Oldest Son and I have been having an argument/discussion for quite some time now. He insists that the various moves made by the Obama administration that have predictable, unintended, and pernicious consequences are the result of incompetence, while I believe there is room for some malicious intent. For example, it is obvious that as constructed, Obamacare will inevitably lead to a single payer system of healthcare. It is not a difficult calculation. If insurance companies have extensive government mandates and government imposed limits on their ability to raise rates, they will inevitably enter a death spiral between rising costs and stagnant (or more slowly rising) income. OS and I both agree that this is either by design or incompetence; he just has a lower opinion of the abilities of the "smartest men in the room."
The question arises again because this administration and our Congress insist upon making an economic recovery more difficult. Hidden within the Financial "Reform" package is a time bomb:
Buried deep inside the new "financial reform" law is a scheme to force affirmative action on small-business lending -- a "reform" with ominous implications for the US economy.
Aimed at curtailing supposed discrimination, the race-based lending mandate is guaranteed to have perverse effects -- just like the drive for "racial fairness" in mortgage lending paved the way for the subprime crisis and the 2008 financial meltdown.
The new Dodd-Frank banking law sets up a data-collection system to monitor small-business loans for racial bias. Lenders must report if a business that applied for a loan is minority-owned, and whether the application was rejected.
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Last year, the Obama Justice Department forced a consent decree on First United Security Bank, which has branches around Birmingham, Ala. Though it still denies the charges of racial redlining, the tiny bank felt compelled to agree, among other things, to set up a special $500,000 fund for black borrowers and businesses.
It must also take several other steps, including making small-business loans to African-Americans on terms "more advantageous to the applicant than it would normally provide" -- even if the applicant "would ordinarily not qualify for such [a lower] rate for reasons including lack of required credit quality, income or down payment."
In other words, don't worry if black borrowers aren't qualified. Just give them the money -- at a discount.
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Black, white or purple, anybody who's credit-worthy should have access to credit. But extending credit based mainly on skin color, rather than on an individual's ability to repay, is a recipe for a rotten economy, not to mention racism of a different kind.
One of the more pernicious ideas to emerge from the Racial Industrial Complex is the concept of "disparate impact." According to this whenever a "designated minority" is underrepresented in an industry there is assumed to be racism at work. Interestingly this does not apply to industries where there is an over-representation of minorities. (Perhaps some enterprising 5' 7" White basketball player can take the NBA to court based on the disparate impact of rules of basketball which obviously discriminate against short white men?)
There is no doubt that affirmative action based on disparate impact in lending to small businesses will be yet another drag on the economy, yet the Democrats must know that if the economy remains in the doldrums through 2012, as appears likely, they will be decimated at the polls. Which again raises the question: Are they malicious, ie trying to destroy the economy for some hidden, nefarious reason? Or are they merely incompetent?
I ask, you decide...
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