Friday, January 4, 2013

Holder Celebrates Strong Arming 3,000 Bankers For Imaginary Racism

This from IBD:

In an end-of-year press release — posted under the banner headline "Accomplishments Under the Leadership of Attorney General Eric Holder" — the Justice Department boasts of charging "nearly 3,000" bankers with lending discrimination and fraud.

This could not be more screwed. One, the way the DOJ is "proving" discrimination is by nothing more than a statistical analysis under a disparate impact theory - the same theory the Supreme Court held unconstitutional in the employment context in the 2009 Ricci decision. Under a disparate impact theory, if statistics show that blacks are being denied loans at a greater rate or at less favorable rates than whites at any particular bank, then that is legally deemed "proof" of racism. The DOJ needn't show even a single case of actual racism. The burden then shifts to the Defendant to prove it made legitimate, color blind decisions in each case - with potential litigation costs being astronomical.

The DOJ uses this scam to strong arm lenders, then directs a substantial portion of all multi-million dollar settlements to fund left wing activist organizations. This was the ACORN model in the Clinton years. Unfortunately, lenders almost uniformly fold when faced with the litigation costs of trying to defend these bogus law suits. This is something that cries out for a hearing before the Supreme Court.

More from IBD;

. . . none of the race-bias cases highlighted by the administration was litigated in court. Evidence was never presented or tested, nor guilt ever proven. What's more, no incident of discrimination was ever specified, and no individual complainants or victims of discrimination were ever identified.

All the major defendants — Bank of America, Wells Fargo and SunTrust Mortgage — settled while strongly denying Holder's allegations that they charged blacks and Latinos a "racial surcharge" for mortgages simply because of the color of their skin. In court documents, they argued that if Holder's civil-rights prosecutors conducted an "appropriate analysis" of their loan data and loan-file documentation, it would have shown no disparate impact in product placement against African-Americans or Hispanics. They argued that any differences in loan pricing were attributable to legitimate, nondiscriminatory factors, such as poor credit.

When one defendant recently fought back in court, the administration admitted in a little-noticed court filing that, indeed, it had not considered all the credit factors that went into the lender's decisions to charge higher rates for loans to minorities whose credit history left them unqualified for prime loans.

GFI Mortgage Bankers Inc. last summer asked a federal judge to dismiss a lending discrimination complaint filed by Holder. The New York-based lender argued that the government failed to establish a link between its policies and lending disparities outlined in the suit.

When Justice opposed GFI's motion, it revealed a serious flaw in its "statistical regression analyses" used in almost every race-bias case filed against lenders under this administration.

It acknowledged that its models do not account for all factors related to borrowers' credit risk and loan characteristics — factors that could explain disparities in loan pricing by race.

In the court filing, Justice Department official Thomas Perez, chief of the civil-rights division, said the sum total of the government's proof was "statistical evidence" that did not include all elements of creditworthiness. But he argued that the government did not need to control "all measurable variables" to prove discrimination, that it "need not prove discrimination with scientific certainty."

In other words, Holders' diversity police relied on incomplete statistics as evidence to prove intentional discrimination. They failed to compare apples to apples. There could have been legitimate business reasons for what they construed from the limited data as racism. Yet they didn't bother to look further.

GFI's attorney Andrew Sandler complained that Justice has been using an overly broad and "now discredited interpretation" of civil-rights law known as "disparate impact." But GFI happened to draw an Obama-appointed judge to hear its motion to dismiss what looked to be groundless charges against it.

With that judicial leaning in mind, GFI agreed to settle the case. It will fork over more than $3.5 million to as-yet unidentified black and Latino victims of alleged mortgage discrimination and also "qualified organization(s) that provide programs targeted at African-Americans and Hispanic potential and former homeowners."

It also agrees to implement over the next 4-1/2 years a "fair lending monitoring program" to make management and its employees more sensitive to the "credit needs" of the minority community.

Only in the race-obsessed Obama administration is a racist "witch hunt" worthy of celebration.

But it gets far worse. Of vastly greater importance, this type of litigation under the Community Reinvestment Act was the "but for" cause of our financial collapse in 2008. It eviscerated bank lending standards As I summarized in a long, 2008 post identifying the causes of our financial collapse:

During the period 1977-2000, most of the elements of our current fiscal crisis were put in place. President Clinton turned a little known law from the Carter-era, the Community Reinvestment Act, into a tool of massive socialist engineering. Color-blind lending standards were eviscerated and new standards were enforced by the police powers of the government and through the enlistment of community organizers and their ilk. Fannie Mae and Freddie Mac were made the engines of the new social engineering, creating an ever-expanding market for mortgages founded upon the new "innovative" lending standards. [And indeed, under the new lending standards, subprime loans were bundled as AAA investments and sold throughout the world financial markets.] All attempts by Republicans to attack this cancer failed. The left deliegitimized and beat back every attempt to reform the CRA by recasting such efforts as racist.

And here we sit today, with the same "race based" cancer still being spread through our financial system. It has been a gross distortion of reality that the left was able to sell the massive lie that the meltdown was caused by the "failed policies" of the Bush administration, coupled with vague references to "Wall St. greed" and "deregulation." They rarely, if ever, get any more specific in their charges than that.

It should also be noted that a lot of what went on in the lead up to our financial meltdown was pure old fashioned fraud. As I wrote in a recent post:

The economic meltdown from the housing bubble should have led to a whole host of criminal prosecutions for fraud. When sub-prime loans were being bundled and resold with a AAA rating, that was not within the realm of reasonable opinion, that was criminal. When Goldman Sachs marketed four sets of complex mortgage securities to banks and other investors without warning of the high risk, or when they "secretly bet against the investors' positions and deceived the investors about its own positions to shift risk from its balance sheet to theirs," that is fraud. Yet the Obama DOJ refused to prosecute Goldman Sachs or anyone else.

As near as I can tell, no one from the economic melt-down of 2007 has been criminally prosecuted by Obama - and its not hard to understand why. That melt-down was caused by Democrat policies over a period of two decades - ones fought by Bush, McCain and most other Republicans. To prosecute anyone for the crimes that occurred in the creation of the melt-down would shine a bright light on the facts - as well as the utter canard that the melt-down was caused by Republican economic policies or de-regulation.

Strong arming 3,000 bankers with false charges of racism is not something Holder and the left should be celebrating with press releases. It should be something they contemplate while trying to scrape the tar and feathers off their bodies.

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