They say that hindsight is 20/20, but I'm pretty sure that the lenders' sight was around 20/20 when they were bluntly told to take risks in order to achieve political and sociological goals favored by the left:
This is the reason why I am so vitriolic toward sociologists and sociology in general. They dragged millions of people down with them in a social experiment, and in the process actually made things worse off than they were before. Now, with the bottom of the housing market starting to crack, the debacle that they created in the name of remaking and reengineering society and the economy has lead to a crisis where many minorities and less affluent whites will just outright lose their homes.
The dark irony of this situation is that the tendency of banks to be conservative in their underwriting standards was a market mechanism to prevent them from making bad choices. Here you had a somewhat self-regulating industry that was forced to stop self-regulation, and now it's free market capitalism that is being blamed for the lack of self-regulation. Truly Orwellian, that argument.
In a nutshell, Liebowitz contends that the federal government over the last 20 years pushed the mortgage industry so hard to get minority homeownership up, that it undermined the country's financial foundation to achieve its goal.Later,
"In an attempt to increase homeownership, particularly by minorities and the less affluent, an attack on underwriting standards was undertaken by virtually every branch of the government since the early 1990s," Liebowitz writes. "The decline in mortgage underwriting standards was universally praised as 'innovation' in mortgage lending by regulators, academic specialists, (government-sponsored enterprises) and housing activists."
A New York Times article from Sept. 1999 states that Fannie Mae had been under increasing pressure from the Clinton administration to expand mortgage loans among low- and moderate-income people and that the corporation loosened its lending requirements to comply.The Clinton Era "prosperity" that people remember was an illusion that was bound to get blown away at some point. At some point, you have to pay the piper, and that's what we're doing now that many banks are collapsing as a natural consequence of being forced to ignore basic banking risks in order to achieve some very dubious social engineering goals.
This is the reason why I am so vitriolic toward sociologists and sociology in general. They dragged millions of people down with them in a social experiment, and in the process actually made things worse off than they were before. Now, with the bottom of the housing market starting to crack, the debacle that they created in the name of remaking and reengineering society and the economy has lead to a crisis where many minorities and less affluent whites will just outright lose their homes.
The dark irony of this situation is that the tendency of banks to be conservative in their underwriting standards was a market mechanism to prevent them from making bad choices. Here you had a somewhat self-regulating industry that was forced to stop self-regulation, and now it's free market capitalism that is being blamed for the lack of self-regulation. Truly Orwellian, that argument.
Now, with the bottom of the housing market starting to crack, the debacle that they created in the name of remaking and reengineering society and the economy has lead to a crisis where many minorities and less affluent whites will just outright lose their homes.
And that's only the beginning. We're witnessing the destruction of the American middle class via inflation, Argentina-style. This is the sort of thing we have to look forward to in the coming years.
And if modern Argentina is any indication, most of our former middle class won't want to hear what's going wrong and how to fix it--ever. Instead, they'll just demand more of the status quo.
Ah, Liebowitz. Maybe folks are finally starting to pay attention to what this guy is having to say.
Then again, maybe not. What's been depressing for me is that people don't bother to look for root causes, they just seize on the whipping boy placed in front of them by the very same pirates that caused this mess in the beginning.
As you and Vox and El Borak have pointed out repeatedly, our economy and markets are far from free. The part that really sucks is that people think that they are because they're stupid or easily deceived by Orwellian double-speak, and will support whatever legislation the pirates want to make them even less so.
Full-up socialism is being installed by increments by discrediting the free market concept by labelling what we have as a free market when it's not.
On a side note, I've been pushing the concept of limited suffrage, as have you IIRC. We're definitely seeing the perils in letting the mob vote, they are so easily manipulated. But these days, I'm not much more enthralled with letting a select few vote, either. A republic is doomed when it's people are corrupted (Prov 11:11); no amount of modulation to the franchise will fix that.