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> 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

by 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.
raincom 8y ago
Thanks to Dodd-Frank regulation, banks now don't offer "semi doc loans". Basically, the pendulum swung back to tougher underwriting standards. Before Dodd-Frank, banks and underwrites had huge discretion. So, that discretion was abused. Now it is almost tough for self-employed, small business owners, to get mortgage through normal channels. When one doesn't get mortgage through normal channels, one goes to a FI(financial institution) that keeps these mortgages on their books. Such FIs charge extra interest rates, demand more downpayment like 30%, etc.

by T2_t2 8y ago

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.

raincom 8y ago

Thanks to Dodd-Frank regulation, banks now don't offer "semi doc loans". Basically, the pendulum swung back to tougher underwriting standards. Before Dodd-Frank, banks and underwrites had huge discretion. So, that discretion was abused. Now it is almost tough for self-employed, small business owners, to get mortgage through normal channels. When one doesn't get mortgage through normal channels, one goes to a FI(financial institution) that keeps these mortgages on their books. Such FIs charge extra interest rates, demand more downpayment like 30%, etc.