Biden breaks promise. Goes all “Equity” with the Fed.

FAUlty Gator

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Oct 27, 2017
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This seems kind of irresponsible and stupid. Looks like what caused the last crash. Forcing banks to make loans, guaranteed to default, so Maxine, AOC and Bernie can feel good about themselves.


President Biden recently promised in these pages not to interfere with the Federal Reserve. Yet last week he endorsed a House bill that would add racial equity to the Fed’s dual mandate of price stability and full employment. How does the White House square this contradiction?


The House bill passed last week 215-207 with little media notice. But it deserves attention because it reveals how the Biden Administration and Democrats plan to politicize monetary policy and financial regulation.

Recall that Candidate Biden advocated making reducing racial disparities a third monetary mandate. You have to wonder if one reason the Fed was slow to tighten policy was because the central bankers agreed with him. Several Federal Open Market Committee (FOMC) members promoted the goal of “inclusive” employment even as inflation began to creep up.

Now House Democrats want to codify racial equity as part of the Fed’s mandate. Their bill would require the Board of Governors and FOMC to “exercise all duties and functions in a manner that fosters the elimination of disparities across racial and ethnic groups with respect to employment, income, wealth, and access to affordable credit.”

The bill directs the Fed to include race in monetary policy, the operation of payment systems, and the supervision of banks and non-banks deemed by the Financial Stability Oversight Council to be systemically important.

Central bankers have a hard enough time balancing full employment with stable prices. Adding a racial equity mandate could cause their models to go catawampus. How small would the black-white unemployment gap have to be, and how high would prices have to climb, before the Fed considers raising interest rates?

The pandemic has been an informal experiment in this triple mandate. It hasn’t worked out for minorities. The Fed’s accommodative policies have driven up asset prices, mainly benefiting relatively well-to-do people who own homes and stock. Now a recession may be in the offing, which would compound the harm inflation has done to minorities.

Requiring the Fed to incorporate race into bank (and potentially non-bank) supervision would likewise contradict its duty to protect financial stability. Would the Fed reduce the capital that banks must hold against loans to minorities? Would banks be graded based on the number of loans they make to minority businesses?

Easing underwriting standards to boost minority credit and homeownership could cause defaults and foreclosures to spike in a recession, as happened during the last financial crisis. Democrats would then accuse banks of predatory lending.
Most banks are trying to increase lending to minority communities, yet the bill would require financial regulators to rate banks on diversity and inclusion. Minority-owned banks would be exempt from these exams and automatically get the highest rating. The bill also instructs federal agencies to move deposits to minority-owned banks.
Such racial favoritism almost certainly violates the Constitution. So potentially does the bill’s requirement that public companies disclose to the Securities and Exchange Commission the racial, gender identity and sexual orientation of directors and executives.
Administrations don’t have to take a position on every bill, so the Biden team’s decision to support this one is revealing. Yet the White House statement glossed over almost all of the bill’s substance. The bill would ensure that all Americans “benefit fully from our Nation’s economic success,” the White House says.
The bill would instead politicize monetary policy and financial regulation when the Fed’s focus should be slaying inflation while avoiding a recession. House Democrats who voted for the bill deserve to be called out for supporting racial favoritism and undermining Fed independence. As for the President, the progressive agenda is apparently a higher priority than controlling inflation.
 

THE_DEVIL

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Their bill would require the Board of Governors and FOMC to “exercise all duties and functions in a manner that fosters the elimination of disparities across racial and ethnic groups with respect to employment, income, wealth, and access to affordable credit.”
 
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FAUlty Gator

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Their bill would require the Board of Governors and FOMC to “exercise all duties and functions in a manner that fosters the elimination of disparities across racial and ethnic groups with respect to employment, income, wealth, and access to affordable credit.”
Yup. Stupid. It’s equity not equality.

“The elimination of disparity”. Well…that’s nice. Let’s not use facts, judgement, logic, math or any other critical thinking tools to decide who should get jobs or loans. Just make sure it’s 50/50.
 

Finance85

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Oct 22, 2003
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If we want racial equality, why are we using race as a criteria for monetary policy?

Full disclosure - I'm mixed race, but most people assume I'm caucasian.

So would I get a 50% better deal? Would I have to say which race I identify with? Would I need a DNA test with percentages?
 
Last edited:
Mar 11, 2020
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This guy is truly ****ing stupid.



There is a reason the standards we have in place are in place right now. When a bunch of people default on their loans because they got more than they should have actually qualified for, remember it was Joe Biden who put his name on this.
 
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Jan Itor

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If we want racial equality, why are we using race as a criteria for monetary policy?

Full disclosure - I'm mixed race, but most people assume I'm caucasian.

So would I get a 50% better deal? Would I have to say which race I identify with? Would I need a DNA test with percentages?
Half cock half Asian?
 

ihhawk

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I was talking to the agent helping me in my house search and he said it’s going to be very ugly in South Florida the rest of the year. 1 in 12 FHA loans written in the past 3 years is in default.

He then said there are 8000 houses in foreclosure in Broward County.

The short sale specialist are getting ready.
 

AreWeCross

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Thanks for posting this Faulty...this thread should be archived for the Great Recession II. If this passes, it is exactly where we are heading.
 

Jan Itor

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No, .I think it’s physically driven, between my blind target side eye and a developing neuropathy in hands and maybe a side effect of a med ...this getting old stuff ain’t for the faint of heart.
Did your decline in your putting game coincide at all with the Covid vaccine rollout? Asking for a friend. ;)
 

Colonoscopy

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What's a mandate actually mean here? It could just be pleasing language.

If not, yeah, I really wonder if best addressed at this level.

I'm starting to think a lot of the fed's equity talk we see exists because they're afraid to make structural economic changes that would address these problems much closer to their source. It's much easier to push the problem down the road with affirmative action type solution.... it's also nice to score easy PR victories.
 
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FAUlty Gator

HR Legend
Oct 27, 2017
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What's a mandate actually mean here? It could just be pleasing language.

If not, yeah, I really wonder if best addressed at this level.

I'm starting to think a lot of the fed's equity talk we see exists because they're afraid to make structural economic changes that would address these problems much closer to their source. It's much easier to push the problem down the road with affirmative action type solution.... it's also nice to score easy PR victories.
Too often political victories come at the expense of common sense.