Mario, Being Sunday, I had a little free-time to respond to your cliches. I hope this will be considered as my Sunday charity to enlighten the mis-informed. :=)) You should follow your own advice to Edward: "Instead of mindless poppycock, wouldn't you have far more credibility if you had responded to some of the facts" with factual information from multiple sources rather than a single talking head?
Edward did respond to the article you are referring to. Perhaps you missed his point. So here is my point by point rebuttal of the article: http://www.jewishworldreview..com/cols/sowell021809b.php3 What was lacking in the housing market, they say, was government regulation of the market's "greed." That makes great moral melodrama, but it turns the facts upside down. It was precisely government intervention which turned a thriving industry into a basket case. GL: It is the author Thomas Sowell, that creates the melodrama in his article, with his opinions and unsubstantiated statements. Thomas Sowell: It was precisely government intervention which turned a thriving industry into a basket case. GL: Wrong .... Period! (pl. see my prior post on this thread which is abstracted below) Thomas Sowell: That was what the market was like before the government intervened. Like many government interventions, it began small and later grew. GL: The govt. intervention did not grow. Thomas Sowell: The Community Reinvestment Act of 1977 directed federal regulatory agencies to "encourage" banks and other lending institutions "to help meet the credit needs of the local communities in which they are chartered consistent with the safe and sound operation of such institutions." That sounds pretty innocent and, in fact, it had little effect for more than a decade. GL: Absolutely true statements! The 1977 Act "encouraged banks." The 1977 Act did not force the banks to make the poor financial decisions. It was a decade later that some with a devious financial mind chose to abuse and take advantage of government regulations to display greater greed and seek more profits. They developed several "'creative' financial arrangements". Thomas Sowell: However, its premise was that bureaucrats and politicians know where loans should go, better than people who are in the business of making loans. GL: Not true statement. It is the author's right-wing spin making the case again for less regulations. Thomas Sowell: In other words, quotas were imposed— and if some people didn't meet the standards, then the standards need to be changed. GL: Both are false statements! Banks have been proven / shown to time and again 'red-line' neighborhoods. So the quotas were 'the other way around'. Thomas Sowell: Both HUD and the Department of Justice began bringing lawsuits against mortgage bakers when a higher percentage of minority applicants than white applicants were turned down for mortgage loans. GL: Please provide data and statistics to back this statement. Thomas Sowell: A substantial majority of both black and white mortgage loan applicants had their loans approved but a statistical difference was enough to get a bank sued. GL: Please provide statistics on how many banks were sued because of failure to implement this act or because of "statistical difference". Thomas Sowell: Whites were turned down for mortgage loans more often than Asian Americans. GL: This should be. Because the average 'Asian American' has a much higher income level than the average 'White'. The act was not designed to help ethnic groups; but rather people of lower income levels and poorer neighborhoods. Thomas Sowell: But saying that would undermine the reasoning on which the whole moral melodrama and political crusades were based. GL: Another right wing cliche with no basis! Was this a talking point of Rush Limbaugh? Thomas Sowell: Lawsuits were only part of the pressures put on lenders by government officials. Banks and other lenders are overseen by regulatory agencies and must go to those agencies for approval of many business decisions that other businesses make without needing anyone else's approval. GL: Another right wing cliche with no basis! Thomas Sowell: Government regulators refused to approve such decisions when a lender was under investigation for not producing satisfactory statistics on loans to low-income people or minorities. GL: Please provide data on how often this happened. Thomas Sowell: Under growing pressures from both the Clinton administration and later the George W. Bush administration, banks began to lower their lending standards. GL: Banks lowered their lending standards. They went beyond that. They encouraged borrowers to lie on the application forms regarding income etc etc. so that a deal could be done and everybody (from the salesperson to the bank president) could get their productivity bonuses. These individuals were now into lying and criminality. Thomas Sowell: Mortgage loans with no down payment, no income verification and other "creative" financial arrangements abounded. GL: True statement. These verifications were to be done by the (private) bank's middle level managers. Thomas Sowell: Although this was done under pressures begun in the name of the poor and minorities, people who were neither could also get these mortgage loans. GL: Another good example of the escalation of the criminal abuses of banks. Thomas Sowell: With mortgage loans widely available to people with questionable prospects of being able to keep up the payments, it was an open invitation to financial disaster. GL: Absolutely! The banks and lending institutions knew it all along. Thomas Sowell: Those who warned of the dangers had their warnings dismissed. GL: Certainly these warnings were not healthy for the bonuses of the middle and upper level management of the financial institutions. Summary: Hope you will respond with facts and not more cliches and opinions; however elegant the authors' titles. And this time please do not patronize me by advising me to stick to my field of expertise.:=)) Regards, GL ----------- Mario Goveia Instead of mindless poppycock about the UK and the 60's, wouldn't you have far more credibility if you had responded to some of the facts from the column in my previous post? Please read the column and see if you can write a reasonable response to what is in it, based on facts. --------- edward desilva Just because you got a cut and paste job, that does not mean that it is a fact. In UK at the moment the HBOS whistle blower said that the Banks were at fault NOT THE GOVT. And he is going to produce a 30 page dossier for the MPs. Facts speak for themselves, not some back street newspaper BS. ---------- Mario Goveia: What was lacking in the housing market, they say, was government regulation of the market's "greed." That makes great moral melodrama, but it turns the facts upside down. It was precisely government intervention which turned a thriving industry into a basket case. ---------- Gilbert Lawrence wrote: It is widely believed that, Derivatives and other risky instruments that banks and other financial entities (like brokerage and insurance companies) developed and widely used, to leverage themselves, that caused the financial failures. Those practices exposed the financial entities to far greater risk than giving sub-prime loans.
