* The Democrats’ obsession with continuing to capture black votes led directly to the “sub-prime mortgage” meltdown. Give loans for those who cannot afford to repay them (ditto with Obama’s takeover of student loans, now over $1,200,000,000,000 with 20% delinquency!). That makes no economic sense but mucho political sense. Elect Democrats and kill the economy worked in 2007-2008 and will work now.
* Media: “Bad banks are not lending to minorities!”
Banks: “OK, we’ll start lending more.”
Media: “Bad banks pushing loans to minorities, saddling them with debt!”
Banks: “OK, we’ll be lending less.”
Rinse, repeat.
* I think the issue with the media today is that it firmly believes cultural groups act the same, behave the same etc on average. That’s just not true. I don’t know if the reporters aren’t coming across that in the personal life or their reporting forays simply don’t uncover them but often times I read articles in the NYT and I’m left wondering what country or place are they describing?
It’s well known in underwriting circles that Blacks on average have worse credit and financial profiles. Heck this paper goes on daily about this inequality or that one involving blacks. Do you want banks to make loans to people that have are likely to pay back the loans or you just want them to make them on the basis of race?
* Hmmm, didn’t the banks in the mid 2000s lend to borrowers who lied about their incomes to qualify for a mortgage after the banks came under pressure from Democrats in Congress to extend credit to low-income people? From what I understand didn’t this help precipitate the Great recession. Now Congress is back forcing banks to lend to people who have no ability to afford any type of mortgage. As Yogi said, Deja Vu All Over Again.
* I am quite liberal, aware of widespread racial discrimination throughout our society and opposed to it. However, what this article describes is or could be a simple consequence of (1) geographic segregation by race, combined with (2) income disparities by race. When neighborhoods are predominantly populated by low-income minorities living in low-value properties, lending in those areas becomes economically unprofitable. A bank is a for-profit institution, and cannot be forced or expected to lend where it does not expect a profit.
The only viable solution is to break up geographic segregation by race, and help people who live in those neighborhoods move to better ones. This, BTW, is also the only proven solution that reduces the school achievement gap, and therefore lifts people out of poverty in the longer term.
There is no point in treating the symptoms without treating the cause.
Our society as a whole has failed to address the profound race-based, race-driven discrimination that continues in so many forms. This is the work ahead of us, not beating up on private actors whose mandate is profit, not social justice. Congress (acting on our behalf) has the mandate to create “a more perfect union” in practice, not just on paper.
* And at the other end of the lending spectrum, you have cities like LA and Miami suing lenders, such as BofA, Chase and Wells Fargo, for having the temerity to lend in poorer neighborhoods. And then when the economy went bust, those neighborhoods and cities allegedly suffered blight, lower tax revenues, and other harms due to defaults and foreclosures. So the banks are generally screwed no matter where or if they lend.
* For the past seven years, the administration and its progressive friends have been screaming at banks to reduce their risks, to take less risk. The venerated Elizabeth Warren and the Dodd – Frank law have been forcing banks to reduce their risks, make fewer sub-prime loans and to stop risking money on poor credits. So is it any surprise when banks do exactly what President Obama, Elizabeth Warren and other progressives have been demanding? Oh, they may never admit that they intended to reduce lending to minority borrowers, but that is the effect of their demands.
* Banks restrict lending to certain groups because they like to be paid back. There is no other logical explanation.
* I don’t feel comfortable with the government forcing companies to open branches and advertise where they see fit. I would assume that another bank would see an opportunity and try to make money in an underserved market. Just the thought of the government micromanaging any market seems odd.
* If there are so many profitable minority mortgages out there then why doesn’t a liberal like George Soros start a bank and scoop up all of this profitable business?
