"What Did We Learn, Palmer?"—Holder Starts Witch Hunt Against Banks Who Aren`t Lending Enough To Minorities
July 13, 2011, 04:44 PM
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Paul Sperry (whose book The Great American Bank Robbery is pretty good) writes in Investor's Business Daily:
Justice spokeswoman Xochitl Hinojosa said the anti-discrimination notice "does not compel the banks to make loans to people who do not qualify." She said such measures are "essential to remedy the harmful effects of the banks' conduct."
But industry analysts fear Attorney General Eric Holder is rekindling an anti-bank witch hunt launched by Attorney General Janet Reno in the 1990s, when Holder served as her deputy.
Some blame that in part for the subprime boom, because banks were ordered to throw open their lending windows to credit-poor minorities. That crackdown spurred the American Bankers Association to distribute to its thousands of members "fair-lend ing tool kits" advising the adoption of more permissive underwriting criteria to help inoculate them from prosecution.
In the new prosecutions, Justice acknowledges in every case it did not prove charges of intentional discrimination, while banks have denied any wrongdoing. Many, in fact, earned outstanding ratings from anti-redlining regulators enforcing the Community Reinvestment Act.
Istook calls Holder's crusade an "egregious overreach by the government." He says many of the targets are smaller banks without the resources to fight a protracted legal battle. The House Judiciary Committee plans to investigate.
"This is an expansion of the law," said a congressional investigator. "They're pushing the envelope as far as they can go in the enforcement of civil rights."
As part of settlement deals, prosecutors have required banks to sign "nondisclosure agreements" barring them from talking about the methods used to allege discrimination. Bank lawyers contend the prosecutors are trying to hide the shaky legal grounds on which the cases are built. "It's horrible what they're doing at the civil rights division," said Reginald Brown, a partner at Wilmer Hale in Washington, who has represented banks in connection to recent race-bias investigations. "They don't have any proof, just theories."
He added, "They want you to sign something saying you agree, under the condition of any settlement with them, that you won't disclose what their theories were. That's because their theories are loopy and wouldn't stand the light of day."
If Paul Krugman ever admitted this kind of thing played any role whatsoever in the Recent Economic Unpleasantness, Mrs. Krugman would have him sleeping on the couch for a month. The title is a reference to the wonderful J.K. Simmons' last lines in Burn After Reading.