Thursday, September 25, 2008

When Discrimination Ain't So Bad

So, the financial world around us seems to be in total chaos. And those evil, greedy, banks and mortgage-lenders are to blame. Shame on them for making such risky loans to people who obviously did not have the ability to make payments on a monthly basis. I mean, who wants to pay every month? Hell, who even wants to pay every other month? Dennis and I could put our mortgage payment towards a lot more "fun" things but since when is that a choice? Once we signed all 90,000 pages at the closing table two years ago, we knew exactly what we were in for. And we planned appropriately. Now, I'm not saying it's fun sending in that money every month, but it's sort-of necessary. And it's exactly what we signed up for.

What drives me absolutely crazy (well, one of the things) is that you very rarely hear about what really caused the current financial situation outside of the "greedy" individuals at banks and other lending institutions. What is very rarely mentioned, probably because it's not as exciting or not as much of a draw for people to listen to, is that the government helped to cause this mess. And, boy oh boy, did they help in a big way. The help the government provided was through the Community Reinvestment Act (which was strengthened under the Clinton administration).

To put it in laymans terms, here is what happened: ACORN and other community activist groups felt that certain people (minorities, lower income families) were being passed over for loans. These people wanted to own a home, too! I mean, there's gotta be a document somewhere stating that everyone has a RIGHT to own a home, doesn't there? Things like a bad credit history or not having a reliable job should not disqualify someone from a mortgage loan. I mean, they want a house, too. And, it's only fair.

So, these groups protested and at the end of the day, political correctness won. The US gov't then went on to say that if banks did not create loans that these individuals could afford (hence, the need for subprime mortgages, ARM's, etc.), then the bank was not able to expand. Basically the government forced these institutions to make knowingly bad loans if they wanted to grow - - it was a price of doing business!

I'm not saying that 100% of the blame is to be placed on the government because people do tend to take advantage of a bad system and I am sure that some super shady deals took place when no one was looking. But, what I am saying is that we need to think about whether or not we really want this much government involvement in the "free market" that we supposedly have today. My vote, which is a shocker, is NO THANKS. Let's not be politically correct and let's say that discrimination is OK. It is OK when we are talking about discriminating based on credit worthiness, job stability, and loaning money. Let's leave those decisions to the banks and not the government.

Ok, there. I got it out. That has been bottled up inside of me all week long and it just sort-of spewed out.


Melissa said...

Thought you might find this video interesting:

Krista said...

Thanks - and it's a very good video - so good that I posted it right on the blog!! :) It's funny b/c I think that I emailed you the same video this morning (through a different link). Great minds think alike! And we're both equally terrified right now!