St. Louis CofCC Blog

CNS News:

Students Urged to Fight ‘Debt Disease’

Beware of debt “disease.” That’s the message from the Service Employees International Union and the League of Young Voters. The groups are urging students to “push back” against big banks that are pushing credit cards.

SEIU and LYV are sponsoring a Web-based video contest, in which students create public service announcements warning about the adverse consequences of going into credit card debt.

The contest’s theme is “Keep It In Your Pants” — the “It” being one’s credit card.

Students ages 14 and up are competing for a top prize of $5,000 for school-related expenses.

(snip)

The Web site accuses the biggest banks of using their size and market dominance to drive up credit card, banking and ATM fees on consumers around the country. It also accuses the big banks of under-serving low-income and minority communities.

Among other things, the SEIU wants Congress to set “basic standards” for fees and interest rates on credit cards, bank accounts and other bank products. It wants the nation’s largest banks to be held to “super” Community Reinvestment Act standards; and it wants to give the Federal Trade Commission the authority to scrutinize bank practices.

The Community Reinvestment Act, and its affirmative action mandates, is the reason why banks are pushing credit cards like candy, to the point where the average person gets many pre-approval junk snail mails every week.  That’s also the source of the “subprime mortgage crisis.”  If “young people” are falling into a “credit trap,” it’s precisely because banks are begging them to get credit cards.  I don’t read here that the SEIU wants to stop that flood of junk mail.

Financial Times of London:

FBI in subprime crackdown

The Federal Bureau of Investigation is investigating 14 companies for possible accounting fraud and insider trading offences related to subprime mortgages.

The development, another sign of fallout from the subprime mortgage crisis, comes as light regulation of the industry – in particular mortgage brokers – has been blamed for mis-selling and abuse of mortgage products.

The Securities and Exchange Commission already has about three dozen different investigations into a range of subprime-related issues.

Bill Carter, an FBI spokesman, said the agency had been working “very closely” with the SEC, with some of the latest investigations moving “in parallel”. He declined to name the companies involved.

Still promulgating the fiction that the subprime crunch is entirely a result of evil mortgage companies tricking gullible people (mostly non-whites) into accepting snake oil, are we?

Springfield News-Leader:

Governor’s plan will protect homeowner from mortgage fraud

Under a new plan announced today by Gov. Matt Blunt, those who commit mortgage fraud against Missouri homebuyers could soon be sent to prison.

Blunt announced new proposals to protect Missouri homeowners and strengthen the penalties against those who commit mortgage fraud. He also established a new free hotline for Missourians to report fraud and access information to protect themselves against foreclosure.

“Homeownership is an essential part of the American dream,” Blunt said in a news release. “For many Missouri families, buying a home is the biggest financial investment they will ever make. Our plan will help at-risk homeowners keep their homes by providing new consumer protections and creating new penalties for those who commit mortgage fraud including prison time and steep monetary fines.”

Blunt’s proposal includes legislation to further enhance consumer knowledge, protect against unscrupulous businesses that prey upon at-risk homeowners and create new punishments for mortgage fraud.

So, if the lenders don’t give mortgages to certain “at-risk” people (read: racial minorities), they’re bad. If they do (like they had until recently, creating the current “subprime crisis,”) then they’re accused of fraud, and Governor Blunt wants to send them to prison.

When will Governor Blunt want to ban stupid borrowers? Oh, I forgot. You can’t fix stupid.

UPDATE 1/15:  And wouldn’t you know it — there’s a left-wing national organization United for a Fair Economy (UFE), complaining that mortgage lenders tricked non-whites into agreeing to subprime mortgages.  If they never did, then UFE would be complaining that non-whites are being denied access to credit.

Aside from the picture, and many clues in this Post-Dispatch article about the subprime bust, there is this short paragraph:

At most risk in St. Louis County, Duncan said, are neighborhoods filled with older, smaller homes — many of them in North County, where subprime loans are more prevalent.

It’s also where blacks are more prevalent.

Related:  Subprime Mortgages and race 

His tears are matched by those of Swiss bankers today.

AP:

ZURICH, Switzerland - Swiss banking giant UBS AG said Monday it will write off a further $10 billion on losses in the U.S. subprime lending market and will raise capital by selling substantial stakes to Singapore and an unnamed investor in the Middle East.

UBS will now record a loss for the fourth quarter and said “it is now possible that UBS will record a net loss attributable to shareholders for the full year 2007.”

UBS said that the government of Singapore Investment Corp., or GIC, is investing 11 billion francs ($9.75 billion), while an undisclosed strategic investor in the Middle East is contributing the other 2 billion francs ($1.77 billion).

(snip)

Western banks have lost billions of dollars from their exposure to U.S. subprime loans, and cash-rich sovereign wealth funds have been stepping in to help them boost their capital. Last month the Abu Dhabi Investment Authority, the sovereign investment fund of the Gulf Arab state, acquired a 4.9 percent stake in Citigroup Inc., the nation’s largest bank, for $7.5 billion.

If UBS would have taken advice from the SVP, they wouldn’t be in this f-i-x.  And yes, the American “subprime mortgage crisis” is largely a racial issue.

Wall Street Journal:

Bush to Unveil Aid to Homeowners

WASHINGTON — President Bush is set to announce a plan to help struggling homeowners avoid losing their properties, including a temporary freeze on low, introductory mortgage-interest rates that would otherwise jump higher in the next few years.

The plan, expected to be announced today, seeks to combat a rising tide of foreclosures by making it easier for lenders to freeze the “starter” interest rate for certain borrowers for five years, according to a document being circulated by the Treasury Department.

As this medium has stated a number of times before, the subprime mortgage crunch is largely, but not entirely, a racial issue.  Mortgages with ridiculously low “introductory rates” on top of low ARM rates within the context of a low-rate climate is how many blacks and other non-whites were able to afford houses, and therefore this is the reason why President Bush was able to gloat about the “record home-ownership rate” among American blacks.  Never mind the fact that it was all built on gullible suckers that easily fall prey for snake oil without reading one word of the fine print, and built on those who have no idea that if 2.95% sounds too good to be true, it probably is.

And why only subprime borrowers?  Why not help those who lost their jobs who had sense enough to finance a mortgage with fixed rates?  And why only houses?  Many furniture stores have “no interest for a year” deals, but that means after you have made a year’s worth of payments, your next payment will include the interest — if you can’t afford the increased payments, and the repo truck stops by to take the furniture back, then tough cookies.  There’s no President Bush, HRC, Pelosi, et al. to help you.

Why only subprime borrowers?  The answer is in this post — it has to do with race.  Not only does President Bush want to maintain the “record minority home ownership” fiction, the NAACP and other “civil rights groups” would be screaming at the sky about “disparate impact” of foreclosures, and how the big bad evil white banks “tricked” blacks and other non-whites into agreeing to these snake oil mortgages, if no “relief” actions are taken.  (In fact, they already are).  Of course, if the banks and loan officers would have explained the situation, the NAACP et al. would have complained about “suppressing credit” and “denying credit to blacks.”

Remember, it wasn’t that long ago that many members of the U.S. Conference of Mayors, including our very own Francis Slay, was boasting about how urban property values were shooting way up.  Now we know that such legerdemain was merely a function of home buyers (especially non-whites), falling sucker for ridiculously low subprime interest rate mortgages.  And now who’s worried that the foreclosure crunch will disparately impact big cities the most?  Right.

World Net Daily:

Stephen Jarislowsky, a billionaire money manager and investor the Canadian newspaper Globe and Mail bills as the Canadian Warren Buffet, has told a parliamentary committee Canada and the United States both should abandon their national dollar currencies and move to a regional North American currency as soon as possible.

“I think we have to really seriously start thinking of the model of a continental currency just like Europe,” Jarislowsky told the Canadian House of Commons’ finance committee, according to the Globe and Mail in Toronto.

Proving that there is not a direct correlation between personal wealth and intelligence.  Even with the American peso sinking against every currency on Earth except the Zimbabwe dollar, it would be insane to link us monetarily with Mexico and Central America.  And for any Canadian to want this is even more insane, because the Canadian dollar is at historical highs against many world currencies, including the American peso.

Jerome Corsi had an article in WND today (no link because it has too many names of sitting judges), about how many banks and other financial institutions might fall like dominoes, because sub-prime mortgages have been bought and sold as assets. Incidentally, this is why Merrill Lynch is in trouble, and its affirmative action CEO was shown the door. The trouble is, the Federal judiciary is ruling that those who purchase the accounts receivable of a mortgage only get that, and not the deed — that means that if a house is foreclosed upon, the bank that originally issued the mortgage owns the house, and gets to keep all of the proceeds of the sale of that house.

But the more fundamental issue is this — Why were so many subprime adjustable rate mortgages issued to begin with, and issued to obviously credit-unworthy borrowers? When I see a lot of stories about the subprime crunch and foreclosures on TV, I’m seeing a lot of black and brown faces. And whenever you add non-white, banks, loans and credit, you get the Community Reinvestment Act of 1977, a Federal law which, on the surface, states that banks have to meet the credit needs of the communities in which they serve, but the net effect is that banks have to engage in affirmative action in credit decisions.

So if you combine low-rate ARMs, in a low-rate climate, with the CRA, then you can see that a lot of blacks and Hispanics got approved for relatively big mortgages, when they really shouldn’t have, then used those pre-approvals against each other to bid-up the sales prices of houses to an insane amount. That kind of financial planning (for anyone) is like fitting a 15-foot tall truck under a metal bridge that has exactly 15 feet of clearance — once the temperature starts going down, and the metal contracts just enough, even if it’s only by one millimeter, that truck is stuck. Likewise, once interest rates inevitably went up from their nadirs, this would mean that ARM mortgages’ rates would go up, forcing the monthly payments upward, meaning that the borrowers couldn’t pay them in full without giving up food and utilities, meaning foreclosures.

Incidentally, this is why President Bush used to be able to gloat about the record-high rate of home “ownership” among blacks. It was all built on financial quicksand.

Verily, some of these banking and monetary problems would have happened even without the affirmative action effects of the CRA, but they’re worse than they would have been with it.

UPDATE 11/26:  Here is MSM corroboration that minorities tend to be more affected by the subprime crunch and foreclosures.

Inspired by this article, I’m going to track daily the exchange rate between the US$ and the Zimbabwe Dollar.

For today, August 5, 2007, that number is 255,120.

Washington Post.

And they wonder why Zimbabwe’s inflation rate is projected to hit 1,500,000% soon. The Zimbabwe Dollar is probably the only currency in the world not to be gaining value against the American dollar.

In other news found in this article, the Washington Post has admitted that printing money causes inflation — this is something that those Keynesians/Phillipsians would have never conceded as late as the early 1980s.

Agence France Presse:

More than 1,300 shop owners and business managers have been arrested in Zimbabwe as part of a crackdown on firms accused of flouting government-imposed price controls, police said Monday.

Most of the 1,328 bosses had been fined but the number also includes 33 company executives arrested since Friday who will now appear in court, said police spokesman Chief Superintendent Oliver Mandipaka.

(snip)

“We will continue to arrest anyone who will defy the government imposed controls on basic food comodities. We will not stop until there is order in the business community,” he said.

On Saturday opposition leader Morgan Tsvangirai called the price controls and subsequent crackdown “crooked economics” and “an election gimmick” ahead of parliamentary and presidential polls due to be held next year.

That’s what they are.  But if they don’t work for the purpose, Mugabe can resort to what he has done in the past to steal elections — murder and terrorize his political opposition, and do the same to likely voters for the opposition.

Mugabe wants to throw government-imposed price controls on top of government-sponsored hyperinflation courtesy of printing press money. The analogy between Mugabe’s solution and President Nixon’s solutions in the 1970s is prescient, but the USA never faced what some economists predict will be a 1,500,000% inflation rate for Zimbabwe next year.