Thursday, August 12, 2010

Wall Street Bailout Bill-Financial Reform - #2032 - Obama's Latest Biz-Killer - New York Post

Buried deep inside the new "financial reform" law is a scheme to force affirmative action on small-business lending -- a "reform" with ominous implications for the US economy.  Aimed at curtailing supposed discrimination, the race-based lending mandate is guaranteed to have perverse effects -- just like the drive for "racial fairness" in mortgage lending paved the way for the subprime crisis and the 2008 financial meltdown. The new Dodd-Frank banking law sets up a data-collection system to monitor small-business loans for racial bias. Lenders must report if a business that applied for a loan is minority-owned, and whether the application was rejected.

Bank examiners will use that data to enforce provisions of the Community Reinvestment Act -- the federal law that (after a Clinton-era rewrite) encouraged "flexible underwriting" and unsafe loans that fed the subprime bubble and bust. If a bank doesn't meet CRA standards, regulators make it impossible for the institution to expand or merge -- and in a competitive industry, that's a slow death sentence.  And the Obama administration plans not only to toughen CRA testing of lending to minorities and communities of color, but also to impose those tests on nonbank institutions -- independent mortgage companies, credit unions, insurers, securities firms and investment banks.  In short, the administration will use the small-business-loan data as a cudgel to beat everyone into lending more to minority businesses.  Problem is, all this will redirect private investment to minorities -- whether or not it's a wise investment.  Read more......

No comments:

Post a Comment