Ed Driscoll

What Could Wrong...Again?

Past Performance is no guarantee of future results:

The Clinton Administration proposed tough new tests today that are intended to insure that banks end discrimination in their lending to members of minority groups and to people with low and moderate incomes.

The changes are the latest effort by the Administration to broaden access to credit, financial services and investments. Officials predicted that people and businesses in these groups would gain access that they might not otherwise get to billions of dollars in credit once the proposals take effect in 1995.

* * * * * *

The proposal is the most important modification of equal-lending enforcement since 1977, when Congress passed the Community Reinvestment Act. That law was intended to force banks to make loans to individuals, businesses and groups in neighborhoods that many large financial institutions had shunned.

— “Clinton Proposes Tough New Rules On Bias By Banks,” the New York Times, December 9, 1993.

The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place.

President Obama’s economic advisers and outside experts say the nation’s much-celebrated housing rebound is leaving too many people behind, including young people looking to buy their first homes and individuals with credit records weakened by the recession.

In response, administration officials say they are working to get banks to lend to a wider range of borrowers by taking advantage of taxpayer-backed programs — including those offered by the Federal Housing Administration — that insure home loans against default.

Housing officials are urging the Justice Department to provide assurances to banks, which have become increasingly cautious, that they will not face legal or financial recriminations if they make loans to riskier borrowers who meet government standards but later default.

— “Obama administration pushes banks to make home loans to people with weaker credit,” the Washington Post, yesterday.

Don’t worry. I’m sure it will work, this time:

[jwplayer config=”pjmedia_eddriscoll” mediaid=”61704″]

Join the conversation as a VIP Member