Wintery Knight

…integrating Christian faith and knowledge in the public square

Obama administration pressuring banks to lower mortgage lending standards

Remember the housing bubble and the mortgage lending crisis of 2008? Well guess what – the Democrats want an encore.

Investors Business Daily explains.

Bankers warn the administration’s new “disparate impact” home-lending regulation will wreak havoc in credit markets, replacing merit standards with political correctness.

The Department of Housing and Urban Development issued the controversial new anti-discrimination rule earlier this year. Now enforced by every federal regulator dealing with banks, it has the effect of criminalizing credit standards used to qualify borrowers for home loans.

Last week, the Mortgage Bankers Association and Independent Community Bankers of America jointly filed a Supreme Court brief arguing that under the new HUD rule:

“Virtually every lender in the United States could be sued for using non-discriminatory credit standards simply because variations in economic and credit characteristics produce different credit outcomes among racial and ethnic groups.”

In their 33-page brief, filed in support of a landmark housing case pending before the court, they complain that HUD recently launched 22 separate investigations against lenders alleging that their policies of requiring minimum credit scores “had a disparate impact on minorities in violation of the Fair Housing Act.”

Dozens of similar actions have been brought against lenders by Attorney General Eric Holder. He is basing claims of bias on statistics showing differences in loan outcomes by race while ignoring racially neutral credit-risk factors that explain those differences.

Under disparate impact’s low standard of proof, the government doesn’t have to show lenders intentionally discriminated against borrowers.

For the first time in history, businesses are being ordered to justify the necessity of a certain level of return on investment given the racial impact resulting from the use of credit-score thresholds.

The mortgage trade groups argue the formalized disparate-impact rule also effectively criminalizes other legitimate business practices, including minimum down-payment requirements, sliding loan rates and the charging of brokers’ fees.

Banks today face increased litigation risk simply by complying with sensible lending standards for hedging against risk.

[...]The social engineers and race demagogues in this administration are trying to enforce a balance in financial outcomes that risks another collapse of the housing market. The Supreme Court must put an end to a scheme so reckless, unfair and unconstitutional.

Does that sound familiar? Yes. In the last recession, the government forced banks to make risky loans in order to increase home ownership. That is exactly what gave us the 2008 recession.

Excerpt:

[Democrat] Congressman [Barney] Frank, of course, blamed the financial crisis on the failure adequately to regulate the banks. In this, he is following the traditional Washington practice of blaming others for his own mistakes. For most of his career, Barney Frank was the principal advocate in Congress for using the government’s authority to force lower underwriting standards in the business of housing finance. Although he claims to have tried to reverse course as early as 2003, that was the year he made the oft-quoted remark, “I want to roll the dice a little bit more in this situation toward subsidized housing.” Rather than reversing course, he was pressing on when others were beginning to have doubts.

His most successful effort was to impose what were called “affordable housing” requirements on Fannie Mae and Freddie Mac in 1992. Before that time, these two government sponsored enterprises (GSEs) had been required to buy only mortgages that institutional investors would buy–in other words, prime mortgages–but Frank and others thought these standards made it too difficult for low income borrowers to buy homes. The affordable housing law required Fannie and Freddie to meet government quotas when they bought loans from banks and other mortgage originators.

At first, this quota was 30%; that is, of all the loans they bought, 30% had to be made to people at or below the median income in their communities. HUD, however, was given authority to administer these quotas, and between 1992 and 2007, the quotas were raised from 30% to 50% under Clinton in 2000 and to 55% under Bush in 2007.

[...]It is certainly possible to find prime mortgages among borrowers below the median income, but when half or more of the mortgages the GSEs bought had to be made to people below that income level, it was inevitable that underwriting standards had to decline. And they did. By 2000, Fannie was offering no-downpayment loans. By 2002, Fannie and Freddie had bought well over $1 trillion of subprime and other low quality loans. Fannie and Freddie were by far the largest part of this effort, but the FHA, Federal Home Loan Banks, Veterans Administration and other agencies–all under congressional and HUD pressure–followed suit. This continued through the 1990s and 2000s until the housing bubble–created by all this government-backed spending–collapsed in 2007. As a result, in 2008, before the mortgage meltdown that triggered the crisis, there were 27 million subprime and other low quality mortgages in the US financial system. That was half of all mortgages. Of these, over 70% (19.2 million) were on the books of government agencies like Fannie and Freddie, so there is no doubt that the government created the demand for these weak loans; less than 30% (7.8 million) were held or distributed by the banks, which profited from the opportunity created by the government. When these mortgages failed in unprecedented numbers in 2008, driving down housing prices throughout the U.S., they weakened all financial institutions and caused the financial crisis.

Reduced lending standards caused the last recession, and now the same party that pushed for reduced lending standards are pushing for reduced lending standards again. Hold onto your hats, there’s a storm coming.

Filed under: News, , , , , , , , , , , , , , , , , , ,

New study: belief in God can significantly improve mental health outcomes

From Psych Central. (H/T Rob P.)

Excerpt:

A new study suggests belief in God may significantly improve the outcome of those receiving short-term treatment for psychiatric illness.

Researchers followed patients receiving care from a hospital-based behavioral health program to investigate the relationship between patients’ level of belief in God, expectations for treatment and actual treatment outcomes.

In the study, published in the current issue of Journal of Affective Disorders, researchers comment that people with a moderate to high level of belief in a higher power do significantly better in short-term psychiatric treatment than those without.

“Belief was associated with not only improved psychological well-being, but decreases in depression and intention to self-harm,” says David H. Rosmarin, Ph.D., an instructor in the Department of Psychiatry at Harvard Medical School.

The study looked at 159 patients, recruited over a one-year period. Each participant was asked to gauge their belief in God as well as their expectations for treatment outcome and emotion regulation, each on a five-point scale.

Levels of depression, well-being, and self-harm were assessed at the beginning and end of their treatment program.

Obviously, the issue of God’s existence is a matter to be decide based on what is true and false, but this kind of story might help us to get motivated for persuasion.

Filed under: News, , , , , , , , , , , ,

New study: married women less likely to suffer post-partum depression

The UK Daily Mail reports. (H/T Dina)

Excerpt:

The study of more than 6,000 women looked at the risks and benefits of marriage.

It found women who cohabited with their partners rather than being married to them were also more likely to suffer domestic abuse and/or abuse drugs. The less time they had lived together, the higher their risk.

Research leader Dr. Marcelo Urquia, from the University of Toronto, said: ‘We did not see that pattern among married women, who experienced less psychosocial problems, regardless of the length of time they lived together with their spouses.’

The study found that 10.6 per cent of married women suffering from post-natal depression.

The figure rose to 20 per cent for women cohabiting in ‘common-law’ relationships and 35 per cent for single women.

Most dramatically, it rose to 67 per cent for women who were separated or divorced in the year prior to the birth of a child.

[...]The study, published in the American Journal of Public Health, coincides with the latest [UK] Census figures unveiled this week which revealed married couple households are in the minority for the first time.

While the number of married people stays constant at 21.2 million, the  number of single adults households has rises by three million compared with 2001.

The census report said there were just under 2.3 million cohabiting couples last year, compared to 2.06 million in 2001.

Cohabitees now make up 10 per cent of all households, while married couples lead 33 per cent of households.

Lone parent households make up another 10 per cent, and 30 per cent of homes have just one individual.

The troubling thing to me is that people aren’t serious about doing what it takes to prepare for marriage, and then choosing the right person for the job. Everyone knows that marriage is better for you financially, emotionally, and for your health, but somehow, people treat it as a casino game. We don’t know how to prepare for marriage with practices that work, like chastity, courting and church attendance. Bad outcomes like cohabitation, divorce and single motherhood don’t just happen by accident. People choose wrong approaches because they don’t want to do things the right way.

Filed under: News, , , , , , , , , , , , , , , , , ,

The learned helplessness of young men in a feminist state

Dr. Stuart Schneiderman writes an article that perfectly explains what young men are facing in a feminist-dominated society.

Excerpt:

It begins in the schools. There, empowered female teachers have set out to enhance the performance of girls by systematically favoring them at the expense of boys.

The Huffington Post reported that British boys are convinced that female teachers grade them unfairly. On the other hand, schoolgirls believe that male teachers grade them fairly.

I do not know the extent to which female American teachers try to punish boys in order to improve the performance of girls, but girls are consistently outperforming boys in schools and are taking up most of the places in colleges.

It seems inevitable that some boys are dropping out of school and failing to pursue advanced education because they have been demoralized.

Think about it, if all the girls receive great grades then boys will, at first try to improve their performance. Once they discover that they are still receiving lower grades, they will give up. This translates into depression.

Convinced, and not without reason, that the game is rigged, they stop playing.

Depression, as Martin Seligman defined it, is learned helplessness. When something is learned, someone is teaching it. When your female teachers convince you that you can never get it right and that you will never be judged fairly, you will become demoralized and depressed.

[...]Rob Long suggests that when these boys grow up they are unlikely to believe that it is possible to have harmonious relationships with women.

A recent poll bears this out. Suzanne Venker reports:

According to Pew Research Center, the share of women ages eighteen to thirty-four that say having a successful marriage is one of the most important things in their lives rose nine percentage points since 1997 – from 28 percent to 37 percent. For men, the opposite occurred. The share voicing this opinion dropped, from 35 percent to 29 percent.

More women want to get married and more men don’t. This suggests that men are increasingly being conditioned to dread close contact with women. It also suggests that men have discovered that, like school, the marriage game is rigged against them.

Read the whole thing.

I post a lot of things for Christian men about how to detect a marriage-enabled Christian woman. But I think we can short-circuit all of that, if you’re rushed. Just send the woman this article and then ask her whether the situation facing young men is a problem she is concerned about, and what she intends to do personally in order to stop it. That’s a one question interview right there.

UPDATE: Reformed Seth has more on this problem.

Filed under: News, , , , , , , , , , , ,

Harvard economist explains why spending cuts are better than tax increases

From Investors Business Daily, an editorial by Dr. Alberto Alesina of Harvard University, that explains which approach to reducing debt and deficits works best. Is it cutting spending and reducing regulation? Or is it continuing to borrow and spend, and raising taxes?

Let’s see what Dr. Alesina says:

The evidence speaks loud and clear: When governments reduce deficits by raising taxes, they are indeed likely to witness deep, prolonged recessions. But when governments attack deficits by cutting spending, the results are very different.

In 2011, the International Monetary Fund identified episodes from 1980 to 2005 in which 17 developed countries had aggressively reduced deficits. The IMF classified each episode as either “expenditure-based” or “tax-based,” depending on whether the government had mainly cut spending or hiked taxes.

When Carlo Favero, Francesco Giavazzi and I studied the results, it turned out that the two kinds of deficit reduction had starkly different effects: cutting spending resulted in very small, short-lived — if any — recessions, and raising taxes resulted in prolonged recessions.

[...]The obvious economic challenge to our contention is: What keeps an economy from slumping when government spending, a major component of aggregate demand, goes down? That is, if the economy doesn’t enter recession, some other component of aggregate demand must necessarily be rising to make up for the reduced government spending — and what is it? The answer: private investment.

Our research found that private-sector capital accumulation rose after the spending-cut deficit reductions, with firms investing more in productive activities — for example, buying machinery and opening new plants. After the tax-hike deficit reductions, capital accumulation dropped.

The reason may involve business confidence, which, we found, plummeted during the tax-based adjustments and rose (or at least didn’t fall) during the expenditure-based ones. When governments cut spending, they may signal that tax rates won’t have to rise in the future, thus spurring investors (and possibly consumers) to be more active.

Our findings on business confidence are consistent with the broader argument that American firms, though profitable, aren’t investing or hiring as much as they might right now because they’re uncertain about future fiscal policy, taxation and regulation.

But there’s a second reason that private investment rises when governments cut spending: the cuts are often just part of a larger reform package that includes other pro-growth measures.

In another study, Silvia Ardagna and I showed that the deficit reductions that successfully lower debt-to-GDP ratios without sparking recessions are those that combine spending reductions with such measures as deregulation, the liberalization of labor markets (including, in some cases, explicit agreement with unions for more moderate wages) and tax reforms that increase labor participation.

Let’s be clear: This body of evidence doesn’t mean that cutting government spending always leads to economic booms. Rather, it shows that spending cuts are much less costly for the economy than tax hikes and that a carefully designed deficit-reduction plan, based on spending cuts and pro-growth policies, may completely eliminate the output loss that you’d expect from such cuts. Tax-based deficit reduction, by contrast, is always recessionary.

UPDATE: George Mason University economists agree: debt is wrecking the economy and the right way to stop it is with spending cuts, not tax increases. In order to grow the economy we need a balanced approach of spending cuts and tax cuts.

Excerpt:

The United States’ high levels of debt are already contributing to slower economic growth and decreased competitiveness. These impacts will worsen if the nation’s debt-to-GDP levels continue to rise, as is currently projected.

[...]High levels of government debt undermine U.S. competitiveness in several ways, including crowding out private investment, raising costs to private businesses, and contributing to both real and perceived macroeconomic instability.

[...]Carmen Reinhart and Kenneth Rogoff examine historical data from 40 countries over 200 years and find that when a nation’s gross national debt exceeds 90% of GDP, real growth was cut by one percent in mild cases and by half in the most extreme cases. This result was found in both developing and advanced economies.

Similarly, a Bank for International Settlements study finds that when government debt in OECD countries exceeds about 85% of GDP, economic growth slows.

[...]While fundamental tax reform is required to correct a host of structural inefficiencies, policymakers can quickly reduce the U.S. statutory rate of 35% to the OECD average rate of 26% or less.

That’s what research tells us. But that’s not what we are doing, because we voted for Barack Obama.

Filed under: News, , , , , , , , , , , , , , , , , , , , , , , , ,

Wintery Tweets

Click to see recent visitors

  Visitors Online Now

Page views since 1/30/09

  • 3,956,405 hits

Enter your email address to follow this blog and receive notifications of new posts by email.

Join 1,746 other followers

Archives

Follow

Get every new post delivered to your Inbox.

Join 1,746 other followers

%d bloggers like this: