Obama hired back all the Clinton-era officials who caused the housing bust — so they can do it all over again
Donovan now serves as secretary of housing, where media reports say he’s pushing hardest to preserve Fannie and Freddie and its “affordable housing mission.” He believes the mortgage giants facilitate “an important democratization of credit” benefiting “underserved groups.”
ELLEN SEIDMAN: Another architect of the disastrous housing policies that caused the crisis, Seidman actually encouraged subprime lending in “underserved” communities as a top Clinton bank regulator enforcing the Community Reinvestment Act. “Growth in the subprime credit market indicates that credit needs in many low- and moderate-income areas are being met,” she said in 1999.
She also cheered the relaxation of credit standards and the development of the subprime securities market.
“Without CRA as an impetus,” Seidman said, “this market would likely not have developed.”
More recently, she argued it’s “absolutely critical” Fannie and Freddie continue their support for “low-income and minority communities,” despite the mortgage giants’ central role in the crisis. Seidman serves as a director on CFPB’s Consumer Advisory Board, where she’s helping rewrite the rules for home lending. CFPB recently released new mortgage rules that, despite claims of tightening standards, require no minimum credit scores or down payments and even count payments from “government assistance programs” as qualifying income.
ERIC HOLDER: As Reno’s deputy, Holder accused banks of racism for failing to market mortgages to poor minorities with weak credit. Fear of prosecution set off a stampede of risky inner-city lending that led, in part, to today’s record subprime foreclosures.
Now as Obama’s attorney general, Holder has sued the nation’s largest home lenders — including Bank of America, Wells Fargo and SunTrust Banks — to “reinvest” in minority communities devastated by those foreclosures. They’ve been told by the government they cannot reject loans to applicants on “public assistance,” and must set aside millions in “special financing programs” for African-American and Latino homebuyers.
In some cases, Justice has actually ordered banks to open new branches in depressed areas of Detroit and other cities. It also encouraged a Detroit bank to “apply more flexible underwriting standards” for minorities, while ordering a St. Louis bank to originate low-rate home loans for black borrowers who, according to a court document, “would ordinarily not qualify for such rates for reasons including the lack of required credit quality, income or down payment.”
THOMAS PEREZ: Perez served as deputy assistant attorney general in the Clinton Justice Department. Now he heads the department’s civil-rights unit, where he’s investigated no fewer than 60 banks on what the banking industry complains are trumped-up charges of lending discrimination. Perez has likened bank defendants to cross-burning Klansmen and said he’s using them to “repair” and “rebuild” entire “minority communities” hurt by foreclosures.
“We will require lenders to invest in the community they’ve harmed,” Perez promised the leftist National Community Reinvestment Coalition in 2011. Added Perez: “We encourage a more holistic approach to lending that looks beyond merely credit score when determining a borrower’s ability to pay.”
Scores of risky mortgages are already being inked, restarting another cycle of risky financing. Obama is so impressed with Perez’s results, he’s promoting him to his Cabinet. Perez is up for Labor Secretary.
ERIC HALPERIN: Halperin prosecuted banks for lending discrimination as a Clinton civil-rights attorney before joining the leftist Center for Responsible Lending in the run-up to the crisis. He helped the center lobby Fannie and private lenders to relax standards for low-income urban borrowers. Now he’s back at the Justice Department prosecuting banks as Obama’s special counsel for fair lending, working under Perez.
Using his nonprofit center’s discredited statistical models for determining racial bias in lending, Halperin has accused dozens of banks of cheating minority borrowers — without controlling for credit scores and other risk factors that explain lending decisions.
GARY GENSLER: One of Obama’s top financial regulators, Gensler once bragged that thanks to subprime mortgages, banks made home loans to minorities at “twice the rate” they made to other borrowers. “A subprime loan is a good option when the alternative is no access to credit,” he said in 2000 as Clinton’s undersecretary of Treasury.
The original cast of the financial disaster are back starring in a bad sequel. So here we go again. Thanks to a failure of accountability, the same social engineers who caused the crisis have wormed their way back into power. And they’re doubling down on their monstrous mistakes, inviting another housing calamity.
Paul Sperry is a Hoover media fellow and author of “The Great American Bank Robbery: The Unauthorized Report About What Really Caused the Great Recession” (Thomas Nelson).
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