Posted on 01/07/2011 2:38:16 PM PST by ninonitti
More likely, they threw out good lending practices because the government pushed them into doing so through the "community reinvestment act". And ACORN hounded them in every large city to make loans to deadbeats in derelict neighborhoods or face consequences in civil court for "redlining".
Now obviously, you can't give loans to deadbeats without lowering lending standards and you can't selectively lower standards for one group or another - if you lower for one, you must lower for all. So, along with low-income (and no-income) buyers, banks loaned to "investors" that were buying multiple homes, hoping to turn them around in a year or two for profit.
Throw in an excessively low prime rate (easy money) and you have all the ingredients to bake up a huge housing bubble.
Of course, along with the coercion from the government and trial lawyers, they were given an "out" and that out was to package all the garbage loans up with good loans and sell them off as mortgage-backed securities. That was how the banks were bailing themselves out from the bad business practices that were essentially forced upon them. While the government looked the other way.
This battle's been going on for a while, and while I won't claim that banks are faultless in this mess, they were, by and large, coerced into this position by the left (and by "go-along" RINOs that fell for the "ownership society" angle).
Because the left-wing media, which shares a bed with the socialists that encouraged this whole mess, don't wish to tell the whole story for fear that it might show their masters in a bad light.
“More likely, they threw out good lending practices because the government pushed them into doing so through the “community reinvestment act”
That’s what they would like you to believe and I can’t stand Acorn anymore then anyone else but these big banks donated to Acorn, Lloyd Blankfein is a life long Democrat and Jamie Dimon is obama’s favorite banker. This was done world wide and they don’t have Acorn all over the world.
Take Ireland for example the ONLY reason they needed a bailout was they were FORCED to bail out the Banks. Their GDP was lower then the UK,Germany and France otherwise.
http://finance.yahoo.com/news/Why-the-Irish-Crisis-is-Going-usnews-4028366968.html?x=0
Those big global bankers are Socialists and just like the other Socialists we had to bail them out, we should have let these obama loving, economy crashing bankers fail. Our own smaller banks who are conservative, decent are failing in the meantime instead.
JPMorgan Chase Asked to Stop Funding ACORN
http://nlpc.org/stories/2009/09/15/jpmorgan-chase-asked-stop-funding-acorn
Editorial: Bailed-out banks should stop funding ACORN
http://washingtonexaminer.com/opinion/2009/04/editorial-bailed-out-banks-should-stop-funding-acorn
Baracks Wall Street Problem is Now Americas
http://www.noquarterusa.net/blog/2008/09/21/baracks-wall-street-problem-is-now-americas/
JPMorgan CEO Jamie Dimon Donates Serious Cash to Democrats
http://www.opensecrets.org/news/2009/07/jpmorgan-ceo-jamie-dimon-donat.html
” Blankfein, a lifelong Democrat, probably falls into the camp of Masters of the Universe who will quietly continue to support the president but won’t make many public comments or host big fundraisers. “
http://dyn.politico.com/printstory.cfm?uuid=2A8140B2-C586-FED2-2F5B406630C0DD88
http://www.freerepublic.com/focus/news/2648756/posts
“Pro Publica has been maintaining a list of bailout recipients, updating the amount lent versus what was repaid.
So far, 938 Recipients have had $607,822,512,238 dollars committed to them, with $553,918,968,267 disbursed. Of that $554b disbursed, less than half $220,782,546,084 has been returned.
Whenever you hear pronunciations of how much money the TARP is making, check back and look at this list. It shows the TARP is deeply underwater.”
http://bailout.propublica.org/list
http://www.zerohedge.com/article/no-big-banks-have-not-paid-back-government-bailouts-and-subsidies
I have not watched the video you sent yet, sir, but in my opinion (based on what I saw when I was in the industry) the fault is 99.9997% that of the banks. I know there are many who like to blame the 'deadbeat borrowers who took too much debt,' but the fiduciary duty to manage risk for the money disbursed stems from the financial institutions, and the fact is they were making too much money lending to care about any risks involved. Hence the proliferation of financial products geared towards enticing more and more people to borrow, since the financial machine (that ended with securitization) had to get raw material for it to work, and that raw material was a continuing stream of new originations (and as the more solid borrowers sated their appetite for loans, the banks had to go to lower and lower and lower tiers, and as those sub-prime borrowers also sated their appetites, the banks had to ocntinue to make the loans even more accessible, the terms more nebulous, the offers more throw-away).
The money-making machine demanded raw material, and the banks gave it.
Which is why I am always surprised when some FReepers blame borrowers yet say nothing about the banks (thinking that saying the banks may be at any level of fault is breaking some tenet of conservatism), when the fact is that the banks nearly destroyed the economy of the most powerful nation on Earth (and may very well have done it and the impact has not hit yet). One may say the borrowers were silly for taking on so much debt (yes, there was not much prudence there, although one has to wonder why a Mexican immigrant picking strawberries and earning minimum wage, yet being offered a jumbo loan of 650,000 Dollars, would not take it to buy a house in the expectation of selling it for 850,000 in a couple months ....when you are being offered free money, many people - including the sanctimonious FReepers preaching on 'deadbeats', would probably take it).
However, it is downright stupid (and I rarely use the word stupid ...it is a strong word, and even in the Bible there is a warning about using the word 'fool' losely) for someone to blame the borrowers yet act like the banks had no choice. Oh, and there are those who talk about the Government 'forcing' banks to lend to minorities. That is the most ridiculous thing I have heard ...I was there. Yes, there was some legislation about lending to 'disadvantaged groups.' However, most of the borrowers were not 'urban Amish' (the latest brain-fart-cum-lame-joke from the so called smart here). And the financial institutions were making so much money from the whole thing that trying to blame this on 'urban amish' ranks high in the annals of stupidity (that word again - I guess that says who I think is most responsible. 99.99997% banks).
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