AdamT
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1. Thats not important. The percentage of failures is whats important. CRA driven loans had a substantially higher fail rate.
That is absolute bull****. The exact opposite is true, as mentioned in several of the reports linked above.
2. Not true. Did you read the article I cited? WaMu wrote $1 billion and caved. BofA showed the 3% of CRA regulated loans were causing 29% of their loan failures. You can twist the metrics to make it appear that CRA regulated banks and loans did perform better but reality is that did not.
Umm, you can't compare CRA regulated to non-CRA regulated by looking only at CRA regulated loans. I should think that's fairly obvious. Bofa's real problem is that it took over Countrywide -- a non-regulated lender that issued FAR more, and far worse, subprime loans.
3. Again reading comprehension---if you mandate targets for fed prime rates, banks will comply.
I have no idea what you're on about there. It has nothing to do with my point No. 3, which is that, with or without CRA, virtually anyone could get a subprime mortgage. The government didn't have to twist arms to get lenders to lend to poor folks. Private lenders were begging them to take out mortgages.
Stop relying on sources based only in government (which wants more than anything to sweep this under the rug) and far left sites that want to blame it on the right. Look at sites that truly want to understand the root causes and avoid them in the future. Which you decidedly are not doing.
Well, I've posted four good sources up until now while you're relying on a single article from a pro-business, pro-banking magazine. I think you'll get a clearer picture of the true situation if you don't swallow the bankers' line of bull**** whole.
My last point would be along these lines...if the CRA didnt cause the housing bubble and subsequent failure, what exactly did?
Dont go for predatory lending, being able to bundle loans to GSEs was part and parcel of the CRA scheme so banks had somewhere to dump loans.
Go look at a comparison of the pricing index versus home prices and you will see exactly when it leaps off and why the correction is taking so long.
There's no real mystery here. The bubble was created by a whole chain of interrelated events:
* loose money supply and large tax cuts create lots of liquidity;
* bank/insurance/derivatives deregulation provides a means for lenders to bust up loans and move them off their books, thus removing any incentive to perform due diligence;
* wrong-headed regulation of credit ratings firms creates financial incentive to issue ratings favorable to corporations, allowing junk-quality debt to be rated AAA;
* comptroller of the currency intercedes to prevent states from enforcing predatory lending laws;
* virtually no regulation of mortgage and real estate broker industry.
It was a recipe for disaster and CRA had nothing at all to do with it.