that "middle-class taxpayers are going to be forced to bail out the Democrats' two most important constituent groups: rich Wall Street bankers and welfare recipients."

To make sure her meaning is clear, Coulter echoes a line from the famous anti-affirmative action "White Hands" commercial Jesse Helms used in his 1990 campaign against black challenger Harvey Gantt. The ad shows a pair of white hands crumpling a job rejection slip as the voiceover intones, "You needed that job, you were the best qualified. But they have to give it to a minority because of a racial quota."

Coulter is in the forefront of a concerted drive to shift the partisan consequences of the collapse on Wall Street from helping Democrats to favoring the GOP. To this end, conservatives have initiated a racially explosive argument, shifting the blame for the current economic crisis to legislation designed up improve access to mortgage financing for African Americans, other minorities and residents of low-income neighborhoods generally.

The campaign is being conducted by such leading advocates of the right as Charles Krauthammer, Mona Charen, Jeff Jacoby, television hosts like Lou Dobbs, and the editorial pages of the Wall Street Journal, Investors Business Daily and the Washington Times.

Krauthammer, for example, makes the case that, "For decades, starting with Jimmy Carter's Community Reinvestment Act of 1977, there has been bipartisan agreement to use government power to expand homeownership to people who had been shut out for economic reasons or, sometimes, because of racial and ethnic discrimination. What could be a more worthy cause? But it led to tremendous pressure on Fannie Mae and Freddie Mac -- who in turn pressured banks and other lenders -- to extend mortgages to people who were borrowing over their heads. That's called subprime lending. It lies at the root of our current calamity."

For those inclined to blame Democratic liberals, this argument is appealing. Neither Krauthammer nor Charen quotes any sources to back up their respective cases, and the only expert cited by Boston Globe columnist Jacoby is Loyola College economist Thomas DiLorenzo. DiLorenzo is most famous as a defender of the Confederacy and for his anti-Abraham Lincoln books, including The Real Lincoln: A New Look at Abraham Lincoln, His Agenda, and an Unnecessary War and Lincoln Unmasked: What You're Not Supposed To Know about Dishonest Abe.

The Community Reinvestment Act has, however, received some attention from more mainstream economists, including Robert Litan of the Brookings Institution. Litan told the Washington Post that when banks sought to merge, "they had to show they were making a conscious effort to make loans to subprime borrowers....If the CRA had not been so aggressively pushed, it is conceivable things would not be quite as bad. People have to be honest about that."

There are a host of experts who sharply dispute that blame for the current Wall Street crisis should be directed at the Community Reinvestment Act (CRA).

Janet L. Yellen, President and CEO, Federal Reserve Bank of San Francisco, made the following case in a March 31 speech:

"There has been a tendency to conflate the current problems in the subprime market with CRA-motivated lending, or with lending to low-income families in general. I believe it is very important to make a distinction between the two. Most of the loans made by depository institutions examined under the CRA have not been higher-priced loans, and studies have shown that the CRA has increased the volume of responsible lending to low- and moderate-income households. We should not view the current foreclosure trends as justification to abandon the goal of expanding access to credit among low-income households, since access to credit, and the subsequent ability to buy a home, remains one of the most important mechanisms we have to help low-income families build wealth over the long term."

University of Michigan Law Professor Michael Barr, a specialist in banking and finance law, flatly rejected claims that the CRA was "a significant factor in the current crisis. CRA was enacted more than 30 years ago. It would be quite odd if this 30-year old law suddenly caused an explosion in bad subprime loans from 2002-2007....Subprime mortgages were mostly made by mortgage brokers and lenders and securitized by investment banks -- institutions not covered by CRA," he told the Huffington Post, adding, "CRA only covers banks and thrifts, and these institutions mostly have not suffered to the same extent or kind from bad lending as the non-CRA-covered institutions at the core of the current crisis. The problem here is not CRA. It is what the late former Fed Governor Ned Gramlich called 'the giant hole in the supervisory safety net' -- bad lending by firms outside the banking sector's rules for prudential supervision, capital requirements, consumer protection and yes, the CRA."

Along similar lines, University of Oregon economist Marc Thoma also cited for the Huffington Post the long delay between enactment of CRA and the current crisis and the fact that only 20 percent of subprime loans were made by CRA-regulated lenders, adding two other points: that "subprime loans grew twice as fast in institutions that did not have to meet the conditions of the CRA" and that the scope of coverage of CRA was reduced in 2004 under the Bush administration, "but even though fewer banks were subject to CRA restrictions, the growth of the subprime market continued unabated."

This idea of faulting the CRA originated in the anti-regulation wing of the far right, and the goal is to blame government intervention for the current economic meltdown, and to score political points by blaming Democrats.

While the preponderance of evidence suggests that the role of the CRA in the current meltdown was modest at most, that does not prevent it from becoming a useful wedge issue for a Republican presidential candidate on the ropes, and there is already some evidence that McCain could well be tempted to pounce on it. In an April interview with Larry Kudlow, the two had the following exchange:

KUDLOW: Would you consider, by the way, rolling back the Community Reinvestment Act, which a lot of people say triggered this, mandating banks and other lenders to make substandard loans in the first place, and the creator of the subprime mortgages back in the middle '90s? Is it time to take a look at the Community Reinvestment Act?


McCAIN: Absolutely, Larry. There were people who predicted that the Community Reinvestment Act might lead to reckless and unsound lending practices just to sort of fill a--you know, a amount of--I don't like to use the word "quota," but certain percentages of a--of a home--of the bank's lending practices. Yes, it has to be re-examined, it has to be judged by its effect, and we need to find out how this particular system affected the overall insolvency of the subprime lending issue. And I think it--I'm not saying it needs to be repealed, but it certainly needs to be re-examined and what its effects have been. And we'll be able to figure that out.

 

[LennyNero1972]

Nothing new.

 

[SC_BROVA]

Nothing new.

Exactly. All the ills of society are scapegoated to minorities--teenage pregnancy, drug dealing, drug use, AIDS, violence, failing schools, now the economy. Minorities, you know what let me just say Blacks, have always been made the poster child of all that is fucked up...just have to keep it moving and try not to break stride.

 

[nukdollars]

Nothing new.

duh.

 

[thoughtone]

They are not including the crackers in the boondocks areas in the foreclose data. More poor whites should be factored in.

source: NPR

Foreclosures Hit Rural America, But Quietly

by Scott Finn

Morning Edition, October 7, 2008 · U.S. policymakers who hope to address the nation's housing crisis may have a blind spot: rural counties.

A company called RealtyTrac provides some of the most widely followed statistics on home foreclosures, but it fails to report on more than 900 rural counties.

Critics say that omitting data from outside metropolitan areas gives the false impression that there is no foreclosure crisis in rural America. And, they say, it could undermine attempts to help homeowners.

RealtyTrac, based in California, compiles data that government officials — and journalists — rely on for a picture of the nation's housing market. But in West Virginia last year, it counted fewer than 500 foreclosure notices. New federal statistics counted 12,000 notices in the state, since the start of 2007.

One of those notices went to June Waselchalk, 79, who lives in a small cinder block house on Sewell Mountain, W.Va. A coal miner's widow, Waselchalk says a fast-talking mortgage broker convinced her to refinance her home.

"He had a whole bunch of papers, and he said sign here, sign here, sign here. He just said I was getting a loan, and my interest was going to be real low, and my payment was going to be real low," Waselchalk said.

But she did not read the fine print. Her monthly payments doubled, and the company threatened her with foreclosure.

Waselchalk turned to a nonprofit law firm called Mountain State Justice for help. And Bren Pomponio, a public interest lawyer at the firm, said Waselchalk wasn't the only one.

"The number of people coming to us to try to save their homes has steadily increased," he said. "It's almost more than we can handle."

Pomponio said he was surprised when RealtyTrac said that West Virginia has one of the nation's lowest foreclosure rates. And, it turned out, the company's data was wrong.

A color-coded map on RealtyTrac's Web site shows huge blank spots in the rural West, Midwest and South — the result of not counting foreclosure notices in 900 rural counties.

That means RealtyTrac's foreclosure rates are far too low for states like South Dakota, Vermont and West Virginia.

"We know we're underreporting in West Virginia. We know we're not covering the whole state as thoroughly as we'd like to," said Rick Sharga of RealtyTrac.

He admits his company only counts a fraction of rural foreclosures across the country. But, he says, RealtyTrac's first priority is large, urban areas.

"If I miss a county in California, I miss more in a month than I'd miss in West Virginia for the whole year," Sharga said.

In all, eight of the 10 most rural states in America are also on RealtyTrac's top 10 list for the lowest foreclosure rate.

Sen. Jay Rockefeller (D-WV) said he believes that rural states are being ignored.

"It's ridiculous, it's embarrassing, it's stupid," Rockefeller said. "And I'm going to fight to make sure everybody gets accurate information, and they get counted."

Rockefeller co-sponsored the Foreclosure Prevention Act, which Congress passed in July. The bill required the Department of Housing and Urban Development to measure foreclosure rates in each state.

On HUD's new list, rural states have significantly higher foreclosure rates. For example, RealtyTrac ranks Mississippi near the bottom. But HUD says it's in the top 10.

And that's important, critics say, because lawmakers depend on RealtyTrac's numbers. In West Virginia, a predatory lending bill died after legislators saw RealtyTrac's low ranking for the state.

"They were led to believe that West Virginia was unique and there wasn't a big problem here, which wasn't the case," Pomponio said. "So nothing ever got done."

HUD is using its new data to distribute money to each state for foreclosure relief.

But the agency has only agreed to gather the complete statistics one time. Rockefeller wants to force the government to continue tracking foreclosures — and not rely on incomplete numbers from companies like RealtyTrac.

 

[actinanass]

thoughtone
This message is hidden because thoughtone is on your ignore list.

My question is, if lending to minorities caused this mess, does it not follow that minorities lending to the wealthy proffer a similar outcome?

-VG

they missed that part out of the story.....

Honestly, Neil should of went to the heart of the problem, and that's the democrats in congress. Bottom line...!!!

BTW, if I have to explain that, then you aren't paying attention...

 

[Mrfreddygoodbud]

well you know its the blacks and minorities fault for wanting to live in a home rather than the street..

its their fault that interest rates are beyond their control...

its their fault that central bankers have think tanks and all the time and resources in the world to sit back and conspire to keep their position in society...

yea its the fault of the most powerless people in this economy..

one day folks will wake up and realize all these financial crisis shyt is not something that just popped up out of nowhere, it is a pre emptive strike to take over companies for the cheap.

man propaganda ceases to amazes me.....

blaming the victim, and in this case the voiceless, is very pathetic but its always effective in passing the buck.

 

[thoughtone]

they missed that part out of the story.....

Honestly, Neil should of went to the heart of the problem, and that's the democrats in congress. Bottom line...!!!

BTW, if I have to explain that, then you aren't paying attention...

Please explain. And you know I'm paying attention!

 

[cthomas0964]

Please explain. And you know I'm paying attention!

This is from 2003/2004

http://www.youtube.com/watch?v=_MGT_cSi7Rs

There is plenty of blame to go around and everyone should stand up and own up to it.

And also fuck Cynthia Tucker. I refuse to read any article she writes since I read her response about the new child support guidelines. She also refuse to respond when I emailed her about how unfair the old ones were. She isn't a journalist reporting the news she is a sounding board for the Democratic party. She just repeats everything they tell her to.

 

[thoughtone]

This is from 2003/2004

http://www.youtube.com/watch?v=_MGT_cSi7Rs

There is plenty of blame to go around and everyone should stand up and own up to it.

And also fuck Cynthia Tucker. I refuse to read any article she writes since I read her response about the new child support guidelines. She also refuse to respond when I emailed her about how unfair the old ones were. She isn't a journalist reporting the news she is a sounding board for the Democratic party. She just repeats everything they tell her to.

Republicrats as always. Now back to the topic. Conservatives/right wing are scapegoating MINORITIES (which is a buzz word for Blacks)! RACISM!

 

[actinanass]

Republicrats as always. Now back to the topic. Conservatives/right wing are scapegoating MINORITIES (which is a buzz word for Blacks)! RACISM!

dude, everyone is "right wing" in your book.

I think its time for a reality check real quick..

From experience, I've seen MY people *black if you don't know* get into houses that they knew they couldn't afford. They got it so they can look like they are in a better situation. People have offered me a 250k house, when I'm only making roughly 40k at the time. If you know your math, that shit don't add up. Luckily I resisted the urge, unlike most of my comrades in the hood. Face it, a lot of niggas *being real right now* got caught up in this game because they thought they were getting something for nothing. Thus, making Cavuto's point, unfortunately.....

I do agree that he *Cavuto* should of worded it better, however, he told the blunt truth about the situation.

Thoughtone if you can't respect that, then you are no more than a mindless puppet in the liberal ranks.

 

[thoughtone]

dude, everyone is "right wing" in your book.

I think its time for a reality check real quick..

From experience, I've seen MY people *black if you don't know* get into houses that they knew they couldn't afford. They got it so they can look like they are in a better situation. People have offered me a 250k house, when I'm only making roughly 40k at the time. If you know your math, that shit don't add up. Luckily I resisted the urge, unlike most of my comrades in the hood. Face it, a lot of niggas *being real right now* got caught up in this game because they thought they were getting something for nothing. Thus, making Cavuto's point, unfortunately.....

I do agree that he *Cavuto* should of worded it better, however, he told the blunt truth about the situation.

Thoughtone if you can't respect that, then you are no more than a mindless puppet in the liberal ranks.

Not everybody, just you and a few other frequently proven wrong posters. Did you read the ENTIRE thread? Rural areas are being under counted.

From experience, I've seen MY people *black if you don't know* get into houses that they knew they couldn't afford

From my experiences I have seen a lot of whites perpetrating. 5, 10 or more credit cards. Way over extend. Post the hard data that shows Blacks are to blame for this mess. If not, then it is just your self hatred opinion filtered through your RIGHT WING mind.

 

[djdez]

...not only for the financial crisis, but it seems to me that minorities are the scapegoat for A LOT of other reasons ...failed health care system, high taxes, welfare abuse...the list goes on...

 

[actinanass]

Not everybody, just you and a few other frequently proven wrong posters. Did you read the ENTIRE thread? Rural areas are being under counted.



From my experiences I have seen a lot of whites perpetrating. 5, 10 or more credit cards. Way over extend. Post the hard data that shows Blacks are to blame for this mess. If not, then it is just your self hatred opinion filtered through your RIGHT WING mind.

btw thoughtone, this thread is about MINORITIES.

 

[thoughtone]

btw thoughtone, this thread is about MINORITIES.

Finish the thread headline.

"Minorities a convenient scapegoat for U.S. financial woes"

source: msn

Did poor minorities cause the crisis?

Cable TV has been airing nonsense about unqualified borrowers who got loans as a form of economic affirmative action. Such baiting tactics belong back in the racial Stone Age.

By The Root

The offensive new vogue in cable TV talking points goes something like this: Wall Street is melting down because the government forced banks to make loans to poor people -- especially poor minorities.

They claim that the entire weight of the global financial collapse rests on the shoulders of unqualified poor, minority borrowers who got loans as a form of economic affirmative action. The evil institutions in this talking-points scenario are Fannie Mae and Freddie Mac, the formerly quasi-governmental creatures of secondary home-mortgage lending.

For several days, I had been hearing a diluted version of these talking points around the edges of various cable news shout-fests. It wasn't until Larry Kudlow, cable host, former Reagan administration official and former Bear Stearns principal, appeared on "Morning Joe" on MSNBC that I was smacked into full alertness. My jaw dropped as he began talking about the subprime mortgage crisis.

"Not everybody can own a home. Some people have to rent, that's just the way it is," he said. Kudlow rattled off his theory that Congress forced banks to make low-income loans with no documentation of a borrower's ability to repay. Countrywide Financial, the notorious subprime lender, was forced to make loans to neighborhoods that banks once "redlined." Wracked with liberal guilt, lenders folded under government coercion to make bad loans, he claimed.

The co-hosts rejected this nonsense and escorted Kudlow from the set, not completely in jest. As Kudlow was escorted off, Joe Scarborough could be heard saying incredulously, "Watch the Kudlow show, where you will probably hear that poor people are responsible for the assassination of President Kennedy."

If only it were just a joke. In reality, these cable talking points have now morphed into an orchestrated Internet campaign of "homemade" videos with shades of Willie Horton. The fake story line reintroduces the trope of the irresponsible welfare queen who was given a house but who was so stupid and ungrateful as to lose it all in an entrepreneurial misadventure. The argument then descends into standard racial farce.

Usually, the videos feature white males glaring into the camera while their eyes dart back and forth to a script off-camera. This band of outraged Joe Six-Packs gives the example of a beneficiary of an "Extreme Makeover" new home who used the home as collateral for a loan to fund a small business that failed. The house went into foreclosure and was sold at auction. This is a sad story that has absolutely nothing to do with the subprime loan crisis.

Another Mr. Six-Pack shouts that the entire financial crisis was caused by a Congress "hell-bent on affirmative action, using mob-style extortion tactics to threaten" banks into making bad loans to "predatory borrowers" without documentation.

No need to dance around it: The story line is a complete lie.

The campaign to racialize a global financial meltdown operates in a fact-free zone. A national study of the performance of banks covered by the Community Reinvestment Act (CRA), enacted by Congress in 1977, shows that these government-backed banks were much less likely than other lenders to make the kinds of risky, high-cost home purchase loans that helped fuel the foreclosure crisis. The average interest rate for CRA loans was much lower than other lenders. CRA banks were more than twice as likely as other lenders to keep the loans they write instead of selling them off to the highest bidder.

By and large, the problem with subprime lending was that independent, unregulated brokers pushed inappropriate loans to poor borrowers and to many American middle-class and wealthy consumers who could not qualify for their second or third vacation home and who took a "liar's loan" from brokers, not covered by CRA. These loans were then sliced and diced into mortgage-backed securities by Wall Street investment houses that then sold them to the financial institutions of the world.

The Wall Streeters often used shaky accounting schemes to buy the loans from brokers who were not regulated by anyone. These brokers took their generous commissions and ran. Like the first people to cash out of a pyramid scheme, the brokers were out of the picture before they could be held accountable for fraud, misrepresentation or other coercive tactics they used to sell the bad loans. Thus, a system of non-accountability flourished outside of the regulated financial system, in what Floyd Norris of The New York Times calls the "shadow banking system."

A crisis arose from a perfect storm: There was the loose-money era created by low interest rates set by then-Fed Chairman Alan Greenspan and a burgeoning, unregulated financial sector. Then we saw the integration of financial systems around the world. Many older CEOs did not really understand these new and complex financial instruments that were too good to be true. Even if the CEOs did, they had no incentive to rein them in because they brought huge profits to their companies, and golden parachutes to them, when things collapsed.

The racial scapegoating in this financial crisis has echoes of another political season two decades ago. Willie Horton, a convicted murder, raped a Maryland woman and beat up her boyfriend while he was out on a weekend furlough from Massachusetts, where Michael Dukakis was then the governor. In 1988, during the winning presidential campaign of George H.W. Bush, the late Lee Atwater, Bush's strategist and a mentor to Karl Rove, announced, "By the time this election is over, Willie Horton will be a household name."

The ad based on Horton, made by a political action committee, became infamous because it never mentioned Horton's race. It featured just a picture of Horton's close-up prison mug shot looking fearsome and warlike with uncombed, nappy hair, a beard and an ice-cold stare.

Being the crafty Republican strategist that he was, Atwater, in choosing to make Willie Horton a household name, affixed a black face to the national problem of crime. This Machiavellian manipulation distorted the fact that 16 white prisoners and only two black prisoners had been furloughed under the program. But facts lost out in the '88 election. H.W. won.

Present-day circumstance cannot fall prey to the same manipulation. Racializing a complex global financial panic is an unforgivably incendiary tactic that has special significance because Barack Obama is the first black nominee for president of either major political party. This campaign, unlike Michael Dukakis' campaign in 1988, is more vulnerable to crude racial manipulation. We have witnessed the claims that Obama is a Muslim, an unpatriotic, American-hating radical, with a wild wife and a raving black pastor. The Atwater Alumni Club seems to forget that their patron saint, Lee Atwater, recanted the Willie Horton tactics and apologized to Dukakis before he passed away in 1991.

Still, the bare-knuckle strategies persist. The sub-slime ploys continue as the Joe Six-Packs of America inject race into a global financial panic. Enough! I hope that this election year, Americans push these race-baiting tactics back into the racial Stone Age where they belong.

 

[thoughtone]

source: CNN Money

NAACP sues major lenders

The lawsuit alleges that HSBC and Wells Fargo gave subprime rates to African-Americans who qualified for better rates.

March 13, 2009: 4:14 PM ET

NEW YORK (CNN) -- The NAACP filed lawsuits Friday against two of the nation's largest mortgage lenders -- HSBC and Wells Fargo -- alleging "systematic, institutionalized racism" in their sub-prime lending.

"We have targeted these banks because we have gone through what we can get our hands on, and it seems like there's a real problem here," NAACP CEO Benjamin Jealous told CNN.

He added that the group wants "transparency. We want to see the books. We are not seeking damages, we just want them to fix the problem."

Both companies denied the allegations.

HSBC (HBC) spokeswoman Kate Durham said the company does not comment on litigation, but she added, "We stand by our lending practices."

Wells Fargo (WFC, Fortune 500) spokeswoman Melissa Murray issued a statement saying, "The NAACP's allegations are totally unfounded and reckless. We have never tolerated, and will never tolerate, discrimination in any way, shape or form in any of our business practices, products, or services."

She went on to say that the company has been "working with the NAACP for the past two years to develop a partnership that would benefit the NAACP, its constituents, and our communities, so we are dismayed that the NAACP has chosen to abandon that constructive dialogue in order to pursue this litigation."

Under subprime lending, people who don't qualify for lower interest rates can borrow money at higher rates. The NAACP lawsuits argue that the companies gave subprime rates to African-Americans who qualified for better rates, and gave better rates to white customers with similar credit histories.

The lawsuits, filed in U.S. District Court in central California, note several studies showing African-Americans have been disproportionately affected by subprime lending.

"These statistical disparities are not mere happenstance, but instead result from the systematic and predatory targeting of African-Americans, as well as facially neutral lending policies and practices that have a disparate adverse impact on African-Americans," the lawsuits say.

The NAACP previously launched similar suits against numerous other lenders. In its statement Friday, the nation's oldest civil-rights group said, "One lender has already entered into a preliminary settlement agreement with the NAACP, and a number of other lenders are engaged in similar discussions."

 

[thoughtone]

Suit Accuses Wells Fargo of Steering Blacks to Subprime Mortgages in Baltimore

source: New York Times

As she describes it, Beth Jacobson and her fellow loan officers at Wells Fargo Bank “rode the stagecoach from hell” for a decade, systematically singling out blacks in Baltimore and suburban Maryland for high-interest subprime mortgages.

These loans, Baltimore officials have claimed in a federal lawsuit against Wells Fargo, tipped hundreds of homeowners into foreclosure and cost the city tens of millions of dollars in taxes and city services.

Wells Fargo, Ms. Jacobson said in an interview, saw the black community as fertile ground for subprime mortgages, as working-class blacks were hungry to be a part of the nation’s home-owning mania. Loan officers, she said, pushed customers who could have qualified for prime loans into subprime mortgages. Another loan officer stated in an affidavit filed last week that employees had referred to blacks as “mud people” and to subprime lending as “ghetto loans.”

“We just went right after them,” said Ms. Jacobson, who is white and said she was once the bank’s top-producing subprime loan officer nationally. “Wells Fargo mortgage had an emerging-markets unit that specifically targeted black churches, because it figured church leaders had a lot of influence and could convince congregants to take out subprime loans.”

Ms. Jacobson’s account and that of the other loan officer who gave an affidavit, Tony Paschal, both of whom have left Wells Fargo, provide the first detailed accusations of deliberate racial steering into subprimes by one of the nation’s top banks.

The toll taken by such policies, Baltimore officials argue, is terrible. Data released by the city as part of the suit last week show that more than half the properties subject to foreclosure on a Wells Fargo loan from 2005 to 2008 now stand vacant. And 71 percent of those are in predominantly black neighborhoods.

Judge Benson E. Legg of Federal District Court had asked the city to file the additional paperwork and has not decided whether the lawsuit can go forward.

Wells Fargo officials have declined detailed interviews since Baltimore filed suit in January 2008. In an e-mail statement on Friday, a spokesman said that only 1 percent of the city’s 33,000 foreclosures have come on Wells Fargo mortgages.

“We have worked extremely hard to make homeownership possible for more African-American borrowers,” wrote Kevin Waetke, a spokesman for Wells Fargo Home Mortgage. “We absolutely do not tolerate team members treating our customers or others disrespectfully or unfairly, or who violate our ethics and lending practices.”

City and state officials across the nation have investigated and sometimes sued Wells Fargo over its practices. The Illinois attorney general has investigated whether Wells Fargo Financial violated fair lending and civil rights laws by steering black and Latino homeowners into high-interest loans. New York’s attorney general, Andrew M. Cuomo, raised similar questions about the lending practices of Wells Fargo, JPMorgan Chase and Citigroup, among other banks.

The N.A.A.C.P. has filed a class-action lawsuit charging systematic racial discrimination by more than a dozen banks, including Wells Fargo.

At the heart of such charges is reverse redlining, specifically marketing the most expensive and onerous loan products to black customers.

The New York Times, in a recent analysis of mortgage lending in New York City, found that black households making more than $68,000 a year were nearly five times as likely to hold high-interest subprime mortgages as whites of similar or even lower incomes. (The disparity was greater for Wells Fargo borrowers, as 2 percent of whites in that income group hold subprime loans and 16.1 percent of blacks.)

“We’ve known that African-Americans and Latinos are getting subprime loans while whites of the same credit profile are getting the lower-cost loans,” said Eric Halperin, director of the Washington office of the Center for Responsible Lending. “The question has been why, and the gory details of this complaint may provide an answer.”

The affidavits of the two loan officers seem to bolster Baltimore’s lawsuit. Mr. Paschal, who is black and worked as a loan officer in Wells Fargo’s office in Annandale, Va., from 1997 to 2007, offers a sort of primer on Wells Fargo’s subprime marketing strategy by race.

In 2001, he states in his affidavit, Wells Fargo created a unit in the mid-Atlantic region to push expensive refinancing loans on black customers, particularly those living in Baltimore, southeast Washington and Prince George’s County, Md.

“They referred to subprime loans made in minority communities as ghetto loans and minority customers as ‘those people have bad credit’, ‘those people don’t pay their bills’ and ‘mud people,’ ” Mr. Paschal said in his affidavit.

He said a bank office in Silver Spring, Md., had an “affinity group marketing” section, which hired blacks to call on African-American churches.

“The company put ‘bounties’ on minority borrowers,” Mr. Paschal said. “By this I mean that loan officers received cash incentives to aggressively market subprime loans in minority communities.”

Both loan officers said the bank had given bonuses to loan officers who referred borrowers who should have qualified for a prime loan to the subprime division. Ms. Jacobson said that she made $700,000 one year and that the company flew her and other subprime officers to resorts across the country.

“I used to joke that ‘I’ll pay for your kids to go to private school if you give me clients,’ ” Ms. Jacobson said in the interview.

Loan officers employed other methods to steer clients into subprime loans, according to the affidavits. Some officers told the underwriting department that their clients, even those with good credit scores, had not wanted to provide income documentation.

“By doing this, the loan flipped from prime to subprime,” Ms. Jacobson said. “But there was no need for that; many of these clients had W2 forms.”

Other times, she said, loan officers cut and pasted credit reports from one applicant onto the application of another customer.

These practices took a great toll on customers. For a homeowner taking out a $165,000 mortgage, a difference of three percentage points in the loan rate — a typical spread between conventional and subprime loans — adds more than $100,000 in interest payments.

The accusations contained in the affidavits, which were given to Relman & Dane, a civil rights law firm working with the City of Baltimore, have not drawn a specific response from Wells Fargo. But city officials say the conclusion is clear.

“They confirm our worst fears: that this is not just a case based on a review of numbers and a statistical analysis,” said the city solicitor, George Nilson. “You don’t have to scratch your head and wonder if maybe this was just an accident. The behavior is pretty explicit.”

Both sides expect to appear in court at a hearing in the case in late June.

________________________________________________​

source: New York Times


Bank Regulation Case Pits U.S. Against States

WASHINGTON — The Supreme Court heard arguments on Tuesday in a case that could change the way big banks are regulated.

In the case, Cuomo v. the Clearing House Association, federal and state regulators have squared off over which part of the government should serve as the nation’s watchdog for national banks. The case began four years ago, when Eliot Spitzer, New York’s attorney general at the time, questioned why some national banks seemed to be making a disproportionate number of high-interest home mortgage loans to black and Hispanic borrowers.

The fight involves fundamental issues of federalism and consumer protection, and, should the court decide for Mr. Cuomo’s position, could open new powers of regulation to the states.

Mr. Spitzer was trying to enforce New York’s antidiscrimination laws, but he ran up against federal precedent that tended to leave regulation of national banks to the Treasury Department, and, specifically, the Office of the Comptroller of the Currency. A consortium of banks sued Mr. Spitzer, and so did the Office of the Comptroller of the Currency.

The banks and federal regulators argued that letting state officials regulate the banks would force the financial institutions to deal with a national patchwork of conflicting regulations. States can make laws concerning the banks’ practices, they argued, but only the federal government should enforce those laws.

That argument appeared to resonate with Justice Stephen G. Breyer, who pictured 51 regulators — one from each state and the federal government — poring over a bank’s books for statistical patterns of differentiation in setting interest rates. “As long as, most unfortunately, income is correlated with race, with minorities being toward the bottom, of course such statistical disparities will exist, some legitimate, some not,” he said. In such analysis, “reasonable people will often differ,” he noted.

Judge Ruth Bader Ginsburg, however, called the unusual arrangement depicted by the government as “passing strange,” while Justice Antonin Scalia called it “weird.” He asked: “What incentive does the federal government have to enforce state law? It has so much spare time after enforcing federal law that it’s going to be worrying about state law?”

A federal district judge in 2005 and the United States Court of Appeals for the Second Circuit in 2007 ruled against New York and for federal regulation.

But much has changed since Mr. Spitzer began his inquiry. For one thing, he is no longer attorney general; Andrew M. Cuomo has succeeded him. And, at the same time, the nation has been shaken by financial scandal and failure in ways that have led many to question the sagacity and effectiveness of the regulatory structure. A brief filed by the 49 other state attorneys general argues, “The recent (and continuing) fallout from the subprime lending debacle demonstrates the need for more oversight and consumer protection enforcement in the area of mortgage lending.”

The Office of the Comptroller of the Currency, the brief states, “has no experience in enforcing state public protection laws, has a minimal track record in consumer protection and has no accountability to the citizens of any state.”

James E. Tierney, director of the National State Attorneys General Program at Columbia Law School, said that the federal regulators’ job was to promote “bank fiscal soundness and not protection of consumers,” and that battling fraud in mortgage lending was an area where state attorneys general had long excelled. “They got it first,” Mr. Tierney said, “and they got it right.”

A brief filed by all the Comptrollers of the Currency since 1973, however, takes a different view. The comptroller’s office, according to the brief, works quietly with banks to address consumer issues in a “prophylactic” way, and “uses the wide range of its supervisory powers in an effort to alert national banks of potential noncompliance that poses risks to consumers and to ensure that they are addressed as early as possible.”

The threat of action by the federal regulators, the comptrollers stated, is “a significant incentive for national banks to address any compliance issues before they become serious problems.” And when such gentle measures fail, the comptrollers wrote, the agency “does not hesitate to take aggressive enforcement action against national banks.”

 

[Nat_Turner]

Nothing new.

Yep, what he said.

 

[thoughtone]

RACE CARD!

 

[thoughtone]

<iframe width="420" height="315" src="http://www.youtube.com/embed/aD2QrbCDtco" frameborder="0" allowfullscreen></iframe>

 

[SPECTRE1]

The cheap easy access to debt was to hide the poor wealth distribution in this country. Now that easy credit access is gone, it has exposed the underlying problem of free trade, poor unionization, and other problems.

There isn't a recession per se, it is poor wealth distribution. However, you will never see the media or economists stating this on record out of fear.

 

[snark9]

funny no mention about the targeting of so-called minorities with sub-prime mortgages [even those who qualified for prime], all he wants to see is how 'minorities' couldn't pay up when the industry jacked the rates sky high.

 

[muckraker10021]

funny no mention about the targeting of so-called minorities with sub-prime mortgages [even those who qualified for prime], all he wants to see is how 'minorities' couldn't pay up when the industry jacked the rates sky high.

No mention of steering and targeting at all!

.....Angelo R. Mozilo, the former CEO of CountyWide was the most rapacious retail mortgage bankster in the United States. Mozilo’s CountyWide engaged in “steering” – steering is the practice of selling higher interest rate mortgages (subprime) & I.O. (interest only) quarterly reset mortgages specifically to a certain group…..DESPITE the fact that their credit score qualifies them for a standard mortgage. Who was the ‘certain group’ Mozilo’s CountyWide, and Wells Fargo & others targeted? Blacks and Hispanics.

<blockquote>
As former Wells Fargo loan officer Beth Jacobson told The New York Times in June 2009, Wells Fargo singled out blacks in Baltimore and suburban Maryland for high-interest subprime mortgages. Jacobson and another former Wells Fargo loan officer said in an affidavit that the bank's employees referred to blacks as "mud people" and to subprime lending as "ghetto loans."

"We just went right after them," Jacobson, who is white, told The Times. "Wells Fargo mortgage had an emerging-markets unit that specifically targeted black churches, because it figured church leaders had a lot of influence and could convince congregants to take out subprime loans."

COUNTRYWIDE

Countrywide Sued by Illinois A.G. For Discriminating Against Black And Latino Mortgage Buyers

The lawsuit claims that even when black and Latino borrowers qualified for higher quality loans they were steered towards subprime mortgages by Countrywide more often than Caucasian borrowers who had the same qualifications.

It also alleges that Latinos and Blacks were charged higher fees and interest rates than similarly qualified white borrowers.

Attorney General Lisa Madigan said, "It's disturbingly clear that if you were an African American or Latino borrower who walked into a Countrywide store, you likely paid more for your mortgage than a white borrower," Madigan said in a statement. "Countrywide effectively imposed a surcharge on mortgage loans based on race and ethnicity."

Bankster Angelo R. Mozilo was called ‘The Sun God,’ both for how his employees seemed to worship him as well as for his deep, permanent tan. Mozilo drove several Rolls-Royces, often in shades of gold, and paid his executives hundreds of thousands of dollars. Mozilo’s shiny white teeth, pinstriped suits, and bravado helped him both stand out and send a message: He was going to shake up the staid industry.
</blockquote>

Yesterday, October 15, 2010 bankster Angelo R. Mozilo got slapped on the wrist by the Securities Exchange Commission. He agreed to give back $68 million of the $500 million he stacked. Meanwhile in 2006 two men go to jail for six months for ‘stealing??’ food from a trash can.



<hr noshade color="#0000FF" size="8"></hr>

 

[thoughtone]

Just a "drop in the bucket". B of A made billions!

source: New York Times


$335 Million Settlement on Countrywide Lending Bias


The Justice Department on Wednesday announced the largest residential fair-lending settlement in history, saying that Bank of America had agreed to pay $335 million to settle allegations that its Countrywide Financial unit discriminated against black and Hispanic borrowers during the housing boom.

A department investigation concluded that Countrywide had charged higher fees and rates to more than 200,000 minority borrowers across the country than to white borrowers who posed the same credit risk. It also steered more than 10,000 minority borrowers into costly subprime mortgages when white borrowers with similar credit profiles received prime loans, the department said.

The pattern and practice covered the years 2004 to 2008, before Countrywide was acquired by Bank of America.

“The department’s actions against Countrywide makes clear that we will not hesitate to hold financial institutions accountable, including one of the nation’s largest, for discrimination,” Attorney General Eric H. Holder Jr. said. “These institutions should make judgments based on applicants’ creditworthiness, not on the color of their skin.”

Dan Frahm, a Bank of America spokesman, stressed that the allegations were focused on Countrywide’s conduct before Bank of America purchased it in 2008.

“We are committed to fair and equal treatment of all our customers, and will continue to focus on doing what’s right for our customers, clients and communities,” he said. “We discontinued Countrywide products and practices that were not in keeping with our commitment and will continue to resolve and put behind us the remaining Countrywide issues.”

The Justice Department had been examining whether Countrywide used unfair lending practices during the heyday of the housing boom, including charging higher fees and rates to Hispanic and African-American mortgage applicants than to white applicants who had the same qualifications.

A court filing in 2010 in a civil fraud case brought by the Securities and Exchange Commission against Angelo R. Mozilo, the former chief executive of Countrywide, disclosed that the firm’s lending practices during the heyday of the housing boom were under scrutiny.

It showed that regulators with the Federal Reserve, analyzing Countrywide data from 2004, had uncovered evidence of “statistically significant disparities by race and ethnicity” among its customers: African-American and Hispanic borrowers were being charged higher fees and rates than whites. The filing also showed that the Fed had referred the matter to the Justice Department’s civil rights division in early 2007.

Under federal civil rights laws — including the Fair Housing and Equal Credit Opportunity acts — a lending practice is illegal if it has a disparate impact on minority borrowers. Amid the housing boom, the Justice Department brought relatively few enforcement actions based on fair lending laws under the Bush administration.

But against the backdrop of the foreclosure crisis, the Obama administration has made a major effort to step up enforcement of fair lending laws. In January 2010, the division created a unit to focus exclusively on banks and mortgage brokers suspected of discriminating against minority mortgage applicants, a type of litigation that requires extensive and complex analysis of data. It also reached an agreement to gain access to data the Treasury Department is collecting from banks about loan modifications for people seeking to avoid foreclosure.

Working with bank regulatory agencies and the Department of Housing and Urban Development, the unit has reached settlements or filed complaints in 10 cases alleging that a lender engaged in a pattern or practice of discrimination — such as by charging African-American borrowers higher upfront fees than non-Hispanic white borrowers or by steering minorities into subprime loans even though they qualified for regular mortgages with lower interest rates.

The cases that have been settled, including one with a subsidiary of A.I.G., have extracted more than $30 million in compensation for individual borrowers, according to a speech in November by Tom Perez, the assistant attorney general for the Civil Rights Division. In those remarks, Mr. Perez said there were seven authorized lawsuits and more than 20 active investigations, including the one “against Bank of America/Countrywide” that had previously been disclosed.

With its aggressive pursuit of growth in the home lending market, Countrywide became a symbol of the excesses and collapse of the housing boom. After accumulating $200 billion in assets, it nearly fell into bankruptcy. As the financial crisis began to mount, it was taken over by Bank of America for $2.8 billion.

Regarded as one of the worst deals ever, the acquisition has already cost the bank tens of billions in losses, and investor uncertainty about just how much more red ink is to come is a prime reason that its stock has lost roughly two-thirds of its value over the last two years.

The decision to buy Countrywide came well before Bank of America’s current chief executive, Brian T. Moynihan, took over in December 2009. But the resulting problems have proved to be a major headache for him and other top managers, with investors seeking to force the bank to buy back billions in soured mortgages, arguing that they did not conform to proper underwriting standards and the risks weren’t fully disclosed.

While Wednesday’s settlement put one legal headache behind the bank, the second-largest in the United States by assets, it still faces legal challenges on a host of other fronts. Besides the effort to force it to buy back the defaulted mortgages, Bank of America and other large servicers are in the final stages of negotiations with state attorneys general to settle an investigation into improper foreclosure practices. That settlement could cost the largest servicers more than $20 billion.

The remnants of Countrywide and its mortgage servicing unit agreed in June 2010 to pay $108 million to settle federal charges that the company charged highly inflated sums to customers struggling to hang on to their homes. The settlement resolved the biggest mortgage-servicing case ever brought by the Federal Trade Commission with one of its largest overall judgments. The money was to be used to reimburse homeowners who were charged excessive fees.

In August 2010, the company agreed to pay $600 million to settle shareholder lawsuits over its mortgage losses.

 

[thoughtone]

^^^^^^^^^^^^

 

[thoughtone]

Could voter suppression have something to do with this?

 

[thoughtone]

No comments from the right?


source: New York Times

Wells Fargo Will Settle Mortgage Bias Charges</NYT_HEADLINE>


WASHINGTON — Wells Fargo, the nation’s largest home mortgage lender, has agreed to pay at least $175 million to settle accusations that its independent brokers discriminated against black and Hispanic borrowers during the housing boom, the Justice Department announced on Thursday. If approved by a federal judge, it would be the second-largest residential fair-lending settlement in the department’s history.

An investigation by the department’s civil rights division found that mortgage brokers working with Wells Fargo had charged higher fees and rates to more than 30,000 minority borrowers across the country than they had to white borrowers who posed the same credit risk, according to a complaint filed on Thursday along with the proposed settlement.

Wells Fargo brokers also steered more than 4,000 minority borrowers into costlier subprime mortgages when white borrowers with similar credit risk profiles had received regular loans, a Justice Department complaint found. The deal covers the subprime bubble years of 2004 to 2009.

Thomas Perez, the assistant attorney general for the civil rights division, said the practices amounted to a “racial surtax,” adding: “All too frequently, Wells Fargo’s African-American and Latino borrowers had no idea they could have gotten a better deal — no idea that white borrowers with similar credit would pay less.”

Wells Fargo admitted no wrongdoing as part of the settlement. In a statement, the bank also announced that it would no longer finance mortgages through independent brokers, and noted that it had ceased making subprime loans in 2008.

“Wells Fargo is settling this matter because we believe it is in the best interest of our team members, customers, communities and investors to avoid a long and costly legal fight, and to instead devote our resources to continuing to contribute to the country’s housing recovery,” said Mike Heid, president of Wells Fargo Home Mortgage.

The bank agreed to pay $125 million to compensate individual borrowers. The Justice Department estimated that the minority borrowers who had been steered into costly subprime loans would receive an average of $15,000, while the victims who had been charged more costly fees would receive $1,000 to $3,500.

In addition, the bank has agreed to give $50 million to a program that assists people in making down payments or improving their homes in eight metropolitan areas: Baltimore, Chicago, Cleveland, an area east of Los Angeles, New York, Oakland/San Francisco Bay Area, Philadelphia and Washington.

Lending data showed, for example, that in 2007 customers in the Chicago area who borrowed $300,000 from Wells Fargo through an independent broker had paid an average of $2,937 more in broker fees if African-American, and $2,187 more if Hispanic, compared with white borrowers with a similar credit risk, the complaint said.

Similarly, it said, the data showed that nationwide, an African-American borrower who had qualified for a regular loan was 2.9 times more likely to be steered into a subprime loan, and a Hispanic borrower was 1.8 times more likely, than were similarly creditworthy white borrowers. Subprime loans, which are intended for riskier borrowers, carry higher interest rates.

Wells Fargo was also facing lawsuits by several entities beyond the Justice Department, including the city of Baltimore, the state of Illinois and the Pennsylvania Human Rights Commission. It settled with all of them as part of the deal, putting to rest its fair-lending cases from the bubble years.

The focus of the settlement is Wells Fargo’s failure to police the behavior of its independent loan brokers. The complaint said that the bank had set basic credit guidelines but then had allowed the brokers discretion to charge higher rates or steer people into less attractive loans without ensuring there was no discrimination based on race or national origin

Wells Fargo and the Justice Department were unable to agree on whether the data had showed any evidence of discrimination in the lending practices of the bank’s in-house “retail” mortgage agents. Instead, they agreed to a methodology to evaluate that data further. If it finds evidence of discrimination, the victims would receive similar compensation on top of the $175 million Wells Fargo has already agreed to pay.

Under federal civil rights laws, a lending practice is illegal if it has a disparate impact on minority borrowers, even without evidence of discriminatory intent.

During the housing boom, Wall Street firms developed a huge demand for subprime loans that they purchased and bundled into securities for sale to investors, creating financial incentives for lenders to make such loans. In early 2010, the Obama administration set up a unit in the civil rights division to focus on lending bias amid the fallout from the wave of foreclosures that had set off the financial crisis.

In December, the division settled a similar lawsuit with Bank of America for $335 million over loan discrimination by its Countrywide Financial unit. In May, SunTrust Mortgage agreed to pay $21 million in a similar case.

 

[thoughtone]

Re: What Do Black Folk Owe The Republican Party?

source: Think Progress

Paul Ryan Blames Poverty On Lazy ‘Inner City’ Men



House Budget Chairman Paul Ryan (R-WI) previewed his upcoming legislative proposals for reforming America’s poverty programs during an appearance on Bill Bennett’s Morning in America Wednesday, hinting that he would focus on creating work requirements for men “in our inner cities” and dealing with the “real culture problem” in these communities. “We have got this tailspin of culture, in our inner cities in particular, of men not working and just generations of men not even thinking about working or learning the value and the culture of work, and so there is a real culture problem here that has to be dealt with,” he said.

Ryan also cited Charles Murray, a conservative social scientist who believes African-Americans are, as a population, less intelligent than whites due to genetic differences and that poverty remains a national problem because “a lot of poor people are born lazy.”

Ryan’s comments come a week after he released a 204-page report analyzing the effectiveness of the nation’s anti-poverty programs 50 years after President Lyndon Johnson declared a national War on Poverty. The former GOP vice presidential candidate, who argues that federal anti-poverty programs have contributed to the nation’s high poverty rate and “created what’s known as the poverty trap,” is expected to offer reforms to the programs in his upcoming FY 2015 budget.

“[W]e want people to reach their potential and so the dignity of work is very valuable and important and we have to re-emphasize work and reform our welfare programs, like we did in 1996,” Ryan told Bennett.

Listen:

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Numerous anti-poverty initiatives already include work requirements, particularly long-term unemployment insurance and the Earned Income Tax Credit. Other programs, such as Head Start, allow parents to go to work while their children attend education programs.

Work requirements have yet to significantly reduce poverty, particularly during a downturn economy. While Ryan touts the success of lowering the number of people on welfare after 1996, poverty has actually increased since the recession and the number of families whose incomes are below half the poverty line (less than $12,000 a year for a family of four) is actually higher now than it was when Congress and President Bill Clinton enacted welfare reform. Welfare’s rigid work requirements improved employment among single mothers initially, but those rates started to decline by 2001, once the economy went into recession. The work provisions also pressure some women to abandon the higher education that could lead to upward mobility in favor of lower-paying jobs that meet the law’s standards.

But Ryan is prepared to double down on the welfare reforms of the mid-90s. “When you question this war on poverty, you get all the criticisms from adherents to the status quo who just don’t want to see anything change,” Ryan said. “We got to have the courage to face that down, just as we did in the welfare reform of the late 1990s and if we succeeded we can help resuscitate this culture and get people back to work.”