Read every last word of the text below.
When I was in college finishing my latest degree I wrote a series of articles on the mortgage crisis (mid 2008). This is a good summary of this section of the scandal and what led to the collapse. This is by no means the whole story but as I said, a good summary of this layer of what gave us this mess.
The Obama Record
The Obama Record: The Obama camp’s running a new ad reminding African-Americans of all he’s done for them as they weather an economic crisis he “inherited.” Left out is his own role in their predicament.
The press has never questioned the president about his involvement. But his fingerprints are there.
Before the crisis, Obama pushed thousands of credit-poor blacks into homes they couldn’t afford. As a civil-rights attorney, he sued banks to rubberstamp mortgages for urban residents.
Many are now in foreclosure. In fact, the lead client in one of his class-action suits has since lost her home and filed bankruptcy.
First some background: Obama focused on “housing rights” when he worked as a lawyer-activist and community organizer in South Side Chicago. His mentor — the man who placed him in his first job there — was the father of the anti-redlining movement: John McKnight. He coined the term “redlining” to describe the mapping off of minority neighborhoods from home loans.
McKnight wrote a letter for Obama that helped him get into Harvard. After he graduated, he worked for a Chicago civil-rights law firm that worked closely with McKnight’s radical Gamaliel Foundation and National People’s Action, as well as Acorn, to solicit lending-discrimination cases.
At the time, NPA and Acorn were lobbying the Clinton administration to tighten enforcement of anti-redlining laws.
They also dispatched bus loads of goons trained by Obama to the doorsteps of bankers to demand more home loans for minorities. Acorn even crashed the lobby of Citibank’s headquarters in New York and accused it of discriminating against blacks.
The pressure worked. In 1994, Clinton’s top bank regulators signed a landmark anti-redlining policy that declared traditional mortgage underwriting standards racist and mandated banks apply easier lending rules for minorities.
Also that year, Attorney General Janet Reno and her aide Eric Holder filed a mortgage discrimination case against a Washington-area bank that forced it to target minority neighborhoods for subprime loans.
Reno and Holder also encouraged civil-rights lawyers like Obama to file local lending-bias cases against banks.
The next year, Obama led a class-action suit against Citibank on behalf of several Chicago minorities who claimed they were rejected for home loans because of the color of their skin. It was one of 11 such suits filed against the financial giant in Chicago and New York in the 1990s.
As first reported in Paul Sperry’s “The Great American Bank Robbery,” the plaintiffs’ claim lacked merit. Factors other than race figured in the bank’s decision to turn them down for loans.
One of Obama’s clients had “inadequate collateral” and “an incomplete application,” while another had “delinquent credit obligations and other adverse credit history.”
Obama argued such facts miss the point: that Citibank’s neutral underwriting criteria may have adversely impacted his clients as a class of people. He demanded it turn over loan files from the entire Chicago metro area to prove it regularly engaged in a pattern of discrimination.
The court didn’t award him the files. But Citibank eventually settled, despite the weak case. Under the 1998 settlement, Citibank vowed to pay the alleged victims $1.4 million and launch a program to boost home lending to poor blacks in the metro area.
In the run-up to the crisis, Citibank underwrote thousands of shaky subprime mortgages to satisfy the court in Obama’s case. Defaults were common. When home prices collapsed, most of the loans went bust.
His lead African-American client, Selma Buycks-Roberson, who was denied a loan due to bad credit and low income, got her mortgage only to default on it years later.
She got a foreclosure notice in 2008, according to The Daily Caller website, along with many of her Chicago neighbors.
By putting them on the hook for loans they couldn’t pay, Obama did them no favors. Blacks have been hit hardest by foreclosures. But what does Obama care? The Caller reports he pocketed at least $23,000 from the Citibank case.
Today, he blames the devastating wealth drain in black communities on subprime mortgages. He says “greedy,” “predatory” lenders tricked poor minorities into paying higher fees and interest rates.
But Obama was for subprime loans before he was against them. “Subprime loans started off as a good idea,” he said as those loans began to sour in 2007.
His closest economic advisers also promoted subprime lending. Several months earlier, Chicago pal Austan Goolsbee, who later became his top economist, sang the praises of subprime loans in a New York Times column. He argued they allowed poor blacks “access to mortgages.”
One of Obama’s top bank regulators, Gary Gensler, once bragged that thanks to subprime mortgages, banks made home loans to minorities at “twice the rate” they made to other borrowers, according to “Bank Robbery.” “A subprime loan is a good option when the alternative is no access to credit,” he said years before the crisis.
Obama hasn’t learned from his mistakes.
Far from it, IBD has learned the mammoth credit watchdog agency he created (with input from NPA radicals) will dust off Clinton’s 1994 minority lending guidelines to crack down on stingy lenders. And he’s ordered Holder, now acting as his attorney general, to prosecute banks that don’t open branches in blighted urban areas.
Not only has Obama scapegoated banks for the crisis he helped cause, he’s exploited minority suffering to continue reckless policies that hurt those he claims to champion.