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"Certainly more study is needed on this issue. But the degree to which the Community Reinvestment Act (renewed and strengthened in 1995; see attached chart), th

"Certainly more study is needed on this issue. But the degree to which the Community Reinvestment Act (renewed and strengthened in 1995; see attached chart), the Home Mortgage Disclosure Act and the many other planks of the raft of federal regulation which have built up over the past couple of decades has pushed the banking industry into making the loans for which they are now being criticized is far and away the most under covered aspect of this story. " https://www.cnbc.com/id/25195425 https://www.cnbc.com/id/25195425 It's amazing how the government somehow managed to successfully pin all the blame on corporations for problems it helped cause. From wikipedia: https://en.wikipedia.org/wiki/Subprime_mortgage_crisis https://en.wikipedia.org/wiki/Subprime_mortgage_crisis "Lenders made loans that they knew borrowers could not afford and that could cause massive losses to investors in mortgage securities." Of course, it was the government itself that pressured banks to make these loans in the first place. From https://www.appeal-democrat.com/thomas-sowell-government-created-financial-crisis/article_5664ba31-59f2-529c-826e-6bcd5b928f0b.html https://www.appeal-democrat.com/thomas-sowell-government-cre... "All this was an opening salvo in a campaign to get Congress to pass laws forcing lenders to lend to people they would not otherwise lend to and in places where they would not otherwise put their money."

SantalBlush 4y ago
That banks extended bad loans under pressure from the government suggests they did so at a loss; otherwise, they would have done it anyway in search of profit. Moreover, Sowell makes bold claims and offers little evidence beyond references to redlining, while the evidence that banks were engaged in unethical and fraudulent practices are backed up by cold-hard data and an abundance of testimony from people within the industry. Sowell's essay is revisionism.
- deleted 4y ago
  [deleted]
- JackFr 4y ago
  You understand the borrowers weren’t the victims of the fraud —- in fact they were engaged in it. The banks settled on charges of selling securities backed by loans that they had not sufficiently vetted, of which many turned out bad.
  - vkou 4y ago
    The banks issuing the loans weren't the victims of the fraud, either. They were making money hand over fist repackaging and reselling those shitty loans.
mscarborough 4y ago
Making the subprime loans in the first place doesn't necessitate packing them into opaque financial instruments and going bananas with the wildly over-leveraged profit-seeking. Financial firms has been making tons of money during decades of increasing wealth inequality. Sure, let's talk about these congressional acts, but not going to put a lot of blame on relatively small programs that required these firms to throw back some scraps.
- PathOfEclipse 4y ago
  I'd rather have wealth inequality, which is natural, especially in a world where even the poorest have only gotten richer over time, than have enforced wealth equity, which has resulted in near universal poverty nearly everywhere it's been implemented. People calling for enforced wealth equity don't have the moral high ground. They're in the moral caves and pits! https://www.investopedia.com/articles/economics/09/financial-crisis-review.asp https://www.investopedia.com/articles/economics/09/financial... "The seeds of the financial crisis were planted during years of rock-bottom interest rates and loose lending standards that fueled a housing price bubble in the U.S. and elsewhere. It began, as usual, with good intentions. Faced with the bursting of the dot-com bubble, a series of corporate accounting scandals, and the September 11 terrorist attacks, the Federal Reserve lowered the federal funds rate from 6.5% in May 2000 to 1% in June 2003. 4 5 The aim was to boost the economy by making money available to businesses and consumers at bargain rates. e result was an upward spiral in home prices as borrowers took advantage of the low mortgage rates. 6 Even subprime borrowers, those with poor or no credit history, were able to realize the dream of buying a home. " The repeated story of our government's behavior in the financial sector is: 1) act with supposedly good intentions 2) Mess everything up 3) Blame the mess on someone else and call for more government action to clean things up.
  - mstipetic 4y ago
    People like you are so annoying. Super natural to have 70 people control 50 percent of the world wealth. Ace.
    - 4y ago
throw474374383 4y ago
Right so it's the government's fault for encouraging the corporations to do something they didn't really want to do, which inevitably led to the corporations naked inhuman amoral greed running amock.
- JackFr 4y ago
  Do you think there was a sea change in the base level of greed in the run up to the financial crisis? (Remembering of course that it’s impossible for a corporation to be greedy, only a human being can be so.) I’ve been beating this drum for more than 10 years. The big story of the financial crisis is that while there was fraud and corruption at the margins, the bulk of the economic dislocation was caused by well intentioned people making good faith decisions that in hindsight proved very foolish. People who had no business buying a home or taking out that loan were. Banks were making the loans not just because there was a global capital glut chasing returns, the credit tranching structures were working, and the ever rising house prices hid any risk. No one in the industry had seen house prices broadly go down in generations. In retrospect there were a number of systemic issues that now seem obvious, but having been there it wasn’t that obvious at the time.
  - throw474374383 4y ago
    the bulk of the economic dislocation was caused by well intentioned people making good faith decisions that in hindsight proved very foolish I agree with that. But that comes about because we've arranged our economic activity into monolithic 'corporations' that are immortal, have the legal status of persons, and are compelled to chase shortsighted profit above all else, show no remorse, and any moral wrongdoing is just a slight financial risk to be approached like any other monetary risk. All the humans working for the oil industry today are making good faith decisions but together they work for a massive unstoppable inhuman juggernaut that is destroying our climate while fighting every attempt to rein it in with every means possible at its disposal. And yes I can call corporations greedy. They have demanded to be treated as people in the courts of law so I'll judge them as people
    - 4y ago
uMeanPpl 4y ago
By government you mean a handful of legislators. The public has been treating their Senators and Representatives like celebrities. Electoral turnovers flush corruption; we really need to stop being ruled by pudding brains with no skin in the future game who LARP concern while doing nothing but living easy: https://www.nber.org/papers/w29766 https://www.nber.org/papers/w29766
- PathOfEclipse 4y ago
  I mean, ultimately government == a handful of legislators plus the executive and judicial branches. If you're suggesting we could avoid this by having the right people in office, you are right. But the founders of our government also clearly stated that if men were angels, they wouldn't even need to be governed, and if the government were run by angels, it wouldn't need to be limited, nor would it need checks and balances. We've forgotten this lesson over and over as our government continues to grow and remove checks against its power.
rhaway84773 4y ago
Bad loans being transformed into A+ loans through bundling wasn’t forced by the govt. And the government didn’t force banks to buy loans from originators who were known to fake documents, and then give them 120 LTV loans.

SantalBlush 4y ago

That banks extended bad loans under pressure from the government suggests they did so at a loss; otherwise, they would have done it anyway in search of profit. Moreover, Sowell makes bold claims and offers little evidence beyond references to redlining, while the evidence that banks were engaged in unethical and fraudulent practices are backed up by cold-hard data and an abundance of testimony from people within the industry. Sowell's essay is revisionism.

deleted 4y ago
[deleted]
JackFr 4y ago
You understand the borrowers weren’t the victims of the fraud —- in fact they were engaged in it. The banks settled on charges of selling securities backed by loans that they had not sufficiently vetted, of which many turned out bad.
- vkou 4y ago
  The banks issuing the loans weren't the victims of the fraud, either. They were making money hand over fist repackaging and reselling those shitty loans.

mscarborough 4y ago

Making the subprime loans in the first place doesn't necessitate packing them into opaque financial instruments and going bananas with the wildly over-leveraged profit-seeking. Financial firms has been making tons of money during decades of increasing wealth inequality. Sure, let's talk about these congressional acts, but not going to put a lot of blame on relatively small programs that required these firms to throw back some scraps.

PathOfEclipse 4y ago
I'd rather have wealth inequality, which is natural, especially in a world where even the poorest have only gotten richer over time, than have enforced wealth equity, which has resulted in near universal poverty nearly everywhere it's been implemented. People calling for enforced wealth equity don't have the moral high ground. They're in the moral caves and pits! https://www.investopedia.com/articles/economics/09/financial-crisis-review.asp https://www.investopedia.com/articles/economics/09/financial... "The seeds of the financial crisis were planted during years of rock-bottom interest rates and loose lending standards that fueled a housing price bubble in the U.S. and elsewhere. It began, as usual, with good intentions. Faced with the bursting of the dot-com bubble, a series of corporate accounting scandals, and the September 11 terrorist attacks, the Federal Reserve lowered the federal funds rate from 6.5% in May 2000 to 1% in June 2003. 4 5 The aim was to boost the economy by making money available to businesses and consumers at bargain rates. e result was an upward spiral in home prices as borrowers took advantage of the low mortgage rates. 6 Even subprime borrowers, those with poor or no credit history, were able to realize the dream of buying a home. " The repeated story of our government's behavior in the financial sector is: 1) act with supposedly good intentions 2) Mess everything up 3) Blame the mess on someone else and call for more government action to clean things up.
- mstipetic 4y ago
  People like you are so annoying. Super natural to have 70 people control 50 percent of the world wealth. Ace.
  - 4y ago

throw474374383 4y ago

Right so it's the government's fault for encouraging the corporations to do something they didn't really want to do, which inevitably led to the corporations naked inhuman amoral greed running amock.

JackFr 4y ago
Do you think there was a sea change in the base level of greed in the run up to the financial crisis? (Remembering of course that it’s impossible for a corporation to be greedy, only a human being can be so.) I’ve been beating this drum for more than 10 years. The big story of the financial crisis is that while there was fraud and corruption at the margins, the bulk of the economic dislocation was caused by well intentioned people making good faith decisions that in hindsight proved very foolish. People who had no business buying a home or taking out that loan were. Banks were making the loans not just because there was a global capital glut chasing returns, the credit tranching structures were working, and the ever rising house prices hid any risk. No one in the industry had seen house prices broadly go down in generations. In retrospect there were a number of systemic issues that now seem obvious, but having been there it wasn’t that obvious at the time.
- throw474374383 4y ago
  the bulk of the economic dislocation was caused by well intentioned people making good faith decisions that in hindsight proved very foolish I agree with that. But that comes about because we've arranged our economic activity into monolithic 'corporations' that are immortal, have the legal status of persons, and are compelled to chase shortsighted profit above all else, show no remorse, and any moral wrongdoing is just a slight financial risk to be approached like any other monetary risk. All the humans working for the oil industry today are making good faith decisions but together they work for a massive unstoppable inhuman juggernaut that is destroying our climate while fighting every attempt to rein it in with every means possible at its disposal. And yes I can call corporations greedy. They have demanded to be treated as people in the courts of law so I'll judge them as people
  - 4y ago

uMeanPpl 4y ago

By government you mean a handful of legislators. The public has been treating their Senators and Representatives like celebrities. Electoral turnovers flush corruption; we really need to stop being ruled by pudding brains with no skin in the future game who LARP concern while doing nothing but living easy: https://www.nber.org/papers/w29766 https://www.nber.org/papers/w29766

PathOfEclipse 4y ago
I mean, ultimately government == a handful of legislators plus the executive and judicial branches. If you're suggesting we could avoid this by having the right people in office, you are right. But the founders of our government also clearly stated that if men were angels, they wouldn't even need to be governed, and if the government were run by angels, it wouldn't need to be limited, nor would it need checks and balances. We've forgotten this lesson over and over as our government continues to grow and remove checks against its power.

rhaway84773 4y ago

Bad loans being transformed into A+ loans through bundling wasn’t forced by the govt. And the government didn’t force banks to buy loans from originators who were known to fake documents, and then give them 120 LTV loans.