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Thread: U.S. sues S&P over subprime ratings

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    "It's always reassuring to find you've made the right enemies." -- William J. Donovan

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    Re: U.S. sues S&P over subprime ratings

    This is my last attempt.

    New Study Finds CRA 'Clearly' - Investors.com
    news.investors.com IBD Editorials Perspective
    "It's always reassuring to find you've made the right enemies." -- William J. Donovan

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    Re: U.S. sues S&P over subprime ratings

    Quote Originally Posted by AlabamaPaul View Post
    The aim of the CRA was to achieve affirmative action in home lending, and if banks didn't play "within the perceived rules", they were taken to court...
    You can only call it affirmative action if you can prove banks were required to provide loans to unqualified borrowers. So far, no on e on this thread has been able to show any legislation or regulation that does that. The CRA did require loans to unqualified borrowers, so it was an ant-discriminatory law, not a form of affirmative action.

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    Re: U.S. sues S&P over subprime ratings

    Quote Originally Posted by Hard Truth View Post
    You can only call it affirmative action if you can prove banks were required to provide loans to unqualified borrowers. So far, no on e on this thread has been able to show any legislation or regulation that does that. The CRA did require loans to unqualified borrowers, so it was an ant-discriminatory law, not a form of affirmative action.
    I suggest you research the associated lawsuits lenders were forced to contend with regarding the issue...
    I don't often change my signature, but this was just too over the top to let anyone forget with what this country is up against...
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    I am for gay marriage because it ticks off Jesus freaks and social conservatives. Gays are also good voters because the vote for my side so I fight next to them.

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    Re: U.S. sues S&P over subprime ratings

    Quote Originally Posted by Somerville View Post
    not that I actually think any bankster will go to prison but still - it is a step in the right direction. A direction toward correcting the fallacious notion that Wall Street cares very much about honest behaviour.



    more from Bloomberg - Default in 10 Months After AAA Spurred Justice on Credit Ratings - Bloomberg
    Thanks for making me spit a good sip of beer out my mouth.....

    "Feds sue S&P over subprime ratings - Feb. 5, 2013"

    It's like stabbing yourself and suing the knife..... hahahaha

    I don't even know what to say about our idiotic present government or our general population that voted these retards into positions of power.....

    Then people wonder why there is a divide???

    Apparently people don't comprehend the economy is collapsing - despite the media lovefest for Obama and his ilk - whatever...

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    Re: U.S. sues S&P over subprime ratings

    Quote Originally Posted by Hard Truth View Post
    You can only call it affirmative action if you can prove banks were required to provide loans to unqualified borrowers. So far, no on e on this thread has been able to show any legislation or regulation that does that. The CRA did require loans to unqualified borrowers, so it was an ant-discriminatory law, not a form of affirmative action.
    I was not able to get the link to post, so I am forced to excerpt.

    New Study Finds CRA 'Clearly' Did Lead To Risky Lending

    By Paul Sperry
    Posted 12/20/2012 06:56 PM ET

    Democrats and the media insist the Community Reinvestment Act, the anti-redlining law beefed up by President Clinton, had nothing to do with the subprime mortgage crisis and recession.

    But a new study by the respected National Bureau of Economic Research finds, "Yes, it did. We find that adherence to that act led to riskier lending by banks."

    Added NBER: "There is a clear pattern of increased defaults for loans made by these banks in quarters around the (CRA) exam. Moreover, the effects are larger for loans made within CRA tracts," or predominantly low-income and minority areas.

    To satisfy CRA examiners, "flexible" lending by large banks rose an average 5% and those loans defaulted about 15% more often, the 43-page study found.

    The strongest link between CRA lending and defaults took place in the runup to the crisis — 2004 to 2006 — when banks rapidly sold CRA mortgages for securitization by Fannie Mae and Freddie Mac and Wall Street.


    Read More At IBD: New Study Blames Community Reinvestment Act For Mortgage Defaults - Investors.com
    Follow us: @IBDinvestors on Twitter | InvestorsBusinessDaily on Facebook
    "It's always reassuring to find you've made the right enemies." -- William J. Donovan

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    Re: U.S. sues S&P over subprime ratings

    Quote Originally Posted by iguanaman View Post
    It would be much more accurate to say
    that the banks (and you) are now
    using that as an excuse for their predatory behavior. The "aim" of the CRA was to simply outlaw "red-lining" of inner city areas causing borrowers there to be unable to get loans no matter wnat thier qualifications. CRA loans did not modify qualifications. That was later when the banks no longer had to care about qualifications since they intended to sell them off. What does that have to do with the CRA program at all?
    Not one bank was forced to make even one subprime loan and I dare you to prove it. Forced means by court order by the way. Don't you think bankers have lawyers either?
    You dare me ? Double dog dare ? Are you 10 years old ? Because it would explain your inabillity to conceptionalize the Sub-prime collapse and your tendency to adhere to one dimensional rebuts.

    Banks federally insured had to comply by CRA regulations but if youv'e noticed this goes beyond CRA ( the regulatory mechanism that mandated the lowering of standards )

    HUDs involvment after CRA and HUD forced the lowering of lending standards on a National scale mandated quotas for the GSEs that grew through the ninetees.

    Your whining rhetoric about "banks" totally ignores the fact that the GSEs held the lions share of sub-prime debt.

    Your whiney rhetoric also ignores the obvious that banks knew these regulations wouldn't MAKE them money, but bankrupt them.

    Its why Holder went after Wells Fargo who refused to participate in this Democrat mandated bubble.

    I've already posted dates and content of actual Congressional hearings, percentage of GSE debt after the collapse (which was the majority ) and the names of the actual HUD and CRA laws and regulations that lowered these standards, Clintons complicit involvment as he allowed securitization of these loans.

    I reminded libs of the GSEs buying and bundling ( good with junk ) mortgage paper for the implicit purpose of selling them off to investment banks and on to investors.

    But you ignored it, made some nonsensical left wing talking point about "the banks".

    Left wingers don't define their ideology according to the truth. They define the truth according to their ideology. "Truth" is secondary to you guys because the truth reveals your ideologies complete lack of integrity.

    Case in point, the sub-prime collapse. With all the damning evidence against you guys, YOU reply with the same old one dimensional nonsense.

    You blame Bush, you blame the rich, you blame the banks. You assume everyone is as superficial and dense as your buddies and that you are influencing any one.

    And you wonder why your'e NOT taken seriously .

    So no amount of facts and/or data will pull you away from your bankrupt ideology. I deal with facts, you struggle with a pathology.

    I wonder sometimes why you even get up in the morning and waste bandwidth by posting talking points. Youv'e got nothing left to learn.
    Last edited by Fenton; 02-11-13 at 09:43 PM.

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    Re: U.S. sues S&P over subprime ratings

    This is the abstract for the study referenced in the editorial that Jack Hays linked to.

    "Did the Community Reinvestment Act (CRA) Lead to Risky Lending?
    Sumit Agarwal, Efraim Benmelech, Nittai Bergman, Amit Seru

    NBER Working Paper No. 18609
    Issued in December 2012
    NBER Program(s): AP CF

    Yes, it did. We use exogenous variation in banks’ incentives to conform to the standards of the Community Reinvestment Act (CRA) around regulatory exam dates to trace out the effect of the CRA on lending activity. Our empirical strategy compares lending behavior of banks undergoing CRA exams within a given census tract in a given month to the behavior of banks operating in the same census tract-month that do not face these exams. We find that adherence to the act led to riskier lending by banks: in the six quarters surrounding the CRA exams lending is elevated on average by about 5 percent every quarter and loans in these quarters default by about 15 percent more often. These patterns are accentuated in CRA-eligible census tracts and are concentrated among large banks. The effects are strongest during the time period when the market for private securitization was booming."

    Did the Community Reinvestment Act (CRA) Lead to Risky Lending?

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    Re: U.S. sues S&P over subprime ratings

    Quote Originally Posted by Jack Hays View Post
    This is my last attempt.


    New Study Finds CRA 'Clearly' - Investors.com
    news.investors.com IBD Editorials Perspective
    Youv'e done everything needed to convince a rational person.

    Sometimes you just have to be content in the fact that you at least are one of the people with sense enough to understand the truth behind the sub-prime collapse.

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    Re: U.S. sues S&P over subprime ratings

    Quote Originally Posted by Hard Truth View Post
    This is the abstract for the study referenced in the editorial that Jack Hays linked to.

    "Did the Community Reinvestment Act (CRA) Lead to Risky Lending?
    Sumit Agarwal, Efraim Benmelech, Nittai Bergman, Amit Seru

    NBER Working Paper No. 18609
    Issued in December 2012
    NBER Program(s): AP CF

    Yes, it did. We use exogenous variation in banks’ incentives to conform to the standards of the Community Reinvestment Act (CRA) around regulatory exam dates to trace out the effect of the CRA on lending activity. Our empirical strategy compares lending behavior of banks undergoing CRA exams within a given census tract in a given month to the behavior of banks operating in the same census tract-month that do not face these exams. We find that adherence to the act led to riskier lending by banks: in the six quarters surrounding the CRA exams lending is elevated on average by about 5 percent every quarter and loans in these quarters default by about 15 percent more often. These patterns are accentuated in CRA-eligible census tracts and are concentrated among large banks. The effects are strongest during the time period when the market for private securitization was booming."

    Did the Community Reinvestment Act (CRA) Lead to Risky Lending?
    This is the best evidence I have seen so far that partially supports the anti-CRA viewpoints

    I haven't read the full report because it isn't available for free. Assuming that the abstract and study are correct, it indicates that banks were more likely to offer riskier loans when they were facing an imminent CRA exam.

    Does that mean that the CRA required banks to offer loans to unqualified borrowers? NO. The CRA does not require loans to unqualified borrowers.

    Does it mean that enforcement measures implemented in the 1990s indirectly encouraged banks to give riskier loans? Possibly.

    Does it mean that the CRA or subsequent enforcement measures caused the mortgage crisis? No, since CRA loans were not a sufficiently significant portion of the defaulted loans.

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