Republicans Push For More Subprime Lending To Minority Borrowers

The GOP goons have found yet another way to try and screw over minorities….just before the midterm elections. Some people just hang themselves…

Republicans Push For More Subprime Lending To Minority Borrowers

Effects from the subprime mortgage lending crisis that jumpstarted the 2008 recession are still being felt today, but despite the obvious need for continued regulation on lending to borrowers who aren’t financially qualified to replay, the GOP says lend away.

via Huffington Post

A congressional hearing to examine the legacy of President Barack Obama’s 2010 Wall Street reform law quickly devolved into a partisan mess Wednesday, with Republicans demanding more loans to low-income minority borrowers, decrying mergers of small banks and pitying the regulatory burden of a community banker who’s exempt from the new law’s key mortgage rules.

Raising the stakes for this bizarre battle was the testimony of former House Financial Services Committee Chairman Barney Frank (D-Mass.), the only Democratic witness called for the hearing. Frank pounced after current panel Chairman Jeb Hensarling (R-Texas) and other Republicans decried the decline in loan availability for low-income and minority borrowers.

“I was very struck by the frankly schizophrenic approach that the majority seems to be making on subprime loans — loans to poor people,” Frank said. “There’s a criticism that under the bill, fewer loans are being made to low-income people — yeah! That was part of what I thought everybody wanted to do. I thought there was a consensus that too many loans were being made to those people.”

Hensarling was particularly vocal about the Dodd-Frank law’s effect on minority borrowers, claiming a Federal Reserve study shows that “about one-third of blacks and Hispanics would not be able to obtain a mortgage,” based on the rule’s requirement that monthly borrower debts not exceed 43 percent of monthly income.

That’s true, according to the Fed’s 2010 data. It’s also generally considered bad personal finance to have that much of your income tied up with debt payments.

But the broader problem is that minority families generally have lower incomes than white families, thanks to widespread institutional racism. Median African-American household income was $33,762 in 2012, compared with median white household income of $55,565.

And issuing expensive loans to families with low income can have terrible results. The proliferation of subprime mortgages during the George W. Bush presidency did disproportionately target people of color. It also hurt them, as many who qualified for better terms were steered into garbage loans with high interest rates. Since most subprime loans were for refinancings, the boom ultimately caused a net loss of homeownership, as many sustainable home financing arrangements were converted to foreclosures.

SMH. For a party that’s sooooooo desperate for minority votes, these GOP goons sure don’t act like it.