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It started around 2004 -- when subprime origninations took off.
wrong it started in 95,under the cra expansion.
It started around 2004 -- when subprime origninations took off.
In late 1995 Clinton's Treasury Secretary Robert Rubin (with strong Republican support in congress) believed Glass - Steagall was very outdated and started pushing for lighter regulation on securities, specifically swaps.
The taper was largely due to the Asian Financial Crisis of 1997 and the tightening of credit as a result of weaker securities markets.
The real bubble began in earnest after the passing of the Gramm Leach Financial Securities Act of 1999, passed by a Republican congress, signed into law by President Clinton, and the Commodity Futures Modernization Act of 2000, once again passed by a Republican congress and signed into law by President Clinton. The result was basically the repeal of Glass Steagall and the deregulation of derivatives. The later proved to be the fuel for the mortgage bubble and the financial crisis we are still digging out of. So basically both parties have their hands dirty on this one.
Its popular right wing mythology that the mortgage bubble was a result of the Community Reinvestment Act. However, even when you ignore the fact that the timeline simply doesn't match at all in terms of correlation, the housing bubble was not in the inner city and minority neighborhoods (the areas covered under CRA), it was largely in upper middle class and wealthy suburbs.
Poor state level regulation of appraisers had a role to play as well.
which version of the cra are you arguing about????it sounds like your speaking of the carter version of the bill and not the clinton version.
Both. Once again, if the CRA or its update under Clinton had anything to do with the housing bubble, then you would have seen a huge housing bubble in the inner city, yet we didn't at all. The CRA had nothing to do middle class and wealthy white people buying far more home than they could afford out in the burbs.
Bill Clinton Helped Cause The Housing Crisis. | Gather
odd question,why did housing prices start going up so fast after the 95 revision????
another question,if the cra required subprime loans for the poor/minority communities,what was to stop them from using subprimes in other class brackets as well???you do realize the 95 revision was the framework and the foundation for the subprime mess,and glass steagall was its last roadblock.
infact housing for minorities/poor grew twice as fast in the 90's as middle class white suburbs,new standards had brought about lending practices that were once taboo,allowing lenders to not only lend to those they wouldnt/couldnt before,but also lend in ways they couldnt before.prior to 95 the term subprime loan was pretty much a non existent term,banks before that just called them bad loans.
In this neck of the woods, it started when new home construction started booming in the mid/late 90s because it became cheaper to buy and maintain a home than it was to rent a home.When did the real estate bubbles start
http://money.gather.com/viewArticle.action?articleId=281474977461051
odd question,why did housing prices start going up so fast after the 95 revision????
another question,if the cra required subprime loans for the poor/minority communities,what was to stop them from using subprimes in other class brackets as well???you do realize the 95 revision was the framework and the foundation for the subprime mess,and glass steagall was its last roadblock.
infact housing for minorities/poor grew twice as fast in the 90's as middle class white suburbs,new standards had brought about lending practices that were once taboo,allowing lenders to not only lend to those they wouldnt/couldnt before,but also lend in ways they couldnt before.prior to 95 the term subprime loan was pretty much a non existent term,banks before that just called them bad loans.
The CRA did not "require" subprime loans. In fact the CRA specifically requires regulated banks to base their underwriting decisions on the ability of the borrower to repay, which means that it precludes the worst subprime loans. The vast majority of subprime loans were given out by investment banks and mortgage brokers who are not regulated by CRA. Looking at subprimes in general, those that were given out by CRA-regulated banks significantly outperformed those issued by non-CRA lenders.
In short, without CRA the subprime problem would have been worse. People who qualified for higher quality CRA loans would have gone to investment banks and been put into horrible balloon ARMs.
under the 95 revision,the cra changed to a score basis for compliance with the act,the score was based on the amount of loans issued to low/middle income households in that banks community,then averaged against the nation.size of the bank total assets and other factors were included as well.
the 95 revision require that a cra rating was used by the fed to determine on allowing a bank to merge or expand business,this basically forced banks to be compliant with the cra to expand business.this made subprimes ideal,as denying low income/middle income neighborhoods loans based on inability to pay would make a bad score,this led to the expansion and use of subprime loans to achive banks goals.
in 99 the cra was expanded again under the repeal of glass steagall,under the democrats agreement with republics to prevent a filibuster,it was included that all new intitutions had to meet cra requirements,same with all other forms of investment crossing into the mortgage market.
this essentually meant banks were forbidden to expand or merge without cra compliance,obtaining the necessary score would require heavy use of subprime loans.and i have no doubt after all those loans looked good on paper,all the banks decided they could all start merging into super banks,let everything fail enron style,and then have uncle sam pay the tab.
Nonetheless, the vast majority of bad subprime loans were made by non-CRA lenders and the housing crisis was not centered in urban areas, where CRA applies. CRA subprime loans had lower interest rates and lower foreclosure rates than non-CRA subprime loans. Logically then, it stands to reason that the subprime meltdown would have been worse without CRA.
Example of how you are wrong: WaMu. They were neck deep into CRA loans and went under and contributed to a cascade effect on the market. BofA is another example. Mortgage foreclsure rates went up by adopting the looser standards of the CRA market, by embracing those lower loan standards based upon collateral, downpayment, etc, the lending market was primed to have problems.
What do I know though? I was the guy that dropped property ahead of the housing crash in one of the worst hit areas in California after 2007. It used to be unheard of to come into a bank without a 10% downpayment for a home. Now its unheard of to do so. That was bank protection against underwater buyers. That protection and similar ones were what banks dropped beginning in the late 90s. Leveraging your way into a house is asking for disaster and thats essentially what about 1/5 of homebuyers did.
Higher taxes = less spending money. Less spending money = less spending. Less spending = less demand. Nobody said anything about doing it out of the kindness of their heart.Increasing demand. Nobody creates jobs out of the goodness of their heart, they hire people because they need more people.
I don't know where this myth came from that if we just cut taxes on the wealthy, they'll create jobs. Tax cuts don't create any more jobs than tax raises do. Business conditions create jobs. A rebounding economy creates jobs.
Example of how you are wrong: WaMu. They were neck deep into CRA loans and went under and contributed to a cascade effect on the market. BofA is another example. Mortgage foreclsure rates went up by adopting the looser standards of the CRA market, by embracing those lower loan standards based upon collateral, downpayment, etc, the lending market was primed to have problems.
What do I know though? I was the guy that dropped property ahead of the housing crash in one of the worst hit areas in California after 2007. It used to be unheard of to come into a bank without a 10% downpayment for a home. Now its unheard of to do so. That was bank protection against underwater buyers. That protection and similar ones were what banks dropped beginning in the late 90s. Leveraging your way into a house is asking for disaster and thats essentially what about 1/5 of homebuyers did.
You have it quite backwards. In fact private loans were much riskier than CRA loans. That's because CRA actually imposes at leas *some* supervision. 80% of the suprime loans written during the bubble were written by lenders not subject to CRA supervision. The 20% of subprime written by CRA-regulated banks (NOT all written pursuant to CRA) had much lower foreclosure rates than subprime loans written by private lenders. CRA banks were more than twice as likely to retain loans that they originated. Of course it would have been even less of a problem if Bush hadn't cut back on CRA enforcement.
Higher taxes = less spending money. Less spending money = less spending. Less spending = less demand. Nobody said anything about doing it out of the kindness of their heart.
Higher taxes = less spending money. Less spending money = less spending. Less spending = less demand. Nobody said anything about doing it out of the kindness of their heart.
its not 4% of their entire salary.
you should know that.
plus the fact that many wealthy folks earn most of their money from capital gains, and NOT income.
having their tax-rate go up 4% won't effect their spending.
having their tax-rate go up 4% won't effect their spending.