Bizarre

Damned if You Do . . .

The chutzpah of the US government defies belief.  When the credit crisis hit and mortgages burnt, sanctimonious politicians criticized banks for their risky lending practices.  Reckless greed.  Must be regulated.  Blah. Blah. Blah.

What was quietly forgotten was that politicians had been pushing and cajoling banks for over two decades to engage in just such risky lending--in the name of social justice and civil rights.  The poor deserve to own their own homes--so you banks had better lend to them, or else.  Now the Obama administration is returning to the lending madness.  It is starting to crackdown on banks that are not lending sufficiently to poor people.  Spare us.

Community activists in St. Louis became concerned a couple of years ago that local banks weren't offering credit to the city's poor and African American residents. So they formed a group called the St. Louis Equal Housing and Community Reinvestment Alliance and began writing complaint letters to federal regulators.

Apparently, someone in Washington took notice. The Federal Reserve has cited one of the group's targets, Midwest BankCentre, a small bank that has been operating in St. Louis's predominantly white, middle-class suburbs for over a century, for failing to issue home mortgages or open branches in disadvantaged areas. Although executives at the bank say they don't discriminate, Midwest BankCentre's latest annual report says it is in the process of negotiating a settlement with the U.S. Justice Dept. over its lending practices. . . .

At the Justice Dept., a new 20-person unit dedicated to fair lending issues received a record number of discrimination referrals from regulators in 2010 and has dozens of open cases, according to a recent agency report. Potential penalties can reach into the millions of dollars. "We are using every tool in our arsenal to combat lending discrimination," Thomas E. Perez, the assistant attorney general for the Civil Rights Div., told a conference of community development advocates in Washington in April.

"Lending discrimination".  OK, so let's get this right.  If a bank refuses to lend money to black person because he is a bad credit risk--too poor to service or repay the loan--it's racism and a violation of civil rights.   If the bank does make the loan (because the government requires it) and the borrower subsequently defaults, it's the reckless greedy banks that are at fault.