Obama Orders Same Policy that Sparked Mortgage Meltdown

John Bennett, WND, April 10, 2013

Undaunted by the housing market collapse that crashed mortgage banks, cut the rug from underneath homeowner equity and slammed taxpayers for billions in bad loans, the Obama administration now has launched a major push for banks to hand out mortgages to those with “weaker credit,” including some on public assistance.

Edward Pinto, a former top executive at Fannie Mae, now with the American Enterprise Institute, confirmed to WND the government’s adoption of a strategy that requires banks to lend to less qualified borrowers or face discrimination complaints.


“This push by FHA will continue to set up for failure the very families and neighborhoods its mission is to help,” he told WND.

Economist Stan Liebowitz told WND the move is an “unnecessary risk being imposed on the economy for no gain except some political chits being generated by politicians for their own venal purposes.”

Liebowitz, an economics professor at the University of Texas at Dallas, said the federal government is once again pushing banks to lower lending standards, which is “exactly what the government did starting in the mid 1990s.”


The administration is reportedly seeking to “encourage safe lending to borrowers who have the financial wherewithal to pay.”

Liebowitz calls that representation “George Orwell doublespeak.”

“Banks are always happy to make safe loans, since it is in their self interest to do so. They do not need to be pressured to do so,” he explained. “The only reason pressure is currently needed is because these are not safe loans and banks know it.”

Pinto noted that the government “is actively encouraging lenders to originate loans that have a 15, 20, even 25 percent chance of foreclosure.”

Journal of Business Inquiry report in 2009 explained that the nation’s recession, from which it still has not recovered fully, began in December 2007.

There were four causes, including “relaxed standards for mortgage loans.”

“Relaxed mortgage lending standards were primarily the result of government influence,” the study said. “Standards for mortgage loans were relaxed as a result of the the following factors: new governmental policies aimed at fostering an increase in home-ownership rates among lower-income households.

“Standards for mortgage loans were fairly consistent in the decades prior to the development of the housing bubble. Most mortgages were 30-year fixed rate loans requiring a down payment of at least 20 percent or mortgage insurance if the 20 percent down payment requirement were not met. The borrowers also had to prove that their income was sufficient to ensure that the monthly mortgage payments would be manageable.”

But then “the Community Reinvestment Act was modified to compel banks to increase their mortgage lending to lower-income households.”

That created an industry in subprime mortgages, which historically had a foreclosure rate “about 10 times higher than prime mortgages.”


The Community Redevelopment Act was widely acknowledged by top economists to have “led to riskier lending by banks” on behalf of officially disadvantaged groups.

Even so, the Obama administration is “doubling down on the disastrous policy mistakes that led to the mortgage crisis and Great Recession by pressuring lenders to finance homes for people who can’t afford them,” according to Paul Sperry, a Hoover Institution media fellow and author of “The Great American Bank Robbery.”

Sperry told WND that under “federal orders issued by the Justice Department, the biggest mortgage lenders in the country–including Wells Fargo and Bank of America–are being forced to advertise in minority media and offer loans even to people on public assistance.”

He said the coercion placed on banks is severe: “They have to adopt minority-friendly loan programs over the next several years or face investigation for discrimination.”

The coercion comes “not just from FHA and Justice and HUD but from the entire regulatory complex of federal financial agencies–including the powerful new Consumer Financial Protection Bureau.”


Concerns about a racial gap in home ownership fueled the first subprime mortgage debacle.

Columnist Thomas Sowell, an early critic of lax lending practices, noted statistical studies about “disparities between blacks and whites in mortgage loan approval rates might be said to have ‘jump-started’ the housing crusades that began in the 1990s.”

“Loudly proclaimed concern for the poor and minorities gave impetus to the drive for over-riding traditional mortgage lending standards,” he said, which housing speculators then took further advantage of by flipping homes.

In what could turn out to be a repeat of past policy, the Washington Post described a scenario in which federal bureaucrats are “encouraging lenders to use more subjective judgment in determining whether to offer a loan.”


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  • The__Bobster

    I’d say the socialist Obongo never learns, but he know exactly what he’s doing: enriching his own people at the expense of YT.

    He doesn’t care if the system collapses again. However, it will be far worse the next time around.

    • guest

      What is “YT”?

      • Cannot Tell


        • guest

          Oh, I see. It’s one of those good, nice, acceptable racial pejoratives. Thank you for explaining.

      • The__Bobster

        Spell it out.

        • blight14

          I always wondered what that meant……

          • Unperson

            It’s a little confusing, because on most websites YT refers to YouTube. But around here it usually means Whitey.

      • thoughtcrime

        Young Turks…LOL.

    • Dr. X

      David Stockman wrote a great article in the NYT on March 30 about the pending collapse. Sacry and depressing, but a very good read. However Bobster, I think you are utilizinf the wrong mental framework when you say “He doesn’t care if the system collapses again.” To the contrary, he cares very much that it WILL collapse again, so that the beople will beg for Big Government to get evern bigger to save them. You bet “it will be far worse next time around.” That’s exactly the plan.

      • Non Humans

        That is one possibility. The other is that of a “Weeding Out” of those responsible (and those who rely on them) for steering our once great country into the ground by way of economic sabotage. Personally, I’m stocking up on ammo for a reason…

      • Sloppo

        It’s called the Cloward Piven Strategy. It’s a plan to turn a relatively capitalist economic system into a marxist dictatorship.


        • StillModerated

          A classic example of wrongdoing that should be punished. We could establish Congloese witch doctor courts to determine the punishment.

      • Paleoconn

        Exactly, nothing gummint thrives on more than collapse and chaos. Fear, maybe, but I’d say they’re all related.

      • StillModerated

        But how hard can they push until a million people snap? Wish I could control it, but I’ll live by my wits when it happens. Much less than 300 years I reckon.

    • MikeS

      Absolutely correct. He knows what’s happening and doesn’t care because his actions have no consequences for him. Regardless of what asinine, idiotic and moronic ideas he has rolling around in that AA coconut of his, he’ll be riding the White taxpayer funded gravy train for the rest of his life and loving every single second of it, especially since he signed legislation giving himself SS protection for the rest of his pathetic life.

  • dd121

    When the socialists finally succeed in sending the dollar up in smoke and the economy implodes that’s when we’re going to find out what’s really going to happen.

    • Non Humans

      That’s when Feinstein and all the other libtards trying to take our guns learn, first-hand, why we need Hi-Cap mags.

    • Sloppo

      It’s going to be a smooth transition which will make this country a better place. That’s why “homeland security” is buying armored vehicles, assault rifles, and billions of hollow point bullets. I wonder if what Obama calls “change” will be the same thing the Bible calls “the tribulation”.

      • Paleoconn

        Hope and change = trial and tribulation


    “The administration is reportedly seeking to ‘encourage safe lending to borrowers who have the financial wherewithal to pay.’”

    Wait just one cotton-pickin’ minnit! “Wherewithal” means “ability”. One must also have the WILLINGNESS.


    “The default rate for blacks is about the same as it is for whites. This shows that they are being evaluated fairly by the lending process. Any lowering of standards for them will necessarily increase their default rate.” — Economist Dr. Thomas Sowell, c. 1990

  • bigone4u

    Definition of insane stupidity: Doing something over and over and expecting a different result. Welcome to housing meltdown 2.0. BTW, that’s my money in the bank and your money that they are forced to lend to unqualified loan applicants. Just how safe is the banking system when bankers can be forced to make bad loans in the name of social engineering.

  • Mike Berman

    As an inveterate community organizer, Obama’s raison d’etre is to extort wealth from whites for redistribution to blacks. Obamacare and subprime mortgages are both integral parts of the scheme.

    • Hugo

      will always occupy the left side of the bell curve. 500 years from now they will still be
      concocting the same bull^%$#.

  • David Ashton

    Deja vu.
    (What does George Soros think?)

    • The__Bobster

      He’s selling us short.

  • NeanderthalDNA

    Institutionalized reparations. How to bleed Whites and any other productive citizen to death.

    But hey, perhaps some loans could be floated for places like this. Check out the cozy little bungalow at the bottom…


  • DailyKenn

    If you loan them money, you’re accused of predatory lending.
    If you don’t loan them money, you’re called a red-lining racist.

    • Stentorian_Commentator

      That is right on the money. There are some on Wall Street I would not mind seeing hang, but so many bankers are put in an unwinnable situation, and the left gets fat and powerful demagoguing off the bad results that they ensure will occur, the scum.

      • DailyKenn

        Yep. Hence the housing crisis that dragged the world economy into recession. How many billions of $$ were lost just to placate ‘social justice’?!

        • Sandy

          As an economist, I can assure you social justice is not the reason for the housing crisis. Profits that are simply unattainable and overly
          ambitious leveraging are the true culprits.

          • Jabberwocky

            You are correct but good luck getting anyone to believe it. The story that ‘the government made it happen’ offers a political hook that most people on the Right want to believe. And besides it’s difficult for the average reader to follow what goes on in the financial markets. So the facts be damned if they get in the way of the myth!

          • Kalashnikov

            So bankers just woke up one day and decided to make trillions in risky loans because it suddenly seemed like a good idea when default rates showed that they had been shunning such loans for decades?

          • Jabberwocky

            To understand what went on you first need to be aware of the major difference between retail banks and investment banks. Retail banks are what you see on the street corner. Investment banks are Wall Street firms.

            Retail banks had been in the mortgage lending business for many decades and often kept their loans. So they had incentive to make only good loans.

            Investment banks had not been mortgage lenders. Conventional mortgages are low yielding debt instruments and didn’t interest them. But subprimes are high yielding, and in the late 1990s investment bankers began looking for a way to develop the subprime market. And after the NASDAQ crash in 2000 they went into the subprime mortgage market in a huge way.

            Investment banks were not subject to regulation. All the talk about the Community Reinvestment Act is misguided since it didn’t apply to them. The IBs were in it because the money to be made was incredible.

            IBs wanted the riskiest mortgage paper they could write. It yielded more. They thought that they had themselves insulated against risk because they would collateralize the debt and sell it as CDOs and they used it all as the food source for creating derivatives, an even more lucrative market. But they guessed wrong. For one thing they ignored their risk officers and they also relied on a complex mathematical formula called the Gaussian Copula Function that they didn’t properly understand.

            Don’t be fooled into thinking that the subprime market was something forced on an unwilling financial industry by government busybodies. There was some of that but it was a tiny fraction of what was going on. The majority of the bad loans were created by herd behavior in the pursuit of high profits, done by firms that ignored all of the long developed standards of good lending.

          • Don’t be fooled into thinking that the subprime market was something
            forced on an unwilling financial industry by government busybodies.

            Not only do I agree with that, it’s a point I’ve been making on AR for a long time. That the financial industry so easily “succumbed” to these orders and precepts without putting up any resistance to me demonstrates that they were willing participants, because they’re as affirmative action crazy as our Federal government. That’s why “private” industry and the Feds jointly deserve the blame.

          • Jabberwocky

            Be aware that the majority of subprime lenders were not subject to government regulation. The unregulated lenders also happened to be the ones who made the riskiest loans. The no doc loans, the ninja loans, the exotic paper that was the first to blow up.

            These lenders were known as the ‘shadow banking’ sector; they were not deposit takers and therefore were not subject to banking regulation. Shadow bankers raised their money from investors, not depositors.

            This is a major distinction that cannot be ignored. You can identify those who know politics but nothing about finance by looking to see if they make a distinction between the types of banks involved. If everything gets lumped together under a generic “the banks were forced to make loans” then you are dealing with someone who doesn’t understand the subprime industry as it existed during the bubble.

          • Nathanwartooth

            Economics is actually one of my new interests.

            So could you please explain in more detail about this?

            From what I have read trying to figure this out is that the banks made a whole bunch of bad loans which were defaulted on. The banks would wrap up all of these loans into one big package and sell it. Even if a couple went bad it didn’t matter because there were so many good loans. But suddenly a lot of the loans started going bad which in turn made the entire lot unprofitable.

            The number of bad loans rising seems to coincide with the community reinvestment act, which forced banks to loan to people who they wouldn’t normally loan to. I always figured that this is why they got bailed out.

            But you are saying that this is completely off the mark? I’m genuinely interested in figuring this out.

      • Jabberwocky

        “but so many bankers are put in an unwinnable situation,”

        Nonsense. Only a small fraction of the lending during the Bubble had anything to do with the Community Reinvestment Act. The vast majority of subprime loans were made by firms that were entirely free from CRA regulation. They were in subprime lending because it was immensely profitable while it lasted.

        • Doesn’t matter. The impetus was a culture of affirmative action in the mortgage industry, partially government imposed and partially embraced by “private” business. Everything else that doesn’t seem like racial pandering were consequences of racial pandering.

          • Jabberwocky

            Racial pandering was certainly there but it didn’t create the subprime bubble. It just exploited what financial firms were already doing.

            BTW one of the purest examples of racial pandering during the bubble was GW Bush’s ‘American Dream Downpayment Initiative’, a program designed to give minorities free downpayments to go along with their subprime loans.

          • Another point I’ve been making: Bush’s demand for zero down payments was the sine qua non of the matter, the straw that stirred the drink. Sure, Democrat politicians from Carter to Clinton and the private banking industry deserve some of the blame, but ZDP mortgages was really the lighted match flipped into the pool of gasoline.

            And Bush/Kemp neo-conservative racial ideology was at the root of that. Mind you, that’s a mentality that Rand Paul is running to, not walking to.

          • Jabberwocky

            Rand Paul, Marco Rubio, Paul Ryan. All of these “conservative rising stars” in the GOP have absorbed the PC racial ideology of the left. But then we have buffoons like Hannity claiming Martin Luther King as a conservative icon so what can you expect. I guess you have to be old enough to remember MLK and the Civil Rights era to realize how preposterous that is.

    • GM (Australia)

      Two further options;

      1, Just print even more money for a social welfare/housing program.
      2.,Follow the example of the Cypriots, just steal 10% of bank depositors funds for government dept/spending.

      • DailyKenn

        It’s coming, my friend.

      • 3. Seize IRAs/401Ks. Doing that has been a lefty trial balloon ever since Clinton came into office. Hypocritically, that very same Federal government produces PSAs telling us to save money.

        • Michael_C_Scott

          They can’t do that, and here’s why: Assets can only be seized under eminent domain law if the owners are paid fair market value. If I as the government seize $120,000 out of your IRA or 401(k), I have to pay you $120,000.
          This leaves me right back where I started, with the addition of heaps of overhead costs.

          • If this happens, the “fair market value” will be considered T-bills of the same value as the person’s IRA/401k. Of course we know by the time the account holder will need to cash in on what was their IRA/401k, the T-bills in its place will be worth either less than face value or nothing. But that won’t matter to today’s politicians, who want to spend today and will be out of office if not dead by the time that happens.

          • Michael_C_Scott

            Why haven’t the feds used worthless T-bills yet to pay for land seized for highway construction? The idea still doesn’t pass a quick reality check.

          • Of course it sounds ridiculous now, because the situation is not that desperate now. But if and when it does get more desperate, it will happen. And you won’t be able to count on judges to block the scheme, because Federal judges are Federal employees paid by taxes the Federal government collapse. Anyone who works for the Federal government, and that includes Federal judges, has an incentive to keep money rolling into the Federal government.

          • Michael_C_Scott

            Another problem is that people being cashed out of their IRAs and 401(k)s with worthless T-bills would simply sell them. What do you think 100 million Americans dumping unwanted T-bills they were forced to accept, all at the same time would do to the ability of the Federal government to sell the silly things to China?

        • GM (Australia)

          I assume IRAs/410 are some sort of retirement benefit. I think governments and social reformers everywhere have always got their greedy eyes on retirement funds, it is quite scary really.

          I am not an economist but there is something very worrying about the fact that making banks in the USA write out risky loans for social engineering/welfare purposes can sent the whole world economy into a tailspin. (It even affected my retirement savings here in Oz!)

          When I see how the government forced banks to lend to people who as one other poster said “do not know what water or sewer bill is” I get very annoyed. Two generations ago my wife and myself had to literally grovel to the bank to get our first home loan and do without a lot of things just to get started off in life. As far as I am concerned if you want a house you work and save for it, not expect the taxpayer or someone else to provide it. Give the scum a free house and it will be very unlikely that they will ever appreciate it and it will end up costing everyone else including the taxpayer and business a lot of money and will not boost the economy.

          • IRA/401k = Superannuation.
            The only difference between an IRA and a 401k is that an IRA is entirely funded by the individual and a 401k is jointly funded by the individual and his or her employer. The capital gains of IRA/401k are not subject to capital gains taxes, but the income drawn by the individual account owner upon retirement is subject to income taxes. Because income tax rates on the margin for the kind of people who have these accounts are higher than capital gains tax rates, this means that over the long term, IRA/401k are a net benefit to American Federal government tax coffers. But the hitch is that big government Democrats see those big pots of money in IRA/401k and start salivating over all the extra gibsmedat they could fund if the gains in those accounts were subject to capital gains, right now, not when the account holders retire.

          • GM (Australia)

            Salivating, yes, I very much think that is the appropriate word! As I said, it is quite scary. (It has not gone unnoticed by big government & others that retirement savings even in this country are now in the trillions of dollars)

          • Jabberwocky

            “there is something very worrying about the fact that making banks in the
            USA write out risky loans for social engineering/welfare purposes can
            sent the whole world economy into a tailspin.e”

            That would be true if the U.S. government had done that. But they didn’t. Wall Street was developing the subprime market as a source of profit, and Wall Street firms were not subject to regulation. The CRA applied only to retail banks and the majority of subprime loans were not made by retail banks.

    • cat cait

      Just do what you have to do. Just loan the damn money.
      Make damn Economy running.
      Nobody cares it is white cat or black cat, as long as the cat can catch a rat, this is a good cat.

      • NeanderthalDNA


    • TheAntidote

      Last time they tried this the banks rolled up the poo paper (liar loan mortgages) into “bundles” which later came to be called toxic bundles or toxic debt. These bundles were sold mostly to foreign banks in places like Finland and Iceland.
      Very quickly it became clear that American Negroes had no interest in home ownership and would have much preferred to have stayed in their rental units. It was revealed some of them didn’t even know what water and sewer bills were nor school taxes. Some had even expected a groundsman to come to mow their lawn—as is done in the projects.
      Well, this time there will be no toxic bundles because the poo paper will be sold to the Fed for poo money—is that how it’s gonna’ work?
      This is all going to end badly.

    • blight14

      Hey Kenn…………….indeed, its a no-win situation………..granted, the latter situation is vastly superior to society than the former…..

    • 48224

      Now you’re catching on!

  • I guess he thinks it didn’t do enough damage the first time. Some people are born to be renters.

    • The__Bobster

      Or live in Section Ape housing.

    • Fighting_Northern_Spirit

      Anyone who has rented to blacks would say some people are born to be homeless.

      • GM (Australia)

        Do not know how the homeless get on in your country but I know the situation in Australia very well, here are some case studies;

        1, A family member rented his investment property to Aboriginals. The Dept of Aboriginal Welfare said they will guarantee the rent and make good any damage. They certainly did after the place was deliberately set on fire! (This equates to the taxpayer paying for it all)

        2, As part of integration they tried to build Aboriginal Welfare houses in better class suburbs. Some friends lived next door to such a place, it was a total disaster. Police there all the time. Extended family there all the time like 20 people living in a 3 room cottage. Fights and noise all day and night. Drink bottles used as random attack missiles. Derelict cars all over the front and back yard. This was in an otherwise nice garden suburb.

        3, Aboriginal Housing Estates. These have reasonable quality basic cottages but the result is a no-go area that looks as bad as Soweto South Africa. Also fences & floorboard regularly used as firewood.

        Conclusion, Most Australian Aboriginals would probably be happier in a hut down on the riverbank. As for a lot of poor whites, they seem to be quite at home in the various charity run shelters and so on or in government housing. Some would never want to own a home, ever, it is a foreign concept to them.

        There are some exceptions, I once got to know a poorer family who had been allocated a new government house, they were so happy to have their own home after a 7 year wait., They kept it immaculate inside and out and established a really nice garden. Life is what you make of it.

        • Rough equivalents in American public policy parlance:

          1. Section 8

          2. Scatter-site

          3. The Projects

          The results are just about the same.

  • sbuffalonative

    Amnesty, ObamaCare, and a new round of high risk mortgages.
    Is this the trifecta that will be the beginning of the end?
    Something’s got to give sometime.

    • NYB

      Nationwide general strikes by whites would shake things up.

      When they can no longer buy us off with our own money, the jig will be up.

      • Non Humans

        Correction, “The Jigs Will Be Up”… As in Tree’d.

      • Michael_C_Scott

        Why does anyone think I refuse to work a steady job of any sort? I’m sure there are a great many whites just like me.

    • Fighting_Northern_Spirit

      I’d say we’re on the fast track to becoming Zimbabwe, so over the past few years I’ve been advising my friends to buy real estate. The inflation that’s coming will make those loans pretty easy to pay off. All this funny money is going to give TPTB the kick in the nuts they richly deserve.

      • Michael_C_Scott

        Paying of a loan in inflated dollars will only work if the mortgage loan is fixed-rate (i.e. non-adjustable). That way, a sharp investor can lock a bank into an interest rate that will eventually be lower than the inflation rate.

  • E_Pluribus_Pluribus

    The myth that minorities are discriminated against by mortgage lenders has its foundation in a 1992 study by the Boston Fed. The Boston Fed study was a large part of the rationale for a two-decades-long attack on traditional lending standards, an attack that finally resulted in the collapse of the U. S. housing market in 2008.

    The Boston Fed study of 1992 has been debunked by four separate research teams. Time line:

    1992 – July – A Federal Reserve Bank of Boston study indicates that “even after controlling for financial, employment, and neighborhood characteristics, black and Hispanic mortgage applicants in the Boston metropolitan area are roughly 60 percent more likely to be turned down than whites.” The study suggests racism is behind the higher loan denial rate.

    1993 – Forbes Magazine queries Boston Fed Senior Vice President and Research Director Alicia H. Munnell on the default rates of black and white mortgage holders in the Boston Fed’s 1992 study purporting to show that racism is behind the higher loan denial rate for blacks. The reporters learn that default rates on loans of whites and minorities are equal. This indicates no discrimination, they point out to Munnell. “[That] is a sophisticated point,” she replies. “You need that [lower default rates for blacks] as a confirming piece of evidence. And we don’t have it.”

    Forbes: Did you ever ask the question that if defaults appear to be more or less the same among blacks and whites, that points to mortgage lenders making rational decisions?

    Munnell: No . . . I do believe that discrimination occurs.

    Forbes: You have no evidence?

    Munnell: I do not have evidence . . . No one has evidence. (1)

    1996 – A study by the Federal Reserve System and academic specialists finds — like the 1993 Forbes investigation — no evidence “of substantial levels of bias in mortgage lending.” Quoting from the abstract of the study:

    “Results of the analysis fail to find evidence of better performance on loans granted to minority borrowers. Indeed, black borrowers are found, all else being equal, to exhibit a higher likelihood of mortgage default than other borrowers. These findings argue against allegations of substantial levels of bias in mortgage lending.”

    1998 – October – Economists Stan L. Liebowitz and Theodore Day investigate the 1992 Boston Fed study suggesting racism in the mortgage market. They are “shocked at the poor quality” of the the data:

    ‘“When we attempted to conduct a statistical analysis removing the impact of . . . obvious data errors, we found that the evidence of discrimination vanished. Without discrimination there would be no reason to try to ‘fix’ the mortgage market. Nevertheless, our work largely evaporated down the memory hole as government regulators got busy putting the results of the Boston Fed study to use in creating policy. That policy, simply put, was to weaken underwriting standards.”

    The two economists warn: Bad loans today will mean dispossessed minorities tomorrow:

    “After the warm and fuzzy glow of ‘flexible underwriting standards’ has worn off, we may discover that they are nothing more than standards that led to bad loans . . . If this is the case, current policy will not have helped its intended beneficiaries if in future years they are dispossessed from their homes due to an inability to make their mortgage payments.” (2)

    1999 – Finance professors at the University of Illinois and at Wichita State University disclose findings on the creditworthiness of minorities consistent with the 1993 Forbes report, the 1996 Federal Reserve study cited earlier, and the 1998 findings of Liebowitz and Day:

    “[E]verything else being the same, minority applicants are probably less creditworthy, on average, than whites. Therefore, in the absence of fair lending laws, it is likely that minorities would be denied loans more frequently than whites and would pay higher interest rates and fees on approved loans . . . [F]air-lending laws have the perverse effect of forcing lenders to cross-subsidize minority borrowers from the higher profits they earn on white borrowers. Such cross-subsidization is inherently ‘unfair’ because it works as a tax on one group that is used as a subsidy for another.”


    1) “The Hidden Clue,” By Peter Brimelow and Leslie Spencer, VDARE.com, first published in Forbes, Jan 4, 1993.

    2) “Mortgage Lending to Minorities: Where’s the Bias?” by Theodore Day and Stan J. Liebowitz. Economic Inquiry, January 1998): 1–27.

    • NYB

      The architects of this scheme knew the debt could be nationalized by Freddie and Fannie.

      The Canadians were tempted to bite this poison apple too, but the PM at the time sagely refused to de-regulate Canadian banking to the same extent.

      • Jabberwocky

        “The architects of this scheme knew the debt could be nationalized by Freddie and Fannie.”

        During the Bubble both Fannie and Freddie were publicly traded firms on the New York Stock Exchange. They had been stockholder owned firms since 1970. The American taxpayer had no legal obligation to backstop them. The decision to nationalize their debts was made by George W. Bush.

    • InspCallahan

      What is the cite for the 1999 study?

      • E_Pluribus_Pluribus

        Why Is Mortgage Discrimination Illegal? A Fresh Look at the Mortgage Discrimination Debate, Stanley D. Longhofer and Stephen Peters, Cato Institute
        Google search links:

    • Ella

      There are always the benefits of two working parents who raise children together and pay the bills -White or Nonwhite. Many Blacks and Hispanics have higher illegitimacy rates (55-78%) and higher number of children on top of trying to afford housing, with more father absenteeism. Govt cannot pay their mortgages. It’ not about discrimination but lack of wealth and larger family budgets. Minorities don’t want to look at their real problems and prefer to blame Whites. I’m so sick of this.

  • StillModerated

    The retired emperor, Bush Lite, was at the helm for the first housing bubble. I guess the Pole Smoker In Charge will get away with blaming him again.

  • Luca

    If Obama spoke the truth:
    “Loaning money to people who don’t know how to manage money isn’t really seem a bad idea, if it helps minorities. Bad credit? Not a problem! On Public Assistance? Not a problem! We tried this before and it was a colossal failure? No worries.

    And remember boys and girls, if anything goes wrong we blame it on predatory lending and those Wall Street swindlers (mostly white) who will bundle the securities and make money selling them.

    And the perfect ace-in-the-hole is we can always get the stupid taxpayers to bail us out yet again. Remember I always ges a pass for being black and the Liberal press is always on my side.

    Please stop using common sense, logic and experience as your guide posts. So don’t worry your little heads over this nice new racial program, just pass the Koolaid and enjoy the chaos sure to ensue.. And in the end when it fails, as it surely must, it still will have sounded like a good thing to do and certainly very PC. And don’t forget to vote for Hilary and Michelle in 2016 so they can continue with our grand scheme of destroying this racist country.”

    • Jabberwocky

      “And remember boys and girls, if anything goes wrong we blame it on
      predatory lending and those Wall Street swindlers (mostly white) who
      will bundle the securities and make money selling them.”

      By the end of the Bubble the derivatives market was driving the creation of subprime loans. The biggest profits were to be made in selling derivatives and Wall Street was pushing their mortgage brokers to write as much subprime paper as possible. Yves Smith describes the situation in her writing, citing one of John Paulson’s hedge funds as the purest example.

  • NYB

    Translation: the banks need new money on the books, pronto. Every new mortgage creates fictitious wealth in the bank ledgers. This indicates how serious the money shortage is becoming.

    Across the pond, bankrupt Britain is making an identical move, threatening to fill green spaces between villages with continuous suburban sprawl on the back of subprime loans.

    Banks and governments alike are approaching hysterical panic mode over looming deficits. They are down to the two most trusted cards they can play – property loans and high immigration.

  • It seems that the outcome from investing in minorities is….. negative equity.

    It says it all really.

  • tickyul

    This is a sick, wicked and corrupt country. All of this meddling is about the FEDGOV getting more and more power and control.
    People might not understand just how bad Fannie and Freddie are. These two entities inject billions upon billions of dollars into the mortgage markets. Now think about it…..what do you think this does to housing prices……YUP, it ARTIFICIALLY inflates them and fuels speculation. How does it do that……well, the greater the money in the mortgage companies hands….the more loans they can make and the more demand there is for homes……the more gambling by people hoping to catch the next “wave” of price bubbles.
    So some poor sap who is starting out in life wants to start a family with his new wife. Well, he is making the average income for the area he lives in….about 29K a year. But guess what, instead of a decent starter home costing about 80-90K…….it is actually 170K…….thanks corrupt FEDGOV. So this poor guy gets to buy a crapshack in an area overrun by crime and scuzzbuckets.
    The scummy politicians LOVE to brag about how rich the USA is. Well, a lot of that wealth is based on phony housing prices that have been pumped up by the ultra-corrupt FEDGOV.

  • Tannhauser

    Obama’s policies are designed to destroy this nation. He creates crises and then steps in with the solution which is always more power and more government. All the while the government seizes more power and begins to erase the sovereignty of it citizens. America is being dismantled like an old Chevy abandoned in the ghetto and its by design.

    • guest

      I agree. I wish it was just Obama, though. It’s Democrats-socialists-Republicans in general, and they’re doing the will of the majority. With the increasingly government-dependent population, led by blacks and browns, the majority is going to make things much worse in the coming years.

      This country is finished.

      • Tannhauser

        Oh no question that the Dem/Rep elites have been advancing this agenda for 60 plus years. The Repubs are slower but the dems are charging at a breakneck pace. I just believe Obama’s not a typical political whore who feeds off the corrupt system. He wants to destroy the current system and replace with one of his own creation.

        • george00

          It’s a theory of mine that maybe the government, that is run by the hostile elite, is intentionally trying to destroy the country so that after it collapses the hostile elite can buy up everything for pennies on the dollar just like what happened in the USSR.

  • Then they wonder why the lenders created derivatives–they got stuck with crappy, likely non-performing mortgages and figured out a way to ‘pass the buck’…

    I honestly don’t blame them when the ‘do-gooder’ politicians force lenders to make risky loans.

    Just look at the govt loans given to Solendra as an example–these govt fools haven’t a clue as to what is required to manage risk in lending.

    • Jabberwocky

      “Then they wonder why the lenders created derivatives–they got stuck
      with bad, likely non-performing mortgages and figured out a way to ‘pass
      the buck’..”

      Derivatives were developed in London during the 1990s. See Gillian Tett’s ‘Fools Gold’. Their creation had nothing to do with the American mortgage market. Mortgages were bundled and sold along with every other conceivable type of debt paper.

    • Michael_C_Scott

      The packaging of these bad loans as tranches and then selling them was the industry’s way of dumping the immenant losses that a second grade class and their pet gerbil could esaily have predicted. They’re not stupid; it’s like a game of musical chairs, except one doesn’t want to be sitting when the music stops.

  • Erasmus

    Out of Africa. A president with his heart in the 3rd world recreating 3rd world policies. What’s not to like? Holder and Obama will do for America what their brethren have done for Atlanta, Detroit and Baltimore.

    • Ned

      It is Baboonery Politics at its finest as practiced by these buffoons.

  • anonymous

    100 years of Federal Reserve banking system and every fed chairman has something in common (I’ll give you a hint, they aren’t allowed to eat bacon).
    Banks LOVE to lend money since it isn’t real. Make money into existiance through book-keeping entry, get real property as security for the “loan”, when the loan defaults you get the real property, then when you can’t make your books look right you cry “too big to fail” and get annother huge infusion of wealth and throw parties that would make Calugula ashamed of himself.
    This fiat paper money game has been played the same way since the 1600’s. Learn about “money supply” and “money creation”. Try to find out how much gold is in Fort Knox. This monkey is dancing to the tune of his organ grinder.

    • K..

      Another loony babbling about the Elders of Zion. Retards like you are the greatest threat to race realism we face.

      • David Ashton

        Serious analysis of a banking system which lives off debt is not necessarily equivalent to conspiracy lunacy or racial antisemitism, but it is in a separate category from the problems of mass-immigration and mass-miscegenation.

  • dj2

    It’s all about the banks. They know the loans are bad. When they go bad, they get more free money, created out of thin air, from the Federal Reserve.

    How is this possible? Because Americans created the most powerful nation on the planet, created electronic exchanges that allow for zero cost money, and continue to patrol the world so the flow of fossil fuels can continue.

    And in exchange for this, your children and grandchildren will be debt slaves. Congratulations.

    • Sherman_McCoy

      Succinct and accurate, though not comprehensive.

      I used to think that building an empire upon debt was the main problem. It isn’t. It is a deception used to mask the destruction of the US by free trade agreements coupled to the importation of cheap labor and the export of high-paying jobs to cheap labor countries. But I’ve also become ever more convinced that the main problem in the US is race-blindness. Trillions wasted on parasites, that could have been used to cure cancer, or taken us to Mars. And if one complains about the importing of cheap Asian or Mestizo labor, then one is automatically branded a “racist.”

      • Thanks Sherman!

        • Sherman_McCoy

          Back at you, Reuben. I just wish we had a few more (hundred thousand) like you.

      • PesachPatriot

        These suit wearing weasels boil my blood far more than pants sagging street criminals with 85 IQ. They have the brains to know what they are doing is wrong and destructive and their kin will pay the inevitable price when americans have to take wheelbarrows to the grocery store to buy bread and milk. If I had my way every last fed reserve employee from NY to San Francisco would be thrown in the chicago or detroit jails and our currency would be once again be backed by gold and silver.

    • Michael_C_Scott

      Actually, if you have good credit, one can arrange loans in which the interest rates are actually lower than inflation, which means that in constant dollars, the interest rate is actually negative; money can actually be had on better terms than simply “free”.

  • Bobby

    You see, this is why I doubt it makes a difference who is elected President, since I’ve noticed that whoever it is, and from whatever political party it is, the policies never change. Bush did this before Obama. Bush was called a nut case and a fool,etc. We are told that Obama on the other hand is a very “intelligent” man and almost other worldly in his wisdom. Yet, here he is, calling for this same foolish policy that even a first semester economics student can see is totally nuts. So the question is, who or what entity, was Bush serving then, and who or what entity is behind Obamas decision now? And why is Congress and the Senate not particularly concerned about any of this stuff, now or in the past. On and on, the puzzle goes, with so many pieces not even trying to be put together by are elected “representatives”.

    • David Ashton

      This is a serious question, equally applicable to the UK, and needs some thoughtful answers. Track down who has the “ear” of the President on these matters just as researchers tracked down the origin of the “community charge” policy which aroused public opposition to an otherwise self-directed Margaret Thatcher.

  • robinbishop34

    Oh boy, I can’t wait for the equity in my home to go down another 20% and property taxes to rise overnight when this fails again.

  • obama antichrist

    That is a shocker from this liberal thief with the keys to the bank who has so far destroyed America and ruined the white race living like a king. The American Dream order by GW Bush who flooded 30 million spics to build 15 million homes and do jobs noone else would do will pay for all the homes this time.

  • I believe that our Chancellor, George Osborne, is also implementing this kind of policy here In Britain. Of course, it is sold as “helping” those who cannot ‘get on the housing ladder’ and ‘helping growth’ by the government (ie, the taxpayers) underwrite the mortgages with the banks. Given the demographic churn in the last 30 years, given the decline of the native birthrate in this period and given the population surges those areas where housing is going to be more desperate and “low income”, I can only suggest who may be taking up many of these offers. As Max Keiser says, it is a recipe for another disaster, and a mechanism of continuing the “ponzi scheme” of debts, bubbles, and collapses.

    • David Ashton

      Max Keiser on Russia Today is always worth watching for specific data – apart from his general “bias””.

      • Yes, there is a bias on Russia Today as a whole – and Max and Stacy also have a particular bias, such as their condolences and soft support for the rioters and looters in London the other year.

        Sure, the point can be made (and is well made) about how they are in courts for a pair of trainers or a bottle of water whilst Osborne’s buddies steal £Millions and even £Billions and nobody even knows or challenges them, but you cannot just excuse that kind of (largely black) crime spree.

        I enjoy the Kieser Report and RT is a refreshing change from the controlled media here in the UK. There are hundreds of important things on there that never air on our main news channels. Their coverage of CIA funding for regime changes, their interviews with True Finns and Lars Haergard, some of the Cross Talk segments are good and useful.

        They even gave some coverage to a ‘right leaning’ Conservative party event during their last party conference, discussing Europe and immigration and such, which did not even get a single mention that it was even happening on the main news channels.

        I have to take on board their bias, but in this game, I think you do well to selectively pick and choose as many sources and places as possible in order to reinforce a nationalistic and racially aware picture. The opposition do it all the time, and for a fair fight, so do we need to do, I reckon.

        • StillModerated

          The bias on Russia Today made me realize how dishonest our own network propaganda has gotten. BBC, France 2 are exactly the same format.

  • Paleoconn

    And this all started in the glorious Clinton years, the most brilliant economist mind ever to grace the White House. Frauds.

    • robinbishop34

      Advised by that little worm Robert Reich.

      • IstvanIN

        Give him credit for one thing, he came right out ad said white men should be discriminated against.

  • Hunter Morrow

    It was the Jew-driven derivatives market around these mortgages that they pushed that drove the international economy into the toilet. Blacks and hispanics were just useful idiots. The 90 trillion mortgage securities derivatives market=JEWS JEWS AND MORE JEWS.

    Period. There is no truth I would not have known.

    Lets see how long this one lasts.

  • Paleoconn

    They spin it so as to pin all the blame on evil capitalism. But it’s socialism, corporatism that is clearly at fault. After all, who forces banks to make loans they would otherwise avoid? Who endlessly prints more money? Who keeps the interest rates at artificially low levels?

  • If Obama & the banks do this, the banks should be allowed to fail and Obama should face prosecution for the crime wether he’s in office or not !
    And everyone pays restitution by surrendering their assets !
    But, it won’t happen…

  • Ella

    It’s the Fed Govts. way to prop up their “equal” dream of minorities to own homes regardless if they can make payments and property taxes more than 3 years (obvious exploitation of minorities). They make monies off of gullible people at the same time selling the mutli-cultural dream of a “fair world.” What happened to the days of loan officers requiring 20% down with income proof- oh yeah, the tax-payer. The article says it all about housing affirmative action programs of “equality” on tax-payers expense. Take it further….this is also about speeding up integration in suburban areas -White communities who still pay the bills.

    • Michael_C_Scott

      The old terms of 20% down with income proof is still called a “conventional loan”. Someone with good credit can get quite nice rates on these mortgage loans, and making accelerated principal payments on them can drastically shorten the amortization period. You save a bundle on interest doing this.
      Some people got “big eyes” and over-bought. A home that a married couple can only afford on two incomes is a potential trap. What happens if one of them loses their job and unemployment eventually runs out?

  • mrx

    Housing market collapsed, because of greedy shady corrupt white people at the top of the food chain manipulated the market, changed the laws and looted the treasury. in the process. Blacks were/are as much of the victim as any one else.

    • Bobbala

      That must explain the prosperity that follows everyplace blacks are unencumbered by outside parasites … perhaps you’d care to name a few of your favorites.

    • C-B

      As far as I understand it, there was no manipulation of the housing market itself in terms of prices or whatever.

      The banks did not even want to lend money and give mortgages to blacks and hispanics who they knew could never repay those debts, but they were forced into it through legislation put into process by Bill Clinton and through the strong-arming of the “race relations” organisations who saw such common sense from the banks as being “discriminatory” and “racist” – even to the point of the legislation including the ability for the government and regulatory bodies to “name and shame” those “racist” banks who are not “diversity friendly”.

      When they were forced into it, they soon saw that they could keep conjouring money out of nowhere in terms of debt, then actively sought to prop up this ‘ponzi scheme’ by actively giving loans to those who could only default on their payments.

      Of course, this impacted negatively on blacks, but I bet they did not mind initially when they were given homes they could not otherwise have afforded even though they knew full well they could not manage to pay for it.

      So yes, they were manipulated by the banking system in the end, but the root cause of it was the libtards and “anti-racists”, the social engineers, and of course multiracial societies in general. To steal the “new mantra” : “If whites had a country of their own, this would not have happened”.

  • FourFooted_Messiah

    What they did here is simply tell the banks they can’t discriminate on _source_ of income, but if you have the _amount_ of income and the _credit rating_, you’re good to go.

    While I have NO sympathy for banks, it’s just dumb telling them they have to give risky loans.