Great piece on why progressives have a huge hand in the government-caused mortgage crisis:
Perhaps the greatest scandal of the mortgage crisis is that it is a direct result of an intentional loosening of underwriting standards—done in the name of ending discrimination, despite warnings that it could lead to wide-scale defaults.
At the crisis’ core are loans that were made with virtually nonexistent underwriting standards—no verification of income or assets; little consideration of the applicant’s ability to make payments; no down payment.
Most people instinctively understand that such loans are likely to be unsound. But how did the heavily-regulated banking industry end up able to engage in such foolishness?
From the current hand-wringing, you’d think that the banks came up with the idea of looser underwriting standards on their own, with regulators just asleep on the job. In fact, it was the regulators who relaxed these standards—at the behest of community groups and “progressive” political forces.
Read on.
-Max Borders
Great article. The closing sentence really sums it up:
“As you might expect, they are now self-righteously blaming those, such as Countrywide, who did what they were told.”
In other words, the lenders were merely following and adhering to the regulators who were on a mission to close the homeownerhip gap between racial groups. Take this 2003 quote from Angelo Mozilo, then head of Countrywide Home Loans:
“if we are to close the homeownership gap by enabling more people to realize their American dream, we must lean on the side of looking for every reason to approve applicants rather than reasons to reject them.”
This rhetoric was squarely in response to political pressure and HUD regulations.
The foreclosure mess is a perfect example of what happens when public policy is dictated by this notion of “social justice” or “equity.” Leftist groups and lawmakers insisted on intervening with the market to correct some perceived “imperfections” and to produce more equality of results.
As is virtually always the case, the end result is that those people the marxsists wanted to help ended up getting hurt, and the global economy is paying a significant price.
How many times must this play out before people wake up? You can not wish away unintended consequences.
Um . . . no.
COme on by sometime, I’ll be happy to teach you what this is really about.
It’s not because they lent to black people.
Nice try.
Rather, it is because the whole industry and the public bought into the idea that land prices always go up.
They don’t.
I’m sure that’s part of it, “Dr.” But single, monolithic explanations rarely work in complex market phenomena. That’s why, in my title, I said “hand in” the mortgage mess. You tastelessly brought up race. So you can keep it. You and all those bureaucrats who asked companies to abandon risk analysis in the name of “inclusion.”
This site has some interesting information on this topic.
http://www.foreclosureprocessnews.com/sitemap.xml
Good Luck