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Monday, November 24, 2008

Socialism has Arrived

In 1994 Barack Obama was one of a group of lawyers who represented Calvin Roberson in a lawsuit against Citibank Federal Savings Bank. The case alleged race discrimination in lending practices by Citibank, and has recently gained a lot of attention as an example of the courts putting pressure on banking institutions to grant loans to high-risk applicants.

Now we know that the federal government has agreed to guarantee $306 billion in risky assets held by Citigroup and to invest another $20 billion in Citigroup on top of the $25 billion the company has already received.

So let me see if I have this right. Government pressures bank to make risky loans. People who can't afford loans get them anyway. Bank goes broke. Government takes tax money from other people to bail out bank.

I think I've got it. Sounds like socialism.

3 Comments:

Blogger SkyePuppy said...

Yep. Sounds like you came to the right conclusion.

Thank you, President Bush, for turning socialist on your way out of office!

1:36 PM  
Anonymous MostlyRight said...

Did you even read what you linked to?

"Plaintiffs alleged that the defendant-bank rejected loan applications of minority applicants while approving loan applications filed by white applicants with similar financial characteristics and credit histories."

They sued due to getting turned down for being Black.

Bob White & Joe Black walk in with similar incomes, and credit histories. The White guy get a loan, the Black guy gets turned down. After awhile everyone notices that only White folks are getting loans. Someone suggest doing something about it.

12:00 AM  
Blogger Bryan Alexander said...

Of course I read what I linked to. Did you read my original post?

"The case alleged race discrimination in lending practices by Citibank..."

The plaintiffs alleged that their loan applications were turned down because of race. Alleged doesn’t mean that it’s true. People claim racism all the time. Look at the plaintiff description in the case details: "All persons who are African-American; and who applied for a first mortgage or refinance loan with Citibank for property located in Cook, DuPage, Lake or McHenry County, IL; and whose loan request was turned down between 7/6/92 and 12/31/95."

Were there were no loan applications by whites that were turned down? Is it not possible that the plaintiffs’ applications were turned down based on good business decisions?

The Settlement Agreement states that Citibank denied all claims of wrongdoing but “agreed to settle the lawsuit in order to avoid the costs and business disruption of further litigation," and that "It is expressly acknowledged by all the parties to this Action that there was no finding of a policy or practice of discrimination by Citibank."

Under terms of the agreement Citibank was required to make it easier for people with low to moderate incomes to obtain mortgage loans. The agreement stated, “Citibank will undertake efforts to organize a lending consortium consisting of Citibank and several other lenders in the Chicagoland area to assist low to moderate income loan applicants in obtaining mortgages.”

The Settlement Agreement is a 34-page document and obviously goes into much more detail. You’re welcome to read it if you like, but the end result of the agreement was that Citibank was pressured into giving mortgage loans to risky applicants.

11:09 PM  

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