by John Hawkins | October 10, 2012 4:41 am
The politicians in D.C. created the housing crisis that tanked the economy with regulations that practically made handing out high risk housing loans a necessity for Freddie, Fannie, and many banks. Of course, you wouldn’t know that from listening to anybody in Congress because the politicians naturally point the finger elsewhere. Unfortunately, they’re alsopushing the same sort of policies that got us into trouble in the first place.
With studies showing home foreclosures hitting blacks and Latinos hardest, the Obama administration’s answer is baffling as well as destructive – to lend them more money, repeating the cycle of easy credit that led to the housing boom and bust.
A new AARP report finds that even elderly minorities are facing serious mortgage delinquencies. Fifty-and-over African-Americans, for example, are almost twice as likely to lose their home as older whites. …
President Obama’s solutions, however, look a lot like the original problems that landed minorities in the financial mess they’re in today.
For starters, his new consumer credit watchdog agency has quietly adopted weaker, minority-friendly mortgage underwriting guidelines first published in a landmark 1994 policy statement released by the little-known Interagency Task Force on Fair Lending.
The 20-page “Policy Statement on Discrimination in Lending” – signed by the heads of 10 federal agencies, including then-Attorney General Janet Reno – warned banks that “the agencies will not tolerate lending discrimination in any form.”
It was a noble goal – undercut by the fact that the statement also set lower standards by which banks could qualify low-income minorities with spotty credit. …
The policy planted the seeds of the mortgage crisis, as lenders abandoned prudent underwriting standards altogether. Yet the 1-year-old Consumer Financial Protection Bureau, which was created by the Dodd-Frank financial overhaul, has dusted off the Clinton-era regulation.
Obama’s solution to the housing bubble popping? It’s not giving the market time to bottom out and come back naturally; it’s attempting to reinflate the same bubble. For all of his faults, Marx was still spot-on when he said,: “History repeats itself, first as tragedy, second as farce.”
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