Wednesday, May 11, 2011

Team Obama is trying to create a new housing bubble

Unsatisfied that its egalitarian Narrative has wreaked sufficient havoc already in the housing industry, the Obama administration is once again trying to force banks to loan money to bad credit risks.
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.

To some banks the crackdown has come as a surprise, say consultants and lawyers representing financial institutions in discussions with regulators. Like Midwest BankCentre, some lenders are being cited for failing to operate in minority and low-income census tracts near their branches, even when they have never done business there before. . . .

Bank lobbyists say the stepped-up government scrutiny could backfire if financial institutions decide to shrink their operations rather than yield to pressure to do business in areas that don't make sense for them.
Of course, if lenders capitulate to the government intimidation and make more bad loans, in the name of "non-discrimination," that will only inflate a new housing bubble: Unqualified borrowers will once again buy more house than they can afford, and that will set up a new scenario for another housing-market collapse.

When it comes to lending, "anti-discrimination" is just a euphemism for "lack of standards." It means that "loans" are no longer to be granted to qualified applicants, but instead are to be treated as a welfare program: as a government "entitlement" benefit to the unqualified, with taxpayers ultimately underwriting all of the catastrophic losses that will result.

Such facts and logic, supported by the bitter experience of the past few years, should offer obvious lessons to liberals. But how can facts, logic, and experience possibly compete with a Moral Narrative about "equality" that isn't drawn from reality, but from a fantasy that is imposed on reality?