Posted on 11/19/2011 5:43:58 AM PST by dangus
I'll tell you what.
If you answer all the questions I asked about the actions Bush took during his first term, then I'll answer your question about CDOs.
In the meantime, I will give you a hint. The answer to your question is buried in the answers to mine.
“If I were to conclude that the optimal level of regulation here is something other than zero, would I be told to go back to DU? “
Well not by me you won’t. IMO financial markets are much different than other parts of the economy and you de-regulate them at your own peril.
The Depression generation learned some hard lessons about unregulated finance and passed the Glass Steagall Act in response. That Act kept investment banks away from the everyday business of main street.
Glass Steagall was chipped away over the years and then aggressively dismantled in 1999. In less than 10 years the world of investment banking once again was in the middle of another major financial collapse. I don’t think that it is a coincidence.
I posted an article by a former regulator that I heard on Coast-to-Coast AM last night:
http://www.freerepublic.com/focus/chat/2810398/posts?page=14
one of his arguments is that the regulatory bodies have been assigned leadership that has had no intention of regulating anything, and this stretches from Clinton through Bush II to Zero.
“than why did the banks insist on the creation of the CDO to mitigate risk?”
The derivatives industry including CDOs was developed by JP Morgan in London in 1994. You can read all about it in Gillian Tett’s “Fool’s Gold”. She was there at the beginning.
I’m quite certain CDOs were not created in response to an arcane American minority mortgage regulation. CDOs cover a much broader sphere of the credit markets than just mortgages. Any kind of loan is grist for the CDO mill.
CDOs were developed as a means of freeing up capital, diversifying risk, and increasing profits. They didn’t quite work out as planned, but that’s the price of letting financial engineers run amok without anyone paying attention to the risk involved.
http://www.lrb.co.uk/v31/n12/donald-mackenzie/all-those-arrows
“the bank remained on the sidelines as the once largely distinct worlds of CDOs and mortgage-backed securities became more closely linked from 2002 onwards. It was an encounter of two subtly different cultures, with, for example, quite different mathematical approaches.
The CDO world developed explicit and increasingly elaborate models of correlation – the ‘Gaussian copula’ that initially puzzled Tett is one of them – while the mortgage world handled the phenomenon entirely implicitly. In most investment banks, and also – as far as I have been able to discover – in the New York head offices of the rating agencies, separate groups or departments handled mortgage-backed securities and CDOs based on corporate debt.
In investment banks, for instance, those different departments seem to have had surprisingly little to do with each other. The two cultures never really merged; instead, the CDO, a structure invented by the corporate-debt world, was applied to the products of the mortgage world.
Members of both cultures now see the encounter as corrupting. ‘They’ – constructors of CDOs based on mortgage-backed securities – ‘took our tools’ and misused them, one specialist in corporate credit derivatives told me a few weeks ago.
Those with a background in mortgage-backed securities blame CDOs (with some justice) for being indiscriminate buyers of those securities, concerned only with their ratings and the spreads (increments over Libor) they offered.
Two experienced industry observers, Mark Adelson and David Jacob, suggest that a fatal point was reached when CDOs became almost the only purchasers of the riskier tranches of mortgage-backed securities.
Previously, those tranches had either been guaranteed against default by specialist insurers, or bought by canny investors, who would carefully assess the risks involved. These insurers and investors acted as a brake on the riskiness of the lower tranches, and thus on the overall riskiness of mortgage-backed securities, and they demanded a healthy rate of return for taking on the risks.
They were displaced by those buying tranches in order to package them into CDOs, who were prepared to buy them at lower rates of return, and who cared a lot less about their riskiness, because those risks were going to be passed on to investors in the CDOs.”
You're so eager to prove what a lousy president Bush was. Fine, BUT THAT DOESN'T IN ANY WAY MAKE EXECUTIVE ORDER 13166 ANY LESS CENTRAL TO OUR BANKING COLLAPSE In fact, if you weren't such a blow-hard, you'd see that this fit everything else you're so vested in.
SO WHAT THE HELL IS YOUR POINT????
CDOs were first created by Drexel Burnham Lambert way back in 1987, actualy. But they allowed into the heavily regulated American banking industry as a result of the banking deregulation of Gramm’s bill, which Clinton allowed to pass on the condition that banks agree to minority lending rules.
CDOs are NOT inherently bad, providing the risks they contain are each sensible. But once banks found that they needed to go to ridiculous extremes to lend to a sufficient number of Limited-English Proficiency persons to support their other lending, the minimum safety criteria were destroyed, and banks simply offloanded all questionable loans to other willfully ignorant institutions, like Fannie Mae and Bear Stearns.
Bear Stearns’ complete lack of concern for the quality of the mortgages is probably why the Bush administration wouldn’t bail them out... to allow natural consequences to a “bad actor.” Little did he realize how terrified financial institutions were that they might be seen as bad actors, or vulnerable to ties to financial partners like Bear Stearns.
Exactly. Thank you.
This was not coincidental.
If we look at the political time line, we can see that Bush had just signed the P4P agreement in September 2001 to blaze the banks' trails for the hoards of Mexican illegal aliens Bush was let stream across the border.
Bush had given his speech about wanting Fannie and Freddie to ramp up their spending on the 'minority' market by $500 billion. As he termed it, the 'Hispanics living here in America'.
Bush was preparing further in-roads with the creation of the New Alliance Task Force which brought US banks, US banking regulators together with the Mexican government to set up formal programs of integration of Mexican illegal aliens into the US financial and real estate mortgage systems.
As you can see, this was a plan moving forward.
"...They were displaced by those buying tranches in order to package them into CDOs, who were prepared to buy them at lower rates of return, and who cared a lot less about their riskiness, because those risks were going to be passed on to investors in the CDOs..."
And, as it turned out, the risks were eventually assumed by the US Government, which means, ultimately, the taxpayer.
For someone who claims a vast understanding of the investment world, you show a woeful lack of knowledge about their motives or means.
Ever heard the expression, "Privatize the profits, socialize the risks".
The bad loans were bought by Fannie and Freddie.
Who backs the bad loans bought by Fannie and Freddie?
EVERY DAMN FOOL ON FR knows about matricular consular cards; you're not telling anyone anything. But the point is that they only MITIGATE risk; they help the illegal alien identify himself WHEN HE WANTS TO BE IDENTIFIED. But if he gets hundreds of thousands in debt, he can still walk away from Matricular consular cards because:
It looks like EVERY DAMN FOOL ON FR (BUT YOU) has also figured out that the illegals who used the Matricula Consular ID used because they DIDN'T want to be identified.
Who ever said anything about Mexican illegal aliens wanting to be identified?
What a stupid thing to say.
A Mexican could walk into any Mexican Consulate and say he was Antonio de Padua María Severino López de Santa Anna y Pérez de Lebrón and get a Consular ID with that name.
Mr. or, if you prefer, Señor Antonio de Padua María Severino López de Santa Anna y Pérez de Lebrón could then use his shiny new Consular ID and walk into any US bank and open an account, get a credit card, get an auto loan, or sign a mortgage.
The banks didn't care about the risks because they were making money and selling the bad paper to the government to assume the risks.
Why wouldn't they jump in? They thought they were stupid not to jump in.
See: White House Philosophy Stoked Mortgage Bonfire
|
Park Place South is, in microcosm, the story of a well-intentioned policy gone awry. Advocating homeownership is hardly novel; the Clinton administration did it, too. For Mr. Bush, it was part of his vision of an “ownership society,” in which Americans would rely less on the government for health care, retirement and shelter. It was also good politics, a way to court black and Hispanic voters. But for much of Mr. Bush’s tenure, government statistics show, incomes for most families remained relatively stagnant while housing prices skyrocketed. That put homeownership increasingly out of reach for first-time buyers like Mr. West. So Mr. Bush had to, in his words, “use the mighty muscle of the federal government” to meet his goal. He proposed affordable housing tax incentives. He insisted that Fannie Mae and Freddie Mac meet ambitious new goals for low-income lending. Concerned that down payments were a barrier, Mr. Bush persuaded Congress to spend up to $200 million a year to help first-time buyers with down payments and closing costs. And he pushed to allow first-time buyers to qualify for federally insured mortgages with no money down. Republican Congressional leaders and some housing advocates balked, arguing that homeowners with no stake in their investments would be more prone to walk away, as Mr. West did. Many economic experts, including some in the White House, now share that view. The president also leaned on mortgage brokers and lenders to devise their own innovations. “Corporate America,” he said, “has a responsibility to work to make America a compassionate place.” And corporate America, eyeing a lucrative market, delivered in ways Mr. Bush might not have expected, with a proliferation of too-good-to-be-true teaser rates and interest-only loans that were sold to investors in a loosely regulated environment. “This administration made decisions that allowed the free market to operate as a barroom brawl instead of a prize fight,” said L. William Seidman, who advised Republican presidents and led the savings and loan bailout in the 1990s. “To make the market work well, you have to have a lot of rules.” But Mr. Bush populated the financial system’s alphabet soup of oversight agencies with people who, like him, wanted fewer rules, not more. The president’s first chairman of the Securities and Exchange Commission promised a “kinder, gentler” agency. The second was pushed out amid industry complaints that he was too aggressive. Under its current leader, the agency failed to police the catastrophic decisions that toppled the investment bank Bear Stearns and contributed to the current crisis, according to a recent inspector general’s report. As for Mr. Bush’s banking regulators, they once brandished a chain saw over a 9,000-page pile of regulations as they promised to ease burdens on the industry. When states tried to use consumer protection laws to crack down on predatory lending, the comptroller of the currency blocked the effort, asserting that states had no authority over national banks. The administration won that fight at the Supreme Court. But Roy Cooper, North Carolina’s attorney general, said, “They took 50 sheriffs off the beat at a time when lending was becoming the Wild West.” The president did push rules aimed at forcing lenders to more clearly explain loan terms. But the White House shelved them in 2004, after industry-friendly members of Congress threatened to block confirmation of his new housing secretary. "In the 2004 election cycle, mortgage bankers and brokers poured nearly $847,000 into Mr. Bush’s re-election campaign, more than triple their contributions in 2000, according to the nonpartisan Center for Responsive Politics. The administration did not finalize the new rules until last month." Among the Republican Party’s top 10 donors in 2004 was Roland Arnall. He founded Ameriquest, then the nation’s largest lender in the subprime market, which focuses on less creditworthy borrowers. In July 2005, the company agreed to set aside $325 million to settle allegations in 30 states that it had preyed on borrowers with hidden fees and ballooning payments. It was an early signal that deceptive lending practices, which would later set off a wave of foreclosures, were widespread. Andrew H. Card Jr., Mr. Bush’s former chief of staff, said White House aides discussed Ameriquest’s troubles, though not what they might portend for the economy. Mr. Bush had just nominated Mr. Arnall as his ambassador to the Netherlands, and the White House was primarily concerned with making sure he would be confirmed. “Maybe I was asleep at the switch,” Mr. Card said in an interview. Brian Montgomery, the Federal Housing Administration commissioner, understood the significance. His agency insures home loans, traditionally for the same low-income minority borrowers Mr. Bush wanted to help. When he arrived in June 2005, he was shocked to find those customers had been lured away by the “fool’s gold” of subprime loans. The Ameriquest settlement, he said, reinforced his concern that the industry was exploiting borrowers. In December 2005, Mr. Montgomery drafted a memo and brought it to the White House. “I don’t think this is what the president had in mind here,” he recalled telling Ryan Streeter, then the president’s chief housing policy analyst. It was an opportunity to address the risky subprime lending practices head on. But that was never seriously discussed. More senior aides, like Karl Rove, Mr. Bush’s chief political strategist, were wary of overly regulating an industry that, Mr. Rove said in an interview, provided “a valuable service to people who could not otherwise get credit.” While he had some concerns about the industry’s practices, he said, “it did provide an opportunity for people, a lot of whom are still in their houses today.” The White House pursued a narrower plan offered by Mr. Montgomery that would have allowed the F.H.A. to loosen standards so it could lure back subprime borrowers by insuring similar, but safer, loans. It passed the House but died in the Senate, where Republican senators feared that the agency would merely be mimicking the private sector’s risky practices — a view Mr. Rove said he shared. ‘We Told You So’ Armando Falcon Jr. was preparing to take on a couple of giants. A soft-spoken Texan, Mr. Falcon ran the Office of Federal Housing Enterprise Oversight, a tiny government agency that oversaw Fannie Mae and Freddie Mac, two pillars of the American housing industry. In February 2003, he was finishing a blockbuster report that warned the pillars could crumble. Created by Congress, Fannie and Freddie — called G.S.E.’s, for government-sponsored entities — bought trillions of dollars’ worth of mortgages to hold or sell to investors as guaranteed securities. The companies were also Washington powerhouses, stuffing lawmakers’ campaign coffers and hiring bare-knuckled lobbyists. Mr. Falcon’s report outlined a worst-case situation in which Fannie and Freddie could default on debt, setting off “contagious illiquidity in the market” — in other words, a financial meltdown. He also raised red flags about the companies’ soaring use of derivatives, the complex financial instruments that economic experts now blame for spreading the housing collapse. Today, the White House cites that report — and its subsequent effort to better regulate Fannie and Freddie — as evidence that it foresaw the crisis and tried to avert it. Bush officials recently wrote up a talking points memo headlined “G.S.E.’s — We Told You So.” But the back story is more complicated. To begin with, on the day Mr. Falcon issued his report, the White House tried to fire him. |
Less coffee for you, dangus.
Why didn't Bush simply overturn it? Obama overturned Bush's policy on stem cells, so we know that EOs can be overturned by future presidents.
Here's why:
Housing Push for Hispanics Spawns Wave of Foreclosures:
Mortgage lenders appear to have regarded Latinos as a largely untapped demographic. Many were first or second-generation U.S. residents who didn't own homes. Many Hispanic families had multiple wage earners working multiple cash jobs, but had no savings or established credit history to allow them to qualify for traditional loans.
The Congressional Hispanic Caucus created Hogar in 2003 to work with industry and community groups to increase mortgage lending to Latinos. At that time, the national Latino homeownership rate was 47%, compared with 68% for the overall population. Hogar called the figure "alarming," and said a concerted effort was required to ensure that "by the end of the decade Latinos will share equally in the American Dream of homeownership."
Hogar's backers included many companies that ran into trouble in mortgage markets: Fannie Mae and Freddie Mac, both now under federal control; Countrywide Financial Corp., sold last year to Bank of America Corp.; Washington Mutual Inc., taken over by the government and sold to J.P. Morgan Chase & Co.; and New Century Financial Corp. and Ameriquest Mortgage Corp., both now defunct.
Hogar's ties to the subprime industry were substantial. A Washington Mutual vice president served as chairman of its advisory committee. Companies that donated $150,000 a year got the right to place a research fellow who would conduct Hogar's studies, which were used by industry lobbyists. For donations of $100,000 a year, Hogar offered to provide news releases from the Hispanic Caucus promoting a lender's commercial products for the Latino market, according to the group's literature.
Hogar worked with Freddie Mac on a two-year examination of Latino homeownership in 63 congressional districts. The study found Hispanic ownership on the rise thanks to "new flexible mortgage loan products" that the industry was adopting. It recommended further easing of down-payment and underwriting standards.
...
Mortgage lending to Hispanics took off between 2004 and 2007, powered by nonprime loans. The biggest jump occurred in 2005. The 169% increase in nonprime mortgages to Hispanics that year outpaced a 122% gain for blacks, and a 110% increase for whites, according to a Journal analysis of mortgage-industry and federal-housing data. Nonprime mortgages carry high interest rates and are tailored to borrowers with low credit scores or few assets.
Between 2004 and 2007, black borrowers were offered nonprime loans at a slightly higher rate than Hispanics, but the overall number of Hispanic borrowers was much larger. From 2004 to 2005, total nonprime home loans to Hispanics more than tripled to $69 billion from $19 billion, and peaked in 2006 at $73 billion.
...
Regions of the country where the housing bubble grew biggest, such as California, Nevada and Florida, are heavily populated by Latinos, many of whom worked in the construction industry during the housing boom. When these markets began to weaken, bad loans depressed the value of neighboring properties, creating a downward spiral. Neighborhoods are now dotted with vacant homes.
By late 2008, one in every nine households in San Joaquin County, Calif., was in default or foreclosure -- 24,049 of them, according to Federal Reserve data. Banks have already taken back 55 of every 1,000 homes. In Riverside, Calif., 66,838 houses are owned by banks or were headed in that direction as of October. In Prince William County, Va., a Washington suburb, 11,685 homes, or one in 11, was in default or foreclosure.
...
These days, James Scruggs of Northern Virginia Legal Services is swamped with Latino borrowers facing foreclosure. "We see loan applications that are complete fabrications," he says. Typically, he says, everything was marketed to borrowers in Spanish, right up until the closing, which was conducted in English.
"We are not talking about people working for the World Bank or the IMF," he says. "We are talking about day laborers, janitors, people who work in restaurants, people who do babysitting."
Two such borrowers work in Mr. Scrugg's office. Sandra Cardoza, a $28,000-a-year office manager, is now $30,000 in arrears on loans totaling $370,000. "Her loan documents say she makes more than me," says Mr. Scruggs.
And what is the official language of the government of Mexico?
Do you notice how politically correct and left-wing your source is?
They won’t name who (and therefore can’t look into why) the people who got these loans were.
I certainly have heard of “Privatize the profits, socialize the risks.”
Gramm’s deregulation bill was privatizing the profits; and the CDOs (with the expectation of government bailout if anything went wrong) were socializing the risk.
If it was ONLY the desire for a new market, why hadn’t the banks been loaning to blacks previously?
How much money every year do poor blacks send to their families back home in Africa?
Mexicans send home between $18-20 billion a year. Every year.
Why did Bush meet with El Presidente de Mexico, Vicente Fox on February 16, 2001, just 3 weeks after his inauguration?
Exactly what was the purpose of the US/Mexico Partnership for Prosperity Agreement?
New Alliance Task Force?
American Dream Down Payment Act?
Why did the Bush Justice Dept. and Treasury Dept. give their blessings to the change in banking regulation to allow banks to accept the Matricula Consular card as ID?
Why did Bush praise Franklin Raines, of Fannie Mae and Leland Brendsel of Freddie Mac and call on them to increase their financial commitments to the 'minority' market by $440 billion?
Why did the Bush Administration change the rules to allow banks that served the 'minority' market through international remittances to claim CRA credit?
What are 'international remittances' and what size is the market?
Why did Bush champion amnesty for Mexican illegal aliens?
Why did the Bush administration claim that national security was a priority and form the TSA and DHS while supposedly fighting a "War on Terrorism", then leave the southern borders wide open by ordering border and interior immigration enforcement to the lowest levels in years?
Why didn't the Bush administration complete the southern border fence despite the signing the appropriations into law?
Why did Bush sign the US/Mexico Social Security Totalization Agreement that would allow a Mexican national to apply for and collect US SS benefits after having worked (illegally) in the US for only 6 quarters (18 months) and could collect US SS benefits for their family back home in Mexico, even if the family had never stepped foot into the US?
One last time: YOU DON’T NEED A MORTGAGE TO SEND A REMITTANCE!
You are either a blithering idiot or you are willfully ignorant.
I never said a mortgage was needed to send a remittance. I have been saying that banks used remittances as the bait to draw illegal aliens into the US banking and mortgage systems.
But, don't believe me. Read what the FDIC, itself, published back in 2004 during Bush's sub-prime lending heyday.
Below is an excerpt from an article on the FDIC web site. It talks about Bush's P4P agreement and NATF and how banks linked mortgages to remittances to increase profits, despite to your petulant assertions to the contrary.
So, are you wrong or is the FDIC wrong about what banks were doing and why?
From: Linking International Remittance Flows to Financial Services: Tapping the Latino Immigrant Market:
Conclusion
Recent economic and demographic trends, coupled with increased financial flows across international borders, have significant implications for U.S. banks and thrifts. As more insured financial institutions reach out to the Latino immigrant market, these institutions are expected to experience more rapid deposit and loan growth. In the Midwest, both small and large banks are capitalizing on remittance flows as a short-term strategy to draw immigrants into the formal banking system. Leveraging these relationships will help these institutions offer a broader range of financial services, positively contributing to their bottom line.
Many Latino immigrants will eventually settle in the United States and raise families. Banks in the Midwest are taking steps to capitalize on the growing presence of this immigrant group. The continued success of the New Alliance Task Force demonstrates that unbanked Latin American immigrants can be brought into the financial mainstream. As a result, the FDIC is considering the feasibility of expanding the NATF pilot to other parts of the country where there are significant immigrant populations. These broad-based private-public sector alliances will help immigrants increase savings, build assets, and strengthen their financial security.
What you are reading is simply this:
The FDIC is the government. The New Alliance Task Force is created to “encourage” banks to lend to minorities. If the banks are so eager to make these loans, why does the federal government have to “encourage” them to make the loans?
Fannie Mae has sent letters to banks, warning them they will face prosecution if they do not provide “equal access” to “persons with Limited English Proficiency.” (Not that Fannie Mae has any authority for such prosecution, but as a representative of government, they could legitimately sue on behalf of the “discriminated.”)
Numerous programs have been created to “promote” lending to minorities from the banks.
So why is that? If the banks are trying to “privatize the profit; socialize the risk,” why is the government actively seeking to be put on the hooks.
All that stuff about George Bush you keep posting: I absolute concur that Bush was working for the banks and was borderline seditious in his dealings with Mexico. But that in no way advances any argument that the banks wanted to do these things, only that Mexico wanted us to do this. The remittance is where the banks made their profits off of illegals, since they get a cut of every remittance.
What you are reading is simply this:
The FDIC is the government. The New Alliance Task Force is created to “encourage” banks to lend to minorities. If the banks are so eager to make these loans, why does the federal government have to “encourage” them to make the loans?
Fannie Mae has sent letters to banks, warning them they will face prosecution if they do not provide “equal access” to “persons with Limited English Proficiency.” (Not that Fannie Mae has any authority for such prosecution, but as a representative of government, they could legitimately sue on behalf of the “discriminated.”)
Numerous programs have been created to “promote” lending to minorities from the banks.
So why is that? If the banks are trying to “privatize the profit; socialize the risk,” why is the government actively seeking to be put on the hooks.
All that stuff about George Bush you keep posting: I absolute concur that Bush was working for the banks and was borderline seditious in his dealings with Mexico. But that in no way advances any argument that the banks wanted to do these things, only that Mexico wanted us to do this. The remittance is where the banks made their profits off of illegals, since they get a cut of every remittance.
This proves why a little bit of knowledge is a dangerous thing. Had you made even a modicum of effort to read the sources I provided, you would know that the NATF is not a purely government organization that was tasked with forcing banks to lend to illegal aliens. Instead, what they really were was a consortium of 62 different members including 34 different banks, banking regulators (FDIC), Mexican Consulate, community-based organizations, (can you say, ACORN?) as well as representatives of the private mortgage insurance companies that came together to reshape the public policy and banking laws to allow banks to gain legal access to the illegal alien market.
Or, are you saying that the banks that were members of the NATF consortium were telling themselves that they had to tap into the illegal alien home loan market?
Fannie Mae has sent letters to banks, warning them they will face prosecution if they do not provide “equal access” to “persons with Limited English Proficiency.” (Not that Fannie Mae has any authority for such prosecution, but as a representative of government, they could legitimately sue on behalf of the “discriminated.”)
Before, or after, Bush took office and his pro-illegal alien policies went into effect?
Numerous programs have been created to “promote” lending to minorities from the banks.
Yes, that's true. The largest were those created under the auspices of Bush's programs, i.e.: the P4P and NATF.
So why is that? If the banks are trying to “privatize the profit; socialize the risk,” why is the government actively seeking to be put on the hooks.
It was not 'the government' seeking to put itself on the hook. It was George W. Bush's policies, such as the P4P and NATF and the American Dream Down Payment Act, etc. that put the government on the hook.
Or, are you saying that a President doesn't set policy for the executive branch of government, sign foreign agreements, set up national programs, give banks $700 billion bailouts, etc.?
All that stuff about George Bush you keep posting: I absolute concur that Bush was working for the banks and was borderline seditious in his dealings with Mexico. But that in no way advances any argument that the banks wanted to do these things, only that Mexico wanted us to do this. The remittance is where the banks made their profits off of illegals, since they get a cut of every remittance.
Your statement above contradicts itself.
You say Bush was working for the banks, but that the banks didn't want the results produced by their employee, Bush.
More contradictions: if banks don't make money off home loans, why are they in the home-loan business? Do they do it for charity? Good will in the community? What is their motive for providing home, auto and business loans, if not for profit?
The fact that you still believe that this was all government and no banks shows you still don't fully grasp the purpose of Bush's policies. Here, again is the two-paragraph conclusion from the FDIC of the P4P and NATF. I've underlined the important parts.
From: Linking International Remittance Flows to Financial Services: Tapping the Latino Immigrant Market:
Conclusion
Recent economic and demographic trends, coupled with increased financial flows across international borders, have significant implications for U.S. banks and thrifts. As more insured financial institutions reach out to the Latino immigrant market, these institutions are expected to experience more rapid deposit and loan growth. In the Midwest, both small and large banks are capitalizing on remittance flows as a short-term strategy to draw immigrants into the formal banking system. Leveraging these relationships will help these institutions offer a broader range of financial services, positively contributing to their bottom line.
Many Latino immigrants will eventually settle in the United States and raise families. Banks in the Midwest are taking steps to capitalize on the growing presence of this immigrant group. The continued success of the New Alliance Task Force demonstrates that unbanked Latin American immigrants can be brought into the financial mainstream. As a result, the FDIC is considering the feasibility of expanding the NATF pilot to other parts of the country where there are significant immigrant populations. These broad-based private-public sector alliances will help immigrants increase savings, build assets, and strengthen their financial security.
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