Let's see if the moron answer my email, I am still waiting on Lew On Oct 18, 4:05 pm, "M.A. Johnson" <[EMAIL PROTECTED]> wrote: > How Crackpot Egalitarianism Caused the Sub-Prime Mortgage Crisisby Thomas J. > DiLorenzo"In a move that could help increase home ownership rates among > minorities and low-income consumers, the Fannie Mae Corporation is easing > credit requirements on loans that it will purchase . . . [to] encourage . . . > banks to extend home mortgages to individuals whose credit is generally not > good . . . . Fannie Mae is taking on significantly more risk."-- New York > Times, September 30, 1999The main cause of the current economic crisis is the > boom-and-bust cycle that was caused by the Greenspan Fed. Years of > artificially-lowered interest rates caused trillions of dollars in > mal-investment in real estate and other industries, and now we must endure > the bust. But crackpot egalitarianism within the Fed and, indeed, in the > entire Washington establishment, has made the crisis infinitely worse. > In the early 1990s the Boston Fed did all that it could to fabricate > "evidence" of widespread lending discrimination against racial minorities. > But when Peter Brimelow and Leslie Spencer of Forbes magazine asked Boston > Fed official Alicia Munnel what evidence of discrimination she really had, > she was forced to admit that she had none. > Fighting discrimination was not the Fed’s real goal. The real goal was to > achieve a more "egalitarian distribution" of housing, period. So under the > phony guise of "fighting discrimination" the Fed, the Congress, Fannie Mae, > Freddie Mac, and myriad other federal government agencies forced, bribed, and > extorted mortgage lenders of all kinds into making literally trillions of > dollars in bad loans to unqualified borrowers. Countrywide Bank alone was > praised by the Fed for making $600 billion in such loans (shortly before it > went bankrupt). > The Fed’s "smoking gun" in this entire charade is a Boston Fed publication > entitled "Closing the Gap: A Guide to Equal Opportunity Lending." There is a > gap, you see, between the value of real estate owned by middle- and > upper-income Americans on the one hand, and lower-income Americans on the > other. (There is also a luxury automobile gap, a two-week European vacation > gap, a luxury boat gap, an expensive suit gap, and many others). The federal > government has used all of its powers of threats, force, and intimidation > over the past two decades to try to close the housing "gap." "The Federal > Reserve Bank of Boston wants to be helpful to lenders as they work to close > the mortgage gap," the publication states. > In addition to closing the "mortgage gap," the Fed also pressured lenders to > adopt a more vigorous racial hiring quota system, presumably under the theory > that minority loan officers would be more likely to acquiesce in the Fed’s > dictates to make more mortgage loans to its political mascots, sub-prime > borrowers. > The Boston Fed report claims that it is only offering lenders "guidelines," > and "suggestions," but it is very clear that failure to obey the Fed’s > "guidelines" can lead to serious financial problems for any mortgage lender. > The report states in bold type that "Failure to comply with the Equal Credit > Opportunity Act or Regulation B can subject a financial institution to civil > liability for actual and punitive damages in individual or class actions. > Liability for punitive damages can be as much as $10,000 in individual > actions and the lesser of $500,000 or 1 percent of the creditor’s net worth > in class actions." > All lenders – banks, independent mortgage companies, etc. – were told that > they needed to pay close attention to "such laws and regulations as the Equal > Credit Opportunity Act (Regulation B), the Fair Housing Act, the Home > Mortgage Disclosure Act (Regulation C), and the Community Reinvestment Act." > A "conscientious [bank] Board will recognize the potential liability > associated with noncompliance . . ." Ah, the subtle power of suggestion. > The Fed instructed lenders to ignore traditional measures of creditworthiness > when it came to "minority and low-income consumers." Traditional underwriting > standards were said to contain "arbitrary or unreasonable measures of > creditworthiness." "Special standards" that "are appropriate to the economic > culture of urban, lower-income, and non-traditional consumers" were urged. > For example, traditional underwriting standards take into consideration such > things as age, location, and condition of a house, but these should be > abandoned when it comes to sub-prime borrowers, said the Fed. > Traditional ratios of mortgage payments to monthly income can also be > ignored, said the Fed. And besides, "the secondary market [i.e., Fannie Mae > and Freddie Mac] is willing to consider ratios above the standard" ones for > other borrowers. "Lack of credit history" should not be a factor either. > "Successful participation in credit counseling" was said to be an adequate > substitute. > Lenders were repeatedly urged to "work with special secondary mortgage market > programs" such as those administered by Fannie and Freddie. Lenders were told > to "be aware that Fannie Mae and Freddie Mac have issued statements to the > effect that they understand urban areas require different appraisal methods." > If a sub-prime borrower has a property appraisal problem, then the Fed or > Fannie Mae could help to find "another experienced appraiser" who would > presumably see to it that the property was "correctly" reappraised so that > the sub-prime loan could be made. Yours truly was always under the impression > that shopping around for "the right" appraiser who would give you the number > you wanted (for a fee) was fraudulent and illegal. Silly me. > In sum, the Fed’s policy of housing market socialism (endorsed and > supplemented by numerous federal laws and regulations), combined with the > boom-and-bust cycle that it created, has been an unmitigated economic > catastrophe for the entire world. Naturally, the Fed’s response has been to > grant itself even more powers, while the executive branch and Congress are > busy nationalizing the capital markets, a move that will kill American > capitalism. Abolishing the Fed would be a very modest first step in > dismantling our rotten Leviathan state so that the next generation can at > least have some hope of living in a reasonably free and prosperous > society.http://www.lewrockwell.com/dilorenzo/dilorenzo154.html --~--~---------~--~----~------------~-------~--~----~ Thanks for being part of "PoliticalForum" at Google Groups. For options & help see http://groups.google.com/group/PoliticalForum
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