I see you excluded the appeal of a death sentence and a few others. Dont cherry pick data, its revealing of the weakness of your argument.
Bolded: strawman, inflammatory and just plain dickish.
Bank in an area is not lending much money because the area is high risk via their lending standards. CRA comes along in the 90s and informs the bank that they HAVE to lend money in their area of they wish to maintain prime lending rates, expand, aquire another bank or merge with another bank. Further, area community groups would be consulted to see what sort of lending practices occur in the local area.
Bank starts lending in the local area.
Why do you think that is?
Lets take it one step past the bank. Once the loan occurs and a bunch of others, the bank bundles those mortgages out with a rating, which they insure against default and also possibly sell portions of the risk and profit--bundling and CDSs. FnF at some point or another will aquire a portion of the risk, if not outright ownership because they own a significant portion of the home lending market by 2007, just under HALF.
A bank seeing that the government is taking up the risk is going to do what? A bank that is being telegraphed that lending standards are of no consequence so long as their CRA compliance is solid---further that they will recieve rosy reports from inspectors for more funds, aquisitions ratings, etc---all the while their CAMELS rating was dropping. Im not providing you with proof, Im asking that you use your brain and follow the steps of what occurred.
Were the dems for expanding home ownership? Sure, many were. Barney Frank and Maxine Waters said many stupid things about govt. support for housing. But at the end of the day, repubs hand was on the wheel and they enacted the dumbest rules (and in the case of lifelong repub Greenspan, he FAILED to enact smart regulations that could have prevented this).
But if you look at HR 1464, the house companion bill for FnF reform, it passed the house in 2005 by a vote of 330 to 90, it passed with a majority from BOTH PARTIES! There were enough dem votes for responsibility, and that vote proved it. Only Frist and the repubs fumbled the ball on FnF reform in 2005.
And this describes Greenspans failure:
mythbusters: telling the truth about the financial crisis, part iii | theParetoCommonsThis post is the last installment in a three-part series harvesting the recent Financial Crisis Inquiry Report (FCIC Report) to debunk the top-ten urban myths about the Financial Crisis. To read about myths 1 – 5, click here.
Myth 6: The Financial Crisis was caused by too much government regulation.
Reality 6: No. Deregulation and regulatory forbearance contributed to the Crisis. Stronger, not weaker oversight is now needed.
- The Report states: “[D]eregulation and reliance on self-regulation by financial institutions, championed by former Federal Reserve chairman Alan Greenspan and others, supported by successive administrations and Congresses, and actively pushed by the powerful financial industry at every turn, had stripped away key safeguards, which could have helped avoid catastrophe. This approach had opened up gaps in oversight of critical areas with trillions of dollars at risk, such as the shadow banking system and over-the-counter derivatives markets. In addition, the government permitted financial firms to pick their preferred regulators in what became a race to the weakest supervisor.”
For example, housing advocates began “meeting with Greenspan at least once a year starting in 1999, each time highlighting to him the growth of predatory lending practices and discussing with him the social and economic problems they were creating.” Greenspan refused to use its authority under the Home Ownership and Equity Protection Act (HOEPA), which permitted the Fed to ban bad underwriting practices at both banks and “nonbank” institutions.
“This was a missed opportunity, says FDIC Chairman Sheila Bair, who described the ‘one bullet’ that might have prevented the financial crisis: ‘I absolutely would have been over at the Fed writing rules, prescribing mortgage lending standards across the board for everybody, bank and nonbank, that you cannot make a mortgage unless you have documented income that the borrower can repay the loan.’” (emphasis added).Instead of a such a rule, in 2006, the Fed adopted non-binding “guidance” for the mortgage industry which “directed lenders to consider a borrower’s ability to make the loan payment when rates adjusted, rather than a lower starting rate. It warned lenders that low-documentation loans should be ‘used with caution.’” In response, the American Bankers Association was “up in arms,” complaining that the guidance “overstated the risk of non-traditional mortgages” and, not surprisingly, the industry ignored it.
Greenspan had the authority to regulate both bank and non-bank operators and he did NOTHING. Greenspan the repub helped it blow up much more than the dems, who had no voting majority while this was blowing up.
Last edited by finebead; 02-11-13 at 07:57 AM.
The Congressional Black Caucus had the race card out and ready to throw it over CRA regulation. You seem to have this stupid ****ing problem where you want to make sure the GOP holds more responsibility....I dont give a flying ****. I know both parties were neck deep in this. I know about Gramm/Leach/Bliley and CDS regs and derivative regulation being eased to the point of basically not existing.
Know what my problem is?
We are still doing it. We are still bailing this **** out. We are still doing subprime lending with GSE backing. Its just damned stupid. The more you use borrowed money to prop up the housing industry the harder it will be for it to fully recover.
Banks didnt magically find a profit fairy in low income loans, they found a way to socialize the loss and keep the profit. Fix THAT and we will have a healthy mortgage market again.
Let's see, I'm in private industry, and I see the govt. lowering lending standards, so I think, gee, this is a smart business model, let me go make some loans to people who probably can't pay them back. Since when has private industry decided govt. was good businessmen and decided to emulate what they do? Never.
That was the Countrywide model. Countrywide CEO made a fortune by selling the bad debt to Goldman, Bear Stearns, Merrill Lynch who rolled them into CMO's and sold them. When the repo agreements kicked in, Countrywide would sell itself off or declare bankruptcy and Angelo would be rich which is what happened (sold to BofA). The only way to prevent this was with up front regulation, and Greenspan had the authority to do it, but he failed to use it and he facilitated the greatest financial crisis in the US since the Depression.