Lenders make loans based on credit scores. Poor people are not well served by getting loans they can’t afford.
Now the Justice Department is going after banks using “disparate impact” theory — the idea that even if lenders don’t actively discriminate they can still be sued if the cumulative effect of their actions implies discrimination.
The Obama Justice Department is forcing banks to lend to minorities at below market rates and in effect dish out cash to politically favored “community groups”. It’s a good bet that many of these loans will eventually go bad.
And the Justice Department is on a roll. In less than two years the government has settled with AIG ($6.1 million), Prime Lending ($2.million), Midwest Band Centre ($1.5 million) and Citizens Republic Ban-corp ($3.5 million). More cases are in the hopper and bigger banks are now in Justice’s sights.
