Conservative U.S. Christians say the culture has gone to hell and it has taken the economy and Wall Street down with it.
It is a view which outsiders may find puzzling but has wide resonance in the U.S. heartland: the notion that moral decay and a lost sense of responsibility has brought on the worst banking and credit crisis since the Great Depression.
Such a view helps explain the unpopularity in conservative Christian circles — which have a big influence on the Republican Party — of a $700 billion bailout plan which the U.S. House of Representatives rejected on Monday, rocking financial markets.
Again the root problem of this credit crisis is not the free market – it was government intrusion into the market place – the use of the Community Redevelopment Act of (I believe) 1977. The left as in ACORN, Janet Reno’s justice department, Barney Frank and gang – accused big lending institutions of racism/redlining becasue they were not lending to historically disadvantaged groups at sufficiently high percentages (I believe that a leading member of the vast right wing conspiracy, Bill Clinton said as much the other day) The fact that the lending institutions were using objective criteria like amount of down payment, credit scores and household income to debt ratios mattered little in the crusade for equality. Faced with the choice of litigation with the Feds or making risky loans the lending institutions with with the risky loans believing that higher interest rates, PMI, and bundling them off to sell on Wall Street would shield them. They were obviously wrong because by greatly expanding the pool of home buyers (ie the renting class) they created a speculative bubble.
Chips,
While I agree that the Government aided this problem it is also the responsibility of bankers who made loans that should never have been made. It is also the responsibility of people who took on debt they had no business taking on. It is the responsibility of speculators who ran up the costs of houses hoping for “one more flip.” It is the responsibility of people who bundled bad debt with worse debt and sold these as “securities.”
The basic problem here is greed and an unwillingness to face the responsibilities of your actions.
Thought for the day is here or here.
YBIC,
Phil Snyder
Still, Government involvement was a major factor. And since both parties were involved there is no way to vote the rascels out.
Phil,
I agree there is plenty of blame to go around – the banker initially had a gun at their backs. But the bad ones then found out ways to capitilize on it – the next most blameworthy are the borrowers and speculators who should have known that they could not afford the houses they were buying. Then comes the builders who in many cases were closely tied to brokers (the brokers may be the most criminal in that they knowingly abeited fraud bythe borrowers). The bundling was a way in which the industry thought it could manage the risk in that only a few would be in foreclosure – they were terribly wrong.
I am from the heartland, and yes, this is a problem with vast moral implications, and was probably caused by “immoral’ acts. Those who decry the Community Reinvestment Act of 1977 as “the start” are likely right – – the Act itself (at least here in the heartland) is widely viewed as an immoral act from a congress was was then, and is still, more than ready to line not only its own pockets, but the pockets of its cronies in the “social agency” lobbies, the banking lobbies, and you – name – it.
When a society sows the wind, it reaps the whirlwind. And no, there isn’t any such thing as a free lunch; and yes, what goes around, comes around. And yes, the “law of sowing and reaping” is still in effect. The heartland – – all us red-neck dummies out here – – have always understood these things to be true, every day, all day, and forever and ever. And until we wake up, as a nation, as a planet, and recognize that God is a moral God, we are going to continue to wonder what hit us. Pogo said it well: “We have met the enemy, and he is us.” Repentance is a good place to start.
Chips [#1]: You are reiterating a set of profoundly false statements about the Community Reinvestment Act, civil-rights enforcement, and Clinton-era bank regulatory policy.
The Community Reinvestment Act contains two modest rules. First, regulators must periodically “assess the institution’s record of meeting the credit needs of its entire community, including low- and moderate-income neighborhoods, consistent with the safe and sound operation of such institution.†12 U.S. Code § 2903(a)(1). This evaluation occurs annually for large banks and every four or five years for small banks.
Second, regulators must take account of that record—along with all other relevant factors—if the bank seeks certain kinds of regulatory approval: e.g., to acquire another bank or to establish a branch. §§ 2902(3), 2903(a)(2). Even when a bank has a problematic CRA record, the other factors usually prevail. On only a few occasions, during the entire 31-year history of the CRA, have regulators denied an application on CRA grounds.
Attorney General Janet Reno ruled around 1993 that bank regulators could NOT use their usual enforcement powers (e.g., cease-and-desist orders and civil fines) to enforce the Community Reinvestment Act.
Regulators’ enforcement powers were limited to denying regulatory applications filed by banks with bad CRA records. That is something regulators almost never do. So far as I’m aware, regulators have denied only two applications on CRA grounds during the past 31 years. (Both denials occurred well before President Clinton took office.) So how did the CRA result in the orgy of coercion to which you refer? How?
Nor did we have an orgy of civil-rights enforcement pressing bankers to abandon sound lending standards.
The loans going bad now were mostly made from 2002 through 2006. Most loans made during the Clinton Administration have already been fully repaid. So how can Clinton-era regulatory policies be the problem?
In any event, if those policies were so bad, why didn’t the Bush Administration CHANGE them?
“Such a view helps explain the unpopularity in conservative Christian circles — which have a big influence on the Republican Party — of a $700 billion bailout plan which the U.S. House of Representatives rejected on Monday, rocking financial markets.” And, of course, when it DID pass, the world became all rosy…
Our parents and grandparents (for those of us 60+) knew the real answer to the problem. If they didn’t before the Depression, they learned after. You didn’t buy what you couldn’t afford. You saved, saved and then you bought what you needed. At least with a house you put enough down money to cover enough of the equity to survive a downturn.
Some of us learned the lesson from our parents, but obviously the government and many others did not. We are reaping the whirlwind of excessive consumption and greed. So there may actually be a moral aspect to all this.
#6, it wasn’t anyone on Wall Street that twisted arms at Fannie Mae to make 12% of their loans to low-income borrowers in 1996, it was HUD. That target went up 20% in 2000, 22% in 2005 and 2008 in 2008. Those are CRA loans, amigo, and they are front and center to this crisis.
I have attached hereto three short articles regarding the Community Investment Act. One is from an activist group touting its success in getting commitmnets outr of such lenders such as Lehman Brothers and AIG using the CRA as a club. Another is from the Pittsburg newspaper and one is a government source. I think the real effect of the CRA since the Mid ’90s was to intimidate lenders into “helping” the community – not sound capitalism but social policy making. was to jack up the lenders.
http://www.innercitypress.org/icpilc.html
http://www.occ.treas.gov/crainfo.htm
http://www.pittsburghlive.com/x/pittsburghtrib/opinion/columnists/reiland/s_590330.html
The Bush administration did nothing likely due to 1) inertia; 2) cowardice; 3) deep down Bush is a liberal “do-gooder” and 4) some people close to the administration were making buckets of money of of the risky loans.
[blockquote]The Bush administration did nothing likely due to 1) inertia; 2) cowardice; 3) deep down Bush is a liberal “do-gooder†and 4) some people close to the administration were making buckets of money of of the risky loans. [/blockquote]
They tried a number of times, but were met with ferocious opposition both at the local level by astroturfed letter-writing campaigns by groups like ACORN and by Democrats (and some Republicans) in Congress. It’s likely that Bush had other legislative priorities and didn’t see utility or liklihood of success in trying to ram through legislation with such small majorities in each house and monolithic Democratic opposition.
#6–I remember a consumer class action being filed against Bank of America here in the Nineties, alleging that Bank of America had failed to make enough loans to minorities and lower income people. Whether that was tied to CRA or not, I don’t know, but BofA didn’t want to look bad, for political correctness reasons I assume, and caved and basically started announcing it was setting up a quota system where it was going to make all these loans based on the race and income of the borrower, which to me sounded dicey from a financial standpoint, and was going to have all these activist types be on an “advisory committee” that would tell them what loans it should make. It was pretty much out and out extortion of the lending community, at least that’s the way it appeared to me.
In any event, BofA stopped doing business here a year or so after that and shut all their branches down, so I don’t know what was the result of those loans it made, and how many it actually ended up doing.
#12, I’ll second that. I had a brother-in-law that was a VP at a large regional bank that used to tell us stories about the bullying they would experience at the hands of regulators, most of which centered around the bank’s dealings with minorities. Risky loans were just the start of it.
Hopper – the argument is that loans should be made upon objective criteria and appropriate risk analysis – not upon a lender’s percieved duty to the community judged by activists and their patrons in government. Individual freedom is critical and includes property rights. “Rights”, such as homeownership that one cannot afford, based upon “group rights” – does lead to systemic collapse.
Indeed, #16, whether an individual or group “right,” putting another’s person or property at the legal disposal of another is surely a bullet train to implosion. Hence my distress at Senator Obama’s insane suggestion that health care is a “right.”
Well lets just introduce liberal class warfare into the mix. But that what liberals do.
[blockquote]Well chips and jeffersonian … the statistics I have seen—and it certainly holds true in my part of the country—indicate that minorities as a group aren’t that much of the cause … representing only a very small percentage of foreclosures. [/blockquote]
I’d like to see those stats, but it might well be the case because minorities are, well, a small percentage of the overall population. But it’s inescapable that the feds were pushing F/F to loan to people who were not creditworthy, no matter what their color, creed or ethnic makeup.
I’ll try to find the graphs I saw a couple of weeks ago, but they showed that boring people like me with 30 year, fixed rate mortgages were no more prone to defaulting today than they have been historically. It’s the people who got into too much house at the upper limit of affordability with ARMs and other risky products that are in trouble.
[blockquote]Outlawing redlining does not require lending to those who are uncredit worthy. [/blockquote]
That’s the theory. In practice, it was quite something else.
Where has anyone tied the current crisis to loans to “low income and minority” individuals? Is this all about “low income and minority” individuals defaulting on the mortgages whose payments they couldn’t meet, or is it about middle income people wanting upper income housing and willing to be suckered into “balloon” mortgages with the idea that — hey, in 5 years when the real bill comes due, the house will have doubled in value and you can refinance and make a tidy profit at the same time.
Thirty percent of the homes purchased in the last five years (just heard this on CBS) are now worth less than the amount owed on them. Not less than they were bought for, less than owed on them. Frankly, a prudent investor, doing the strictly rationale economic thing, would default on such a mortgage, even if they suddenly won the lottery and could afford to pay the whole mortgage right now. It’s simple economics.
But that’s not the cause of the credit crisis. It’s the fact that investment firms were allowed to package and repackage these securities as derivatives and to extend themselves at a 32 to 1 (and more) ratio, thanks to deregulation during the Bush administration. If you want to think that the world economy is collapsing because HUD made Fannie Mae loan money to poor people, you can, but you’re dreaming.
I have posted the article from the Office of the Comptroller – I think it speaks for itself.
Community Reinvestment Act Information
The Act (CRA)
The CRA was enacted in 1977 to prevent redlining and to encourage banks and thrifts to help meet the credit needs of all segments of their communities, including low- and moderate-income neighborhoods. It extends and clarifies the longstanding expectation that banks will serve the convenience and needs of their local communities. The CRA and its implementing regulations require federal financial institution regulators to assess the record of each bank and thrift in helping to fulfill their obligations to the community and to consider that record in evaluating applications for charters or for approval of bank mergers, acquisitions, and branch openings. The federal financial institution regulators are: Office of the Comptroller of the Currency; Board of Governors of the Federal Reserve System; Federal Deposit Insurance Corporation; and Office of Thrift Supervision.
The law provides a framework for depository institutions and community organizations to work together to promote the availability of credit and other banking services to underserved communities. Under its impetus, banks and thrifts have opened new branches, provided expanded services, adopted more flexible credit underwriting standards, and made substantial commitments to state and local governments or community development organizations to increase lending to underserved segments of local economies and populations.
CRA Institutions
CRA applies to federally insured depository institutions, national banks, thrifts, and state-chartered commercial and savings banks.
OCC’s CRA Responsibilities
The CRA’s implementing regulation (12 CFR 25, et seq.) requires the OCC to assess a national bank’s record of helping to meet the credit needs of its entire community, including low- and moderate-income neighborhoods, consistent with safe and sound operations. It also mandates that the agency consider that record in its evaluation of a bank’s application for new branches or relocation of an existing branch, bank mergers and consolidations, and other corporate activities. In general, the OCC conducts a CRA examination of a national bank every three years. However, the Gramm-Leach-Bliley Act mandates an extended examination cycle for smaller banks. CRA examinations for banks with an overall CRA rating of outstanding and aggregate assets of $250 million or less can be started no sooner than 60 months after the most recent CRA examination. Similarly, CRA examinations for banks with an overall CRA rating of satisfactory and aggregate assets of $250 million or less can be started no sooner than 48 months after the most recent CRA examination. Banks may be removed from this extended CRA examination cycle for reasonable cause or in connection with an application for a depository facility. The OCC publishes an advance notice of scheduled CRA examinations quarterly. A written performance evaluation of the bank’s CRA activities, including a CRA rating, is prepared at the end of each CRA examination and made available to the general public. The OCC encourages community and civic organizations, government, and other members of the public to express their views about a bank’s CRA performance to the bank and the OCC at the earliest possible time. This allows the bank to address any concerns and the OCC to take the public’s views into account in evaluating the bank’s CRA record and reaching conclusions about its performance ratings. If those comments are sent to the OCC, the OCC will also consider them when reviewing applications covered by the CRA.
Additional Information
If you are interested in obtaining additional information about CRA, visit our website at http://www.occ.treas.gov or contact:
Office of the Comptroller of the Currency
Compliance Division
250 E Street, SW – Mail Stop 6-7
Washington, DC 20219
Telephone: (202) 874-4428
Fax: (202) 874-5221
And liberals revel in it to gain power and redistribute other peoples money.
But this is dragging us off topic and shows the harm that people like Hooper do. They want to fix blame and make political and ideological points. We need to analyze what happened and try to fix it. However the political problem is the hardest whether it is the executive telling the regulators to go easy or the liberals forcing the industry to do things that were not waranted financially. I am sure that politicions on both the right and left were all over the place. I don’t doubt that the regulators messed up and I don’t doubt that some caved to political pressure. This was a long time problem and has spaned several governments. And then of course you have the industry crooks, whom I do not doubt exist, and those who milked the system.
So Hopper you fight the class struggele. In the meantime lets the rest of us focus on what went wrong and what can be done to lessen the harm and see if it can be prevented in the future. No one is clean in this.
As I said the CRA has been used as a club by goverment and activist groups. Many low income people are not miniority and also benefited. In California, Miami, Las Vegas the buble was built on speculation. In Texas we had only a modest bubble. It is the subprime markets existence that led to the bubble in most parts of the country – it brought in a percentage of persons who would not have been able to purchase homes into the market. I just read an article on the auto industry – the subprime buyer/borrower was 18% of car sales the year before – if you suddenly remove the subprime buyer from real esate and auto transactions – then the bubble bursts as a significant portion of demand no longer exists. Currently there are rows of moderate income housing sitting empty and even more lots that are not being built on. Builders are now unloading them below cost – lowering the value of existing homes. It trickles up the ladder – and yes the creative financing allowed middle income people to purchase upper middle and upper income homes. There is plenty of blame to go around – but the subprime market was insanity.
But did the subprime market exist because of supposed “politcal pressure” or because the mortgage companies thought they could make zillions on it in a market that only goes up and up? If some guy buys a house that he can’t afford for half a mill, then he defaults in three years, it’s now worth 3/4 of a mill, so the company makes money anyway! I can remember driving around with the radio on listening to commericals that almost sounded like the Mafia wanted to lend you money — “No asset, no income verification! Lousy credit, NO PROBLEM! We say yes when others say no. ” (anybody remember that one?) I kept thinking — why would you want to take out a loan with a company that says yes to you when, by their own admission, every other rationale lender wouldn’t come near you with a 10 foot pole? Obviously, just like the Mob, they plan to strip you bare.
Chips, unfortunatly when bubbles burst the underlying cause is frequently found to be insane. You wonder how people could have done what ever they did. Why would people buy a house they could not afford? Why would people take out an adjustable rate mortgage with a balloon that at the end of 5 or 10 years they would not be abble to pay? Why would people take out a home equity loan to finance their credit card debt? Why do people have multiple credit cards and run them up to levels they can never pay off?
I can understand that something bad can happed, but this is not the occasional run of bad luck it is systemic.
And to tip a hat to Hopper, I was appalled after 9/11 when Bush told people to go out and shop. An economy built on people buying what they don’t need and penalizing safe and secure saving is nuts.
As far as why people would take out a balloon mortage that they can’t pay off, I can answer that one. A friend of mine almost did. He wanted to buy a house in Manhattan. Price was 4 million. His idea was to take out a balloon mortgage, then divide the place into two separate apartments, then rent one part out. Then, in five years when the balloon came due, sell one half (for, one would assume based on the market AT LEAST two mill, but probably three and maybe even four. ) That way he’d have a nice house for 1 mill or even less. As it happens, he didn’t do it. Actually, given the relatively minor decline in Manhattan real estate prices even now, it might have been a good idea. Now, if he’d done it in Pittsburgh it would have been a really bad idea. But who knew?
Chips [#10]: Your first link is to some self-promotion by a leftist group. It in no way proves that the CRA has had the effects you claim.
Your second link is to a summary of the CRA by a bank regulatory bureau of the Treasury Department. This summary (quoted at length in #25) is consistent with the one I provided in #6, isn’t it? What evil do you find there?
Your third link is to a right-wing opinion article evidently part of the current smear campaign against the CRA and Clinton-era financial regulatory policies.
_ _ _ _ _ _ _ _ _
I ask you once again: If those policies were so bad, why didn’t the Bush Administration change them?
The answer is the Bush Administration didn’t try to change those policies because it considered them acceptable.
Senator Mel Martinez (R-Fla.), Bush’s HUD secretary and later general chairman of the Republican Party, took that view in 2001 congressional testimony. He declared that the CRA had “a very important role to play†in helping low- and moderate-income communities build a more prosperous future. “One of the things that I have done in the private sector is serve as the director of a bank. And it is in that role that I know that at times it can be a headache for the private sector to fulfill the C.R.A. requirements. But I also know it is the right thing to do and it is a good thing for communities.â€
Chips is just trying to improve McPalin’s poll numbers by preaching to the choir. I agree with Iraneaus, in that the present administration thought the practices were OK. Blaming a crash on the poor and disenfranchised is about as sensible as the thinking that got us into this crisis.
[blockquote]Chips is just trying to improve McPalin’s poll numbers by preaching to the choir. I agree with Iraneaus, in that the present administration thought the practices were OK. Blaming a crash on the poor and disenfranchised is about as sensible as the thinking that got us into this crisis. [/blockquote]
I agree that a lot more than the “poor and disenfranchised” played a part in this, but they had incentives dangled in front of them just like a lot of more savvy Wall Street types did. The CRA definitely played its part, as did Fannie, Freddie and the mau-mauing shock troops for the Left like ACORN. As long as we’re talking about Phil Gramm, here’s what he said about the Clinton Admin’s changes at the time:
[blockquote]The Clinton administration has turned the Community Reinvestment Act, a once-obscure and lightly enforced banking regulation law, into one of the most powerful mandates shaping American cities—and, [b]as Senate Banking Committee chairman Phil Gramm memorably put it, a vast extortion scheme against the nation’s banks.[/b] Under its provisions, U.S. banks have committed nearly $1 trillion for inner-city and low-income mortgages and real estate development projects, most of it funneled through a nationwide network of left-wing community groups, intent, in some cases, on teaching their low-income clients that the financial system is their enemy and, implicitly, that government, rather than their own striving, is the key to their well-being.[/blockquote]
[url=http://www.city-journal.org/html/10_1_the_trillion_dollar.html]Read it all[/url]
Dear Ireaneaus-
1) the leftist groups release was bragging about using the CRA as a club to get commitments from lenders they listed Lehman and Aig by name – I think that is very intersting and helps proves my point that leftist groups were using the CRA has leverage.
2) The govement article talks about the CRA is getting Banks to do their duty to the community – “duty to the community” is not sound banking practice.
3) My point is simple – the left using the CRA and leaned on the banking world to lower lending standards to nearly the lowest common denominator in order to prevent charges of discrimination.
4) The banking world caved in to their demands and came up with novel lending products – subprime and alt A.
5) The large influx of new homebuyers (formely the renting class) casued demand for new homes to swell causing a buble. The renting class was less than truthful on the applications for loans – they were added and abetted by mortgage brokers, builders and lenders.
6) the banks knowing they had a lot of bad loans sold them as a group thinking it would reduce risk to third parties – this has now nearly destroyed the financial world.
7) the renting class has defaulted in numbers exceeding the bankers expectations – lending has tightened buble burst and the formerly affluent speculators and the not affluent subprime borrorers are now both being foreclosed on.
8) The Bush administration out of cowardice, greed or more liberal views than they should have did nothing to stop it.
9) World wide train wreck. But the spark that started the fire was the belief that you could put large numbers of low income people into 30 yr mortgages with no down payment.
10) I am a real estate lawyer – I am involved daily in the debris.
McCain talking points on a religion blog – I swan…
Chips [#38]: You still fail to substantiate your outlandish and unfounded claims about the Community Reinvestment Act.
(1) You take the leftist group’s self-promoting claims at face value. Since you would dismiss anything else this group said, what makes you such a believer in these claims to efficacy. Many nonprofit organizations make outsized assertions about how they changed the world. And if you added up governors’ and mayors’ about how many jobs they “created,†the total would dwarf actual U.S. job growth.
(2) Banking policy has long expected banks to “meet the convenience and needs†of their communities. See, e.g., 12 U.S.C. §§ 1816(6). In a CRA context, bank examiners evaluate a bank’s record of meeting the credit needs of its entire community, including low- and moderate-income neighborhoods, CONSISTENT WITH the SAFE AND SOUND OPERATION of such institution.†§ 2903(a)(1). Thus the CRA itself specifies that meeting credit needs must always be consistent with safety and soundness.
(3) There’s a huge difference between being criticized and being coerced.
(4) Lenders adopted more “flexible†(i.e., lower) credit standards in the expectation of profit. Commercial bankers did not, as you imply, lead the charge. On the contrary, nonbank lenders originated the worst mortgages. In any event, credit standards went down for many things besides mortgages. Corporations with junky credit ratings had a heyday financing themselves with junk bonds—often at remarkably low interest rates.
(5) When speculators got their hands burned on technology stocks during the early years of this decade, they turned to real estate. So did many other people. Low interest rates enabled buyers to pay higher prices. McMansion-building flourished, as did high-end home improvement. This bubble wasn’t driven by the working poor or the lower middle class. It was driven by speculators, by affluent people who wanted more house than they already had, and by a herd mentality that expected prices to continue rising.
(6) Banks routinely sell 30-year fixed-rate mortgages for two good reasons. First, banks fund themselves mostly with short-term deposits—and thus are vulnerable to rising interest rates. It’s financially unsound to use checking accounts and other short-term deposits to fund large portfolios of long-term, fixed-rate mortgages. Second, mortgages were actually worth more when turned into mortgage-backed securities. The securities were far more liquid than the loans: you could sell them quickly without taking a discount. The loan pool had better geographic diversification, reducing its vulnerability to a regional recession. Because the pool included so many different borrowers, investors could more easily predict prepayments and defaults than in the case of individual loans. Bank capital standards adopted during the 1980s accordingly require banks to hold only one-fifth as much capital against mortgage-backed securities as against mortgages themselves.
_ _ _ _ _ _ _ _ _ _ _
Yes, we face a colossal mess. But it still fits the broad pattern of past booms and busts. It is not some special creation of leftists or ratty renters.
Correction to #38: In point (1), the last sentence should read:
“If you added up governors’ and mayors’ CLAIMS about how many jobs they have ‘created,’ the total would dwarf actual U.S. job growth.”
RE: ” . . . it’s a rehash of Bloom’s Closing of the American Mind . . . ”
Great book.
“. . . more of the perpetual fret about the “decline of the west†… a failure blamed on any and everything except ye old elite class of very white males . . . ”
Not at all — much of the denigration of Christian values in the Episcopal Church was led by aging white male baby boomers, left-over from their glory days back in the 60s, desperate for another “cause” they can believe in. Right now it’s gay rights. But I’m more than happy to blame our hippy white male clergy’s thirst for relevancy and meaning and hipness for further declines in Christian values.
RE: “Of course it’s a “decline†begun by the ideas behind the American Revolution … the concept of individual freedom … which has been forever expanding to include those beyond the elite circle at the beginning … those beyond, of course, include women, minorities, etc.”
Quite the opposite, it’s a decline led by people who greatly desire to be the ones in charge of the masses — you know, because they’re so erudite, advanced, and full of gnosis that they should be the ones in charge of the simple proletariat — even to the extent of telling them who they should rent to, and whom they should hire.
RE: “What we have is a longing for the days of old … the good old days … days which are perceived to have been a near paradise … when the few ruled the many. And of course … always the speaker/writer is on the inside referring to the outside … relishing (even if on a subconscious level) the pleasure of excluding all those “others.â€
Heh — a little fantasizing there, Hopper? You’re probably one of the aging white males I refer to. You perfectly fit the TEC profile. Bitter, sniping, envious, desperate for another cause, angry, of course, over the primitive peasants’ resistance to what’s best for them . . .
RE: “… but the neocons remain forever stuck in their secret and very self-centered vanity. . . ”
Lol. Careful — the bitterness is oozing out again.
I think it is quite amusing to place the blame for the fall of the entire global economy upon the CRA. Yep, the poor. If we had just not given the poor credit, everything would be just dandy, and the free market would have worked magically. Mortgages in Russia and England all tied to the CRA act.
heh.
Perhaps the problem is that even the financiers didn’t really believe in the free market to begin with. What’s pretty clear is that most bankers and governments are scared about what would happen if we just decided to let the free market run its course.
As far as the article goes, well, that is, coincidentally, what Iran’s been saying: America is being punished for its misdeeds.
Ireaneaus-
I was not suggesting that the CRA brought this about single handedly but that it was the spark that started the fire. Many others took advantage of the elimination of credit standards – I am merely stating that it was because of the desire by many on the left to see everyone get credit that all of the foolishness started. And although I do not agree with leftwing groups or believe their ideology they are extremely effective at coercing read shaking down weatlhy white male banker types especially Northeastern ones (money is usually cowardly). Jesse Jackson has made a 7 figure income out of it and perfected it to an artform.
Hm, the Spark? Really? So Alan Greenspan’s reducing the treasury rate had nothing to do with it?
The left wing is effective at shaking down white male banker types? Why not just admit it: Bankers are a bunch of socialists to begin with.
As far as the left wing wanting everyone to get credit to begin with, that makes no sense, and doesn’t jive with the facts. The CRA was meant for people who had decent credit in neighborhoods avoided by banks altogether. Secondly, if you want to see how a leftist program really works, you might want to study the Nehemiah housing program in the bronx and brooklyn. AFter 20 years of getting mortgages for the poor, there have been only 10 foreclosures.
My point: the left did not eliminate the regulations. They did not invent NINA loans or Credit Swaps, or those Toxic waste securities that some people think should be bought at non-market value. Those were bankers trying to make a buck. Not the left.
It’s kind of amazing the attitude that bankers would only make deals that would cause sky-high bonuses because they were forced to.
I guess, to Chip, bankers are just less money driven than the rest of us. Its a nice idea.
Chips [#46]: Credit standards have evolved and fluctuated over the years. To take just a few examples:
— Legions of bankers lost their shirts making real estate loans during the 150 years preceding the Community Reinvestment Act. No one made them do it; they did it willingly, seeking to maximize their profits. They did it so willingly that the original National Bank Act (1864) narrowly limited national banks’ power to make such loans.
— During the 1970s, big banks got into trouble making huge loans to developing countries like Nigeria, Mexico Colombia, Ecuador, and Venezuela. No one made them do it; they did it willingly.
On the positive size, banks found that they could extend credit safely and soundly in new ways.
— During the 19th century, banks would have regarded our standard 30-year self-amortizing mortgage as preposterously unsound. Yet for tens of millions of qualified borrowers, it has worked well.
— Banks long disdained the business of the working poor. But during the 1920s, the attorney general of New York (seeking to quash loan sharks) persuaded Citibank to begin making small, unsecured loans to people of modest means. Borrowers compiled good repayment records, and the business quickly became very profitable.
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
CRA lending has historically been profitable—not the disaster you seem to think. In a report entitled The Performance and Profitability of CRA-Related Lending (2000), the Federal Reserve Board surveyed banks about the profitability of CRA loans. Most banks reported that on their CRA lending they reaped profits “about the same” or “somewhat higher” than on their other lending. See pages 43-64 and tables 3a, 4a, and 5a.
http://www.federalreserve.gov/boarddocs/surveys/craloansurvey/cratext.pdf (text)
http://www.federalreserve.gov/boarddocs/surveys/craloansurvey/cratables.pdf (tables)
If CRA lending generated profits “about the same” or “somewhat higher” than banks’ other lending, how can it be the baleful force you make it out to be?
RE: “forever rewriting in her take no prisoners effort to turn the tables . . . ”
Just pointing out for the world that your stated principles in the above comment were entirely inconsistent and wrong. I know it’s irritating to have your rhetoric turned on you so swiftly and thoroughly, but stick around and you’ll get used to it — or get a bit more rigorous and rational in your comments.
RE: ” . . . as Sister Sarah Hay Explains It All For You from her self-contented world of absolute certainty where doubt exists not and her version alone is The Truth.”
It stung a little, didn’t it, Hopper? ; > )
This article confirms that firms not subject to the Community Reinvestment Act (e.g., nonbank mortgage companies) accounted for most subprime lending:
http://www.mcclatchydc.com/251/story/53802.html