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> What I am saying is that now some lenders — banks — are under rules so tough they can’t support equality-enhancing mortgages What is an equality-enhancing mo

> What I am saying is that now some lenders — banks — are under rules so tough they can’t support equality-enhancing mortgages What is an equality-enhancing mortgage? My guess is that it's akin to an equal opportunity / affirmative action campaign. The thing is, actuarial tables aren't oppressive - they're merely reflective of reality. If a particular group presents a higher risk profile than another, the only sane course of action is to be more restrictive when lending to members of that group. The alternative is for banks to give out easy money again like in the leadup to 2008 and that didn't work out well. I'm sorry that some people can't get mortgages but the answer is not to aggregate out their financial problems onto those of us who do, in fact, pay our bills.

gammateam 8y ago
Equality-enhancing mortgages WERE subprime mortgages. Congress pushed the banks into doing them in the early 2000s to extend credit to marginalized populations! oh man, here we go again! I wonder if Y Combinator will fund my Collateralized Equality Enhanced Swap
- cuckcuckspruce 8y ago
  One of the issues here is affordable housing. If the cost of housing were accessible to the common person without a loan then there would be no need to push the banks to extend who they loan to. It's one of the criticisms of the Affordable Care Act - it's really the Mandated Insurance Act. If the cost of healthcare were such that insurance was not needed for people to access it then there would be no need to mandate that people have insurance.
- piker 8y ago
  > Congress pushed the banks into doing them in the early 2000s to extend credit to marginalized populations! ...but didn't push banks to lever the loans 10x, securitize, sell and repeat over and over again. Fault for those days lied in a lot of places, and sub-prime mortgages aren't inherently a bad thing.
  - cm2187 8y ago
    When you have over 50% delinquencies, it is a bad thing.
    - gammateam 8y ago
      > When you have over 50% delinquencies, it is a bad thing. They didn't. The banks levered up so much that 7% of delinquencies was enough to crash the global economy.
      - JumpCrisscross 8y ago
        > 7% of delinquencies was enough to crash the global economy The delinquencies ended up being less of a problem than the uncertainty around them. 7% delinquencies didn't kill anyone. Investors' fears that 7 would become 20 did.
        deleted 8y ago
        [deleted]
      - cm2187 8y ago
        No, on subprime portfolios, the delinquencies were as high as 50% sometimes worse.
      - btilly 8y ago
        Can you provide a source? https://www.chicagofed.org/~/media/publications/profitwise-news-and-views/2010/pnv-aug2010-reed-final-web-pdf.pdf https://www.chicagofed.org/~/media/publications/profitwise-n... quotes average default rates in the 30+% range on subprime mortgages.
        gammateam 8y ago
        yes, it looks like you are correct. The Collateralized Debt Objects reduced this risk down by being bundled with better credit worthy debt servicing.
- mac01021 8y ago
  Saddling someone with (or allowing him to take on) an unpayable debt raises him to a state more equal with people who were previously better off? How? Doesn't buying a house (at market price) have an approximately zero effect on your net worth?
  - piker 8y ago
    > How? Doesn't buying a house (at market price) have an approximately zero effect on your net worth? As of the closing date, sure. However, closing on a home allows a renter to become an owner for about the same monthly cost (plus produces some significant tax benefits typically only available to the wealthy). After 30 years of paying a mortgage, if holding all else constant, one probably owns the property. After 30 years of paying rent, holding all else constant, one still owns nothing.
    - pixelbash 8y ago
      This is okay as long as you are in one of the locations where mortgage is roughly equal to rent. In some places it’s closer to double, unless you want a 100 year mortgage.
      - brightball 8y ago
        If you live in a place where a mortgage is double rent, you're basically a temporary resident.
        pixelbash 8y ago
        Our rent: 700NZD pw Our calculated repayment on a 20 year mortgage with a 300k down payment on the estimated CV of this house: $1370 NZD pw Yep!
      - seanmcdirmid 8y ago
        Also, interest-only loans are a thing in some parts of the world. Beijing is a good example of a place where rents are way lower than sale prices, so you can totally wind up paying $1000/month to rent something that is on the market for $1 million.
- cowsandmilk 8y ago
  > Congress pushed the banks into doing them in the early 2000s to extend credit to marginalized populations! How so? Subprime mortgages were largely not sold to government entities, but to private investors as CDOs. And government banking regulations about investing in low income communities never required making subprime loans.
  - gammateam 8y ago
    They pushed as in asked them to. It is often times prudent to strengthen relationships in the country you do business. This turned out to be fruitful as a different congress hedged their failed bets with money that taxpayers were going to give Congress.
    - scarface74 8y ago
      With all the money banks pay for lobbying, do you really think they would go against their own self interest just to “strengthen relationships”?
- scarface74 8y ago
  The government didn’t push subprime loans. Subprime loans were by definition “non comforming loans” that were not backed by any government institution like FHA or Fannie Mae.
Nasrudith 8y ago
To be fair even if it literally is 100% reflective of reality that doesn't mean it lacks unjust feedback loops. If after generations of past policies the stats say 100% of people with red hair are bandits and the longstanding policy is that they are to be shot at on sight only redheads with plans to rob or kill you will approach within rifle range. I think the best that can be hoped for is rigorous justification of lending criteria in non pure correlative ways. As opposed to discrimination laundering bullshit like sentencing based on the size of their yard. Judge them via their neighborhood foreclosure rates as opposed to ethnic make up. There are antidiscrimination in real estate laws on the books but I don't know enough to comment upon the current implementation and its pros and cons.
- JumpCrisscross 8y ago
  > the best that can be hoped for is rigorous justification of lending criteria in non pure correlative ways OP's point is government has better tools for enacting social policy than lending regulations. Improving low-income borrowers' finances, instead of pushing banks to stretch to them, seems saner. Unfortunately, we have a broad segment of the population that enjoys "sticking it" to the banks, thereby perpetuating the cycle.
- sigstoat 8y ago
  > To be fair even if it literally is 100% reflective of reality that doesn't mean it lacks unjust feedback loops. if you're worried about feedback loops, maybe don't lend based on any criteria other than the best possible estimate of ability to pay the loan back. if you loan somebody money for a house that they can't pay back, they're going to 1) end up with even worse credit and 2) lose the house, which they made other emotional and financial investments in.
  - vkou 8y ago
    Or, alternatively, 3) - they sell the house for a profit, and everyone (who matters) wins. The assumption of 3) was what drove 2008.
  - beat 8y ago
ypzhang2 8y ago
Banks can't meet capital requirements for lower than prime lending or aren't willing to do it. This leads to a segment of the population (usually lower income, but not always) without broad access to credit or leverage.
- core-questions 8y ago
  So? If they cannot afford to pay a reasonable interest rate on the money, could they even really afford to pay it back at 0%, or even negative?
  - ypzhang2 8y ago
    There are certainly segments of this population that can afford to pay back a loan. Or there is a loan that can be structured so that this segment of customer can pay it back. Its just not profitable or efficient for a bank to lend in this segment as a whole currently.
maxhallinan 8y ago
Inequality in the context of this interview means wealth distribution. It does not refer to racial equality, as I interpret your reference to affirmative action. "...We Got More Inequality" refers to the ease with which people can borrow money from a bank. New regulations make it more expensive for banks to loan money to people with relatively less capital. So those with less capital have less access to credit. This includes people who are capable of paying off the loans. And those with more capital have easier access to credit, simply because it is less expensive for the bank. So now it is easier for the wealthy to grow their wealth and the result is a less even wealth distribution.
bofh1d10t 8y ago
The alternative is to accept we have a lot of people without adequate housing and actively deal with it and quit playing games to satisfy the fetish of spoiled rich people Edit: https://www.cnbc.com/2018/08/08/gop-congressman-chris-collins-to-be-indicted-on-insider-trading-charge.html https://www.cnbc.com/2018/08/08/gop-congressman-chris-collin... I’m sure things like this are isolated incidents given that members of Congress have a level of immunity from such laws. Let’s keep discussing market solutions in a market that has been and always will be rigged and rerigged as needed coughpanamapaperscough
AmericanChopper 8y ago
This is exactly what lead up to the 2008 crisis. Like, exactly. In the 90s when wage growth was low one of the mechanisms for addressing it was to simply give everybody access to mortgages they couldn’t really afford. By 2008, most banks were levered by more than 30:1. The key result of Dodd-Frank was that it gave the Fed power to influence how leveraged banks were, and now most of them are levered at about 10:1. Changing this would remove the key element of protection against another crisis occurring.
deleted 8y ago
[deleted]
florabuzzword 8y ago
I think you meant to say “can, in fact, pay our bills.”
beat 8y ago
I think you're reading a partisan meaning into "equality-enhancing" that is not what the speaker intended, and then kicking a strawman down the road. Are you sure that's what she meant, or is it just an easier thing for you to argue against?
scarface74 8y ago
It is so easy to get an FHA loan, if you don't qualify for one -- you really don't deserve it. This is coming from someone who was able to get a less than 4% FHA $340K mortgage three years after having two foreclosures a short sale, and three additional loans that were settled for less than full value. Unless you live in an high priced area where rent is going up more than inflation a mortgage isn't really worth it. It ties you to a location and makes it harder to move to where the jobs are.
- vonmoltke 8y ago
  > It ties you to a location and makes it harder to move to where the jobs are. This sentiment gets expressed frequently in these discussions. There is a hell of a lot anchoring me to a particular place than whether or not I own the place I live. If I had to move, selling my residence would be a relatively minor consideration in the grand scheme.
  - scarface74 8y ago
    Not if you happen to be underwater. Some places still haven’t recovered from 2008. There are parts of the metro area where I live that are still underwater. It wouldn’t be easy, but if I had a choice between staying where I am where I couldn’t find any jobs and moving. I would move. But in my case, if I can’t find any company that’s looking for a software developer with an up to date skill in my entire metro area and I couldn’t find any type of remote job or contract, I’ve got bigger issues. My responsibilities are only to my spouse, minor children, and some day maybe my parents. My parents already live in a different town than I do, but they would have to move to wherever I move to.
    - vonmoltke 8y ago
      When I buy I intentionally buy well below what I can afford, so being underwater has not been an issue for me. As far as abandoning a metro area, it took quite a bit for my wife and I to finally uproot. That we owned our house was relatively low on the friction list. Hell, my wife wants to delay buying again (we rent) because she finds the act of moving so stressful.
grosjona 8y ago
>> The alternative is for banks to give out easy money again like in the leadup to 2008 and that didn't work out well It could have worked out well if the Obama administration had just allowed the financial system to collapse instead of bailing it out. The collapse of the financial system would have meant that many poorly run companies would have disappeared and they would have been replaced by newer, smaller and more efficient companies. Europe recovered from WW2 relatively quickly; surely the US could also recover from a partial market collapse. Before 2008, there were a lot of talented, ambitious people desperately waiting for an opportunity to compete on the marketplace but the government bailouts took away that opportunity and allowed corporations to keep running their inefficient oligopolies uninterrupted. Today, most of these talented, ambitious people have become losers; they're poor and paralyzed by self-doubt. The reality is that they might actually have succeeded if the government had simply allowed capitalism to take its natural course. The carpet was pulled from under them.
- s73v3r_ 8y ago
  I feel everyone saying this is completely ignoring what that would mean. You like 10% unemployment? Cool. Here's 25+% unemployment. Sure, a few people might have benefitted in such a way that it would allow them to be the new entrenched banking class, but millions more people would have found themselves laid off, foreclosed upon, and in general completely fucked over through no fault of their own.
  - grosjona 8y ago
    Everyone would have survived and they would have gained a great deal of wisdom from this experience. Rich people would have learned humility and everyone else would have learned that the system actually works. Instead, rich people learned complacency and everyone else learned that the system is rigged.
- aerotwelve 8y ago
  > Europe recovered from WW2 relatively quickly; surely the US could also recover from a partial market collapse. Well, part of that is because of countries like ours which weren't completely destroyed were able to assist financially, help rebuild essential infrastructure, and -- perhaps most importantly -- provide political stability to the region (which they desperately needed in 1945). I'm not sure who would have played that role if we had let the entire global financial system melt down in 2008.
stcredzero 8y ago
> What I am saying is that now some lenders — banks — are under rules so tough they can’t support equality-enhancing mortgages What is an equality-enhancing mortgage? My wife works at a community bank which has been cited as an important institution for social justice on the west coast. Equality enhancing mortgages could well be mortgages accessible to under-served populations who have the financial means to pay them back, but who face cultural barriers or ethnic discrimination. Community banks have been railroaded out of the home mortgage business. There are now a lot of timing-dependent requirements and really stiff penalties in the banking regulations. It was sold to the public as a curb on the big banks, but what really it means, is that only banks large enough to write their own software or wealthy enough to license custom software can stay in the home mortgage business. Basically, we the public were sold flowery rhetoric by politicians on the wave of sentiment following the banking crisis, while big banks lobbied to write into law an even bigger advantage.
- deleted 8y ago
  [deleted]
- T2_t2 8y ago
  > could well be Do you have any evidence of that - the discrimination part? Is there evidence that lending institutions choose to lend based on criteria other than ability to repay? Also, do/did smaller lenders fare as well or better than the big lenders during the financial crisis? Or were their loans more risky? I think that would be the strongest evidence either way. Your second paragraph is really interesting, and creating an expensive barrier to entry is always a tactic big business implements to stifle competition. I just wonder what the way out of that is?
  - stcredzero 8y ago
    Do you have any evidence of that - the discrimination part? The various Chinatown community banks wouldn't even exist (and have greatly succeeded for awhile) if some form of cultural barrier didn't exist. The barrier isn't all the fault of one side or another. However, it's simply historical fact that big banks left a lot of money on the table -- in a way which could be characterized with gross demographics -- which smaller banks made their bread and butter for a few decades. Is there evidence that lending institutions choose to lend based on criteria other than ability to repay? Of course community banks choose to lend based on criteria other than ability to repay. Basically, community banks must use their advantage in local intelligence to distinguish between prospects who look a bit marginal but who are really strong, versus prospects who might look a bit marginal to normal but who constitute a risk. Basically, the big banks swoop up almost all of the "normal" customers and leave the smaller banks scrambling for the best of the odd ones left over. Your second paragraph is really interesting, and creating an expensive barrier to entry is always a tactic big business implements to stifle competition. I just wonder what the way out of that is? An informed electorate.
knuththetruth 8y ago
They’re similar to all the government support(subsidized mortgages, education) given to white people post WWII that allowed them to build the generational wealth and greater proportion of middle class standing they enjoy today.
mindslight 8y ago
Actuarial tables don't lie, but the question they answer isn't necessarily the correct one.

gammateam 8y ago

Equality-enhancing mortgages WERE subprime mortgages. Congress pushed the banks into doing them in the early 2000s to extend credit to marginalized populations! oh man, here we go again! I wonder if Y Combinator will fund my Collateralized Equality Enhanced Swap

cuckcuckspruce 8y ago
One of the issues here is affordable housing. If the cost of housing were accessible to the common person without a loan then there would be no need to push the banks to extend who they loan to. It's one of the criticisms of the Affordable Care Act - it's really the Mandated Insurance Act. If the cost of healthcare were such that insurance was not needed for people to access it then there would be no need to mandate that people have insurance.
piker 8y ago
> Congress pushed the banks into doing them in the early 2000s to extend credit to marginalized populations! ...but didn't push banks to lever the loans 10x, securitize, sell and repeat over and over again. Fault for those days lied in a lot of places, and sub-prime mortgages aren't inherently a bad thing.
- cm2187 8y ago
  When you have over 50% delinquencies, it is a bad thing.
  - gammateam 8y ago
    > When you have over 50% delinquencies, it is a bad thing. They didn't. The banks levered up so much that 7% of delinquencies was enough to crash the global economy.
    - JumpCrisscross 8y ago
      > 7% of delinquencies was enough to crash the global economy The delinquencies ended up being less of a problem than the uncertainty around them. 7% delinquencies didn't kill anyone. Investors' fears that 7 would become 20 did.
      - deleted 8y ago
        [deleted]
    - cm2187 8y ago
      No, on subprime portfolios, the delinquencies were as high as 50% sometimes worse.
    - btilly 8y ago
      Can you provide a source? https://www.chicagofed.org/~/media/publications/profitwise-news-and-views/2010/pnv-aug2010-reed-final-web-pdf.pdf https://www.chicagofed.org/~/media/publications/profitwise-n... quotes average default rates in the 30+% range on subprime mortgages.
      - gammateam 8y ago
        yes, it looks like you are correct. The Collateralized Debt Objects reduced this risk down by being bundled with better credit worthy debt servicing.
mac01021 8y ago
Saddling someone with (or allowing him to take on) an unpayable debt raises him to a state more equal with people who were previously better off? How? Doesn't buying a house (at market price) have an approximately zero effect on your net worth?
- piker 8y ago
  > How? Doesn't buying a house (at market price) have an approximately zero effect on your net worth? As of the closing date, sure. However, closing on a home allows a renter to become an owner for about the same monthly cost (plus produces some significant tax benefits typically only available to the wealthy). After 30 years of paying a mortgage, if holding all else constant, one probably owns the property. After 30 years of paying rent, holding all else constant, one still owns nothing.
  - pixelbash 8y ago
    This is okay as long as you are in one of the locations where mortgage is roughly equal to rent. In some places it’s closer to double, unless you want a 100 year mortgage.
    - brightball 8y ago
      If you live in a place where a mortgage is double rent, you're basically a temporary resident.
      - pixelbash 8y ago
        Our rent: 700NZD pw Our calculated repayment on a 20 year mortgage with a 300k down payment on the estimated CV of this house: $1370 NZD pw Yep!
    - seanmcdirmid 8y ago
      Also, interest-only loans are a thing in some parts of the world. Beijing is a good example of a place where rents are way lower than sale prices, so you can totally wind up paying $1000/month to rent something that is on the market for $1 million.
cowsandmilk 8y ago
> Congress pushed the banks into doing them in the early 2000s to extend credit to marginalized populations! How so? Subprime mortgages were largely not sold to government entities, but to private investors as CDOs. And government banking regulations about investing in low income communities never required making subprime loans.
- gammateam 8y ago
  They pushed as in asked them to. It is often times prudent to strengthen relationships in the country you do business. This turned out to be fruitful as a different congress hedged their failed bets with money that taxpayers were going to give Congress.
  - scarface74 8y ago
    With all the money banks pay for lobbying, do you really think they would go against their own self interest just to “strengthen relationships”?
scarface74 8y ago
The government didn’t push subprime loans. Subprime loans were by definition “non comforming loans” that were not backed by any government institution like FHA or Fannie Mae.

Nasrudith 8y ago

To be fair even if it literally is 100% reflective of reality that doesn't mean it lacks unjust feedback loops. If after generations of past policies the stats say 100% of people with red hair are bandits and the longstanding policy is that they are to be shot at on sight only redheads with plans to rob or kill you will approach within rifle range. I think the best that can be hoped for is rigorous justification of lending criteria in non pure correlative ways. As opposed to discrimination laundering bullshit like sentencing based on the size of their yard. Judge them via their neighborhood foreclosure rates as opposed to ethnic make up. There are antidiscrimination in real estate laws on the books but I don't know enough to comment upon the current implementation and its pros and cons.

JumpCrisscross 8y ago
> the best that can be hoped for is rigorous justification of lending criteria in non pure correlative ways OP's point is government has better tools for enacting social policy than lending regulations. Improving low-income borrowers' finances, instead of pushing banks to stretch to them, seems saner. Unfortunately, we have a broad segment of the population that enjoys "sticking it" to the banks, thereby perpetuating the cycle.
sigstoat 8y ago
> To be fair even if it literally is 100% reflective of reality that doesn't mean it lacks unjust feedback loops. if you're worried about feedback loops, maybe don't lend based on any criteria other than the best possible estimate of ability to pay the loan back. if you loan somebody money for a house that they can't pay back, they're going to 1) end up with even worse credit and 2) lose the house, which they made other emotional and financial investments in.
- vkou 8y ago
  Or, alternatively, 3) - they sell the house for a profit, and everyone (who matters) wins. The assumption of 3) was what drove 2008.
- beat 8y ago

ypzhang2 8y ago

Banks can't meet capital requirements for lower than prime lending or aren't willing to do it. This leads to a segment of the population (usually lower income, but not always) without broad access to credit or leverage.

core-questions 8y ago
So? If they cannot afford to pay a reasonable interest rate on the money, could they even really afford to pay it back at 0%, or even negative?
- ypzhang2 8y ago
  There are certainly segments of this population that can afford to pay back a loan. Or there is a loan that can be structured so that this segment of customer can pay it back. Its just not profitable or efficient for a bank to lend in this segment as a whole currently.

maxhallinan 8y ago

Inequality in the context of this interview means wealth distribution. It does not refer to racial equality, as I interpret your reference to affirmative action. "...We Got More Inequality" refers to the ease with which people can borrow money from a bank. New regulations make it more expensive for banks to loan money to people with relatively less capital. So those with less capital have less access to credit. This includes people who are capable of paying off the loans. And those with more capital have easier access to credit, simply because it is less expensive for the bank. So now it is easier for the wealthy to grow their wealth and the result is a less even wealth distribution.

bofh1d10t 8y ago

The alternative is to accept we have a lot of people without adequate housing and actively deal with it and quit playing games to satisfy the fetish of spoiled rich people Edit: https://www.cnbc.com/2018/08/08/gop-congressman-chris-collins-to-be-indicted-on-insider-trading-charge.html https://www.cnbc.com/2018/08/08/gop-congressman-chris-collin... I’m sure things like this are isolated incidents given that members of Congress have a level of immunity from such laws. Let’s keep discussing market solutions in a market that has been and always will be rigged and rerigged as needed coughpanamapaperscough

AmericanChopper 8y ago

This is exactly what lead up to the 2008 crisis. Like, exactly. In the 90s when wage growth was low one of the mechanisms for addressing it was to simply give everybody access to mortgages they couldn’t really afford. By 2008, most banks were levered by more than 30:1. The key result of Dodd-Frank was that it gave the Fed power to influence how leveraged banks were, and now most of them are levered at about 10:1. Changing this would remove the key element of protection against another crisis occurring.

deleted 8y ago

[deleted]

florabuzzword 8y ago

I think you meant to say “can, in fact, pay our bills.”

beat 8y ago

I think you're reading a partisan meaning into "equality-enhancing" that is not what the speaker intended, and then kicking a strawman down the road. Are you sure that's what she meant, or is it just an easier thing for you to argue against?

scarface74 8y ago

It is so easy to get an FHA loan, if you don't qualify for one -- you really don't deserve it. This is coming from someone who was able to get a less than 4% FHA $340K mortgage three years after having two foreclosures a short sale, and three additional loans that were settled for less than full value. Unless you live in an high priced area where rent is going up more than inflation a mortgage isn't really worth it. It ties you to a location and makes it harder to move to where the jobs are.

vonmoltke 8y ago
> It ties you to a location and makes it harder to move to where the jobs are. This sentiment gets expressed frequently in these discussions. There is a hell of a lot anchoring me to a particular place than whether or not I own the place I live. If I had to move, selling my residence would be a relatively minor consideration in the grand scheme.
- scarface74 8y ago
  Not if you happen to be underwater. Some places still haven’t recovered from 2008. There are parts of the metro area where I live that are still underwater. It wouldn’t be easy, but if I had a choice between staying where I am where I couldn’t find any jobs and moving. I would move. But in my case, if I can’t find any company that’s looking for a software developer with an up to date skill in my entire metro area and I couldn’t find any type of remote job or contract, I’ve got bigger issues. My responsibilities are only to my spouse, minor children, and some day maybe my parents. My parents already live in a different town than I do, but they would have to move to wherever I move to.
  - vonmoltke 8y ago
    When I buy I intentionally buy well below what I can afford, so being underwater has not been an issue for me. As far as abandoning a metro area, it took quite a bit for my wife and I to finally uproot. That we owned our house was relatively low on the friction list. Hell, my wife wants to delay buying again (we rent) because she finds the act of moving so stressful.

grosjona 8y ago

>> The alternative is for banks to give out easy money again like in the leadup to 2008 and that didn't work out well It could have worked out well if the Obama administration had just allowed the financial system to collapse instead of bailing it out. The collapse of the financial system would have meant that many poorly run companies would have disappeared and they would have been replaced by newer, smaller and more efficient companies. Europe recovered from WW2 relatively quickly; surely the US could also recover from a partial market collapse. Before 2008, there were a lot of talented, ambitious people desperately waiting for an opportunity to compete on the marketplace but the government bailouts took away that opportunity and allowed corporations to keep running their inefficient oligopolies uninterrupted. Today, most of these talented, ambitious people have become losers; they're poor and paralyzed by self-doubt. The reality is that they might actually have succeeded if the government had simply allowed capitalism to take its natural course. The carpet was pulled from under them.

s73v3r_ 8y ago
I feel everyone saying this is completely ignoring what that would mean. You like 10% unemployment? Cool. Here's 25+% unemployment. Sure, a few people might have benefitted in such a way that it would allow them to be the new entrenched banking class, but millions more people would have found themselves laid off, foreclosed upon, and in general completely fucked over through no fault of their own.
- grosjona 8y ago
  Everyone would have survived and they would have gained a great deal of wisdom from this experience. Rich people would have learned humility and everyone else would have learned that the system actually works. Instead, rich people learned complacency and everyone else learned that the system is rigged.
aerotwelve 8y ago
> Europe recovered from WW2 relatively quickly; surely the US could also recover from a partial market collapse. Well, part of that is because of countries like ours which weren't completely destroyed were able to assist financially, help rebuild essential infrastructure, and -- perhaps most importantly -- provide political stability to the region (which they desperately needed in 1945). I'm not sure who would have played that role if we had let the entire global financial system melt down in 2008.

stcredzero 8y ago

> What I am saying is that now some lenders — banks — are under rules so tough they can’t support equality-enhancing mortgages What is an equality-enhancing mortgage? My wife works at a community bank which has been cited as an important institution for social justice on the west coast. Equality enhancing mortgages could well be mortgages accessible to under-served populations who have the financial means to pay them back, but who face cultural barriers or ethnic discrimination. Community banks have been railroaded out of the home mortgage business. There are now a lot of timing-dependent requirements and really stiff penalties in the banking regulations. It was sold to the public as a curb on the big banks, but what really it means, is that only banks large enough to write their own software or wealthy enough to license custom software can stay in the home mortgage business. Basically, we the public were sold flowery rhetoric by politicians on the wave of sentiment following the banking crisis, while big banks lobbied to write into law an even bigger advantage.

deleted 8y ago
[deleted]
T2_t2 8y ago
> could well be Do you have any evidence of that - the discrimination part? Is there evidence that lending institutions choose to lend based on criteria other than ability to repay? Also, do/did smaller lenders fare as well or better than the big lenders during the financial crisis? Or were their loans more risky? I think that would be the strongest evidence either way. Your second paragraph is really interesting, and creating an expensive barrier to entry is always a tactic big business implements to stifle competition. I just wonder what the way out of that is?
- stcredzero 8y ago
  Do you have any evidence of that - the discrimination part? The various Chinatown community banks wouldn't even exist (and have greatly succeeded for awhile) if some form of cultural barrier didn't exist. The barrier isn't all the fault of one side or another. However, it's simply historical fact that big banks left a lot of money on the table -- in a way which could be characterized with gross demographics -- which smaller banks made their bread and butter for a few decades. Is there evidence that lending institutions choose to lend based on criteria other than ability to repay? Of course community banks choose to lend based on criteria other than ability to repay. Basically, community banks must use their advantage in local intelligence to distinguish between prospects who look a bit marginal but who are really strong, versus prospects who might look a bit marginal to normal but who constitute a risk. Basically, the big banks swoop up almost all of the "normal" customers and leave the smaller banks scrambling for the best of the odd ones left over. Your second paragraph is really interesting, and creating an expensive barrier to entry is always a tactic big business implements to stifle competition. I just wonder what the way out of that is? An informed electorate.

knuththetruth 8y ago

They’re similar to all the government support(subsidized mortgages, education) given to white people post WWII that allowed them to build the generational wealth and greater proportion of middle class standing they enjoy today.

mindslight 8y ago

Actuarial tables don't lie, but the question they answer isn't necessarily the correct one.