Before my Liberal friends form a lynch mob… I’m playing here… It’s a Joke… Well a half joke…
In truth, I wrote this just to stir the pot. I think that anyone with little effort can spin anything any way they want. This is my attempt at proving that “Facts” are just a matter of spin. I hope you enjoy it.
The banking collapse was in fact caused by Liberal Democrats, not Conservative Republicans.
Lets look at the facts.
Many liberals believe that it’s wrong to deport illegal workers (This is a term that I use to mean inclusively any person who has entered this country illegally. )
That the term illegal workers has come to be synonymous with Illegal hispanic workers is a discussion for another time. I will say this… if a term has come to be redefined as descriptive of a situation, well perhaps you need to ask how that came to be…
Many liberals believe that housing must be equal opportunity no matter what. (I also believe that housing should be equal opportunity, meaning that if you can afford a home or apartment you shouldn’t be denied access to that home or apartment based on race, color, creed, sexuality, or religion.)
Many liberals believe that higher education is a right, not a privilege and as a result have enacted a multitude of affirmative action policies nationwide.
Many of those affirmative action laws, regulations, and policies have been expanded to apply to more than education and now apply in a variety of other aspects of our society including banking.
Having worked in the mortgage banking industry approximately 4 years before the collapse (I got out because I saw it coming) I got to see some things from the inside.
Remember No document loans?
How about reverse amortization loans?
These “products” were a direct result of mortgage lenders complying with affirmative action regulations.
The mortgage bankers I worked for felt that they couldn’t deny a loan application because affirmative action regulations demanded a certain percentage of what was called “B & C” paper be accepted by a bank. Think of it like “Assigned risk in insurance.”
Essentially, these “B & C” designations were loans to people who were far more likely to default than the so called “A” paper loans.
Sadly the “A, B, & C” paper loans shook out along largely racial lines due to underlying aspects of our society.
This meant that someone like myself (A paper) who was employed, had a mortgage, had never been late on a payment, was making more money than I ever had in my life, and who wanted to refinance my house at a lower percentage rate without taking any money out of it, and who provided documentation to all of the above…
Would be scrutinized to a maddening degree and even had to answer questions like “Why has your income increased?“
No Shit! The fact that I was making more money was actually a bone of contention between me and the underwriter. It pissed me off to the point that I told her I’d quit my job if that would make it easier on her then we could average my income over the past decade.
The mortgage lender I was working for at the time did not hold my mortgage… but over lunch one day I asked WTF? of an underwriter I knew well.
His answer was that since I had a history and had provided all kinds of documentation, the underwriters had to do a full process where they, by banking regulations checked everything about the loan they were going to fund.
He went on to say that if I’d gone for a new house instead of a refi, and the loan had been a “Jumbo Loan” I could have gone with a no document loan and been approved within a week.
I still didn’t get it.
My underwriter friend explained, because of equal opportunity lending regulations and HUD rules, and half a dozen other regulations designed to prevent discrimination, the no doc loans had become known as the Housekeeper loans and I’d have qualified easily for one of those.
He’d seen 800,000 loans approved for gardeners in Orange County. After the loan was approved, typically within 120 days the first payment was late.
Then another department in the company we worked for would start calling and asking for payments to be made including late fees.
The late fees were always paid first and the remainder of whatever payment we got was sent to the mortgage holder. This was called “servicing” a loan. It was / is a very profitable enterprise. This is especially true when only a partial payment gets sent to the mortgage holder because the cycle can repeat several times a month on the entire amount that is in arrears. The late fees keep stacking up and the profit for the loan servicer keeps increasing.
It was the interaction of protections for the poor, affirmative action, the lack of proper identification requirements, the right to privacy about where you obtained your income, and other liberal progressive factors that created the no document loan in the first place.
The banking industry simply made all of these regulations profitable!
These loans were given to people who sometimes didn’t understand what they were signing and at other times actually couldn’t write their own names.
Then the loan was packaged up as an investment portfolio that was mandated by law to have a specific % of A, B, & C paper loans. The completed portfolio was sold to a wall street firm.
Back to my original statement…
It was the liberal demands for equality in lending, and housing, their insistence on not deporting illegal workers, the bleeding heart progressive agenda, and complete lack of concern or perhaps the liberal demonization of profit and business, that is in fact responsible for the banking collapse.
By forcing the banking industry to approve a percentage of questionable loans that the banking industry normally wouldn’t have approved, the liberals created the housing bubble. Simultaneously making it far more difficult for honest citizens to carry on with their lives and pursuit of the American Dream.
The evil banking industry was just following orders.