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Date Posted: 15:08:31 10/13/11 Thu
Author: JMcEnaney
Author Host/IP: 68.195.253.213
Subject: Re: Arthur, here is something else you may want to consider..Racial predatory loans fueled U.S. housing crisis: study
In reply to: Mark S. 's message, "Arthur, here is something else you may want to consider..Racial predatory loans fueled U.S. housing crisis: study" on 13:47:43 10/13/11 Thu

Mark:
Nobody held a gun to Harrisburg's head. They did it to themselves. They've been teetering for a long while. Hell, back 6 or 7 years ago the then-mayor spent close to $10 million from the general fund to buy western artifacts to stock a yet-to-be built Wild West Museum as he embarked on a plan to turn Harrisburg into a Disney World. It was funny at the time. But today the artifacts are gone and museum remains un-built. The National Civil War Museum this same kooky mayor built is running a $2 million annual deficit. The Harrisburg political machine has kept a steady flow of corrupt politicians in office and in various city agencies. They blew through all their credit on failed and mismanaged public works projects. They never cut expenses. Their union and pension promises far exceed anything they could ever meet. The City made promises it knowingly couldn't keep.

And yet this is the bank’s fault? They intentionally made bad loans so they could foreclose and come to own the City of Harrisburg? If I borrowed $10 million and bought Buffalo Bill’s jacket and then told the bank I didn’t have the money to pay them back, should I expect the bank to renegotiate the loan? Should I expect them to keep lending me money to build my museum? In amounts in excess of my collateral, underlying assets, and future cash flow? If morons run a city or a company into the ground, the lenders should just shrug it off? And if they did, how do you think they’d recoup their losses? I’ll tell you: they’d either a.) go to their cronies in Washington crying “too big to fail”, or, b.) charge idiots like me more for my mortgage and my credit cards. Either way, I’m footing the bill for some a**hole's bad decisions. And I should be OK with this? I’ve got a litany of my own bad decisions I’m paying for and nobody’s bailing me out.

And as to the assertion that the banks’ foreclosures are racially motivated, please consider the following excerpted from an article in yesterday’s Wall Street Journal. A rational person might deduce the regulatory requirement for the banks to make subprime loans was in fact an act of economic affirmative action. And for this we’re pissed at the banks? If we are, we’re focusing on the symptoms, not the cause, which is exactly what the administration in Washington wants us to do.
“Beginning in 1992, the government required Fannie Mae and Freddie Mac to direct a substantial portion of their mortgage financing to borrowers who were at or below the median income in their communities. The original legislative quota was 30%. But the Department of Housing and Urban Development was given authority to adjust it, and through the Bill Clinton and George W. Bush administrations HUD raised the quota to 50% by 2000 and 55% by 2007.
It is certainly possible to find prime borrowers among people with incomes below the median. But when more than half of the mortgages Fannie and Freddie were required to buy were required to have that characteristic, these two government-sponsored enterprises had to significantly reduce their underwriting standards.
Fannie and Freddie were not the only government-backed or government-controlled organizations that were enlisted in this process. The Federal Housing Administration was competing with Fannie and Freddie for the same mortgages. And thanks to rules adopted in 1995 under the Community Reinvestment Act, regulated banks as well as savings and loan associations had to make a certain number of loans to borrowers who were at or below 80% of the median income in the areas they served.” End of excerpt.

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Replies:

  • Re: Arthur, here is something else you may want to consider..Racial predatory loans fueled U.S. housing crisis: study -- arthur, 19:54:36 10/13/11 Thu
  • Re: Arthur, here is something else you may want to consider..Racial predatory loans fueled U.S. housing crisis: study -- bill, 20:39:34 10/13/11 Thu
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