Oh, this is rich: Hans Olaf Henkel, senior advisor to Bank of America in Germany and one of the biggest advocates for deregulation of financial institutions and higher executive pay for bankers, has blamed the global financial crisis on regulations that prohibited racist lending practices. You see, Herr Henkel is nostalgic for the old days or "redlining" where banks essentially colluded to deny mortgages and other banking services to poor – mostly black – Americans. Unfortunately – in the eyes of Herr Henkel – liberal "do-gooders" forced the banks to lend to these undesirables:
"a certain type of do-goodism
among American politicians caused the remarkeable increase of home
ownership in the U.S. and contributed significantly to the real-estate
bubble in (the United States).
Herr Henkel makes no reference to the $70 trillion in "Credit Default Swaps" that were written after deregulation transformed financial institutions such as AIG, Goldman Sachs and Bank of America into giant casinos that gambled away their capital. No, for Herr Henkel the problem is simply that banks lent money – under duress – to these black slumdwellers:
Mr. Galbraith should familiarize himself
Jimmy Carter's "Housing and Community Development Act" where in Section
VIII Banks were prohibited the practice of "red lining" which until
then enabled them to distinguish "better living quarters" and "slums".
William K. Black, professor of economics and law at the University of Missouri has written an open letter to chairman of Bank of America concerning Herr Henkel's comments:
Mr. Henkel is not simply a bigot. His substantive policy advice –
deregulation and far higher executive compensation – makes him one of
the principal German architects of the crisis. He gave Bank of America
awful advice.
The letter is worth reading in its entirety, and has been translated in German here.
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Look, while you’re right in critising Henkel, because he’s referring to the smaller part of financial improbity, lending money to people who can’t afford the payments was stil a criminal act and it was committed by the do-gooders. In that vein, Clinton and Obama, biggest recipient from Fanie Mae and Freddie Mac ought to go to jail for ruining black househiolds, wouldn’t you agree? Was this premeditated to drive the blacks away from suburbia and reintroduce segregation through the backdoor? It makes me wonder. And the CDS and CDOs etc. or at least a substantial part of those rode on the back of that wave of unsustainable lending! And who allowed the FHA, Fannie and Freddie etc. under the very nose of regulators underwrite mortgages that were unaffordable from the start (http://crisismaven.wordpress.com/2010/01/28/bloom-of-doom-ii-of-mortgage-brokers-arms-attrition-and-marathons/)? And who didn’t understand that this now means the US technically is as insolvent as Greece and less creditworthy than most Third World Countries (http://crisismaven.wordpress.com/2010/02/08/bloom-of-doom-v-we-have-control-of-the-ship-we-have-a-plan/)? Defenders of the Union, probably?
You’re entitled to your opinion but not to making up facts. Do you really think that several $billion lent to black households caused a $5 trillion global meltdown? That is just tea-bagger nonsense!
BTW, 84% of all subprime loans were made by private lenders who had nothing to do with liberal “do-gooders”. Rather, they were driven by greed and easy profits.
Between 2004 and 2006 (note: during the Bush administration) when subprime lending was exploding, Fannie and Freddie went from holding a high of 48 percent of the subprime loans that were sold into the secondary market to holding about 24 percent, according to data from Inside Mortgage Finance, a specialty publication. One reason is that Fannie and Freddie were subject to tougher standards than many of the unregulated players in the private sector who weakened lending standards, most of whom have gone bankrupt or are now in deep trouble.
After the painful early years of transition, economic growth took off, trade flourished, and stable institutions took root. What is most important: integration has improved the quality of people’s lives.
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Even if this was true, which I don’t believe it is, on the bright side it helped out many a bankruptcy attorney in chicago, and everywhere, for that matter. It is not an overall good thing, but these kinds of crisis’s are what shapes the future of the economy. It is not always a bad thing to lose money.
My understanding is that the banks were giving predatory loans to often Mexican immigrants, and that due to their racist loan practices and deregulation, it created a housing bubble. Blacks, on the other hand, figured highly in these same loans, but statistically, Latinos were the highest number of people to receive these loans.
These article shows how it was actually the Democrats and Republicans TOGETHER that removed the Glass-Steagall Act of 1933:
http://www.wsws.org/articles/1999/nov1999/bank-n01.shtml
Both the Dems and Reps are both fascists. The difference is that the Republicans have told me to leave the USA, whereas the Democrats have told me Im not allowed to leave the USA. Frankly, this not being allowed to leave is far more frightening than the blow-hard republicans and their totalitarian bent.
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