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  • Twin Lights Louisville, KY
    July 12, 2013 11:59 a.m.


    No banks I know of keep mortgage loans in house. Not to say some bank somewhere does not do so, but most only warehouse them for long enough to get them sold.

    Also, none of this addresses the many mortgage companies (which are not subject to bank regulation).

    The LONG history of banking is not the govt. forcing lower standards. It is of maintaining strong standards to retain confidence in the system.

    My experience here is simple. When times are good and money is to be made, the standards fly out the window for all but the most circumspect bankers. No one wants to miss out on the profit party.

    Also, remember that many of the large institutions that failed were NOT banks. And who gave the rating agencies the wink to keep ratings high on products they could not really analyze fully?

    Sorry, there might have been minor influence here from govt. push but the real govt. problem was not pushing for loans to be made but in less regulation and an unfounded confidence in laissez faire economics.

    There are only two significant forces in the markets. Greed and fear. We had too little fear, too much greed.

  • RedShirtMIT Cambridge, MA
    July 12, 2013 11:24 a.m.

    To "merich39" but not all banks sell of their mortgages. Some keep them in house.

    But that isn't the point. The point is that the government either through edict or through court cases have forced banks to lower their lending standards.

    If lower lending standards were part of the cause for the meltdown, why should we continue to allow government to mandate the same low standards?

    If your kids beg you for a pony do you go out and buy one? Do you have enough internal strength to resist them?

  • merich39 Salt Lake City, UT
    July 12, 2013 9:16 a.m.


    If a bank makes a mortgage loan, then packages and sells that mortgage loan, I don't think they really care too much whether that loan defaults or not. It's become the problem of the loan buyer. And when the housing market is booming on paper, as it was, then the buyers and sellers are all making money hand over fist. It's all just on paper, of course. But the bonuses being paid to bank execs for manufacturing these paper gains was definitely real. Then when the paper gains bubble burst, the taxpayers bailed out the banks for those paper losses and then bank execs turned around and paid themselves huge bonuses for securing those taxpayers bailouts.

    Finally, what connection are you trying to make between government regulations and the banks begging myself and literally millions of other Americans to over-extend our credit to purchase a motor home? Maybe you know of some government regulation that required banks to beg me to over-extend my credit? If yes, please share. If not, then please don't deflect.

  • RedShirtMIT Cambridge, MA
    July 12, 2013 9:08 a.m.

    To "Shaun" if you looked more into that case, you find that Citibank had policies where they didn't like making loans for certain geographical areas because of the higher rates of defaults. The bank didn't want to make the loan.

    You appear to agree that Obama was on the legal team that did in fact force the bank to make a loan that it didn't want to. Thanks for confirming my original statement.

    If you want to look at what Obama has done as President to further force banks into making loans they don't want to we can do that too.

    From the Washington Post we read "Obama administration pushes banks to make home loans to people with weaker credit". Here we have Obama using the power of the Government to tell banks to lower their lending standards.

  • Shaun Sandy, UT
    July 11, 2013 5:40 p.m.

    @redshirt. Alright redshirt, in Buycks-Roberson vs. Citibank Federal Savings Bank, the complaint is:

    This is a civil action brought by Selma Buycks-Roberson, on behalf of herself and all other African Americans who made home loan applications to Cititbank, and whose applications were rejected because of their race or color, or because the racial composition of the neighborhood in which their property was located. This action seeks injunctive relief and monetary damages for violations of 42 U.S.C 1981 " Equal rights under the law";42 3605 " Discrimination in residential real estate-related transactions" and U.S.C 15 1691a "Scope of prohibition"

    So this lady sued citibank because of denying her credit based on race. If you would of actually read the complaint you would have read the plaintiff was rejected because of adverse credit. She followed up with citibank providing extensive financial documentation proving her creditworthiness and ability to repay. She was denied again.

    In addition Barack Obama was a junior member at the law firm that initiated this case and only did research for the case. So basically he was doing his job.

  • RedShirtMIT Cambridge, MA
    July 11, 2013 4:51 p.m.

    To "merich39" go and read about what the government has done to regulate minimum loan qualifications. Look at the percent of mortgages that have defaulted over the past 100 years. Prior to government regulation of mortgages few were sub-prime and few were defaulted on. As the government took over credit and lending standards, the number of defaults went up. Do you think that banks want loans to default? If banks don't want bad loans, then what has pushed them to make so many bad loans?

  • merich39 Salt Lake City, UT
    July 11, 2013 3:11 p.m.


    You appear to be making an argument that if one bank was forced to make a loan that shouldn't have been made, then all loans made by all banks were forced. I doubt you have any factual data to support such a claim since it would be a false claim to being with. Ask anyone who has experienced predatory lending. I'd have a difficult time believing you have never experienced predatory lending, since it is so prevalent in our society.

  • merich39 Salt Lake City, UT
    July 11, 2013 11:08 a.m.

    The author makes it sound like banks had their doors unlocked but their lights turned off hoping poor people would stop by for a home loan for which the bank would be powerless to deny.

    This is completely opposite from the truth. The truth is that the banks were practicing predatory lending with wild abandon. I can't tell you the number of unwanted junk mailers I received from banks practically begging me to refinance my home at 120% of it's appraised value so I could buy that boat or motor home I'd always wanted. I've worn out multiple shredders shredding all the pre-approved Visa card notices I've received. I wasn't seeking out over extending my credit from the banks. The banks were seeking out over extending my credit for me.

    The banks were riding a wave of credit spending... a wave they helped create and extend. When that wave inevitably crashed on the shores of economic reality, the banks were rescued from financial harm while individuals were left to suffer for their poor financial decisions. Bankers rewarded themselves with huge bonuses from those taxpayer subsidies while foreclosing on those homes they over-financed.

  • RedShirtMIT Cambridge, MA
    July 11, 2013 10:57 a.m.

    To "Shaun" Obama was part of the legal team in the case of Buycks-Roberson vs. Citibank Federal Savings Bank. It was after that lawsuit the bank changed its lending standards. If the bank thought that their lending standards were good before the lawsuit, and changed them to relax those standards after being sued and forced todo so, doesn't that mean that banks were forced to loan money that they didn't want to loan?

    Now, since the collapse, we see that Obama has been adding to the problem of forcing banks to lower their lending standards. Read "Clinton Added Teeth To CRA, Obama Turned Them Into Fangs" at IBD.

    Remember, if banks thought that their practices were good, why did they have to be sued to lower their lending standards? By forcing lower lending standards, are you not by default forcing them to loan money they would rather not loan out?

  • Shaun Sandy, UT
    July 10, 2013 5:24 p.m.

    @redshirt. You are wrong. What is the case number in the Acorn/Obama case? Banks got greedy plain and simple. All the banks wanted to do is to originate as many loans as possible and then bundle them and sell them.

    They made money selling them, servicing them, and tons more if the loan went into default. This is why the home loan modifications really never worked. The banks didn't care if homeowners went into default because they made tons of money if the home went into foreclosure.

  • Lew Scannon Provo, UT
    July 10, 2013 1:40 p.m.

    To RedShirt:

    Well-placed commas enhance readability.

  • RedShirt USS Enterprise, UT
    July 10, 2013 12:53 p.m.

    To "Roland Kayser" actually they were. Obama was involved in several lawsuits while he worked with ACORN to force banks into making loans that they didn't want to make.

    Also, Clinton used the Justice Department to force banks to lower their lending standards and make loans that they didn't want to make.

    To "Kent C. DeForrest" it is called Fascism. This is a form of socialism where the government picks their favored businesses, micromanages those companies as if they own them, then ensures that they do not fail.

  • Gildas LOGAN, UT
    July 10, 2013 12:03 p.m.

    Someone recently said that free enterprise should not be confused with free trade. I agree with that statement. Free trade is best between and within the states of the union.

    Formerly federal taxes were largely or entirely collected from import duties which protected our workers and businesses. Nowadays we destroy our economy by obliging domestic businesses to trade with nations that pay employees relatively little and are not so bogged down with regressive taxes, environmental regulations etc. It surprises me that either a conservative or a liberal would support such policies.

    At any rate our economy would thrive under free enterprise tempered only by the usual safeguards against monopolies. Our level of employment would benefit greatly, also, by ending free trade with certain nations, especially mainland China, and ending illegal immigration by punishing employers who connive with such illegality for personal profit.

    So bring our corporations home by making it unprofitable for them to outsource and reduce our domestic corporate taxes dramatically. Disburden our economy by removing the most egregious obstacles and ceasing to micromanage domestic businesses small and large. Place reasonable protective tariffs on imports.

  • Kent C. DeForrest Provo, UT
    July 10, 2013 10:28 a.m.

    Has anyone noticed that the Wall Street banks that did the most damage also came out of this mess smelling like a rose? They are once again reeling in huge profits through speculative adventures (knowing that the taxpayer will be there to bail them out), while Average Joe American is worse off (perhaps still unemployed).

    Finance used to exist to support the production of real products. But now money is the most sought-after product, even though it is not really a product at all. The financial sector passed manufacturing as the biggest sector in the economy several years ago. That is certainly a sign that we've got a few things upside down in our economy. Regulation, anyone?

  • Twin Lights Louisville, KY
    July 10, 2013 10:13 a.m.

    Eric and Roland got this right. Thanks.

  • Eric Samuelsen Provo, UT
    July 10, 2013 9:40 a.m.

    Utter nonsense. Do some research. Read up on Washington Mutual, or Long Beach Bank and Trust, and the tens of thousands of bad loans they made, knowing they would never have to service those loans, knowing those loans would be bundled into CDOs and sold on bond markets.
    The government is, however complicit in one sense. They passed Gramm-Leach-Bliley, the worst piece of legislation passed since the Smoot-Hawley tariff. They abandoned sound principles of finance embodied in Glass-Steagall, and the results were devastating. They deregulated, stupidly and without forethought.

  • Hutterite American Fork, UT
    July 10, 2013 8:51 a.m.

    The examples provided have had surprisingly little effect on free enterprise or the economy in general. You got your chance to throw rocks at the President, though, so it's all good.

  • Ultra Bob Cottonwood Heights, UT
    July 10, 2013 8:27 a.m.

    The real truth is that virtually nothing is done by government other than those things done at the behest of businessmen.

    A government guaranteed loan is a win/win loan for the lender, a bank. When there is a guaranteed payback, there is no incentive to make only good loans. Further by having the government make a rule to make bad loans, at the behest of the banks, the banks absolve themselves of any guilt.

    The words Free Enterprise covers all the different ways and means of transferring the wealth of people to the rich and powerful. Inflation, deflation, recession and depression are tools used for the purpose. They are contrived and executed at the will of businessmen.

  • Roland Kayser Cottonwood Heights, UT
    July 10, 2013 1:03 a.m.

    No bank was ever forced to make a loan to a buyer who couldn't repay it. They did so willingly because they made the bank more money, and the loan could be sold off to Wall St., meaning the bank didn't lose if the buyer defaulted. The whole thing fell apart because every bank, acting on their own best interest, made so many bad loans that the volume of bad loans swamped the system.

    The entire world economy has been severely hammered by the recession. Compared to most other developed countries, our economy is doing comparatively well. No one is doing great. That is not the fault of the Obama administration.