What the Heck is "Predatory" Lending? »
Posted By LibertyKnight 9 months, 2 weeks ago in Political News
To the extent "predatory lending" is a real problem, it is caused by government interference in the housing market.
Read Full Story at campaignforliberty.com »
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Wolfie20079 months, 2 weeks ago
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Great article, thanks for posting it.
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FTA
have no real dispute with much of this. What troubles me, however, is the presumption that the State must protect certain people from taking out a loan that they themselves are seeking in the first place! I rather think predatory lending is when the taxpayer lends the government money to finance the clean-up of a malady that government policy caused. (Actually, in that case lending is a bogus description. That scenario sounds more like theft.) But maybe I'm getting ahead of myself. -
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ELISHEVA19 months, 2 weeks ago
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Thanks for this story. It is clear that there is no need for transparency any longer. This is going on globally... The people are the one's that need that bail out and never should money be trusted to the charge of corporations for this task. I'm wondering how long it will be before the masses everywhere will collectively feel and act as: 'It is enough!!'
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rimbaud9 months, 2 weeks ago
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Predatory lending is the loan-brokers' pursuit of attractive commissions by exploiting flexibilities in the qualification or documentation of lenders. With real property as collateral, there is no reason a mortgage should not be secure, unless the money lent is greater than the value of the collateral.
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rimbaud9 months, 2 weeks ago
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Predatory lending is the loan-brokers' pursuit of attractive commissions by exploiting lenders' flexibilities in the qualification or documentation of borrowers. With real property as collateral, there is no reason a mortgage should not be secure, unless the money lent is greater than the value of the collateral.
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nostalgia9 months, 2 weeks ago
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Maybe we need to ask Barney Frank to define predatory lending
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Political Interference Seen in Bank Bailout Decisions
Barney Frank Goes to Bat for Lender, and It Gets an Infusion
Troubled OneUnited Bank in Boston didn't look much like a candidate for aid from the Treasury Department's bank bailout fund last fall.
The Treasury had said it would give money only to healthy banks, to jump-start lending. But OneUnited had seen most of its capital evaporate. Moreover, it was under attack from its regulators for allegations of poor lending practices and executive-pay abuses, including owning a Porsche for its executives' use.
Nonetheless, in December OneUnited got a $12 million injection from the Treasury's Troubled Asset Relief Program, or TARP. One apparent factor: the intercession of Rep. Barney Frank, the powerful head of the House Financial Services Committee
Mr. Frank, by his own account, wrote into the TARP bill a provision specifically aimed at helping this particular home-state bank. And later, he acknowledges, he spoke to regulators urging that OneUnited be considered for a cash injection
http://online.wsj.com/article/SB123258284337504295...
Who needs Federal regulators when you have Barney Frank?-
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Will13139 months, 2 weeks ago
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On Dec. 19, OneUnited received $12 million from the Treasury, on condition it raise $20 million from its shareholders, which it did.
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Ms. McLaughlin, the spokeswoman for the Bush administration Treasury, said that OneUnited's application was subject to the same review process as other banks faced.
Mr. Frank said he didn't try to interfere with the regulatory process. "We have never told the regulators that they should ease up on them or not order them to do this or that," he said.
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seems they got no preferential treatment... -
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THOMNH629 months, 2 weeks ago
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Nostalgia, becareful slamming Barney here on Libscape you will be demonized as hateful and not wanting to allow poor people the chance at a home. Frank, Dodd and Bill Clinton hold much of the blame for the mortgage crisis. It is called the community reinvestment act. Good post though nice to see less some intellegent debate.
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hyperbola9 months, 2 weeks ago
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Simple minded propaganda again.
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The fact is that Fanny and Freddie loans made to poor people had a better payoff rate than those made in markets where there was NO government involvement.
The real problem in any case was not mortgages, but the derivatives and other speculative instruments created by investment banks (with little or no government oversight) and insured by insurance companies like AIG. These "debts" were then used as collateral by "investment" companies to create Ponzi schemes. In the end the "instruments" created by the financial groups (with little or no oversight) outweighted the underlying mortgage debts by hundreds of times.
Yes government was involved. The single most destructive element in allowing the bubble to grow to enormity was the Bush administration relaxing reserve requirements on investment banks in 2005. This allowed speculators, inclduing the investment banks, to "place bets" with as little as 3% of their own money - exactly the same scenario as led to the Great Depression.
Americans should start educating themselves so they are not suckers for silly propaganda. -
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beprogress9 months, 2 weeks ago
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I wish I could prop things down for being right-wing nuttery. I love that in the midst of an economic crisis most obviously caused by a lack of regulation, idiotic free market fundamentalists are still trying to tell us that we need even less regulation.
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Sorry, the results are in, you lose.
And if you want to know what predatory lending is, and how it targets minorities, you should read "Segregation: The Rising Costs for America", instead of this right-wing nonsense.-
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willottica9 months, 2 weeks ago
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The article isn't pure right-wing-nuttery as you put it. It also mentions, though briefly, the problem of 'loan guarantees'. Without these guarantees, the banks likely wouldn't have lent out so much in such a risky manner.
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With these guarantees, when a bank made a bad loan, they really didn't have to worry about it. There were tax write-offs and write-downs and insurance schemes and all kinds of ways for them to recoup their losses without actually taking a significant loss.
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ConsAreNonGrata9 months, 2 weeks ago
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LMAO
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CRA did not "force" banks to do anything. CRA did not even account for the majority of the crap that caused this mess. Do you think Countrywide is a CRA operation?
Banks had massive liquidity. That means they are going to lend, lend, lend. It's like automakers, they don't leave idle capacity around if they can help it.
In a lot of cases banks were not doing their due diligence in finding out if the people they were loaning money to were even telling the truth about their financial situations. It's true somebody should understand that loan he takes out, but it's also the responsibility of the lender to make good loans. If not, they can sink with the bad loans they made.
I just love it how the poor banks were forced to do something. That it's not their fault they engaged in bad business practices. I mean really the government forced banks to hand out massive commercial loans and credit cards with long lines of credit (that'd be another wave of defaults coming).
This S#@$ is completely out of balance.-
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wtagg9 months, 2 weeks ago
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When you give a gazillion dollars to a bunch of guys who failed miserably, you sometimes need to dress up the pig. The pig can be made to look good by making those that surround it to appear less desirable.
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Please remember where many get their *information* from.
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tadair9199 months, 2 weeks ago
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some months before his arrest eliot spitzer wrote an op-ed article in the post detailing how district attorneys from all 50 states were taking legal action against the banks, just prior to the bush administration stepping in and stopping the legal recourse.
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Read about it here: http://www.washingtonpost.com/wp-dyn/content/artic...
Bush’s banking buddies were especially steamed that Spitzer hammered bank practices across the nation using New York State laws. Spitzer not only took them on countrywide, he took on their predatory enablers, including Bank of America. -
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tadair9199 months, 2 weeks ago
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"...predatory lending practices cannot bring the market to foreclosure. Economically, this is specious, nearing idiotic, political rhetoric."
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"If a bank preys on people who cannot pay by, for instance, originating loans to them at higher-than-reasonable rates or with unfavorable terms, only one of two outcomes is possible. One, those people will pay that interest, making the bank a healthy profit. Two, those people will not be able to pay and the bank will lose money. In the case of outcome one, other banks will seek to woo those customers to them, and (you guessed it) competition will drive the loan rates, and the related components of the loan packages in a direction that benefits the people seeking the loans." -
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CHAM9 months, 2 weeks ago
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Liberty. Excellent Post. Predatory lending to me is any lending that is immoral, unethical, or is presented in a manner to defraud someone.
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Credit Card Company Policies is a good example. I got into a wrangle with Capitol One and while their Credit Card CEO was blathering to the public that they only raise interest rates on those that miss at least three monthly payments a year (his statement was in the Newspaper), I received a notice that my interest was going to almost double. There I sat with a Credit rating of Excellent, an assets ratio to debt of 13 to 1, a history of never having been late with any payment with Capitol One, or any other business for that matter, and a practice of usually paying triple the minimum on my account, I get the notice. The reason? I didn't opt out of accepting an interest rate hike. The thing is I did. And I called as instructed to do to opt out. They said they had no record of my opting out although they did admit that I called. I paid off my balance immediately, will never do business with them again and counsel all people to steer clear of them.
These people are predatory lenders because I'll bet that the majority of the people they did that to ( around a million ), weren't able to immediately pay off their accounts like I was.-
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DarkWizard9 months, 2 weeks ago
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CHAM,
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"Predatory lending to me is any lending that is immoral, unethical, or is presented in a manner to defraud someone."
I totally agree with that statement and it has deeper roots than just the banking industry. The problem with this article is that it is focused on one aspect of a multi-headed monster. As you mentioned, credit card companies are escalating interest rates on those with excellent credit ratings. Where I live, everyone I know, that owns their home, has received property tax increases in the last couple of months. Water and electric have increased their rates. HOAs are going up. All this when unemployment is rising, the value of homes are decreasing, and qualifying for loans or credit is becoming more difficult.
If these trends persists it will almost guarantee the end of the middle class. I predicted 10 months ago that the government couldn't move fast enough to head off the economic disaster looming for 2009. I predicted 4 months ago that the bailout money would only have a short term effect in "jump starting" the economy and then we would accelerate into a downward spiral. I believe that President Obama has good intentions, but that he has stepped into a crisis of epic proportions and will not be able to stop the momentum of this economic juggernaut. -
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CaptainLucid9 months, 2 weeks ago
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Hey Chom. I find the whole idea of not opting out of an interest rate hike a joke. Do these companies expect anyone to say I would rather pay 14% instead of 7%? I have had the same experience with rebates. They have a major financial incentive to commit fraud. I would love to see RICO prosecutions on the financial industry.
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