obvious Child

No, but that doesn't make Rebel's statement true about all welfare people being lazy bums. I'd like to see his response how giving Exxon or ADM free money for things they'd do anyways isn't welfare.

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No, cops cannot threaten to rape and murder your family during interrogations.

sazerac

Where is the White House website link?

prrriiide

You should do a little more research and a little less letting talking heads think for you. You are dead wrong about CRA, and here is the proof to back that statement up.

The CRA was put in place to help people from redlined areas get into homes and build equity as a way of building wealth. It worked spectacularly. The VAST majority of the people helped by the CRA paid their mortgages and accomplished EXACTLY what the policy meant for them to accomplish. There are literally hundreds of thousands of people that own houses - free and clear, little to no remaining mortgage - that got their original loan through the CRA.

Consider:

The sub-prime meltdown didn't happen until 25 years AFTER the passage of CRA, but less than 5 years after deregulation of the financial sector. Why do you suppose that is?

Or how about the fact that independent mortgage firms - firms which ARE NOT constrained by the CRA - made high-priced sub-prime loans at more than TWICE the rate of banks covered by CRA. In fact, nearly 3/4 of the sub-prime loans made were made by firms not effected by CRA. A 2008 study by the legal firm of Traiger & Hinckley, LLP states:

That third point is very important. CRA institutions hold on to the paper on those loans at a rate twice that of non-CRA institutions. That means that they didn't dump their risk on Fannie/Freddie or the secondary markets nearly as often.

If you will follow the link, you will find all sorts of facts, figures and graphs showing the exact figures for the origination of risky loans comparing CRA vs. non-CRA lenders in different MSA areas.

In the pre-Gramm-Leach-Bliley era, the CRA worked like a charm because the investment banks couldn't take over bad paper coming out of the mortgage brokerages. Since there was no secondary market after Fannie/Freddie, the brokerages wouldn't make STUPID loans because Fannie/Freddie wouldn't back them. What deregulation did was obliterate the firewalls that kept that secondary market for bad paper out of the housing market. It allowed Fannie/Freddie to become a credit middle-man instead of a credit supplier. Exit their objectivity.

CRA mandated that people with less than attractive credit be given a chance at a home loan. It DID NOT mandate that the banks had to make the asinine loans with NO income proof, NO job verification, and NO proof of assets. That is a strawman. NOBODY mandated that those loans be made. That is ENTIRELY on the institutions that made those risky loans (overwhelmingly non-CRA), knowing that, due to DEREGULATION and the disappearance of the firewalls between investment and commercial banks, they could dump their bad paper into a morass of derivative trading that is so complex that even the Fed doesn't completely understand it.

But when the Fed raised interest rates, and those NO income-NO-job-NO asset loans re-set, it opened a pandora's box on Wall St. That box would have not existed if the firewalls between the commercial and the investment banks had not been destroyed in the name of deregulation.

Yes, there would be an economic downturn without GLBA. BUT it would have been confined to the housing sector, and not threatened the economy as a whole, with the credit market stuck like it was in quick-set concrete. If those bad loans could not have made it onto Wall St., we wouldn't be worrying about employers making payroll tomorrow because the businesses that rely on that type of short-term credit would be able to get it.

Deregulation didn't cause the housing mess. The financial institutions making STUPID loans, of types NOT mandated by CRA, caused the housing bust. Tearing down the levees between the commercial and the investment sectors allowed the ocean of bad loans to drown the economy as a whole.

So to re-cap: The CRA has little to do with the loans that were defaulted upon because the overwhelming majority of those loans were made by institutions that are not required to follow the mandates of the CRA.

American

Clinton Administration added subprime mortgage authority in the 1995 CRA modification.

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"Laws are made for men of ordinary understanding and should, therefore, be construed by the ordinary rules of common sense. Their meaning is not to be sought for in metaphysical subtleties which may make anything mean everything or nothing at pleasure." -- Thomas Jefferson יהוה

rebelbuc

prrriiide, I don't disagree with all of your points, but changes in the CRA and the passing of the Gramm-Leach-Bliley Act both had bad effects and both occurred during the Clinton watch. Although slim Republican majorities existed during the mid to late 1990s, Democrats successfully used the filibuster and class warfare tactics (along with a willing press) to attack any Republican effort that they did not agree with. As you can see below, more Democrats in both the senate and house had to vote in favor of the Gramm-Leach-Bliley Act for the numbers below to work out.

From Wikipedia:
The final bill resolving the differences was passed in the Senate 90-8-1 and in the House: 362-57-15. This 'veto proof legislation' was signed into law by President Bill Clinton on November 12, 1999[1]

Republicans, Democrats, and President Clinton all deserve credit/blame (depending on how you see it), but Clinton could have vetoed Gramm-Leach-Bliley or CRA changes with Democrat party support if he desired. Class warfare tactics by the Democrats (pushed by groups like ACORN) has contributted to Republicans adopting some poor legislation in the past. I do blame the Republicans for not standing up to the Democrats in these instances.

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"The Earth has a fever!"... I guess it does - political correctness and socialism are making the planet sick!

Iriemon

Three-quarters of white America owns their homes. Less than 50 percent of African Americans are part of the homeownership in America. And less than 50 percent of the Hispanics who live here in this country own their home. And that has got to change for the good of the country. It just does. (Applause.)

And so here are some of the ways to address the issue. First, the single greatest barrier to first time homeownership is a high downpayment. It is really hard for many, many, low income families to make the high downpayment. And so that's why I propose and urge Congress to fully fund the American Dream Downpayment Fund. This will use money, taxpayers' money to help a qualified, low income buyer make a downpayment. And that's important.

...

That's why I've challenged the industry leaders all across the country to get after it for this goal, to stay focused, to make sure that we achieve a more secure America, by achieving the goal of 5.5 million new minority home owners. I call it America's home ownership challenge.

And let me talk about some of the progress which we have made to date, as an example for others to follow. First of all, government sponsored corporations that help create our mortgage system -- I introduced two of the leaders here today -- they call those people Fannie May and Freddie Mac, as well as the federal home loan banks, will increase their commitment to minority markets by more than $440 billion. (Applause.) I want to thank Leland and Franklin for that commitment. It's a commitment that conforms to their charters, as well, and also conforms to their hearts.

President Bush, June 2002.

President Calls for Expanding Opportunities to Home Ownership

rebelbuc

Oh, I forgot to mention in my previous post:
Notice how the two videos in the beginning of this post have mysteriously disappeared from youtube. I understand that Time-Warner is in the tank for Obama and can't stand to have such "propaganda" that might allow voters to actually view the actions of their politicians and think for themselves. Time-Warner would rather than we put our trust in the socialist hands of Barack Obama. There must be a lot of truth in those videos or why else would they have been pulled. It's hard to argue with videos that feature the moving lips of crooked or misguided Democrats. This is similar to the actions that I understand are being taken in Missouri where Obama's lawyers are attempting to take legal action against opposing viewpoints. Just think of it... the brave new world of Obama... complete with rainbows, unicorns, and NO FREEDOM OF SPEECH!

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"The Earth has a fever!"... I guess it does - political correctness and socialism are making the planet sick!

obvious Child

Rebelbuc

How is giving Exxon or ADM free money for things they'd do anyways not welfare?

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No, cops cannot threaten to rape and murder your family during interrogations.

prrriiide

No. You are wrong. Completely.

Follow the link I provided. That study is dated 2007 - 12 years AFTER the Clinton changes to CRA. Tell me why it took 12 years for changes to CRA to bollix the system, instead of the 7 years after deregulation of the financial sector?

Class warfare? Are you serious? Do you really know what redlining was? That meant that if you wanted a loan in a particular area, you couldn't get it. Period. It didn't matter if you were rich, white, and had Warren Buffett as a co-signer. Put it another way: without CRA, the were areas of NOLA proper that would have never got loans for ANYTHING- for rehabilitation of grand old mansions, for small businesses, auto loans, ANYTHING.

Why do you think our inner-cities have made a come-back? Because banks were required - under CRA - to make those loans to investors that wanted to rehabilitate old industrial buildings into lofts and small shops and revenue-generating properties. Do you know what the West 40's in Manhattan looked like in the era of redlining? Now what does it look like since the practice has been outlawed? The mandates of the CRA have made a lot of property investors a lot of money.

Which has more value to the community: a dilapidated firetrap sitting vacant in a block of vacant dilapidated firetraps, or a rehabilitated code-certified building creating a financial stream and generating sales and property taxes? There are more than a few cities, New York being one of them, that were able to boot-strap themselves out of a financial pit by a judicious combination of CRA financing, better law enforcement, and tax breaks to property investors.

Show me the bad effects of the 1995 changes to CRA. Show me the data. I have provided you with data to back up my argument that the CRA had no effect on the sub-prime meltdown that led us to this deregulated point. Where is your data showing the "bad effects" and how the CRA did lead us down this rosy road?

You know why GLBA had such bi-partisan support? Aside form the enormous financial backing of congressional members by the financial sector, it was because it retained the integrity of the CRA in a GOP-sponsored bill that was widely marketed as a banking privacy act. 1/3 of the Senate and all of the House were coming into an election year. How were they to have responded when their opponents rightly accused them of voting against an act safeguarding their constituent's financial and banking privacy? It was a masterful sleight-of-hand by the GOP. Keep them watching the privacy issues in one hand while you gut Glass-Steagal with the other.

In the face of contradictory evidence and all logic, you are hanging on to this thread in order to place blame on Democrats. There is blame there for Dems to accept, but CRA isn't it.

You mean the same way all of the videos of the Co-Chair of the AIP stating unequivocally that SARAH Palin (not just Toddles) was indeed a member of a secessionist party have mysteriously disappeared?

Yayasmom

Fannie Mae Eases Credit To Aid Mortgage Lending - New York Times

"In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans." September 30, 1999