AZ Nomad wrote:
On Mon, 22 Jun 2009 10:22:13 -0700, Jon Danniken
wrote:
Smitty Two wrote:
"Colbyt" wrote:

Actually a lot of them never had "credit". The moronic loan
companies loaned money to people I would not rent to.

And we wonder how the "crisis" came about?

The people with the money demanded more loans to buy. The loan
companies, far from being "moronic," supplied the loans.

More like the guidelines for loaning money for homes were relaxed
due to the incessant whining from groups such as Acorn and idiots
such as Ted Kennedy. You see, to those individuals, it just wasn't
"fair" that people who were too risky to loan money to didn't own
their own homes.

That is what started this whole ball rolling.

Bull****. Nobody forced the lenders to make risky loans. They did it
to make a quick buck and to toss the loan like a hot potato.

No, they were forced.

Banking regulators evaluated how much investment the financial institutions
were making in "underserved" areas and that proportion weighed heavily on
the regulator's decisions regarding expansion, mergers, etc.

If you doubt this, take a spin through the most disreputable parts of your
town. You'll find a Wells Fargo branch next to the pawn shop, a Bank of
America store front adjacent to a bodega. Heck, you'll find branch banks on
streets where the only retail businesses are hookers and dope dealers. Some
of these banks go for DAYS without a bona-fide customer.

Believe me, these banks didn't open where they are out of either a profit
motive or altruism.

Specifically, from Wikipedia:

"The Community Reinvestment Act is a United States federal law designed to
encourage commercial banks and savings associations to meet the needs of
borrowers in all segments of their communities, including low- and
moderate-income neighborhoods. Congress passed the Act in 1977 to reduce
discriminatory credit practices against low-income neighborhoods, a practice
known as redlining. The Act requires the appropriate federal financial
supervisory agencies to encourage regulated financial institutions to meet
the credit needs of the local communities in which they are chartered,
consistent with safe and sound operation. To enforce the statute, federal
regulatory agencies examine banking institutions for CRA compliance, and
take this information into consideration when approving applications for new
bank branches or for mergers or acquisitions."
http://en.wikipedia.org/wiki/Community_Reinvestment_Act

This all started under Carter in 1977, but the regulatory insistence was put
in under Clinton in 1995.

You are correct in that the banks tossed this loan as soon as they could -
banks may from stupid regulations but they're not stupid themselves.