Monday, October 31, 2011

Smoking Gun: Document Found That Touched Off the Mortgage Meltdown

The entire Democrat Party hardest hit:

[In 1994] the federal government declared war on an enemy — the racist lender — who officials claimed was to blame for differences in homeownership rate, and launched what would prove the costliest social crusade in U.S. history.

At President Clinton's direction, no fewer than 10 federal agencies issued a chilling ultimatum to banks and mortgage lenders to ease credit for lower-income minorities or face investigations for lending discrimination and suffer the related adverse publicity. They also were threatened with denial of access to the all-important secondary mortgage market and stiff fines, along with other penalties.

The threat was codified in a 20-page "Policy Statement on Discrimination in Lending" and entered into the Federal Register on April 15, 1994, by the Interagency Task Force on Fair Lending. Clinton set up the little-known body to coordinate an unprecedented crackdown on alleged bank redlining.

The edict — completely overlooked by the Financial Crisis Inquiry Commission and the mainstream media — was signed by then-HUD Secretary Henry Cisneros, Attorney General Janet Reno, Comptroller of the Currency Eugene Ludwig and Federal Reserve Chairman Alan Greenspan, along with the heads of six other financial regulatory agencies...

...The unusual full-court press was predicated on a Boston Fed study showing mortgage lenders rejecting blacks and Hispanics in greater proportion than whites. The author of the 1992 study, hired by the Clinton White House, claimed it was racial "discrimination." But it was simply good underwriting.

It took private analysts, as well as at least one FDIC economist, little time to determine the Boston Fed study was terminally flawed. In addition to finding embarrassing mistakes in the data, they concluded that more relevant measures of a borrower's credit history — such as past delinquencies and whether the borrower met lenders credit standards — explained the gap in lending between whites and blacks, who on average had poorer credit and higher defaults...

Lenders -- faced with ten federal regulatory bodies, the Attorney General, the President and the HUD Secretary -- quickly fell into line.

[They] threw such a scare into the industry that the American Bankers Association issued a "fair-lending tool kit" to every member. The Mortgage Bankers Association of America signed a "fair-lending" contract with HUD. So did Countrywide.

HUD also pushed Fannie and Freddie, which in effect set industry underwriting standards, to buy subprime mortgages, freeing lenders to originate even more high-risk loans.

And the rest, as they say, is history.

Barack Obama can blame George W. Bush, Herman Cain, Rick Perry, and Carmen Electra for the housing crisis. But the real culprits were the social engineers, criminals and cronies in the Clinton administration.

Please read the rest -- and pass it on.


Molon Labe said...

And which of the people that shhok down the banking industry by threatening that the government would use its full force against any entity that resisted its mafia tactics will hupsilibe sent to jail?

Our Constitution is flawedin that unlike Switzerland we allow the foxes to guard the henhouse and pass verdict on any other fox.

You get the government you deserve.

Ten Mile Island said...

My last two post have been on the Minimum Wage laws. Don't want a link, but would like a comment.

If I'm wrong in my analysis, I really would like some constructive hatred!

directorblue said...

@Ten Mile... where's the link?

directorblue said...

Never mind, found it.

Anonymous said...

The National Community Reinvestment Coalition (NCRC) found [1] that from 1997 to 2007, $4.7 trillion in home loans were made under the Community Reinvestment Act (CRA). In 2007, over 50% of home loans were made to people who would normally have not qualified for one. According to a Reuters' story [2], “S&P now projects defaults on subprime loans issued in 2005, 2006 and 2007 at 11 percent, 30 percent and 49 percent, respectively.” These losses represent a good fraction of the $4.7 trillion lent under the CRA.

[1] NCRC, NCRC Documents Trillions of CRA Dollars in Communities since 1977; CRA Commitments: 1977-2005,

[2] Reuters, S&P raises loss expectations for risky US mortgages, July 6, 2009,

juandos said...

I believe (guessing) the following is the 'infamous 20 page threat': Policy Statement on Discrimination in Lending

Anonymous said...

I'm not exactly sure about how"Smoking Gun"works. Does your agency investigate charges? There are 3 of us in a situation with a private contractor that hires people for military hospitals only. This company hired other people, who have more rights than we have. When this contractor moved to another site, the three of us were promised full time hours and our choice of places to wprk. This company keep telling us that we had another contract with another military hospital and we could work there and the one we are presently working. Another contractor got the contract and had jobs posted in the newspaper for help. We didn't apply because we trusted the company we are presently working. As I eluded to above,the company has hired new people and took away our full time hours and other priviledges, and continue to lie to us.Is this against the law,because it sounds like preferrential treatment( discrimination). If so what should we do? Is this a case for EEOC?