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DOJ handed new weapon in fight against banks

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Mortgage Professional America | 21 Aug 2013, 03:37 AM Agree 0
A federal judge has given the go-ahead for the DOJ to use a rarely-utilized law to go after big banks over their role in the financial crisis
  • NoSpinJustTheFacts | | 21 Aug 2013, 10:05 AM Agree 0
    When will the Barney Franks and Christopher Dodds be held accountable for their defective government policies to provide homeownership to the "under-served" which was code for bad credit and no money?

    Let's start with the cause (foundation) of the housing crisis before we begin going after the implementers of their "under-served" housing policy.
  • Jon Anthony | | 21 Aug 2013, 11:28 AM Agree 0
    @NoSpinJustTheFacts, CRA of 1977 had been in place for 3 decades without any negative underwriting issues or results. The facts are CRA was set up to prevent red lining discrimination practices. You highlighting this substandard issue as the foundation tells me your a Fox News watcher and you're only focused on the blame game of deflection & misdirection. So my point is what factors or regulations really changed the game ? The REAL FOUNDATION of the housing crisis was the political removal of the Glass-Steagall Act of 1933 which had in fact separated commercial banking FDIC assets from the highly speculative investment practices of US banks and Wall street firms. The development of banks leveraging capital requirements now at 30-1 into Credit Derivatives and Credit Default Swaps or Mortgage Back Security Pools is the real game changer which resulted in an estimated 71 Trillion in such derivatives products being sold globally and leading to the 2008 Fall out on Wall Street and created the present dangerous economic position of banks too big to fail and too big or powerful to jail.
  • Ken | | 21 Aug 2013, 01:09 PM Agree 0
    The basic idea here is to fill Government coffers by wresting financial settlements from the banks. The banks are just going to consider it a cost of doing business. It's a tax by another name. The costs will be passed on to the consumer.
  • NoSpinJustTheFacts | | 22 Aug 2013, 04:52 AM Agree 0
    Jon Anthony, your assumptions are an indicator of your lacking knowledge of mortgage lending underwriting history. You are wrong, I do not Fox News. I have been a mortgage lending professional for 27 years and watched the politicians' bureaucratic regulators destroy underwriting guidelines that for decades were successful in balancing risk of home lending with the quality of applicants.
    The CRA of 1977 required a small amount of applicants to receive home mortgages in poor neighborhoods and actually required documenting a responsible credit history using nontraditional sources such as utilities, insurance, savings patterns etc.. These were higher risk mortgages were supported by counseling on homeownership.

    The Barney Franks coined as "under-served" applicants with bad credit and no money. It was the politicians seeking votes from this segment of society that was the cause (foundation) from which the implementers mounted onto building the housing crisis. President Clinton's appointments to head Fannie & Freddie were paid outrageous sums to cook the books in covering up the ensuing debacle. Wall Street & the rating agencies were given their assignments by the Barney Franks to play ball or suffer the hells of regulatory aggressions.

    Eliminating Glass-Steagall of 1933 had very little impact in the housing crisis. The fact the rating agencies put high ratings (as designed by the Barney Franks) on the MBS would have allowed banks to own these assets under Glass-Steagall.

    Everyone in Washington knew what was going on and on January 26, 2005 S. 190 [109th]: Federal Housing Enterprise Regulatory Reform Act of 2005 was introduced. It came of out committee on a 13-9 vote (along party lines). Christopher Dodd and Chuck Schumer kept the bill from every being voted on in the Senate.

    Thus Jon, your attempts to indicate the cause (foundation) of the housing crisis was not the Barney Franks and Christopher Dodds exposes you selectively ignore where the crisis began.
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