Post by Woody Williams on Sept 30, 2008 14:28:04 GMT -5
(Must Read) Assault on the mortgage lenders: in the name of racial justice, the Clintons...
Assault on the mortgage lenders: in the name of racial justice, the Clintonites want the power to decide who gets a home of his own - efforts to impose regulations on banks to make loans even if applicants are not creditworthy
National Review, Dec 27, 1993 by Robert Stowe England
QUIETLY, behind the scenes, the Clinton Administration is preparing for the biggest regulatory crackdown of recent years. Attorney General Janet Reno is linking up with banking regulators and with HUD Secretary Henry Cisneros to end the supposed epidemic of discrimination against minorities in making home loans. The implications for society at large are ominous.
Here, as in affirmative-action efforts in hiring, college admissions, and the drawing of voting districts, the Washington establishment is obsessed with "disparate impact," which it equates with racism. In the mortgage-lending area, there is ample evidence of disparate impact to feed this obsession. Data collected by the Federal Government reveal that in 1992, while 16 per cent of white applicants for mortgage loans were rejected, 36 per cent of black applicants were rejected.
But does disparate impact indicate racism? According to Lawrence Lindsey, the Federal Reserve governor who oversees the collection of mortgage lending data, even the celebrated Boston Fed study that inspired this crusade found that factors other than race--such as one's credit record and whether one has sufficient income to meet the payments--are enough to account for nearly all the difference in rejection rates. Furthermore, a different analysis of the data in the Boston Fed study by David Horne, an economist with the Federal Deposit Insurance Corporation, finds no evidence of a pattern of discrimination. In any case, Census data show whites and blacks, taken as groups, have similar default rates. If discrimination were in fact occurring--that is, if banks were applying a higher standard to blacks than to whites--you would expect blacks to have a lower default rate.
The essentially irrational assumption underlying the notion that there is widespread discrimination in mortgage lending seems to be that lenders are willing to give up good profits in order to feed their subtle but thorough-going racism. Says Senator Don Riegle (D., Mich.), "They talk about how the free-enterprise system is supposed to work, but it's sophistry, as we all know." Senator Riegle (one of the Keating Five who plans to retire rather than run for re-election next year) has made a holy crusade of mortgage-lending discrimination since he took over the Senate Banking Committee in 1989.
Senator Riegle has found enthusiastic allies in the Clinton Administration, particularly Attorney General Reno, Secretary Cisneros, and Comptroller of the Currency Eugene Ludwig. As Ludwig told the Senate Banking Committee, "We have to use every means at our disposal to end discrimination and to end it as quickly as possible."
One Size Fits All
MR. LUDWIG'S idea of ending discrimination is for blacks and whites to have the same rejection rates, regardless of the legitimate reasons for differences. The crackdown is already well under way, as the Administration turns many of its bank examiners into discrimination police by re-interpreting the Fair Lending Act of 1968 and the Equal Credit Opportunity Act of 1974.
The primary responsibility of banking regulators--the Office of the Comptroller of the Currency (OCC), the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC), and the Office of Thrift Supervision--has always been the safety and soundness of banks and thrift institutions. In the last few decades a separate cadre of bank examiners for fairness and consumer protection has been established. These so-called "compliance examiners" represent the shock troops of the Clinton assault. Ludwig is increasing the number of OCC compliance examiners from 330 to 530 by next year. Already they've been busy examining loan files; their work has resulted in four referrals to the Department of Justice for further investigation. Miss Reno, meanwhile, has chastised the other bank regulatory agencies, including the Federal Reserve, before the Senate Banking Committee for failing to get with the program.
While Justice has not yet identified any of the four referrals, two of them have publicly identified themselves: Shawmut National Bank of Hartford, Conn., the largest mortgage lender in New England, and Barnett Bank of Jacksonville, Fla. Only two weeks after Miss Reno's slap at the banking regulators in Senate testimony, the Federal Reserve Board, usually not prone to politicizing its bank examinations, prevented Shawmut from acquiring New Dartmouth Bank of Manchester, N.H., under a rarely used provision of the Community Reinvestment Act (CRA) of 1977, claiming Shawmut had discriminated against minorities. While it is impossible to judge the case against Shawmut without more information, the timing of the denial is suspicious. Henry Cisneros quoted Fed Chairman Alan Greenspan as saying in Senate testimony that an end to discrimination would boost economic activity. Mr. Greenspan has made no secret of his campaign to win over the President on the issue of the Fed's independence, endangered by battles with congressional leaders like House Banking Committee Chairman Henry Gonzalez. Thus, the Fed's Shawmut action might be seen as the regulatory equivalent of sitting next to Hillary Clinton at the President's inauguration.
Read the rest here –
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Assault on the mortgage lenders: in the name of racial justice, the Clintonites want the power to decide who gets a home of his own - efforts to impose regulations on banks to make loans even if applicants are not creditworthy
National Review, Dec 27, 1993 by Robert Stowe England
QUIETLY, behind the scenes, the Clinton Administration is preparing for the biggest regulatory crackdown of recent years. Attorney General Janet Reno is linking up with banking regulators and with HUD Secretary Henry Cisneros to end the supposed epidemic of discrimination against minorities in making home loans. The implications for society at large are ominous.
Here, as in affirmative-action efforts in hiring, college admissions, and the drawing of voting districts, the Washington establishment is obsessed with "disparate impact," which it equates with racism. In the mortgage-lending area, there is ample evidence of disparate impact to feed this obsession. Data collected by the Federal Government reveal that in 1992, while 16 per cent of white applicants for mortgage loans were rejected, 36 per cent of black applicants were rejected.
But does disparate impact indicate racism? According to Lawrence Lindsey, the Federal Reserve governor who oversees the collection of mortgage lending data, even the celebrated Boston Fed study that inspired this crusade found that factors other than race--such as one's credit record and whether one has sufficient income to meet the payments--are enough to account for nearly all the difference in rejection rates. Furthermore, a different analysis of the data in the Boston Fed study by David Horne, an economist with the Federal Deposit Insurance Corporation, finds no evidence of a pattern of discrimination. In any case, Census data show whites and blacks, taken as groups, have similar default rates. If discrimination were in fact occurring--that is, if banks were applying a higher standard to blacks than to whites--you would expect blacks to have a lower default rate.
The essentially irrational assumption underlying the notion that there is widespread discrimination in mortgage lending seems to be that lenders are willing to give up good profits in order to feed their subtle but thorough-going racism. Says Senator Don Riegle (D., Mich.), "They talk about how the free-enterprise system is supposed to work, but it's sophistry, as we all know." Senator Riegle (one of the Keating Five who plans to retire rather than run for re-election next year) has made a holy crusade of mortgage-lending discrimination since he took over the Senate Banking Committee in 1989.
Senator Riegle has found enthusiastic allies in the Clinton Administration, particularly Attorney General Reno, Secretary Cisneros, and Comptroller of the Currency Eugene Ludwig. As Ludwig told the Senate Banking Committee, "We have to use every means at our disposal to end discrimination and to end it as quickly as possible."
One Size Fits All
MR. LUDWIG'S idea of ending discrimination is for blacks and whites to have the same rejection rates, regardless of the legitimate reasons for differences. The crackdown is already well under way, as the Administration turns many of its bank examiners into discrimination police by re-interpreting the Fair Lending Act of 1968 and the Equal Credit Opportunity Act of 1974.
The primary responsibility of banking regulators--the Office of the Comptroller of the Currency (OCC), the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC), and the Office of Thrift Supervision--has always been the safety and soundness of banks and thrift institutions. In the last few decades a separate cadre of bank examiners for fairness and consumer protection has been established. These so-called "compliance examiners" represent the shock troops of the Clinton assault. Ludwig is increasing the number of OCC compliance examiners from 330 to 530 by next year. Already they've been busy examining loan files; their work has resulted in four referrals to the Department of Justice for further investigation. Miss Reno, meanwhile, has chastised the other bank regulatory agencies, including the Federal Reserve, before the Senate Banking Committee for failing to get with the program.
While Justice has not yet identified any of the four referrals, two of them have publicly identified themselves: Shawmut National Bank of Hartford, Conn., the largest mortgage lender in New England, and Barnett Bank of Jacksonville, Fla. Only two weeks after Miss Reno's slap at the banking regulators in Senate testimony, the Federal Reserve Board, usually not prone to politicizing its bank examinations, prevented Shawmut from acquiring New Dartmouth Bank of Manchester, N.H., under a rarely used provision of the Community Reinvestment Act (CRA) of 1977, claiming Shawmut had discriminated against minorities. While it is impossible to judge the case against Shawmut without more information, the timing of the denial is suspicious. Henry Cisneros quoted Fed Chairman Alan Greenspan as saying in Senate testimony that an end to discrimination would boost economic activity. Mr. Greenspan has made no secret of his campaign to win over the President on the issue of the Fed's independence, endangered by battles with congressional leaders like House Banking Committee Chairman Henry Gonzalez. Thus, the Fed's Shawmut action might be seen as the regulatory equivalent of sitting next to Hillary Clinton at the President's inauguration.
Read the rest here –
findarticles.com/p/articles/mi_m1282/is_n25_v45/ai_14779796/pg_2?tag=artBody;col1