Obama admin pushing banks to offer sub-prime mortgages again...

[Richard L]

Hugh,

The Office of the Comptroller of Currency and the Office of Thrift Supervision are part of Obama's administration and that is a fact.

Only that the President appoints the Comptroller of Currency. This agency answers only to the Congress, not to the President. The CofC deals with banks in the regulation of currency not credit, loans or mortgages

EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 1 - THE COMPTROLLER OF THE CURRENCY



-HEAD-

Sec. 1. Office of Comptroller of the Currency



-STATUTE-

There shall be in the Department of the Treasury a bureau charged

with the execution of all laws passed by Congress relating to the

issue and regulation of national currency secured by United States

bonds and, under the general supervision of the Board of Governors

of the Federal Reserve System, of all Federal Reserve notes, except

for the cancellation and destruction, and accounting with respect

to such cancellation and destruction, of Federal Reserve notes

unfit for circulation, the chief officer of which bureau shall be

called the Comptroller of the Currency and shall perform his duties

under the general directions of the Secretary of the Treasury. The

Comptroller of the Currency shall have the same authority over

matters within the jurisdiction of the Comptroller as the Director

of the Office of Thrift Supervision has over matters within the

Director's jurisdiction under section 1462a(b)(3) of this title.

The Secretary of the Treasury may not delay or prevent the issuance

of any rule or the promulgation of any regulation by the

Comptroller of the Currency.

The Office of Thrift Supervision does oversee many banks in dealing with enforcement of sound banking practices, and comsumer complaints. They can certainly look into any consumer complaint that banks are not following their regulations. But if you think that means that Obama can put pressure on banks to due sub prime loans, that would go against the OTS you might want to read exactly what they regulate:

Enforcement

The OTS legal team implements agency authority to take action for unsafe or unsound practices and violations of law by OTS-regulated savings associations, their affiliates and their subsidiaries.

That would certainly imply that they would be against unsound banking practices such as offering Sub Prime loans. I'm sure that Obama or any consumer can complain that banks are Redlining areas and not giving any credit to predominately black areas...I think this is something that would fall into the OTS area of enforcement but not sub prime loans



The final point that you continue to overlook is that Sub Prime loans only applied to Mortgages and was offered by Fannie Mae, the now defunct Federal agency that handled mortgages. Clinton pushed them to lower their standards so more people could buy homes.

The Fannie Mae told the banks that they were offering these new Sub Prime mortgages and relaxed the standard necessary to qualify. The Banks just used these lower standards...and even lowered them further by not checking incomes and credit to qualify people. Then the Banks dumped all these Sub Prime mortgages on the CDO's who got stuck with these toxic loans.



If Obama wants to initiate some new form of Sub Prime Mortgage, he would have to go to whatever Federal Agency that (now) deals with home Mortgage standards. They dictate what their credit standards are to all lending institutions...If the lending institution wants to accept sub prime mortgage applications they can, but they do not have to. If they do accept application for sub prime mortgages, they are required to follow the standards set up by the Feds.



If people from OTS where investigating banks, it was not because the were being pressured to give sub prime mortgages, it was because they were Redlining predominately black area. Sub Prime mortgages were never mentioned in the article accept by the Author and even then put the in brackets which was his erroneous interpretation. Nobody but you and the author see a push for new "Sub Prime" mortgages.



I suspect that the OTS is investigating the Redlining practices of banks. But these loans and credit are about not making normal business loans, or any kind of investment loans to people who live in these Redlined areas which are predominately black.



...Rich

 

[Richard L]

 

[Tom Schindler]

If the majority of Sub-Prime loans originated from banks located in the ghetto, Hugh MAY have a point.



Sub-Prime loans originated from all areas and many more times in area's that are white.



This is a form of racism. Equal opportunity is the law. Get used to it.





Tom

 

[Richard L]

Caymen,

You are correct. Sub Prime mortgages were from all neighborhoods and all walks of people. They were designed to allow people who had less than excellent credit get a low interest mortgage. Banks and other mortgage companies accepted these higher risk mortgages because the Federal Mortgage agency (Fannie Mae) that regulates home mortgages lowered their standards based on pressure from the Clinton Administration.



The financial melt down occured when the Banks and other mortgage lending institutions taking these applications were approving these loans on paper as meeting Fannie Mae's requirements without verifying credit and incomes to insure the customer was actually qualified. Fannie Mae did not do their jobs, and just assumed all the mortgages they got had met the qualifications and were verified.



Most of the banks saw these as higher risk mortgages and quickly sold them off to CDO investors or anyone else who would buy them. Banks made some money and realized that the more of these Sub Prime loans they can approve and sell the more money they can makes and the less risk they take. So that's what they did. I'm sure that some banks got burned when the Sub Prime loan fiasco blew up and they had loans they could not sell off fast enough and they got stuck with.



Hugh's article claims that the Obama Administration is putting pressure on banks to make Sub Prime loans, when in reality, the banks cannot do Sub Prime loans without authorization from the Federal Morrgage regulating agency (who ever that is now?) Obama, nor the Banks and the Federal bank regulators simply do not have that authority.



The article seem clear to everyone (except Hugh) that Obama may be concerned that the banks Redlining practice may be a violation of Federal and State banking regulations that require equal access to credit to all US citizens. The issue has nothing to do with Sub Prime mortgages, but to insure that business and people everywhere have equal access to loans and mortgages, andd not arbitratily blocked because you live in the wrong neighborhood. When these redlined areas are predominately black areas, it can be looked at as a racial issue as well. This does not mean or imply that the banks can or should lower their standards for credit worthiness...but that appears to be exactly what the author of the article wants to imply to the reader.



...Rich