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PostPosted: Fri Sep 07, 2012 12:58 pm 
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Posted on MH's facebook page on Wed, Sept. 5, 2012

Here's the link to the original article from the Daily Caller. It is rather lengthy (6 pages).

[url]http://dailycaller.com/2012/09/03/with-landmark-lawsuit-barack-obama-pushed-banks-to-give-subprime-loans-to-chicagos-african-americans/
[/url]
Quote:
Mike Huckabee

Wednesday

You have to give the Democrats props for successfully sending the housing crisis down the memory hole. From their campaign rhetoric, you’d think the so-called “failed policies of the past” were all Republican ideas like smaller government and lower taxes. No, the economic crisis had nothing to do with the housing bubble that began with a massive Democratic push to force banks to give home loans to people who couldn’t qualify for them. But with terrible timing for the Democrats, that inconvenient truth has burst out of the crypt and back into the news, just as they were convening in Charlotte.

Yesterday, the Daily Caller revealed some previously unpublished court information about a landmark case that many consider the fuse that set off the subprime mortgage boom and eventually, the economic meltdown. It was a 1995 discrimination lawsuit against Citibank, on behalf of a group of African-Americans who claimed they couldn’t get loans because of their race. It was part of a coordinated effort at the time by progressive groups. The banks didn’t want to be sued or accused of racism, so they loosened requirements for credit history and down payments. What the Daily Caller discovered is that among the original plaintiffs in that case, there was a startling loan failure rate. Out of about 186 homebuyers, roughly half have since gone bankrupt or received one or more foreclosure notices. As few as 19 still own homes with clean credit ratings. Even some of the plaintiffs now say the banks never should’ve made those loans.

And here’s the kicker: the lead attorney on that case that prompted banks to start making home loans to people who couldn’t qualify for them was a young Chicago community activist named Barack Obama.


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PostPosted: Fri Sep 07, 2012 2:31 pm 
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I know nothing about the lawsuit but I don't think that it's honest to blame lending discrimination lawsuits for the subprime mortgage crash - especially when there were actual documented cases of racial discrimination against creditworthy borrowers. On the other hand, there should have always been across-the-board standards that every borrower has to adhere to. Demographic factors should not enter into the decision to lend or not to lend one way or the other.

There have been many financial crises that have occurred in the time period between 1995 and 2008. The Dot Com bubble and subsequent crash. The real estate bubble and subsequent crash (which intersected with the sub-prime crisis but also extended way beyond it). The elimination of the federal budget surplus and the doubling of the national debt. What's common to all of these crises is the belief that it's possible to live beyond our means and that for some reason, the bill will not eventually come due. There are a lot of people to blame, across many races, political factions, companies and governments, for the sorry mess that we and the rest of the world fell into over the past decade.

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http://thevaluesvoter.spaces.live.com


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PostPosted: Sat Sep 08, 2012 10:00 pm 
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Subprime lending has existed for centuries, it's not a new thing. Banks normally hold diversified portfolios; Some low-risk, some medium-risk and some high-risk (subprime) loans. That's just good finance.

No, the problem was financial engineering, through which banks tried to tell themselves and others that the high-risk loans weren't really high-risk, and since they weren't really high-risk, there was no reason not to give out massive amounts of these loans.

The other problem was the federal reserve, which oversupplied the market with cheap credit after the dotcom bust.


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