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May 18 2012

Cities Double Down on CRA Insanity That Caused 2008 Crisis

One of the main reasons poor countries are poor is that they are run by ham-fisted thugs who make it impossible to generate wealth by doing business. An example from a country that isn’t impoverished yet but soon will be if it doesn’t reverse course:

The two largest cities this week approved laws requiring banks doing business with them to meet race-based quotas for mortgage and small-business lending. They’ll also have to stop foreclosures on previous bad loans and vow to open new branches in urban neighborhoods.

New York and Los Angeles officials who voted for the laws say they’re trying to “build on the Community Reinvestment Act.” This is the same federal banking regulation that fed the subprime bubble by requiring banks to make riskier mortgages in “underserved communities.” …

The moves effectively turn local authorities into bank regulators along with the federal government, adding another layer of CRA enforcement and creating additional pressure on banks to make risky loans.

In the short term, this authoritarian lunacy will cause another financial crisis, just as it did in 2008. In the immediate term, it will create large compliance costs that will be passed along to bank customers, as well as require still more bureaucracy, to be funded by taxpayers.

Still, New York and Los Angeles are joined by several other major cities in passing such social banking laws, including Pittsburgh, Kansas City and Cleveland. In addition, San Diego, Oakland, Seattle, Boston, Austin, Philadelphia and Portland have drafted similar laws.

Banks are required to use race as the main qualification not only in making loans, but in hiring executives.

Here’s how it works:

After signing contracts with the city, banks submit to performance reviews and receive points for meeting quotas and timetables. Points are subtracted for closing inner-city branches, as well as charging “excessive interest rates.” Review panels made up of city officials and reps from inner-city groups and unions issue report cards each year.

Banks with weak minority lending records and high foreclosure rates have less chance of landing city contracts, deposits and other business. Those accused of “predatory lending,” “discrimination” or “redlining” are shut out of the bidding process.

“Predatory lending” means lending money to minorities who can’t pay it back. “Discrimination” and “redlining” mean not lending money to minorities who can’t pay it back. Heads the commies win, tails America loses.

Do the pressure tactics work? Cleveland has shaken down banks for more than $10 billion in CRA loans and investments.

Before long banks will be driven into bankruptcy, as planned. Then they can be taken over by the government, either through outright nationalization or gradually, through coercive “bailouts” and ever more rigid regulation.

Call it race-based Marxism on the installment plan.

USSA-flag

On a tip from Sam.



14 Responses to “Cities Double Down on CRA Insanity That Caused 2008 Crisis”

  1. Jimbo says:

    Human’s “Social Engineering” always fails. Always.
    Liberals = FAIL. Every single time.

  2. Spider says:

    “Banks are required to use race as the main qualification not only in making loans, but in hiring executives…”

    So, by this standard, can all buisnesses use race to determine who to hire and fire? Oh, so long as those businesses are not owned by Whites. I get it.

  3. JNN says:

    This is for the people who live in these cities and have functioning brain cells. If you are able to vote out the idiots then please do so. If not, leave. Remember, their ideology is parasitic. Force them into bankruptcy, then they will have to listen.

  4. James says:

    Unbelievable! Here we go again 🙁

    Even worse, the Republican Party has still FAILED to educate the public on exactly what sparked the 2008 financial meltdown occurred in the first place. It’s not hard to understand. Instead, they let Dims and the MSM blame it all on Bush and deregulation when the exact opposite was true. Ron Paul was the only Repub candidate that ever mentioned the CRA and its effect of the market crash, but he never really explained it so the average idiot could understand it. So frustrating.

    Where is Romney in all this? He’s a businessman. Why doesn’t he explain it?

  5. Sam Adams says:

    This is what creates banking deserts.

    James says:
    May 18, 2012 at 2:01 pm
    ____
    he never really explained it so the average idiot could understand it. So frustrating.

    Where is Romney in all this? He’s a businessman. Why doesn’t he explain it?
    __________

    People want to believe you can get something for nothing. They want to believe that there are no real costs associated with regulation of any kind. Look at the dim bulbs in California; contrary to facts, they believe that they can hike taxes on the rich folks and the job creators, that the amount of tax they will raise will meet expectations, and that the rich folks and those who create jobs won’t continue to flee the state as fast as possible.

  6. Mike Porter says:

    “Still, New York and Los Angeles are joined by several other major cities in passing such social banking laws, including Pittsburgh, Kansas City and Cleveland.”

    While I agree that such laws are completely wrong-headed, I really question your sources. I don’t think that this has happened in KC…yet.

  7. Smitty says:

    The author of the LA Bill is Councilman Alarcon he’s currently indicted for voter registration fraud.

    The “resolution” is basically a “solicitiation for bribery” in exchange for parking the city’s huge cash horde in the “briber’s bank”, all you have to do is “friend” the council’s friends with a lil business.

    Funny now with a Latino majority city councils are so emboldened that they’re openly and publicly passing resolutions for soliciting bribes.

    “here’s s a cash dump, all you have to do is ignore all our friend’s bad loans and fund our pet projects”

  8. Red Dawn says:

    Well, people tend to forget that “critical race theory” is simply marxism recast from a “class struggle” into a “race struggle”.

    Very, very primitive stuff. And potentially very destructive.

  9. -Sepp says:

    Easy fix…If you own a bank in any of those cities…close the doors and move to a city that respects your PRIVATE business.
    They’ll have a hard time forcing you to open a location in any place you don’t want one.

    When they have no place available to cash their checks or, draw bad loans…too f’ing bad then.

  10. Ghost of FA Hayek says:

    Where is Romney in all this? He’s a businessman. Why doesn’t he explain it?
    James
    When future Marxist indoctrinates enter college, they believe student LOAN means free money
    They have absolutely no concept of personal responsibility outside the perception that the word itself equals oppression.
    This is all they know, and Romney telling them otherwise is just plain mean of him.
    Obama whispering sweet little collectivist paradises is all they want to hear. The rest is backround noise.
    The slap in the face moment arrives if they decide to enter the workforce to finally extract themselves from moms basement, and they realize uncle sugar demands his third.

  11. Ghost of FA Hayek says:

    Oh, and as for the “supposed” adults, the left instinctively knows it can buy a boatload of votes on the mere implication that John Q can aquire that 750,000 castle and blow off the payments whenever he wishes.
    Preaching thrift is always good for a few laughs though

  12. Bo Jangles says:

    What the Left is trying to do to the whole country, is exactly what they’ve done to black Americans, that is, teach them that they’re victims and not responsible for anything they do. So, if you make $200. per week, there’s no reason you can’t buy that $400K home. Can’t pay for it? No problem. It’s not your fault. We’ll force the hard-working White fools to pay your bills.

    Democrats. Republicans. It doesn’t matter. Our whole system of govt. is a complete failure because it’s all based on lies, corruption, and an insatiable lust for power. And power = control, and control is the main prize. The power and ability to control the everyday lives of every single person, from what we eat, drink, drive, smoke, and hear, to what kind of lightbulbs we must use. Only a complete fool would call that freedom.

  13. Sam Adams says:

    Bo Jangles says:
    May 18, 2012 at 10:12 pm
    Democrats. Republicans. It doesn’t matter.
    _________

    That is changing, nor was it ever true.

    For example, consider how the Depression of 1921 was handled? Then look at how two Self-Described Progressives (one Republican, one Democrat) handled the crash of 1929, followed by the depression of 1930.

    Progressives have infiltrated both parties and it is tough getting rid of them. At least there are some non-progressive Republicans left….can’t say the same for the Democrats.

  14. chuck in st paul says:

    Good. I need to sell my house in the next couple years and I’ve lost a good $60,000 off the price. I need the prices to zoom up again in another bubble so I can get off with a decent profit.


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