Nov 22, 2016

The importance of allowing cities to continue to enforce housing laws...

Banks continue to discriminate against minorities. Cities across the country suffer because of this institutional conduct. Cities should continue to enforce the housing laws against banks and insurance companies on behalf of its inhabitants.

Apr 22, 2016

DOJ continues to hold banks accountable for the 2008 financial crisis.

The Department of Justice holds Goldman Sachs accountable for their part in the lending collapse of 2008. The Department and Goldman agreed to $5.06 billion settlement.

          DOJ alleged that prior to 2008 Goldman Sachs was falsely assuring investors that the securities it was selling to them were backed by sound mortgages. These securities are referred to as Residential Mortgage Backed Securities (RMBS). Goldman Sachs was fully aware that the RMBS they were selling were not backed by sound mortgages. This illegal action led investors to buy these security-backed mortgages, which ultimately failed when the mortgagees defaulted on their mortgage payments. These continuous defaults from multiple pools of mortgages led to the housing bubble bursting. The banks were no longer bringing in money from the loans and the investors were losing their investments. Goldman Sachs’ actions cost both private and government entities billions.

          Goldman Sachs failure to do their required due diligence led to these illegal actions. Giant banks, such as Goldman Sachs, purchased these mortgages from smaller lending firms and banks and then became the creditor for the mortgagee. Goldman Sachs then sold securities backed by these mortgages. A practice that is common if they are backed by sound and quality loans. However, this is where Goldman Sachs failed in their due diligence. It was Goldman Sachs responsibility to do research on the loans before purchasing them. They were to test a portion of the loan pool to see if they were quality loans. Testing a portion is common in the industry because testing all of the loans would be highly economically inefficient. Goldman Sachs tested these loan pools, however in pools where there were high levels of quality questions, instead of doing further testing and research, they passed the loans through. This led to a large amount of poor quality loans being used to back the securities that Goldman Sachs was selling to these investors. This action is illegal and led directly to the crashing of the housing market and costing the investors and the government billions. Goldman Sachs knew that there were issues with a portion of the loans they were using to back securities and yet they did it anyways.
          The Justice Department in accompaniment with state and federal partners has led the charge to bring banks such as Goldman Sachs to justice. They did so with Goldman Sachs with the largest settlement today, $5.06 billion, to be parted three ways. The first $2.385 billion will be used to pay the fines under the Financial Institutions Reform, Recovery, and Enforcements Act (FIRREA). The next $1.8 billion will be used to help those that have suffered from the housing crisis. It will be used to help those that are underwater on their mortgages, restructuring other mortgages, and the forgiveness of mortgage loans all together. The last $875 million will be used to pay settlements with federal and state entities.

          DOJ sees this as a step in the right direction to bringing responsible parties to justice. With the successes of the cases against JP Morgan Chase and now Goldman Sachs, DOJ and those involved are confident that it is holding parties responsible for the 2008 disaster. The recession that was primarily caused by the burst of the housing market bubble. DOJ has dedicated itself to holding these banks and firms responsible for their actions since the bubble burst in 2008.

48 years of Prohibiting Discrimination

48 years of Prohibiting Discrimination
Forty-eight years ago this month, on April 11, 1968, President Lyndon Johnson signed the federal Fair Housing Act, which prohibited discrimination concerning the sale, rental, and financing of housing based on race, religion, national origin, sex, handicap and family status. This important law also made it unlawful for a housing provider to make, print or publish any statement or advertisement that states a preference based on these classes. Let us not forget this eventful day by reminding people we know of the current state of the law and the  rights afforded to victims of discrimination.