Too Much Policing in Black Neighborhoods

[coloradoatheist]

It was all parties that were happy with the relationship. I think they all figured it would just top off and come down a little, just not crash.

You had HUD rewriting the lower lending standards that banks used. The GSEs were buying the MBS because it met their goals of minority ownership. The FED fueled the interest rates for an excessively long time because it was improving the economy and banks and mortgage companies were making money. It took a lot of different things to come together to bring this about.

For conservative atheists, gov't has replaced Satan as the source of all the badness in the world.

I would go with Libertarian atheist. Only conservative in economics.

 

[Malintent]

Your idea is racist.

That when residents don't talk to the police this leads to low % of crime solved is racist? Damn, everything is racist, ain't it? What isn't racist anymore. Anything?

do you believe in the existence of races? if so, then you are a racist.

 

[Loren Pechtel]

Yes, it was caused by loaning money people too aggressively thinking they could make their money back.

What?

That has nothing to do with the redlining practices of banks and real estate agents that have gone on for decades.

And banks never lent anything "too aggressively".

They did lend without caring because they knew they could pass the bad loan to some sucker hidden in huge bundles.

Just because you don't like the truth doesn't make it go away.

Mind explaining how redlining could have anything to do with the meltdown??

 

[untermensche]

What?

That has nothing to do with the redlining practices of banks and real estate agents that have gone on for decades.

And banks never lent anything "too aggressively".

They did lend without caring because they knew they could pass the bad loan to some sucker hidden in huge bundles.

Just because you don't like the truth doesn't make it go away.

Mind explaining how redlining could have anything to do with the meltdown??

The only connection is crooked bankers doing crooked things.

 

[Loren Pechtel]

Bullshit. They deliberately created a parallel criterion for what they termed "high risk loans" and imposed standards that even so-called "low risk" borrowers wouldn't usually meet. When the feds cried foul, they briefly relaxed those extra requirements, and THEN they realized they could package those bad loans and pass them off as securities and they relaxed them a little more while saying "look how fair we're being to minorities!"

Try a bit of reality rather than leftist propaganda.

In practice the documentation and income standards came from the government, not the banks--based on what Fannie May and Freddie Mac would buy. The relaxation in lending standards came from the government changing what loans it was willing to buy. When you define crap to be quality what do you expect?

That was when the sub-prime mortgage thing really started, and at that time the banks started pushing totally unrealistic directives on their brokers: they were restricted from conducting credit checks of any kind, of checking the backgrounds of borrowers, in some cases threatened with firing if they even bothered to confirm that the people they were loaning to even really existed. The game had changed at that point; the banks KNEW they were creating a bubble and they were trying to package up as many loans as they could and then sell them as commodities.

I'm sure there was some of that--shady bankers exploiting the gaping loophole the feds left.

You're half right. Again, it wasn't the Feds that ordered them to relax those standards, certainly not to the extent that they actually did. Once it was realized that trading bad loans as securities wouldn't get anyone into serious trouble, taking obviously bad loans seemed like a route to quick cash and everyone started doing it.

The feds did order it.

They would be punished for not writing enough loans to blacks. They would not be punished for writing crap loans as they could simply sell them to the government.

Even now, we are seeing the banks that were prudent getting punished, the ones who obeyed the insane directives weren't punished (other than by failing.)

 

[Loren Pechtel]

Now it's racist for a mortgagor to lend based on a potential mortgagee's default risk? Really, everything is racist now. Everything. Common sense out the window.

You clearly do not understand what "redlining" means

We understand what redlining means. We also understand that what is being called redlining was simply being prudent about lending.

It makes no sense that they would discriminate against poor neighborhoods only for low-down mortgages, not for 80/20 mortgages. Why be selective about it??

On the other hand, it makes perfect sense that they were looking at expected appreciation in evaluating the risk. The Feds can't find any discrimination, the punishment is purely over disparate impact. In practice "disparate impact" usually means they didn't play along with the illusion.

- - - Updated - - -

I think it's silly to ignore the fact that if you don't let the majority of people living in a community own the houses they live in, those hoses will be owned by landlords who don't care to maintain or improve those houses, and that this leads to a decline in value over time relative to other areas. This in turn makes the area less 'lendable' except to outside buyers, and so the cycle continues, exacerbated by the higher costs of renting vs paying a mortgage.

And look what happened when the standards were thrown out the window--the blacks ended up worse off than when the standards were reasonable.

 

[laughing dog]

Try a bit of reality rather than leftist propaganda.

In practice the documentation and income standards came from the government, not the banks--based on what Fannie May and Freddie Mac would buy. The relaxation in lending standards came from the government changing what loans it was willing to buy. When you define crap to be quality what do you expect?....

You do realize you just admitted
1) the gov't did not order anything, and
2) the private sector voluntarily reduced its lending standards.

In other words, you rebutted your own argument.

[

 

[coloradoatheist]

Try a bit of reality rather than leftist propaganda.

In practice the documentation and income standards came from the government, not the banks--based on what Fannie May and Freddie Mac would buy. The relaxation in lending standards came from the government changing what loans it was willing to buy. When you define crap to be quality what do you expect?....

You do realize you just admitted
1) the gov't did not order anything, and
2) the private sector voluntarily reduced its lending standards.

In other words, you rebutted your own argument.

[

So if we have

1) Hud wrote the underwriting standards that banks used
2) GSEs bought the loans packaged up using those underwriting standards
3) The government threatened banks who didn't lend to minorities.
4) The Fed fueled interest rates for a long time knowing it was going into the housing market


So how is it not a joint effort?

 

[laughing dog]

You do realize you just admitted
1) the gov't did not order anything, and
2) the private sector voluntarily reduced its lending standards.

In other words, you rebutted your own argument.

[

So if we have

1) Hud wrote the underwriting standards that banks used
2) GSEs bought the loans packaged up using those underwriting standards
3) The government threatened banks who didn't lend to minorities.
4) The Fed fueled interest rates for a long time knowing it was going into the housing market


So how is it not a joint effort?

LP's argument - "The feds ordered it" - is a special case of the more general "joint effort".

 

[untermensche]

So if we have

1) Hud wrote the underwriting standards that banks used
2) GSEs bought the loans packaged up using those underwriting standards
3) The government threatened banks who didn't lend to minorities.
4) The Fed fueled interest rates for a long time knowing it was going into the housing market


So how is it not a joint effort?

None of this caused the crisis.

What caused the crisis was banks giving loans without checking any information. To people of all colors, mostly to white people.

This on top of the credit default swaps. This was a deliberate scheme to defraud, and nobody in the banks or the ratings agencies has been prosecuted for this massive deliberate fraud.

 

[coloradoatheist]

So if we have

1) Hud wrote the underwriting standards that banks used
2) GSEs bought the loans packaged up using those underwriting standards
3) The government threatened banks who didn't lend to minorities.
4) The Fed fueled interest rates for a long time knowing it was going into the housing market


So how is it not a joint effort?

None of this caused the crisis.

What caused the crisis was banks giving loans without checking any information. To people of all colors, mostly to white people.

This on top of the credit default swaps. This was a deliberate scheme to defraud, and nobody in the banks or the ratings agencies has been prosecuted for this massive deliberate fraud.

The problem wasn't necessarily the bundle, it was the percentage of loans in the bundle that went into default at once. And when things collapsed it was just from the belief of the uncertainty in knowing what the bundles were actually worth.

 

[untermensche]

None of this caused the crisis.

What caused the crisis was banks giving loans without checking any information. To people of all colors, mostly to white people.

This on top of the credit default swaps. This was a deliberate scheme to defraud, and nobody in the banks or the ratings agencies has been prosecuted for this massive deliberate fraud.

The problem wasn't necessarily the bundle, it was the percentage of loans in the bundle that went into default at once. And when things collapsed it was just from the belief of the uncertainty in knowing what the bundles were actually worth.

The problem was the bundles were not what the ratings agencies said they were.

 

[Loren Pechtel]

Try a bit of reality rather than leftist propaganda.

In practice the documentation and income standards came from the government, not the banks--based on what Fannie May and Freddie Mac would buy. The relaxation in lending standards came from the government changing what loans it was willing to buy. When you define crap to be quality what do you expect?....

You do realize you just admitted
1) the gov't did not order anything, and
2) the private sector voluntarily reduced its lending standards.

In other words, you rebutted your own argument.

1) While it didn't take the form of an order the prosecution of the banks that didn't comply shows that it really was an order.

2) The private sector did what the government told them to do.

Just because the order was given in a deniable form doesn't make it not an order.

- - - Updated - - -

So if we have

1) Hud wrote the underwriting standards that banks used
2) GSEs bought the loans packaged up using those underwriting standards
3) The government threatened banks who didn't lend to minorities.
4) The Fed fueled interest rates for a long time knowing it was going into the housing market


So how is it not a joint effort?

None of this caused the crisis.

What caused the crisis was banks giving loans without checking any information. To people of all colors, mostly to white people.

This on top of the credit default swaps. This was a deliberate scheme to defraud, and nobody in the banks or the ratings agencies has been prosecuted for this massive deliberate fraud.

The banks gave loans without checking because that's what the government wanted them to do!

 

[untermensche]

The banks gave loans without checking because that's what the government wanted them to do!

This is a lie and you can't produce one bit of evidence to support it.

The banks gave loans without checking information because they came up with an illegal scheme involving the ratings agency to sell the bad loans fraudulently.

Massive crimes that nobody has ever been prosecuted for.

 

[laughing dog]

1) While it didn't take the form of an order the prosecution of the banks that didn't comply shows that it really was an order.

People ordered to not steal or not murder because thieves and murderers are prosecuted? Sorry, that is a ridiculous interpretation.

2) The private sector did what the government told them to do.

The gov't did not tell anyone to not check potential borrowers. That is an absolute falsehood.

Just because the order was given in a deniable form doesn't make it not an order.

An order is a command. Nothing you have written indicates anything was an order.

 

[RavenSky]

You clearly do not understand what "redlining" means

We understand what redlining means. We also understand that what is being called redlining was simply being prudent about lending.

So clearly you don't understand what redlining means. Got it.

 

[Mumbles]

The banks gave loans without checking because that's what the government wanted them to do!

This is a lie and you can't produce one bit of evidence to support it.

The banks gave loans without checking information because they came up with an illegal scheme involving the ratings agency to sell the bad loans fraudulently.

Massive crimes that nobody has ever been prosecuted for.

At one point, they were actually forging loan applications - changing people's income to much higher than it was in reality in order to get them the largest possible loan. Government certainly never told them to do that. And yeah, it was done for money, not for any sort of regulation - same as Wells Fargo's recent shenanigans.

 

[Trausti]

Maybe black neighborhoods are under policed?

http://eml.berkeley.edu/~jmccrary/chalfin_mccrary2015.pdf

 

[Jarhyn]

Something that struck me on the bus this morning... Living in North Minneapolis, many neighborhood properties are rentals, probably a majority just a block or two south of where I live.

Rentals generally charge more rent than the mortgage payment would constitute until the property is paid for, and my experience seems to support the idea that rent is generally between 700 for a two bedroom duplex unit to 1500 for a house. My own mortgage is around 1000/month.

What this means is that the population of the region of the city in which I live have been paying for their properties for years, without being given any ownership of their homes; renting yeilds no equity. This means that while people in most other areas of the city are building equity, this vital nestegg is being denied across generations of North Minneapolis families. Loans can't be taken against that equity for education or property improvement, people living in the homes are barred from directly resolving issues with those properties, and damage to the property yeilds a loss of deposit, rather than deeper consequences of loss of home value, leading to a pattern which fails to teach people to respect the place where they live as a 'nice thing'.

People in the thread seem to be complaining that the housing crash happened when slack was placed on lending standards, however there is a valid question that should be asked: these people have already been paying for their homes, for years, generations even, and given NO equity for it. Why should we be talking about loans when in all reality, there have already been generations worth of equity that ought be afforded to these people?

I've been considering for years some fairly reasonable (reasonable in the manner that it is eminently ethical, albeit radically different from the status quo) methods of resolving the problem, mostly centered around elimination of a system of rental-without-equity; people paying for a thing, particularly a residence, should be afforded a share in its ownership according to what they pay, as much as people adding real value in a business ought be afforded ownership of the business according to the loss of net profit to shareholders.

 

[Derec]

Maybe black neighborhoods are under policed?