Last year the Biden administration ordered the Federal Reserve and its fellow independent bank regulators to draft a new "anti-redlining" regulation that is slated to take effect in January 2026. The new regulation will require banks to approve home loans in lower-income communities if they have a concentration of mortgage and small-business loans in those areas, rather than just where they have physical branches.
Banks will be fined if they fail to make the mandated percentage of home loans in the required lower-income areas. And just never you mind if the recipients have bad credit and/or insufficient income to actually pay back those home loans.
Have we forgotten about the 2008-2009 sub-prime mortgage catastrophe caused by the federal government's pushing banks to make billions of dollars in high-risk home loans to people with low incomes and/or poor credit? Thanks to Fannie Mae, Freddie Mac, and new Federal Reserve CRA-based lending requirements, lending institutions were pressured or coerced into making hundreds of thousands of home loans to people whose ability to repay them was doubtful or non-existent. Those sub-prime mortgages played a major role in causing the Great Recession.
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www.lewrockwell.com
Banks will be fined if they fail to make the mandated percentage of home loans in the required lower-income areas. And just never you mind if the recipients have bad credit and/or insufficient income to actually pay back those home loans.
Have we forgotten about the 2008-2009 sub-prime mortgage catastrophe caused by the federal government's pushing banks to make billions of dollars in high-risk home loans to people with low incomes and/or poor credit? Thanks to Fannie Mae, Freddie Mac, and new Federal Reserve CRA-based lending requirements, lending institutions were pressured or coerced into making hundreds of thousands of home loans to people whose ability to repay them was doubtful or non-existent. Those sub-prime mortgages played a major role in causing the Great Recession.
How Fannie, Freddie and Politicians Caused the Crisis
By mid-2008 Fannie and Freddie (the “GSEs”) had a combined $5.4 trillion in securities outstanding, all of which were backed by the GSEs’ full faith and credit. These securities financed 45% of all the residential mortgage debt in the U.S. GSE securities were viewed as having the implicit...
www.aei.org
The Government Did It
Don't call the mortgage crisis the result of insufficient regulation. Our government was behind the wheel all along.
www.forbes.com
New Study Finds CRA 'Clearly' Did Lead To Risky Lending
Special Series: The War On Banks Democrats and the media insist the Community Reinvestment Act, the anti-redlining law beefed up by President Clinton, had nothing to do with the subprime... Read More
www.investors.com
The Government-Created Subprime Mortgage Meltdown - LewRockwell
The thousands of mortgage defaults and foreclosures in the "subprime" housing market (i.e., mortgage holders with poor credit ratings) is the direct result of thirty years of government policy that has forced banks to make bad loans to un-creditworthy borrowers. The policy in question is the...
www.lewrockwell.com
