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Obama & the Community Reinvestment Act


Chaka

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This is an interesting video attempting to trace the origins of the sub prime loan crisis and relating the roles of both Obama and McCain.

I am not going to express an opinion on it one way or the other but I did find it interesting am hoping to hear other angles to the issue not discussed in the video. Filtering through pages upon pages of political threads eventually represents both sides of an issue quite well. I hope that happens here.

It is 10 minutes long and well worth watching.

(I searched for +Obama +Community +Reinvestment & +Obama +Burning +House so if it's a Honda I apologize but at least I tried)

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Do we really have to try to perpetuate the idea that it is increased minority ownership that caused this when it is factually innaccurate? And the exidence for that has been posted here several times.

Again let me state that I have not drawn an opinion about this and I am looking for the facts on the opposite side of this video. It seems that it was pretty cut-and-dried and cited multiple sources. I would love any information you have on the other side of this issue. Specifically the Community Reinvestment Act and how it benefited the economy.I rely on the FFA to help present both sides of an issue, between flaming posts, and I am hoping for some of that here.
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Let me also state for the record, and I have made multiple posts on the issue to support this, that I am not supporting either Obama or McCain.

I have no agenda here other than learning the whole story.

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Do we really have to try to perpetuate the idea that it is increased minority ownership that caused this when it is factually innaccurate? And the exidence for that has been posted here several times.

I also do not believe that increasing incentive to make loans to low income families necessarily equates to minority lending, aren't there are far more broke ### white people that benefited from the CRA?
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Do we really have to try to perpetuate the idea that it is increased minority ownership that caused this when it is factually innaccurate? And the exidence for that has been posted here several times.

That's a fairly poor argument.
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Do we really have to try to perpetuate the idea that it is increased minority ownership that caused this when it is factually innaccurate? And the exidence for that has been posted here several times.

I am also do not believe that increasing incentive to make loans to low income families necessarily equates to minority lending, aren't there are far more broke ### white people that benefited from the CRA?
Yeah there are but amazingly it rarely gets mentioned and the finger don't tend to get pointed that way. Also the whole gist of this is spin to let the GOP off the hook in an election year.
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Do we really have to try to perpetuate the idea that it is increased minority ownership that caused this when it is factually innaccurate? And the exidence for that has been posted here several times.

I am also do not believe that increasing incentive to make loans to low income families necessarily equates to minority lending, aren't there are far more broke ### white people that benefited from the CRA?
Yeah there are but amazingly it rarely gets mentioned and the finger don't tend to get pointed that way. Also the whole gist of this is spin to let the GOP off the hook in an election year.
Off the hook for what? Are you of the opinion that the CRA did not create the subprime loan industry and, by extension, the housing bubble?Were the conservatives also responsible? If so, how?
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Do we really have to try to perpetuate the idea that it is increased minority ownership that caused this when it is factually innaccurate? And the exidence for that has been posted here several times.

I am also do not believe that increasing incentive to make loans to low income families necessarily equates to minority lending, aren't there are far more broke ### white people that benefited from the CRA?
Yeah there are but amazingly it rarely gets mentioned and the finger don't tend to get pointed that way. Also the whole gist of this is spin to let the GOP off the hook in an election year.
Off the hook for what? Are you of the opinion that the CRA did not create the subprime loan industry and, by extension, the housing bubble?Were the conservatives also responsible? If so, how?
Technically, subprime mortgages have been around since the late 1980s, but they were not bought up in hoards by Wall Street until the late 1990s/early 00s. Yes, a large part of this was the CRA amongst other reasons.
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Do we really have to try to perpetuate the idea that it is increased minority ownership that caused this when it is factually innaccurate? And the exidence for that has been posted here several times.

I am also do not believe that increasing incentive to make loans to low income families necessarily equates to minority lending, aren't there are far more broke ### white people that benefited from the CRA?
Yeah there are but amazingly it rarely gets mentioned and the finger don't tend to get pointed that way. Also the whole gist of this is spin to let the GOP off the hook in an election year.
Off the hook for what? Are you of the opinion that the CRA did not create the subprime loan industry and, by extension, the housing bubble?Were the conservatives also responsible? If so, how?
Yeah I am of the opinion that what was done with the Commodities act was mroe responsible. And I believe the whole mess is a bg red X on the deregulation shtick that is the conservative mantra.
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Do we really have to try to perpetuate the idea that it is increased minority ownership that caused this when it is factually innaccurate? And the exidence for that has been posted here several times.

I don't think it matters whether the people involved are black, white, brown, or green with pink polka dots, the fact of the matter is that there are a lot of people that overborrowed, and now it's coming back to bite them. Hard. Only fools want to separate this into a discussion of ethnic problems. They made their bed and now they have to sleep in it.
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Do we really have to try to perpetuate the idea that it is increased minority ownership that caused this when it is factually innaccurate? And the exidence for that has been posted here several times.

I am also do not believe that increasing incentive to make loans to low income families necessarily equates to minority lending, aren't there are far more broke ### white people that benefited from the CRA?
Yeah there are but amazingly it rarely gets mentioned and the finger don't tend to get pointed that way. Also the whole gist of this is spin to let the GOP off the hook in an election year.
Off the hook for what? Are you of the opinion that the CRA did not create the subprime loan industry and, by extension, the housing bubble?

Were the conservatives also responsible? If so, how?

Technically, subprime mortgages have been around since the late 1980s, but they were not bought up in hoards by Wall Street until the late 1990s/early 00s. Yes, a large part of this was the CRA amongst other reasons.
This point was mentioned in the video and the fact that the CRA created incentive (through penalties) for banks to make these loans.

Clearly there are many factors that lead to this type of crisis but does it happen without the CRA? Is the Clinton administration ultimately responsible for what is happening today?

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Do we really have to try to perpetuate the idea that it is increased minority ownership that caused this when it is factually innaccurate? And the exidence for that has been posted here several times.

I don't think it matters whether the people involved are black, white, brown, or green with pink polka dots, the fact of the matter is that there are a lot of people that overborrowed, and now it's coming back to bite them. Hard. Only fools want to separate this into a discussion of ethnic problems. They made their bed and now they have to sleep in it.
To bad we don't feel the same way about the people that sold them the beds.
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Do we really have to try to perpetuate the idea that it is increased minority ownership that caused this when it is factually innaccurate? And the exidence for that has been posted here several times.

I am also do not believe that increasing incentive to make loans to low income families necessarily equates to minority lending, aren't there are far more broke ### white people that benefited from the CRA?
Yeah there are but amazingly it rarely gets mentioned and the finger don't tend to get pointed that way. Also the whole gist of this is spin to let the GOP off the hook in an election year.
Off the hook for what? Are you of the opinion that the CRA did not create the subprime loan industry and, by extension, the housing bubble?Were the conservatives also responsible? If so, how?
Yeah I am of the opinion that what was done with the Commodities act was mroe responsible. And I believe the whole mess is a bg red X on the deregulation shtick that is the conservative mantra.
Google search for Commodities Act brings up a lot of results. Can you direct me to a good resource for information supporting this stance?
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Do we really have to try to perpetuate the idea that it is increased minority ownership that caused this when it is factually innaccurate? And the exidence for that has been posted here several times.

I am also do not believe that increasing incentive to make loans to low income families necessarily equates to minority lending, aren't there are far more broke ### white people that benefited from the CRA?
Yeah there are but amazingly it rarely gets mentioned and the finger don't tend to get pointed that way. Also the whole gist of this is spin to let the GOP off the hook in an election year.
Off the hook for what? Are you of the opinion that the CRA did not create the subprime loan industry and, by extension, the housing bubble?

Were the conservatives also responsible? If so, how?

Technically, subprime mortgages have been around since the late 1980s, but they were not bought up in hoards by Wall Street until the late 1990s/early 00s. Yes, a large part of this was the CRA amongst other reasons.
This point was mentioned in the video and the fact that the CRA created incentive (through penalties) for banks to make these loans.

Clearly there are many factors that lead to this type of crisis but does it happen without the CRA? Is the Clinton administration ultimately responsible for what is happening today?

Well of course he is.
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Do we really have to try to perpetuate the idea that it is increased minority ownership that caused this when it is factually innaccurate? And the exidence for that has been posted here several times.

I don't think it matters whether the people involved are black, white, brown, or green with pink polka dots, the fact of the matter is that there are a lot of people that overborrowed, and now it's coming back to bite them. Hard. Only fools want to separate this into a discussion of ethnic problems. They made their bed and now they have to sleep in it.
To bad we don't feel the same way about the people that sold them the beds.
Aren't those people the Federal Government? No one is going to say that the banks did not take advantage in every way possible of the situation but when you have the government telling the banks that they will insure these loans and imposing penalties for not making these loans doesn't that make the government responsible?
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Do we really have to try to perpetuate the idea that it is increased minority ownership that caused this when it is factually innaccurate? And the exidence for that has been posted here several times.

I am also do not believe that increasing incentive to make loans to low income families necessarily equates to minority lending, aren't there are far more broke ### white people that benefited from the CRA?
Yeah there are but amazingly it rarely gets mentioned and the finger don't tend to get pointed that way. Also the whole gist of this is spin to let the GOP off the hook in an election year.
Off the hook for what? Are you of the opinion that the CRA did not create the subprime loan industry and, by extension, the housing bubble?

Were the conservatives also responsible? If so, how?

Technically, subprime mortgages have been around since the late 1980s, but they were not bought up in hoards by Wall Street until the late 1990s/early 00s. Yes, a large part of this was the CRA amongst other reasons.
This point was mentioned in the video and the fact that the CRA created incentive (through penalties) for banks to make these loans.

Clearly there are many factors that lead to this type of crisis but does it happen without the CRA? Is the Clinton administration ultimately responsible for what is happening today?

Well of course he is.
:mellow:

Come on NC, I am not playing partisan politics here. Sometimes a discussion requires naming names. I am happy to blame the Bush administration for multiple atrocities.

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Economist's View: It Wasn't the Community Reinvestment Act

First, there's the timing. CRA came in 1977. The crisis came in 2007. Indeed, by 2004, the Bush administration had weakened the CRA -- and after that (though not, presumably, because of it), bubble lending really took off. Further, CRA only governs a certain class of federally insured banks. Problem is, half of the subprime loans came from mortgage companies with no CRA involvement at all. Another 25%-30% came from companies with very little CRA exposure. For those who left their abacus at home, that's 80% of the loans which were fully or largely outside CRA jurisdiction. More than that, the non-CRA mortgage firms made subprime loans at twice the rate of CRA-covered firms. Which basically leaves a stake in the heart of this particular theory.

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Do we really have to try to perpetuate the idea that it is increased minority ownership that caused this when it is factually innaccurate? And the exidence for that has been posted here several times.

I don't think it matters whether the people involved are black, white, brown, or green with pink polka dots, the fact of the matter is that there are a lot of people that overborrowed, and now it's coming back to bite them. Hard. Only fools want to separate this into a discussion of ethnic problems. They made their bed and now they have to sleep in it.
To bad we don't feel the same way about the people that sold them the beds.
Same goes for the banks. Why should they get a bailout? They don't deserve it. Oh, and before I forget, here's some food for thought for all of you party-liners out there: Obama and McCain voted in support of the bill. Now tell me that one or the other knows how to run a friggin' bake sale, let alone a formerly-great nation.
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Here's the thread where the video is discussed. Youtube pulled the original due to use of of music without proper authority/permission/payment.

In the thread, I included a link to a study re:CRA loans.

A short summary:

- CRA loans constituted only 23% of all loans and 9.2% of high-cost loans.

- CRA loans were twice as likely to be retained in the originating bank’s portfolio than loans made by other institutions.

- CRA loans were less likely to be foreclosed upon than other loans.

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Economist's View: It Wasn't the Community Reinvestment Act

First, there's the timing. CRA came in 1977. The crisis came in 2007. Indeed, by 2004, the Bush administration had weakened the CRA -- and after that (though not, presumably, because of it), bubble lending really took off. Further, CRA only governs a certain class of federally insured banks. Problem is, half of the subprime loans came from mortgage companies with no CRA involvement at all. Another 25%-30% came from companies with very little CRA exposure. For those who left their abacus at home, that's 80% of the loans which were fully or largely outside CRA jurisdiction. More than that, the non-CRA mortgage firms made subprime loans at twice the rate of CRA-covered firms. Which basically leaves a stake in the heart of this particular theory.

Excellent. This is what I am looking for.
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Here's the thread where the video is discussed. Youtube pulled the original due to use of of music without proper authority/permission/payment.

In the thread, I included a link to a study re:CRA loans.

A short summary:

- CRA loans constituted only 23% of all loans and 9.2% of high-cost loans.

- CRA loans were twice as likely to be retained in the originating bank's portfolio than loans made by other institutions.

- CRA loans were less likely to be foreclosed upon than other loans.

:mellow:

Thanks for pointing me to that other thread. I think it contains most of the info I am looking for.

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Do we really have to try to perpetuate the idea that it is increased minority ownership that caused this when it is factually innaccurate? And the exidence for that has been posted here several times.

I am also do not believe that increasing incentive to make loans to low income families necessarily equates to minority lending, aren't there are far more broke ### white people that benefited from the CRA?
Yeah there are but amazingly it rarely gets mentioned and the finger don't tend to get pointed that way. Also the whole gist of this is spin to let the GOP off the hook in an election year.
Off the hook for what? Are you of the opinion that the CRA did not create the subprime loan industry and, by extension, the housing bubble?

Were the conservatives also responsible? If so, how?

Technically, subprime mortgages have been around since the late 1980s, but they were not bought up in hoards by Wall Street until the late 1990s/early 00s. Yes, a large part of this was the CRA amongst other reasons.
This point was mentioned in the video and the fact that the CRA created incentive (through penalties) for banks to make these loans.

Clearly there are many factors that lead to this type of crisis but does it happen without the CRA? Is the Clinton administration ultimately responsible for what is happening today?

We still probably would have had some form of a housing bubble, but it would have likely resembled the late 1980s bubble which was not nearly as big in terms of dollars and widespread in terms of market segments (i.e., no subprime or even Alt-A).
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Do we really have to try to perpetuate the idea that it is increased minority ownership that caused this when it is factually innaccurate? And the exidence for that has been posted here several times.

Do you have a link for this? I'm interested in reading it.
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Do we really have to try to perpetuate the idea that it is increased minority ownership that caused this when it is factually innaccurate? And the exidence for that has been posted here several times.

I am also do not believe that increasing incentive to make loans to low income families necessarily equates to minority lending, aren't there are far more broke ### white people that benefited from the CRA?
Yeah there are but amazingly it rarely gets mentioned and the finger don't tend to get pointed that way. Also the whole gist of this is spin to let the GOP off the hook in an election year.
Off the hook for what? Are you of the opinion that the CRA did not create the subprime loan industry and, by extension, the housing bubble?

Were the conservatives also responsible? If so, how?

Technically, subprime mortgages have been around since the late 1980s, but they were not bought up in hoards by Wall Street until the late 1990s/early 00s. Yes, a large part of this was the CRA amongst other reasons.
This point was mentioned in the video and the fact that the CRA created incentive (through penalties) for banks to make these loans.

Clearly there are many factors that lead to this type of crisis but does it happen without the CRA? Is the Clinton administration ultimately responsible for what is happening today?

Well of course he is.
:mellow:

Come on NC, I am not playing partisan politics here. Sometimes a discussion requires naming names. I am happy to blame the Bush administration for multiple atrocities.

Seriously I am waiting to hear how it's all Carters fault. It is such obvious spin and damage control. This crisis is destroying what was left of the GOP brand. They are officially headed for the wilderness for a while.
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Do we really have to try to perpetuate the idea that it is increased minority ownership that caused this when it is factually innaccurate? And the exidence for that has been posted here several times.

Do you have a link for this? I'm interested in reading it.
See Analogs post. He has been all over this.
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Do we really have to try to perpetuate the idea that it is increased minority ownership that caused this when it is factually innaccurate? And the exidence for that has been posted here several times.

Do you have a link for this? I'm interested in reading it.
See Analogs post. He has been all over this.
Thanks.
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Here's the thread where the video is discussed. Youtube pulled the original due to use of of music without proper authority/permission/payment.

In the thread, I included a link to a study re:CRA loans.

A short summary:

- CRA loans constituted only 23% of all loans and 9.2% of high-cost loans.

- CRA loans were twice as likely to be retained in the originating bank’s portfolio than loans made by other institutions.

- CRA loans were less likely to be foreclosed upon than other loans.

This is misleading as the CRA created a market for subprime loans that did not really exist before (or at least not on a significant scale).

I am not going to sit here and tell you that the CRA was the sole reason for the housing bubble, but it's difficult to deny that the CRA and government's intervention in the housing market in general were the primary sparks to the bubble.

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Here's the thread where the video is discussed. Youtube pulled the original due to use of of music without proper authority/permission/payment.

In the thread, I included a link to a study re:CRA loans.

A short summary:

- CRA loans constituted only 23% of all loans and 9.2% of high-cost loans.

- CRA loans were twice as likely to be retained in the originating bank's portfolio than loans made by other institutions.

- CRA loans were less likely to be foreclosed upon than other loans.

This is misleading as the CRA created a market for subprime loans that did not really exist before (or at least not on a significant scale).

I am not going to sit here and tell you that the CRA was the sole reason for the housing bubble, but it's difficult to deny that the CRA and government's intervention in the housing market in general were the primary sparks to the bubble.

Thanks for mentioning this.
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Here's the thread where the video is discussed. Youtube pulled the original due to use of of music without proper authority/permission/payment.

In the thread, I included a link to a study re:CRA loans.

A short summary:

- CRA loans constituted only 23% of all loans and 9.2% of high-cost loans.

- CRA loans were twice as likely to be retained in the originating bank’s portfolio than loans made by other institutions.

- CRA loans were less likely to be foreclosed upon than other loans.

This is misleading as the CRA created a market for subprime loans that did not really exist before (or at least not on a significant scale).

I am not going to sit here and tell you that the CRA was the sole reason for the housing bubble, but it's difficult to deny that the CRA and government's intervention in the housing market in general were the primary sparks to the bubble.

Actually not so difficult:

Did Liberals Cause the Sub-Prime Crisis?, by Robert Gordon, TAP: The idea started on the outer precincts of the right. Thomas DiLorenzo, an economist who calls Ron Paul "the Jefferson of our time," wrote in September that the housing crisis is "the direct result of thirty years of government policy that has forced banks to make bad loans to un-creditworthy borrowers." The policy DiLorenzo decries is the 1977 Community Reinvestment Act, which requires banks to lend throughout the communities they serve.

The Blame-CRA theme bounced around the right-wing Freerepublic.com. In January it figured in a Washington Times column. In February, a Cato Institute affiliate named Stan Liebowitz picked up the critique in a New York Post op-ed headlined "The Real Scandal: How the Feds Invented the Mortgage Mess." On The National Review's blog, The Corner, John Derbyshire channeled Liebowitz: "The folk losing their homes? are victims not of 'predatory lenders,' but of government-sponsored -- in fact government-mandated -- political correctness."

Last week, a more careful expression of the idea hit The Washington Post, in an article on former Sen. Phil Gramm's influence over John McCain. ... [T]he Brookings Institution's Robert Litan ... suggested that the 1990s enhancement of CRA, which was achieved over Gramm's fierce opposition, may have contributed to the current crisis. "If the CRA had not been so aggressively pushed," Litan said, "it is conceivable things would not be quite as bad. People have to be honest about that." ...

The revisionists say the problem wasn't too little regulation; but too much, via CRA. The law was enacted in response to both intentional redlining and structural barriers to credit for low-income communities. CRA applies only to banks and thrifts that are federally insured; it's conceived as a quid pro quo for that privilege. This means the law doesn't apply to independent mortgage companies (or payday lenders, check-cashers, etc.)

The law imposes on the covered depositories an affirmative duty to lend throughout the areas from which they take deposits, including poor neighborhoods. The law has teeth... Studies ... have shown that CRA increased lending and homeownership in poor communities without undermining banks' profitability.

But CRA has always had critics... Rhetoric aside, the argument turns on a simple question: In the current mortgage meltdown, did lenders approve bad loans to comply with CRA, or to make money?

The evidence strongly suggests the latter. First, consider timing. CRA was enacted in 1977. The sub-prime lending at the heart of the current crisis exploded a full quarter century later. ... In late 2004, the Bush administration announced plans to sharply weaken CRA regulations... Yet sub-prime lending continued, and even intensified -- at the very time ... the law had weakened.

Second, it is hard to blame CRA for the mortgage meltdown when CRA doesn't even apply to most of the loans that are behind it. ... Perhaps one in four sub-prime loans were made by the institutions fully governed by CRA.

Most important, the lenders subject to CRA have engaged in less, not more, of the most dangerous lending. Janet Yellen, president of the San Francisco Federal Reserve, offers the killer statistic: Independent mortgage companies, which are not covered by CRA, made high-priced loans at more than twice the rate of the banks and thrifts. With this in mind, Yellen specifically rejects the "tendency to conflate the current problems in the sub-prime market with CRA-motivated lending." ...

Yellen is hardly alone... One of the only regulators who long ago saw the current crisis coming was the late Ned Gramlich... But Gramlich praised CRA...

It's telling that, amid all the recent recriminations, even lenders have not fingered CRA. That's because CRA didn't bring about the reckless lending at the heart of the crisis. Just as sub-prime lending was exploding, CRA was losing force... And the worst offenders, the independent mortgage companies, were never subject to CRA -- or any federal regulator. Law didn't make them lend. The profit motive did. ...

Article
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Is it fair to say that CRA enabled the crisis, then crooks like Franklin Raines abused it and it drove our economy off a cliff? Or is that still racist?

No it isn't. At least not if you want to be accurate in any way.
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Is it fair to say that CRA enabled the crisis, then crooks like Franklin Raines abused it and it drove our economy off a cliff? Or is that still racist?

No it isn't. At least not if you want to be accurate in any way.
This is my key frustration with the FFA today. Coherent arguments from reputable sources are posted and they are ignored by a majority of posters. It's like screaming at a big conservative brick wall.
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Is it fair to say that CRA enabled the crisis, then crooks like Franklin Raines abused it and it drove our economy off a cliff? Or is that still racist?

No it isn't. At least not if you want to be accurate in any way.
This is my key frustration with the FFA today. Coherent arguments from reputable sources are posted and they are ignored by a majority of posters. It's like screaming at a big conservative brick wall.
It's not a new phenomena.
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Here's the thread where the video is discussed. Youtube pulled the original due to use of of music without proper authority/permission/payment.

In the thread, I included a link to a study re:CRA loans.

A short summary:

- CRA loans constituted only 23% of all loans and 9.2% of high-cost loans.

- CRA loans were twice as likely to be retained in the originating bank's portfolio than loans made by other institutions.

- CRA loans were less likely to be foreclosed upon than other loans.

This is misleading as the CRA created a market for subprime loans that did not really exist before (or at least not on a significant scale).

I am not going to sit here and tell you that the CRA was the sole reason for the housing bubble, but it's difficult to deny that the CRA and government's intervention in the housing market in general were the primary sparks to the bubble.

Actually not so difficult:

Did Liberals Cause the Sub-Prime Crisis?, by Robert Gordon, TAP: The idea started on the outer precincts of the right. Thomas DiLorenzo, an economist who calls Ron Paul "the Jefferson of our time," wrote in September that the housing crisis is "the direct result of thirty years of government policy that has forced banks to make bad loans to un-creditworthy borrowers." The policy DiLorenzo decries is the 1977 Community Reinvestment Act, which requires banks to lend throughout the communities they serve.

The Blame-CRA theme bounced around the right-wing Freerepublic.com. In January it figured in a Washington Times column. In February, a Cato Institute affiliate named Stan Liebowitz picked up the critique in a New York Post op-ed headlined "The Real Scandal: How the Feds Invented the Mortgage Mess." On The National Review's blog, The Corner, John Derbyshire channeled Liebowitz: "The folk losing their homes? are victims not of 'predatory lenders,' but of government-sponsored -- in fact government-mandated -- political correctness."

Last week, a more careful expression of the idea hit The Washington Post, in an article on former Sen. Phil Gramm's influence over John McCain. ... [T]he Brookings Institution's Robert Litan ... suggested that the 1990s enhancement of CRA, which was achieved over Gramm's fierce opposition, may have contributed to the current crisis. "If the CRA had not been so aggressively pushed," Litan said, "it is conceivable things would not be quite as bad. People have to be honest about that." ...

The revisionists say the problem wasn't too little regulation; but too much, via CRA. The law was enacted in response to both intentional redlining and structural barriers to credit for low-income communities. CRA applies only to banks and thrifts that are federally insured; it's conceived as a quid pro quo for that privilege. This means the law doesn't apply to independent mortgage companies (or payday lenders, check-cashers, etc.)

The law imposes on the covered depositories an affirmative duty to lend throughout the areas from which they take deposits, including poor neighborhoods. The law has teeth... Studies ... have shown that CRA increased lending and homeownership in poor communities without undermining banks' profitability.

But CRA has always had critics... Rhetoric aside, the argument turns on a simple question: In the current mortgage meltdown, did lenders approve bad loans to comply with CRA, or to make money?

The evidence strongly suggests the latter. First, consider timing. CRA was enacted in 1977. The sub-prime lending at the heart of the current crisis exploded a full quarter century later. ... In late 2004, the Bush administration announced plans to sharply weaken CRA regulations... Yet sub-prime lending continued, and even intensified -- at the very time ... the law had weakened.

Second, it is hard to blame CRA for the mortgage meltdown when CRA doesn't even apply to most of the loans that are behind it. ... Perhaps one in four sub-prime loans were made by the institutions fully governed by CRA.

Most important, the lenders subject to CRA have engaged in less, not more, of the most dangerous lending. Janet Yellen, president of the San Francisco Federal Reserve, offers the killer statistic: Independent mortgage companies, which are not covered by CRA, made high-priced loans at more than twice the rate of the banks and thrifts. With this in mind, Yellen specifically rejects the "tendency to conflate the current problems in the sub-prime market with CRA-motivated lending." ...

Yellen is hardly alone... One of the only regulators who long ago saw the current crisis coming was the late Ned Gramlich... But Gramlich praised CRA...

It's telling that, amid all the recent recriminations, even lenders have not fingered CRA. That's because CRA didn't bring about the reckless lending at the heart of the crisis. Just as sub-prime lending was exploding, CRA was losing force... And the worst offenders, the independent mortgage companies, were never subject to CRA -- or any federal regulator. Law didn't make them lend. The profit motive did. ...

Article
This is an excellent article but can't it be argued that banks made these loans in response to market forces? I mean if you owned a bank and you see another bank drawing more clients aren't you going to do everything you can target those clients?

The point is even if most of these loans did not fall under the CRA didn't the CRA enhance the climate for these type of loans?

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Seriously I am waiting to hear how it's all Carters fault. It is such obvious spin and damage control. This crisis is destroying what was left of the GOP brand. They are officially headed for the wilderness for a while.

Well, since you asked...

Had Carter not boycotted the Olympics, one of those kids could have turned a gold medal into a full-ride scholarship to a top business school, and then into a high position with a Fortune 500 company, becoming recognized as an expert in finance, and perhaps one, just one, Congressman would have listened to him/her, and this whole crisis could have been averted.

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Seriously I am waiting to hear how it's all Carters fault. It is such obvious spin and damage control. This crisis is destroying what was left of the GOP brand. They are officially headed for the wilderness for a while.

Well, since you asked...

Had Carter not boycotted the Olympics, one of those kids could have turned a gold medal into a full-ride scholarship to a top business school, and then into a high position with a Fortune 500 company, becoming recognized as an expert in finance, and perhaps one, just one, Congressman would have listened to him/her, and this whole crisis could have been averted.

Well really can't argue against that. It was Carters fault.
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Is it fair to say that CRA enabled the crisis, then crooks like Franklin Raines abused it and it drove our economy off a cliff? Or is that still racist?

No it isn't. At least not if you want to be accurate in any way.
This is my key frustration with the FFA today. Coherent arguments from reputable sources are posted and they are ignored by a majority of posters. It's like screaming at a big conservative brick wall.
It's not a new phenomena.
I suppose it gets worse around election time. It's like beginning of the season Shark Pool in here.
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Is it fair to say that CRA enabled the crisis, then crooks like Franklin Raines abused it and it drove our economy off a cliff? Or is that still racist?

No it isn't. At least not if you want to be accurate in any way.
This is my key frustration with the FFA today. Coherent arguments from reputable sources are posted and they are ignored by a majority of posters. It's like screaming at a big conservative brick wall.
It's not a new phenomena.
I suppose it gets worse around election time. It's like beginning of the season Shark Pool in here.
That wasn't very excellent.
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Is it fair to say that CRA enabled the crisis, then crooks like Franklin Raines abused it and it drove our economy off a cliff? Or is that still racist?

No it isn't. At least not if you want to be accurate in any way.
This is my key frustration with the FFA today. Coherent arguments from reputable sources are posted and they are ignored by a majority of posters. It's like screaming at a big conservative brick wall.
It's not a new phenomena.
I suppose it gets worse around election time. It's like beginning of the season Shark Pool in here.
That wasn't very excellent.
I'm just sayin.
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Seriously I am waiting to hear how it's all Carters fault. It is such obvious spin and damage control. This crisis is destroying what was left of the GOP brand. They are officially headed for the wilderness for a while.

Well, since you asked...

Had Carter not boycotted the Olympics, one of those kids could have turned a gold medal into a full-ride scholarship to a top business school, and then into a high position with a Fortune 500 company, becoming recognized as an expert in finance, and perhaps one, just one, Congressman would have listened to him/her, and this whole crisis could have been averted.

Well really can't argue against that. It was Carters fault.
Phew, glad we got that settled.
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Seriously I am waiting to hear how it's all Carters fault. It is such obvious spin and damage control. This crisis is destroying what was left of the GOP brand. They are officially headed for the wilderness for a while.

Well, since you asked...

Had Carter not boycotted the Olympics, one of those kids could have turned a gold medal into a full-ride scholarship to a top business school, and then into a high position with a Fortune 500 company, becoming recognized as an expert in finance, and perhaps one, just one, Congressman would have listened to him/her, and this whole crisis could have been averted.

Well really can't argue against that. It was Carters fault.
Phew, glad we got that settled.
:thumbup:
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Here's the thread where the video is discussed. Youtube pulled the original due to use of of music without proper authority/permission/payment.

In the thread, I included a link to a study re:CRA loans.

A short summary:

- CRA loans constituted only 23% of all loans and 9.2% of high-cost loans.

- CRA loans were twice as likely to be retained in the originating bank's portfolio than loans made by other institutions.

- CRA loans were less likely to be foreclosed upon than other loans.

This is misleading as the CRA created a market for subprime loans that did not really exist before (or at least not on a significant scale).

I am not going to sit here and tell you that the CRA was the sole reason for the housing bubble, but it's difficult to deny that the CRA and government's intervention in the housing market in general were the primary sparks to the bubble.

Actually not so difficult:

Did Liberals Cause the Sub-Prime Crisis?, by Robert Gordon, TAP: The idea started on the outer precincts of the right. Thomas DiLorenzo, an economist who calls Ron Paul "the Jefferson of our time," wrote in September that the housing crisis is "the direct result of thirty years of government policy that has forced banks to make bad loans to un-creditworthy borrowers." The policy DiLorenzo decries is the 1977 Community Reinvestment Act, which requires banks to lend throughout the communities they serve.

The Blame-CRA theme bounced around the right-wing Freerepublic.com. In January it figured in a Washington Times column. In February, a Cato Institute affiliate named Stan Liebowitz picked up the critique in a New York Post op-ed headlined "The Real Scandal: How the Feds Invented the Mortgage Mess." On The National Review's blog, The Corner, John Derbyshire channeled Liebowitz: "The folk losing their homes? are victims not of 'predatory lenders,' but of government-sponsored -- in fact government-mandated -- political correctness."

Last week, a more careful expression of the idea hit The Washington Post, in an article on former Sen. Phil Gramm's influence over John McCain. ... [T]he Brookings Institution's Robert Litan ... suggested that the 1990s enhancement of CRA, which was achieved over Gramm's fierce opposition, may have contributed to the current crisis. "If the CRA had not been so aggressively pushed," Litan said, "it is conceivable things would not be quite as bad. People have to be honest about that." ...

The revisionists say the problem wasn't too little regulation; but too much, via CRA. The law was enacted in response to both intentional redlining and structural barriers to credit for low-income communities. CRA applies only to banks and thrifts that are federally insured; it's conceived as a quid pro quo for that privilege. This means the law doesn't apply to independent mortgage companies (or payday lenders, check-cashers, etc.)

The law imposes on the covered depositories an affirmative duty to lend throughout the areas from which they take deposits, including poor neighborhoods. The law has teeth... Studies ... have shown that CRA increased lending and homeownership in poor communities without undermining banks' profitability.

But CRA has always had critics... Rhetoric aside, the argument turns on a simple question: In the current mortgage meltdown, did lenders approve bad loans to comply with CRA, or to make money?

The evidence strongly suggests the latter. First, consider timing. CRA was enacted in 1977. The sub-prime lending at the heart of the current crisis exploded a full quarter century later. ... In late 2004, the Bush administration announced plans to sharply weaken CRA regulations... Yet sub-prime lending continued, and even intensified -- at the very time ... the law had weakened.

Second, it is hard to blame CRA for the mortgage meltdown when CRA doesn't even apply to most of the loans that are behind it. ... Perhaps one in four sub-prime loans were made by the institutions fully governed by CRA.

Most important, the lenders subject to CRA have engaged in less, not more, of the most dangerous lending. Janet Yellen, president of the San Francisco Federal Reserve, offers the killer statistic: Independent mortgage companies, which are not covered by CRA, made high-priced loans at more than twice the rate of the banks and thrifts. With this in mind, Yellen specifically rejects the "tendency to conflate the current problems in the sub-prime market with CRA-motivated lending." ...

Yellen is hardly alone... One of the only regulators who long ago saw the current crisis coming was the late Ned Gramlich... But Gramlich praised CRA...

It's telling that, amid all the recent recriminations, even lenders have not fingered CRA. That's because CRA didn't bring about the reckless lending at the heart of the crisis. Just as sub-prime lending was exploding, CRA was losing force... And the worst offenders, the independent mortgage companies, were never subject to CRA -- or any federal regulator. Law didn't make them lend. The profit motive did. ...

Article
This is an excellent article but can't it be argued that banks made these loans in response to market forces? I mean if you owned a bank and you see another bank drawing more clients aren't you going to do everything you can target those clients?

The point is even if most of these loans did not fall under the CRA didn't the CRA enhance the climate for these type of loans?

So, you're saying CRA forced some banks to open their doors to low-income individuals, other banks saw how profitable that segment could be, decided to agressively pursue that market segment, and the greed-filled need to lure the money of the poor into banks everywhere created an environment in which financial institutions were bound to fail?
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Here's the thread where the video is discussed. Youtube pulled the original due to use of of music without proper authority/permission/payment.

In the thread, I included a link to a study re:CRA loans.

A short summary:

- CRA loans constituted only 23% of all loans and 9.2% of high-cost loans.

- CRA loans were twice as likely to be retained in the originating bank's portfolio than loans made by other institutions.

- CRA loans were less likely to be foreclosed upon than other loans.

This is misleading as the CRA created a market for subprime loans that did not really exist before (or at least not on a significant scale).

I am not going to sit here and tell you that the CRA was the sole reason for the housing bubble, but it's difficult to deny that the CRA and government's intervention in the housing market in general were the primary sparks to the bubble.

Actually not so difficult:

Did Liberals Cause the Sub-Prime Crisis?, by Robert Gordon, TAP: The idea started on the outer precincts of the right. Thomas DiLorenzo, an economist who calls Ron Paul "the Jefferson of our time," wrote in September that the housing crisis is "the direct result of thirty years of government policy that has forced banks to make bad loans to un-creditworthy borrowers." The policy DiLorenzo decries is the 1977 Community Reinvestment Act, which requires banks to lend throughout the communities they serve.

The Blame-CRA theme bounced around the right-wing Freerepublic.com. In January it figured in a Washington Times column. In February, a Cato Institute affiliate named Stan Liebowitz picked up the critique in a New York Post op-ed headlined "The Real Scandal: How the Feds Invented the Mortgage Mess." On The National Review's blog, The Corner, John Derbyshire channeled Liebowitz: "The folk losing their homes? are victims not of 'predatory lenders,' but of government-sponsored -- in fact government-mandated -- political correctness."

Last week, a more careful expression of the idea hit The Washington Post, in an article on former Sen. Phil Gramm's influence over John McCain. ... [T]he Brookings Institution's Robert Litan ... suggested that the 1990s enhancement of CRA, which was achieved over Gramm's fierce opposition, may have contributed to the current crisis. "If the CRA had not been so aggressively pushed," Litan said, "it is conceivable things would not be quite as bad. People have to be honest about that." ...

The revisionists say the problem wasn't too little regulation; but too much, via CRA. The law was enacted in response to both intentional redlining and structural barriers to credit for low-income communities. CRA applies only to banks and thrifts that are federally insured; it's conceived as a quid pro quo for that privilege. This means the law doesn't apply to independent mortgage companies (or payday lenders, check-cashers, etc.)

The law imposes on the covered depositories an affirmative duty to lend throughout the areas from which they take deposits, including poor neighborhoods. The law has teeth... Studies ... have shown that CRA increased lending and homeownership in poor communities without undermining banks' profitability.

But CRA has always had critics... Rhetoric aside, the argument turns on a simple question: In the current mortgage meltdown, did lenders approve bad loans to comply with CRA, or to make money?

The evidence strongly suggests the latter. First, consider timing. CRA was enacted in 1977. The sub-prime lending at the heart of the current crisis exploded a full quarter century later. ... In late 2004, the Bush administration announced plans to sharply weaken CRA regulations... Yet sub-prime lending continued, and even intensified -- at the very time ... the law had weakened.

Second, it is hard to blame CRA for the mortgage meltdown when CRA doesn't even apply to most of the loans that are behind it. ... Perhaps one in four sub-prime loans were made by the institutions fully governed by CRA.

Most important, the lenders subject to CRA have engaged in less, not more, of the most dangerous lending. Janet Yellen, president of the San Francisco Federal Reserve, offers the killer statistic: Independent mortgage companies, which are not covered by CRA, made high-priced loans at more than twice the rate of the banks and thrifts. With this in mind, Yellen specifically rejects the "tendency to conflate the current problems in the sub-prime market with CRA-motivated lending." ...

Yellen is hardly alone... One of the only regulators who long ago saw the current crisis coming was the late Ned Gramlich... But Gramlich praised CRA...

It's telling that, amid all the recent recriminations, even lenders have not fingered CRA. That's because CRA didn't bring about the reckless lending at the heart of the crisis. Just as sub-prime lending was exploding, CRA was losing force... And the worst offenders, the independent mortgage companies, were never subject to CRA -- or any federal regulator. Law didn't make them lend. The profit motive did. ...

Article
This is an excellent article but can't it be argued that banks made these loans in response to market forces? I mean if you owned a bank and you see another bank drawing more clients aren't you going to do everything you can target those clients?

The point is even if most of these loans did not fall under the CRA didn't the CRA enhance the climate for these type of loans?

So, you're saying CRA forced some banks to open their doors to low-income individuals, other banks saw how profitable that segment could be, decided to agressively pursue that market segment, and the greed-filled need to lure the money of the poor into banks everywhere created an environment in which financial institutions were bound to fail?
I am not saying that is what actually happened but it does seem plausible from my limited viewpoint.
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I guess no one reads anymore.

Don't fret. I followed and bookmarked the links you posted and will read it all but I will do most of that reading when I am not at work.I am sincerely interested in this issue but, just like I did with the video in my OP I will not accept anything as fact simply because it is stated as such. I look at both sides and try to formulate my own opinion on the subject.
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I guess no one reads anymore.

:popcorn:I read through a good portion of your link and other info posted in here and yet no one here is willing to admit that the loosened lending guidelines pushed by the CRA and other government efforts helped spark a lot of bad loans. Again, were they the sole cause or factor in all of this? No, but it certainly helped give the market a good push-start.A couple other points of clarification from earlier posts I've seen in here...(i) Yes, subprime loans continued to be made after the CRA was curtailed in 2004, but at that point the cat was already out of the bag and the bubble was already feeding upon itself with the subprime RMBS market already well-established. (ii) Yes, there were plenty of loans made by "independent" mortgage companies outside of the CRA, but these independent mortgage providers were really just brokers/middlemen in all of this with the actual loan funds originating from other banks - often under the purview of the CRA.
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If anyone wants to read a comprehensive account of the bubble in residential mortgage market, Chain of Blame has been highly-reviewed from a number of sources. I have not had a chance to read through it myself, but hope to pick it up later this winter...

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I won't say that the CRA is the sole problem here, but will say that I think Fannie Mae and Freddie Mac are, together, the biggest contributor to this financial mess we're in. Their lending policies were, in part, influenced by the CRA... so it has to be lumped in there.

I've tried to argue this to Obama supporters (my brother, mainly) in the past - that I feel like government has gotten us into this mess... and basically enabled the greed on Wall Street... and if nothing else stood idly by and watched as GSE's and Wall Street made a mess of the economy. Either way, government got us here, and government is asking for much more money to squander as they tend to do... but, I digress.

Obama has (as far as I've seen) refused to acknowledge that failure of government. It wouldn't make sense for him to, really, since he's proposing handing over a large portion of our lives to the government, but it would be nice to not hear him pandering and telling half-truths. Greed and bad government policies got us here.

Fannie and Freddie finance about 40 percent of all U.S. mortgages, with $5.3 trillion in outstanding debt. Owned by private shareholders but chartered by Congress, they are exempt from state and local taxes and receive an estimated $6.5 billion-a-year federal subsidy because they can borrow money more cheaply than other investors. In return, they are expected to serve "public purposes," including helping to make home buying more affordable.

...

In 1995, President Bill Clinton's HUD agreed to let Fannie and Freddie get affordable-housing credit for buying subprime securities that included loans to low-income borrowers. The idea was that subprime lending benefited many borrowers who did not qualify for conventional loans. HUD expected that Freddie and Fannie would impose their high lending standards on subprime lenders.

...

For Wall Street, high profits could be made from securities backed by subprime loans. Fannie and Freddie targeted the least-risky loans. Still, their purchases provided more cash for a larger subprime market.

"That was a huge, huge mistake," said Patricia McCoy, who teaches securities law at the University of Connecticut. "That just pumped more capital into a very unregulated market that has turned out to be a disaster."

In 2003, the two bought $81 billion in subprime securities. In 2004, they purchased $175 billion -- 44 percent of the market. In 2005, they bought $169 billion, or 33 percent. In 2006, they cut back to $90 billion, or 20 percent. Generally, Freddie purchased more than Fannie and relied more heavily on the securities to meet goals.

...

- http://www.washingtonpost.com/wp-dyn/conte...8060902626.html

They hurt the market directly and indirectly... but contributed more money to the crisis (and pumped in more capital, as the article says) than any other source, I'd bet.

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Oh, and now that the subprime mortgage has since been obliterated, guess who is picking up the slack?

Taxpayers via the FHA

It's like history repeating itself. Granted FHA borrower does not necessarily <> subprime borrower, there is still a huge overlap between the two groups given that FHA loans require little/no money down or minimum credit scores. Thank you Washington for continuing to ####-up our housing markets at taxpayers' expense!

:cry::goodposting:

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