[quote=Hobie]Hold on guys. Put your guns down. The intent of the policy was to encourage banks to lend to folks who didn’t qualify under the current terms. ie. 20% down, income to prove loan repayment, etc.
The administration looked at the banks lending policies as ethnic discrimination rather than based on financial ability to repay.
The problems were the unintended consequences from this noble policy.[/quote]
As to the bolded part, not exactly. But that is exactly how lenders who had been redlining neighborhoods for years saw it. Despite the fact that down payment and ability to repay loans were not even part of the equation in their redlining.
The act outlawed redlining but specifically required that lending be done consistent with safe and sound lending practices. Not make loans to people who didn’t qualify.
Economic theorists rarely see descrimination. They make the false assumption that the market is color blind and class blind, collect their data based on that assumption, and prove their thesis. Empirical research, however shows otherwise.
