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  1. #1
    Atomic Punk rocknblues81's Avatar
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    Default Former Chase Banker Admits His Bank Pushed Minorities Into Subprime Mortgage Loans

    Former Chase Banker Admits His Bank Pushed Minorities Into Subprime Mortgage Loans

    http://thinkprogress.org/economy/201...bprime-pushed/

    By Pat Garofalo on Dec 1, 2011 at 9:20 am

    One of the most pernicious practices in which the nation’ biggest banks engaged during the lead up to the financial crisis was pushing minority borrowers into subprime loans, even when many of them qualified for prime loans. Wells Fargo had perhaps the most horrifying practices in this department, calling the subprime loans that they pushed in poor, black neighborhoods “ghetto loans.”

    This rampant predatory lending helped inflate the housing bubble; a Center for American Progress investigation actually found huge racial disparities in lending at the big banks that wound up getting bailed out, with minority borrowers far more likely to receive high-priced loans.

    One former banker for Chase — James Theckston — told the New York Times’ Nick Kristof that not only did his bank push minority borrowers into higher-priced loans, but senior executives then tried to cover up the racial disparity in their banks’ lending:

    One memory particularly troubles Theckston. He says that some account executives earned a commission seven times higher from subprime loans, rather than prime mortgages. So they looked for less savvy borrowers — those with less education, without previous mortgage experience, or without fluent English — and nudged them toward subprime loans.

    These less savvy borrowers were disproportionately blacks and Latinos, he said, and they ended up paying a higher rate so that they were more likely to lose their homes. Senior executives seemed aware of this racial mismatch, he recalled, and frantically tried to cover it up.

    “The bigwigs of the corporations knew this, but they figured we’re going to make billions out of it, so who cares? The government is going to bail us out. And the problem loans will be out of here, maybe even overseas,” Theckston explained.

    In 2006, Chase made high-price loans to 16.4 percent of white borrowers, while nearly half of black borrowers and more than one-third of Hispanic borrowers received high-price loans. These disparities help explain why, according to a new report from the Center on Responsible Lending, Latinos and blacks are twice as likely to have been impacted by the housing crisis as whites. In fact, “approximately one quarter of all Latino and African-American borrowers have lost their home to foreclosure or are seriously delinquent, compared to just under 12 percent for white borrowers.”
    Yikes.

  2. #2
    Forum Frontman fudd's Avatar
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    Chase? You mean the same bank who threatened to lock up people past due on the credit card bills? Wouldn't surprise me.

  3. #3
    Atomic Punk
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    Who's most responsible?

    The person the gave the other person the gun, or that person who pulled the trigger with it pointed into their own temple?

    Were they forced into signing documention?

    I doubt it...

    Were they ignorant and wanted to keep up with the Jones'...

    For certain...

    Simple math folks...
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    Baluchitherium loveevhsince79's Avatar
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    Quote Originally Posted by voivod View Post
    Who's most responsible?

    The person the gave the other person the gun, or that person who pulled the trigger with it pointed into their own temple?

    Were they forced into signing documention?

    I doubt it...

    Were they ignorant and wanted to keep up with the Jones'...

    For certain...

    Simple math folks...
    I understand what you are saying but, it is the duty of the bank to fully explain the loan that you are getting and all the options available to you. It's also not "simple math" when you have the complicated loans that they were selling. I'm not so sure if these people did get a full disclosure on what it was that they were signing/buying. There is no integrity left in the business world. Take advantage of someone less intelligent but make a profit for yourself and your company and you are hailed as a hero. People have become dirty, rotten and low down and there is no honor in the corporate world.

    This is not to say that there were many people who knew what they were getting themselves into, it was over their heads but they did it anyway. That happened too.
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  5. #5
    Atomic Punk rocknblues81's Avatar
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    Quote Originally Posted by voivod View Post
    Who's most responsible?

    The person the gave the other person the gun, or that person who pulled the trigger with it pointed into their own temple?

    Were they forced into signing documention?

    I doubt it...

    Were they ignorant and wanted to keep up with the Jones'...

    For certain...

    Simple math folks...
    I want to agree, but as for as being responsible goes, it's a 2 way street. People's lack of decency is just as big of a problem in this country as the lack of responsibility is. I tend to side less with the ones that aren't displaying decency.
    Last edited by rocknblues81; 12.01.11 at 10:39 AM.

  6. #6
    Gird your loins Daisy Hill's Avatar
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    Quote Originally Posted by loveevhsince79 View Post
    I understand what you are saying but, it is the duty of the bank to fully explain the loan that you are getting and all the options available to you. It's also not "simple math" when you have the complicated loans that they were selling. I'm not so sure if these people did get a full disclosure on what it was that they were signing/buying. There is no integrity left in the business world. Take advantage of someone less intelligent but make a profit for yourself and your company and you are hailed as a hero. People have become dirty, rotten and low down and there is no honor in the corporate world.

    This is not to say that there were many people who knew what they were getting themselves into, it was over their heads but they did it anyway. That happened too.
    agree....but what is also heinous here is that they were putting people who qualified for prime loans in to the higher risk and more lucrative sub prime category

    that's just robbery......that's like taking a five dollar bill from a blind person and giving them change for a single

    and your average consumer...let alone a consumer who may have language barrier, would have a hell of time figuring out what their loan documents really mean...they get the interpretations from the officers at the closing..seldom do es anyone show up at a closing with their own attorney

    don't tell me that at some point in your life you didn't sign a contract that you read, but still had some uneasiness about your understanding of it

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  7. #7
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    Quote Originally Posted by Daisy Hill View Post
    agree....but what is also heinous here is that they were putting people who qualified for prime loans in to the higher risk and more lucrative sub prime category

    that's just robbery......that's like taking a five dollar bill from a blind person and giving them change for a single

    and your average consumer...let alone a consumer who may have language barrier, would have a hell of time figuring out what their loan documents really mean...they get the interpretations from the officers at the closing..seldom do es anyone show up at a closing with their own attorney

    don't tell me that at some point in your life you didn't sign a contract that you read, but still had some uneasiness about your understanding of it
    Sounds about like went on here in Flagler with real estate agents luring Russians to move and buy real estate. There are some documented cases that these people could have paid for the house 4 or 5 times over by the time the 30 years over, but they were tricked and decieved into paying much more. To say nothing of overpaying for property to begin with.
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  8. #8
    Atomic Punk lovemachine97(Version 2)'s Avatar
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    I'm not sure I understand. If they lived in "poor, Black neighborhoods," wouldn't they only qualify for a subprime loan?

    Some quotes from the original NYTimes article show culpability both ways. For example, “You’ve got somebody making $20,000 buying a $500,000 home, thinking that she’d flip it,” he said. “That was crazy, but the banks put programs together to make those kinds of loans.”

    But here's the one that separates groups of people: “The bigwigs of the corporations knew this, but they figured we’re going to make billions out of it, so who cares? The government is going to bail us out. And the problem loans will be out of here, maybe even overseas.”

    Most people are going to say, "See? They figured they'd repackage the loans and get them out." Let's not forget that the government was providing an avenue for banks to do that--GSEs that were given tax incentives to buy subprime loans.

    This is what infuriates me about the idea that the free market failed. No, it worked. The government circumvented the best regulation we have--and the banks knew they would! And instead of realizing that we HAVE regulations on the books and we HAVE laws against fraud and yet the regulators didn't do their job, we wright MORE rules and MORE regulations that make it MORE complicated to follow and will make regulators jobs more difficult--but also cost more money to supposedly follow through.

    http://www.nytimes.com/2011/12/01/op...gret.html?_r=2

  9. #9
    Atomic Punk rocknblues81's Avatar
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  10. #10
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    Quote Originally Posted by voivod View Post
    Who's most responsible?

    The person the gave the other person the gun, or that person who pulled the trigger with it pointed into their own temple?

    Were they forced into signing documention?

    I doubt it...

    Were they ignorant and wanted to keep up with the Jones'...

    For certain...

    Simple math folks...

    What a wonderful argument for something called fraud...Con-men rejoice!
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  11. #11
    Eruption gabby gabbster's Avatar
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    The absurd notion that Wall Street bares little blame in practically destroying our economy continues to be the go-to-meme among conservatives. I suppose it's easier for some to grasp onto the idea that minorities and others just wanted to live in a bigger house than they could afford.. rather than, say, dig into the particulars and numbers to realize that people's mortgages didn't bring down the banking system. The whole sub-prime mortgage market was only worth about 1.4 trillion. Compare that figure to the stinking soup shit sludge of default swaps, CDO's, and other shitty derivatives which were worth as much as 140 trillion! A shitty sludge that was packaged, sold a thousand times, bet against, and ultimately cost taxpayers 14 trillion to recover from... It would have cost about three percent of the bailout to simply provide capital to borrowers who needed their loan balances reduced (to what their properties were actually worth).
    Besides the fact that bloated financial instruments were worth 100 times more than mortgage loans (hence the need for such a huge bailout), but these bankers and hedge fund managers knew full well what they were selling. They knew they were selling shitty ass loans to poor unsuspecting people who not only didn't have the financial background to understand MIT physics level equations that defined their loan agreements, but were told their homes would continue to appreciate. Who was engaged in fraud here? The dumbass who took out a 3 year arm, or the bankster who knowingly sold a piece of shit loan and made a commission?

  12. #12
    Good Enough cabomiro's Avatar
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    Quote Originally Posted by gabby gabbster View Post
    The absurd notion that Wall Street bares little blame in practically destroying our economy continues to be the go-to-meme among conservatives. I suppose it's easier for some to grasp onto the idea that minorities and others just wanted to live in a bigger house than they could afford.. rather than, say, dig into the particulars and numbers to realize that people's mortgages didn't bring down the banking system. The whole sub-prime mortgage market was only worth about 1.4 trillion. Compare that figure to the stinking soup shit sludge of default swaps, CDO's, and other shitty derivatives which were worth as much as 140 trillion! A shitty sludge that was packaged, sold a thousand times, bet against, and ultimately cost taxpayers 14 trillion to recover from... It would have cost about three percent of the bailout to simply provide capital to borrowers who needed their loan balances reduced (to what their properties were actually worth).
    Besides the fact that bloated financial instruments were worth 100 times more than mortgage loans (hence the need for such a huge bailout), but these bankers and hedge fund managers knew full well what they were selling. They knew they were selling shitty ass loans to poor unsuspecting people who not only didn't have the financial background to understand MIT physics level equations that defined their loan agreements, but were told their homes would continue to appreciate. Who was engaged in fraud here? The dumbass who took out a 3 year arm, or the bankster who knowingly sold a piece of shit loan and made a commission?
    Agree 100%

    If the actual bank that gave out the loan was responsible for collecting the payments from the customer [and lose money if they didn't pay], none of these mortages would have been approved because they know these people were never gonna be able to make the payments.
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  13. #13
    Eruption gabby gabbster's Avatar
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    Quote Originally Posted by cabomiro View Post
    Agree 100%

    If the actual bank that gave out the loan was responsible for collecting the payments from the customer [and lose money if they didn't pay], none of these mortages would have been approved because they know these people were never gonna be able to make the payments.
    Exactly, and because there was no oversight or regulation of these newly formed derivatives, banks were allowed to package them and let go of all liability. Then the huge banks that bought these repackaged shit-stain loans had really no idea their worth since there was no oversight in the derivative markets while the credit rating agencies helped launder the risk (which were paid off by Wall St. firms).
    Last edited by gabby gabbster; 12.05.11 at 11:37 AM.

 

 

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