Do you happen to have the primary source for that quote on hand? The only relatively similar regulations I'm aware of involve non discriminatory mandates in terms of finances, regardless of race, not demographic quotas of any sort.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.
Do you happen to have the primary source for that quote on hand? The only relatively similar regulations I'm aware of involve non discriminatory mandates in terms of finances, regardless of race, not demographic quotas of any sort.
...not my quote. Ask Finebead. I provided a sourced set of regulations at another point in the thread.
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.
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:
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 matter the truth,
No matter the truth??? Is the truth not important to you?
there are far too many Americans who allow their unreasoning hatred of the President to twist and alter reality
No one has to 'alter reality'. The reality is there for all to see.
This is all silliness. Whenever you see a website offering unattributed quotes, or statements unrelated to the facts at hand, then you should just quickly move on.
Here's the case and findings - Buycks-Roberson v. Citibank Fed. Sav. Bank | Civil Rights Litigation Clearinghouse
Right. And were you able to discover how much money Obama and the other lawyers received for their efforts and how much their clients received? You can see by that the the Snopes link you sent how it meanders from the facts.
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.
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.
AIG sold CDSs that were a regulatory requirement for collateralizing those mortgage backed securities as they were purchased, and then bunldled up ( good with bad ) by the GSEs to be pushed out into the market as derivitives.
Interesting your "evil bank" scenario ignores who allowed these sub-prime loans to be securitized in the first place.
Without the securitization of those MBSs mixed up and sold by the GSEs to make their value practically impossible to access there would have been no secondary market in the first place.
No sub-prime collapse. How on earth do you think the GSEs financed this disaster ?
When it was all said and done the GSEs and other Govt Financial Entities wound up with the lions share of that debt on their books. Over 80%.
But you want to focus on the issue at the mid way point or towards the end , blame the banks when my focus has always been whos responsible for implementing and then perpetuating the policies and programs that allowed this to happen.
No private lending institution had the regulatory power or endless cash reserves to start and then finance this disaster. Regulations that lowered the underwriting standards and then put the GSEs on a quota system were NOT issued by banks, they were issued by Democrats in the early 90s.
CRA regulations were the driving force to the change banking systems long held and strict standards for lending. The banks were given ultimatums which essentially would have forced them into bankruptcy had the GSEs not been forced to acquire the majority of the sub-prime debt.
To blame the banks is making the claim that private institutions had the power to alter Govt regulations and force policy that was essentially detrimental and counter to their bussiness practices that had prevented this for the last hundred years.
Fannies been around since the thirties with originations of less than 10% of Alt-a loans on their books just prior to the 90s.
What policies forced their participation to the 60+% of sub-prime debt by 2008 ?
You want to blame Greenspan ? Plueeeze. Most of the GSEs sub-prime trash were ARMs and from 1995 to 2008 Countriy Wides involvment added up to a staggering 5% of total sub-prime involvment.
No, a disaster this huge had to have real backing. Institutionalized buying up under HUD regulatory enforcment of sub-prime debt so it could be hidden in derivitives and sold to investors.
But you blame the banks. Unreal. Not ONE GSE representitve or politician was held responsible.
Credit Default Swaps - The New York TimesSwaps also became something traded in and of themselves, as a form of speculation. That kind of trading also landed investment banks in multiple and seemingly conflicted roles, as when Goldman Sachs helped sell bundles of mortgage-backed securities and then used swaps to bet that they would go belly up.
LOL!!
And that law didn't have any consequences on the banks? Later Bill Clinton actually boasted about this!!
But you blame the banks. Unreal.
Not ONE GSE representitve or politician was held responsible.
The banks chose to accept the consequences and conducted business profitably under the CRA in the vast majority of cases, I have posted links to proof of this. So, what's your point.
Do you think banks should be allowed to go into areas, pick up their deposits and then not give loans to anyone in the area, i.e. red line them. That is damaging to the area, they can't improve themselves.
In the south we used to have "separate but equal schools" which were not equal, this was deemed unfair, and the schools down here were integrated by force. That was the right thing to do. It was worth paying a price to correct this institutionalized mistake. Same with banks opening, siphoning out deposits and refusing to grant loans. The social cost to the area was too high, and the price the banks had to pay to fix it was, well they didn't pay anything since the vast majority of CRA loans were profitable.
So, what's your point?
Your freedom to swing your arm stops before you hit my face. Freedom is not unlimited.
Do you think banks should be allowed to go into areas, pick up their deposits and then not give loans to anyone in the area, i.e. red line them.
If bolded is less than 90%, it is not profitable. Vast majority doesnt make it. Thats exactly why relaxed lending standards are not good.
Of course. It cannot be any other way. Only those who are very well qualified should be allowed loans, and then at the banks discretion.
That is a separate argument. The argument proferred here is that CRA was a major factor in the financial crisis, and I have shown it was NOT.
Whether you like it at the individual bank level is another manner, but it was not a major factor in the financial crisis, unless you have some facts that show different results than the ones I've already posted.
Its the entire point. Bank profit margin is below 10%. What happens when 10% of its mortgages fail?
I believe CRA had adequate teeth. But
CRA was NOT the problem with the
financial crisis and I have posted proof of this in post 117, so I'll quote it again:
CRA was NOT THE PROBLEM, it was the unregulated independent mortgage lenders like Countrywide, New Century, Freemont, Option One, etc.
Then you had pres. Bush in 2002 set his objective to extend home ownership to 5.5 million minority families, I posted the speech already, and the repub Chris Cox led SEC allowing the biggest banks to triple their leverage in 2004, and repub Bill Frist blocking legislation to reform Fannie and Freddie in 2005. This debacle was mostly on the repubs who had their hands on the wheel the whole time the problem got out of hand and exploded.
Your "proof " was that "some legal and finacial experts state" .....
Thats not proof and its not even relevant to what I'm refering too.
Remember as you blame Bush who in fact in 2003 argued for further regulations on the GSEs to slow down the Govt mandated bubble, that the mechanisms put in place in the early 90s were up until the crash the root cause of this crisis.
Freddie Mac Tried to Kill Republican Regulatory Bill in 2005 | Fox NewsFreddie Mac arranged stealth lobbying in 2005
Associated Press ,Oct. 19, 2008
WASHINGTON — Freddie Mac secretly paid a Republican consulting firm $2 million to kill legislation that would have regulated and trimmed the mortgage finance giant and its sister company, Fannie Mae, three years before the government took control to prevent their collapse.
In the cross hairs of the campaign carried out by DCI of Washington were Republican senators and a regulatory overhaul bill sponsored by Sen. Chuck Hagel, R-Neb. DCI's chief executive is Doug Goodyear, whom John McCain's campaign later hired to manage the GOP convention in September.
Freddie Mac's payments to DCI began shortly after the Senate Banking, Housing and Urban Affairs Committee sent Hagel's bill to the then GOP-run Senate on July 28, 2005. All GOP members of the committee supported it; all Democrats opposed it.
In the midst of DCI's yearlong effort, Hagel and 25 other Republican senators pleaded unsuccessfully with Senate Majority Leader Bill Frist, R-Tenn., to allow a vote.
"If effective regulatory reform legislation ... is not enacted this year, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system and the economy as a whole," the senators wrote in a letter that proved prescient.
Unknown to the senators, DCI was undermining support for the bill in a campaign targeting 17 Republican senators in 13 states, according to documents obtained by The Associated Press. The states and the senators targeted changed over time, but always stayed on the Republican side.
In the end, there was not enough Republican support for Hagel's bill to warrant bringing it up for a vote because Democrats also opposed it and the votes of some would be needed for passage. The measure died at the end of the 109th Congress.
The Republican senators targeted by DCI began hearing from prominent constituents and financial contributors, all urging the defeat of Hagel's bill because it might harm the housing boom. The effort generated newspaper articles and radio and TV appearances by participants who spoke out against the measure.
Inside Freddie Mac headquarters in 2005, the few dozen people who knew what DCI was doing referred to the initiative as "the stealth lobbying campaign," according to three people familiar with the drive.
They spoke only on condition of anonymity, saying they fear retaliation if their names were disclosed.
Freddie Mac executive Hollis McLoughlin oversaw DCI's drive, according to the three people.
"Hollis's goal was not to have any Freddie Mac fingerprints on this project and DCI became the hidden hand behind the effort," one of the three people told the AP.
Before 2004, Fannie Mae and Freddie Mac were Democratic strongholds. After 2004, Republicans ran their political operations. McLoughlin, who joined Freddie Mac in 2004 as chief of staff, has given $32,250 to Republican candidates over the years, including $2,800 to McCain, and has given none to Democrats, according to the Center for Responsive Politics, a nonpartisan group that tracks money in politics.
On Friday night, Hagel's chief of staff, Mike Buttry, said Hagel's legislation "was the last best chance to bring greater oversight and tighter regulation to Freddie and Fannie, and they used every means they could to defeat Sen. Hagel's legislation every step of the way."
"It is outrageous that a congressionally chartered government-sponsored enterprise would lobby against a member of Congress's bill that would strengthen the regulation and oversight of that institution," Buttry said in a statement. "America has paid an extremely high price for the reckless, and possibly criminal, actions of the leadership at Freddie and Fannie."
Nine of the 17 targeted Republican senators did not sign Hagel's letter: Sens. Mitch McConnell of Kentucky, Christopher "Kit" Bond and Jim Talent of Missouri, Conrad Burns of Montana, Mike DeWine of Ohio, Lamar Alexander of Tennessee, Olympia Snowe of Maine, Lincoln Chafee of Rhode Island and George Allen of Virginia. Aside from the nine, 20 other Republican senators did not sign Hagel's letter.
If bolded is less than 90%, it is not profitable. Vast majority doesnt make it. Thats exactly why relaxed lending standards are not good.
Of course. It cannot be any other way. Only those who are very well qualified should be allowed loans, and then at the banks discretion.
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?
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