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U.S. sues S&P over subprime ratings

It seems people cannot accept the fact that CRA loans (even sub prime CRA
loans) performed better than their counterparts at equal risk levels.

It seems the left doesn't possess the cognitive abillity to understand the impact of CRA regulations on the lending standards of private and Govt backed institutions.

No, the banks lowered the standards of Govt backed sub-prime loans. How ridiculous.
 
No cite ? I post 99% of the time from a droid phone. Its difficult to post links so take the information I laid out in specifics( which is more than you have to offer ) and Google your damn self.

Yea your'e right, allot of people have no idea what actually transpired and your one of them.

Your the one trying to make the point; its your duty to back up your statements when challenged. I want to see what you got... I want to know its not from a right-wing political porn site (as I know it is).

.... I have googled this stuff and know it pretty well (as have personal, professional experience with this stuff, including being involved in the legislative process that led to the CRA in the 70's and strategic consulting for a sub-prime mortgage originator in 2005) Despite having personal experience with this stuff, I have no shortage of cites to back up my positions; you can't produce ONE.

I suggest that before you make this obnoxious claims that it it "amazes you have few people understand this issue"... that you document your understanding of it. We'll wait for you to make one of those 1% posts that doesn't come from a Droid.

Again, the CRA had no regulatory control... it had NO TEETH. It was substantially a watered down piece of legislation that had reporting requirements.... the reporting could be used against bank, but in no case inhibited any major bank from doing what this wanted. The Wells Fargo issue you cited as a not a suit under the CRA, it was a suit under fair lending and civil rights laws. It did not involve mortgages going to specific districts under the affirmative-action type system of CRA; the steering of loans from otherwise credit worthy individuals into sub-prime loans (at considerably higher costs) just because of race.

http://www.nytimes.com/2012/07/13/b...tle-mortgage-discrimination-charges.html?_r=0
 
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People are claiming that the CRA forces banks to give loans to unqualified borrowers.

No, the CRA went largely unnoticed until the early 90's when Barack Obama, acting for ACORN, sued Citibank for discriminating against minorities. Of course at the time even Black owned banks were discriminating against these people because they were risks.
I would like to see the language in the CRA legislation, or associated regulations, that require banks to give loans to people who are not qualified. I don't believe that such language exists because it is never quoted by the CRA opponents. I suspect that the opposition to the CRA is from racists and/or people who oppose government regulation against discrimination.

You are missing the point.

If the argument is that regulators are misinterpreting the law or going beyond the law to force banks to give loans to the unqualified, then it is an issue with the interpretation or the enforcement, not the legislation itself. I don't believe that problem is widespread, but if anyone has statistics that doesn't come from a right wing organization that proves regulators frequently abused the law to force banks to provide loans to the unqualified I will reconsider.

You can look up Barrack Obama sues Citibank in Chicago which forced banks to lend money to credit risks. It's all a matter of record and if you genuinely want to see something, as you say, just do some research. No one can spoon feed you.
 
Your the one trying to make the point; its your duty to back up your statements
when challenged. I want to see what you got... I want to know its not from a right-wing political porn site (as I know it is).

.... I have googled this stuff and know it pretty well (as have personal, professional experience with this stuff, including being involved in the legislative process that led to the CRA in the 70's and strategic consulting for a sub-prime mortgage originator in 2005) Despite having personal experience with this stuff, I have no shortage of cites to back up my positions; you can't produce ONE.

I suggest that before you make this obnoxious claims that it it "amazes you have few people understand this issue"... that you document your understanding of it. We'll wait for you to make one of those 1% posts that doesn't come from a Droid.

You have experience but continue to push the false narrative that CRA and HUD given regulatory control over Govt and Private institutions in the early 90s had no or little appreciable impact ?

That the securitizing of these sub-prime loans wasn't given the green light under Clinton ?

That there was no quota system put in place by Barney Frank and is ilk in the early 90 s ?

That the GSEs didn't buy, and then bundle good paper with bad paper fro the express purpose of getting these toxic securities out into the market ?

But yea " the banks did it "

Thats not experience, thats ignorance.
 
LOL !!! So much for your week attempt at trying to remain objective. You went off the deep end and took the bait. The lenders had no more abillity or power to lower underwriting standards of Govt backed sub-prime mortgages than donald duck.

Caught in your own web of lies. :naughty Underwriting of subprime mortgages increased BECAUSE of the boom in subprime mortgage lending and pressure from shareholders. If there was no market for it then they wouldn't have done it.
 
No, the CRA went largely unnoticed until the early 90's when Barack Obama, acting for ACORN, sued Citibank for discriminating against minorities. Of course at the time even Black owned banks were discriminating against these people because they were risks.


You are missing the point.



You can look up Barrack Obama sues Citibank in Chicago which forced banks to lend money to credit risks. It's all a matter of record and if you genuinely want to see something, as you say, just do some research. No one can spoon feed you.


No matter the truth, there are far too many Americans who allow their unreasoning hatred of the President to twist and alter reality

snopes.com: Obama Required Banks to Lend Money to Poor People

Here's the case and findings - Buycks-Roberson v. Citibank Fed. Sav. Bank | Civil Rights Litigation Clearinghouse
 
It seems the left doesn't possess the cognitive abillity to understand the impact of CRA regulations on the lending standards of private and Govt backed institutions.

No, the banks lowered the standards of Govt backed sub-prime loans. How ridiculous.

It doesn't seem the right understands it was their president Bush who revved up the housing bubble by wanting to put minorities in homes, circa 2002:

June 17, 2002
President Bush Calls for Expanding Opportunities to Home Ownership
Atlanta, Georgia

But my attitude is, if somebody can't find work and they want to work, we've got to continue to work on expanding the job base. And part of economic security is owning your own home. (Applause.) Part of being a secure America is to encourage homeownership. So somebody can say, this is my home, welcome to my home.

Now, we've got a problem here in America that we have to address. Too many American families, too many minorities do not own a home. There is a home ownership gap in America. The difference between Anglo America and African American and Hispanic home ownership is too big. (Applause.) And we've got to focus the attention on this nation to address this.

And it starts with setting a goal. And so by the year 2010, we must increase minority home owners by at least 5.5 million. In order to close the homeownership gap, we've got to set a big goal for America, and focus our attention and resources on that goal. (Applause.)

<snip>


And what we've got to do is to figure out how to make sure these stories are repeated over and over and over again in America. 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.

One of the barriers to homeownership is the inability to make a downpayment. And if one of the goals is to increase homeownership, it makes sense to help people pay that downpayment. We believe that the amount of money in our budget, fully approved by Congress, will help 40,000 families every year realize the dream of owning a home. (Applause.) Part of the success of Park Place is that the city of Atlanta already does this. And we want to make the plan more robust. We want to make it more full all across America.

Secondly, there is a lack of affordable housing in certain neighborhoods. Too many neighborhoods, especially in inner city America, lack affordable housing units. How can you promote homeownership if people can't afford a home?

And so what I've done is propose what we call a Single Family Affordable Housing Tax Credit, to encourage the development of affordable housing in neighborhoods where housing is scarce. (Applause.) Over five years, the initiative amounts to $2.4 billion in tax credits. And that will help. It will help a lot to build homes where people can -- where when fully implemented, people will be able to say, I own my home.

A third major barrier is the complexity and difficulty of the home buying process. There's a lot of fine print on these forms. And it bothers people, it makes them nervous. And so therefore, what Mel has agreed to do, and Alphonso Jackson has agreed to do is to streamline the process, make the rules simpler, so everybody understands what they are -- makes the closing much less complicated.

We certainly don't want there to be a fine print preventing people from owning their home. We can change the print, and we've got to. We've got to be wise about how we deal with the closing documents and all the regulations, but also wise about how we help people understand what it means to own their home and the obligations and the opportunities.

And so, therefore, education is a critical component of increasing ownership throughout America. Financial education, housing counseling, how to help people understand that there are unscrupulous lenders. And so one of the things we're going to do is we're going to promote education, the education of owning a home, the education of buying a home throughout our society. And we want to fully implement the Section 8 housing program, homeownership program. The program will provide vouchers that first-time home buyers can use to help pay their mortgage or apply to their downpayment.

<snip>

And so these are important initiatives that we can do at the federal government. And the federal government, obviously, has to play an important role, and we will. We will. I mean, when I lay out a goal, I mean it. But we also have got to bring others into the process, most particularly the real estate industry. After all, the real estate industry benefits when people are encouraged to buy homes. It's in their self interest that we encourage people to buy homes. (Applause.)

And so one of the things that I'm going to talk about a little bit today is how to create a sustained commitment by the private sector that will have a powerful impact. First of all, we want to make sure that we help work to expand capital available to buyers, and as I mentioned, overcome the barriers that I've delineated, as well as provide the education component. In other words, this is not just a federal responsibility.

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.

This means they will purchase more loans made by banks after Americans, Hispanics and other minorities, which will encourage homeownership. Freddie Mac will launch 25 initiatives to eliminate homeownership barriers. Under one of these, consumers with poor credit will be able to get a mortgage with an interest rate that automatically goes down after a period of consistent payments. (Applause.)

Fannie Mae will establish 100 partnerships with faith-based organizations that will provide home buyer education and help increase homeownership for their congregations. I love the partnership.
President Calls for Expanding Opportunities to Home Ownership

It was on the repubs. They controlled congress from 1995 until the wrecked the country in 2007 and the people threw the irresponsible louts out.
 
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No dude, CRA "loans" were NOT the issue. AGAIN, CRA having regulatory control over banks to force the lowering of underwriting standards WAS the issue..

Show me these regulations which forced banks to lower their standards.

You claimed that redlining was never a legitimate concern, which sounds racist to any non-racist who knows some history.
 
....If you want to make the case that CRA played a major role in the crisis, first explain HOW it MADE the banks MAKE loans to people who did not deserve them. I know the CRA bill, and I don't believe it.

The CRA critics just keep dodging this question and bring up assorted other financial issues to distract from the question. Clearly the CRA hate is a faith-based belief, not one based on fact. But why do they want to believe this?
 
LOL !!! So much for your week attempt at trying to remain objective.

You went off the deep end and took the bait.

The lenders had no more abillity or power to lower underwriting standards of Govt backed sub-prime mortgages than donald duck.

Your'e so partisan you have to marginalize your argument and continue to push the manufactured narrative of the left.


Those "eeebil banks". How simplistic could you be ?

Your in the "financial industry" ? Without the fundamental abillity to remain objective ? Do you work for the Govt ?

Until you can show us the actual laws/regulations that forced banks to lower lending standards you have no credibility.
 
No, the CRA went largely unnoticed until the early 90's when Barack Obama, acting for ACORN, sued Citibank for discriminating against minorities. Of course at the time even Black owned banks were discriminating against these people because they were risks.


You are missing the point.



You can look up Barrack Obama sues Citibank in Chicago which forced banks to lend money to credit risks. It's all a matter of record and if you genuinely want to see something, as you say, just do some research. No one can spoon feed you.

As I quoted in post #85, at least three posters on this thread claimed that the CRA forced banks to give loans to unqualified borrowers.

I'm not asking about court cases, and their results. I want to see the proof that the CRA forced banks to give loans to unqualified borrowers.

No one can show us the actual legislation or regulation that requires banks to give out loans to unqualified borrowers, yet they can find the time to post long posts with irrelevant assertions.
 
To make it easier for our anti-CRA posters, I am providing a link to a document summarizing the CRA which includes the modifying legislation over the years. It even addresses criticisms of the CRA, which strangly enough, does not include "forces banks to loan to unqualified borrowers."

This section address the issue of community groups and lawsuits:

"1. In practice, community and local activist groups have often protested the
applications of depository institutions and their holding companies on
CRA grounds in an apparent effort to hold up the transaction until certain
demands are met. On occasion, such protests have caused institutions or
holding companies seeking regulatory approval for a transaction to modify
particular business practices in order to satisfy such groups and/or the
federal bank regulator, or even to agree to provide a protesting group with
financial support for its particular projects. More often, however, the
federal regulators have rejected these sorts of protests and proceeded to
approve an institution’s or a holding company’s application.

2. When federal bank regulators have approved applications notwithstanding
CRA protests, community groups have occasionally sued the regulator to
block the approval. The courts, however, thus far have dismissed these
actions on the ground that CRA protesters suffer no constitutional “injury”
necessary to invoke federal jurisdiction."
 
As I quoted in post #85, at least three posters on this thread claimed that the CRA forced banks to give loans to unqualified borrowers.

I'm not asking about court cases, and their results. I want to see the proof that the CRA forced banks to give loans to unqualified borrowers.

No one can show us the actual legislation or regulation that requires banks to give out loans to unqualified borrowers, yet they can find the time to post long posts with irrelevant assertions.

I agree with you, the righties in this thread post no facts with backup, they just state erroneous opinions.

I read the CRA from 1996 and I will tell you what I think it says. If anyone disagrees, come back with your proof.

The problem dating back to the CRA original passage in 1977 was that banks set up in low income areas, took their deposits, but would not give them loans, so the inner city continued to decay. Banks used a process called red lining to exclude minorities by zip code. The 1977 bill disallowed red lining.

Then banks went to credit scores that nobody in the inner city could qualify for, and still no loans in the inner city and still it decayed.

In 1996, Clinton passed a new set of rules that said:
- if you have a bank in the inner city, the ratio of loans you grant should match the demographics of the area you serve, so if 80% of the residents are black, then 80% of the loans should go to black families. They said do banking the old way, get to know your customers and give loans to the ones with steady jobs and character you trust.
- if you don't meet the requirement, you can sell the bank, or you will not be allowed to open another bank in that state.

Technically, you did not HAVE to grant a loan to anyone, especially if you were ok with the consequences. For a local bank, say a family bank, there were NO consequences, assuming you didn't want to expand.
 
In 1996, Clinton passed a new set of rules that said:
- if you have a bank in the inner city, the ratio of loans you grant should match the demographics of the area you serve, so if 80% of the residents are black, then 80% of the loans should go to black families. They said do banking the old way, get to know your customers and give loans to the ones with steady jobs and character you trust.
- if you don't meet the requirement, you can sell the bank, or you will not be allowed to open another bank in that state.

Technically, you did not HAVE to grant a loan to anyone, especially if you were ok with the consequences. For a local bank, say a family bank, there were NO consequences, assuming you didn't want to expand.

So the government forced banks to "alter" lending standards to comply with demographic quotas, a decade and a half later the economy crashes due to large-scale default on mortgages, and the two are completely unrelated. And I'm a racist for implying a connection.

I've learned much in this thread.
 
So the government forced banks to "alter" lending standards to comply with demographic quotas, a decade and a half later the economy crashes due to large-scale default on mortgages, and the two are completely unrelated. And I'm a racist for implying a connection.

I've learned much in this thread.

No one has provided evidence on this thread that banks were forced to alter lending standards in a way that required lending to unqualified borrowers.

From my reading and learning about the history, the consensus opinion (from those who don't have an anti-CRA or general anti-regularity bias) on the major causes of the mortgage crisis is that it was largely caused by the widespread use of derivatives and related deception and/or lack of diligence involved with their sales. Many parties played a part by investing with the assumption that the steady increase in housing prices that was happening at the time would continue forever.

What is interesting is that some people find it hard to believe that a significant number of people working within these business sectors would use deception to make a profit. It is my experience that a good portion of any group of people will do unethical acts for profit if they think they can get away with it. I find it easier to believe that lax regulations gave some people an opportunity to get rich at other's expense, than to believe that laws against redlining and racial discrimination caused the problem.
 
Until you can show us the actual laws/regulations that forced banks to lower
lending standards you have no credibility.

The last few post, especially the one which tries to pin the blame on Bush 10 years after the HUD and CRA initiatives were signed, 8 years after Clinton allowed these loans to be securitized is a great explanation of how Obama could have won twice.

A cancer of ignorance, low intelligence and ideology has metastisized to the point where the dumbest of our electorate now determine our path.

Just the thought that private lending institutions had the regulatory power to first free up massive amounts of credit and second to manipulate Govt backed loans should set off a spark of disbelief at least.

But supposed "educated " people here have embrased the narative of the Liberal Democrats completely. The very simplistic and obviously wrong acusations against Bush, who in 2003 tried to reign in the GSEs massive aquisition of sub-prime debt, and the banks who didn't even hold a marginal amount of sub-prime debt when the house of cards fell.

Over 85% of sub-prime debt wound up on the books of Government Financial Entities.

Links have been posted for you "Hard Truth ".

Your foray into calling posters racist is not without irony though. Its the very trigger that initiated the enforcment of CRA and HUD regulations that nearly collapsed our economy.

I judge people by their actions, not by their skin color. You want to call people racist because you cant argue the merits of your counter position be my guest. Trust me, most Conservatives really could care less if their considered racist for criticizing the policies that brought us to such a perilous point in our countries history.

It been a term used so often without merit that its now lost its denigrating effect.
 
So the government forced banks to "alter" lending standards to comply with demographic quotas, a decade and a half later the economy crashes due to large-scale default on mortgages, and the two are completely unrelated.

The fact of the matter is that the vast majority of CRA subject banks did business PROFITABLY. Yes, if you get to know your customer, look him in the eye, know his job stability, and do your banking the old fashioned way, you can succeed. I never heard of ONE bank that pulled out of the inner city because of CRA. They made money. That is why the CRA did not cause the financial crisis.

Lehman Bros. was an early and enthusiastic backer of subprime lending. It purchased the mortgages and used pools of the loans to back complex bonds, many of which were sold overseas. Merrill Lynch came onto the scene later.

After the late-1990s meltdown in the subprime securitization business, Lehman stepped in with funds and other services that enabled First Alliance of Irvine to continue business in 1999 and 2000 despite lawsuits filed by state attorneys general, consumer groups and AARP.

A 2003 decision by a Santa Ana federal jury, later upheld on appeal, found Lehman liable for aiding and abetting a carefully scripted First Alliance fraud targeting elderly and financially strapped homeowners. Plaintiffs’ attorneys had focused on internal memos, especially a Lehman due-diligence report that said First Alliance required its employees “to leave your ethics at the door.
Lehman was big, early supporter of subprime - Los Angeles Times

First Alliance was not a bank, therefore not controlled by CRA.

A fairly implemented CRA would not have produced these results. Corporate predatory practices targeting people who were not sophisticated are what caused this.
Some economists, politicians and other commentators have charged that the CRA contributed in part to the 2008 financial crisis by encouraging banks to make unsafe loans. Others however, including the economists from the Federal Reserve and the FDIC, dispute this contention. The Federal Reserve and the FDIC holds that empirical research has not validated any relationship between the CRA and the 2008 financial crisis.[56][57]

Economist Stan Liebowitz wrote in the New York Post that a strengthening of the CRA in the 1990s encouraged a loosening of lending standards throughout the banking industry. He also charges the Federal Reserve with ignoring the negative impact of the CRA.[51] In a commentary for CNN, Congressman Ron Paul, who serves on the United States House Committee on Financial Services, charged the CRA with "forcing banks to lend to people who normally would be rejected as bad credit risks."[58] In a Wall Street Journal opinion piece, Austrian school economist Russell Roberts wrote that the CRA subsidized low-income housing by pressuring banks to serve poor borrowers and poor regions of the country.[59] Jeffrey A. Miron, a senior lecturer in economics at Harvard University, in an opinion piece for CNN, calls for “getting rid” of Fannie Mae and Freddie Mac, as well as policies like the Community Reinvestment Act that “pressure banks into subprime lending.”[60]

However, others dispute the involvement of the CRA in the crisis. San Francisco Federal Reserve Bank Governor Randall Kroszner has stated that no empirical evidence had been presented to support the claim that "the law pushed banking institutions to undertake high-risk mortgage lending".[56] In a Bank for International Settlements ("BIS") working paper, economist Luci Ellis concluded that "there is no evidence that the Community Reinvestment Act was responsible for encouraging the subprime lending boom and subsequent housing bust," relying partly on evidence that the housing bust has been a largely exurban event.[61] Others have also concluded that the CRA did not contribute to the current financial crisis, for example, FDIC Chairman Sheila Bair,[62] Comptroller of the Currency John C. Dugan,[63] Tim Westrich of the Center for American Progress,[64] Robert Gordon of the American Prospect,[65] Daniel Gross of Slate, and Aaron Pressman from BusinessWeek.[66]

Some legal and financial experts note that CRA regulated loans tend to be safe and profitable, and that subprime excesses came mainly from institutions not regulated by the CRA. In the February 2008 House hearing, law professor Michael S. Barr, a Treasury Department official under President Clinton,[67][34] stated that a Federal Reserve survey showed that affected institutions considered CRA loans profitable and not overly risky. He noted that approximately 50% of the subprime loans were made by independent mortgage companies that were not regulated by the CRA, and another 25% to 30% came from only partially CRA regulated bank subsidiaries and affiliates. Barr noted that institutions fully regulated by CRA made "perhaps one in four" sub-prime loans, and that "the worst and most widespread abuses occurred in the institutions with the least federal oversight".[68] According to Janet L. Yellen, President of the Federal Reserve Bank of San Francisco, independent mortgage companies made risky "high-priced loans" at more than twice the rate of the banks and thrifts; most CRA loans were responsibly made, and were not the higher-priced loans that have contributed to the current crisis.[69] A 2008 study by Traiger & Hinckley LLP, a law firm that counsels financial institutions on CRA compliance, found that CRA regulated institutions were less likely to make subprime loans, and when they did the interest rates were lower. CRA banks were also half as likely to resell the loans.[70] Emre Ergungor of the Federal Reserve Bank of Cleveland found that there was no statistical difference in foreclosure rates between regulated and less-regulated banks, although a local bank presence resulted in fewer foreclosures.[71]
Community Reinvestment Act - Wikipedia, the free encyclopedia

I also showed proof in post 107 of President Bush's leadership role in 2002, expanding home ownership for minorities. This was led by Bush, and I have shown the proof.
 
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The last few post, especially the one which tries to pin the blame on Bush 10 years after the HUD and CRA initiatives were signed, 8 years after Clinton allowed these loans to be securitized is a great explanation of how Obama could have won twice.

A cancer of ignorance, low intelligence and ideology has metastisized to the point where the dumbest of our electorate now determine our path.

Just the thought that private lending institutions had the regulatory power to first free up massive amounts of credit and second to manipulate Govt backed loans should set off a spark of disbelief at least.

But supposed "educated " people here have embrased the narative of the Liberal Democrats completely. The very simplistic and obviously wrong acusations against Bush, who in 2003 tried to reign in the GSEs massive aquisition of sub-prime debt, and the banks who didn't even hold a marginal amount of sub-prime debt when the house of cards fell.

Over 85% of sub-prime debt wound up on the books of Government Financial Entities.

Links have been posted for you "Hard Truth ".

Your foray into calling posters racist is not without irony though. Its the very trigger that initiated the enforcment of CRA and HUD regulations that nearly collapsed our economy.

I judge people by their actions, not by their skin color. You want to call people racist because you cant argue the merits of your counter position be my guest. Trust me, most Conservatives really could care less if their considered racist for criticizing the policies that brought us to such a perilous point in our countries history.

It been a term used so often without merit that its now lost its denigrating effect.

Irrelevant links have been posted, but no links or quotes have been posted showing where the law requires loaning to unqualified buyers. On the other hand, Finebead (in post#117) and others have presented good evidence that the claim is false. It is a myth and/or lie.

If you review my posts I have not called out any particular political party or politician for the economic crisis. There is definitely enough blame to go around for both parties. (although one party is more to blame for deregulation and lax enforcement)

I have not made any arguments in favor or opposing any particular regulation, except to challenge the myth that the CRA forced lenders to offer loans to unqualified borrowers.


I did not call any poster a racist, I said that those who oppose the CRA are racist and/or oppose regulation. I feel especially confident in this assertion since no one can show where the law or regulations require anyone to give loans to unqualified buyers. However, if anyone on this thread appears to be racist, it is the one person who claims that that there has never been a problem with redlining and racism in loans. If that isn't racist, it is awfully ignorant.
 
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To make it easier for our anti-CRA posters, I am providing a link to a document summarizing the CRA which includes the modifying legislation over the years. It even addresses criticisms of the CRA, which strangly enough, does not include "forces banks to loan to unqualified borrowers."

This section address the issue of community groups and lawsuits:

"1. In practice, community and local activist groups have often protested the
applications of depository institutions and their holding companies on
CRA grounds in an apparent effort to hold up the transaction until certain
demands are met. On occasion, such protests have caused institutions or
holding companies seeking regulatory approval for a transaction to modify
particular business practices in order to satisfy such groups and/or the
federal bank regulator, or even to agree to provide a protesting group with
financial support for its particular projects. More often, however, the
federal regulators have rejected these sorts of protests and proceeded to
approve an institution’s or a holding company’s application.

2. When federal bank regulators have approved applications notwithstanding
CRA protests, community groups have occasionally sued the regulator to
block the approval. The courts, however, thus far have dismissed these
actions on the ground that CRA protesters suffer no constitutional “injury”
necessary to invoke federal jurisdiction."

Look at their pro-bono work. Covington & Burling LLP | Publications

About halfway down. Bleeding heart liberals through and through, I wouldnt trust their judgement in anything but to wring billable hours out of it. You pick a DC law firm out of thin air or did google do it for you?
 
The fact of the matter is that the vast majority of CRA subject banks did business PROFITABLY. Yes, if you get to know your customer, look him in the eye, know his job stability, and do your banking the old fashioned way, you can succeed. I never heard of ONE bank that pulled out of the inner city because of CRA. They made money. That is why the CRA did not cause the financial crisis.

Lehman was big, early supporter of subprime - Los Angeles Times

First Alliance was not a bank, therefore not controlled by CRA.

A fairly implemented CRA would not have produced these results. Corporate predatory practices targeting people who were not sophisticated are what caused this.

Community Reinvestment Act - Wikipedia, the free encyclopedia

I also showed proof in post 107 of President Bush's leadership role in 2002, expanding home ownership for minorities. This was led by Bush, and I have shown the proof.

So WaMu.....
Huge bailouts of AIG and BofA.
Its worth noting that among industry leaders WaMu and BofA had very high CRA compliance ratings. So I guess thats just cioncidence and not causality.

How about this?
Background & Purpose
■The CRA requires that each insured depository institution's record in helping meet the credit needs of its entire community be evaluated periodically. That record is taken into account in considering an institution's application for deposit facilities, including mergers and acquisitions. (See CRA Ratings) CRA examinations (see Exam Schedules) are conducted by the federal agencies that are responsible for supervising depository institutions: the Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the Office of Thrift Supervision (OTS).

I guess Im just blowing smoke.....
 
In 1996, Clinton passed a new set of rules that said:
- if you have a bank in the inner city, the ratio of loans you grant should match the demographics of the area you serve, so if 80% of the residents are black, then 80% of the loans should go to black families. They said do banking the old way, get to know your customers and give loans to the ones with steady jobs and character you trust.
- if you don't meet the requirement, you can sell the bank, or you will not be allowed to open another bank in that state.

Technically, you did not HAVE to grant a loan to anyone, especially if you were ok with the consequences. For a local bank, say a family bank, there were NO consequences, assuming you didn't want to expand.

The law had no teeth....I believe thats what all the libs have been saying. Those teeth looks like they could take off a limb.
 
So WaMu.....
Huge bailouts of AIG and BofA.
Its worth noting that among industry leaders WaMu and BofA had very high CRA compliance ratings. So I guess thats just cioncidence and not causality.

AIG was bailed out because they couldn't run a business, and sold credit default swaps (CDS) without understanding the risk and without charging enough for the insurance to cover the claims that came in from Goldman Sacks among others. Nothing to do with CRA.

B of A was not a major subprime lender. It got in trouble after it made a bad decision to buy Countrywide which was a major independent mortgage lender in subprime which by the way was NOT under CRA regulation because they were not a bank. B of A took TARP money but Treasury forced many banks to take TARP that did not need it so there would not be the appearance of "good banks" and "bad banks" (like US Bankcorp took TARP but did not need it). B of A was so strong that Treasury turned to BofA to take over Merrill Lynch (which it did) before ML went bankrupt like Lehman did. BofA paid too much for ML, which with the bad deal for Countrywide got Ken Lewis fired, but BofA repaid all TARP money in 2009. BofA was not hurt by CRA, it shot itself in the foot with some bad decisions to buy crumbling companies, Countrywide and ML.

Here are the top subprime lenders for 2006, and only WAMU was under CRA guidelines, the rest were independent mortgage lenders and not banks:
Large mortgage finance companies and banks made big bucks on sub-prime loans. Last year, 10 lenders -- Countywide, New Century, Option One, Fremont, Washington Mutual, First Franklin, RFC, Lehman Brothers, WMC Mortgage, and Ameriquest -- accounted for 59 percent of all sub-prime loans, totaling $284 billion.
The Conservative Origins of the Sub-Prime Mortgage Crisis

The problem was not CRA, the problem was unregulated mortgage companies listed above.

Greenspan had interest rates too low in 2004, the rating agencies lied and put AAA ratings on junk bonds, President Bush pushed home ownership for minorities which I posted his speech in 2002, the republican-run SEC allowed the investment banks to triple their leverage in 2005 which caused the collapse of Lehman Bros, Bear Stearns, and Merrill Lynch and would have cratered Goldman except for the bailout of AIG (which bailed out Goldman), and Bill Frist in 2005 would not even allow a vote in the senate on a repub sponsored bill to regulate Fannie / Freddie, which was the nations last hope to stop the financial crisis.
 
No cite ? I post 99% of the time from a droid phone. Its difficult to post links so take the information I laid out in specifics( which is more than you have to offer ) and Google your damn self.

Yea your'e right, allot of people have no idea what actually transpired and your one of them.

YOU made the claim. YOU back it up. No excuses.
 
One of the biggest problems out there, and nobody talks about it much, was the deregulation at the SEC that relaxed the capital requirements at the 5 biggest investment firms, and effectively outsourced the compliance to the 5 banks themselves.

Many events in Washington, on Wall Street and elsewhere around the country have led to what has been called the most serious financial crisis since the 1930s. But decisions made at a brief meeting on April 28, 2004, explain why the problems could spin out of control. The agency’s failure to follow through on those decisions also explains why Washington regulators did not see what was coming.

On that bright spring afternoon, the five members of the Securities and Exchange Commission met in a basement hearing room to consider an urgent plea by the big investment banks.

They wanted an exemption for their brokerage units from an old regulation that limited the amount of debt they could take on. The exemption would unshackle billions of dollars held in reserve as a cushion against losses on their investments. Those funds could then flow up to the parent company, enabling it to invest in the fast-growing but opaque world of mortgage-backed securities; credit derivatives, a form of insurance for bond holders; and other exotic instruments.

The five investment banks led the charge, including Goldman Sachs, which was headed by Henry M. Paulson Jr. Two years later, he left to become Treasury secretary.

A lone dissenter — a software consultant and expert on risk management — weighed in from Indiana with a two-page letter to warn the commission that the move was a grave mistake. He never heard back from Washington.

One commissioner, Harvey J. Goldschmid, questioned the staff about the consequences of the proposed exemption. It would only be available for the largest firms, he was reassuringly told — those with assets greater than $5 billion.

“We’ve said these are the big guys,” Mr. Goldschmid said, provoking nervous laughter, “but that means if anything goes wrong, it’s going to be an awfully big mess.”

Mr. Goldschmid, an authority on securities law from Columbia, was a behind-the-scenes adviser in 2002 to Senator Paul S. Sarbanes when he rewrote the nation’s corporate laws after a wave of accounting scandals. “Do we feel secure if there are these drops in capital we really will have investor protection?” Mr. Goldschmid asked. A senior staff member said the commission would hire the best minds, including people with strong quantitative skills to parse the banks’ balance sheets.

Annette L. Nazareth, the head of market regulation, reassured the commission that under the new rules, the companies for the first time could be restricted by the commission from excessively risky activity. She was later appointed a commissioner and served until January 2008.

“I’m very happy to support it,” said Commissioner Roel C. Campos, a former federal prosecutor and owner of a small radio broadcasting company from Houston, who then deadpanned: “And I keep my fingers crossed for the future.”

The proceeding was sparsely attended. None of the major media outlets, including The New York Times, covered it.

After 55 minutes of discussion, which can now be heard on the Web sites of the agency and The Times, the chairman, William H. Donaldson, a veteran Wall Street executive, called for a vote. It was unanimous. The decision, changing what was known as the net capital rule, was completed and published in The Federal Register a few months later.

With that, the five big independent investment firms were unleashed.

In loosening the capital rules, which are supposed to provide a buffer in turbulent times, the agency also decided to rely on the firms’ own computer models for determining the riskiness of investments, essentially outsourcing the job of monitoring risk to the banks themselves.

Over the following months and years, each of the firms would take advantage of the looser rules. At Bear Stearns, the leverage ratio — a measurement of how much the firm was borrowing compared to its total assets — rose sharply, to 33 to 1. In other words, for every dollar in equity, it had $33 of debt. The ratios at the other firms also rose significantly.

The 2004 decision for the first time gave the S.E.C. a window on the banks’ increasingly risky investments in mortgage-related securities.

But the agency never took true advantage of that part of the bargain. The supervisory program under Mr. Cox, who arrived at the agency a year later, was a low priority.
http://www.nytimes.com/2008/10/03/business/03sec.html?_r=1

This is why we had to bail out the banks. The SEC let them take on too much debt (a control mechanism added after the great depression, and the old limit was 15:1, and it was relaxed to 45:1), and then did not follow through under Bush's appointee, Chris Cox (repub).

The CRA allowed banks to lend to people that were marginal, but they did require checking of income. The egregious offenses in lending were by Countrywide, New Century, Freemont, Option One etc., and that was all private sector non-bank non-CRA.

The republicans had their hands on the wheel 2001-2006 and they relaxed regulations that had worked for 50 years such as the Net Capital Rule set at 15:1, and its on the republicans who raised it to 45:1 and in less than 5 years all the investment banks were bankrupt, sold off, bailed out (Goldman) or converted from investment bank to commercial bank. Great rule there republicans...
 
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The conspiratorial claims are somewhat understandable given the downgrade in recent memory, but judgement should be withheld until the actual contents of the case are disclosed in full. Some speculate that the subject of the lawsuit is S&P's rating of a single CDO worth some 1.6 billion alone, while others speculate it will be based on their ratings practices as a whole covering a 3 year period directly preceding the financial crisis, and other credit rating agencies could likely face legislation in the future for similar breakdowns in speculative accuracy. In either case, the merits of the legal case should stand apart from political interests.
 
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