And, of course, a bit of race-baiting political advantage for the President in 2012. From Business Week:
…At the Justice Dept., a new 20-person unit dedicated to fair lending issues received a record number of discrimination referrals from regulators in 2010 and has dozens of open cases, according to a recent agency report. Potential penalties can reach into the millions of dollars. “We are using every tool in our arsenal to combat lending discrimination,” Thomas E. Perez, the assistant attorney general for the Civil Rights Div., told a conference of community development advocates in Washington in April.
To some banks the crackdown has come as a surprise, say consultants and lawyers representing financial institutions in discussions with regulators. Like Midwest BankCentre, some lenders are being cited for failing to operate in minority and low-income census tracts near their branches, even when they have never done business there before. “If you put your branches only in upper-income areas, the regulators are not accepting that anymore,” says Warren W. Traiger, a lawyer at BuckleySandler in New York, which advises banks on fair lending issues…
If there is anything we should have learned from the recession and our crushing, national debt is that debt is poison – you’re not doing a person a favor by lending them money. All you’re doing is hooking them – and making it less likely they’ll be responsible and giving them fewer real opportunities to build wealth and acquire property. Borrowed money is like a drug – and once you borrow some, you’ll want to borrow some more. After all, borrowing money allowed you to instantly gratify that desire for a new car…so why not allow it to gratify your desire for a new TV and some fine, new clothes? After a while, your disposable income – part of which is supposed to be saved – is being eaten up by interest and fees. You never get ahead.
True, some people can manage debt – manage, that is, to pay it off with rapidity. Most people aren’t able to do that. It just becomes too easy. I work in credit; I see it all the time. People who have piled up debt and never pay it off. Some go bankrupt (and most of the time start the process over again as soon as discharged), others just stagger along, making slightly more than the minimum payments, never getting done with it. I’m not saying we should ban debt – some times it can be vital, but mostly only in purchases of very large items (a house, eg) or for business expansion – but we should never, ever be seeking ways to make obtaining debt easier. It should be hard – only the most successful, hard-nosed people should be able to obtain it…because only they won’t be screwed by it.
Mostly, this is just a pander – a way to generate leftist sympathy; let the minority communities know that Obama is “fighting for them”; get in the papers. The other side of the coin is the corrupt deals that government will cut with the banks to let them off the hook – the sort of deals which profited handsomely politicians like former Senator Dodd while also allowing things like Fannie Mae to become financial monsters. But it is bad, all around bad – and the worst effect will be on the poor people it is supposed to be helping. Making it easier for them to borrow – making it easier for them to become debtors; making people least equipped to handle complex, financial matters the easy prey of those best able to create financial scams.
For goodness sake, it is high time we got government out of this – to learn the lesson that if you try to “fix” things in the economy via government power, you’ll just make it worse. The way out of poverty is by hard work and frugal living – not by a combination of welfare and a credit card. Sure, that can make a poor person seem like he’s not poor…but it doesn’t help him obtain work skills, financial skills, savings and property…the things of real wealth. Those who are pressing this issue should be ashamed.
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